Leading the Charge

The future of the grid

By Leigh Collins, Managing Editor, Recharge

As the Leading the Charge series details, decarbonising the power sector well before 2050 will require a massive increase in wind farms, solar panels and energy-storage systems, while at the same time electrifying the transport, heat and industrial sectors.  

But what is often forgotten is that none of this will be possible without fundamental changes to the power grid.  

Our electricity networks were set up around 100 years ago to enable large centralised fossil-fuel power plants to send energy to people’s homes — a simple one-way system. Yet the electricity system that is now emerging — which will be fundamental to our decarbonised world — will be incredibly complex, with solar panels on people’s houses and offices, batteries in their cars and homes, and smart appliances all helping to balance the varying amounts of large-scale wind and solar power coming onto the network.  

We’re talking about grid systems containing millions, or perhaps billions, of input and output points, many of which will be bidirectional — able to take energy from the grid and send it back when required, such as electric vehicles (EVs). These grids will also have a great deal more flexibility built in, with batteries and internet-connected smart appliances such as electric heaters, air conditioners and washing machines in people’s homes that will be able to automatically switch off when there is too little renewable energy on the system a process known as demand-side response (DSR).  

There will also be larger-scale energy storage systems, which are now being developed, such as the hot-rock thermal-storage solution being tested by Siemens Gamesa, and EDF’s power-to-gas technology — in which clean electricity is used to split water molecules into hydrogen and oxygen inside a machine called an electrolyser, with that ‘green hydrogen’ then being available for later conversion back to electricity via fuel cells, or for heating.  

And it will no longer be a system where companies have monopolies on their service areas.


New business models are continuously evolving, with companies such as Sonnen (recently acquired by oil giant Shell) aggregating thousands of solar panels and batteries into “virtual power plants”, and peer-to-peer schemes, such as Vattenfall’s Powerpeers, where solar-panel owners sell their excess energy to nearby homes and businesses, rather than back to the grid. Even car companies such as Nissan are getting in on the act, offering free electricity to Nissan Leaf owners in the UK in exchange for being able to use the EV batteries for grid services. 

Most forward-thinking utilities are already offering services to consumers that will make them ‘prosumers’, such as solar panels, smart EV charging home batteries and smart appliancesincluding Italy’s Enel, Spain’s Iberdrola, Sweden’s Vattenfall and Ireland’s ESB, as seen in the Leading the Charge series.  

As Pat O’Doherty, the chief executive of ESB, said: “I think there’s a real obligation here and leadership required by the industry to bring the consumer along a different journey and indeed to travel that journey with the consumer.” 

The new smarter grid 

To sum it up, the current grid is not fit for purpose.  

For the future energy system to function, both the transmission and distribution grids — which transmit high-voltage power long distances and distribute low- and medium-voltage power to consumers — will have to become a lot smarter. 

Grid operators will need to know the exact demand and supply from different parts of the networks at any given time, from a single solar panel on a village garage to a gigawatt-scale offshore wind farm 100km from shore. At the same time, they will need to ensure that every home, business and power project gets paid — or pays — the correct amount. 

To do this, grids need to be digitalised, with sensors and smart meters placed throughout their networks, and some kind of software platform — almost certainly requiring artificial intelligence — that is able to manage, analyse and instantly act upon the colossal amount of data being gathered in real time. 

“You’ve got to have more data from more sensors from more appliances from more locations, more price signals than anything conceivable today,” said Michael Liebreich, founder of analysts Bloomberg NEF. “Those price signals have to go all the way to the end user — are they rewarded for putting on a solar roof, putting in a battery, buying an electric car, letting someone demand-manage their freezer, their car, etc? That price signal has to be joined up because the value of that might be to avoid having to build an interconnection [linking two grids] or something at the other end of the food chain.” 

This digitalisation will require upfront costs, but the technology required is fairly inexpensive. As Sander van Ginkel, managing director of Accenture Strategy in the Netherlands, said: “A smart device just requires a micro chip [that costs] a couple of cents. So the cost is not so much preventing the adoption of these technologies. 

“There needs to be investments [from the DSOs], but there is a huge return on those investments. First of all, it allows them to avoid very costly capacity investments — they’re going to utilise the existing grid infrastructure in a smarter way.”Changes will also need to be made to the energy market itself, as the ways that power is bought and sold were designed for the old one-way system. Distributed energy (ie, that originates on the distribution grid) must be allowed to bought and sold on every type of energy market — from wholesale and flexibility markets to the so-called “ancillary services” markets such as voltage control that maintain the stability and security of the grid. Changes in tax laws will also be needed in many countries too, to avoid generated energy being taxed when it is stored and taxed again when the stored energy is sent to the grid. 

Other regulatory changes may also be needed. For instance, transmission and distribution system operators (TSOs and DSOs) — privately owned monopolies in their operating territories — are overseen by regulators focused on keeping grid fees as low as possible for consumers. This focus on short-term costs may well discourage network operators from conducting pilot projects and rolling out the new technologies that the future grid will require. 


So how on earth is this all going to happen? 

To start with, much of the technology required already exists. Sensors and smart meters are cheap, and companies such as US corporation GE, Canada’s Enbala and China’s Envision Energy are offering software that they hope will become the Microsoft Windows of the energy space. 

And many countries are looking again at their energy market design and the taxation. Most notably, the EU has agreed (but not yet implemented) a new set of rules — collectively known as the Clean Energy Package — that will treat distributed and stored electricity as equally as centrally generated power. 

But several big questions remain unanswered. 

At the moment, TSOs manage transmission systems and DSOs manage distribution systems. But as the two systems become increasingly inter-reliant and operate more and more as a single power system, who will manage what? How will the data be managed? How will it be shared? Will it be stored on a single data network or multiple data platforms? Who will get access to the data? Who will own the data?

Many TSOs believe they should control the system as they are primarily responsible for the balance between generation and consumption. Some DSOs argue that they will have a more complex bidirectional system to manage so they should in control. Discussions are under way in several countries and also on a pan-European basis, with the European Commission funding research and innovation projects such as Coordinet, which E.ON discusses in the Leading the Charge campaign. 

But a path forward has still to be agreed. 

Laurent Schmitt, secretary-general of the European Network of Transmission System Operators for Electricity (ENTSO-E), is not convinced that there should be a single data network responsible for a national or, perhaps an international grid system. 

“I don’t believe in a single data hub, to be honest,” he says. “I believe in sets of data-exchange platforms interacting with each otherwhat we call ‘the power system of systems’.  

“So the issue is not ‘where do you store the data?’ but the issue is ‘what are the relevant APIs [application programming interfaces] to exchange information between these players?’” 

Van Ginkel believes it would make sense for two or three data platforms to be rolled out at first in different regulatory areas. 

“You need a certain level of competition to get the right platform,” he says. “And then, at a certain point in time, it becomes necessary to say, ‘now we’re going to standardise this and award it to one platform’.” 

But the idea of an all-powerful single entity controlling an electricity network is anathema to many. 

Some argue that a decentralised blockchain system would eliminate the need for a single entity to manage the super-complex energy network — because transactions would be processed by computers distributed around the world, and the system would be free for anyone to use. This would ensure that the electricity network could not be open to abuse, would remain free from political interference, and would also reduce the risks from hacking. 

Although this central question of smart grid management is yet to be resolved, the industry is confident that all the potential roadblocks — technical, market and regulatory will be overcome. As the old saying goes, necessity is the mother of invention.



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