Smart Grids To Overhaul Power Sector

Australian
Monday 29/3/2010 Page: 26

JUST as mobile phones allowed the long-standing business models of the telecommunications industry to be broken, so it seems that the emergence of electric car networks and smart grids will turn the multi-trillion-dollar car and energy industries on their head. No longer will these industries be dominated by the old carmakers, petroleum groups and centralised utilities. Indeed, they seem destined to follow the path of AT&T and Telstra broken up, downsized and desperately defending a declining traditional business while trying to match wits and expertise with innovative and fast-moving competitors.

How exactly this plays out in energy markets is exercising the thoughts of strategists everywhere, fascinated and animated by the potential incursions of Google, which now has a generator's licence in the US, and the likes of India's mobile phone group Airvoice, which is involved in a joint venture to build $50 billion worth of large-scale solar and wind capacity. One of the principal technologies that will allow these dramatic changes is the development of the smart grid, essentially an energy network that allows communication, monitoring, control and two-way sales. GE's Bob Gilligan, who heads the company's push into digital energy, describes it as an "energy internet".

But how will smart grids affect the average consumer, apart from rendering the electricity bill as impenetrable as the mobile phone bill? Gilligan says it could reduce the size of the bills, lead to the purchase of more efficient appliances and prioritise their use at different times of the day. Portugal is now one of the most advanced renewable nations in the world, producing 44% of its energy needs from renewables on one day last year, and recently lifting its annual target to 31% by 2020.

Logica's Jose Antunes, who led the technology side of Portuguese utility EDP's Invogrid Project, says one of the most interesting developments has been the emergence of the "prosumer", home owners equipped with solar panels and wind turbines who are now using the smart grid to sell energy back into the network for five times the price it would cost them to buy. So far, there are 100,000 such prosumers, and the monthly online "auction" of new positions has to be closed down within an hour.

"Consumers are able to reshape their behaviour in way which allows them to save, reduce consumption at peak time, and allows utilities to better manager their networks," Antunes says. "If you can do that in such a way which means you no longer have to build a $1bn peaking plant, then you can start to understand the benefits of smart grids."

GE's Gilligan says smart grids will be essential as the world moves towards electric vehicles and electric car networks, which will probably be charged in off-grid hours and could conceivably sell energy back into the grid to cope with peak demands. Gilligan says smart grids and smarter usage will allow the current power generating sources in the US to support the transition of cars to EV. This suggests the businesses that dominate the energy industry of the future may not be the biggest power providers, but those with the smartest software. "We are seeing a massive business change affecting a very large set of infrastructure businesses," Gilligan says.