by Ravi Mandalika, Wipro Technologies
In March 2010, Bloomberg’s New Energy Finance (NEF) CEO Michael Liebreich announced his forecast for global investments in clean energy. NEF expected this year’s total to be between $175 billion and $200 billion, compared with $162 billion in 2009.
The figures are part of a growing trend that has its origins in 2008 when a U.N. report said that clean technologies had attracted investments of $140 billion compared with $110 billion for gas, coal and electric power.
The key challenge of this growing trend for energy utilities is evident: How can rapidly developing renewable energy sources be integrated into existing generation and distribution networks to deliver reliable, efficient and environmentally friendly operations? What are the strategic and technological implications of the emerging developments in renewables? And how can they be made to benefit consumers?
Compelling factors drive the use of renewables in energy. These factors are shaping smart grids, the transmission and distribution systems of tomorrow.
World energy consumption has risen 45 percent since 1980 and is projected to be 70 percent higher by 2030.
Fossil fuel as a source to meet this demand is untenable. Already, coal fuels more than 40 percent of the world’s power supply and is the largest and fastest growing contributor to greenhouse gas emissions (see Figure 1) and global dimming.
It is imperative that unsustainable and environmentally damaging fossil fuel be replaced by solutions that harvest biomass, solar, wind, geothermal and tidal power.
Renewable Sources, Supply-side Issues
The challenge lies in putting energy from renewable sources onto existing grids that are largely outdated, inefficient and lumbering under the stress of growing demand.
To integrate large-scale renewable energy into existing infrastructure, a utility must ensure efficient energy management.
In some geographies, technical losses in transmission and distribution can be as high as 80 percent between energy generation and consumption. Transmission, distribution and consumption of energy need to be optimized thereby creating additional capacity on existing grids.
Unresolved or unavoidable problems with renewable sources further complicate integration with legacy distribution systems. For example, the intermittent nature of renewables has a direct implication on the stability and reliability of supply, posing a business risk. Existing grids are not built to withstand major fluctuations that wind and solar sources experience. Existing generation, transmission and distribution systems lack storage capacity. Existing transmission lines were not built around renewable sources.
Integration, Management of Renewable Energy Sources
Given the significant concerns regarding climate change, tapping distributed solar and wind power is critical. According to the European Wind Energy Association, integrating wind or solar power into the grid at scale at levels higher than 20 percent will require advanced energy management techniques and approaches at the grid-operator level. The smart grid’s ability to manage all sources of power on the grid dynamically means that more distributed generation can be integrated within it.
The impact and outcome of grid congestion and transmission inefficiencies varies, depending on the economic imperatives of the geography. Grid congestion forces operators to curtail services to consumers, resulting in business disruption. For example, in third-world nations when demand exceeds supply, operators are forced to adopt load shedding. In more advanced economies where blackouts are unacceptable, operators have invested in excess generation capacities that are wasteful because the power cannot be stored.
Businesses cannot afford load shedding and blackouts, and the demand for stable, uninterrupted power supply is growing. Poor and unpredictable power supply comes at an enormous economic cost.
The 2006 report “Cost of Power Interruptions to Electricity Consumers in the United States” published by the Environmental Energy Technologies Division of the Ernest Orlando Lawrence Berkeley National Laboratory estimated the annual cost of power interruptions to U.S. electricity consumers to be $79 billion.
New Technologies, Smart Trends
Microgeneration of power will help address future energy needs. Microgeneration is the small-scale production of energy at low volumes and offers the possibility of turning consumers into producers.
Microgeneration technologies use solar, wind, biomass or small hydro units to generate power. The power generated in this manner can be pooled by communities and sold to energy providers.
Microgeneration power is used where it is generated, so transmission and distribution losses are minimized. Microgeneration could be critical to energy security and managing the environmental impact of the energy business. Microgeneration also is seen as a way to engage consumers, improve their understanding of energy production and its impact on climate change, and influence their consumption patterns.
The new developments in renewables, clean energy, microgeneration, the urgency of power storage technology and improved consumer stewardship pose newer challenges that smart grids can address.
Smart Grid Intervention
Intelligent grids that empower consumers to make better choices, optimize power usage, reduce transmission and distribution loss and host renewable and distributed energy sources will transform utility companies.
Centralized production and one-way power transmission are being replaced by distributed production and two-way systems that bring about higher efficiencies, smarter choices for consumers and lowered environmental impact.
Tests in an IBM pilot project in Fayetteville, N.C., aimed at identifying the energy savings realized through smart grid and simple consumption habit changes indicated a minimum 15 percent savings.
Smart grids with the two-way flow of data between suppliers and consumers will help reduce typical traditional losses by providing real-time visibility to grid activity, improving the use of grid assets, lowering grid congestion, allowing energy storage options, increasing energy saving, reducing CO<sub>2</sub> emissions and permitting cheaper energy options to be used. These smart grids will help achieve sustainable development, linking different but complementary renewable resources, combined heat and power (CHP) and other cleaner and more efficient distributed microgeneration technologies.
Preparation for the Future
A smart grid also is a necessity for plugging in the next generation of automotive vehicles, including plug-in hybrid electric vehicles (PHEVs), to provide services supporting grid operation. Such ancillary services hold the potential for storing power and selling it back to the grid when required.
According to the Pacific Northwest National Laboratory, existing U.S. power plants could meet the electricity needs of 73 percent of the nation’s light vehicles (i.e., cars and small trucks) if the vehicles were replaced by plug-ins that recharged at night.
Such a shift would reduce oil consumption by 6.2 million barrels a day, eliminating 52 percent of current imports.
The Driver of Change
“Roadmap 2050,” an April 2010 report by the European Climate Foundation, said Europe could meet at least 80 percent of its energy needs from renewables by 2050. The report provides direction for de-carbonizing the EU’s power sector and cutting greenhouse gases at least 80 percent by 2050. In addition, the report suggests that the future cost of electricity would not be higher in 2050 than using fossil fuel-based generation. At the core of this transformation is the smart grid revolution. The long-term effect of smart grids that enable the large-scale deployment of low-carbon technologies include reduced greenhouse gases, lowered pressure on depleting fossil fuels, reduced economic losses from more reliable power supply, lowered health costs as a consequence of clean energy and increased customer satisfaction.
Ravi Mandalika is the solution delivery head of Wipro Technologies. Mandalika is responsible for delivery of smart metering and smart grid programs for utilities across the globe. For more information, visit http://wipro.com.
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