What Next Smart Grid Development? Challenges and Opportunities

Most of the world’s electricity system was built when primary energy was relatively inexpensive. Grid reliability was assured by having excess generation capacity in the system with unidirectional electricity flow to consumers from centrally dispatched power plants. Investments in the electric system were made to meet increasing demand; not to fundamentally change the way the system works.

Moving to a smart grid infrastructure can help utilities to address some of the challenges that they are now striving to overcome.

Here’s a quick summary of four of those trends with their challenges:

1. Changing Supply:

Europe‘s significant increase in renewable generation has been a blessing for the global climate. The EU’s target for 2020 is 20% production from renewables. The good news is that some countries are pushing hard. For instance, Denmark has already gone well past 50% of power production generated by renewables, mainly wind power. However, unpredictable production creates intermittent supplies, since most green electrons are produced only when the wind is blowing or when the sun is shining. Usually, wind power production does not match up well with peak demand times. Therefore, either too much or not enough capacity is in the system. In addition, some renewable sources feed into a part of the system, the medium and low voltage grid, that today is not constantly monitored (unlike the high voltage transmission grid). Thus, inadequate information is available on the electricity that is being fed into those systems.

2. Changing demand patterns:

In the past, demand was stable and predictable. Due to variable energy costs and growing environmental concerns, customers have been changing their demand behavior.

Not only are unpredictable supply sources a challenge, but so too are the fluctuations on the demand side. As a consequence, it’s becoming more and more complex to maintain the electricity system’s reliability – the key ingredient in avoiding outages.

3. Regulation / Compliance:

Utilities must face up to the twin dilemma: addressing increasing energy demand while simultaneously reducing their overall carbon footprint. As governments across the globe have been imposing stricter restrictions on greenhouse gas emissions, this makes traditional generation sources like coal more expensive. Another example: the U.S. federal government now mandates cybersecurity compliance for critical infrastructure protection.

Many regulatory bodies are mandating security compliance for critical infrastructure protection. In the U.S., NERC-CIP provides specific requirements that mandate both physical and cybersecurity solutions. Consumer privacy and data protection will also drive security measures -- all the way from homes to the utility’s own data centers. In addition, global substation automation standards (as detailed in both IEC61850 and IEEE1613) are driving adoption of new technologies within the substation itself.

4. New opportunities:

With an increase in the number of electric vehicles on the road, utilities are seeing the emergence of a huge new market. Since supply to the transportation sector is still dominated today by the oil and gas majors, the electric utilities are keen to find the lowest-cost and highest-margin opportunities to supplant them. One angle is to economically store electricity in assets/batteries across the network, to meet local demand surges. This is a tremendous opportunity to optimize the electricity system, especially in countries such Denmark, who must cope with unpredictable supplies like wind-power generating turbines.

Technology evolutions

Emerging systems make it possible to embed processing and digital communications on top of the analog power grid, with the resultant communications infrastructure capable of handling greater data volumes, and managing the greater data velocity. This enables it to become more advanced in several specific ways:

A more observable grid. This means that utilities are coming closer to the point where they have complete awareness of grid state. It also means that they can more effectively and efficiently transport sensor data and control commands.
A more controllable grid. This derives from the new ability to drive the grid to any desired state.
A more automated grid. This provides utilities with the ability to adapt to rapidly changing conditions, and if necessary without human intervention.
A more integrated grid. Connect siloed utility systems and siloed processes can deliver enhanced business benefits.

Utilities now benefit from the fact that growing numbers of private technology companies provide advanced communication equipment developed specifically for utility requirements. These are designed and developed to fit with core electrical equipment. Such privately developed equipment matches up with the required industry standards, and can be adjusted for specific conditions (e.g., comms-agnostic, depending on the specifics of the local environment).

Much attention inside the tech industry is now focused on both the transmission networks and substation networks. These networks are important because they reside within and between distribution and transmission substations and utility operation centers. Such transmission and substation networks must carry a variety of different traffic types for a varied set of functions, including:

operation and control communications from Supervisory Control and Data Acquisition (SCADA) systems, to collect data on substation operations;
communication between substations and control centers;
remote workforce management;
remote engineering access communications.

The best substation networks are designed with these three important characteristics in mind: redundancy; integrated security; scalability to support these multiple communication types.

The most advanced solutions available to utilities can help to reduce substation operating expenses by improving reliability and optimizing the integration of distributed energy resources. These new systems have some smart capabilities which include the following:

2-way communication between transmission-focused SCADA equipment and energy management systems (EMS) for grid monitoring and control.
support for fault detection, isolation, and restoration, as well as proactive management and maintenance of grid infrastructure.
compliance services, site security and network management.

Two parts to the smart grid are growing in important, even though they are not especially sexy or visible: networks that connect substations to control centers and to each other; and networks inside substations. In a smart grid environment, there is far more peer-to-peer communications at all levels than the utility’s old star models.

Operation centers are the central point for the analysis of operational data following into and through the smart grid. Applications residing in control centers perform a variety of functions, ranging from fault detection and fault isolation to maintenance planning and scheduling. Getting the right data from smart grid intelligent devices to the right applications quickly and accurately—and providing a response in near-real-time —is the core function of the best-designed operation center.

Emerging technologies and services aim to enable sophisticated data collection, analysis and response solutions for distribution automation and for demand response applications. The core capabilities integrated with the best systems include these:

virtualized computing for SCADA, AMI distribution automation, energy management applications.
application acceleration between operation centers and data center.
operation center security and secure application hosting.

Smart grids are rapidly evolving toward systems that enable distributed intelligence. There is a latency hierarchy in a smart grid, such that some data must be consumed before it ever reaches a control center or data center.

The utility network and regional networks are the networks responsible for delivering the data between substation networks to central operations centers for analysis, control, and response. In order to be adequate to the challenges of our times, these networks must provide functionality in a manner which is secure, reliable, high performance, and customized -- to meet the varying delivery and management requirements for the different types of data traffic flowing over it.

The Field Area Network (FAN) is the “last mile” in the power delivery system, which ends with the power consumer. The FAN connects consumer energy management systems to power utility substations. The FAN enables fault location, isolation and restoration; grid optimization; demand response; and management of distributed energy sources -- to name just a few of its vital functions. Devices connected to the FAN include optimization equipment (distribution transformers, capacitor banks, voltage regulators); fault identification, isolation and restoration equipment (relays, switches, reclosers and RFIs); and workforce automation equipment (laptops, specialized device access equipment).

The big vision must be for us to use technology to transform how the world manages energy and environmental challenges, enabling an end-to-end, highly secure global smart grid. That vision is looking forward to a world where the following elements are present:

Converging utility systems and processes work well, across all key elements of the grid, with the aim of increasing grid intelligence and grid efficiencies.
Providing solutions using a highly secure platform which is based on open-standards.
Delivering increased grid reliability, security, resiliency, and power quality.
Enabling smart grids to become platforms for innovation.
Making smart grid work well hinges on observability: the fast, reliable and secure exchange of data among all components, via pervasive sensing in real-time. This is measured in increasingly shorter durations, as short as 120th of a second.

Today’s electric utility companies have their hands full with myriad dilemmas: The grid is old and increasingly insecure, the traditional one-way broadcast model is outmoded, supply and demand patterns are changing, and utility companies are under regulatory pressure to address increasing energy demand much more efficiently. At the same time, consumers are demanding lower energy bills, more reliable service, better visibility into their usage patterns, and more choice about where their energy comes from.

Regardless of geographic location, the strategy utility companies are rapidly turning to is the “smart grid”, an intelligent communications infrastructure that can efficiently integrate all supply and demand elements connected to the electric grid. Moving to a smart grid infrastructure can address many of the challenges that utility companies worldwide are striving to overcome, including:
Inefficient and outdated grid infrastructure: Most of the world’s electricity system was built when primary energy was relatively inexpensive. Grid reliability was assured by having excess generation capacity in the system with unidirectional electricity flow to consumers from centrally dispatched power plants. Investments in the electric system were made to meet increasing demand; not to fundamentally change the way the system works.
Unpredictable energy sources: When using renewable resources like wind and solar, electricity is produced only when the wind is blowing or the sun is shining. Usually, renewable power production does not match the peak demand times; as such, it offers either too much or not enough capacity at any one time.
Unpredictable demand: In the past, demand was very stable and predictable. Due to rising energy costs and growing environmental concerns, customers are changing their usage behavior, and this is resulting in greater demand fluctuations. As a consequence, it becomes more difficult to maintain reliability and avoid outages in the electricity system.

The framework for utility regulation, in use today, is more than 120 years old. This conceptual framework for utility regulation in use today is contained in a speech titled, “PUBLIC CONTROL AND PRIVATE OPERATION” (before the National Electric Light Association, now Edison Electric Institute), in Chicago, Illinois, on June 7, 1898. (This speech was delivered by Samuel Insull, the former business partner to Thomas Edison, and a leading utility executive of his time.)

The timing is excellent for an update of utility regulation frameworks, especially in light of the transformations now underway. Some governments and some customers are doing the right thing: actively encouraging and rewarding utilities which make smart grid investments. These same utilities are moving towards greater use of more efficient, more reliable and cleaner energy sources. That is, in fact, not only good for the utility and for its customers. It’s helping to ensure a more sustainable future for us all.