How smart grids increase the potential uptake of renewable energy sources

In November 2013, IRENA (International Renewable Energy Agency) published a working paper explaining how smart grid technology can enable a higher share of renewable energy resources in power systems.

Power systems all over the world face an increasing share of renewable energy resources. The output variability, the decentralized nature and capital intensity and other aspects, typically attributed to these resources, argue in favour of incorporating smart grid technologies. These provide information and communication technology into every aspect of the power system in view of enhancing cost-efficiency, reliability and sustainability.

The document puts forward a comprehensive table providing the maturity, market penetration, economics (costs, payback time), as well as the strengths and weaknesses of each technology.  This information is used to make a classification into three groups: firstly, well-established technologies such as advanced demand response and distribution automation enable renewable generation and are generally assessed as cost-effective. Secondly, advanced technologies such as smart invertors and renewable forecasting technologies are technically available, and in use, though they result in additional costs. Therefore, these technologies become particularly important for high renewable capacity penetrations of 15% and more. Thirdly, emerging technologiessuch as distributed storage, micro-grids and virtual power plants are not yet at “entry level” and focus should be put first on the roll-out of the previous categories. Although the different technologies are highly relevant, they find themselves in different stages of research and development. Whilst the first two categories can benefit from roll-out support policies, the latter category need additional research efforts. In all cases, pilot and demonstration projects are found to be crucial in providing insight on how these technologies perform in the system.

When implementing demand response, it is recommended to start with commercial and industrial consumers. This is an economic consideration following higher flexibility capabilities. After experience and technology improvement, it is recommended to apply the technology to other customers such as large-scale residential customers or emergency services. The document is particularly conservative towards the adoption of advanced metering infrastructure and advanced pricing, which is stated to be not strictly necessary for renewable integration. However, it can be argued that these remain crucial for achieving economic efficiency while achieving renewable integration at high security of supply standards.

The paper points out that non-technical issues may be the main barriers for the adoption of smart grids. Traditionally, power systems are strongly regulated and smart grids may change the institutional relationship between actors in the sector. Data ownership and privacy, grid security, the control of distributed resources, the role of new market players and the need for standards are identified as key topics with limited worldwide experience. Again pilot and demonstration projects are crucial to open up the electricity system to new products, services and actors.