What are the driving forces behind the attempt to build the modern Smart Grid?

1. Energy Efficiency: The modern world economy is hungry for energy. The human population is close to 7 Billion. A substantial percentage of this population lives in under-developed countries. Without an adequate energy supply, no nation can develop and sustain a growing economy. Energy supply has become a matter of national security for many countries. With too many countries trying to get hold of the limited resources, there is bound to be an upward pressure on energy prices. In such circumstances, every nation has a lot to gain by improving the efficiency of its existing supplies. There is thus a great benefit if we can reduce wastage and losses and do more with less. At the generation, distribution and transmission level, by upgrading the infrastructure to newer technologies, we could reduce losses and improve energy efficiency. At the individual consumer level, it is believed that people tend to consume less when they are given real-time feedback of their energy consumption. For example, if people were able to see their home’s energy consumption on a regular (hourly/daily) basis, they would adjust their energy usage habits to reduce consumption.

2. Energy Diversification: Our main, and traditional, energy sources are Coal, Oil & Gas, Hydro-Electricity and Nuclear power. The entire electricity infrastructure is built around these energy sources. A large thermal, hydro-electric or nuclear plant generates electricity that is then distributed to individual homes and buildings. The vast network of plants, sub-stations, transmission and distribution stations that make it possible to transfer the energy from the bulk-generation center to the end consumer constitute the electric grid. With more energy generation options such as Solar, Wind, and other Green Technologies vying to become a big part of our energy supply, the infrastructure has to be updated to accommodate them. For example, solar panels can be placed on every roof-top. This would make every building not only an energy consumer but also a generator as well. What if some of these buildings generated more than they consumed? Would they be able to supply their excess energy to the rest of the grid? That’s where a smarter grid would help.

3. Utilities’ Efficiency of Operation: Consider the humble electricity meter in your home. The meter itself reliably performs a fairly simple task of keeping track of your energy consumption. However the utility company has to spend a lot of resources reading the meter readings and reporting it back to the consumer. The typical process involved sending employees once a month to every home and reading the meter values. This number is then used to calculate the bill and mailed back to the consumer. It is obvious that this process is inefficient. Energy companies have a great incentive to reduce the amount of time and resources spent on such a trivial task. This is driving the innovations occurring in the Automated Metering Infrastructure (AMI) space. Imagine the savings if every meter was converted in to a smart meter that could automatically send its reading to both the energy company and the consumer.

4. Grid Reliability: At a recent Smart Grid conference, one of Duke Energy’s employees shared an internal joke: their SCADA system was ‘Someone Called And Duke Answered’. In many remote areas Electric Utilities typically have to depend on people calling in to report loss of service. Utilities have always wanted an efficient method of maintaining their vast networks. With a distribution network literally spread across thousands of miles, it is extremely difficult to pin-point the location of a problem. What if every electric pole was equipped with a cell-phone that would automatically call the local office if it every detected a problem in its vicinity? Smart Grid communication technologies aim to make such reporting a reality. The need for pin-pointing trouble spots is not new, but the ability to make such automatic reporting is now a technological reality.

5. Moore’s Law: No discussion about the rapid growth of electric/electronic technology over the last forty years can ignore the effects of Moore’s Law. In many ways, the Smart Grid is the inevitable by-product of the developments in other technical areas. Our computation and communication technologies not only have great capabilities but are also extremely cost-effective. It is economically viable to have wireless/wired communication capability in to every household appliance/electrical device. It is now feasible to convert every electrical device in to a fully electronic device. This means that appliances such as a dish washer are not just passively converting electrical energy in to kinetic energy to clean clothes, but they would also be actively conveying information about their operational status, energy consumption etc. to other devices. Every electrical device is transformed in to a smarter electronic device.

6. Dynamic Pricing: The aim of Dynamic Pricing is to reduce peak energy demands and thereby evenly spreading out energy consumption across time. Most of the energy is consumed during working days. There is a considerable gap between the energy demands at peak hours versus non-peak hours. These demand fluctuations place a strain on the grid. If the demand peaks were to somehow disappear or at least reduce, then the grid would not be under as much stress. If the utilities had the ability to dynamically change the price of electricity, then it is expected that consumers would try to use as much as possible during the off-peak, low-price hours. Dynamic Pricing would encourage people to spread out their energy consumption. For example, if the price of electricity were lower in the middle of the night, consumers might benefit from running the dishwasher at that time. But how would the dishwasher know when the price was low? How would the dish washer start operating in the middle of the night? The communication technologies being developed for the Smart Grid aim to address these sorts of issues.

Each of the points discussed above can be discussed in greater detail. I plan to explore the Smart Grid space a lot more in the coming weeks.