Demand for change

Francesca Moll explains why an active demand side is the key to unlocking some of the greatest challenges in the energy and water sectors.

Lawns paved over. Cars going unwashed. Sirens in public showers.

This is everyday life for ordinary people in drought-stricken Cape Town, South Africa. The city has been experiencing the worst drought in 100 years, and will shortly approach a ‘day zero’ where the majority of the city’s water supply is shut off and water rationed through collection points around the city.  This gives us an early foretaste of the formidable environmental challenges energy and water may face in the coming years.

Pippa Malherbe, resident of Cape Town suburb Somerset West, is one of the many South Africans who have had to adapt to the city’s new normal. She has installed a host of water efficiency measures in her home to help her and her family keep within the allowance of 50 litres a day per person.

She has pipes to collect used water and runoff from her shower, gutters and washing machine, which is used to water her garden and flush toilet cisterns. She reports not using municipal water for this purpose for over a year. Rather than shower every day, Pippa and her husband bathe in their pool, which they keep topped up with water they buy from those lucky enough to have access to boreholes.

‘This drought has cost us a lot of money and hardship. Every night I must use the grey water to water my plants in the garden, by hand.  Physios are making a killing as so many women… have neck, shoulder and back pain due this excessive carrying of water,’ says Pippa.

However, despite these personal struggles, the adaptability and resilience of ordinary people like Pippa in the face of the Cape Town water crisis shows how an active demand side can help manage a challenge such as a serious drought.  And although sun-drenched South Africa may be the other side of the world, the problems they’re facing are not a million miles away for us in the UK. According to WaterUK, there is a 12% chance of ‘severe’ drought in the East / South East of England over a 25 year period.

In the process of Sustainability First’s New-Pin project, we have identified an active demand side as one of the key enablers of the energy and water systems of the future.  It can help deliver value for money, and hence ease affordability pressures, along with helping deliver long-term resilience.

In recent years there have been huge developments which have made active and engaged participation by consumers in their energy and water systems a growing reality. With the smart energy meter roll-out, and the opportunities represented by digitisation and data, there is the possibility of tailored services and greater customer engagement with the energy and water they’re using. This can prompt behaviour change such as a reduction in usage and the installation of efficiency measures.  This can help keep bills down.

Other technological innovations, such as heat storage and grey water reuse, can work to save customers even more money by reducing their need to draw on the water system, or giving them the chance to buy energy at cheaper times. With the possibility of household generation, customers can even become ‘prosumers’, selling energy back to the grid. ‘Smart power’ i.e. interconnection, storage and flexible demand – could save consumers up to £8bn a year by 2030. Storage capacity could increase from 3GW to 4-11GW by 2030.  These changes can reduce systems costs, potentially benefiting all consumers if they lead to a reduction in the amount of peak capacity needed.

Approaches to resilience have traditionally been top down and supply-side focused. But with the range and unpredictability of the challenges energy and water may face in the coming year - through extreme and unpredictable weather along with new risks such as electricity dependency - old ideas may have to be rethought. An engaged demand-side can provide the diversity and flexibility to respond to this uncertain future.  It can also push back the need for new investment until such time as there is greater clarity on future need or when technology costs have fallen or new innovations have come to market.

However, the engaged demand side of the future is far from inevitable. The biggest barrier is trust. At the moment there is a crisis in trust in existing structures- in the UK, barely 1 in 10 people believe ‘the system’ is working for them (Edelman trust Barometer).  This will have to be overcome to encourage consumer behaviour change and engagement in their water and energy systems. Consumers and citizens will be paying for future investments – they need to be ‘on side’ of any changes.  Their contribution to the demand side cannot be taken for granted.

We must also be careful to proceed with an eye on the distributional impact of this change—as it is likely to be more well-off people who have the resources and knowledge to innovate and as early adopters gain the benefits of efficiency measures and household generation / water re-use.  Given energy and water are essential services, it would not be acceptable for vulnerable consumers to be left behind in the new smarter world.

Nevertheless, there is no doubt that the demand side represents a real opportunity, if we can find ways of unlocking its potential.

Our full findings in this area are detailed in our final major New-Pin Report, which is being launched at the New-Pin final wrap-up conference on 28 February 2018.