Now that we know what the smart grid is and why we need it, let’s take a look at its benefits. First, it addresses the issue of intermittency, one of the major challenges facing the incorporation of renewable energy into the grid: most renewable sources of energy provide more or less power depending on conditions (high wind, rainy days). When digital technology is applied to the grid, resources such as wind and solar are better able to communicate how much of the resource is available for consumption. This enables distributors to better manage and respond to clean power fluctuations.
Our energy grid will also become more decentralized. Small-scale clean power generation, such as solar panels, produce energy and consume it onsite, decreasing both the losses from distribution and overall grid vulnerability. Not only will the smart grid allow for more renewables to come online, it appears a decentralized grid may be more stable than a centralized system.
The environment will also win. This anticipated growth in renewable energy would decrease greenhouse gas emissions by displacing the construction of new traditional fossil-fuel power plants. Carbon-intensive power plants can gradually be replaced with renewable sources of power generation, reducing CO2 emissions. Yet by how much? According to the Electric Power Research Institute, it is estimated that all “mechanisms enabled by a Smart Grid can avoid the equivalent of 60 to 211 million metric tons of CO2 per year in 2030.” To put this in perspective, EPRI’s most aggressive estimate means that the smart grid’s CO2 reduction capability could equate to the removal of to 38.6 million passenger vehicles, 45.4 coal fired power plants, or the electricity used in 29.3 million U.S. homes.
Utilities are also poised to benefit from smart grid implementation, as it will decrease need for new capacity build and enable them to gather greater data and information on energy consumption from the end-user. Forecasts outlined by the U.S. D.O.E.’s Energy Information Administration (EIA) predict that if smart grid and energy efficiency technologies are pursued, new-build capacity would be halved and the overall price of a meeting demand would be cheaper. An intelligent grid will also enhance operational efficiency, as failures will be self-diagnosed by the grid allowing for a faster response than a customer phone-in.
If utilities embrace smart grid technologies, the subsequent growth in renewable generation will create a clean energy workforce. The Obama Administration has committed to spurring the renewable power industry and driving the development of green jobs by investing up to $150 billion in clean energy research and development. A recent study by the Pew Center anticipates that clean energy jobs will grow in the coming years due to shifts in favor of energy efficiency, better environmental protection, higher venture capital investments, and stronger policies deploying renewable energy and energy efficiency measures. In 2008 alone, investors put over $5.9 billion into U.S. businesses operating in clean energy. Clearly, the money is talking, and it’s saying “clean energy.”
The American consumer may be the biggest winner of all. With today’s system, consumers purchase electricity without knowing how much it costs. A smart grid can change this by giving consumers information on how much they are using, the price, and how much the price will change in the near future. This information may encourage consumers to alter energy consumption behavior, decreasing the need for further capacity additions by reducing demand. The consumer will not only save money but will also gain greater control of power purchasing. Users will play a much more prominent role in the energy marketplace and feed surplus clean energy back into the network grid. Solar panel owners become energy suppliers and can be compensated financially. This concept, executed through either net metering or feed-in tariff legislation, is gaining political momentum nationwide.
The smart grid has many stakeholders: citizens, utilities, the environment, legislators, and the private sector. What is clear is that they will all benefit from smart grid implementation. The question is: how do we get there? Next week, we’ll take a look at where the U.S. stands today in regard to upgrading our grid.
I don’t see smart grid working in a much-deregulated environment. One objective should be the decrease of power flow over transmission lines, so as to favor local generation / consumption (clean or not). Will lead to a constant choice of what geenrators should be used, at a local stage, where electrical considertaions have to be mixed with financial rules : no authority exist to run that.
Note that transmission lines should (on the long-term) be used only for carrying power from a) big plants , and b) wind farms where the geographic dispersion is a help for smoothing gaps and peaks.