UPDATE 1-UK smart grid could create jobs, help economy-report

Tue Apr 24, 2012 8:13am EDT

Related Topics

* UK economy could get 13 billion pound boost

* Smart grid could create 10,000 new jobs (Adds details, minister's quote in 10th paragraph)

LONDON, April 24 (Reuters) - Britain could pump 13 billion pounds ($21 billion) into its economy and create up to 10,000 jobs by upgrading its power distribution network with smart grid technology, an Ernst & Young report said on Tuesday.

Smart grid proponents say the technology has the potential to transform the way electricity is generated, distributed and consumed just as the Internet transformed the way the world communicates.

The idea is to create a vast communication network to maximise efficiency in supply and demand and to cut costs for homes and businesses - even for those opting for low-carbon technology such as electric cars or solar power.

A transition to smart grids will require an investment of 23 billion pounds up to 2050, but a business-as-usual approach to supplying power using conventional technology will cost the economy 42 billion, Bill Easton, utilities director at Ernst & Young said.

"In addition to the direct economic benefits, we can also expect to see wider economic benefits to the UK, providing a welcome boost to growth, jobs and exports," Easton said.

"These could include close to 10,000 new jobs and exports in excess of 5 billion (pounds)," he said, adding "overall, the report paints a compelling case in favour of smart grids".

But the report also identifies challenges such as whether current or proposed government-backed schemes will deliver results. It said the adoption of smart grid technology is likely to be slow, with little investment before 2023.

One of the biggest challenges is to convince consumers that spending money on new technology now will help them save money in the future.

Since many people still don't know what a smart grid is, there is a risk that it will be perceived as something consumers will have to pay more for in the future but feel like they will get less, he told a smart grid conference in London.

'MUST BE DONE'

Charles Hendry, UK minister of state for energy and climate change, stressed the importance of rebuilding the energy network to secure supply, create jobs and help meet goals to cut emissions - even during a period of austerity.

"I think the economic pressures are focusing the attention on ... what has to be done rather than what is nice to do. Rebuilding our energy infrastructure is a have-to-do," he said.

The UK faces a challenge in managing a future that is uncertain as to when and where power output from wind and solar projects will be connected to the grid, he said.

By providing the right information, smart grid technology can enable network companies to divert power where it is needed and away from constrained areas.

The government has made plans for every household and business to be fitted with a smart meter, a system to allow them to monitor their energy demand, by 2019.

Ernest & Young completed the report on behalf of SmartGrid GB, an industry body made up of energy suppliers, technology companies, consumer groups and network operators.

Some of its members include British Telecom, Cable & Wireless, General Electric, IBM, Scottish Power, Siemens and Toshiba. The UK government, energy regulator Ofgem and Consumer Focus are observer members.

Robert McNamara, manager of SmartGrid GB, said the UK cannot afford to take a 'wait-and-see' approach if it wants to be a world leader in smart grid technology, given that China, the United States and others are developing similar systems.

"Failure to deploy a smart grid will hamper development of clean tech industries and push up domestic electric costs," he said.

($1 = 0.6205 British pounds) (Reporting by Jeff Coelho, editing by Will Hardy and Jane Baird)

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