The power to change: why utilities are embracing smart grids

Energy companies have been facing a range of challenges in recent times, from meeting the needs of growing populations to whole categories of new usages like data centers and electric cars. All the while, they have strict environment targets to hit. Every day humanity powers through more than a million terajoules of energy. With an energy industry facing a need for dramatic transformation, how do we ensure the lights stay on?

Challenges abound for the energy industry today, but perhaps the biggest challenge is overall uncertainty. There are uncertainties surrounding the supply side of oil and shale gas production, plus geopolitical factors that affect demand for oil and gas in major importing countries. There has been a rise in economic nationalism and protectionism, plus a growing opposition to ongoing reliance on hydrocarbons for energy. Energy derived from renewable sources has become markedly cheaper, and there has been big growth in the development of electric vehicles and a major shift towards their use – electric vehicle growth in Europe alone grew a whopping 42 percent in H1 2018 versus H1 2017.

All of this has made predicting future demand for energy more complicated. All of this takes place in an industry that is built on very traditional infrastructure that is not very scalable. Providers today are compelled to obtain more energy from green sources, comply with stringent – and important – regulations and operate in a competitive marketplace. The past ten years have seen energy providers undertake a mission to shift to a smarter way of operating: making power generation and transmission more efficient using smart grids and enhancing operations at the consumer end using smart meters to cut data collection costs and provide better insights is the way forward. Where are we with smart grids?

What are smart grids?

To begin with, a primer on smart grids. Smart grids are electricity networks that intelligently integrate the behavior and actions of the users connected to it, with a goal of creating more efficient, sustainable, secure electricity supplies. They combine multiple types of renewable energy sources to build a more comprehensive, flexible energy system for the future. Energy providers have now been working towards smart grids for over a decade.

Furthermore, smart grids that use improved monitoring, control and automation technologies can help energy providers enable new business models and develop system-wide benefits such as reduced outages, improved response times, and even deferral of investment in the grids themselves thanks to their sustainability.

What are utility providers doing?

Around the world, utility companies are building smart grids.

Governments are committing to a smart grid future and viewing it as a strategic investment in their infrastructure that will help them in the short and long terms: smart grids drive economic benefits and can also assist countries with their commitments to carbon emission reduction targets.

The global smart grid sensor market has been valued at around $174 million in late 2017 and is forecast to grow to $1.45 billion by 2025: that’s a CAGR of around 30 percent per year, a healthy growth rate. In North America, this growth rate is being assisted by increased research and development expenditure by energy companies: advancements in measurement science solutions for smart grid technologies has been rapid and is making them more prevalent and more affordable, and as such, demand for these grid sensors is increasing.

China has been pouring investment into smart grid technologies and a couple of years ago overtook the USA as the world’s biggest smart grid market: China invested around $4.3 billion in smart grids, and the country now has the most electric vehicle charging stations in the world with 214,000 public charging points as of the end of 2017. Almost half of these charging stations were put in place in 2017, and China sold some 777,000 electric vehicles in that year.

France is another country demonstrating its commitment to a smart grid future, with examples like the recent Enedis project to digitally connect over 3,000 industrial and tertiary sites in a smart power network to the fore. The smart grid will enable energy flow data collection, real-time surveillance, automated self-healing in the event of faults and remote management capacities for the whole network, making overall operations exponentially more efficient.

A smart future full of potential

According to research conducted by the University of California Riverside, smart grids can look forward to a bright future: by 2020, the smart grid market is projected to reach a value of $400 billion and could save utility companies over $100 billion dollars over the next 20 years. The benefits are now tangible, including reducing the cost of energy production and consumption, improving the availability of renewable energy sources and facilitating car charging for electric vehicles.

The World Economic Forum has recognized the importance of smart grids and digital transformation of the energy industry, as well, forecasting that there is $1.3 trillion of value to be captured globally from 2016-2025. By maximizing the potential of digital technologies and creating smart grids, utility providers the world over have the chance to revolutionize a traditional industry and reap the benefits.

Discover how Enedis is accelerating its industrial strategy to develop the smart power network of the future with Orange. Also, read how Orange is helping Birdz, a pioneer in remote water consumption metering.

Steve Harris

I’ve been writing about technology for around 15 years and today focus mainly on all things telecoms - next generation networks, mobile, cloud computing and plenty more. For Futurity Media I am based in the Asia-Pacific region and keep a close eye on all things tech happening in that exciting part of the world.