Move smart grids from theory to reality

Regulatory frameworks and innovation have set the scene and the time is ripe to move smart grids from theory to reality, says Robert McNamara.

Smart grids are principally about the application of existing and new technologies to electricity distribution networks to make them more intelligent.

With this new found intelligence, the networks will be better able to overcome many of the barriers associated with the energy trilemma. Sustainability could be addressed through easier incorporation of low carbon distributed generation and a more efficient energy system. Security of supply could be helped by smart grid technologies that make better use of the network’s capacity and aid the incorporation of intermittent sources of generation, such as wind.

Crucially, smart grids could also deliver significant benefits to consumers through products like smart meters, new energy tariffs and intelligent domestic appliances, which, when used together, can inform consumers of their energy usage and costs, leading to more energy-efficient behaviour and lower bills.

Away from the benefits they could deliver to the energy system and consumers, smart grids offer substantial positives for UK plc. SmartGrid GB conducted research that found smart grid development could deliver major savings to utilities. By upgrading networks smartly, as opposed to using traditional reinforcements, electricity network operators could save up to £19 billion between now and 2050. An export economy of £5 billion is also achievable in the same period, according to our report, Smart Grid: A Race Worth Winning?

Fortunately, Britain is a world leader in smart grids. Its regulation is unique and places a strong focus on innovation. The Department of Energy and Climate Change’s  (Decc’s) Smart Grid Vision & Routemap provides clear leadership. Its industry and academic communities have the skills and expertise required to bring smart grids to life.

The funding for smart grid projects and demonstrations has been a particular success story. The Low Carbon Networks Fund (LCNF), for example, allocated £500 million for electricity networks and their industry partners to trial innovative solutions to help drive operational efficiencies, explore new business models and deliver better value to consumers. The good work achieved by the LCNF will be carried on by the new network innovation competitions and network innovation allowances. In all, these efforts have helped establish Britain as one of the most fertile and exciting locations for smart grid projects in the world.

However, there is still much that needs to be done to make smart grids a reality. The country is in the early phases of a decades’ long race. As the general election draws near, and with energy policy set to be a major battleground, it is important the case continues to be made for smart grid development.

In late 2014, SmartGrid GB worked with Navigant Consulting to study the cost-benefit case of smart grid development and produced a report, Making Smart Choices for Grid Development. This document makes a series of recommendations that would help Britain realise the opportunities smart grids have to offer. Three, in particular, are straightforward opportunities to help smart grids grow.

First, we need to dispel the perception that key smart grid technologies are not market ready. Many are. The report looked at 11 key smart grid applications and found an overall positive cost-benefit case of £2.8 billion in favour of investment. In particular, the research found that three technologies – automated voltage control, self-healing grid, and enhanced fault prevention – had especially strong cases. Utilities would do well to actively investigate the deployment of these technologies when devising their smart grid investment strategies.

Second, there exists a significant challenge in terms of understanding which parts of Britain’s fragmented energy system should pay for smart grid upgrades, and which parts will profit. This was identified as a major issue. In many instances, electricity distribution network operators shoulder lots of the upfront costs of smart grid development even though other parts of the electricity system derive most of the benefits. There is a problem relating to who owns the costs and who owns the benefits. This problem should be addressed by a small, cross-industry taskforce which could assess the cost-benefit distribution of smart grid development across the supply chain, from generation to end-user.

Third, smart grid development is perhaps more usefully seen as part of the much broader challenge of modernising UK infrastructure in general, from transportation to the built environment.

Smart grids, for example, will enable electric vehicle rollout and associated developments such as smart cities. However, both are mutually reinforcing. Until electric vehicles and electric heating are widely rolled out, one could argue that the impetus to modernise the electricity grid will be minimised. Therefore Decc and Ofgem should investigate whether their existing smart grid initiatives might benefit from more engagement with related industries, such as automotive or construction, as well as other government departments.

Britain is perfectly positioned to maintain its leadership role in smart grid development. However, it is vital that the country does not rest on its laurels. We must continue to push forward in the innovation of new technologies, as well as the ways in which all parts of the value chain work together to take the smart grid from theory to reality. Smart grids represent a clear opportunity for Britain, and the work of SmartGrid and Navigant has identified a series of clear ways in which those opportunities could be seized.

Robert McNamara, executive director, SmartGrid GB