On Demand

Imagining a more flexible grid: 

Nesta Impact Investments invests in solutions which will accelerate the decarbonisation of UK households. We have been looking at the role of demand flexibility in supporting efforts to deliver a net zero grid, by tuning demand for energy to match increasingly variable weather-dependent supply. Grid flexibility will bring valuable benefits to householders through:

  • Lowering electricity system costs – and therefore all of our energy bills.
  • Allowing households to take part in demand flexibility provision by turning up/down their consumption to help balance the grid.

Nesta Impact Investments hosted a panel discussion on the challenges to scaling demand flexibility provision in the UK. We were delighted to welcome Marzia Zafar from Ofgem, Alex Howard from UK Power Networks, Alex Schoch from Octopus Energy, Jo-Jo Hubbard from Electron and Andy Regan from Nesta’s A sustainable future mission team, to share and discuss perspectives on the significance, scale and challenges of demand flexibility and the spread of potential economic benefits. 

Overall we found that there is growing importance being placed on scaling demand-side flexibility provision to help defer grid upgrade costs, whilst supporting the connection of more renewable generation sources. Current provision is approximately 60GW and sits, mainly at the high voltage (‘transmission’) layer of the grid. Panellists believed that >200GW would be required by 2050 to help balance the forecast growth in renewable generation sources against the increasing load from the electrification of heating and mobility. 

The panel reminded the audience that the electrical grid, particularly at the transmission level, has been dynamically balanced for decades, predominantly by flexing the supply of electricity. In a future of abundant but intermittent supply, the requirement to flex demand becomes more apparent. The panellists agreed that the greatest, and still mostly untapped, opportunity for flexibility was “behind the meter”, helping consumers to utilise their energy assets such as heat pumps, EV’s, batteries and other electrical devices to provide flexibility.

To unlock the potential scale of demand flexibility, the panellists felt certain key challenges needed to be addressed:

  • Clear price signals, incentivising the flow of energy to match when and where it is required in the network.
  • Standard market templates and protocols for the design and provision of flexibility services.
  • Half hourly settlement to allow more real time, granular assessment of network constraints, feeding back into price signals

To unlock end user participation in demand flexibility provision:

  • Accelerated smart meter roll out.
  • Embedding domestic devices that work together seamlessly, and can automatically participate in flexibility, so that consumers willing to turn up or down their consumption can do so easily.  
  • Consumer awareness and trust to help people understand the reason for and the  benefits of participating in demand flexibility.

If you are working in this area and would like to know more, please contact Alex Hook via askinvestments@nesta.org.uk.

Building the case for an Impact Tech ecosystem in the UK

At Nesta Impact Investments we launched our fund almost three months ago now. In that time we have seen some really interesting organisations come through our door. Over the next four years we expect to make investments in just 20 organisations, aiming to target our money at the most impactful, the most scalable, and the most viable social ventures in the UK.

One thing that really interests us is the use of digital technology to deliver impact at scale; Impact Tech, or what Google and others are coining ‘Tech for Good’.  This week we invited Robert Hodgkinson, MBA Student at INSEAD and someone who has done some serious thinking on this opportunity, to lay out the case for Impact Tech, the huge potential it has to address some of our most serious social problems and the importance of developing this sector.

This is the first in a series of guest blogs on this topic. 

Building the case for an Impact Tech ecosystem in the UK, Robert Hodgkinson, MBA Student at INSEAD.

Social and tech innovation have for too long been distinct disciplines in the UK. While social funders tend to favour analogue projects, the UK tech ecosystem largely focuses on the lower-hanging fruit of me-too products in consumer-facing industries. By failing to blend its cultural strength in social innovation with the technical talent in the burgeoning tech community, the UK has neglected the opportunity to deliver superior social outcomes, particularly in education and healthcare, by creating fundamentally innovative (and hugely valuable) tech start-ups. These sectors are ripe for disruption by committed entrepreneurs; the UK should start to build an Impact Tech ecosystem today.

Impact Tech is a collective term for citizen-focused technology that explicitly seeks to deliver specific social outcomes (such as EdTech and Digital Health). Technology is essential for transformational social innovation:

  • Scalable – high accessibility of technology within the UK population (particularly the near 100% saturation of mobile telephones) elevates technology as an effective means of distributing impactful solutions to large sections of the population. The potential scale of Impact Tech could enable credible financial returns
  • Cost effective – technology can help policymakers achieve ‘more for less’, delivering innovative solutions at significantly lower costs. Technology can radically transform public services with comparatively low levels of investment, a particularly attractive proposition in the current economic environment
  • Personalised – Impact Tech is predominantly consumer-facing technology that enables more personalised public services. Technology allows solutions that are both truly scalable and highly tailored to the individual’s requirements. The growth of the consumer internet also encourages more active participation in public services
  • Decentralised – Impact Tech is delivered by non-state actors to encourage more decentralised delivery of public services. The increasingly low cost of technology allow the general public to engage in the creation of tech-based solutions

As ever, the United States has already taken the lead, with 4% of tech VC being invested in Digital Health and $400m being invested in EdTech in 2011 alone. The corresponding European market for these sectors is tiny and not sufficiently defined to warrant any credible data. And yet the imperative for closer cooperation between technologists and social innovators is ever more pressing:

  • Fiscal challenges – the current economic climate is forcing a reworking of the provision of government public services. Innovative solutions are required that can produce ‘more for less’. In the US context, Bain argues that extensive use of digital health can help flatten the healthcare cost curve, saving up to 3.5% of GDP in the next ten years; the Boston Consulting Group believes that digital health could help save up to $700bn of waste in healthcare annually.
  • Cultural shift in public service – the paternalistic state is being replaced by a more citizen-centred approach that seeks to tailor the public service to the individual. The accessibility of technology enables more bespoke public service solutions.
  • Accessibility of technology – consumer technology, particular mobile phones, is mature with significant accessibility and reach. The Digital Citizen Pulse Survey, conducted by Accenture, suggested that 65% of UK citizens already use a website or portal to interact with public services.
  • Business models – for over a decade education and healthcare have been tipped as sectors ripe for tech innovation. Tech innovation and the development of a consumer-facing internet has led to more credible potential business models.

Impact Tech is the essential means for scalable social innovation and will enable government to deliver ‘more for less.’ It is early days for the sector, there are some organisations doing some impressive work to support Impact Tech such as Nominet Trust, Google, Tech City and specialist funds such as Nesta Impact Investments.  However, there still remain a lot of barriers to overcome in order to ensure we accelerate this sector and build an ecosystem around it which enables it to thrive.


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