The three main drivers of the European Union (EU) energy policy are climate change and sustainable development, security of supply, and competitiveness. As far as climate change is concerned, the EU has agreed under the Kyoto protocol to reduce greenhouse gas (GHG) emissions by 8% between 2008 and 2012, based on 1990 levels. As a result of the Kyoto agreement, GHG issues are playing a central role in EU energy and environmental policies. More recently a communication on the security of supply has indicated that there is an urgent need to reduce the continuously increasing dependence of the EU on imports of primary energy sources.

To be able to meet the requirements of the Kyoto deadline of 2010, actions on the demand side offer the largest and most economically viable solutions. By acting on the energy demand, the EU can also substantially improve the security of supply in the short term, while waiting for the further development and deployment of renewable energy sources (RES).

Traditionally, policy actions to improve energy demand have been concentrated on the supply of efficient equipment. More recently, however, the focus has been moved to the end-user, by trying to give him the information and price signals which will make him carry out the necessary demand control measures.

With the gradual opening of European electricity and gas markets to competition, new market-compatible tools are needed to promote end-use energy efficiency. One possible market-based policy could be energy saving quotas for some category of operators (distributors, vendors, consumers, etc.) coupled with a trading system for energy efficiency measure certificates. This scheme would allow market participants who are not covered by the quotas to invest in end-use energy efficiency and sell the associated certificates to the operators who must meet the quotas. This is similar to the renewable energy tradable (green) certificate (TGC) a policy instrument used to promote renewable energy in many countries around the world.

INNOVATIVE MEASURE TO REDUCE ENERGY USE

Recently, an innovative policy mix introduced in Italy combines command-and-control measures (energy savings targets for electricity distributors) market instruments (tradable energy efficiency certificates issued both to distributors and energy service companies) and tariff mechanisms (cost-recovery mechanisms through electricity rates). The proposed Italian system is not currently integrated with the RES TGC scheme that is already in force in Italy. The scheme has been operational since January 2002, but the first check on compliance with the obligations will be carried out in mid-2004.

The Australian RES TGC scheme for electricity from RES allows the creation of certificates for solar water heaters based on the electricity consumption they displace. This is an example of integrating demand-side options (displacement of electricity) in renewable TGC schemes.

In the UK, the Energy Efficiency Commitment (EEC) programme requires that all energy suppliers with 15,000 or more domestic customers must encourage or assist those customers to take energy efficiency measures in their homes. Suppliers may trade either energy savings from approved measures or obligations to another supplier, with written agreement from the regulatory office (Ofgem). It is expected that suppliers will be able to trade excess energy savings into the national emissions trading scheme as carbon savings. The rules and mechanisms will be devised by the UK Department of Environment and Ofgem when the emissions trading policy is finalised.

Common issues raised by renewable energy certificate schemes already under way are:

  1. Defining rules for energy-efficiency certificate trading (who can issue certificates, who must redeem them, what technologies are eligible, what the redemption period should be, how to arrange banking and borrowing, etc.).
  2. Defining a non-compliance regime (sanctions).

THE ROLE OF NEW TECHNOLOGIES

Recent advances in metering, information and communications technology have opened up new possibilities for improving energy efficiency and increasing the use of renewable energy sources. Use of technological resources such as the Internet and advanced meters can allow real-time trading of ‘green’ energy certificates, which guarantee that a specific percentage of power is generated from RES. Such use could also permit simultaneous trading in green energy certificates and certificates for the amounts of electricity saved by demand-side energy efficiency measures.

Tradable green certificate schemes have been developed and tested in several European countries to foster market-driven penetration of renewables. The possibility for combining them with demand-side management strategies in an Internet-based system is still under investigation. In the combined tradable certificate scheme, both renewable energy sources and demand-side energy efficiency measures could be bid in real time through the Internet to meet a defined level of power demand.

Examples of the available technologies that will have a positive impact on demand management are real-time meters, which would allow users to know the price and environmental impact of the electricity they are using; intelligent appliances and equipment, which would allow energy savings to be maximised; and buildings designed to minimise energy use and maximise the wellbeing of the occupants.

The evolution of power line communication and ADC technology for energy management has permitted automatic meter reading (AMR) solutions to become highly competitive. Today these solutions are not only capable of guaranteeing the automatic reading of consumption; they also have the ability to offer the domestic user new services necessary for optimising energy consumption and respecting the environment.

REAL-TIME INFORMATION

Demand-side strategies using the Internet and/or advanced metering have been developed mainly to get real-time information on energy consumption. Recently eBidenergy, Inc. has developed energy information systems and services to commercial and industrial customers facing the challenges of emerging competitive energy markets. At the heart of the eBidenergy service offering is PowerTrak®, “an Internet-based Energy Information System that not only collects, stores, displays, and analyses energy data of all kinds, but also facilitates integration with other key data sources that strongly influence energy consumption and facility management such as weather, production, occupancy, facility area, and real-time location based energy pricing.” (eBidenergy).

Another example of the use of the Intenet to get real-time load curtailments is that of the Bonneville Power Administration, which has created the THE DEMAND EXCHANGE® Trading Platform, “an innovative way to include electric utility customers as active trading partners in the wholesale market for electricity not only in North America, but around the world. Today’s electricity traders buy and sell power based solely on supply side alternatives: power plants and transmission line loadings. Tomorrow’s traders will include the demand side: the customer’s choice of curtailing, shifting, storing electricity and/or running their on-site generation.” (The Bonneville Power Administration)

INTELLIGENT END-USE EQUIPMENT

In parallel with policy developments regarding energy efficiency certificates, a new range of ‘intelligent’ end-use equipment has been introduced to the market, including white goods with Internet connection/control (e.g. Samsung and Merloni Elettrodomestici appliances presented at the Lonworld Fair in October 2001, Frankfurt), Internet-based building control systems (Echelon) and advanced metering. The largest Italian electricity distribution company, ENEL, started to install digital meters for its 27 million residential customers in 2002. What the end user will be able to do with such an advanced meter is to:

  • Check the total consumption (KWh).
  • Check the instant absorbed power (KW).
  • Get consumption figures for the last week/month.
  • Check if it is increasing/decreasing. (It would also be useful to have a comparison with the same month the previous year).
  • Understand the consumption of individual appliances.
  • Have information about the type of electricity used (to serve for the full disclosure and Guarantee of Origin, Tradable Green Certificates, etc.).
  • Receive guidance on how to save energy, power and maximise the use of renewable energies.
  • Participate in real-time demand side bidding (if the scheme exists).
  • Take advantage of time-of-use-tariffs or real-time tariffs.

In the home, the meter will become an ‘intelligent home gateway’. It can act as a two-way interface between the external service centre and home appliances or systems, and generate related graphic or aural feedback to the user through a dedicated display, the television receiver or the PC monitor. The meter will be able readily to supply data to display energy usage, which profiles lighting, heating, wet appliances and cold appliances. The careful presentation of this information can reduce energy consumption.

A small-scale UK project, in which homes were fitted with a display screen giving a clever presentation of total energy usage, recorded a sustained 10% average energy requirement reduction for all homes. (Harrison).

CONTROLLING POWER CONSUMPTION IN THE HOME

The digital technology applied to residential appliances includes at least three distinctive elements:

  1. the existence of an electronic control system;
  2. the ability to generate; and
  3. store important information, as well as the possibility of exchanging this information with the outside world.

The information generated and stored by each household appliance during normal operation can become very useful when it is acquired and processed by the intelligent meter.

The advantage of intelligent home systems is the ability to control the actual power consumption of the house. The actual power consumption of each domestic appliance can be measured by the power meter. The power meter is able to broadcast actual power consumption of the house through the ‘indoor’ communication network, enabling all listening appliances to self-regulate the power drawn. If the system is based on a distributed architecture, each appliance takes decisions according to the value of the power consumption measure sent by the power meter, being used as a ‘smart sensor’ instead of a central controller. A power levelling algorithm allows each domestic appliance to self-regulate the power it draws according to the maximum amount of power available and the actual power consumption of the house.

The second advantage is to have domestic appliances capable of self-activating when energy cost is low. The role of the power meter is to broadcast information about tariff zones and tariff costs to all connected appliances.

The third advantage is to exploit the relationship between appliances using hot water, such as washing machines and dishwashers, and appliances providing hot water, such as hot water heaters powered by either gas or electricity. To exploit that relationship it is important to have a communication link between these appliances, to ask for a specific temperature or to know the availability of water at a specific temperature. Integrating the meter and home network with heating, gas and water reading functions is another factor which benefits both the user and the environment. (Aisa).

DEMAND RESPONSE INITIATIVES

Another relevant development is the recent research and experimentation on dynamic pricing and demand response. Demand response refers to the capacity of electricity customers to reduce their consumption as prices rise on an hourly basis in wholesale markets, or to reduce their consumption in response to emergency calls for curtailment or reduced load to forestall the need to implement rolling blackouts. These developments have taken place in the US, mainly in California following the electricity crisis in 2000. Time-of-use-tariffs, real-time pricing and critical peak pricing have helped to enhance system reliability, reduce power purchase and individual consumer costs, and protect the environment.

The environmental and energy challenges facing many of us require a new way of using scarce energy sources. The economic efficiency of and increased demand for green electricity requires more advanced control systems and meters, so that scarce energy sources can be optimally used while living conditions are not adversely affected. Advanced meters will be an essential component of a sustainable energy system.