Rachel Fletcher, partner, distribution, Ofgem, at the CBI's energy conference. London, September 2010.

1. Smart Grids and Energy Users CBI Energy Conference 2010 Rachel Fletcher, Partner Distribution 15 September 2010

2. Overview What is a smart grid? What does this mean for network companies? What are we doing to the regulatory framework to bring about change? What should all this mean for energy users (and producers)?

3. What is a smart grid? Difficult to define its component parts Easier (and perhaps more important) to define what networks of the future should achieve: Integrate (intermittent) generation and (active) demand Connect new low carbon technology (EV, heat pumps, DG, wind, biogas etc) Make use of low carbon/energy saving technology (DSM, DG, smart meters etc) to improve the network performance Provide security of supply at value for money http://www.ensg.gov.uk/assets/ensg_smart_grid_wg_smart_grid_vision_final_issue_1.pdf

4. What does this mean fornetwork companies ? Profound changes – entail much more than adopting new technology

5. What are we doing to the regulatory framework? strong incentives, innovation stimulus and focus on outputs = RIIO Incentives better than a roll out mandate

6. What should all this mean for users? Should continue to enjoy presentday security of supply even where grid is more highly utilised Should be able to get a speedy connection where this is required for new technology Should have greater choice over when and what type of energy you use and should be rewarded via network charges where your choices reduce the need for network reinforcement (and vice versa) Should be able to sell back power and negative demand to the grid (could be automated through in-home devices) Should have network companies that are more interested in the services you need now and how they are changing Should be able to enjoy all this at a lower cost than if network companies applied business as usual solutions