Choice of format and standard is a practical issue that needs to be resolved if smart grids are to develop, as well as a strategic opportunity for countries and suppliers to lock end-users into their products. The corollary to this is that any supplier that calls the format wrong is likely to find themselves increasingly locked out of markets in which they may at one time have been dominant.
Format issues in the energy market:
- Communications infrastructure-Utilities either build dedicated communications infrastructure out to their transmission grid or use existing public infrastructure
- Communications channel-Different solutions (wireless, power line, mobile telephony, etc) are appropriate for different parts of the grid. There is no consensus over the optimum technology in significant areas (eg. last mile connection to grid)
- Communications standard-In home, there are currently six communications standards in widespread use. In the last two years, ZigBee has been gaining an edge over other standards
- Standards as national advantage-Japan and China are using standards as a means to extend their market share for smart technology internationally. Japan appears to be doing so consciously and as a strategic aim of government. China has an edge simply because of its size and ability to develop stand-alone standards cost-effectively within its own borders
National trends for transnational approaches:
- Development of smart grid will vary by nation according to national economic characteristics. The economics of smart metering are significantly different in developed nations where the cost of energy and therefore potential saving from energy efficiency is far greater than in developing nations.
- Developing nations-the focus is likely to be towards infrastructure. Grid development in developing nations will be motivated in the short-term by basic economic need: China, India, Brazil are looking to provide a basic level of energy supply to their population, and to connect rural communities currently without grid access
- Developed nations-the focus is more on business fine-tuning. In Japan, it is putting in place the infrastructure to link up sub-national grids. In the US, it is the debate on the sharing of smart grid benefits and who should bear the implementation cost
- There are significant and growing instances of cross-border transmission of energy as a means to average energy supply: US/Canada;France/UK; Eastern Europe (Germany, Austria, Poland, Czek Republic)
- Analysts are currently speculating long-term about a pan-Oceanic grid, stretching from Korea to Australia, including China, Japan and Indonesia. This would help many countries, with high energy needs, to cope with their own chronic lack of local energy source
The Asian Century ?
Energy supply is becoming a key issue for national security. This means that the growing reliance on one geographic region must be factored into strategic thinking. One possible view of the future of energy in the Far East is given by research firm Greentech Media which shows the potential for one player to dominate, and therefore exert, significant geopolitical pressure.
The view that China and the Far East will emerge as leading economic powers over the 21stcentury is echoed by developments in the smart grid:
- South Korea, China, Japan all feature in the top ten for government investment in smart grid technology
- Japan is using standards to gain commercial edge for its products
- China is already supplying the energy chain with components at every level
High impact issues –consistent supply, market lock-in and ICT performance
Interruption to the consistent supply of energy to consumers
Not taking risks has become risky. Business as usual is not an option. The reality is that in a very short space of time, utilities will be left with too many new initiatives that can’t be joined together or could even lead to an interruption in the consistent supply of energy to consumers.
Issues over market lock-in are likely to become increasingly important and may in time assume a national/geo-political dimension. At one level, these will reflect similar issues in past format wars. However, with the added debate over state/utility control (typified by China) and free market (US)-with a more mixed strategy adopted elsewhere in the OECD (EU)- two further issues come in to play:
- The showcase effect-in the struggle to implement smart grid, what political /economic model will succeed?
- The struggle for supremacy-to what extent will state led industries be able to leverage their status to gain global dominance?
The absolute baseline is that companies need to “do” Information and Communications Technology (ICT) well. If done badly, some companies with major assets in terms of brand, presence, loyalty or strategic allies may be able to compensate for a while. However, they will most likely be pushed aside eventually.
All technology providers need to be aware that the IT and data management solution will need to solve issues of real-time computing and is likely to be cloud-based and integrate principles of advanced computational intelligence within it. The new generation of computing technologies will be “intelligent” and based around advanced computational intelligence as opposed to traditional optimizing algorithms.
Control and operational decision-making may need to be handed over to Artificial Intelligence technologies for the following reasons:
- Grid operation and demand response programs-Will require data to be captured and decisions to be taken in seconds, sometimes micro-seconds
- Security-Will be based around intelligent agent solutions that must evaluate independently of traditional virus databases if the code may pose a threat
- Interoperability and standard-setting- Will need to deal with an exponentially growing range of interactions until the traditional standards committee approach ceases to be practical and optimizing software is needed
Specialist companies and the sustainable way to implement smart grid:
Implementing smart grid is best served by partnering with specialist companies that have the relevant in-depth expertise. The expertise required in these areas goes well beyond that which is likely to exist within traditional utilities or distribution companies. However, some may have centers of excellence in one or other aspects of these technologies.
As with all new technology, a proper analysis of all scenarios is required to ensure smooth running. The smart grid is no exception, especially since it is still in the development stage. Since energy requirements are always changing, we can safely assume that smart grid technology (and the industry as a whole) will need to be constantly reassessed in order to accommodate for these changes.