Credit: Dreamstime
Credit: Dreamstime

We have been talking about the smart grid for a decade now, but how far have we comeā€¦ and where are we going next? Elisa Wood finds out.

Developing an intelligent grid is much like developing the human intellect: no-one ever reaches the pinnacle of wisdom and learning and change go on.

Or as GE’s John McDonald puts it: “The major concept of smart grid is that it is more of a journey than a destination. Technically, we can’t say by 2014 we will finish the smart grid. The more that we do, the more we realize what can be done.”

Perhaps we cannot pinpoint a date when we will finish smart grid. But now that we are about a decade into our quest, it is a good time to ask: How far have we come in developing this Internet-like electric system? And where are going next?

Clearly, intense effort is underway to build a grid with a 21st-century brain – an electric system whose various parts can talk together, automate, self-heal and make consumers active energy managers, all with game-changing speed and scope. World investment in smart grid more than doubled over three years from $16.2 billion in 2010 to $36.5 billion in 2012, according to “The Smart Grid Business 2012 to 2017”, a report issued in second quarter 2013 by London-based Memoori Business Intelligence.

The large outlay is no surprise, given smart grid’s promise to reduce costs, increase energy efficiency, ensure greater reliability, integrate renewable energy, lower emissions, and promote consumer choice. With its superior ability to manage data, smart grid solves many of the most irksome utility problems. So the concept has quickly penetrated almost every corner of the electrified world, moving from drawing-board theory to serious investment throughout North America, Europe and Asia.

In the UK, the transmission grid is already reasonably smart with automation, remote monitoring and control switches. Now the nation is focusing on the distribution network. The real nuts and bolts of smart grid are unlikely to be completed until after 2020 in the UK, according to John Peters, managing director of Engage Consulting, who assisted in the development of the UK’s metering, energy trading and settlement arrangements. This comes as the UK rolls out smart meters for 30 million homes and businesses, an effort that begins next year and is expected to run through 2019.

A smart grid can warn operators of a problem as it occurs or even before it happens<br>Credit: GE
A smart grid can warn operators of a problem as it occurs or even before it happens
Credit: GE

Overall, European spending on smart grid totalled $1.4 billion and is likely to rise after 2014 as both the UK and France undertake major installations, according to Bloomberg New Energy Finance.

Countries are advancing smart grid in a range of different ways, some focusing on massive technology rollouts, others on small, but cutting-edge experiments. Here are some examples of smart grid progress.

  • In the US, Florida Power & Light in April completed a four-year effort to create what’s being touted as one of the largest smart grid projects from home to power plant. Working with GE, the utility installed 4.5 million smart meters and 145 substation upgrades in 35 counties, as part of a programme called Energy Smart Florida. The new system helps anticipate disturbances on the grid, prevent outages and restore power quickly in a state often hit by destructive hurricanes. The utility can diagnose system problems remotely and make fixes before issues occur. FPL received $200 million in federal stimulus for the project, the maximum granted per utility under the American Recovery and Reinvestment Act of 2009, which initiated several major US smart grid efforts. In all, the US spent about $4.3 billion on smart grid in 2012, according to BNEF.
  • Honeywell has completed China’s first smart grid demand response project in the Tianjin Economic-Technological Development Area (TEDA). Honeywell installed automated demand response in commercial, industrial and government facilities, as a way to reduce need on the grid to run expensive peak power plants and cut emissions and costs. The Honeywell technology lets customers create customized energy reduction strategies that utilities put into action when the grid is under strain. The project is part of a joint US-China energy co-operation programme helping to advance China’s long-term goal of creating a robust, national smart grid by 2020. To that end BNEF says China’s investments in smart grid rose 14 per cent in 2012 to $3.2 billion.
  • PowerMatching City in the Netherland’s Hoogkerk district bills itself as “the first real-life smart grid community in the world” – a kind of living lab initially made up of about two dozen households. Participants use many of the gadgets and appliances appropriate for smart-grid equipped households: micro combined heat and power systems, hybrid heat pumps, smart meters, PV panels, electric vehicles and charging stations, wind power, and smart household appliances. The homes are meant to demonstrate how we will all use electricity by 2030. DNV KEMA Energy & Sustainability, an energy consulting and testing & certification firm, is leading the initiative.
  • In Sweden, ABB and the utility Fortum are helping the Stockholm Royal Seaport become an energy-smart district of the future. The goal is to reduce carbon dioxide emissions attributable to each person in the district from 4.5 tonnes per person to 1.5 tonnes, as the smart seaport becomes a reality through 2030. The project includes a range of energy innovations, from fuelling ships with electric grid power rather than dirtier diesel, to helping homeowners produce 30 per cent of their own electricity through solar and wind energy, and store excess power in electric vehicles. The project focuses on various technologies to help residents become “prosumers” – both consumers and producers of power, who can buy and sell in the energy marketplace. ABB is providing a smart control centre to manage all of these technologies, according to Gary Rackliffe, vice president of smart grids for ABB, a power and automation technology company.
  • In the US Northeast, smart grid had a chance to show off its stuff during Superstorm Sandy, a devastating October 2012 storm that knocked out power for weeks or even months for some whose buildings were too damaged to connect to the grid. Utilities with sophisticated communications networks – the hallmark of smart grid – were able identify outages on the system more quickly as smart meters signalled trouble back to the utility’s central control. “The IT system, the operation system, doesn’t put the wire back up in the air, but it tells you where these problems are,” said Brad Williams, vice-president for industry strategy at Oracle Utilities, an information technology company that serves several of the large utilities in the Northeast.
  • Australia’s largest electricity network, Ausgrid, is leading a $100 million initiative called Smart Grid, Smart City in Newcastle, Sydney and the Upper Hunter region of New South Wales. The three-year project tests various new energy technologies and pricing schemes with 30 000 households. Ausgrid is experimenting with a range of smart grid devices and approaches from fault-isolating equipment that allows crews to monitor supply remotely to home energy devices, distributed generation, storage, electric vehicles and smart homes. The programme is being rolled out through 2013.
  • In Canada, Ontario has installed small meters for all accounts. About 4.35 million customers were on time-of-use rates as of June 2012. About a dozen companies, among them GE, Siemens and IBM are working on refining smart grid through various province-funded projects. The province is testing in-home energy displays, leveraging data to manage load, advancing grid automation and self-healing, and integrating renewables and electric vehicles.
  • Ecuador, in March 2013, became a leader among Latin American countries with release of a three-phase smart grid roadmap to 2030. The plan is designed to promote efficiency, adopt new technology and gain better grid awareness and control. Ecuador will install foundational technologies and expand its distribution and transmission over the first four years. The second four-year phase will bring advanced technologies, among them volt and volt-ampere reactive control and decentralised power. In the third phase, from 2023 to 2030, the country will install micro-grids, advanced load management and other measures.

Smart grid advancements have emerged differently from continent to continent, according to the Global Inventory and Analysis of Smart Grid Demonstration Projects, prepared last year by DNV KEMA for the Association of Energy Network Operators in the Netherlands.

A diagram that provides an overview of AutoDR technology based on the OpenADR industry standard<br>Credit: Honeywell
A diagram that provides an overview of AutoDR technology based on the OpenADR industry standard
Credit: Honeywell

The US has focused on peak load reduction and dynamic pricing, including advanced metering and distributed automation, while Europe has emphasised energy efficiency, reducing emissions and integrating intermittent renewable energy.

The Asia-Pacific has been generally slower to adopt smart grid, and the drivers vary by country. However, China has significantly ramped up its smart grid spending in recent years, as it focuses on grid modernisation and reliability, while Australia and New Zealand have pursued greater load management. Regulatory mandates for grid modernisation exist in several Asian countries, among them Australia, New Zealand, Singapore, South Korea and Japan, according to DNV KEMA .

Europe and the US at first seemed to be moving in different directions as they developed smart grid, but are tending now to “meet in the middle” with similar goals, according to Mike Gordon, CEO of Joule Assets, a New York company that helps create energy reduction assets and revenue streams.

US smart grid efforts have long centred on demand response – the reduction of energy use by customers during peak periods. This is because the US grid finds itself under strain on hot summer afternoons when air conditioners are running. Utilities and grid operators offer incentives for consumers to reduce consumption during these periods.

Meanwhile, Europe had focused more on installing smart grid technologies that help balance its grid as it adds more intermittent resources such as solar and wind power.

Europe and US converge

Now the US is developing the same intermittency problems, as it increasingly adds renewables, especially in the middle part of the country, and rural areas of Maryland, New Jersey and New York. Conversely, Europe is focusing more on demand response, as it begins to install greater amounts of air conditioning. Countries such as Poland are beginning to experience greater summer peaks, Gordon said. However, they lack the power supply in the summer to meet the demand, so are looking to smart grid solutions to ensure that the lights stay on.

Meanwhile, demand response worldwide is becoming increasingly sophisticated. Once meant predominantly for large energy consumers, DR is being incorporated more readily into the home and small business. California, in particular, is emerging as a new leader in finding ways to use automated demand response for the smaller customer, according to Gordon. “California is moving toward sensible markets,” he said. “You have the utilities beginning to play with automated demand response which allows for some of the smaller consumers to engage.”

Prescient grid

A smart grid isn’t only intelligent; it’s also somewhat prescient. It detects and warns system operators of problems just as – or even before – they occur. Such is the case now for FPL because of its Energy Smart Florida.

When an outage occurs, the utility knows about it before the customer calls in. The smart meter sends one last communication upstream to the utility before it loses power. “If neighbouring meters also are communicating a failure the utility knows it is more than just your house that is in trouble,” said GE’s McDonald, who is director of technical strategy and policy development for digital energy.

As well as smart meters, FPL fitted 10 000 devices that help monitor the condition of its transformers. This is especially important in the US, where the average transformer is 42 years old. “The probability of a failure is greater as they age and a lot of these can be catastrophic failures. A transformer explodes and not only destroys the transformer but the entire substation,” McDonald said.

Meanwhile, on the distribution system, smart grid can find and restore service through automation. For example, the equipment can determine readily if an outage is being caused by the utility or a problem within the home.

“When customers call in and they have a problem, many times the problem is within a house, it’s not a utility problem,” McDonald said. Through its new smart grid, FPL resolved 32,000 customer problems remotely over a year, and reduced customer outages by 5.3 million minutes. “So on the one hand, customers have electricity more often. On the other hand, for FPL that is minutes of electricity they have sold to the customer.” McDonald said.

Ultimately a relationship

While a great deal of progress has been made in building a smart grid, much work remains.

Getting the technology right is only part of the formula. Common, international communication standards must be set, so the technologies and components of the grid work together. Business and financial models need to be fine-tuned with consideration to the new relationship that smart grid creates between utility and customer.

Usage graph of an AutoDR participant, showing load reduction in a direct response event<br>Credit: Honeywell
Usage graph of an AutoDR participant, showing load reduction in a direct response event
Credit: Honeywell

“Irrespective of the nature of service, it is important to understand that the smart grid means transformation of relationship,” said Jay Sparling, director of global business development for Honeywell Smart Grid Solutions. “We don’t think it is just putting in the newest generation asset or newest, efficient line – it is adjusting the manner in which the whole ecosystem functions.”

What is this new ecosystem? Traditionally, utilities and regulators solved grid problems, such as capacity shortfalls, by building new infrastructure. With smart grid they are instead taking advantage of the energy capability that resides in homes and businesses.

Sparling sees the next step as a quest for clarity. “Utilities need assurances. They need to know what new technologies and approaches regulators will accept. They need confirmation that they will be allowed to recover costs. Tariffs must be designed and governments must set clear resource priorities. Once this is done, then smart grid really takes off worldwide.”

So 2013 finds smart grid systems of various sizes, technologies and purpose emerging throughout the globe. Some are experimental or meant to demonstrate technologies, perhaps for export; others are working, full-scale operations. All are contributing to an eventual – still years away – fully functioning smart grid. And when we stop distinguishing between the grid and the smart grid, then we will know we have arrived.

Elisa Wood is a US-based energy writer.

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