Today's power systems are designed to support large generation plants that serve faraway consumers via a transmission and distribution system that is essentially one-way.
However, the grid of the future will necessarily be a two-way system where power generated by a multitude of small, distributed sources flows into a grid based on a network rather than a hierarchical structure. Just as the Internet has driven media from a one-to-many paradigm to a many-to-many arrangement, so too will the smart grid enable a similar shift in the flow of electricity.
The diagrams below illustrate this shift. In the first, we see today's hierarchical power system, which looks much like an organizational chart with the large generator at the top and consumers at the bottom. The second diagram shows a network structure characteristic of the fully realized smart grid. There are, however, a large number of “smart” technologies that can be applied today to facilitate the transition.
Current status
The first steps toward a fully realized smart grid are being taken now, and the potential investment is substantial. EPRI (Economic Policy Research Institute) estimates the market for smart grid related projects in the U.S. alone could be approximately $13 billion per year over the next twenty years. That comes in addition to an estimated $20 billion per year spent on transmission and distribution projects generally.
Legislatively, the Energy Policy Act of 2005 (EPAct) introduced mandatory reliability standards and required state regulators to investigate advanced metering, time-based pricing, and demand response programs, all of which will rely on smart grid implementation. More recently, the Energy Independence and Security Act of 2007 (EISA) included an entire Smart Grid title, which provides funding for R&D efforts and requires state regulators to consider smart grid alternatives before approving investments in traditional technologies. As a result of ABB’s thought leadership in power technologies, our CEO in North America was chosen to serve on the newly-created U.S. Department of Energy Electricity Advisory Committee.
The U.S. is also home to several consortia working on smart grid issues. EPRI's IntelliGrid program and the Dept. of Energy's supported GridWise Alliance are just two examples. The nation’s utilities are likewise actively involved with around 80% of investor-owned utilities developing some form of smart grid, for example by participating in pilot studies of advanced distribution automation technology and wide area measurement systems (WAMS).
The European Union experiences a similar level of government support and utility participation in smart grid development, and the two regions – Europe and North America – will likely continue to lead the way.
In Asia, the power sector is still largely focused on adding capacity and supporting the tremendous economic growth that has characterized countries like China and India. The advantage Asia has is that while building up their vital basic infrastructure they are able to use modern 21st century technologies.
The Middle East, Africa and South America will likely leverage the work of the early adopters as they move eventually toward smart grids.