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“Energy efficiency will become the ‘first fuel’ choice for electric utilities in 2009”

Analyst Rick Nelson at Energy Insights

Smart Grids
Smart Grids
The smart grid will allow more efficient use of renewables

The world’s electricity grids need a major overhaul. Most national power grids are using technology invented in the nineteenth century and the whole infrastructure (with massive, centralised power plants supplying far-flung cities) is hugely inefficient, with up to 20 per cent of all electricity generated lost in transmission. These grids are also vulnerable to natural disaster and accidents, and simply aren’t flexible enough to deal with the variable nature of renewables. In other words, they’re pretty dumb.

 
Enter the smart grid. The essence of a smart grid is to add 'intelligence’  (information technology) to the electric networks. The aim is to maximise energy efficiency whilst reducing electricity consumption. The starting point are smart meters, advanced electricity meters which monitor consumption and feed the information back to the utility for analysis and billing.
 
Smart meters allow consumers to control their electricity consumption to coincide with cheaper rates, for instance, and also facilitate local energy generation: households with their own solar panels, hydro power or mini wind generators will be able to feed the power they don’t need back into the grid and get paid for it. Several European countries now have feed-in tariffs (FITs) to encourage this: Britain is the latest recruit, with a Government announcement in January 2009 that a FIT will be introduced starting in 2010. Smart meters are also integral to the deployment of Plug-In Hybrid Electric Vehicles (PHEVs).

On a commercial scale, using information technology to reduce overall power needs is know as Demand-Side Management, and it’s playing an increasingly important part in allowing large-scale commercial or industrial electricity users to reduce their costs and for utilities to manage demand at peak times.

 
As the smart grid evolves, there will be less reliance on centralised power generation – instead, more energy will be generated locally. The grid will be able to take power from multiple renewable sources and distribute it more efficiently. When the wind is blowing hard in Norway or the sun is at its peak in Spain, surplus electrons will be more easily distributed to the rest of Europe through new, high-powered transmission lines.
 
See our Sector Snapshot for an overview of initiatives around the world to implement smart grids. Our Companies snapshot and Companies Directory will provide some signposts to the investment opportunities.


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The Green Investor

A guide to profiting from the sustainability revolution
By Nick Hanna

ISBN-13: 9781906659677
Format: Paperback
Pages: 196
Edition: 1st
RRP: £14.99
Due for publication: 24th May 2010

Harriman House |

Pre-order Now



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