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What Smart Grids Have in Store for Us

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What Smart Grids Have in Store for Us This article has been contributed by Linda Jackman, Group Vice President of Industry Strategy at Oracle Utilities 

The electrification of the world during the 20th century has had a greater impact on the way we live than almost any other innovation. Since then however, there has been surprisingly little development around how our power grids operate.

They were and have remained analogue distribution systems, capable only of ‘dumbly’ delivering power to homes and then charging customers for usage based on rather simple metering systems.

This state of affairs is changing rapidly however. The combination of now well-documented trends including population growth, the industrialisation of emerging economies and the scarcity of fossil fuels is leading to a second great wave of infrastructure investment and the advent of a new type of energy grid: the smart grid.

“A smart grid is an electrical grid that uses information and communications technology to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.”

The benefits of smart grid

Where smart grids really differentiate themselves from legacy power networks is in the level of intelligence they bring to the management of electricity supplies. This intelligence will drive network applications that simply have not been possible in the past; everything from the ability to automatically balance power supply and demand in the distribution grid, to delivering a deeper insight into how consumers are using their energy. In fact, if implemented correctly, smart grids have the power to transform the entire energy landscape and allow us to use dispersed forms of power generation such as domestic wind generators and solar panel systems.

A greater insight into energy consumption means that utility companies can better manage the grid during periods of high and low demand, which helps conserve energy and encourage savings; savings that can either be passed on to the customer or re-invested into the grid to enable further improvements.  It can also help utility companies identify consumption patterns within the grid, enabling them to tailor their customer offerings and offer financial incentives to users who prove effective at reducing their levels of energy consumption.

Additionally, smart grid rollouts encourage the public uptake of smart meters. Smart meters, coupled with in-home displays, can record and display energy usage in near real-time. This delivers an overview of energy consumption, which can help create awareness of energy usage, build client engagement and encourage users to adapt their consumption patterns accordingly. By using the data collected by smart meters, for example, customers can see clearly how simple actions such as turning off lights and devices, when not in use, can have a massive impact on their energy consumption and the monthly bill.

More data means greater insight

For the utility, the data generated by smart meters is huge. A recent survey we conducted in the US found that the average utility with at least one smart meter programme in place has increased the frequency of its data collection by 180x—collecting data once every four hours as opposed to just once a month.  While that might not be very surprising, it’s still a big number and represents a huge opportunity for energy suppliers. Utilities can use the massive data volumes they collect from smart meters and other systems to place a renewed focus on network and service reliability.

Unprecedented data availability—coupled with sophisticated analytics solutions—will drive utilities to evolve many aspects of their businesses.  For example, asset risk analysis can help identify and avoid operational risks, such as major or catastrophic events.  As a result, utilities can integrate work and asset management systems with field operational performance data to better assess risk.

However, it’s not about just collecting data to improve operational efficiency, service reliability and customer engagement. Utilities must have the right systems, people, and processes in place to analyse the data, report on it, and act on it. Otherwise, it will be impossible to make sense of the staggering amount of data they’re collecting from smart meters and other smart grid components.

As utilities gain the ability to analyse big data, they will realise deeper levels of insight into how their own businesses operate and into their customers’ needs.

Linda Jackman, Group Vice President of Industry Strategy at Oracle Utilities.

Linda Jackman, Group Vice President of Industry Strategy at Oracle Utilities.

Integrating renewables

Because the smart grid is capable of integrating renewable energy, the number of power sources being used within the grid will increase, helping to reduce demand for fossil fuels. Renewable energy sources are not as predictable in their outputs as traditional fossil fuel-based power plants and there are also a lot more of them. It is only through the intelligence of the smart grid that such sources can be integrated onto a national power infrastructure and used to provide a meaningful source of power.

In fact, the International Energy Agency (IEA) has predicted that renewables will become the world’s second-largest source of power generation by 2015 and start to rival coal as the primary source by 2035. According to the IEA, this amounts to 3400TWh of wind and solar powered generation being added to the grid, more than the entire electricity consumption of the European Union.

As well as helping to improve the environment, the greater use of renewables, enabled by smart grids, will also provide employment opportunities. For example, as of December 2011, Bangladesh’s rural solar home system installations had accounted for an estimated 60,000 jobs. Similarly, the United Nations Development Programme in Nepal has, between 1998 and 2012, supported the construction of 323 micro-hydro plants, leading to the equivalent of 3,850 full-time jobs.

The 21st century grid

The smart grid is very much a product of its time. With the ways in which we generate power changing in line with declining resources and rising costs, it is the only approach that makes sense for the 21st century. From generating savings for consumer and utilities alike, enabling renewable energy distribution and increasing network efficiency, smart grids promise the greatest changes – and greatest benefits – to power supply since the first grids switched on in the 1880s.

This article has been contributed by Linda Jackman, Group Vice President of Industry Strategy at Oracle Utilities.

Martin Thompson

Martin is the founder of Energy Demand. Learn more about him here and connect with him on Twitter or LinkedIn.

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  • Energy_Innovator

    This has already been published on WSJ at http://green.blogs.nytimes.com/2012/07/11/so-much-data-from-smart-meters-but-who-can-analyze-it/#more-144222

    and commented in detail:

    (1) Wait a second. Who is making this point? It’s the very organization that stands to make money by selling a service to the power companies.

    “The sky is falling!” said Mr. Chicken P. Little, the CEO of Sky Support Incorporated, a company that has created a method of making the sky not appear to be falling.

    (2) Utilities will develop analytical capabilities that take advantage of the new data when they have a financial incentive to do so. Currently, they make money based upon rate structures that were designed around the old dumb meters. Until more Utility Commissions move towards Time of Use, Critical Peak, or Real Time Pricing, utilities have no financial reason to develop the expertise to use the data.

    It is all about services, regulatory framework, business innovation, open, standard based and discrimination free access to and sharing of information.