The role of ICT in creating energy smart grids

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by Simon Sherrington

There is growing worldwide acceptance of the need to upgrade power infrastructures to better deal with the supply and demand issues of the future, and help companies and countries meet the economic and environmental challenges they face.

New ‘smart grids’ will be needed that can:

• Reduce strain on the power grid
• Improve grid efficiency
• Support customers in changing their energy usage patterns, reducing power consumption and saving money
• Integrate distributed power sources, including renewable energy

Reducing strain: The infrastructure of the modern electricity grid has in some cases remained unchanged for decades. In some countries or regions, there is considerable strain on the grid from today’s electricity demand, and blackouts are increasingly common. The smart grid’s potential for more intelligent management of power supply can reduce strain on the grid, through intelligent storage and routing of power in response to demand.

Improving grid efficiency: Current grid models are one-way and relatively unresponsive; during peak times, extra power sources must be brought on-line to satisfy demand. Better management of energy would reduce the need for large-scale plant expansion, reducing capital expenditure for utilities; and features of the smart grid such as demand response and load control would improve transmission and distribution efficiency.

At the same time, intelligent grid asset status and management applications and mobile workforce applications can be used together to effectively maintain and repair grid assets. This should reduce the number of false alarms, and save on field service team call-out costs.

Facilitating change in energy usage patterns: Current billing models do not allow energy users to gain timely access to information on usage, making it harder for them to manage their energy use proactively. The real-time information provided by a smart grid would encourage home users and businesses to invest in energy efficient appliances, adjust usage patterns to avoid higher charges at peak times, and adopt other energy-saving measures.

Integrating distributed power sources: Smart grids can support reduction in the use of non-renewable energy sources. The ability to transmit power from distributed sources enables small- to medium-scale renewable power sources to be included in the main power grid. These power sources - such as local photovoltaic solar panels, small wind turbines and biomass generators - can be installed at home and business sites. The user can then export electricity to the grid (assuming an appropriate legal and commercial framework) as well as providing power for local use and saving money.

Components of the smart grid

The creation of smart grids is not a quick or simple endeavour. The creation of new national infrastructures will require large-scale change in the electrical grid, at the utilities themselves, in energy markets, and in the home and business environment. It will require tremendous investment, and also involves a complex mixture of technologies– as Figure 1 shows.

Figure 1: Smart grid technologies

Source: Innovation Observatory

At the heart of the smart grid is the integration of advanced information and communication technologies into the traditional power distribution infrastructure. This encompasses the communications systems to enable real-time, two-way data transfer throughout the network, and IT systems to enable intelligent routing, power storage, usage, and billing, as well as security management.

A number of companies have recognised the need for these communications and IT technologies and are positioning themselves to play in the smart grid market. For instance technology vendors have been swift to recognise the potential: Cap Gemini, Cisco, HP, IBM and Oracle have all announced IT solutions to support smart grid networks. Wireless technology (including chip, antennae and transceiver) vendors are also early to market; these include Qualcomm (CDMA), Full Spectrum and GridNet (WiMAX) and GainSpan (WiFi). Specialist smart grid solution vendors such as Silver Spring and Trilliant are deploying RF mesh networks (Silver Spring’s technology operates in the 900 MHz frequency band; Trilliant’s uses the IEEE standard 802.15.4 which is compatible with a number of frequency ranges). Some mobile telecom operators have already spotted the potential too – particularly in the US, where Verizon has joined forces with Qualcomm to develop smart grid solutions, and Sprint Nextel has announced its intention to add smart grid solutions and technologies to its portfolio. Wireless operators see the potential to drive new – and importantly monetised – data traffic growth in their networks. Use of fibre-optic networks and broadband-over-powerline are also being trialled for data transport within the home or business site and in the wide area.

Whilst the early movers in the market include heavyweight technology players, most countries are still at early stages in the development of their smart grid infrastructures, and no one company can deliver every element of a smart grid network. Of necessity companies with different priorities (and who are sometimes competing with each other) must work together to provide the components for a complete network. There is everything to play for, and with predictions for cumulative global spend on smart grids up in the hundreds of billions of dollars range by 2015, the financial prize for even moderate market share is tremendous. But the market is also moving fast, and big buyers will value proven expertise and technology robustness, so those with an eye on this market must have their go-to-market strategies in place very soon.

Innovation Observatory’s forthcoming report Assessing the smart grid opportunity, due for publication in April 2010, includes detailed analysis of the market drivers for smart grids, the technologies needed to realise the global smart grid vision, the companies investing right now and their varying market positions. It looks at funding and regulatory incentives for investment, and provides go-to-market recommendations for all players in the value chain.

The analysis is underpinned by interviews with a variety of companies including ABB, Advanced Digital Design, Alcatel-Lucent, AlertMe, Control4, GainSpan, Grid Net, Elster, Landis+Gyr, Sentec, Silver Spring Networks, Tendril, Texas Instruments, and Ventyx.