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Smartening-up electricity supply

Google and GE are among those working on a new way of supplying electricity to homes and businesses – smart grids are hailed by some as a miracle cure for global warming, writes Conal Walsh

Suddenly, the talk everywhere is of smart grids. In the boardrooms of GE and Siemens, among green activists and along the corridors of political power, this new way of delivering energy to homes and businesses is being held up as a 21st century salvation from fuel shortages and environmental destruction.

New, computerised generators and transmitters will revolutionise the relationship consumers have with their energy suppliers, enabling them to choose what sources their electricity comes from, when to buy it and at what price. That, at least, is what the champions of smart grids say, among them the US president.

Barack Obama called on Congress earlier this year to "act without delay" in passing legislation that would overhaul the patchwork of transmissions and distribution systems in the US and transform the way Americans receive their electricity. The new grid will cost tens of billions of dollars of public money to build, but could eventually lead to $5bn-a-year's worth of energy-efficiency savings in the country.

Many experts claim it offers Western society a bigger and more elusive prize – the chance to make drastic, but relatively painless, cuts in carbon emissions. Small wonder that European governments are following the US' lead in devoting large chunks of their recession-busting, capital-expenditure programmes to smart grids. Only last month, Ofgem, the UK energy regulator, announced a 25% increase in investment to replace the country's ageing electricity-distribution network with smart-grid technology.

A combination of new technologies

A smart grid isn't a single device, but a combination of new technologies at different points in the electricity-supply chain. These range from modernised central electricity transmitters to user-friendly digital smart meters, which could one day be installed in every household and will tell customers how much the energy they are using costs.

The smart grid promises two fundamental improvements: it should be much better than the antiquated infrastructure in use today at accepting energy supplied from alternative, greener sources, such as solar and wind power; and, by giving consumers closer control over their own energy usage, it ought to cut waste, reducing emissions in the process.

Most Western countries are served by power grids that were designed in the late 19th and early 20th centuries. They have barely changed since, owing to an understandable reluctance on the part of utilities and public authorities to risk any kind of experimentation with such critical infrastructure. But the result is that many countries' grids are unable to handle the intermittent, weather-dependent nature of electricity from greener, alternative sources, such as the sun and the wind. Nor does the old grid's unidirectional system, representing only what engineers thought possible a century ago, allow end-users easily to control their own energy consumption.

With new infrastructure and smart meters in homes, that ought to change. Suppliers will receive a more precise reading about customer usage, which will end inaccurate estimated billing. The meters will be able to inform customers when energy demand is high and, therefore, when power is likely to be more expensive.

The result, it is hoped, will be a more energy-conscious public and savings for every household. Power companies may even introduce off-peak deals similar to those offered by telephone companies. And with consumers and businesses incentivised to reduce their energy usage at peak times, the peaks of demand experienced at certain times of day ought to flatten out. This in turn will allow for a reduction of the total number of power stations needed, lowering pollution.

One day, a redesigned national grid could also include plug-in points for electric cars, experts say; or the chance for ordinary people to generate their own energy – from solar panels at home, for example – and sell it back into the market.

The system will need two-way communications systems, advanced sensor technology and computerised distribution modelling to work. Google, GE and Cisco Systems are among the companies pouring millions of research dollars into smart-grid gadgets.

Gaining political support for a drastic restructuring of national grids promises to be difficult, however, and securing the agreement and co-operation of publicly and privately owned utility companies will not be easy. Logistically, the task at hand is very big: installing smart meters would require 27 million home visits in a country of the UK's size.

Then there is the expense. Smart grids of varying sizes and degrees of complexity have been trialled in cities in Italy, the Netherlands, Texas and elsewhere – and with some success. But the up-front cost of a genuinely national roll-out is likely to be very high.

In May, government ministers said a comprehensive UK scheme would cost between £7bn ($11.5bn) and £9bn, or an average of £269-346 per household. Ernst & Young estimates that the true cost will be at least 49% higher, at £13.4bn, or £515 per household. It would probably take at least three years for the average household to earn this money back through reduced bills.

There is debate, of course, about the way economists have forecast usage. How ordinary customers would really behave under a new electricity regime and how quickly savings would genuinely materialise, remains to be seen. But Western countries are worried about their dependence on Russian gas and oil from the Middle East, and anything that could diversify the energy mix is strategically attractive.

And then there is the issue of global warming. The EU has set itself a target of reducing greenhouse-gas emissions by 25-40% by 2020 and 80% by 2050. The US will also commit to deep emissions cuts at the Copenhagen climate-change summit in December, recognising the need to take a lead in order to persuade the emerging industrial powers of Asia to do the same. A reduction in wasted energy, and technology that better harnesses wind and solar power, are obvious ways for developed countries to meet their testing treaty commitments.

By luck or chance, the US' grids are ageing in any case. Often dating from the mid-20th century, many will need replacing between 2010 and 2030 – at an estimated cost of $1.5 trillion, according to the Department of Energy. Given that level of unavoidable expense, it may not cost much more – and may yield great benefits – to make the new grids smart.


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