Finding the perfect balance of supply and demand

Article keywords: Technology R&D

Various forces are combining to change the way our electricity is produced and sold: the rapid growth of renewable energy, more market-based competition, a drive for energy efficiency, and the rise of consumer power. Can a smart grid create an environment where all this is possible?

by Tristan Edmundson

Interactive services

Send articles

Print articles

A smart grid is one that makes the electricity grid more reliable and dependable – making it more efficient by minimising losses and evening out demand. This will enable different sources of energy to be integrated and will foster competition between utility companies. According to Senior Policy Analyst Julian L. Wong, at the Center for American Progress (a US think-tank), a smart grid is “a complete ecosystem of harnessing, transmitting, and distributing clean energy in a way that is efficient and customizable to different types of energy and various patterns of energy use. A smart grid relies on the convergence of energy technology with information technology.”

Julian L. Wong

Wong explains that there are different elements that make up a smart grid, including “high voltage transmission lines that can tap into renewable energy sources from remote areas and transmit them over long distances with limited line losses. A smart grid should let consumers manage their electricity use through smart meters and may also be able to integrate renewable energy generated by end-users, such as roof-top solar panels installed by homeowners, feeding this clean energy into the grid for general use.”

Why is a smart grid important for renewable energy?

Electricity produced from sources such as the wind and the sun is variable and uneven. With an energy mix increasingly dependent on renewable energy, the big challenge is matching the predictable, but uneven, requirements of electricity consumers with an unpredictable electricity supply from renewable energy.

A smart grid aims to get around these problems through evening out demand, transmitting electricity to where it is needed, enabling energy storage and the selection of clean energy by electricity customers. However, there are many issues to look at before designing an appropriate smart grid infrastructure.

“Many in Europe are pushing for a new high-voltage super-grid across the continent in order to take over a large percentage of power production,” says Dr Michael Pollitt, assistant director of the Electricity Policy Research Group at the University of Cambridge. However, rather than a continental smart grid, Dr Pollitt favours a smaller-scale smart grid solution. “In order to justify the very high capital costs of a new high-voltage transmission grid, very high rates of power line utilisation are required, but wind is of course quite variable. Instead, a better idea may be local and decentralised smartness where localised storage solutions would enable the grid to smooth out power supply.”

Dr Michael Pollitt

Dr Pollitt points out that “the ability to remotely manage or automatically control electricity consuming devices, or to aggregate the power consumption of say freezers, which could be turned on or off in relation to peak loads, would be key for managing electricity demand in relation to integrating power from renewables.”

How much does it cost and is it justified?

According to Dr ML Chan, executive director of the Smart Grid Cooperative at the Joint US-China Collaboration on Clean Energy (JUCCCE), a non-profit organisation helping to make China’s electricity companies green, spending on smart grids is justified. “The business case for smart grids is generally very strong. Reliability of electricity supply has great value, since regulators come down heavily on grid operators who fall outside their performance targets, and the economic benefits of having a reliable supply of electricity are obvious. Greater competition through giving customers more information and choice and the ability to manage their own energy usage also have tangible business benefits. In countries that have set up carbon trade markets, smart grids that readily accommodate renewable energy can accrue even more value. In addition, smart grids can also help utilise existing grid assets more efficiently and lower the amount of investment needed to increase reliability and smooth out demand.”

However, one major problem is finding someone to foot the smart grid bill since the benefits of an intelligent grid are not necessarily enjoyed by those who pay for it, so one of the biggest challenges of governments and regulators is devising equitable financing systems.

Dr Chan

How likely is it that Europe, the US and China will get smart grids in the next decade?

According to Dr Chan, who also works for Quanta Technology, LLC, a utility engineering and consulting firm, the development of a smart grid in Europe has been driven by “the desire to be less dependent on external natural gas supply sources. A smart grid can enable more self sufficiency in electricity production through integrating, primarily, wind power into the electrical grid.” Europe has committed to 20% of electricity production by 2020, essentially binding itself to the creation of a smart grid which will enable that target to be reached.

In the US, $4.5bn of the economic stimulus package has been allocated to smart grids, partly due to the fact that the average US customer sees outages of about 106 minutes per year, in contrast to an average of less than three minutes a year in Japan. Dr Chan explains that in the US, the smart grid has been “driven by regulators from each state seeking to achieve reliable energy supply and encourage competition. By the end of the decade, I expect over 50% penetration in terms of utilities using smart grids to deliver their energy.”

China has a “strong smart grid” policy, which aims to complete a smart grid by 2020 with full scale implementation scheduled to start in 2011. Dr Chan says, “China’s smart grid will focus on first ensuring the robustness and reliability of the transmission grid, which will facilitate the integration of centralised renewable resource generation. In the future, I expect China will deploy smart grid technologies for the distribution systems and market-driven smart metering.”