THE SOCIO-ECONOMIC BASED DRIVERS FOR EFFICIENT

ENERGY CONSUMPTION AND SMART GRIDS

Afshin Tafazzoli

1,2

, Miguel Marco Fondevila

, Abel Ortego

and Sabina Scarpellini

Industrial Plant and Renewable Energy Tendering Department, ACCIONA, Avda. de Europa 16, Madrid, Spain

Energy Socioeconomics of CIRCE Foundation, University of Zaragoza, Zaragoza, Spain

Keywords: Smart Grid, Energy Efficiency, Socio-economic.

Abstract: The electric power grid infrastructure that has served us so well for so long is rapidly running up against its

limitations and needs to be optimized. Long-term drivers in the energy market are the cause of a current

systematic optimization of the energy system. In this article the current position of the smart grid, the issues

surrounding it, the challenges ahead, the countless opportunities it presents, and the benefits we all stand to

gain by its adoption are discussed. There is a massive challenge to put the global energy system on a

sustainable basis to offer less impact on the environment and CO

emission control. Energy networks and

grids have to become more efficient, flexible, reliable, green and decentralized. To address all these drivers,

new technologies, public policies, economic incentives and regulations are fundamental to bring the smart

grid to full implementation. The transformation from a centralized, producer-controlled network to one that

is less centralized and more consumer-interactive is proposed. This empowers consumers to become active

participants in their energy choices to a degree never before possible and offers a two-way visibility and

control of energy consumption.

1 INTRODUCTION

It is a big task to accomplish, but it is a task that

must be done. Equally critical to the success of this

effort is the education of all interested members of

the public as to the nature, challenges and

opportunities surrounding the smart grid and its

implementation. It is intended to primarily address

to the public the existence of, and benefits derived

from, a smarter grids and what the application of

such intelligence means for the globe and citizens.

The risks associated with relying on an often

overloaded grid grow in size, scale and complexity

every day. From challenges like power system

security to those global in nature such as climate

change, the near-term agenda is formidable.

There are in fact two timelines for the grid

transformations to keep in mind:

The short-term promise – offers “a smarter grid”

for valuable technologies that can be deployed

within the very near future or are already deployed

today. A smarter grid will function more efficiently,

enabling it to deliver the level of service we have

come to expect more affordably in an era of rising

costs, while also offering considerable societal

benefits such as less impact on our environment.

The long-term promise – represents a grid

remarkable in its intelligence and impressive in its

scope, although it is universally considered to be a

decade or more from realization.

A smarter grid applies technologies, tools and

techniques available now to bring knowledge to

power – knowledge capable of making the grid work

far more efficiently by:

 Ensuring its reliability and monitoring

 Maintaining its affordability

 Reinforcing the global competitiveness

 Accommodating renewable and traditional

energy sources

 Potentially reducing the carbon footprint

 Allowing for best ideas and innovations.

Full implementation of the smart grid will evolve

over time. Further in future, with the appropriate

application of ingenious ideas, advanced technology,

entrepreneurial energy and political will, there will

come a time when the dream for smart grid comes

true.

239

Tafazzoli A., Fondevila M., Ortego A. and Scarpellini S..

THE SOCIO-ECONOMIC BASED DRIVERS FOR EFFICIENT ENERGY CONSUMPTION AND SMART GRIDS.

DOI: 10.5220/0003946502390242

In Proceedings of the 1st International Conference on Smart Grids and Green IT Systems (SMARTGREENS-2012), pages 239-242

ISBN: 978-989-8565-09-9

 2012 SCITEPRESS (Science and Technology Publications, Lda.)

2 BACKGROUND

The many hazards associated with operating the 20

century grid in the 21

century is of high concern.

Even as demand has skyrocketed, there has been

chronic underinvestment in getting energy where it

needs to go through transmission and distribution,

further limiting grid efficiency and reliability. As a

result, system constraints worsen at a time when

outages and power quality issues are estimated to

cost more than hundreds of million dollars each year

(Wijayatunga, 2004). In short, the grid is struggling

to keep up.

Based on 20

century design requirements and

having matured in an era when expanding the grid

has the only option and visibility within the system,

the grid has historically had a single mission, i.e.,

keeping the lights on. It was not simply a primary

concern when the existing grid was designed to

consider the energy efficiency, reliability, security,

and environmental issues (Detchon, 2009).

EFFICIENCY: If the grid were just 5% more

efficient, the energy savings would equate to

permanently eliminating the fuel and greenhouse gas

emissions from 53 million cars. Consider this,

replacing just an incandescent bulb with a compact

fluorescent bulb; the country would conserve

enough energy to light millions of homes and save a

fortune annually.

RELIABILITY: There have been few massive

blackouts over the past 40 years. More blackouts and

brownouts are occurring due to the slow response

times of mechanical switches, a lack of automated

analytics, and “poor visibility” – a “lack of

situational awareness” on the part of grid operators.

In many areas the only way a utility company knows

there is an outage is when a customer calls to report

it. This issue of blackouts has far broader

implications than simply waiting for the lights to

come on. Imagine plant production stopped,

perishable food spoiling, traffic lights dark, and

credit card transactions rendered inoperable. Such

are the effects of even a short regional blackout.

SECURITY: The grid’s centralized structure leave it

open to attack. In fact, the interdependencies of

various grid components can bring about a domino

effect – a cascading series of failures that could

bring the nation’s banking, communications, traffic,

and security systems among others to a complete

standstill.

CLIMATE CHANGE: From food safety to personal

health, a compromised environment threatens us all.

To reduce the carbon footprint and stake a claim to

global environmental leadership, clean, renewable

sources of energy like solar, wind and geothermal

must be integrated into the grid. However, without

appropriate enabling technologies linking them to

the grid, their potential will not be fully realized.

Figure 1: Smart grid power system (Gellings, 2011).

This all comes in to the preparation for an

electric system that is cleaner and more efficient,

reliable, resilient and responsive – a smarter grid

(Figure 1).

3 THE SMART GRID

The electric industry is poised to make the

transformation from a centralized, producer-

controlled network to one that is less centralized and

more consumer-interactive. The move to a smarter

grid promises a new business model and relationship

with all stakeholders, involving and affecting

utilities, regulators, energy service providers,

technology and automation vendors and all

consumers of electric power.

A smarter grid makes this transformation

possible by bringing the philosophies, concepts,

technologies and the industry’s best ideas for grid

modernization to achieve their full potential. It may

surprise you to know that many of these ideas are

already in operation.

Smart grids will increase the possibilities of

distributed generation, bringing generation closer to

those it serves (think: solar panels on your roof). The

shorter the distance from generation to consumption,

the more efficient, economical and “green” it may

be. Distributed generation is the use of small-scale

power generation technologies located close to the

load being served, capable of lowering costs,

improving reliability, reducing emissions and

expanding energy options. An automated, widely

distributed energy delivery network will be

characterized by a two-way flow of electricity and

information that will be capable of monitoring

everything from power plants to customer

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preferences to individual appliances. It incorporates

into the grid the benefits of distributed computing

and communications to deliver real-time information

and enable the near-instantaneous balance of supply

and demand at the device level. It will empower

consumers to become active participants in their

energy choices to a degree never before possible and

it will offer a two-way visibility and control of

energy usage (Figure 2).

Figure 2: The smart grid in operation (Lorenz, 2010).

While supply and demand is a bedrock concept

in virtually all other industries, it is one with which

the current grid struggles mightily because, as noted,

electricity must be consumed the moment it is

generated. Without being able to ascertain demand

precisely, at a given time, having the ‘right’ supply

available to deal with every contingency is

problematic at best. This is particularly true during

episodes of peak demand, those times of greatest

need for electricity during a particular period.

In making real-time grid response a reality, a

smarter grid makes it possible to reduce the high

cost of meeting peak demand. It gives grid operators

far greater visibility into the system enabling them to

control loads in a way that minimizes the need for

traditional peak capacity that may eventually

eliminate the use of existing peaker plants or build

new ones.

3.1 A Grid Transformation and

Complexities

Until relatively recently, the utility operations are

not necessarily well positioned for integrated

strategic initiatives like the smart grid although they

have collectively and forcefully advocated in the

past on issues such as security and climate change.

With growing consensus around the crucial need

for smart grid deployment, the cultures of these

entities are now changing dramatically. Thanks to

these and other efforts, many regulators are moving

toward new regulations designed to incentivize

utility investment in the smart grid. Among these are

dynamic pricing, selling energy back to the grid, and

policies that guarantee utilities cost recovery and/or

favourable depreciation on new smart grid

investments and legacy systems made obsolete by

the switch to “smart meters” and other smart grid

investments.

One of the reasons the electric industry has been

slow to take advantage of common technology

standards – which would speed smart grid adoption

– is a lack of agreement on what those standards

should be and who should issue them.

Fortunately, the agendas of utilities, regulators

and automation vendors are rapidly aligning and

movement toward identifying and adopting smart

grid standards is gaining velocity.

Figure 3: Smart grid roadmap programs (Tanaka, 2011).

It is underway to develop a common interface

between Societal, Financial, Technology, Regulatory

and policy aspects of the smart grid to further create

a basic platform and roadmap (Figure 3).

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3.2 A Look at the Current and Future

Initiatives

A smarter grid is taking shape by bringing new

initiatives and platforms in place. At present, there

are no fully fledged smart grids anywhere in the

world, beyond small-scale pilot projects. Smart grids

will be rolled out globally over the next 20-30 years,

but rates of development will differ from region to

region, and from country to country (KEMA, 2009).

The nation of Malta (population 400,000) is

about to become the world’s first smart grid island.

IBM is building the island’s national smart grid

network, which will consist of 250,000 smart meters

placed in homes around the country. The network

will allow Malta’s national utilities to perform

remote monitoring, meter-reading, and management

of the network. Utilities can then use information

collected from these tools to adjust electricity

pricing based on the time of day. Island residents

will also have the opportunity to track their energy

usage online. The socioeconomic impacts of this

initiative, given the historical water and energy

constraints of the island, are quite obvious.

Therefore, the smart grid projects are not restricted

to technologies and the advancement of “hardware”,

but also include the socio-economic and policy

oriented aspects of the energy system.

The European Commission recently launched an

ambitious Energy Infrastructure Package that

promises to deliver the hardware aspects of a smart

grid (Giordano, 2011). In Europe, over €5.5 billion

has been invested in about 300 smart grid projects

during the last decade.

A recent report by Pike Research forecasts that

during the period from 2010 to 2020, cumulative

European investment in smart grid technologies will

reach €56.5 billion, with transmission counting for

37% of the total amount. The report also suggests

that by 2020 almost 240 million smart meters will

have been deployed in Europe.

According to the International Energy Agency

(IEA), Europe requires investments of €1.5 trillion

over 2007-2030 to renew the electrical system from

generation to transmission and distribution. This

figure includes investments for smart grid

implementation and for maintaining and expanding

the current electricity system.

4 CONCLUSIONS

The smart grid transforms the current grid to one

that functions more cooperatively, responsively and

organically that would ultimately enables:

 Allowing the seamless integration of renewable

energy sources

 Leading in a new era of consumer choice

 Making large-scale energy storage a reality

 Enabling nationwide use of plug-in hybrid

electric vehicles.

The global market for energy demand is growing

rapidly and energy production being still quite

dependent on rough materials whose price is

continuously increasing makes indispensable

development of smart grids an important element to

reduce the gap or, at least, to optimize the

production capacity.

The policy makers should allow for the best

ideas to prove themselves. Smart grid efforts are

well underway on several key fronts, from forward-

thinking utilities to decision making organizations.

New technologies and public policies, economic

incentives and regulations are aligning to bring the

smart grid to full implementation. Its success is

imperative to the economic growth and vitality of

our future. Of course, it is an ongoing attempt to

bring a clearer understanding of the need for

immediate and concerted actions in the

transformation of electrical grid working as an

enabling engine for our economy, our environment

and our future.

ACKNOWLEDGEMENTS

The authors express their ultimate gratitude and

appreciation to ACCIONA and CIRCE Foundation

for their supports and funding of the project.

REFERENCES

Wijayatunga, P., 2004. Assessment of economic impact of

electricity supply interruptions in the Sri Lanka

industrial sector. Energy Conversion and

Management.

Detchon, R., 2009. The national clean energy smart grid:

An economic, environmental, and national security

imperative. EFC.

Gellings, C., 2011. Estimating the costs and benefits of the

smart grid. EPRI.

Lorenz, G., 2010. 10 steps to smart grids. EURELECTRIC.

Tanaka, N., 2011. Technology roadmap for smart grids.

IEA.

KEMA, 2009. Smart Grid Project Evaluation Metrics.

GridWise Alliance.

Giordano, V., 2011. Smart grid projects in Europe. JRC.

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