Smart Grid
Content
SMART Grid – The regulatory Challenges.
The word “smart” is nowadays frequently touted in connection with electrical energy in media reports. Invariably this hints at the emergence of a new paradigm in the power sector- The Smart Grid. In this short write-up we are trying to analyze how this new concept has emerged and what led to this wide spread debate and its possible acceptance by utilities. Subsequently we also try to look at how the regulatory landscape is going to change considering the enormous changes that the electricity utilities are going through. Electricity has traditionally been considered as a commodity that has a low price elasticity of demand and a very low consumer involvement. The consumer has come to see the flat prices as more of a ‘right’. The price that the consumer saw was more or less a flat one and any change in the tariff resulted in a change in consumption pattern several months later. One of the fundamental changes that the smart grid has brought in is the consumer involvement. Before we look at how smart grid attempts achieves this, a discussion on how the electricity supply industry evolved over years is in order here. In the recent years two major issues took centre stage when it came to any debate on energy related issue, and more so in the electricity supply industry. These are the issue of containing the damage to environment and the issue of energy security. The electricity generating plants, especially the coal fired plants, have been among the most polluting industries across the globe. The power utilities are increasingly put under tremendous regulatory pressure to bring down the pollution levels. This meant that utilities needed to source substantial portions of their electricity supply from renewable energy sources. The issue of energy security is gaining prominence in the face of increasing oil prices and unreliable supply lines from countries in the strife torn regions in the south East Asia. So the oil importing countries are forced to look beyond the hydro carbons for their future energy needs. To further reduce their oil dependence, many countries are encouraging their transport sector to adopt Plug-in Hybrid Electric Vehicles (PHEV). This is going to be the single most important factor that is going to drive the consumption of electricity in the coming future. The fear of terror strikes demanded that much of the generation capability should be distributed across the grid so that parts of the grid can be isolated and will still be functioning in an eventuality. These two factors demanded a tightly integrated and coordinated electricity supply industry. Naturally any such attempt should start at the aging grid that exists in many countries. So we are about to see a grid that is a way smarter in its new ‘avatar’ A substantial generation capacity strewn across the grid – which is referred to as the distributed generation (DG) capacity. A higher component of renewable energy sources in its energy portfolio. Involves an effective way to signal the retail prices to the consumers to bring more effective consumer involvement in energy consumption – popularly known as the demand response (DR) programs.
Two way communication that connects the utility and the generating plants with the retail energy meters which gives accurate energy consumption data. This also helps the utility in making more accurate prediction of the demand and to defer demand during peak hours. A grid that is able to support power flow in both the directions as the households will have electricity generation capability and can now feed power back to the grid as well.
The word “smart” is nowadays frequently touted in connection with electrical energy in media reports. Invariably this hints at the emergence of a new paradigm in the power sector- The Smart Grid. In this short write-up we are trying to analyze how this new concept has emerged and what led to this wide spread debate and its possible acceptance by utilities. Subsequently we also try to look at how the regulatory landscape is going to change considering the enormous changes that the electricity utilities are going through. Electricity has traditionally been considered as a commodity that has a low price elasticity of demand and a very low consumer involvement. The consumer has come to see the flat prices as more of a ‘right’. The price that the consumer saw was more or less a flat one and any change in the tariff resulted in a change in consumption pattern several months later. One of the fundamental changes that the smart grid has brought in is the consumer involvement. Before we look at how smart grid attempts achieves this, a discussion on how the electricity supply industry evolved over years is in order here. In the recent years two major issues took centre stage when it came to any debate on energy related issue, and more so in the electricity supply industry. These are the issue of containing the damage to environment and the issue of energy security. The electricity generating plants, especially the coal fired plants, have been among the most polluting industries across the globe. The power utilities are increasingly put under tremendous regulatory pressure to bring down the pollution levels. This meant that utilities needed to source substantial portions of their electricity supply from renewable energy sources. The issue of energy security is gaining prominence in the face of increasing oil prices and unreliable supply lines from countries in the strife torn regions in the south East Asia. So the oil importing countries are forced to look beyond the hydro carbons for their future energy needs. To further reduce their oil dependence, many countries are encouraging their transport sector to adopt Plug-in Hybrid Electric Vehicles (PHEV). This is going to be the single most important factor that is going to drive the consumption of electricity in the coming future. The fear of terror strikes demanded that much of the generation capability should be distributed across the grid so that parts of the grid can be isolated and will still be functioning in an eventuality. These two factors demanded a tightly integrated and coordinated electricity supply industry. Naturally any such attempt should start at the aging grid that exists in many countries. So we are about to see a grid that is a way smarter in its new ‘avatar’ A substantial generation capacity strewn across the grid – which is referred to as the distributed generation (DG) capacity. A higher component of renewable energy sources in its energy portfolio. Involves an effective way to signal the retail prices to the consumers to bring more effective consumer involvement in energy consumption – popularly known as the demand response (DR) programs.
Two way communication that connects the utility and the generating plants with the retail energy meters which gives accurate energy consumption data. This also helps the utility in making more accurate prediction of the demand and to defer demand during peak hours. A grid that is able to support power flow in both the directions as the households will have electricity generation capability and can now feed power back to the grid as well.
