Around the world there is strong consensus that we are about to see significant changes in the way we use and generate electricity.
Innovations in areas such as renewable and micro-generation, heating and the mass commercial development of electric vehicles (EV) will place new requirements on the networks that transmit and distribute electricity.
Meeting these requirements will necessitate large scale investment in these networks to make them more intelligent, efficient and secure. In time, these investments will be replicated in every country around the world.
The transition to this ‘smart grid’ will cost billions of pounds, but will result in a more efficient and flexible grid that will meet the needs of business, consumers and governments in a secure and affordable way for generations to come.
A number of countries have quantified their benefits and stand ready to take advantage of the growth it might deliver. However, there is currently less clarity in the UK about how to make it happen, or the speed at which the transition needs to take place.
To make progress on these issues, it is first necessary to get a deeper understanding of the quantum and breadth of the potential benefits that smart grid might deliver and how those benefits relate to the costs.
Ernst & Young has recently released a report commissioned by SmartGrid GB outlining the full economic case for smart grid and providing a detailed assessment of the potential benefits that might accrue to the British economy as a result of its development.
The report also looks at the core benefits that will be realised from investing in a more efficient network, quantifies the wider benefits that will accrue across the industrial supply chain, and the important downstream economic activities that will be enabled as a result of smart grid.
Further, the report explores the export potential that could be realised if UK companies were to become global leaders in the development of smart grid technologies and services.
What is smart grid?
The most widely-adopted definition to date is “(A smart grid is) an electricity power system that can intelligently integrate the actions of all users connected to it – generators, consumers and those that do both – in order to efficiently deliver sustainable, economic and secure electricity supplies.”
Benefits of smart grid
o The main direct benefits of a smarter grid include:
o Reduced total energy use and reduced peak demand (largely through changing consumer behaviour)
o Reduced energy losses
o Greater power reliability, safety and quality
o Reduced capital and operating costs
o Reduced carbon emissions
o Facilitation of the decarbonisation and electrification of energy
o Lower energy prices
Maximising impacts and benefits
So how does one maximise impacts and benefits of smart grid as an enabling technology for secondary industries?
A smart grid has a fundamental role to play to ensure that the UK captures the full benefits that could result from the timely growth of secondary industries. Without a smart grid, the full potential value of many of these technologies could be lost.
Although conceptually different, in practice these two mechanisms can be difficult to distinguish or separate, with many smart grid solutions directly addressing both aspects at the same time.
Some brief examples of how smart grid solutions can impact on a range of other energy system components are:
Electric Vehicles
Smart grid techniques can allow faster home EV chargers to be connected without physical network reinforcements, allowing consumers to buy EVs without a potentially long delay (and potentially high cost) to be allowed to install such a charger.
Smart grid demand response technologies can allow Electric Vehicles to charge off-peak at a substantially lower cost than would be possible in a conventional grid.
This enduring cost saving will be key in encouraging more consumers to buy EVs rather than traditional vehicles.
Electric heat
Similarly to basic EVs, smart grid solutions allow electric heaters (with some form of heat storage) to use cheaper electricity at off-peak times, making them more cost-competitive against other heating options.
Smart grid techniques can also allow connection of a greater heating load without fear of overloading the network, or the cost and delay of physically reinforcing it. These two aspects will materially influence the uptake of electric heating solutions.
Renewables generation
Intermittent renewable generation varies with the natural energy source that drives it (wind, sun, water, etc), creating various macro-level supply / demand balance issues and localised network capacity and power quality challenges.
Smart grid techniques can mitigate all of these at a lower cost than traditional alternatives, reducing the barriers to connecting generation and allowing projects to be more economic.
Seeing energy differently
A fundamental change in how we use and store energy is inevitable. As more energy efficient technology becomes accessible to consumers, investment in upgrading the distribution network is vital.
Our report indicates that an incremental £23billion net present value (NPV) will need to be spent between now and 2050 on smart investments to upgrade the distribution network. However, this is significantly cheaper than pursuing a conventional investment strategy in grids.
Andy Boak is head of cleantech and sustainability at Ernst & Young in Scotland
