First published in Cleantech Infocus: Smart Grid, February, 2009. Copyright Cleantech Investor Ltd. 2009
The shortcomings of the electricity grid in developed economies are becoming more acute. In the US, the pressure to overhaul the relatively antiquated system which supports the energy infrastructure has received further impetus from the support expressed by President Obama for a ‘smart grid’ – in effect the internet brought to the electricity system. This promises to transform the centralised producer-controlled network with which we are familiar to a more distributed, consumer interactive one.
Obama’s ‘Green New Deal’
President Obama’s ‘Green New Deal’, a cornerstone of his economic stimulus plan, includes promised investment of $60 billion in new power grids and energy efficiency improvements in government buildings. Obama’s goal – to create a clean energy economy in which the production of alternative energy will double in the next three years – will require signifi cant upgrades to the existing grid system in order to aid the uptake of renewable energy - in particular the distribution of renewable energy from remote resources where it is plentiful (sunny deserts/tidal streams/ high wind locations) to key population centres.
The US may be leading the surge of investment with the ‘Green New Deal’, but there are similar initiatives taking place around the world. An increasing effort is now being expended internationally on developing smart grids and associated communications infrastructures that will enable distributed generation, end-use effi ciency and demand response. With the growing role slated for renewables in worldwide greenhouse gas reduction programmes, the prospect of a grid infrastructure that can operate reliably with a signifi cant amount of power (up to 20-30%) derived from intermittent sources is now in sight, solving the instability issues with current grid architecture. A smart grid will be able to accommodate a broadening range of new generating sources, including solar, marine and wind power, biomass and heat pumps. In addition to the issues of intermittency, offshore wind and marine energy sources are also generally inconveniently located, and long distances from where the energy is consumed.
A further facet of the smart grid is the scope to use electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) as storage devices. Car owners could sell the power in their cars’ battery packs back to their local utilities. Such vehicle to-grid (V2G) sales involve charging cars at off-peak times during the night, and these cars can then share any excess power stored in their batteries with the grid. Widespread adoption could contribute to the creation of an energy storage system capable of stabilising power quality and shaving peak loads on the grid. It has been estimated that such a system would enable the U.S. power grid to derive as much as 50% of its energy from intermittent sources like wind and solar power.
The need for change
While its limitations have become increasingly apparent, the US grid still represents an outstanding achievement as the largest interconnected system on Earth. The US Department of Energy describes the present grid as comprising more than 9,200 electric generating units with over one million megawatts of generating capacity connected to more than 300,000 miles of transmission lines. Although the grid is 99.97% reliable, that still means that every year the interruptions and outages cost around US$150 billion. The performance constraints stemming from the inherent limitations of the architecture, together with the lack of expenditure on the grid in the US and many developed economies and the increasing age of the infrastructure, all point to the need for a radically different approach. Taking a global perspective, there are a number of factors driving the move away from the traditional architecture to smart grids. First, there is a strong drive for greater efficiency and reliability in the system both to meet increasingly stringent carbon emissions targets and to reduce the costs of energy in general and of disruptions in particular. Secondly, there is growing support for distributed generation, so that customers are both consumers and suppliers. Following from this, customers must be given the fl exibility to selecttheir source of energy, be it the grid, solar or any other
form of available energy. Moreover, through the two-way communications integral to a smart grid, consumers will be
able to export electricity from microgeneration or EVs back to the grid through net-metering. In addition, there may be a need to extend the scope of the grid. The current model involves utilities producing electricity and delivering it over transmission lines to residential and commercial consumers. In the future a system that incorporates the transport sector as both a consumer and a producer of electricity (should the EV market grow as strongly as some predictions) would provide a comprehensive cleantech solution to power.
A smart grid can achieve these aims by applying the philosophy and technology behind the internet to the electricity grid. An enabling technology central to the smart grid is smart metering, whereby digital meters allow home and building owners, as well as utilities, to monitor power demands in real time, creating a more effi cient system of electricity pricing. Thus utilities will be able to set prices that vary by time of day. The Advanced Metering Infrastructure (AMI), already in existence, uses open standards to integrate consumers and allow them to use electricity more efficiently while providing utilities with the ability to operate their systems more effi ciently, and indicates how a central aspect of the smart grid, pricing energy to costs in real time, might work.
Price signals are sent to smart home controllers and devices like thermostats and appliances, which in turn process the information based on a learned pattern of consumer preference and behaviour. Involving minimal human interaction, this smart use of power returns significant reductions in energy consumed and thus cost to the consumer.
Smart grids now
There is probably enough sophisticated technology available currently to smarten the existing grid, but to implement the smart grid as envisaged will require still further solutions and standards in the hardware and software of communicating with appliances, the adoption of global standards and protocols, and the development of technologies for energy storage. Some standards are emerging – such as the ZigBee wireless language – and companies are developing demand response (DR) systems which offer considerable potential. However, there is still much more development required. A further challenge for developed economies is the need to implement the smart grid infrastructure in situ without missing a beat.
That said, there is encouraging, albeit limited, recent experience of smart grids. Italian utility Enel’s Telegestore project, completed in 2005, is the earliest (2000) example, and the largest. Enel took total charge of this project, including the design and manufacture of the meters and the in-house development of the systems software. The Telegestore project ultimately replaced the traditional meters of 30 million customers with a remote meter reading system and a customer management system. It incorporates the potential for a value added services delivery system and works in conjunction with the cellular telephone network. At a project cost of €2.1 billion, it is estimated to generate annual savings of €0.5 billion. Austin, Texas began building a smart grid in 2003. The Austin Energy utility initially replaced a third of its traditional meters
with smart meters that communicate via a wireless network, and is reported to be on track to install smart meters in every residence in its service area. Also in the US, Boulder, Colorado has a smart grid project under way (see Case Study). The approach taken in both projects is to use the smart meter to access the home automation network that controls smart sockets and various devices.
These early forays now have the weight of government policy behind them. Irrespective of the Obama stimulus package, the Energy Independence and Security Act of 2007 in the USA, for example, will provide $100 million funding per annum over the 2008 to 2012 timeframe in a matching programme to encourage states, utilities and consumers to develop smart grid technologies. Projects are also under way in China and Canada, and Europe has the EU SmartGrids Technology Platform (part of the European Technology Platform initiative). The EU SmartGrids Technology Platform has been promoting a long term European vision for next generation electricity grids since 2005. However, a report by Capgemini SA, published last year, concluded that slow implementation of smart meters in EU countries, due partly to disagreement over who should pay for them, would restrict the potential savings which might be achieved. The authors, who included VassETT (a Helsinki, Finland based energy think-tank) and Enerdata (a Grenoble, France based energy research company), anticipated that the true savings are likely to be just 40% of the full potential, or $20 billion, due to slow implementation of smart meters – anticipating that “only Sweden and Italy will have comprehensive smart metering coverage by 2010”.
With the EU Commission pledging support for a ‘Green New Deal’ programme, there may be some grounds for optimism that smart grid roll-out might be accelerated in EU countries – and the US certainly is moving forward. Smart grid and smart metering companies look set to attract additional investment even in this recessionary environment.
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