Smart Grids


Click the questions to get answers on key grid issues…

What is the Definition of a Smart Grid?

The European Technology Platform Smart Grid (ETPSG) defines the smart grid as follows:

A Smart Grid is an electricity network that can intelligently integrate the actions of all users connected to it – generators, consumers and those that do both – in order to efficiently deliver sustainable, economic and secure electricity supplies.

Based on ETPSG definition, Smart Grid employs innovative products and services together with intelligent monitoring, control, communication, and self-healing technologies to:

  • Better facilitate and manage the connection and operation of all sources of energy.
  • Give consumers more choice so they can  help to optimize energy use;
  • Provide consumers with greater information and choice of supply;
  • Significantly reduce the environmental impact of the whole electricity supply system;
  • Deliver enhanced levels of reliability and security of supply.

Smart Grid deployment creates “observability” across the entire energy chain: It deploys  information and communications technologies to link devices and information, market and commercial considerations to engage users, environmental impacts, regulatory framework, standards for interoperability,  managing social and government requirements, and transformation strategies to handle the new environment.


What are the Characteristics of a Smart Grid?

A Smart Grid will be fundamentally different to current network operations. The new grid will:

  • Support wide-spread distributed energy resources by managing;
    • Bi-directional flows of power and real-time information;
    • Intermittent renewable generation;
    • Supply / demand balancing within the distributed networks;
  • Facilitate the participation of customers by;
    • Enabling new technologies so consumers can monitor and automatically control energy use;
    • Providing opportunities for consumers to participate in the market to meet demand / response signals;
  • Support increased penetration of Electric Vehicles.

What are the Drivers for a Smart Grid?

The drivers for developing a Smart Grid can be grouped into the following three categories:

  1. Government policy;
  2. Customer behavior and requirements; and
  3. Industry and technology changes.

Many of the drivers are interrelated and cross the category boundaries, and sometimes also conflict.

Government policy drivers include:

  • Climate change objectives – Renewable Energy Targets (RET), feed-in tariffs, and the proposed Emissions Trading Scheme (ETS) are responses to concerns over global warming and its impact on the environment. In addition Energy Efficiency policies are being developed that will also contribute to improving energy security.
  • Competitive economy objectives – Governments will introduce policies to spur industry productivity and competitiveness. Given the huge investment in the ‘green race’ (where Smart Grids play an important enabling role), countries will need to invest and take advantage of any opportunities they have in this field to ensure employment opportunities are addressing the new industries. Policies will need to encourage R&D, skills development, and working through energy security issues, as well as measuring and monitoring carbon impact.
  • Customer protection objectives – Governments (and regulators) are tasked with ensuring customers receive reliable and affordable energy supply. There is also a requirement to balance the needs of the country to grow energy supply with the impact on consumers and vulnerable parts of the community.

Customer behavior and requirement drivers include:

  • Increasing demand – The growing number and increasing energy requirements of electrical devices in homes and businesses is pushing up peak demands on networks. Meeting higher peak demands requires a significant investment by energy companies in new generation and energy efficiency.
  • Increasing functionality requirements – New technological developments, climate change concerns and supportive government policies are encouraging consumers to adopt products such as small scale renewable solar generation. These technologies require increased network functionality including higher levels of safety to support their operation.

Industry and technology change drivers include:

  • Existing technologies are becoming more affordable – Technologies that improve monitoring and control throughout transmission networks are becoming more affordable, allowing them to be deployed at a lower level in the distribution networks.
  • New technologies are available – The availability of new technologies creates both opportunities and threats to the network that will need to be managed. There are new network monitoring and controlling options, while new technologies for customers offering higher functionality have to be supported. Both contribute to the evolution of the network becoming “smarter”. In addition, the intermittent nature of renewable energy generation (large or small scale), and the resulting mismatch with consumer demand, will require increased functionality to support it in the network. One new technology, the electric vehicle, may become highly useful in facilitating this increased penetration of renewable technologies through their power storage capacity, however, charging the batteries could increase electricity demand and require additional functionality.
  • Ageing infrastructure needs replacing – The network is comprised of high value long life assets which are due for replacement to ensure reliability and consistent customer service. Now is the best time to reassess the type of investments being made to ensure that the network will remain viable over the long term and has the right mix of new technologies to maintain network performance.

How Will the Consumer Benefit from a Smart Grid?

The Smart Grid will benefit the consumer in a variety of ways:

  • Supporting a growing economy over the long term that can weather the developing global changes, while minimizing the increase in energy costs;
  • Providing consumers with greater choice and the opportunity to make informed decisions about their energy use;
    • Consumers have the greatest opportunity to reduce their energy bills by changing their behavior; using less energy, using energy at off peak charging times, by installing energy efficient appliances as well as choosing lower carbon energy supply.
    • Suppliers will be able to offer a wider range of products based on a variety of factors including renewable sources of energy such as ‘green’ wind energy, flexible tariffs that may incentivize load shedding during peak demand, or automated controllers to minimise energy bills.
  • Increased reliability and resilience to weather events through multiple generation sources and self-healing capabilities in the network;
  • Automatic fault location removing the need for customers to notify the supplier about power outages and enabling faster maintenance;
  • Facilitating long term savings in electricity supplier operations that can be passed onto the consumer from:
    • Automatic meter reading
    • Remote connection and disconnection
    • Load management – especially during peak usage times to relieve grid stresses, enable deferment of capital for new assets, and align supply and demand loads
  • Providing functionality to enable consumers (prosumers) to sell their generation on the grid.

What are the Environmental Advantages of a Smart Grid?

A Smart Grid can deliver environmental benefits to society from:

Energy Conservation

  • Reduction in usage by customers making informed decisions – in 2006, a pilot project in Ontario, Canada, savings of 6.5% were achieved with the introduction of real-time, home energy monitors.
  • Pacific Northwest National Laboratory (in a 2010 study for the United States Department of Energy) found the Smart Grid provides the potential for direct reductions in U.S. electricity sector consumption and emissions of 12 per cent in 2030, with further indirect reductions of 6 per cent. The study suggests that further work is needed to embed these reductions.
  • Reduced transmission losses – through new technologies better managing electricity supply to assist bringing electricity supply closer to the consumer, thereby reducing the amount of wasted power from long haul electricity transmission.
  • Improved voltage regulation – by operating the grid at the lower end of the allowable voltage tolerance (230V) the magnitude of transmission and distribution losses can be reduced.

CO2 Reduction

  • Customer making informed decisions – providing choices, such as renewable energy plans, and information on CO2 generation associated with those choices will enable consumers to reduce their carbon footprint.
  • Enhanced integration of renewables – the integration of renewables is facilitated by the Smart Grid but the operation of weather dependent sources (solar, wind) can be further enhanced through optimizing operations using predictive weather information. “Running reserve”, where less environmentally friendly power stations keep generators running so that they may be brought on board quickly when consumption increases, could be reduced with more predictable renewable sources.
  • Plug in Hybrid Vehicles and Electric Vehicles (EV) – substituting fuel sources in vehicles with renewable energy sources has the opportunity to lower CO2 production. Alternatively, vehicles plugged in at night when the majority of electricity generated is “running reserve”, which would have been generated anyway (and wasted), could also lower CO2 generation.
  • Enhancing Smart Grid operations through Vehicle to Grid (V2G) technology facilitating the use of EV batteries for peak levelling and managing intermittent renewable energy generation could provide further benefits.

Other Opportunities Within the Smart Grid Ecosystem

There are other opportunities to minimise network duplication and maximise the benefits to users and suppliers that also need to be considered in the deployment of a Smart Grid including:

  • Integration with the National Broadband Network (NBN);
  • Integration with gas and water operations.