BuddeBlog

This will be a crunch year for smart grids. By the middle of the year the outlines of the country’s first smart grid project should become visible, and over the next three years important lessons will be learned for a national roll out. This will also stimulate others to separately, from the demonstration project, progress their own smart meter and smart grid roll outs. Several projects in Victoria will start showing the first results of this process. They took the leadership with smart meters, which made many utilities focus on the underlying infrastructure – building on this we will start seeing their versions of smart grids arriving in Australia in 2010. There will be further pressure on the government to better align energy and environmental policies as well as electricity regulations. Governments can use their influence here to encourage electricity utilities to invest in smart grids rather than just in smart meters. The $100 million Smart Grid/Smart City (NEEI) project is discussed in a separate report. 

Smart City/Smart Grid Project

The previous government in Australia failed to embrace the smart grid concept, instead it launched a national (not so) smart meter policy. When it became clear that political change was in the air the industry became more interested in the development of smart grids. While in Opposition, the Labor Party had already demonstrated an interest in this and under the leadership of the Prime Minister the $100 million Smart Grid/Smart City project (also know as National Energy Efficiency Initiative – NEEI) was launched. Paul Budde from BuddeComm played a key role in this process. Paul established Smart Grid Australia, the industry alliance that was instrumental in lobbying for the project. In late 2009 the implementation study was presented and this has provided a sound basis for the project. The aim is to link 9,500 homes to a smart grid during the period 2010-2013. The project will become the blueprint for a national rollout. 

Major Players and Projects

Smart grids support the delivery of electricity to consumers using digital communications technology to improve efficiency and reduce costs. The major players building smart grids in Australia are mostly large energy retailers and producers supported by IT and telecommunications firms. Country Energy and EnergyAustralia are perhaps the most active firms in this area. The period over 2010-2013 is likely to see significant development by firms relating to smart grids driven by Government initiatives. 

Climate Change and Photovoltaics

The fundamental shift that has taken place in environmental policies since 2007 has a huge effect on the utilities market. Energy policies that were developed prior to this now need to be considered in relation to the new climate change and environmental realities – and for the ICT and energy industries this will involve checking government initiatives such as smart meters and national fibre telecoms networks against the new directions. By 2009 some of CO₂ policies such as the Cap and Trade system as well as policies in relation to renewable energy started to become clearer. Intensive lobbying aimed at risk aversion rather than at looking towards new opportunities, is making it more difficult to drive changes more through new technologies for renewable energy and for smart grids. It could well be that in the end clean energy policies driven by photovoltaics are going the be the catalyst for the development of smart grids. 

Demand Side Management

Power Line Communications has been used since the 1890s to send low level telecoms signals out to activate or deactivate devices along the electricity grid. This technology was further developed over the last century and is used, for example, for the off-peak hot water service that most electricity companies offer their customers. Broadband Power Line started to arrive in the late 1990s. Simultaneously the energy companies are also being forced to look for telecoms solutions for their core business and are looking at Demand Side Management services to better manage their network, offer better services to their customers and handle the gigantic increase in electricity demand throughout the world and at the same time manage security issues and the environmental impact of all of that. It looks like DSM will only reach its full potential once combined with the development of smart grids. 

Smart Meters

While developments in Automatic Meter Reading (AMR) and Demand Side Management (DSM) have been taken place over many decades, the current smart meter debate originated in Victoria in 2004. This started with the utilities to modernise the meter network which would amongst other things, allow them to capture electricity usage in 30-minute intervals. This enables differential pricing by time-of-day and enables utilities to discourage certain types of ‘non-time-critical’ use during periods of high demand. Reducing peaks has a major impact on electricity generation costs – alleviating the need for new power plants and cutting down on damaging greenhouse emissions. 

Based on the latest environmental challenges, the focus needs to be shifted to smart grids, and smart meters should only be considered in the broader context of the modernisation of electricity networks through the introduction of sensing, communications and information technology into the grid. 

Smart Grids and the Communications Revolution

The communications revolution is an important element of the broader ICT revolution, and it is unfolding before our very eyes. We are right in the middle of a transition from old communications structures (mainly one-way streets) to new intelligent structures that are fully-interactive and video-based. This is not simply a technology-based development – it brings with it massive changes in the way we live, work and communicate. It impacts on healthcare and education, as well as on environmental services such as smart electricity grids. This necessitates collaboration between the various industries such as utilities, telcos, IT, vendors and consultants. As well as the benefits the transformation brings to the nation it also brings with it massive new business opportunities. The energy industry will be one of the last on the planet to be affected by the ICT revolution. A total business transformation will be required over the next 5-10 years. 

Grid IT – Where Energy Meets Comms

There is now widespread agreement of the need for smart grids; however the regulatory system and the risk adverse electricity distribution structure are hampering a more rapid deployment. This is creating opportunities for other telcos and companies such as Google and Microsoft to enter this market. Energy and comms technologies offer a powerful coalition that could lead to an energy/comms revolution, resulting in unprecedented new opportunities that will benefit the planet, save energy and thus lower costs and create new business opportunities. 

National Broadband Network based on Trans-sector Model

Trans-sector thinking will be required to guide us through the next stage of human evolution. We draw attention here to the importance of looking across sectors to create synergy. BuddeComm has previously discussed at length the opportunities within the ICT industries of utilising new telecoms networks for e-health, e-education, smart grids (managing renewables, saving energy), etc. The Australian government is leading the world in trans-sector thinking. This also requires a new approach, towards all infrastructure projects, and to look at the potential synergies between the building of roads, sewerage systems, water and gas pipe networks as well as telecoms and electricity networks. 

Smart Cities, Buildings and Communities

This then leads to the concept of smart communities, based on intelligent infrastructure such as broadband (FttH) and smart grids, so that connected and sustainable communities can be developed. However, before these smart communities can be built, trans-sector policies and strategies need to be developed. They can’t be built from the current silo structure that dominates our thinking; but require a holistic approach which includes environmental issues such as self sufficient energy buildings, energy exchanges for renewable energy and e-cars, delivery of e-health, e-education, e-government services as well as digital media and Internet services. 

For more information on this new BuddeComm report see Australia – Smart Grid Market

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The communications revolution is shifting the national and global focus towards e-health, e-education and smart grids. Increasingly we are seeing governments around the world undertaking national broadband initiatives as awareness grows that broadband infrastructure can also be used by other sectors such as healthcare, education and government services as well as by smart grids and digital media. Another key reason is that, in the context of the recent economic crisis, they see this development as a new method of economic innovation.

Such an approach will increasingly need to be based on a trans-sector concept and these digital developments need to be able tap into the economic and social multiplier effect that new broadband and smart grid infrastructure investments have to offer – the same infrastructure can be used by all. For this to become economically viable, open infrastructure needs to be available to these sectors on a utilities basis. It does not make economic sense for all of these sectors to develop and run their own communications infrastructure. The economic and social benefits of such an approach makes it necessary for the government to take a leadership role to make this happen.

Countries around the world are now recognising the urgent need to address issues such global warming, CO2 emissions and the need for energy savings. Electricity generation is the single largest contributor to global CO2 emissions, but also offers the greatest potential for reducing such emissions in the short and medium term via smart grids and smart metering.

The USA and Australia are two countries that are leading the world in smart grid development and in October 2009, as part of its economic recovery package, the US government awarded over $3.4 billion of matching grants for the development of smart grids. The funding will underpin more than $8 billion worth of intelligent energy technology projects and will provide a significant stimulus to growth of this sector.

In Australia, the alliance known as Smart Grid Australia requested funding for a smart grid demonstration project and the Government responded with the provision of AU$100 million for a National Energy Efficiency Initiative to develop an innovative smart-grid energy network. Combining broadband with intelligent grid technology and smart meters in homes, this demonstration project will enable greater energy efficiency and better integration of renewable energy sources, such as solar and wind power. Funding will be provided to a consortium of state and local government, public and private energy companies and other private sector investors for the large scale demonstration of integrated smart grid technologies. Perhaps the most interesting element of the smart grid demonstration project is that it is linked to the National Broadband Network (NBN). It clearly shows the trans-sector thinking the government has embarked upon.

Around the world, many of us now live in cities and over the last century, cities that hold more than one million people have increased from around 20 to 450. The infrastructure systems used in these cities to manage water, energy, food supply, transport, communication, economic and social structures are faltering however, so it now makes sense to explore what city communities can do to survive, and even thrive, in the changing environment. Cities are also the major polluters, as they generate the vast bulk of CO₂ emissions. This leads us to the concept of smart communities, of which smart grids and intelligent infrastructure based on broadband are an integral element.

Before these smart communities can be built, trans-sector policies and strategies need to be developed. They simply can’t be built from the current silo structure that dominates our thinking and require a holistic approach. This includes considering environmental issues such as self sufficient energy buildings, energy exchanges for renewable energy and e-cars, delivery of e-health, e-education, e-government services as well as digital media and Internet services.

Key highlights:

• The financial crisis has focused global attention on new infrastructure developments and facilitated a unique opportunity to shift the broadband emphasis from a high-speed Internet service to a national infrastructure for the digital economy that will underpin a range of positive social and economic developments.
• The Australian government showed leadership in May 2009 when it announced a AU$100 million investment in a new smart grid demonstration project which is linked to the NBN.
• According to the Energy Efficiency and Conservation Authority (EECA), there is sufficient spare capacity in the grid available at off-peak times to allow charging all of New Zealand’s cars and other light vehicles if these were replaced by electric vehicles.
• Smart grid technology can help to address Africa’s chronic power shortage in a market growing at around 10% per annum.
• An integral aspect of smarts grid are smart meters, with the proportion of US homes equipped with smart meters estimated to rise from 6% to 40% over the next five years.

This new BuddeComm report provides valuable insights into the important developments taking place in terms of smart grids and smart metering. It includes a global overview of smart grid development, including information on two of the leading markets, Australia and the USA. It also includes analyses on the importance of smart grids in terms of environmental issues. As infrastructure is an essential element for smart grids, the report provides a strategic vision in terms of NBNs and the communications revolution. Regional information on the progress of smart grids and smart metering is included where applicable for North America, Latin America, Europe, Middle East, Africa and Asia Pacific.
For more information see: Global Smart Grids – Intelligent Energy Technology

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Despite the disappointing results of the Climate Change Conference in Copenhagen, one thing is very clear – all over the world people want their leaders to take action. This issue should not be driven by politics; it should be driven by what the people want. And, while politicians may find this idea difficult to contend with, the people do want them to make tough decisions. 

Assisted by changes in technology political power will increasingly shift from the political arena to the people. Look at all the Internet campaigns – millions actively involved in cheering their leaders on, urging them to bite the bullet and move forward. And these activities will increase unless our leaders start taking some decisive action. 

While the carbon emission schemes are so enormously complex that very few people actually understand them, they do support them simply because they want to see action. 

However, simultaneously, it is also critical for governments to come up with policy decisions that bring the message closer to home. For example, at present people have little or no control over the management of electricity within their homes. A three-monthly bill is often all they get. 

Nowadays technology is available that could improve this situation. Advances in telecommunications allow a link to be made between the electricity networks and the telecoms networks that would make relevant data available to households. Furthermore, home networks can link devices to the network that would enable a close monitoring of their efficiency, power use, deficiencies, etc. 

Going one step further we see devices being developed that will allow buildings to be smart. Linked to computers via the telecoms network, sensors can monitor temperature, insulation, and the building itself, providing feedback on improvements that can be made. 

The next step is to look at smart communities. Rather than being linked to the network of a coal generator neighbourhoods could set up a smart distributed grid; they themselves could then generate solar and wind energy and exchange this within their own community. Smart charging points for hybrid cars as well as smart street lighting are all technologies that are now reaching mass market production levels. 

Some thinking is necessary to get the electricity industry and the telecoms industry working together to explore how they can best cooperate in creating smart cities. 

It is widely understood that smart concepts such as these provide savings that are more than enough to warrant the infrastructure that is needed. Some seeding money might initially be needed to kick-start these projects but the ongoing work can be financed within the existing energy, healthcare, education and telecoms budgets. 

Far more important, perhaps, is the necessity to create government policies to ensure that the sectors start working together (many of them are under the control of the government and the government should take a leadership role here). Some countries have problems finding a good business model to upgrade their broadband networks, largely because they fail to ensure that this infrastructure is used for trans-sector purposes. Energy, healthcare, education, telecoms and media can all share the same infrastructure and suddenly the business model becomes crystal-clear. 

Certain regulations are actually blocking some of these sectors from moving forward. Telecoms investments by energy companies are not recognised by some regulators as core investments, and therefore they cannot be taken into account in their cost base. Electronic doctor consults by broadband video, for example, are not covered by health insurance. 

Issues like this can be easily solved. 

These are all attainable goals that are relevant to the community and they also offer people the opportunity to actively participate in creating smarter communities for themselves.

While perhaps to a large extent Copenhagen failed to effectively address the bigger climate change issues, a number of very easy wins could be achieved by making relatively simple decisions.

The Rudd Government can build on its existing policies in relation to Smart Grid/Smart Cities and the National Broadband Network, and also start looking at a range of small-step, smart infrastructure initiatives that could deliver more direct and positive outcomes to the climate change debate.

Paul Budde 

• Global – Trans-sector strategies – an empirical approach
• Global Next Generation Telecoms – FttH and Trans-Sector Strategies
• Smart Cities, Buildings & Communities
• Smart Grids – Energy & Environmental Issues
• Smart Grids – Global Overview & Activities
• Smart Grids – Global Overview & Trends 2009
• Smart Grids – Grid IT – Where Energy Meets Comms
• Smart Grids and the Communications Revolution

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