Smart grids: electricity networks and the grid in evolution

A smart grid is an electricity network/grid enabling a two-way flow of electricity and data whereby smart metering is often seen as a first step.

Smart grids – as a concept – became known over a decade ago and are essential in the digital transformation of the electricity sector. An introduction with definitions, trends and essential characteristics of smart grids.

A smart grid is an electricity network enabling a two-way flow of electricity and data with digital communications technology enabling to detect, react and pro-act to changes in usage and multiple issues. Smart grids have self-healing capabilities and enable electricity customers to become active participants.

Big data analytics and IoT technologies are important technology drivers in smart grids whereby analytics shift to the edge, as in edge computing. Smart grids leverage more technologies but aren’t just about IT nor even technologies.

A smart grid serves several purposes and the movement from traditional electric grids to smart grids is driven by multiple factors.

Smart grids - the smart electrical grid. A smart grid is an electricity grid enabling a two-way flow of electricity and data; smart grids include various operation and energy measures such as smart meters, smart appliances, renewable energy resources, and energy efficient resources.

These include the deregulation of the energy market, evolutions in metering, changes on the level of electricity production, decentralization (distributed energy), the advent of the involved ‘prosumer’, changing regulations, the rise of microgeneration and (isolated) microgrids, renewable energy mandates with more energy sources and new points where and purposes for which electricity is needed (e.g. electrical vehicle charging points).

An electrical grid or electric grid is a network to deliver electricity from the producer(s) and places where it’s generated and transformed (power plants and substations) to the final destinations where electricity is ‘consumed’: households, businesses, various facilities and the consumer in general.

In practice it is a highly interconnected network with several components such as substations, transmission lines and wiring, distribution lines, transformers and more.

Grid ecosystem players have various challenges in the decentralization of energy production and transport.

Smart grid and grid modernization – what’s in a name?

Do note that some people in the industry don’t talk about smart grid anymore. They see that term as referring to a first stage where advanced metering infrastructure (AMI) initiatives were deployed with first-generation smart meters.

They prefer to speak about power grid modernization, for example, as that is what it’s really about with far more elements than smart metering, sending data in two directions and adding power to the grid in the opposite direction. However, although many countries, regions, states etc. already took such smart metering initiatives a decade ago there are still several where this is only really starting. In many countries the challenges of grid players are mainly seen in the decentralization of the production of energy and the transport of it.

For IoT companies such as AllThingsTalk the challenge that energy and grid players ask them to help resolve is the connection of a multitude of meters and normalization of resulting data, enabling to roll out faster and in an automated way as founder Tom Casaer explains in an interview.

The smart grid compared to traditional electricity grids – the essence and differences

Traditional electricity grids had almost no storage capabilities, they are demand-driven and have a hierarchical structure. In an electricity network voltage is gradually lowered so the electricity can be used by these different consumers: from transmission voltage levels to distribution voltage levels to service voltage levels (in reality it’s both gearing up and down and thus a bit more complex).

Typically, a distinction is made between transmission (transmission grid: high and extra high voltage) and distribution (distribution grid: lower voltage), where different wiring and cabling systems come in the picture. The purpose of an electrical grid is to make sure that electricity is always provided when and where needed, without interruption – and herein lie many challenges where a smart grid can already offer solutions/answers.

In smart grids, self-healing capabilities enable to automatically detect and respond to grid problems and to ensure quick recovery after disturbances.

Given the complexity and the multiple challenges that can arise such as the consequences of severe weather conditions, damage by wildlife, human sabotage and other external factors and internal factors (issues with equipment failure and crucial assets) managing a grid is very complex and a dedicated field for experts who also need to consider the choices regarding energy regulations and sustainability initiatives by governments, also regarding a more sustainable industry.

The two-way flow of electricity and data that is the essential characteristic of a smart grid enables to feed information and data to the various stakeholders in the electricity market which can be analyzed to optimize the grid, foresee potential issues, react faster when challenges arise and build new capacities – and services – as the power landscape is changing.

The electricity market, the consumption of electricity, regulations, demands of various stakeholders and the very production of electricity are all changing. So, smart grid initiatives exist across the globe, albeit sometimes with different approaches and goals.

While smart grid still refers to the bi-directional transmission of data and electricity (with prosumers and organizations generating electricity too), the meaning and reach of the term has broadened given the many possibilities enabled by this important change and ever more technologies used in a context of smart grid deployments.

This includes, as previously mentioned, IoT technologies (electrical grids are highly sensor-intensive operations since long before anyone used the term IoT), big data and advanced analytics with artificial intelligence and machine learning on top, ample communication standards used to send data from one point to another (e.g. from smart meters to utility companies) and more technologies (digital twins, for example) which we see popping up in the digital transformation of utilities and in Industry 4.0.

As said, we also must mention edge computing here. Edge computing and edge analytics play an important role in utilities overall.

Smart grids explained by Power and Energy EU with multiple energy sources isolated microgrids microgeneration and power storage at the center and various benefits detailed - view larger image - GDS Infographics - CC BY 2.0
Smart grids explained by Power and Energy EU with multiple energy sources isolated microgrids microgeneration and power storage at the center and various benefits detailed – view larger image – GDS InfographicsCC BY 2.0

Smart grids: more than smart meters and advanced metering infrastructure

As mentioned, one of the first and perhaps main aspects of smart grid initiatives, when people first hear about them, concern metering and so-called smart meters. Smart meters are the next stage in an evolution that started decades ago and led to the first smart grid technologies such as automatic metering and, next Advanced Metering Infrastructure.

Microgrids play an important role in building a low-carbon future because they bring resilience to the main grid, optimize energy costs, allow for renewable energy hosting, increase electrical vehicle integration, and improve energy accessibility.

However, a smart grid is about much more than just smart metering and some other elements include the distribution lines and substations (substation automation and, increasingly, digital substations), technologies and mechanisms to prevent power outages and ensure power quality (availability, reliability, etc.), the integration of energy from various sources with an increased focus on ‘green energy’, smart power generation, sensing along transmission lines, power system automation, the inclusion of microgeneration whereby especially organizations and larger facilities can generate their own power and supply it to the central network grid (on top of prosumers), better and more power storage capabilities, ways to enhance security, alternative transmission methods to save on precious metals and the design of more modern and stable electrical grids in countries and areas where old grids need replacement.

Currently there is a lot of focus on self-healing grid capacities, microgrids and distributed energy resources (DER), the communication architectures and technologies in grids and the usage of smart grid technologies/solutions/approaches in regions with older electricity grids that suffer from outages and poor power quality.

“One of the primary characteristics of a smart grid is its ability to self-heal” confirms Julio Cesar Martins of Schneider Electric (that has a channel program, called EcoXpert for certifications in critical power, substation automation etc. and is one of the leading players in the smart grid market).

Pointing to FLISR technology (fault location, isolation, and service restoration) he adds that self-healing capabilities minimize blackouts because they allow for continuous self-assessments that inspect, analyze, react to, and automatically respond to problems.

This is made possible through the widespread deployment of smart sensors and other intelligent devices and automated controls that check and evaluate the status and condition of the network to identify abnormalities and problems he states.

The role of the Internet of Things in the smart grid evolution - source
The role of the Internet of Things in the smart grid evolution

Flexibly is another keyword. According to the previously mentioned by 2023, 65% of electricity companies will have invested in digital technologies and platforms to support flexibility services, thereby activating a load potential of up to 35% of installed capacity.

Using the power of analytics, a smart grid typically includes Industrial IoT use cases in areas such as asset optimization, predictive maintenance, the mentioned self-healing and any method to get (parts of) grids up again in case of issues or needed maintenance or external factors and ways to correct and optimize power quality while making sure demand for electricity is met in the most optimal way with energy savings and environmental mandates never being far away.

Centralized power generation is increasingly giving way to decentralized as new technologies continue to allow for different forms of power generation, storage, and transmission.

The prosumer plays an important role in the efforts of energy companies and various players in the utilities value chain such as energy retailers whereby customer-centricity and improving customer experience are key. In 2019 utilities/energy retailers double their investments in artificial intelligence to improve convenience, customization, and control for clients, thus enhancing customer experience says IDC.

Smart grids shouldn’t just lead to less power waste and enhance competitiveness in the electricity sector but also aim to put the consumer more in control (whereby energy companies also hope to see less unpaid bills).

Decentralized energy generation and the smart grid

As mentioned, one of the main changes in the electricity industry is the rise of so-called decentralized energy generation and of microgrids/microgeneration.

Decentralized energy generation essentially means that more and more energy gets generated (and stored) in various ways that are closer to the customer that needs the energy. If consumers of energy in the broadest sense generate their own energy more often this de facto means that less money is made in various ‘higher’ levels of electrical grids.

Decentralization of energy generation and distributed energy storage makes customers part of the smart grid equation which is both opportunity and challenge and is one of the key changes in the electricity market along with electrification and digitalization - source and more
Decentralization of energy generation including distributed energy storage makes customers part of the smart grid equation which is both an opportunity and a challenge and is one of the key changes in the electricity market along with electrification and digitalization

“Closer” doesn’t necessary mean in terms of distance. If a company has power-generating means where it is located, then chance is indeed high nothing else is physically closer. Yet, you can perfectly imagine situations where a power plant could be physically very close as well. What matters is the ability to integrate the various resources whereby decentralized energy in general refers to the energy produced closer to the point of usage instead of at some large plant from where it is sent across the national grid.

By 2023, 65% of electricity companies will have invested in digital technologies and platforms to support flexibility services, thereby activating a load potential of up to 35% of installed capacity (IDC)

“Centralized power generation is increasingly giving way to decentralized as new technologies continue to allow for different forms of power generation, storage, and transmission” says Emmanuel Lagarrigue. Decentralization is nothing less than a revolution in how we generate, store, move, and consume energy he adds.

One of the challenges is integrating all this but also sending additional capacity that might be created in a decentralized way to the grid whereby companies – and people – become sellers of energy as well as buyers. You can imagine that this isn’t the easiest task in the smart grid equation. Isolated microgrids also enable to minimize impact of potential disruption.

What is a smart grid? Smart grid definitions and some challenges to address

A smart grid has been defined as (a network of) self-sufficient systems enabling the integration of power generation sources of any type and/or scale to the electrical grid that reduces the workforce and aims to offer safe, reliable, high-quality and sustainable electricity to consumers and organizations alike.

The aspect of workforce reduction is indeed important as well. It is expected that smart grids will need very little workers as they become the true self-sufficient systems they are aimed to be. It is less emphasized in definitions offered by national and international instances working on smart grids whereby mainly the benefits are addressed (some more challenges are mentioned at the bottom of this article).

Some characteristics of a smart grid compared to traditional electric grid approaches on the level of production the market transmission distribution and the electricity consumer - image
Some characteristics of a smart grid compared to traditional electric grid approaches on the level of electricity production, the electricity market, transmission, distribution and the electricity consumer – image Bartz/Stockmar CC BY-SA 4.0

Another definition, from Debashish Chakraborty: “A smart grid is an intelligent digitized energy network delivering energy in an optimal way from source to consumption”.

“This is achieved by integrating information, telecommunication, and power technologies with the existing electricity system. It introduces a two-way dialogue where electricity and information can be exchanged between a utility and its customers. It’s a developing network of communications, controls, computers, automation and new technologies and tools working together to make the grid more efficient, more reliable, more secure and greener”.

And of course, we can’t forget those national and supranational instances (electricity grids can be regional, national, international etc., depending on the region) who have their smart grid projects/policies.

The EU defines a smart grid as follows: a smart grid is an electricity network that can cost-efficiently integrate the behavior and actions of all users connected to it – generators, consumers and those that do both – to ensure economically efficient, sustainable power system with low losses and high levels of quality and security of supply and safety.

The benefits of a smart grid include improved efficiency and reliability of the electricity supply, integration of more renewable energy into existing network, supporting the development of electric vehicles at scale, new solutions for customers to optimize their electricity consumption and reduction of carbon emissions.

While the EU (PDF downloads) recognizes that there are elements of smartness in several parts of electrical power grids it distinguishes between existing grids and smart grids as follows: “the difference between a today’s grid and a smart grid of the future is mainly the grid’s capability to handle more complexity than today in an efficient and effective way”.

According to the EU a smart grid employs innovative products and services together with intelligent monitoring, control, communication, and self-healing technologies to:

  • Better facilitate the connection and operation of generators of all sizes and technologies;
  • Allow consumers to play a part in optimizing the operation of the system;
  • Provide consumers with greater information and options for how they use their supply;
  • Significantly reduce the environmental impact of the whole electricity supply system;
  • Maintain or even improve the existing high levels of system reliability, quality and security of supply;
  • Maintain and improve the existing services efficiently.

Similar smart grid definitions exist in other regions through the world where smart grid initiatives exist which is the case for most countries, obviously including the US.

The U.S. Department of Energy describes “the Smart Grid” (as the overall smart grid initiative in the US is called) as representing an unprecedented opportunity to move the energy industry into a new era of reliability, availability, and efficiency that will contribute to economic and environmental health.

It sums up some benefits associated with the Smart Grid (again, the initiative, but you can expand it to smart grids overall):

  • More efficient transmission of electricity;
  • Quicker restoration of electricity after power disturbances;
  • Reduced operations and management costs for utilities, and ultimately lower power costs for consumers;
  • Reduced peak demand, which will also help lower electricity rates;
  • Increased integration of large-scale renewable energy systems;
  • Better integration of customer-owner power generation systems, including renewable energy systems;
  • Improved security.

Smart grids: some additional challenges

Obviously, there are also challenges regarding the movement to a smart grid. Some were addressed earlier in this overview. Additional ones include consumer concerns (privacy and personal data protection) and cybersecurity.

In countries where smart meter initiatives have started we often see resistance from consumers (whereby often the installation of a smart meter in the end becomes an option; in other countries refusing leads to financial consequences or, let’s say accepting means a financial reward).

A second challenge is certainly the overall cybersecurity aspect which is typical in all industrial environments where digitization and digital transformation are ongoing, data become key and IT and OT converge (IT stands for information technology, OT for operational technology).

Smart grids will increase network flexibility by the development of additional intelligence (e.g. temperature control of transformers, real time thermal monitoring of cables, etc) integrated within network equipments and will improve the existing communication systems (EU Commission Task Force for Smart Grids)

Additional challenges in smart grids include regulatory changes, the complexity in integrating sources, systems and partnerships between various players in a deregulated market, the local situation whereby a selected number of large companies often still dominate and changing attitudes among prosumers.

The goal of this article was to introduce smart grids and explain the essence of the smart grid concept (we call it a concept as there is no real smart grid yet). However, there is of course more to it given the sheer complexity of electrical grids, the involved components and the many stakeholders.

Smart grids obviously fit in a broader digital transformation of utilities and, given these many stakeholders (including local and higher-level authorities) and the fact everything is connected also touches several other so-called ‘smart’ areas, from smart manufacturing and smart cities to the smart home and smart buildings.

The smart grid in the smart ecosystem

From advanced metering infrastructure to distributed energy resources

A final thought: as said the smart grid concept isn’t new. Moreover, it’s a journey and gradual processes, a spectrum encompassing many possible different steps and challenges. Nevertheless it’s clear that we’ve moved far beyond the early days of advanced metering.

Smart grids include various operation and energy measures such as smart meters, smart appliances, renewable energy resources, and energy efficient resources.

Zach Pollock describes the evolution on the ‘smart grid journey’ since the term first popped up well: “The first wave of grid investments occurred in the late 2000s under the banner of smart grid technology, resulting in utility-owned, front-of-the-meter assets like advanced metering infrastructure (AMI) and distribution automation devices. Today, grid modernization has evolved to be more inclusive of customer preferences and desires. In many geographies, this has translated to infrastructure and process improvements that have facilitated the integration of distributed energy resources (DER)“.

As is explained here, distributed energy resources (DERs) are electricity-producing resources or controllable loads that are directly connected to a local distribution system or connected to a host facility within the local distribution system.

DER systems typically use renewable energy sources, including small hydro, biomass, biogas, solar power, wind power, and geothermal power, and increasingly play an important role for the electric power distribution system.