Smart grids key to low carbon economy


Geneva, Switzerland — (METERING.COM) — July 17, 2009 – Smart grids are an enabler to the low carbon economy and to avoid stalling progress towards a sustainable and low carbon future, necessary investments must be made in power grid and urban infrastructures that will effectively accommodate smart grid technologies at large scale deployment, says a new report from the World Economic Forum.

The report, “Accelerating Smart Grid Investments,” which was developed with Accenture and industry experts, says the world is now at the point of transition to a new era where clean energy will be at a premium, networks will need to be flexible to the incorporation of new low carbon technologies, and customers will demand greater insight and control over their own consumption.

Smart grids are a necessary element to enable this transition but a number of factors are holding it back and may ultimately act as a limiting factor to the broader drive to reduce greenhouse gas emissions, says the report, which seeks to identify strategies to accelerate smart grid development.

The report finds there are two key themes that sit at the heart of overcoming the challenges – the need for regulatory refresh and public-private partnerships and societal value propositions.

There is an urgent need to refresh the utility regulatory regimes that oversee the governance and economics of the power industry. No longer is it the sole purpose of this industry to provide energy to the masses at cost-competitive prices; there now exists a set of competing imperatives which center on the provision of infrastructure to support a low carbon economy while maintaining security of supply and quality of service to the end consumer. Governments and regulators should provide clear profit motives to utilities to place value on energy efficiency, encouraging utilities to produce and deliver clean electricity as efficiently as possible, without compromising security of supply.

Furthermore, the limitations need to be recognized of either the utility or the city/region acting in isolation. A wealth of smart grid benefits sit across the boundary between the utility and society as a whole. It is unrealistic to expect the utility shareholder to take on the full risk of investment in this instance. Public-private partnerships are required for this technology to reach its full potential. It is necessary to move away from purely financial business cases to develop broader societal value propositions, which are reflective of more than financial benefits and consider positive effects on citizens and businesses from clean, reliable energy supply.

The report says that to achieve the successful acceleration of smart grid investment, it is necessary to raise awareness and understanding across all industry stakeholders. In parallel, it is imperative to support a transition from planning to implementation, establishing pragmatic policy and regulatory structures which drive the right behaviors and long-term outcomes across the industry.

The report also notes that during the early stages of the transition towards smart grids, cities will play a critical role in demonstrating the art of the possible. Cities such as Boulder, CO and Austin, TX are already leading the way with large-scale pilots, and this trend can be expected to continue with a migration to larger and larger cities. However, not every city is suitable to be at the vanguard of this change. To identify those cities that are most likely to lead the change, a number of factors must be considered, including the market structure (i.e. regulated or liberalized), the degree of political alignment at the city level, and the occurrence of municipal asset ownership.

“Smart technologies are a necessary element of the transition to a fully fledged low-carbon economy,” said Espen Mehlum, head of electricity industry at the World Economic Forum. “As we see the results of pilot projects and significant amounts of money allocated to smart grids in the United States’ economic stimulus package, it is important to recognize that we are still in the early stages of smart grids development, and a range of barriers must be tackled before substantial investments start flowing into them.”