The Smart Grid

03 June 2013 04:24 PM | #Market Research

The “Smart Grid” is a generic term that describes the next-generation network of infrastructure supporting electricity distribution around the country. The current National Grid was constructed in the 1950s and was not planned to satisfy the demands placed on it by a dynamic low-carbon energy society. Chief among the shortcomings of the current Grid is the limited ability to accept electricity back into the grid from, for example, distributed generation. The Smart Grid would allow two-way flows of electricity and would also manage the demand placed on the network. A smart grid is more efficient, flexible and robust than our networks of today.

It is envisaged that the appliances in our houses are to have controls that understand the state of the network and current generation capacity. These smart appliances can moderate when power hungry modes are used so that demand is more evenly distributed throughout the day. For instance, if a household receives most of its electricity from a wind turbine, but the wind speed has dropped, the fridge might recognise this and not click the cooler on until the wind speed picks up once more.

Additionally with an infrastructure supporting electric vehicles (EVs) in place, the smart grid could utilise the storage potential of an EV battery. Thus in times of low demand power is fed into the battery, but in times of high demand power is withdrawn from the battery, so that additional generation is not required. This technology is often referred to as Vehicle-to-Grid (V2G), with a subset including plug-in hybrids (PHEV) for the medium term.

The purpose of managing the demand and consumption of power is so that the Grid becomes more reliable, reducing the likelihood of black-outs or ‘load-shedding’. This will also reduce our dependence on fossil fuel-powered electricity as quick responders to surges in demand. The more controlled demand profile can be seen in Figure 1, with less sudden rises and falls. Managing this demand will become increasingly important with a growing population and significant proportions of generating capacity due to be decommissioned by 2015.

Comparison between conventional Grid demand and Smart Grid demand management
Figure1: Comparison between conventional Grid demand (blue, dashed line) and Smart Grid demand management (red, solid line). The Smart Grid has a much smoother demand profile, with lower peaks.

Other properties of the smart grid include “smart meters”: visible energy meters that can tell the consumer what appliances are consuming power at what time, with the potential to add cost and emission data to this. Smart meters are predicted to change the mind-set of domestic consumers by making energy consumption more visible and hence encourage efficiency in the home. Smart meters also communicate directly with the energy company so that meter readings are performed remotely and accurately. In conjunction with the roll-out of smart meters, many utility companies are offering dual-tier supply contracts, with a cheaper tariff when energy is used at off-peak times, such as the early hours of the morning.

Investing in Smart Grids

Smart grid technologies are varied and cover many applications. For instance remote monitoring software, storage technologies, smart appliances and even broadband telecommunications are used in smart grids.

Over the next two decades investment in smart grids are set to rise five-fold according to recent research. Many of the IT and software giants are increasingly becoming interested in Smart Grids and investing in promising technologies. GTM Research report that 2009 Q3 investments in smart grid technologies topped $150 million, having the third highest investments of cleantech sectors. Total investment in Smart Grid companies has increased from $60m in 2005 to $461m in 2008.

Industry drivers

Utility companies cannot connect an infinite amount of renewable energy projects to the current Grid without substantial upgrades. Ofgem, the regulator, has planned to invest £6.5 billion by 2015 to upgrade the infrastructure in readiness for smart grids.

Although smart grids have received backing from utilities and industry, there has been resistance since higher efficiency could lead to a fall in revenue for utilities. However, GE predicts that the largest hurdle will be consumer resistance.

Policy drivers

EU legislation dictates that all member countries should install smart metering systems with 80% coverage by 2020, with full coverage by 2022. Increasing integration of European electricity networks will also require the deployment of smart grids in order to balance supply and demand. Developments such as this will be required to ensure appropriate distributed generation for security of supply issues.

The UK government has provided £10 million to Ofgem in order to trial smart metering in 50,000 households. The trial started in 2007 and final reports detailing behavioural changes and efficiency measures with the most impact will be available in 2010. Interim reports are released each six months, available on the Ofgem website.

Feed-in-tariffs are set to be introduced from early 2010, with the aim to encourage more distributed micro-generation from renewable sources. A large uptake in distributed generation could put the current infrastructure under huge amounts of stress until upgrades can be delivered.

The Code for Sustainable Homes requires on-site energy generation in order to be qualified for the top rated level, with feed-in-tariffs subsidising the extra costs associated with installing generation equipment, such as solar PV panels.