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Maximising our assets

The UK is working hard to find new ways to manage power supply and demand.

This article first appeared in the New Statesman supplement 'Smartening up: Powering the UK's future energy needs through innovation and technology', sponsored by IBM.

All around us we see the constant evolution of technology. The way we watch television has moved from black and white to colour, to digital and now 3D. The vehicles we drive have changed in shape and size. Even the book is developing into something new - an entire library can now be accessed on one small screen while travelling by public transport. The way we harness and deliver electricity to homes and businesses is also being modified as the 21st century progresses.

The most sweeping changes to the electricity market since privatisation are currently being made. A quarter of our existing generating capacity will shut down as coal and nuclear power stations close over the next decade. Without action, there is a risk of uncomfortably low capacity margins and a higher chance of blackouts.

To ensure we do our bit to tackle climate change while meeting new demands securely and affordably, our new electricity mix is going to be diverse and low carbon. We expect nuclear and renewable sources, such as wind and marine energy, to play an increasing role. This is already bringing challenges for how we manage the electricity grid.

It is absolutely vital that we find ways to harness, deliver and store electricity that makes the best use of our assets. This is what the concept of smarter electricity systems is all about, including the smart grid, smart meters in every home and small business, a competitive retail market, technological developments in key areas such as electricity storage, and greater interconnection to allow us to buy and sell electricity with other countries.

The coalition government has ambitious plans for the electricification of domestic transport and heating. This poses challenges for the grid, but also opportunities. Clearly if everyone comes home and charges their electric vehicles in unison there could be a major surge. But with innovation, householders could effortlessly and cheaply charge overnight, helping to balance demand.

Storage of electricity - in the form of batteries, pumped hydro or even heat - is already important. However, technological advances could allow it to play a much bigger role in the future. We may see storage being used at a range of scales, even down to local level. For example, a community group may invest in storage so they can save the power produced by their solar panels to charge their cars.

The UK government is taking action now. The Electricity Market Reform White Paper set out our high-level strategy for the future networks and system flexibility, and committed to a more detailed electricity systems policy paper next year. And we helped set up Smart Grid GB, a forum that provides leadership and expertise to inform decisions about smart grids and their potential impact.

Innovation will be crucial as we seek a smarter way of managing our electricity. We want the UK to lead the world in this field. To facilitate this, we are providing funding, including Ofgem's Low Carbon Networks Fund, which will provide £500m over the next five years to support smart grid trials. The Department for Energy and Climate Change's (DECC) Low Carbon Innovation Fund provided £2.7m to eight smaller smart grid projects, while the Office for Low Emission Vehicles has held a competition for pilot electric vehicle infrastructure projects worth £30m.

As we seek to decarbonise the energy system, it is vital the grid works effectively to deliver power to homes. Smarter systems will be vital to achieving this.

Charles Hendry is energy minister at the DECC.

This article first appeared in the New Statesman supplement 'Smartening up: Powering the UK's future energy needs through innovation andtechnology', sponsored by IBM.

This article first appeared in the 05 December 2011 issue of the New Statesman, The death spiral