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Research & Development Smart grid status and outlook

Editor: Florian Richert

Smart grid technologies may still be in their infancy, but they are already delivering concrete benefits for energy producers and consumers. Find out what makes a smart grid “smart” and why the digitization of our electricity networks is essential for tackling climate change.

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Smart grids are essential for the global energy transition, and there is plenty of evidence to suggest that consumers are ready to make the switch.
Smart grids are essential for the global energy transition, and there is plenty of evidence to suggest that consumers are ready to make the switch.
(Bild: Public Domain / Unsplash)

The majority of electricity grids in operation today were built 50 to 100 years ago. They are inefficient, unresponsive, centralized, and typically comprise just a few major power plants and large scale delivery infrastructure.

What’s the smart grid?

The “smart grid” concept emerged around 20 years ago. Rather than being designed to replace the existing grids, smart grids are a digitized, upgraded, and expanded version of the current systems. They require the integration of new digital technologies, the involvement of new types of electricity producers, and the implementation of new transmission and distribution infrastructure. The result: electricity grids are becoming two-way systems that empower consumers.

What exactly do smart grids do?

Smart grids are digitized energy networks that enable “monitoring, analysis, control, and communication within the [energy] supply chain to help improve efficiency, reduce energy consumption and cost, and maximize the transparency and reliability of the energy supply chain”. They do this through the use of integrated sensors and telecommunication technologies (most of which are online). Other emerging technologies are now also coming into play, such as augmented reality.

Smart grids facilitate two-way digital communication between the sources that generate energy (power plants) and countless points throughout the network (transmission and delivery infrastructure, consumers). They also allow for the two-way flow of electricity, which makes it possible to integrate renewable energy sources such as wind turbines and solar farms alongside traditional power producers like coalfired plants.

Benefits for the consumer

Consumers benefit in two major ways: smart grids save them money while providing a more stable (and potentially cleaner) supply of electricity. Continuous automated moni-toring and troubleshooting makes digital energy networks “selfrepairing”, which improves the availability and reliability of the power supply. Problems can be identified and diagnosed more easily, and then quickly solved via built-in processes or rapid intervention by the utility company. As a result, the electricity supply will be restored more quickly, e.g. following storms that damage nearby power lines.

Furthermore, the vast amount of grid data generated by communication between suppliers and consumers makes it possible to generate realistic consumption forecasts. This means utilities can adapt their electricity production to accommodate expected peaks in demand (thereby avoiding blackouts and power shortages) and reduce energy surpluses (thereby lowering electricity prices). More balanced energy production also sinks utilities’ operating and management costs, which can have a positive knock-on effect on consumers’ power bills.

Smart meters are a key part of the smart grid concept. They empower consumers to adapt their energy usage so that it is in line with fluctuations in supply and demand, which enables them to save electricity and money. At off-peak times when energy is cheaper, for example, consumers can opt to run more energy-intensive appliances, such as washing machines and dishwashers.

According to the Environmental and Energy Study Institute, smart meters “help utilities balance demand, reduce expensive peak power use and provide a better deal for consumers by allowing them to see and respond to real-time pricing information through in-home displays, smart thermostats and appliances”.

In addition, smart meters make it possible for consumers to integrate their own power generation systems (typically solar panels) into the grid, so they can produce their own electricity and feed any excess power back into the system, so that nothing goes to waste.

Benefits for the environment

Smart grids improve energy efficiency in myriad ways, which is a clear win for the environment. Smart meters help consumers to use less electricity while ensuring the grid is more balanced. As a result, power plants don't have to switch off and on as many times in order to regulate their energy production. The digitized maintenance processes mentioned above improve infrastructure uptime and energy forecasts, leading to more efficient energy transmission and less wasteful surplus. What’s more, by decreasing energy usage and waste, all these benefits reduce the volume of CO2 emissions generated by fossil fuel power plants.

Perhaps most importantly of all, smart grids give national networks the chance to decentralize and diversify their power generation by integrating renewable energy systems. This makes smart grid applications vital for the transition to clean energy sources and efforts to mitigate the effects of climate change. Renewable energy such as solar and wind power are variable and require a grid that can respond to such fluctuations.

Smart grids also support the uptake of emission-free electric vehicles, which is another major benefit for the environment. For example, real-time electricity pricing information enables consumers to work out the cheapest time to recharge their cars, which is an added incentive to switch to e-mobility.

Smart grids: Where to next?

Smart grids are essential for the global energy transition, and there is plenty of evidence to suggest that consumers are ready to make the switch. Smart grid technologies are already being rolled out around the world in places like the U.S., Europe, China, Brazil, Australia, South Africa, and India. By 2020, the UK aims to roll out smart meters to all domestic customers, and the European Commission expects that “almost 72 percent of European consumers will have a smart meter for electricity” within the next year.

The smart grid industry is expected to be valued at over 400 billion USD in 2020. Further growth seems inevitable. Artificial intelligence (AI) is creating an adaptive framework across multiple sites, assets and markets, while data analytics and machine learning will further improve energy consumption predictions and enhance grid security. It will become easier for consumers to contribute to the grid with plug-and-play technologies, and there is talk of integration with smart buildings and smart factories. The ultimate goal is likely to be full automation in terms of power generation, distribution and service management.

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