transmission & distribution

Embracing the Smart Grid

1 August 2009

What does the UK need to do to take full advantage of the benefits of an intelligent two-way supply system?

Smart Grids have been a hot industry topic for some years now. But since US president Obama announced support for such schemes the subject has been propelled to the forefront of the mainstream news and government agenda.

As power industry professionals know, much of the technology to establish and use smart grids is already available. Grid operators are already deploying advanced network sensors and high-tech materials that increase transmission and distribution capacity and ‘self-heal’ some power disruptions. New analytical tools and algorithms daily increase the extent to which we can rely on intermittent power generation from renewables like wind and solar. And advances in these technologies are now occurring at a rapid pace.

So why has the UK not widely embraced the smart grid? In part, at least, it is because the benefits have not been adequately explained to all stakeholders. In particular, customers have not been shown the ways they can use the smart grid to participate in solving one of the most pressing issues of our time – reducing the carbon emissions that contribute to climate change.

This article is a step toward filling that gap.

A customer view of the Smart Grid

For customers, smart grids begin with smart metering systems that give electricity users a comprehensive, real-time view of energy use across their business or home – a view that helps them understand how much they are using and how much it is costing them at any given moment.

That understanding helps customers understand the economics of generating some or all of their power on site. For industrial customers, that may involve recycling heat from process manufacturing. For the coastal or northern farmer, it may mean wind generators; for the cottage owner, solar panels on the roof.

When on-site power generation outstrips needs, customers can become power producers, selling their surplus via the grid to a utility or other buyer.

Broader implications

Clearly, customer-site distributed generation has positive environmental impacts. Excess heat or available wind and solar power can be harnessed rather than wasted and used in place of less sustainable, carbon-emitting fossil fuels.

Distributed generation also improves energy security. It reduces dependence on large, costly power plants and the nuclear and fossil fuels that feed them – factors that could become important in the future if resistance to nuclear plants increases or if North Sea gas supplies decrease.

Additionally, a long-term trend toward distributed generation will produce very large numbers of small generation points that feed into a grid. That will increase options for rerouting power flow around grid congestion or line breaks.

Further assisting in that task are the advanced sensors and distributed computing that are also part of the smart grid. These technologies underpin the sophisticated power flow analysis and automatic re-routing that would have been impossible in the past.

The result of these combined technologies is clear: system faults in the future will affect far smaller numbers of users than they do today.

Why delay?

The government has announced that the first step towards the smart grid – smart metering – will be compulsory by 2020. But there are significant obstacles to meeting that goal.

First is the problem of costs. The UK government’s position is that utility companies must pay for the installation of smart meters, at least through to 2020. However, long-term meter ownership is unclear. What will be the effect on meter ownership and operation when an energy user wants to switch suppliers? Without clarity on this point, the various stakeholders are understandably reluctant to invest.

A second obstacle is the fact that the UK’s deregulated market has as yet produced no single and focused organisation driving the implementation of smart metering and, beyond it, the smart grid. Without this leadership, individual utilities may struggle to make the business case for large investments that would move the smart grid forward into a future that is, from a business perspective, less than clear.

A third obstacle involves the difficulty in rapidly changing meter manufacturing. For decades, manufacturers have designed meters around the assumption that only utility personnel need to read or understand them. Now we are asking for meters that are as easy to read and understand as the microwave or the television. Manufacturers are more than willing to produce these new meters. But design concepts are only just emerging, and standards may be years in the making.

A fourth obstacle is power storage. In principle, generation is most efficient when used on-site, thus eliminating transmission and distribution line loss and other inefficiencies. But generation from renewables does not always occur when customers most need it. The option of selling power back through the grid may not exist if there are no buyers or if the prices customers receive are too low to justify maintaining the grid connection.

There are ongoing technology advances in energy storage. Unfortunately, some of the most significant globally involve chillers and ice manufacture for air conditioning systems – technologies that, in the UK, are impractical on the scale of the individual homeowner and are in any event largely unneeded. The obvious alternative, stationary battery storage, remains less than optimally efficient. And vehicular battery use requires a concentration of electric vehicles that currently does not exist.

What does the UK need to do?

The potential environmental and security benefits of a smart grid dwarf the obstacles, but the obstacles must be overcome and a focus group or organisation dedicated to solving them is a near-term essential. For maximum effectiveness, the group should operate under government leadership. The role of each stakeholder within the group should be clearly defined from the outset so that members can focus on advancing their part of the plan. High on this group’s agenda should be answering the question of ownership of smart meters and other parts of the infrastructure.

The UK also needs to examine smart metering and smart grids within the larger European context. To fully succeed in achieving 2020 targets, the UK will need to work with other EU member states and align its grid transformation with theirs. The rollout of smart grid technology will work most effectively if the dedicated focus group analysing the UK situation is replicated across Europe. Each country can then make the long-term investment in grid infrastructure that will be needed to make it smart while co-ordinating with others focused on identical issues elsewhere.

The groups must also face up to additional issues. The role of the smart grid as an information highway and the dependence of our physical and economic well-being on that information, for instance, mean that data security will be paramount. Fortunately, there are solutions; the operators of mobile networks have significant security knowledge that can be directly applied to this issue. Action on all these fronts will encourage UK utilities to make interim investments in the grid without fear that those investments will become stranded.

Regulation and education

Clearing obstacles and ensuring security are essential. In addition, the UK will want to consider new regulations that can further promote smart grid goals. One potential regulation with considerable UK support is a requirement already instituted in some member countries that obligates utilities to buy excess renewable power from distributed photovoltaic installations. Extending such obligations through a guaranteed time scale helps site owners cost-justify equipment purchases.

Some advocate extending this buy-back requirement to generation from gas-powered CHP engines in order to incentivise use of this greener technology. In fact, some utilities have already begun CHP pilot programmes.

Even with all these measures in place, smart grid success will still need the support of educated customers. Education programmes might be modelled, for instance, on the successful government campaigns to recycle waste. Education, however, should spread beyond merely emphasising the smart grid’s impact on the environment and security to encompass individual economic benefits. Energy prices are lower than the peaks reached over the last 24 months, but most UK customers would still consider their energy to be expensive. And customers who view their electricity and gas use as they do petrol usage in their cars – the consumption of which is both expensive and visually obvious – are more likely to engage with learning how to use microgeneration and smart grids effectively.

By combining regulators, environmentalists, educators, and industry stakeholders in an organisation focused on the pressing need to reduce the negative environmental impact of energy consumption, the UK will be able to move into a leadership position on smart grid implementation and more rapidly experience its benefits.

Bastian Fischer is vice-president and general manager of EMEA, an Oracle Utilities Global Business Unit.

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