SmartGrid – Here and Now

The need for a smarter energy system to meet our changing energy needs is continually debated and theorised by academia, industry and government. The concept that SmartGrid will evolve through commercial efforts rather than be created and managed top down is not new (indeed, it was a key theme from our London & Palo Alto SmartGrid dinners last year).

Meanwhile, there are a significant number of projects actively turning theory in to practice. The topic at our most recent SmartGrid dinner, hosted in London on 20 February 2013, was how these live projects interact with the big picture. A number of the companies pioneering SmartGrid projects provided interesting insights into what is working and what challenges remain.

The jigsaw pieces: Regional schemes

The increase in distributed power generation (directly linked to increased renewable energy), and the rapid development of automated demand response technologies, have already brought two significant developments: regional/community power off-take structures, which move well beyond the concept of relatively small ‘enthusiast’ communities; and private wire arrangements giving large businesses the first call on energy. Two case studies discussed by attendees illustrated the practical application of each approach.

First, the Honeywell/SSE Thames Valley project is based on aggregated load-shedding by a collection of geographically close buildings using Automated Demand Response. Second, the Eco Island scheme (in which IBM is a core participant) sees the Isle of Wight become a mini-grid that is managed and balanced before importing shortfall or exporting excess to the national grid.

These live projects suggest that the evolution of SmartGrid in the UK will be on a regional basis, without an overarching structure to ensure interoperability of ideas. Guests liked this market driven approach and were against too complex a national structure which could indefinitely delay implementation.

In North America, as recounted by Trilliant, regional application of grid-balancing solutions is gaining significant traction. Arguably, due to the structure of our energy market, there are additional challenges in the UK: in particular how the various projects can be fitted together to bring the maximum benefit.

How do the pieces fit together?

Are the regulators assisting in overcoming these challenges? Whilst projects undertaken within the LCNF are producing a wide range of benefits and spurring innovation, it is a long-term strategy that many felt could be stifled unless accompanied by a shift in the overall regulatory environment. Joe Warren, Commercial Manager at Open Energi, commented that Demand Side Response (DSR) has huge untapped potential to make a significant contribution if the right policy and regulatory framework is there to help it thrive but that understandably, it’s really hard for small companies to get their voice heard.

The consensus view was that the environment to enable the most efficient establishment of SmartGrid will need to be underpinned by agreed standards. These standards would enable the system to communicate and integrate to function on a national (or even regional) level.

The free market has established standards in the past, although often it is not actually the best solution that wins, e.g. VHS coming out on top against Beta Max. Is this a powerful enough argument against standards being set by the state? One view is that governmental standard setting will accelerate the move towards a solution, avoiding the adoption of different regional systems (as is being seen with electric vehicle charging).

Another view is that this approach increases both the likelihood of further errors and the delay risk – civil servants will continue to debate the issue instead of relying on a market-based solution.

Ross Taylor, Director of Energy, Communications & Managed Services at HP, summed up the issue well: reliable standards emerge either in the most highly liquid markets, or in extremely regulated environments. Let’s be careful what we wish for.

In the end, the majority of participants agreed with Roger Hey, Future Networks Manager at Western Power Distribution, who highlighted that the current demand side response market is based on old supply chain structures, and therefore risks being sub-optimised in a smart grid world. And, in the words of Jon Z Bentley, Smarter Energy Leader and Partner at IBM: What we need is a slightly different regulatory environment to the one we enjoy at the moment, letting the small things add up to something big. We need to enable organic local development of solutions.

Despite these challenges, the overall feeling was one of progression towards an increasing number of power management solutions being implemented. Moving forward, the government’s most logical role may be in designing a framework which will allow these free-market solutions to thrive.

On 20 February 2013, industry experts joined Osborne Clarke to discuss power management and the evolution of the SmartGrid.  The event was the latest in a series of events held by Osborne Clarke across the US and Europe focussed on the energy challenge and the security of energy supply.

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