Bastian Fischer examines how the rise of Smart Grid technology is helping to build a successful and more sustainable future
The global demand for energy is growing at an unsustainable rate, throwing up challenges that this generation must deal with in order to preserve the planet for future generations so that they are able to enjoy the quality of life they are entitled to.
In large part, this is about addressing the spiralling carbon footprint of modern industries and lifestyles but it is also about ensuring there is energy available to power those industries and lifestyles in the future. This may sound an over-dramatisation to some, but there exists a very real risk that current supply and demand of energy in rapidly urbanising and expanding populations will no longer keep pace with one another in the near future.
Beyond this pressing reality, there is a further fundamental truth: fossil fuels are financially and environmentally unsustainable. They are a finite resource in a world where the needs are infinite. At the current rate of consumption their cost is only going to increase as their supply declines relatively. Furthermore, vulnerabilities within energy supply chains and volatility within energy markets are becoming ever-more transparent. The implications of rapid rises in the price of oil, for example, have been seen to have had a destabilising effect elsewhere, such as air travel and freight, manufacturing, logistics, retail and transport.
The motivation to effect change, however, is not purely about practicality or sound global citizenship. There is a regulatory compulsion too. The European Council’s ‘Low Carbon 2050 Strategy’ requires an 80-95 percent cut of greenhouse gas emissions below 1990 levels by 2050. This requires wholesale change and smarter thinking about the supply and demand of energy. Additionally, it requires investment in smart energy technologies, clean and renewable energy sources and innovations such as electric vehicles and the infrastructure required to power them.
Substantial progress is already being made with the integration of clean energy sources – principally wind and solar – into the power grid, both from energy companies and individuals. In fact the UN Intergovernmental Panel on Climate Change (IPCC) states 50 percent of the electricity production installed globally between 2008 and 2009 were renewable sources. The same body also believes more than 75 percent of the world’s energy demand can be met by renewable sources by 2050.
The Oracle Utilities ‘Future of Energy’ report, produced in association with Future Laboratory, highlights claims from renewable energy consultancy, Ecofys, who believe that if 100 percent of energy demands are met by renewable sources by 2050, it will cut energy demand by 15 percent over the next four decades and save nearly €4trn. It’s a strong argument for addressing the current situation.
Furthermore, The European Renewable Energy Council predicts that the number of people employed in the renewable energy sector in Europe could increase from 500,000 today to over six million in 2050, though this will naturally be offset by transition within large existing utilities providers, as the move from fossil fuels to more renewable sources takes place within their own businesses.
Getting smart with data
Some of the greatest efficiencies which will be found in the management of the supply and demand of energy will be through the smarter use of technology – principally the building out of smart grid and smart meter infrastructure. In order to enable the required energy transformation, the grid needs to be capable of converging data, energy and information communication technology (ICT), which will allow utilities to increase their operational efficiency. The guiding principles of interoperability, openness, scalability, security and distributed intelligence will ensure that the grid is information∞rich and able to integrate renewable sources. Coupled with this, the smart grid will also provide the foundation for energy and business innovations for more sustainable energy usage.
Often inefficiency within the grid is at the heart of wastage and overproduction. Better management of peaks in demand will enable savings even without a change in the level of consumption. However, smart meters will also allow consumers to better manage their personal energy consumption throughout the day, taking advantage of incentivised and feed-in tariffs.
Furthermore, the in-home-displays which accompany smart meters will also encourage consumers to think more carefully about consumption if they can see what they are actually using. This will give consumers a clearer understanding of energy consumption and an ability to see costs rising, especially when consumers think their home is ‘at rest’, will motivate many to turn off devices and lights and power down heating. Similarly, a greater understanding of smart technologies will help reduce energy consumption, while also educating consumers and easing fears surrounding security in the smart grid. The protection of ICT platforms and integrity of all active smart grid components is a pre-requisite of the platform and will encourage consumer adoption of the technology. Education and realisation are key to a successful implementation. The Organisation for Economic Co-operation and Development (OECD) predicts improved consumer awareness of energy use throughout the day can reduce domestic consumption by up to 20 percent. In addition to this, governments need to help push the awareness and the move towards smart metering systems.
If implemented correctly the smart grid and metering will transform the current energy landscape and play a key role in achieving required savings and carbon reduction. The rise of the smart grid also encourages the development of new business models creating renewed competition across the utilities sector with fast-growing challengers in the sustainable and smart energy space.
But currently, the momentum behind the move to smart technology is not uniform around the world or even across regions, such as the EMEA. In some countries, smart metering is yet to become a political or social issue.
Undoubtedly this is hindering the rollout and governments must meet organisations such as the EC halfway by implementing and reinforcing their own recommendations for improving efficiency and educating homeowners about the options on offer. So-called “nudge” policies will help accelerate the rollout of the smart grid and must be considered, not least because the need for this move will only increase over time. Firm policies today will be more preferable than dramatic interventions later in time.
By implementing a smart grid infrastructure, capable of delivering improved energy efficiency and demand handling, as well as effectively integrating renewable energy sources, we will go a long way to reducing carbon levels. ICT is integral to this as without it, the transformation of the energy infrastructure won’t be possible. ICT will enable the energy grid to become more active and transparent and allow for the convergence of greater communication to make the new energy supply chain an efficient reality. The smart grid network in turn will also support additional technologies and services which lower carbon levels and costs. To achieve this by 2050, everyone must work together to drive awareness, consumer education and adoption of new technologies. As businesses and consumers it falls to us to take up responsibility and call for change.
Bastian Fischer, VP of Industry Strategy, Oracle Utilities Web: www.oracle.com/us/industries/utilities