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Kepco pioneers new smart grid business model

South Korea will raise electricity prices to fund $25 billion investment in smart grids that carefully monitor the supply and demand for electricity to eliminate waste

South Korean utility Kepco said it will introduce new business models nationwide based on smart grid power delivery by 2015. The plan builds upon a pilot programme on the island of Jeju which concluded in May 2013.

Kepco vice-president Hwang Woohyun told delegates to the World Energy Congress that most investment would come from the private sector, but about $2.8bn would come from the government."For that heavy investment, we will need to increase the electricity price - customers won't like that. They will prefer to stick to the old ways," he said.

"We have to introduce intelligent operations systems. It will require a lot of budget, and we are considering how to ensure return on investment."

Smart grids employ data analysis and intercommunication to maximise the efficiency of power supply and delivery. About 500 smart grid pilot projects are under way around the world but the technology is young. "We have to show the successes of those 500 projects," said Ronnie Belmans, executive director of the Global Smart Grid Federation. "But we also have to show the failures. Because we can learn a lot more from the failures."

Consumers need to persuaded of the utility of smart grids if they are going to help pay for trials, said Jochen Kreusel, head of smart grid for Switzerland's ABB."We have to offer them some sort of value - not always only economic value, but sometimes maybe just feeling better," he said. "If you tell them they are consuming energy more sustainably, maybe they will feel good about that."

Michael Valocchi, vice-president of IBM described smart grids as "an information platform where we've just scratched the surface of what we can do."

He said once major industry players build out the platform backbone, "there will be innovation on that platform by new entrants in the industry that will develop business models on top of [it]." He added that consumer benefits will include service, reliability, comfort, and peace of mind.

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