The Evolution of the Smart Grid

The smart grid concept promotes a holistic approach to leveraging common infrastructures. So how can utilities integrate such diverse systems as meter data management, customer information systems, GIS, mobile workforce, SCADA/distribution management systems and demand side management to build an intelligent grid infrastructure? It’s a question that’s right at the top of the agenda for grid designers and power industry experts.

“Creating a smart grid is a long-term process involving gradual deployment and integration of ‘smart’ equipment, but the key to grid intelligence is focused on awareness,” says Anthony Miller, Research Analyst for Frost & Sullivan’s Energy and Power Systems team in North America. “The massive amount of data from these diverse systems needs to be put to successful use, and the pivotal aspect in successful integration is analytics – software tools that take this data and convert it into usable information. The analytics tools will highlight performance indicators and analyze data metrics, thus providing modelling for optimization at the highest levels. So diverse systems are only effective if the data can be put to good use to optimize efficiency and provide true cost savings.”

Indeed, Miller believes that the smart grid is only truly smart if it involves the end user and facilitates their efficient and intelligent use of energy in a cost-effective manner. Consequently, a renewed focus on demand-side management will be key to tackling the smart grid challenge. “In order to address the demand-side, utilities must set up marketing campaigns promoting efficiency and provide appropriate incentives during peak hours,” he explains. “Reports provided during billing cycles with analyzed usage can provide customized incentives. As AMR systems become more intelligent, the consumer will become more cognizant of consumption, which in turn will lead to better end-user education.”

One of the promises of a smart grid is to make it possible to fully deploy strategies such as demand response and real-time pricing. “New generation is increasingly expensive and traditional fuels – such as pulverized coal – are facing increased legislative pressure because of emission concerns,” says Miller. “This scenario has forced utilities to think differently. Efficiency is now looked at as another form of power, another fuel source if you will. Maximizing usage without increasing capacity leads to the greatest profit for the utility, and demand response and real-time pricing help make this possible.”

Upgrading the infrastructure is just the start. “The infrastructure in the United States is aging, and addressing this will be a gradual process that will take years and billions of dollars to address,” he says. For instance, ensuring that the information collected is communicated reliably and securely is just one issue that utilities will need to monitor closely. “I think the SCADA security market will be astronomical,” he suggests. “This is an emerging area and first-movers will have a real advantage. I do not think there is a clear solution at this point on the security front. My advice would be to look to success stories in current installations and pursue those technology providers.”

So what are the primary hurdles to be overcome for the widespread adoption of smart grid technologies and strategies to become a reality? Miller cites the lack of incentives as a major issue. “There are no regulatory barriers, per se,” he explains. “However, the incentives to invest in new infrastructure and smart grid technologies are not there. Regulations in the energy industry reward utilities do not take risks, and unless proper incentives and greater flexibilities are established, implementation will be slow and laborious. I think the AMI business case is already present; greater operational benefits always add marginal improvement. The real setback is lack of incentives.”

So how does Miller think the concept of the smart grid will evolve over the next few years, and what challenges remain to be overcome? “In the near term, the groundwork for intelligent grids will be placed involving network automation focused on substation communication, analytics and the infrastructure associated,” concludes Miller. “This will be at the substation level. In the future we will see it move out to the distribution grid, with large-scale distributed sensors and more advanced analytics allowing historic analysis and even the ability to predict future problems before they occur.”

About the author:

Anthony Miller has in-depth knowledge and strategic insight on various renewable power generation technologies through market sizing, trend study and growth analysis. In addition, he has experience in more conventional areas, having worked on consulting projects dealing with natural gas, coal, generator-sets, and gas and steam turbines. He is well versed with state and federal regulations that directly correlate with renewable technologies and emission standards, and his current role is focused on transmission and distribution infrastructure, both on the demand and supply side.