The physical basis of today’s electricity networks are based on engineering design principles which
have not changed substantially since World War 2. This has led to a stable, secure but intrinsically
conservative electricity network system, characterised by small, incremental changes and
technological advances. However, two major drivers are currently pushing a period of substantial
innovation and change in the networks. The first of these is the need to incorporate increasing
quantities of variable renewable generation at distribution level, as well as to prepare for increasing
levels of electrification in heating and transport. The second comprises the new opportunities arising
from the incorporation of ICT technology into the networks, including smart metering, smart
appliances, demand-side participation and the development of new business models and services
which facilitate active consumer engagement.
These drivers challenge the notion of an electricity grid being a simple unidirectional series of wires
and transformers and make the case for a ‘smart grid’, in which information and communication
technologies (ICT) are integrated directly into the electricity networks. These advances have the
potential to transform the way customers and supply companies interact with electricity, and provide
significant new commercial opportunities for communications, monitoring, control and data
aggregation technologies throughout the electricity system from generation through to the consumer.
New network and smart grid technologies are a major focus in the UK’s low carbon innovation
strategy, with substantial public funding (£81 million p.a) provided through the Ofgem-administered
Low Carbon Network Fund (LCNF) and its successor the Network Innovation Competition (NIC).
These are novel programmes, both in the UK and elsewhere due to their structure, which involves
consortia led by network operating companies bidding for public funds. The LCNF has recently
completed its five-year funding programme, making it an opportune time to evaluate the scheme’s
effectiveness.
This paper benchmarks, utilising systematic analysis of the European Patent Office’s PATSTAT
database, the UK’s performance in smart grid patenting activity over the 2000-11 period. It then
examines the LCNF, through quantitative analysis of spend patterns and semi-structured interviews
with key stakeholders to assess whether the LCNF has been successful at developing and
demonstrating new technologies and practices, if these technologies and practices are successfully
proceeding from demonstration to deployment and if the LCNF has been open to new entrants and
more radical and disruptive ideas.