A framework for the evaluation of smart grids in the UK
December 7, 2011
Ofgem has appointed Frontier and EA Technology to develop a framework that will allow smart grid investment opportunities to be evaluated. This report sets out a proposed methodology for developing this framework for consultation.
Frontier and EA Technologies aim to help Ofgem and the industry reach a better understanding of:
• the drivers of the value of smart grids;
• the value of the flexibility smart grids may provide under conditions of uncertainty; and
• the parties in the value chain that will benefit from smart grid solutions.
The analysis will have the following scope:
• it will focus on the impact of smart grid investments at distribution network level;
• it will seek to identify the spread of costs and benefits across the electricity sector, as well as the net benefits to society as a whole; and
• it will take a long-term view and assess the impacts of smart grid investments out to 2050, although our focus will be on drawing out the implications for the near term.
It is recognised that a framework for evaluating the net benefits of smart grid solutions is important if Distribution Network Operators (DNOs) are to justify smart grid investments, when the benefits of such investments are less certain than for more conventional solutions.
This report sets out our proposed methodology for developing the framework for consultation. Following this consultation, we will formalise the evaluation framework in a simple and transparent model. This model will be available in the public domain and will allow users to assess how the net benefits of smart grid technologies might change with different developments in the electricity sector.
