BuddeBlog

Smart grids are now well and truly on the agenda of most electricity companies around the world – and indeed on many of their governments’ political agendas. It has become increasingly clear that smart grids are able to transform the energy industry, and that a much broader group of industries are also affected by this, such as the IT, telecoms, white goods, renewables, management consultants, storage and transport sectors.

The electricity grid is becoming the enabler in many industry changes, and by making it an intelligent grid and adding telecoms to it, the power will shift away from the electricity companies to the customers – and the appliances that will be developed will assist this process; some of that on a machine-to-machine (M2M) basis.

While progress has certainly been made in the development of smart grids; it is important to note that due to its very nature, the concept continues to be ill-defined and rather fluid. This makes it difficult to develop firm plans of action, especially when considering that smart grids involve several key elements – the grid itself, the consumer home energy network, and the facility to include and manage renewable energy and e-cars.

The electricity utilities started off with one of the smart grid elements, the smart meter, and that still dominates many of the developments. At the same time, it does to a certain extent; limit more truly ‘smart’ developments. However smart meters do have the ability to enable more complex time and usage-based tariffs, which will drive change in customer behaviour and create increased opportunity for differentiation by the utilities. They also set the stage for greater use of discounts and incentives, and a wider range of product offerings, including micro-generation and non-energy products.

Unfortunately, marketing the benefits to the customer has been something of an afterthought in the development of smart meters and smart grids, and the industry is paying dearly for that oversight. There appears to be very little interest among customers in regards to smart grids and smart meters, and this is mainly because the benefits have not been communicated well to consumers. Perhaps if the industry had had a smart grid vision instead of a smart meter vision, they would have been able to explain to the customer that they would be provided with tools that would enable them to manage their energy use better. This would result in saving energy which would ultimately lower the costs – to such an extent that it could even lead to a neutral outcome in relation to the ever-increasing electricity prices.

Environmental policy remains one the key global problems being faced around the world. While the climate change issue has dropped off the headlines, it is still very high on most countries agendas. With fossil fuel energy being the single largest culprit in the problem, no matter how one looks at this issue, the overriding solution is to move as quickly as possible away from fossil fuels to renewables.

A significantly large part of the population is interested in lowering their CO₂ footprint. Furthermore there is evidence that this and other energy saving measures can lead to overall savings of around 30%. This could largely offset the increases in electricity prices. Disruptive energy developments from new energy service providers which will lead to the development of new business models around distributed (renewable) energy, will also add to the dynamics of this emerging market.

The Copenhagen Summit was the first global event where countries came together to address a common cause. This in itself was an enormous achievement – a beacon to illuminate future global policy-making. The complex dynamic surrounding the carbon price still needs to be resolved, but it also became clear that smaller steps are necessary, and that now is the time to try and create some wins here, particularly in the area of smart energy. In other words, can we save energy through smart grids, smart infrastructure, smart buildings, smart transport and smart cities?

The concept of smart cities and smart communities is 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; rather it requires a holistic approach which includes environmental issues such as energy self sufficient 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.

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 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 to 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 and a total business transformation will be required over the next 5-10 years.

Key insights:

• The jury is still out on how smart grids are going to be developed. Will the industry lead the development of smart grids? Will it be government-mandated or will disruptive elements force changes in a traditionally risk-averse and slow-moving industry?
• ‘Smart’ means communication and many countries are also addressing their broadband infrastructure. Of course, a smart thing to do would be to roll out fast broadband infrastructure in combination with smart grids and, wherever applicable, other smart infrastructure.
• Clean energy is rapidly becoming the new political tool. Fossil fuel based energy has wielded enormous political power over the last 50 years. Clean energy will most certainly follow in its footsteps and will become an important source of geo-political power.
• The greatest achievement in Copenhagen was that the governments of the world sat down together and worked on a global problem.
• We are in the middle of a communication revolution. After the massive deployment of microchips we have now reached a mass deployment of IT. The arrival of the Internet started the communications revolution, which, like the other major techno-economic revolutions of the last 200 years, will deliver great economic and social benefits. The communications revolution will see the national and global focus shift to e-health, e-education and smart grids.
• Smart grid developments in the US have rapidly gathered momentum following the Obama administration’s $4 billion stimulus package for smart grids. Consequently, the proportion of US homes equipped with smart meters is estimated to rise from 6% in 2010 to 50% by 2020.
• Europe has become a major proponent of smart grid infrastructure and smart metering. A growing number of countries have smart meter policies in place, while most others have drafted policies to take effect during 2011.
• Despite the cheap energy available in the Arab world, in many countries energy shortfalls are either evident already or anticipated in the near future. Consequently there is more interest in the Middle East in smart grids and related intelligent energy technology than perhaps might be expected.
• Smart grids can help solve Africa’s power crisis.
• Many governments across Asia have been starting to explore smart grid technology, while being cautious over security risks associated with new infrastructure.
• An Australian consortium is developing Australia’s first commercial-scale smart grid which will also be one of the largest and most integrated smart grid projects anywhere in the world.
• Since 2007/08, there has been a growing interest in smart energy technologies among Latin American countries, with Brazil leading the way.

For detailed information, table of contents and pricing see: Global Smart Grids – An Industry in Transformation

This entry was posted on Thursday, December 2nd, 2010 at 9:07 am and is filed under From Paul's Desk, Smart Grids. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.