Since I have spent some time on this blog on the supply i.e. generation side of the game I thought today I will look into the demand side of the game. Hence smart grids. First, lets define the demand. So, what is the demand?
In United states, this demand is causing rise of electric bills.
So, we need to increase the supply or respond to the demand to reach the equilibrium or maintain it. But how do we respond to the rising demand? It cannot be the existing technology as that is causing this rise and is not able to balance the demand.
Hence we need a new technology – a smarter infrastructure that can think like us and feel like us and in some way act like us human beings. Thus, smart grid. But what is a smart grid?
Quoting from NEMA (The Association of Electrical and Medical Imaging Equipment Manufacturers) – “ Smart Grid refers to an improved electricity supply chain that runs from a major power plant all the way inside your home.”
In reality, it is an integration of electrical infrastructure and information infrastructure.
An electricity supply chain consists of three parts: generation (power plants); delivery (transmission and distribution networks); and customers (residential, commercial, industrial, military, etc.). Supply and demand have to remain tightly balanced at all times, since there is
no commercial solution for large-scale storage of electricity to absorb any excess power or shortfall.
It is a complex and expansive system consisting of numerous primary elements interacting continuously through electrical, magnetic, and mechanical forces—far more complex than what might be ascribed to transportation or communication systems.
And why cannot existing grids work when we put some solar and wind firms and replace fossil fuel? Quoting Alan Schriber, Chairman of Ohio PUC – “ You can build wind generators and solar
panels. All that’s nice, but at the end of the day, reducing consumption is the cheapest way to do it. By leveling demand, you forgo the need to continually build. That’s the beauty of Smart Grid”
Yes, it is about leveling the demand of our digital society.
So, how do we level it out? We improve (which will increase) the demand management. Going back, thinking about electrical infrastructure and information infrastructure, that is done using smart meters and AMI (automated meter infrastructure).
Through such a consolidated infrastructure, the customers respond better to price signals and price responds better to customer demands. It acts as a pipe through which electricity, information and money flows.
Caveat: Since our target is demand response, we need to be cognizant of the fact that as consumers we will only respond if we are stakeholders in this game i.e. our utility bill gets reduced if we install smart meter at our home and turn of that hallway light during day time. Thus, we need incentives which is the rate plan. Yes, that is the single most thing that can make or break the success of the demand response strategy.
Here is some data about how demand response using smart grid has worked.
In conclusion: it is more about economics of demand response that makes smart grids the most enticing of all clean tech investments. It leverages as much as possible existing infrastructure of electricity and internet.