Make every kilowatt of electricity intelligent

As highlighted in our previous article, the rapid development of AI has led to a significant increase in electrical energy demand. This surge in energy consumption underscores the urgent need for more efficient and sustainable solutions to meet future electricity requirements. In last week’s discussion, we explored energy storage as a solution to store excess energy for recycling. Another key solution gaining attention is smart grids, which enhance the management and distribution of electricity using advanced communication and automation technologies. By enabling more seamless integration of renewable energy sources, smart grids help optimize energy flow and significantly improve overall grid efficiency.

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What is Smart Grids?

Traditionally, the power grid has operated as a one-way system, where energy is produced by generation stations and distributed to consumers. This system has been mostly passive, lacking real-time data on energy usage and demand. Smart grids upgrade this traditional model. Smart grids operate in a two-way flow and integrate the requirements and capabilities of generators, grid operators and end-users to optimize the overall system’s performance. Smart grids can reduce costs and environmental impact while enhance reliability, resilience, and stability of the entire electricity system.

The U.S. has installed nearly 10,000 electricity generation units, linked by over 300,000 miles of transmission lines, and capable of generating more than a million megawatts of energy. However, the impact of smart grid technologies extends beyond utility companies; they also enable consumers to manage their own energy usage.

Smart grids are an evolving set of technologies that will be deployed at different rates in various settings around the world. The "smartening" of the electricity system is an evolutionary process, not a one-time event. The graph below illustrates the evolutionary nature of smart grids.

The National Energy Technology Laboratory (NETL) identifies five key categories of smart grid systems that contribute to the transformation from traditional power grids to smart grids :

1. Integrated Communications: Broadband and wireless connections between devices and users enable seamless information exchange.
2. Advanced Grid Components: Smart devices and energy storage solutions improve the overall performance of the grid.
3. Advanced Control Methods: Automation technologies enhance distribution management and fault detection.
4. Sensing and Measurement Technologies: These systems allow for real-time information flow from grid components to users.
5. Improved Interfaces and Decision Support: Tools that effectively organize and present data support informed decision-making.

The graph shown below illustrates how the smart grid operates and the interactions among its various components.

The smart grid comprises both the physical hardware components as well as the sophisticated software systems.

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Green and Smart Grids

Over the past decade, the global power sector has been shifting toward cleaner energy generation, with many coal plants being decommissioned. Renewable energy is set to play a vital role in meeting rising energy demand, as global renewable capacity surpassed 3,371 GW in 2022. Smart grids, which are essential for managing the complexities of clean energy integration, are expected to see growing demand driven by the increasing adoption of renewable energy.

Due to the intermittent nature of renewable energy sources like solar and wind, periods of instability can occur when energy generation fluctuates. During these times, energy storage systems can provide additional power to ensure a reliable electricity supply. However, large-scale storage facilities are often concentrated in regions with abundant water resources, limiting their widespread application and flexibility.

To address this challenge, smart grid technology enhances overall supply capacity by improving operational efficiency, real-time monitoring, and data analysis, enabling better integration of energy resources from various regions. Moreover, during peak demand or supply shortages, smart grids can quickly adjust loads and allocate resources, reducing the frequency of outages and ensuring a dependable power supply. Even during a blackout, smart grids can quickly activate automated equipment to effectively manage and respond to the situation.

Smart grids play a crucial role in reducing carbon emissions by enabling the use of various low-carbon energy technologies, including electric vehicles, variable renewable energy sources, and demand response initiatives. According to the International Energy Agency(IEA), smart grids have the potential to cut net annual emissions by 0.7 to 2.1 GT of CO² by 2050.

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Development of Smart Grids

The global smart grid market is expected to experience significant growth, increasing from approximately $74 billion in 2024 to around $161 billion by 2029, which represents a compound annual growth rate (CAGR) of 17%. This rapid expansion is fueled by several factors, including initiatives for grid modernization, the rising integration of renewable energy, and the growing demand for enhanced grid resilience and automation. North America, Europe, and the Asia-Pacific region are at the forefront of smart grid investments.

• U.S.: The Department of Energy announced a USD 11 billion program for smart grid upgrades in 2022.
• Canada: The Energy Innovation Program called for proposals to support smart grid innovations in 2023.
• European Union: The European Commission supports smart grid development with an estimated EUR 584 billion (USD 633 billion) needed by 2030.
• China: Investment in China’s smart grids is projected to grow at about 6% annually from 2021 to 2025, reaching 158 billion yuan (USD 23 billion) by 2025.
• Middle East & Africa: The Dubai Electricity and Water Authority (DEWA) has invested AED 7 billion in its Smart Grid Programme, aiming to make Dubai the smartest city in the world with a value-driven strategy launched in 2021.

The U.S. total investment in smart grids has shown a consistent upward trend, growing from $995 million in 2014 to $22 billion by 2024. The most significant growth has occurred in the categories of "Smart Grid-Related Operations IT" and "'PURE' SMART GRID DEVICES/SYSTEMS," with investments in these areas rising from $270 million in 2014 to $11 billion in 2024. This trend highlights the strong emphasis that electric utilities are placing on enhancing grid automation capabilities and deploying advanced smart grid technologies.

Cyber Security

While smart grids enhance the reliability and efficiency of electricity systems by integrating advanced information and communication technologies (ICT), they also constitute complex infrastructures that encompass critical devices and communication systems. This complexity introduces vulnerabilities and increases the risk of cyberattacks. Research indicates that the regulatory environment in the electricity sector may complicate efforts to secure smart grids, as utilities often prioritize regulatory compliance over comprehensive security measures. Additionally, consumers generally have limited awareness of the benefits and risks associated with smart grids, and some systems lack adequate security features, resulting in ineffective information-sharing mechanisms and evaluation metrics.

Specific cybersecurity threats to smart grids include malware propagation, denial-of-service attacks. For instance, in 2015, malware targeted a power station in Ukraine, leading to widespread outages. In 2017, Russian hackers successfully infiltrated U.S. electricity infrastructure, aiming to steal sensitive information and compromise control systems. This incident underscored the significant risks posed by cyber threats and prompted the U.S. and other countries to bolster its cybersecurity defences for critical infrastructure. The U.S. Department of Energy has introduced the Cybersecurity for Energy Delivery Systems (CEDS) program to bolster the resilience and security of the country’s essential energy infrastructure. This initiative involves creating and implementing cutting-edge cybersecurity solutions tailored for smart grids.

Conclusion

The rapid rise in energy demand highlights the need for efficient, sustainable solutions. The combination of smart grids and energy storage offers a powerful solution, creating a more resilient and efficient energy infrastructure. This integrated approach is key to meeting future energy demands and advancing toward a sustainable, net-zero future.

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