Time for an upgrid

Global power grids need investment and fresh thinking if they are to cope with low-carbon living, say Richard Noakes and Mark Hudson

The growing popularity of wind and solar generation is putting workload pressures on distribution networks for which they were not designed. Many countries are seeing renewable output levels at all-time highs. In November last year, for example, 59 per cent of Spain’s power was generated by windfarms, while the Californian system operator reported a record solar peak in June 2012 with nearly 1GW on line.

At the same time, electric vehicles are beginning to have an impact on electricity demand. Should uptake prove strong, there could be heavy and varying demand at largely unpredictable locations on the low-voltage network.

At present, the grid is not flexible enough to deal with hourly capacity swings resulting from unpredictable supply and demand patterns. Investment is needed now to safeguard the future state of the network. Additional storage and line capacity is required in both distribution and transmission. Other viable options for increasing network capacity, including interconnectors between countries to share and disperse the workload (as Denmark, Germany and Sweden have been doing for years) must also be considered.

Future investment will come not only from traditional contributors – grid and renewable companies – but will extend across distribution firms, research specialists, private investment companies, banks, international organisations and emerging players in the storage capacity space. Moreover, energy consortia such as the windfarm partnership between Scottish Power Renewables and Sweden’s Vattenfall are increasingly being set up to share investment in energy-efficient devices and network capacity.

That said, it is hard to envisage a scenario where investors will put aside their vested interests for the benefit of the entire value chain. In the UK, due to a consumer-focused smart meter rollout, not enough attention has been placed on managing distribution automation of the grid. In France, lack of involvement on the part of the retailers and customers and reliance on distribution company investors has been met by consumer opposition, which may affect the country’s ability to meet its energy efficiency objectives. In France, the focus is on reducing demand volatility. The UK has chosen to go down the retailer route, putting smart grid investments at risk.

So what would be an appropriate model to ensure smart grid investment delivers value for all parties? One answer could be an entity created by the distribution company, funded by all parties and validated by the regulatory bodies. We can look for precedent to American Electric Power, which set up an independent organisation to invest and operate a central service for customer choice and electricity flow reconciliation.

Alongside more investment, the industry’s overall approach to distribution automation needs to change. Chiefly, there ought to be a more structured and holistic approach to forecasting both supply and demand. Forecasting has traditionally been conducted in silos: the supply arm of the business focusing on demand, the trading arm on derivatives, and the renewables arm on the weather, production and revenue forecasting.

Finally, investment in information and the management of information flow between systems is vital. The solution may lie in the cloud and cloud services, which different players can access and contribute to across the network, diminishing vested interests and silos. A good example of how this has been put into practice in another industry sector is the GS1, a global non-profit organisation dedicated to improving supply chain efficiencies using a cloud-based recall service tracing and removing potentially harmful food products from the supply chain.

Ultimately, it is for the world’s regulators to grasp the nettle on this. To enable them to make the right decisions and to ensure smart grid and smart network investments deliver real value for money, we need better information sharing, forecasting capabilities and industry co-operation.

Richard Noakes, enterprise architect, and Mark Hudson, industry consultant, HP Utilities

This article first appeared in Utility Week’s print edition of 19th October 2012.

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