Smart Grid

Description

"* The coming decade will be defined by a rampant growth in new Intelligent Energy technologies, just as computers and communications devices have defined the recent past. Making our energy systems “smart” holds the key to protecting our planet and to fueling our global economy.

• Innovative approaches to deliver energy-efficient and environmentally-friendly processes and products will be enabled by the application of information systems to production, logistics, product design, transport, consumption and many other aspects of our day-to-day activities.

• Empower the user to actively participate in this process, through a range of interactive intelligent home appliances, allowing them to save energy and assisting them in addressing the inevitable price increases for electricity."

(http://www.smartgridaustralia.com.au/)

Characteristics

From Cisco's Connected Urban Development project:

"The main principles of a Smart Grid include:

• Demand Management: Reducing electricity consumption in homes, offices, and factories.

Demand Management includes:

- Demand Response: During emergency periods of peak energy usage, utility companies send electronic messages to alert consumers about reducing their energy consumption by turning off (or turning down) unessential appliances.

- Smart Meters and Variable Pricing: In many areas, electricity prices rise and fall based on demand at that moment. "Smart meters" let consumers shift energy consumption from high-priced periods to low-priced periods (load shifting and shedding).

- Smart Buildings with Smart Appliances: Traditional, stand-alone building control systems are now converging onto a common ICT infrastructure that allows appliances (heating, ventilation, air conditioning, lighting, and so forth) to "talk" to each other, coordinating their actions and reducing waste.

- Energy Dashboards: Online energy dashboards provide real-time visibility into energy usage while suggesting ways to reduce consumption.

• Distributed Energy Generation: Encouraging homes and businesses to install their own renewable energy sources.

Distributed Energy Generation includes:

- "Microgeneration": Some homes and offices generate their own electricity locally using small equipment (wind generators, photovoltaics, fossil-fuel generators with heat reclamation). Many of these devices are now as affordable as energy from utilities, and produce 50 percent less greenhouse gases.

- Storage and Hybrid Electric Vehicles: Owners of plug-in hybrid electric vehicles (PHEVs) can buy energy when it is inexpensive, store it in batteries, and sell it back to the grid when the price goes up. PHEV drivers hope to arbitrage the cost of power, while utilities see fleets of PHEVs supplying power to reduce peaks in demand.

• Supply-side Efficiency: Using IT to improve control of the electric distribution grid.

Supply-side Efficiency includes:

- Grid Monitoring and Control: Utilities are installing sensors to monitor and control the grid in near real time to detect faults earlier and provide time to prevent blackouts.

- Grid Security and Surveillance: Utilities are installing surveillance sensors to monitor and secure unmanned, remote equipment that is vulnerable to terrorism." (http://www.connectedurbandevelopment.org/connected_and_sustainable_energy)

Discussion

Bill St. Arnaud:

"A good example is smart grids with the first generation of smart meters. The major beneficiary of this technology is NOT the consumer, NOR the environment - but only the utility. Smart grids help the utility to better manage peak load and thereby reduce the need to build more power plants. It does not reduce overall power demand or GHG emissions - it only displaces them to different periods of the day.

The second generation of smart grids will allow consumers to monitor energy consumption in real time and thereby reduce their energy bill. There is a small number of studies that indicate there may be a positive effect here. But it is too early to tell if this effect will be enduring or simply an artifact of a committed study group. Nevertheless smart grids of any generation do NOT reduce GHG emissions in any meaningful way.

Rather than building an expensive SMART grid, we are much better off with the inefficient STUPID grid we have today. With a stupid grid, and structural separation of energy supply and infrastructure consumers would be able to purchase renewable or nuclear power independent of their network operator. This is possible in Canada, most of Europe and some US states.

Providing incentives for consumers to purchase renewable power (and waste as much energy as they want) will be much more effective in reducing GHG emissions than deploying incredibly expensive smart grids which will only result in marginal gains.

I think "third generation" smart grid, independent of the utilities, will play a critical role in reducing GHG emission.

But the current generation of smart grids and smart meters serve only to benefit the utilities and will have minimal impact on GHG emissions. Reducing GHG emission is the real issue - not energy conservation or efficiency. Even the next second generation of smart meters and grids will largely only benefit the utilities and not have a measurable impact on GHG reduction.

In terms of impact, a much better investment in the short term, than smart grids in reducing GHG emission would be:

(a) to build higher capacity transmission lines so that we can bring renewable energy to consumers who want it;

(b) structurally separate ownership of transmission facilities from power producers;

(c) introduce concept of network neutrality to electrical transmission systems (which today's smart grid technology much like "intelligent" networks will inhibit); and

(d) introduce carbon taxes ( or better still carbon credits) to encourage consumers to use renewable energy and adopt energy reduction strategies, and there by demand smart meters to monitor their usage ( the cart following the horse)

In terms of smart grids it is essential, in my opinion that we build a smart grid architecture independent of the utilities. The utilities and electrical distribution companies are the enemy for any strategy in reducing GHG emissions. They are married to their dirty coal plants and antiquated network architectures for transmission lines.

What would a third generation smart grid look like? Here is one possible scenario:

The biggest challenge for renewable power companies is establishing direct relations with their customers. Renewable power sources must sell their power to utilities and distribution companies who then bundle their power with more traditional sources to deliver to consumers. In some cases consumers or businesses can pay a premium and buy REPs - renewable energy credits, whose price is supposed to reflect the bundling of new renewable power. And in jurisdictions where there is structural separation they can buy energy directly from ESCOs (energy service companies), some of whom specialize in delivery of green power.

The challenge for renewable power companies is linking their production to consumption. Most renewable power is unpredictable in terms of its supply (wind, solar) and so deployment of renewable power has not eliminated the need for traditional coal plants who must stay on line in case of disruption in the renewable source.

With a third generation smart meter/grid, the renewable power companies would have a direct Internet connection to their customer's power meter, independent of the utility. Such meters already exist. The customer's meter may be "multi-homed" to several different power suppliers such that the customer can switch energy suppliers automatically based on price and availability of power. This will much more effective in reducing GHG than demand displacement systems mart grids that are being advocated today. The tricky part will be negotiating a settlement system between the various power operators and the owner of the transmission lines." (arch-econ mailing list, October 2008)