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SMART GRIDS Power grid digitalization

Author / Editor: Nigel Charig / Jochen Schwab

Aging power grids with large, centralized fossil fuel power stations are increasingly subject to concerns about environmental damage, reliability, integration of renewable energy resources, and other issues. This article looks at how utilities can use digitalization to build smart grids that address these challenges.

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The rise of the Internet of Things (IoT) and digitalization in the twenty first century is allowing grid operators to develop technology-driven responses.
The rise of the Internet of Things (IoT) and digitalization in the twenty first century is allowing grid operators to develop technology-driven responses.
(Source: gemeinfrei / Unsplash)

The first alternating current system was installed in 1886 in Great Barrington, Massachusettsi. At that time, electricity power grids were centralized unidirectional systems of electric power transmission, electricity distribution, and demand-driven control.

Since then, and throughout the twentieth century, grids grew steadily in response to accelerating customer demand, often in an ad hoc, patchwork fashion. As time passed, though, limitations to the original centralized model became increasingly evident. Often, electricity supply could not keep up with peaks in demand, resulting in poor power quality, blackouts, and brownouts. Concern was growing about the pollution and dangers of fossil fuel and nuclear power stations, while renewable energy uptake has been inhibited by the unpredictable nature of wind and solar power sources. Central power stations are possible targets for terrorist threats. Meanwhile, rising energy costs are always an issue for commercial, industrial, and domestic consumers alike.

Digitalization to the rescue

However, the rise of the Internet of Things (IoT) and digitalization in the twenty first century is allowing grid operators to develop technology-driven responses to these issues. These responses are adding up to the ever-evolving concept of the Smart Grid. In fact, Smart Grid has been formally defined both in the US – by the Energy Independence and Security Act 2007 (EISA-2007)ii – and in Europe, by the European Union Commission Task Force for Smart Gridsiii.

The European definition covers six key points. It states that a smart grid employs innovative products and services together with intelligent monitoring, control, communication, and self-healing technologies in order to:

  • Better facilitate the connection and operation of generators of all sizes and technologies.
  • Allow consumers to play a part in optimizing the operation of the system.
  • Provide consumers with greater information and options for how they use their supply.
  • Significantly reduce the environmental impact of the whole electricity supply system.
  • Maintain or even improve the existing high levels of system reliability, quality, and security of supply.
  • Maintain and improve the existing services efficientlyiv.

Benefits for utilities and for consumers

As utilities move to a more sustainable, renewable energy-based economy, they can use an IoT concept called The Internet of Energy (IoE). This cloud-based system allows utilities to monitor, control and optimize the rapidly growing number of solar power systems, battery-based energy storage systems, smart thermostats and thousands of other new Internet-connected devices that generate, store, and use electricity. They can use these distributed energy resources (DERs) to improve grid reliability, reduce energy costs for their customers and, most importantly, increase their use of renewable energy resourcesv.

For example, solar panels generate clean energy, which energy storage systems can hold during periods of high generation and low demand. Smart thermostats make energy use more efficient.

However, utilities need the Internet of Energy in a world where DERs are proliferating, because, unlike large, centralized fossil-fuel dependent power plants under the utilities’ control, these DERs are often owned and deployed by customers and distributed across the grid in factories, office building and homes. Additionally, it is hard for utilities to predict how much energy they will generate, store, or use at a given time.

Fortunately, with the Internet of Energy, utilities can tap into these DERs to compensate for changes in energy supply and demand – whether caused by the DERs themselves or by other factors. For example, many utilities are rolling out demand response programs where customers are compensated for allowing the utility to turn on their biofuel-powered emergency generator, discharge energy from their home’s battery energy storage system or temporarily lower the rate at which they charge their EV.

This fits in well with changing consumer profiles. Many are becoming ‘prosumers’, meaning they have invested in solar, wind and other independent systems and want to sell power back to the grid. They are also more knowledgeable and seek more engagement in a two-way electricity supply process. With smarter grids, utilities can now fulfil these deeper relationships, to the benefit of both sides.

Through mobile apps, consumers have control and choice over how they consume power and can exert environment-friendly decisions by choosing renewable power. They can also take advantage of lower tariffs by planning activities that consume more power during off-peak hours. By doing this, customers can also help utilities to plan and manage consumption, and accordingly implement peak shaving strategies to reduce power consumption during periods of high demand. This can be more economical than investing in battery energy storage systems for backup supplies.

On the transmission side, digitalization of the power grid will revolutionize operations, improving productivity and efficiency. Transparency allows operators to ‘see’ into the grid’s vast field installations and infrastructure from remote locations.  Soon, almost all equipment will have some level of intelligence and the ability to communicate and transmit data. This increased transparency on the health of field assets enables utilities to better monitor, control and maintain their assets and infrastructurevi. 

A smarter grid will add resiliency to electric power systems, better preparing them for emergencies such as severe storms, earthquakes, large solar flares, and terrorist attacks. Because of its two-way interactive capacity, the Smart Grid will allow for automatic rerouting when equipment fails or outages occur., Smart Grid technologies will detect and isolate a power outage when it occurs, containing it before it become a large-scale blackout. The new technologies will also help ensure that electricity recovery resumes quickly and strategically after an emergency—routing electricity to emergency services first, for examplevii. 

The Smart Grid is a way to address an aging energy infrastructure that needs to be upgraded or replaced, while also enabling the greener, more energy-efficient power resource that we all so urgently need. At the same time, it allows consumers to participate in more distributed, user-generated electricity that is more resilient to demand surges, natural disasters, and malicious attacks.