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Major Investments Propel Smart Grid Development Worldwide

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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By Felicity Bradstock ↗ – Dec 30, 2023, 2:00 PM CST

  • Smart grids enable two-way communication between utilities and customers, improving efficiency, reliability, and environmental impact.
  • They offer robust responses to emergencies, rerouting electricity automatically to prevent widespread outages and support distributed generation.
  • Significant global investments are being made in smart grid technologies, with initiatives like the EU’s $633 billion plan and the U.S.’s GRIP Programme, reflecting the urgent need for modern, resilient electrical grids.

As more electricity grids worldwide are being connected to renewable energy projects, such as wind and solar farms, suppliers are using this as the opportunity to develop smart grids that are safer, can better respond to consumer needs, and can carry out real-time demand monitoring activities. While this is no easy or cheap feat, the expansion of smart grids could enhance power distribution and improve efficiency, leading to a long-term cost reduction. 

Smart grids are electric grids – a network of transmission lines, substations, and transformers – that use smart technologies, such as artificial intelligence (AI) and machine learning. Many electricity grids were built in the late 1800s and early 1900s, meaning they are outdated, in poor condition, and insufficient at delivering power to growing populations. Further, many existing grids are connected to energy hubs that rely on fossil fuels for their power. However, with the rise of renewable energy, suppliers are increasingly finding that they must develop expansive new transmission lines across previously unheard-of energy regions, as more rural land is being developed for green energy production. 

Smart grids use digital technology that allows for two-way communication between the utility and its customers, permitting the grid to respond to changing energy demand. This type of infrastructure coordinates the needs and capabilities of all generators, grid operators, end users and electricity market stakeholders to provide power more efficiently and reliably, with a reduced impact on the environment. Many of the technologies that can be incorporated into a smart grid have already been developed and tested, meaning there is significant potential for the wide-scale rollout of smart grids. Some of the benefits of a smart grid include greater efficiency in electricity transmission ↗, faster restoration time following power outages, reduced operations and management costs for utilities, reduced electricity costs for consumers, reduced peak demand, the integration of renewable energy resources, and improved security.

The existing electricity grids in most countries are extremely vulnerable and are prone to failure. In the U.S., the government has been researching ways to develop grid systems that are resilient to extreme weather conditions and other challenges. At present, a power outage can negatively affect a range of services, such as banking, communications, traffic, and security. Further, during severe weather, houses can be left without power and heating, making residents extremely vulnerable. However, smart grids are better at responding to emergencies and can automatically reroute electricity when equipment fails or outages occur to avoid widescale blackouts and enhance power recovery. Smart grids can also support distributed generation, using customer-owned power generators to produce power when power is not available from utilities to power critical infrastructure. 

Not only do smart power grids offer a wide range of benefits, but they are also becoming increasingly necessary for the delivery of power to consumers. As countries around the globe shift away from fossil fuels in favour of renewable alternatives, they are becoming more dependent on green energy sources, such as wind and solar power, which fluctuate throughout the day. Smart prediction technologies can better respond to this fluctuation to ensure the grid is not left without power. AI can provide utilities with massive amounts of real-time sensor data from users to provide accurate forecasting and suggest trends. 

Karen Panetta, a fellow of the Institute of Electrical and Electronics Engineers, explains ↗ that “the power of AI” is needed to help “correlate trends and do better forecasting”. “Many traditional approaches to forecasting only have the capacity to look at a small number of parameters with small datasets… AI can allow us to explore relationships and look at ways to mitigate failures in the grid and understand how to re-distribute energy in the most efficient ways.” 

Meanwhile, consulting firm Indigo Advisory has identified over 50 potential uses for AI in the energy sector, demonstrating the value of developing smart grids. More users are expected to be connected to mini-grids in the coming years, which will deliver power to hard-to-reach communities from renewable energy operations, particularly in developing countries. The use of smart grids and battery storage can help ensure that consumers who could not previously access electricity supplies can be provided with a reliable power source. 

According to the International Energy Agency (IEA), investment in smart grids needs to more than double by the end of the decade ↗ to ensure we are on track with the Net Zero Emissions by 2050 Scenario, particularly in emerging markets and developing economies. Several countries have already announced plans for the development of a smart grid, particularly high-income states. In 2022, the European Commission launched the EU action plan “Digitalisation of the Energy System ↗”. It hopes to invest $633 billion in the European electricity grid by 2030, with $184 billion going towards digitalisation, such as smart metres, automated grid management, digital technologies for metering, and improvements to field operations.

In North America, the U.S. announced its Grid Resilience Innovative Partnership (GRIP) Programme ↗ in 2022, providing $10.5 billion in funding to support the upgrade and expansion of the country’s electric grids. In Canada, the government is investing $100 million in its Smart Grid Programme to deploy smart grid technologies and smart integrated systems.

Several countries across Asia have also launched a range of initiatives aimed at enhancing smart grid technology. China aims to spend $442 billion on the modernisation and expansion of its electric grids between 2021 and 2025. In 2022, Japan announced a financing programme of $155 billion to spur investment in smart grids. That same year, in India, the government established a $38-billion scheme to help power distribution companies and improve distribution infrastructure. 

By Felicity Bradstock for Oilprice.com

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Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

More Info ↗

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Michael Maren
Michael Maren
Former marine biologist who likes to spend as much time in the tropics as possible, due to a horrible time I once had in Alaska. Brrrr.

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