Dynamic Demand Appliances Bill [HL]

Part of the debate – in the House of Lords at 12:34 pm on 24th March 2006.

Alert me about debates like this

Photo of Lord Redesdale Lord Redesdale Spokesperson in the Lords (Energy), Environment, Food & Rural Affairs, Spokesperson in the Lords (Energy), Trade & Industry 12:34 pm, 24th March 2006

My Lords, I beg to move that this Bill be now read a second time. I must apologise to those people wandering into the Chamber that the Title of the Bill gives absolutely no indication of what it is about.

The purpose of this Private Member's Bill is to enable a certification mechanism and market incentive for intelligent electrical appliances that are able to sense power shortages on the electricity grid and alter their consumption accordingly.

Dynamic demand appliances contain a low-cost electronic microcontroller. This listens to the mains hum, which runs at a frequency of around 50 hertz. The signal can be detected through every plug socket connected to the national electricity supply. Through this signal, the dynamic demand appliances can sense whether the National Grid is under stress and adjust the time at which they use electricity. The technology is suitable for appliances that already switch on and off during the day on a "duty cycle", such as domestic and industrial fridges, freezers and water heaters.

Millions of such appliances acting together would smooth out demand for electricity. This could allow for greater integration of variable sources of renewable energy, such as wind and solar. Such considerations are critical to long-term planning for the national electricity system if we are to achieve the high penetration of renewable energy necessary to meet and exceed Kyoto Protocol targets.

Use of dynamic demand appliances would also cut carbon emissions by reducing the need for back-up generation on the electricity system. Currently, some power generators run at less than their full output so that they can continuously respond to changes in our electricity demand. Such generation is generally less efficient because it has to run partly loaded and at variable rate, resulting in additional fuel use and carbon emissions. Academics are currently working to calculate the likely carbon savings associated with dynamic demand. Best estimates so far indicate that this may be in the order of 2 million tonnes of carbon dioxide per year. To put this in context, 2 million tonnes of carbon dioxide is equivalent to approximately one-quarter of the amount that would be saved if the Government met their 10 per cent renewable energy target.

The company which operates the National Grid currently spends around £80 million per year to commission the type of back-up service that dynamic demand could supply. Dynamic demand could therefore significantly reduce the costs of running the national electricity grid.

Early computer simulations also indicate that dynamic demand could provide significant system stability on the electricity grid by being highly responsive to sudden loss of generation, such as the failure of a major power plant or the tripping-out of a nuclear power station. In times of system crisis, dynamic demand appliances sense the system conditions and automatically defer their electricity consumption.

This is one of those simple yet powerful technologies with a huge potential to help curb climate change. As customers, we would notice no difference in the performance of our domestic appliances, yet our refrigerators and water heaters would be providing a continuous stabilising service to the electricity grid, reducing our dependence on inefficient back-up generation and preparing the system for variable renewable energy sources. This is an important point because it negates any need to educate the consumer in the use of appliances.

A laboratory test of a dynamic demand refrigerator and freezer is currently underway by the independent appliance testing company Intertek. This test has been sponsored by the Market Transformation Programme of Defra to assess the effect of dynamic demand operation on the performance of the appliances and to ensure that food safety is maintained. I look forward to development of the testing programme into a field trial, to verify the findings of computer simulations of the aggregated effect of many dynamic demand appliances operating together.

By supporting dynamic demand technologies through this Private Member's Bill, we will help to create the conditions conducive for this technology to become a market reality. We will also greatly enhance opportunities to develop UK expertise in demand-side energy management. This has a significant part to play in reducing greenhouse gas emissions and is an area of technology development that has global significance, especially in rapidly developing economies such as India and China.

It is worth noting that a House of Commons Private Member's Bill containing a clause that deals with dynamic demand passed its Report stage on Friday, 17 March. That Bill—the Climate Change and Sustainable Energy Bill—would require government to identify and address barriers to the introduction of dynamic demand on the electricity grid.

On Monday, 20 March, I hosted a meeting in the Attlee Room—I commend the Catering Department for a fine lunch—bringing together representatives of Ofgem, National Grid, DTI, Defra, the Market Transformation Programme, the Energy Savings Trust, appliance manufacturers, electronic component manufacturers, energy suppliers and academics. We discussed routes to market for dynamic demand. Participants identified the need for a reward system to incentivise the redesign of electrical appliances to provide valuable demand-smoothing services to the National Grid, with the significant public and environmental benefits that I have already outlined.

Several companies have made forays into exploring the technology and its potential benefits, yet none can justify the investment needed to realise the benefits of dynamic demand technology at a national level, unless a financial incentive system is in place. Conversely, while the grid operator would benefit from the services, it would do so only once sufficient dynamic demand appliances are in operation. Provision of an incentive scheme, without public policy intervention, is therefore highly unlikely. It is that need that this Private Member's Bill seeks to address.

Before I discuss the clauses in detail, I have three questions for the Minister to see how the DTI could help in developing dynamic demand. Could a field trial, involving appliances in people's homes, be undertaken? That would help us assess the exact effect on the power grid that an aggregation of appliances would have. Secondly, could the DTI fund computer modelling of the power system to assess the precise benefits in terms of carbon dioxide emissions? Thirdly, could it fund modelling to assess the benefits of many dynamic demand appliances in helping to smooth the variable power from renewable energy resources? So far, this work has been undertaken by volunteer organisations whose funding is coming to an end.

I turn to the Bill. The first clause seeks the establishment of a standard for dynamic demand appliances and a certification process for this standard. The clause also makes provision for the establishment of an incentive mechanism to reward appliance manufacturers for making dynamic demand appliances and introducing them on to the UK electricity grid. The second clause defines the term "dynamic demand appliance". I shall now explain each of the clauses in greater detail.

Proposed new paragraph (a) in Clause 1 requires the establishment of a dynamic demand appliances standard for electrical appliances. A standard is necessary to ensure that all dynamic demand appliance controllers behave in a way suited to the needs of the National Grid, achieve the desired demand-smoothing effect, support carbon efficiency and maintain proper operational standards such as food safety. A published standard will also help to encourage manufacturers, competition and innovation to meet the criteria.

Proposed new paragraph (b) requires the establishment of a certification process. This would allow for independent testing and verification of manufacturers' claims against the agreed standard. The certification process should ensure that dynamic demand appliances fulfil system requirements, deliver on-system and environmental benefits, and provide full accountability for the financial incentive mechanism.

Finally, proposed new paragraph (c) requires the establishment of a dynamic demand incentive mechanism, whereby manufacturers may benefit financially for each dynamic demand electrical appliance certified and connected to the UK electricity grid.

At the event I hosted on 20 March, an electronic component manufacturer indicated that the likely additional cost of introducing a dynamic demand controller would be in the region of £3 to £4 per appliance. A fridge manufacturer said that while this seems to be a small amount per unit, the profit margin on electrical appliances is small, so dynamic demand technology would be highly unlikely to be introduced without a financial incentive or legal requirement to do so.

Due to their significant potential for allowing greater integration of renewable energy on to the electricity grid, and reducing carbon emissions associated with electricity generation, dynamic demand technologies may qualify for incentives funded by the energy efficiency commitment. An incentive mechanism enabled by energy efficiency commitment funds is a very promising method to incentivise dynamic demand technology. However, this would also require further research to be undertaken. For example, it would be important to verify the carbon savings attributed to individual dynamic demand appliances to enable a proportionate financial reward. I recommend to the DTI that this study be commissioned as soon as possible. It is important to send a signal to appliance and component manufacturers that it is worth investing in the development of this innovative technology. I also hope that the Minister can confirm that the new clause in the Climate Change and Sustainable Energy Bill currently in the Commons, which refers to the energy efficiency commitment, will cover dynamic demand.

Clause 2 simply defines the term "dynamic demand appliance" as meaning those electrical appliances that have the ability to adjust their electricity consumption or output according to instantaneous power imbalances on the National Grid. This definition is necessary to distinguish dynamic demand technologies from the many other demand-side energy management techniques that already exist but which do not involve individual appliances monitoring and responding to signs of system stress indicated by mains frequency. The definition is also sufficiently broad to allow for competitive innovation among manufacturers.

The measures in the Bill are simple, practical ways of addressing barriers to the introduction of an innovative and useful technology that could help combat climate change. The figure of 2 million tonnes of carbon dioxide is a worthy target in anybody's book. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Redesdale).