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Smart grid

Technology group:
A smart grid is an electrical grid which includes a variety of operational and energy measures including smart meters, smart appliances, renewable energy resources, and energy efficient resources. Electronic power conditioning and control of the production and distribution of electricity are important aspects of the smart grid.

The smart grid is the state-­‐of-­‐the-­‐art technology for electrical system that can sensibly execute the operations to all interconnected elements -­‐ from generator to consumers. Smart grid simply converts the conventional power grid towards the modern grid in order to regulate sustainable, economic and reliable electricity (Massoud &Wollenberg, 2005 and Gellings, 2009). Smart grid intelligently executes operations from primary and secondary generators through the transmission and distribution network to the different types of consumers. EPRI 2009, defines Smart Grid as, “a modernization of the electricity delivery system so it monitors, protects and automatically optimizes the operation of its interconnected elements – from the central and distributed generator through the high-­‐voltage network and distribution system, to industrial users and building automation systems, to energy storage installations and to end-­‐use consumers…and their devices”.


The smart grid concept involves integrated communications, sensing and measurements, advanced components, advanced control, decision support or self-­‐ healing and self-­‐adaptation. Smart grid can be termed as intelligent grid, grid wise, digital grid, self-­‐healing grid, green grid, and interactive grid (NETL, 2007).

In a detailed experiment, households (several hundred households, which were as homogeneous as possible) were equipped with programmed computers, which showed electricity prices every five minutes. The households received continuous information of the price of electricity and power consumption, and hence regulated the load. On an average, 5-­‐10% of the electricity bills were reduced by the households, and the peak electricity consumption also reduced (Pratt et al., 2010).

Smart grid technology may possibly contribute to GHG emission reductions by increasing efficiency and conservation, promoting renewable energy, distributed generation integration and facilitating Plug-­‐in Hybrid Electric Vehicles (PHEVs).

Figure 1 illustrates a whole electricity network system from generation to end use which is the ultimate smart grid concept. A central control system will regulate all the elements involve in the electricity network like generators in the power plants, distributed generation, transmission, industrial consumers and residential consumers. In the residential sector smart meters, Plug-­‐in hybrid electric vehicles (PHEVs), solar panels could be connected to the smart grid. Smart meters is a kind of energy meters that sends electronic meter readings to energy supplier automatically for monitoring and billing purpose.

Smart grid is not one particular technology rather it consists of a suite of technologies. Smart grid technologies offer a number of potential social, economic and environmental advantages, such as:

  • Improve the system reliability, quality and security of supply
  • Enhance grid operation and grid infrastructure
  • Reduce operating costs for utilities
  • Reduce expenditures on electricity by different consumers
  • Create new jobs
  • Reduce the environmental impacts
  • Bring consumer satisfaction

Feasibility of technology and operational necessities

Smart grid is a two way communication network and becomes smart by sensing, exchanging information and intelligently applying control and feedback. Smart grid involves diverse technologies that extend the electricity system from generation through transmission, distribution to the end use consumer. The following figure shows an entirely enhanced electricity system which will combine all the technologies.

There are several activities as shown in the above figure, namely,

  • Wide-­‐area monitoring and control involves real-­‐time monitoring over the generation and transmission side and assist system operators for protection, control and automation through the power system network. Systems and software are used for decision making, to solve disturbances and to develop reliability.
  • Information and communications technology integration means involvement of different communication devices for bilateral communication through different stakeholders. This integration results real time operation for more efficient controlling of the grid network.
  • Renewable and distributed generation integration in the smart grid means the involvement of clean technologies. Renewable and distributed generation could be integrated with smart grid any point from generation to consumer.
  • Transmission enhancement applications increases the reliability and security of the transmission network. Various technology and applications are used in transmission system. Flexible AC transmission systems (FACTS) devices could be used for better control and maximum power transfer, High Voltage DC (HVDC) technologies to attach offshore solar, wind to main grid, while High-­‐temperature Superconductors (HTS) can help cut transmission losses.
  • Distribution grid management also increases the reliability and security of the distribution side. Real time monitoring through different technologies helps to manage fault location, adjust voltage level, power optimization, etc.
  • Advanced metering infrastructure (AMI) replaces smart meter and can do bilateral communication by sharing information and data from consumer to utilities and vice-­‐versa.
  • Electric vehicle charging infrastructure involves several intelligent features for smart charging (grid-­‐to-­‐vehicle) when electricity demand is low.
  • Customer-­‐side systems involve regulating electricity for different prices and loads, distributed generation, efficient appliances, energy storage devices etc.

The table below shows different technology areas in the smart grid network and the hardware and software used in the entire network to intelligently control and regulate the network. For example for information and communications technology integration to the whole system some communication equipment’s like power line carrier, mesh network and routers, relays, switches, gateway, computers required as hardware, and Enterprise Resource Planning (ERP), Customer Information System (CIS) required as software and system.

Feasibility in developing countries

In developed countries smart grids are in use and widely supported by Europe and USA. However, in many developing countries there is shortage of electricity, lack proper electricity infrastructure and coverage of electricity, but, they have high electricity demand, high transmission and distribution loss in the perspective of fast financial growth, huge urban population and lack of modern technologies. These conditions create both challenges and opportunities for smart grid implementation. Most of the developed countries have welcomed the smart grid technology in order to meet their green energy objectives. Japan, China, Singapore, South Korea and Australia have issues regulatory mandates that require utilities to modernize the existing grids. On the other hand, lack of financial support has restrained widespread acceptance of smart grids in countries of Malaysia, Indonesia, Thailand, and the Philippines (Mulder et al., 2012).

Application of smart grid in developing countries can bring huge opportunities for electricity infrastructure. By reducing losses and improving efficiency of the power system smart grid can build reliable and secure electricity network. Renewable and distributed generation can easily be connected to the national grid.

The figure below illustrates one electrification pathway in developing countries which commences from rural areas and the final destination is the national grid. In rural areas, electrification can be through solar, wind, biomass or hybrid systems which in turns to the micro/micro-­‐grid. This will connected to the national grid and then to the regional grid. Involvement of smart grid helps the successful implementation of the whole process. The most important factor for smart grid deployment in developing countries is capital investment.

Status of the technology and its future market potential

The red/white table above shows the development trends of smart grid technologies. The table shows maturity level and development trends of different components of smart grid. For example, renewable and distributed generation integration in smart grid is a fast developing area. Within this technology area, battery storage technology is less mature than other distributed energy technologies due to the involvement of high cost and low life time of battery. Information and communication technology integration technology area is mature and fast developing. Transmission enhancement area is also mature but within this technology area application of superconducting technology is still in the developing phase of maturity. Distribution grid management is in the developing phase of maturity and development trend is moderate. The table shows that this technology is still in developing level. However it shows fast developing trends.

National smart grid initiatives

  • United States: United States has taken several projects worth USD 4.5 billion in its efforts to the deployment and demonstrations of smart grid. These includes USD 3.48 billion for the conversion of the existing grids into smart grids, USD 435 million for provincial smart grid demonstrations and USD 185 million for energy storage demonstrations (IEA, 2011).
  • Canada: Ontario in Canada has smart meters in almost every home and small businesses. By 2010, 4.5 million of smart meters has been installed and approximately 1.6 billion consumers has been using the time-­‐of-­‐use billing system (OSGF, 2011).
  • Brazil: APTEL (Associação de Empresas Proprietárias de Infraestrutura e de Sistemas Privados de Telecomunicações) , a utility company working jointly with the government on a pilot project on narrowband power line carrier. A number of utilities in the country are also running smart grid projects on trial basis. These includes a power distributor, which installs smart meters at the consumer side as a result to establish secure networks and minimize peak demand and losses (IEA, 2011).
  • United Kingdom: OFGEM ( Office of the Gas and Electricity Markets an energy regulator company of UK established Registered Power Zone to inspire utilities to promote and establish advanced methods which will interconnect distributed generators to the electricity network. OEGEM invested GPB 500 million under the banner of Low Carbon Network fund to support DSO (Distribution System Operator) programs which will be used for testing new technology and commercial activities (IEA, 2011).
  • Spain: In 2008, the Spanish government asked utility companies to exchange the current meters through smart meters and the consumers did not have to pay any further cost to the companies. The utility company Endesa sets their target to install smart meter to over 13 million consumers from 2010 for 5 years period and utility company Iberdrola will install around 10 million meters (IEA, 2011).
  • France: ERDF (Électricité Réseau Distribution France) one utility company in France started a pilot project to replace 300000 smart meters. If that project succeeds then ERDF will replace around 35 million smart meters within 2012 to 2016 (IEA, 2011).
  • China: The Government of the People's Republic of China has taken a huge and long term plan to invest on power grids, a significant amount of which goes on smart grids. In 2010, state grid company of China started pilot smart grid program. By end of 2011, China has installed approximately, 300 million smart meters. (KEMA, undated). By 2020, investments on smart grid will reach approximately USD 96 billion in China (IEA, 2011).
  • Japan: Smart grid technology with consumer’s participation in utilizing the real-­‐time metering information is increasing in Japan. Japan’s large-­‐scale demonstration projects are some of the examples of this emerging movement. In 2010 Japan has invested around USD 849 million in large smart grid projects, such as Yokohama City project (Mulder et al, 2012).
  • South Korea: Establishing smart grids to countrywide by 2030 is a national goal for the government of South Korea (IEA, 2011). South Korean Government has launched Smart Grid Roadmap to promote this technology (MKE & KSGI, 2010). In 2010 South Korea has invested around USD 824 Million in large smart grid projects (Mulder et al, 2012).
  • Australia: In 2009 the government of Australia announced a pilot project named “Smart Grid, Smart City” and financed AUD 100 million to establish a commercial-­‐scale smart grid. Integration of renewable energy with smart grid is going under process (IEA, 2011).

How the technology could contribute to socio-economic development and environmental protection

Smart grid implementation could increase benefits by improving in reliability, economics, efficiency, environmental, security and safety.

Social-economic development opportunities

  • The manufacture, installation, operation and maintenance of smart grid involve employment creation and enterprise development. (A study showed that in USA, USD 10 billion investment in the smart grid deployment may possibly create around 239,000 new or retained jobs for each years (Atkinson et al., 2009)).
  • Smart grids can lead to higher consumer satisfaction. Lower costs, better reliability and consumer control will increase satisfaction to all consumers.
  • Smart grid creates direct economic benefits. Utilities can offer more reliable energy and manage their costs more efficiently by reducing operation costs. Consumers have access on energy information and tariff choices. Several industries could spread out to introduce technology into the generation, distribution and storage sector.
  • Improving energy efficiency and integrating renewable and distributed generation enabled by smart grid could save around USD 36 billion yearly by 2025 (US DOE, 2010).

Financial barriers

Customer expense is a major impediment for implementing smart grid. A survey among utility manages indicated that around 42 % were mentioned ‘customer expense’ as the major impediment for implementing smart grid (Oracle, 2009). Smart Grids rely on sophisticated technologies which incurs large investment. Decision makers must therefore weigh the expected benefits against the expected costs. However, there is a large degree of uncertainty regarding costs, making it difficult for decision makers to assess how much it will cost to implement a smart grid system. An example in USA showed that installation cost of smart grid technology was four times the expected cost (EPA, 2009).

Technological barriers

Out of these utility managers, 30 % mentioned lack of technology as the major impediment for implementing smart grid. Low life span of technology and low standardized technology showed the utmost threat for implementing smart grid (Oracle 2009).

Regulatory Barriers

Regulatory barrier is another issue for implementing smart grids. Generally, in developing countries power system is regulated by the government, and the decision making authority takes much time to finalize a project. Sometimes the decisions are uncertain which needs several reviews, and may take several years for decisions to be made. Actions through local to state level can result in cost addition and supervisory risk of implementing a smart grid project (Oracle, 2009).

Lack of awareness

Smart grid is a combination of different technologies which are developing very quickly and because of this new concept there are lots of confusion between different stakeholder’s customers, regulators, utilities and policymakers.

To implement smart grid and remove the barriers, it is necessary to develop policy options which will suite both the consumer and utilities. Some important issues must be addressed in the policy options:‐

  • The government should provide funding
  • Development of national standards for electricity network and grid
  • Development of national communications infrastructure
  • Increase awareness amongst all stakeholders


Smart grid technologies can reduce significant amount of GHG emissions increasing efficiency and conservation, facilitating renewable energy introduction and facilitating Plug-­‐in hybrid electric vehicles (PHEVs).

By improving energy efficiency and conservation in U.S., over half of the GHG emission can be reduced. These include transmission loss reduction, real-­‐time equipment monitoring, managing peak load, and electricity pricing information sharing to the consumers. Sharing information to consumers where the consumers regulate electricity consumption according to different pricing could reduce GHG emissions which could be equivalent to 31-­‐114 MMT CO2/year in 2030 ( EPRI, 2008).

Generating more energy from renewable sources and integration with smart grid could cut potential GHG emission which is equivalent to 19 to 37 MMT CO2/year by 2030 (EPRI, 2008). Rooftop solar can be an example of renewable energy integration.

Comparing with traditional vehicles using fossil fuels, PHEVs emission is much lower. Plug-­‐in hybrid electric vehicles integrated with smart grid could reduce GHG emission, equivalent to 10-­‐60 MMT CO2/year by 2030 (EPRI, 2008).

Financial requirements and costs

The cost-­‐benefit analysis for smart grid involves three stakeholders: utilities, customers and society. Although the major benefit from some technologies is emission reduction, smart grid offers a wide range of benefits.

Utilities: The utility companies usually are responsible to setup primary smart grid infrastructure which requires huge capital investment. The price for each smart meter ranges from USD 70 – 140, and the installation cost ranges from USD 7-­‐ 15 in U.S. (EPRI, 2011). Estimations show that to build up a national smart grid infrastructure would cost around USD 338-­‐ 476 billion for twenty years. At the same time, smart grid would create benefits worth of USD 1,294-­‐ 2028. California’s Pacific Gas and Electric (PG&E), fitted 7.9 million smart meters from 2007 up to May, 2011. The costs of these meters were USD 2.095 billion, and by 2011 the company received benefits worth of USD 111.3 million (EPRI, 2011).

Consumers: Consumers can regulate their electricity usage during peak load and gain benefits in terms of less electricity bill. The consumers also benefit from better quality power. A project in Peninsula, Washington funded by DOE resulted in 10 % reduction of utility bills (Gridwise Alliance, 2011).

Society: Improved reliability and environmental benefits of smart grid benefits society. Estimation from EPRI states that USD 102-­‐ 390 are the benefits by reducing CO2 emission and USD 281-­‐ 444 billion are the benefits by improving reliability (EPRI, 2011).


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