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06/07/2015

Empowering the Consumer through the Smart Grid

Cet article a obtenu le 9ème prix au concours étudiant Génération Energies sur le thème "Comment repenser le nouveau monde de l'énergie à partir des réseaux intelligents ?", organisé par Sia Partners et en partenariat avec RTE. Félicitations à Gil Shefer et Cheng Luo (Sciences Po Paris), auteurs de cet article.

The past decade has given rise to remarkable improvements in renewable energy generation, yet in many countries the underlying grid remains outdated, inefficient, and lacking in integration. These constraints have inspired the next evolution in the energy world, known as the “smart grid,” a fluid concept without any universal definition[i]. The smart grid aims to reinvent the energy world through greater consumer independence and unprecedented decentralization, yet how will these changes be attained?

Consumer Independence

“Prosumers,” a term denoting consumers that have already installed renewable energy generating equipment in their homes, purchased an electric vehicle, or rely on advanced thermostats that help control energy consumption, are a striking example of consumers’ willingness to embrace advancement. The smart grid promises to facilitate this change by bringing the renewable energy revolution to millions of consumers through three noteworthy innovations that put the consumer in control: net metering, smart metering, and grid-enabled EV[ii] infrastructure.

Net metering is a new business model that allows consumers with on-site energy generating equipment to receive financial credit for any excess electricity they send back into the grid. In the U.S., the average annual growth of customer participation in net metering between 2003 and 2010 was 56%, with a 61% increase between 2009 and 2010 (see illustration 1)[iii].

For some customers in California, excess electricity can be sold back to the grid for the full retail rate, including costs that would normally include generation, transmission and distribution. The prospect of financial reward could encourage many more consumers to become self-sufficient energy producers. 

The smart meter is another innovation that is gradually becoming scalable. Unlike conventional meters, a smart meter allows the consumer to “assess usage, develop tariff schedules that adapt to changing customer needs, control the load on the grid and manage the flow of power and gas more effectively.”[1] Although the penetration rate of smart meters was only 23% in the U.S. as of 2014 (see illustration 2)[2], China is forecasted to reach a 74% penetration rate by 2020, illustrating the rapid adoption of this technology[3].

Another drastic impact on consumers could come in the form of smart grid enabled EV charging stations, designed to provide dependable points of service to consumers while not overloading the grid. Some of the principle benefits include “load smoothing and greater utilization of base load capacity during non-peak periods, lower cost provision of ancillary grid services, and easier integration of variable renewable electricity sources[4].” Current research may even allow consumers to feed energy from EVs back into the grid. Notwithstanding this research, E.U. investments in EV infrastructure have been lagging compared to smart metering (see illustration 3), suggesting this technology is still in its infancy.

Unprecedented Decentralization

While individual consumers can leverage smart grid technology to gain greater independence on a household level, developments in energy storage and micro grids[iv] can work on a societal level, decentralizing energy for the benefit of both communities and utilities, all while benefiting the entire grid.

Energy storage has become increasingly critical to supporting intermittent renewable energy sources. However, a lesser known, but equally novel application of energy storage is “asset management,” where a storage unit is connected to individual homes or businesses to avoid costly increases in grid connection[v]. Each time the home uses new, more energy-consuming technologies, a local battery supplements the grid. Unsurprisingly, hybrid solar PV and storage solutions have already become popular throughout the world (see illustration 4), particularly in Japan, where electricity prices were up by 20% for homes and 30% for businesses in the aftermath of Fukushima[5]. Consumer-level storage may also lighten grid-wide demand, allowing utilities to better manage peak periods.

Japan provides yet another example of smart grid decentralization, in the form of self-sustaining micro grids. In the town of Litate, just 39 km from the Fukushima nuclear power plant, villagers formed their own power company and are building a 50KW solar installation for local energy consumption. Excess electricity will be fed into the grid, generating revenue that can be reinvested into the community. Universities like UC San Diego, which operates a 42MW mixed-use energy installation, have also made micro grids a sustainability objective. These self-sufficient grids can lower energy costs, utilize uninhabitable land, and provide revenue for communities in need- all while providing excess electricity that benefits everyone connected to the grid, as well as the environment.

Conclusion, a Path Forward

From its inception, electricity has always had a transformative effect on consumers. The smart grid could be the next installment in electricity’s trajectory - a response to a world where resources are scarce and the looming specter of climate change grows more severe each day. The smart grid provides a novel, interconnected response to modern constraints[vi], asking each consumer to take ownership of their needs for the benefit of the entire grid.  As the examples herein illustrate, the smart grid can make a meaningful impact on the energy world, diminishing grid-wide congestion while simultaneously empowering individuals and communities. The path forward, however, is far from secure. Issues related to privacy, cyber security, and economic scalability, still stand in the way of many smart grid innovations. How these challenges are managed may truly determine whether the smart grid has empowered consumers, or disenfranchised them.

Gil Shefer and Cheng Luo 

PARCOURS
Gil Shefer et Cheng Luo sont tous les deux étudiants à Sciences Po Paris.

 

Notes

[i] “Although the definition of smart grid varies from country to country, the underlying concept is the same: an electricity system that uses information technology (IT) to connect those who generate and transmit electricity with those who consume it.” (Smart Grid Around the World: Selected Country Overviews, 2011); also see Energy Independence and Security Act 2007§1301, Statement of Policy on Modernization of Electricity Grid (USA); 12th Five Year Plan of the People’s Republic of China (PRC).

[ii] EV stands for Electric Vehicle.

[iii] Although early figures for net metering are promising, participating consumers still only represented 0.1% of all customers in 2010.

[iv] According to the United States Department of Energy, a micro grid is defined as “a group of interconnected customer loads and distributed energy resources (DER) within clearly defined electrical boundaries that acts as a single controllable entity that can connect and disconnect from the grid (known as “islanding”).”

[v] Changing the grid connection could require the utility to physically change wires and other apparatus on the home or business.

[vi] Exxon Mobil forecasts 35% global energy demand growth by 2030.

 

Sources

[1] “How Smart Meters are Giving Power to Customers,” Gemalto Publication, 2014

[2] “The US Smart Meter Market Is Far From Saturated,” Steven Lacey, 2013, http://www.greentechmedia.com/articles/read/smart-meter-penetration

[3] “Installed Base of Smart Meters in China to Reach Nearly 380 Million by 2020.” January 15, 2013, http://www.navigantresearch.com/newsroom

[4] “Electric Vehicle Grid Integration in the U.S., Europe, and China: Challenges and Choices for Electricity and Transportation Policy,” International Council on Clean Transportation (ICCT), 2013, http://www.theicct.org/sites/default/files/publications/EVpolicies_final_July11.pdf et http://www.theicct.org/electric-vehicle-grid-integration-us-europe-and-china>

[5] “Can Japan Recapture Its Solar Power?” Peter Fairley, December 18, 2014

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