Smart technology is answer to balancing future energy supply

THE two gas balancing alerts issued last week by the National Grid are unprecedented, being only the second and third times that the mechanism has ever been used. This, in conjunction with stories about panic buying and supplies of rock salt running out, has added to a general feeling of alarm about our ability to cope during extreme periods of demand.

The alerts do not signal the arrival of the apocalypse as some reports would suggest. Gas balancing is simply a warning to the industry that supplies are stretched and that they need to use other methods of generating power (by taking up spare capacity at coal-fired stations, for example) in order to keep the lights on. However, it is also an early indicator that we need a longer-term solution to the issue of energy use.

As we face up to the prospect of more extremes of temperature, coupled with the fact that a number of power stations in Scotland are coming to the end of their useful life, we will see increased pressure on fossil fuel prices. If we don't put in place new and alternative methods of generating energy, we could eventually see a significant energy gap, with demand outstripping supply much more frequently.

Currently, energy companies only really control one side of this supply and demand equation: supply. If demand increases, the present solution is to build more generating capacity. Plans are in place to do exactly this in Scotland and across the UK, delivering new nuclear and renewable energy from wind and wave. In gas, we should certainly consider boosting storage capacity. But on the other side of the equation, there is little that the energy companies can do to curb demand. Some large industrial customers do have contracts that allow their suppliers to occasionally ask them to stop using energy. But beyond politely asking consumers to use less power and sending out low energy bulbs in the hope they will be used, there is little suppliers can do to reduce demand.

However, new technology could have an answer. The rollout of smart metering and smart grids will introduce a new method of responding to the challenge of balancing supply and demand. Smart technologies will ultimately enable both consumers and their suppliers to actively manage demand to match available supply for the first time.

At first, this could sound a little scary. But we are not talking about Big Brother controlling and watching our every energy move. Instead, customers who have chosen a new contract with their energy supplier will be given the option to allow the supplier to remotely control part of their energy demand – say for example by turning their heating down by one degree for one hour at times of peak demand. In return the customer will receive a competitive pricing structure that rewards their flexibility.

Another example is electric car charging. Should electric cars become the norm, it is possible that our energy networks would be unable to accommodate everyone trying to charge their car during peak times. Again, suppliers may agree with customers to be allowed to flexibly manage this demand on the network, with no detrimental effect to the customer.

Options like these will provide a new tool in the electricity industry's kitbag, delivering effective energy management and balancing supply and demand through innovation. In such a smart world, things like a gas balancing alert will no longer be a cause for concern. With new generation sources, increased storage and flexible demand management we'll have the long-term solutions in place to just deal with it, via our flexible, low-carbon energy infrastructure.

• David Socha is business development director, utilities, with Logica.