feature: trial runs

Published: 24th October 2012

Running trials on how to encourage customers to change their electricity use is a core feature of CLNR. Recruiting the trial participants has been instructive in itself.

trial runs

Running trials to test ways that customers can change how and when they use electricity, via a combination of tariff incentives, efficient technologies and closer relationships with the electricity supplier and network operator, is central to our research. The success of these trials relies on customer recruitment, and this in itself has delivered some interesting results.

tariffs

Tariff options have to be commercially viable, reflecting the real cost of delivering electricity by 2020, and also be acceptable to customers. A good uptake will show that customers are prepared to be flexible in how they use electricity, in return for a rate that reflects the value to distribution networks.

Frontier Economics, working with the tariff teams from British Gas and Northern Powergrid developed three tariffs aimed at solving two different problems. The first two, Time of Use and Restricted Hours, are both ‘regular’ use tariffs, developed for customers on low voltage networks. With the time bands pre-set, both tariffs aim to reduce demand at peak times. Under Time of Use the customers are unconstrained in their electricity usage, whereas with Restricted Hours certain devices are switched off at peak times - though the customer can choose to override the restriction.

In contrast, on Direct Control, the third tariff, customers allow certain loads to be interrupted up to a pre-agreed number of times a year. This provides network operators with an additional tool to actively manage the network, reducing demand to overcome short term constraints. Direct Control is available to customers connected to the high voltage part of the network as well as to low voltage customers, making it attractive to larger energy users. If successful, this proposition may be a cost effective alternative to network reinforcement.

domestic customers

British Gas’s half a million smart meter customers were well-placed to take part in these smart grid trials and their response to the idea was excellent. Higher than expected numbers signed up to the Time of Use tariff, attracted by its three-rate time banding which prompts customers to shift their usage away from the 4pm - 8pm weekday peak.

Even more interesting was the response from customers who jumped at the chance not only to take part in the trials but to have a smart meter installed too.

When asked, customers said their main reason for taking part was to save money on their electricity bills - reducing carbon emissions wasn’t high on the list. But the added incentive of M&S vouchers at the start and end of the trial didn’t tip the balance for many; the gift was welcome but they would have said yes anyway.

Many Time of Use trial participants claim they don’t use electricity much during peak hours, so they won’t have to change their habits all that much. But only when all the data has been analysed will the research team know if this is in fact the case.

In tests which focus on customers with low carbon technologies such as solar panels, customers are keen to know how much electricity their devices generate and how this affects their bills.

heat pump hold-up

While recruitment on Time of Use has been easy, other tariff propositions have been a tougher sell. Restricted Hours rested partially on customers with heat pumps, but small initial uptake of this technology meant that numbers of potential participants were limited. Heat pumps, it transpired, weren’t well understood, and without sufficient incentives they were expensive - and tricky to fit in locations with limited space.

But with funding from the Department of Energy and Climate Change (DECC), British Gas have so far been able to install over 240 new heat pumps for customers and these are now primed for the trial. Some just have basic monitoring equipment attached, while others are ‘smart’ heat pumps with storage in the form of a 300 litre hot water tank which allows a home or business to use the stored heat when the heat pump’s output is reduced over the peak load period on the network.

Where lack of customers has limited recruitment, trials have been adapted and some participants are simply being monitored for their ‘live’ usage instead.

sme challenge

Small and medium enterprise (SME) customers present a slightly different story. While customers are drawn to the trials initially, attracted by the prospect of lower bills and being ‘greener’, many withdraw when they realise more fully what’s involved. SMEs are highly dependent on their electricity supply to run their business, and can’t just reduce availability of essential equipment, as they’d have to do with the Restricted Hours or Direct Control trials. Many businesses already reduce their loads through energy efficiency measures and can’t be any more flexible. Or they may be concerned about the size and impact of the monitoring or interrupting equipment. Some businesses have no say in their power use because they’re in serviced properties, or part of a larger organisation, or they deal with electricity through a broker.

Still, the Time of Use tariff trial was filled quickly, as the three-rate time bandings are good for business: for most of the day they’re on the middle rate while peak rate, in the later afternoon, is when they’re powering down, so SMEs can see the benefit.

While it’s disappointing that there aren’t more SME customers involved, it is still useful to discover this about a portion of the customer base where there was little previous insight. Follow-up technical surveys and interviews by researchers at Durham University will inform the team more about other limiting factors.

The project team knows that any new pricing and usage systems have to benefit the customer as well as the network and supplier, and what these trials will show is where to strike the balance.