With global electricity networks at varying stages of development, author of smart grid blog Memoori Allan McHale asks from what point are smart meters and grids best developed.
In Northern Europe the electrical transmission network is robust and reliable, as much of it, for some years has been regularly refurbished and fitted with automatic controls. In Germany, this has allowed electricity from renewable energy sources, which now account for some 15 per cent of the total generating capacity, to be accommodated without any problems.
In some quarters they are confident that this figure can probably be doubled before they need a fully digitised network in place. They are now initiating smart metering projects and no doubt the whole communication and information structure will fall in place with time.
At the other extreme is the US, the premier source of innovation and entrepreneurship in IT and communications and the application of this technology to produce a fully digitised electrical network.
But before it can become smart and efficient enough to accommodate this brave new low carbon renewable energy world, the US electricity grid needs a lot of work. The average annual outage in the US can be as high as just over 200 minutes, which is costing them dearly. It is not surprising therefore that electrical generation and transmission infrastructure in the US is receiving so much attention from the President’s desk, with much support from stimulus funds and generous tax hand outs.
It is no surprise therefore as to where technology advances and investment will be made during the next five years. Smart meters have taken the majority of investment but the move now (and not before time) is to attend to and spend on the aging transmission and distribution network.
So far the largest spend for any single segment in the smart grid business has gone to smart meters. The reason for this is that the basic network grid topology was built on stand-alone facilities offering limited if any interactive networked intelligence from the substation, distribution and transmission side with even fewer capabilities on the user-demand side.
With limited network capabilities in place, the US power companies pushed to offer end-user network intelligence for every user on the demand side of the grid and this was thought necessary to quickly show smart grid utility return on investment and power generation savings. The basic demand-side theory was that if you could gather intelligence from the power grid demand side first, you could immediately reduce peak load consumption offering tremendous capital and raw material recurring savings.
This approach is now being questioned because it is not being built on a firm foundation of a reliable, robust and flexible T&D network. As explained in last month’s blog and it now seems more likely, that demand response and pricing signals to homes and businesses could be better achieved via the internet through a combination of home area networks and energy management software.
However, electrical utilities would much prefer having an AMI infrastructure which they control. Developed countries have elected to adopt different strategies when bringing their transmission and distribution networks into the smart grid age and time will tell which strategy has been most successful.
Most developing countries seem to be going for the US model. However, in China the majority of their investment is going into constructing new facilities and here they are incorporating digitised systems into their transmission and distribution networks.
Other BRIC members have been more attracted, it would seem, in starting their smart grid programmes by installing smart meters. But when it comes to volume of spend China will eclipse all other countries by 2015 and the major segment of the business will be automating the control and balancing of demand and communications in transmission and distribution networks.
This abstract has been taken from memoori’s Executive Brief – Business Opportunities in the Smart Grid Industry. It is a monthly world review of the issues that will determine and identify business opportunities in the smart grid industry, particularly focusing on merger, acquisition, investment and alliance.
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