Aoife Brophy Haney

Smart Metering and Electricity Demand: Technology, Economics and International Experience

In recent years smart metering of electricity demand has attracted attention around the world. A number of countries and regions have started deploying new metering systems; and many others have set targets for deployment or are undertaking trials. Across the board advances in technology and international experience characterize the metering landscape as a fast-changing one. These changes are taking place at a time when increasing emphasis is being placed on the role of the demand-side in improving the efficiency of energy markets, enhancing security of supply and in unlocking the benefits of energy and carbon savings. Innovative forms of metering can be a useful tool in achieving an active demand-side and moving beyond a supply-focused sector. In this paper we focus in particular on smart metering in liberalized electricity markets. We firstly set the context for innovative electricity metering in terms of policy, the role and market structure for metering, and the potential for smart metering to increase demand-side participation. We then provide an overview of new metering technologies by examining international trends, the various components of smart metering systems, and the likely future developments. Next we assess the economics of smart meters focusing on the costs and benefits of smart metering and the distribution of these. We review the evidence in Europe, North America and Australia; we look at how countries and regions have differed in their approaches and how these differences have had an impact on policy making. We conclude by outlining the main challenges that remain, particularly in technology choice and its regulation, the methodology of analyzing costs and benefits and the role of uncertainty in investment and policy making.

New Models of Public Ownership in Energy

The current challenges facing the energy sector cast doubt on the universal applicability of a wholly privately-owned, competitive and independently-regulated energy industry. In this paper, we discuss these challenges and ask why it is that they have led to the emergence of new forms of public ownership and involvement. We then explore six case studies to illustrate the variety of ownership models that have developed in response to the challenges of climate change, energy security, energy poverty and the uncertainty around electricity market reform. Our case studies show that public involvement can coexist with generally liberalised electricity markets, including at the retail market level. They also demonstrate that ‘public’ ownership can take a number of forms, including mutual ownership, consumer trusts, state ownership and municipal ownership. Public organisation is on its way back in but in many new forms with many different structures. The choice is no longer between full state ownership and full private ownership. The challenge is to maintain the benefits of both and to encourage innovation in new organisational forms.

Demand-side Management Strategies and the Residential Sector: Lessons from International Experience

This paper explores demand side management (DSM) strategies, including both demand response and energy efficiency policies. The aim is to uncover what features might strengthen DSM effectiveness. We first look at key features of residential energy demand and the limits to energy indicators. We then turn to historical energy intensity trends in the sector which uncover its large untapped potential. A range of barriers to energy efficiency accounting for this gap are surveyed as well as a number of potential policy responses. This reveals the necessity of a portfolio approach with bundled strategies that simultaneously impact different parts of the market, enhance the strengths of individual measures while compensating for their weaknesses through the use of complementary policies. Evidence from the international experience, in Denmark, Germany, Japan, and US is reviewed. This helps us to contrast and shed some light on the UK experience. We conclude with an emphasis on the need for a holistic underpinning approach and the indentification of a number of attributes that reinforce DSM strategies.

Smart metering: Technology economics and international experience

Introduction As we have seen particularly from Part I of this volume, the participation of the demand side is essential in improving the overall efficiency of energy markets. In liberalized electricity markets, active demand-side participation has been limited to date, although there is increasing emphasis on its importance in contributing to a number of energy policy challenges (Bilton et al. , 2008; Borenstein et al. , 2002; Spees and Lave, 2007). Climate change, security of supply and fuel poverty are the three main areas where a more active demand side has the potential to have both significant and cost-effective impacts (Ofgem, 2006b). The widespread recent interest in smart electricity and gas metering can best be understood in this context. Innovative forms of metering allow for more detailed information to be collected on consumption. Communications technology facilitates greater interaction between the end-user and the rest of the supply chain. Both information and interaction allow for end-users to become more actively involved by, for example, responding to price signals. Smaller users (domestic, small and medium-sized enterprises (SMEs)) have been the focus of recent smart metering policy debate around the world as they have traditionally not been given the appropriate incentives, means or information to become active participants in energy markets. In the European Union (EU), the 2006 Energy Services Directive (2006/32/EC) has given impetus to the debate by requiring member states to incorporate metering and billing policies into their National Energy Efficiency Action Plans. This has prompted a number of EU countries to explore the costs and benefits of implementing smart metering as well as the appropriate models and regulatory frameworks for deployment. The recent interest in smart grids in both the EU and the US provides a broader framework for looking at some of these issues. Although the definition of a smart grid is a work in progress, the overall aim of developing smart grids is to modernize the electricity system in such a way that it will be able to deal with increased complexity in an efficient and reliable manner. Part of this complexity comes from a more active demand side. Other important factors include the integration of greater amounts of renewable generation, distributed generation and the use of more advanced network control technologies to reduce losses (ERGEG, 2009).

From citizen to consumer: Energy policy and public attitudes in the UK

Introduction Interest in the role of the individual and the community in tackling major energy policy challenges has increased significantly over the past decade in the UK and internationally. The main challenges addressed by UK energy policy are climate change and the transition to a low-carbon economy; diversity and security of energy supply; and supporting consumers by overcoming fuel poverty and improving energy efficiency. Long-term continuity of policies concerning the above areas as well as that of liberalization of the energy sector is largely dependent on support from the public. The Department of Energy and Climate Change (DECC) was created in October 2008, mainly in recognition of the fact that these challenges are interlinked and require comprehensive policy making. Each of these challenges also involves an important role for the demand side. For households this includes a role for individuals as consumers of energy as a commodity on the one hand, and as citizens with social and political responsibilities on the other (Devine-Wright, 2007). The role for consumers in an advanced liberalized energy market such as Great Britain is further augmented due to retail competition: consumers can choose supplier and switch to an alternative supplier if they are dissatisfied with price, quality or customer service. They may also be more exposed to changes in energy prices. As citizens, individuals may participate both privately and collectively in policy-making processes. The degree of participation depends in large part on the willingness of policy makers to engage with the public. Until now, public engagement in UK energy policy making has been based on the information deficit model or the rational choice model. The assumption at the heart of these models is that improving awareness and understanding through providing information is central to encouraging sustainable behaviour and public acceptance for sustainable solutions, e.g. the siting of new wind-turbine developments (Owens, 2000; Owens and Driffill, 2008). This is beginning to change, however, and a number of recent studies have attempted to integrate a more sophisticated approach, acknowledging that the link between attitudes and behaviour is complex and influenced by a range of social, political, institutional and cultural factors (Jackson, 2005; Defra, 2008).

International benchmarking of Electricity Transmission by Regulators: Theory and Practice

Benchmarking of electricity networks has a key role in sharing the benefits of efficiency improvements with consumers and ensuring regulated companies earn a fair return on their investments. This paper analyses the theory and practice of international benchmarking of electricity transmission by regulators. We examine the literature relevant to electricity transmission benchmarking and conduct a survey of 48 national electricity regulators. Consideration of the literature and our survey indicates that electricity transmission benchmarking is significantly more challenging than electricity distribution benchmarking. New panel data techniques aimed at dealing with unobserved heterogeneity and the validity of the comparator group look intellectually promising but are in their infancy for regulatory purposes. In electricity transmission choosing variables is particularly difficult, because of the large number of potential variables to choose from. Failure to apply benchmarking appropriately may negatively affect investors’ willingness to invest in the future. While few of our surveyed regulators acknowledge that regulatory risk is currently an issue in transmission benchmarking, many more concede it might be. New regulatory approaches – such as those based on tendering, negotiated settlements, a wider range of outputs or longer term grid planning - are emerging and will necessarily involve a reduced role for benchmarking.

UK Retailers and Climate Change: The Role of Partnership in Climate Strategies

More and more companies in the UK are developing strategies to address the challenges of climate change. We focus on the UK retail sector and explore the role of partnership in shaping the climate change commitments and actions taken by retail companies. We use a social capital approach to firstly measure best practice in the climate strategies of a sample of 60 companies. We then measure the differences in engagement with partner organisations across the same set of companies. Using our best practice and partnership indices, we investigate how committed companies are to climate strategies; how partnerships have an impact on best practice; and we try to understand the distinction between companies that are more and less highly engaged in partnering. We find that partnership has an important role to play; and specifically that higher levels of partner diversity and greater depth of engagement improve the impact of partnership on best practice.

Making It Personal: Developing Sustainability Leaders in Business

Sustainability challenges present organizations in many industries with the need to change. Leaders are critical to the process of becoming more sustainable, and yet leading change for sustainability requires new competencies. Learning at an individual level is central to developing new competencies; however, there has been limited focus to date in the literature on corporate sustainability on how leaders can learn to respond to sustainability challenges. In this article, we focus on how managers learn to become sustainability leaders in their organizations by exploring the phenomenon of experiential learning programmes. We do this by interviewing participants and organizers of four programmes about what they learned and how the programmes helped them achieve these learning outcomes. We find that the programmes supported the development of understanding, personal connection, and empowerment to act for sustainability. In particular, making sustainability personal for participants led to deep learning in each of these three areas. We contribute to conversations in the corporate sustainability literature on the potential for individuals within organizations to respond to and connect with sustainability issues in different ways. We also contribute to the literature on education for sustainability and provide practical implications for experiential learning programmes in business and business education.

Opportunity Incorporated? Organizational identity perception in an incumbent facing change

Environmental discontinuities require incumbents to change their organizational identity from a focus on risk aversion to a focus on opportunity-seeking. The previous literature stresses that such identity change processes include changing organizational members’ perception of the ideal and current organizational identity. However, thus far, the literature provides no systematic evidence of the factors that shape how individuals within incumbent organizations perceive their organizations’ ideal and current identity. As a result, it is unclear how managers can influence the process of adapting organizational identity in times of change. In this paper, we propose that whether individuals perceive the ideal and current organizational identity as risk averse versus opportunity-seeking is shaped by individuals’ perception of (1) environmental and (2) organizational change as well as (3) their openness to change. Importantly, we propose that those factors that positively affect individuals’ ideal identity, nega...

Managerial interpretation and innovation in the context of climate change

Firms have developed climate change strategies over the last decade in response to rising regulatory, social and competitive pressures. Increasingly, these strategies include the development of new products and services (P&S) to reducing the environmental impact of the firm and its customers. In this paper, I explore how managerial interpretation of climate change has evolved over time and how these changes in interpretation are associated with innovation outcomes. The existing literature suggests that interpreting environmental challenges as opportunities is more likely to lead to open and innovative strategies. Using qualitative survey data on 99 Global 500 firms over the period 2003 to 2009, I find that threat-based interpretation can in fact lead to positive innovation outcomes at early stages of new P&S development. I identify three main mechanisms through which the detailed identification of threats encourages innovation in response to climate change. Furthermore, I develop a temporal dimension to the relationship between interpretation and stages of P&S development. I find that at advanced stages of P&S development, a balanced and opportunity-focused interpretation becomes more important. The results imply that managerial interpretation can provide firms with added flexibility to provide innovative responses to social and environmental challenges. But the relationship between interpretation and innovation is not static, nor is it a question of threat or opportunity interpretation but a combination of the two at different times that provides flexibility.