The new electricity age – interview with Ralf Christian


The smart grid market is growing rapidly, driven by the growing realisation of the importance of smart grids in underpinning future electricity supply. Indeed Siemens has estimated the global market will have a value of €30 billion by 2014, and the company, planning to grow at a rate of more than double the market itself, is looking to capture more than 20% of this.

In this interview Ralf Christian, CEO of Siemens Energy’s Power Distribution Division, who is driving the company’s smart grid ambitions, discusses the smart grid business and some of the issues utilities should be considering in implementing a smart grid.

Please start by giving an overview of the smart grid market.
We use the term in a relatively broad sense, starting from the generation side where we see thousands of renewable and small decentralised generators coming into the power grid. On the other side one has consumers who are starting to becoming producers because they have rooftop installations or maybe combined heatpower installations in their homes, or they are becoming active consumers in the sense that they buy electricity more when the price is low and less when the price is high. So we see the two ends – smart generation and smart consumption, and in between the grid, and what we’d like to drive is a good balance, with both communicating with each other.

Which parts of the world do you see as the main growth areas for smart grids?
Smart grid technologies are being implemented in the majority of the projects that are currently being implemented in the western world – Europe, North America. But in the past, I would say, 12 months, emerging markets have started to pick up very quickly so we do have projects in the Middle East and Asia, and China has been launching a major smart grid programme.

I think that 2010 is the year when smart grids become a global issue. And the big markets, such as China and India, are going to be the biggest smart grid markets in the emerging markets in the future.

What are the technology solutions that are needed in broad terms?
There are different elements. The most famous, which you have in the name of this magazine, are the meters – the smart meters, and there has been a big focus specifically here. But the meter is just one measuring point and what is really driving the overall efficiency is the system behind it.

To break it down, there are elements in the transmission grid, which has been relatively intelligent for many years. For example, there is a lot of activity around high voltage DC links, power electronics, and FACTS (flexible AC transmission systems). Then you have the whole area of blackout prevention – we had a blackout in Europe three years ago, and there were several in the United States, and a lot of this was due to manual interaction with the grid not being well advised, so there is a lot of technology being developed in order to provide better tools for grid operations and for the control centres to avoid this.

Then there is the distribution grid, which by and large has not been intelligent at all. There is very little knowledge in utilities of what is really happening in the distribution grid and that is where we see a lot of portfolio opportunities, starting from the meter and going into distribution automation. We also need to manage the data coming from those meters, the millions of data points every day, and we need to deal not only with the billing, but also to use the data to drive the grid to higher efficiency.

Could one implement a completely smart grid now?
First generation smart grids, absolutely, you can fully implement today. All the technology is available.

But there will for sure be a constant evolution. Take the auto industry: For 100 years we have had cars with four wheels, but every year there is still new technology coming into the car. We will see the same with the smart grid. We are now looking at the first generation smart grids but our engineers will not be short of more ideas in the future to make the 2nd, 3rd and 4th generation grids in the next 20-30 years.

Where would you see the most important developments being required?
I think we will see a lot of further developments with what I would call the intelligence of dealing with the data and providing better information to consumers as well as to grid operators. I think there is still a lot that can be improved in order to provide more artificial intelligence to help the operators do a much better job at management of the grid. This requires a lot of data mining and linking different sources of data.

The basic technologies – how we communicate from a meter to a concentrator and from a concentrator into a central system – have been available for many years – it’s power line carrier or wireless. I would not expect any radical changes. We can talk about improving bandwidths and so on, and there may be a PLC with a certain bandwidth today and tomorrow it is slightly better, but still the technology will be very similar.

The electrical system can be likened to the human body and in the health care system there are many tools available to support doctors to help them in making the right diagnosis. Many things can happen and we need real time diagnosis and simulation tools. That’s a huge technological challenge that will keep us busy for many years.

What are the broad steps that a utility should take when installing a smart grid?
I hesitate to answer, because there isn’t one blueprint. It really depends on your current stage. Take the analogy to the body, again. If you’re a healthy, young person your problem may be different from that of an 80-year-old, but you both have the same basic system.

Some utilities may start from the blackout prevention and reliability point of view and others may want to drive open market, transparency to consumers.

But if we look at the long term perspective and see where those grids are in 20-30 years from now, in the end they will converge. One starts at different points but all the utilities will work through all the areas of the system at different times, so probably 20 years from now the capabilities will be very similar.

What about utilities in developing countries that in general, aren’t looking at utility-wide AMI rollout?
Again there are different application areas. One, which I like a lot from a vision perspective, is to consider an isolated area in an emerging market, for example in the western part of China or in Africa, which is not connected to the grid – you´re sitting there and you need to manage your generation resources which may be fluctuating, like wind or solar, and you basically create a micro grid – a small, isolated CO2-free grid – and there are many applications in emerging markets that would actually need this.

I wouldn´t view emerging markets as so different. They may have different basic needs, like getting power for the first time, but the solutions are equally applicable in other parts of the world. In the end, it’s a platform of modules and a microgrid in an emerging country would use the same or similar technology to a microgrid on a US university campus.

What are the main challenges in developing smart grids?
One is the market structure – we do have open competitive markets in some areas and regions, where utilities, service providers, retailers and generators are really in competition. Typically in the end, competition always drives new creative ideas so I would say in an open market environment you get probably faster adaption of new technologies to generate competitive advantage. In fully regulated environments it takes more time until the administration is embracing a new idea. I would view China as one of those markets. They were not the first movers – the US market was the first mover in many aspects, but let’s see where both countries are in five to ten years from now, and I would not exclude the Chinese from winning the race.

What do you feel a vendor should be able to offer a utility?
One of our unique advantages is that we really know the overall system and we can support a lot of utilities in order to make the system work. It’s not just about the meter and making a single meter work, or making 1,000 or 10,000 meters communicate as that only gives us a stack of data in the end. To make the whole system worthwhile, productive and to generate benefits from it is much more than just an intelligent meter. We are successful because we have overall competence, including competency beyond and above the meter.

What about interoperability?
Every company has started with its own solutions but I think today we are in the transition phase where one still has company specific solutions in the early stage, although everybody knows open and interoperable standards will be required. There is a lot of activity in order to get us there. Different companies have done different investments so there are some stakes, in some cases high stakes, out there. I am convinced we are going to see interoperability and open standards in the next few years.

Do you have any new products coming up that you can talk about?
Our latest products are those that make up the full smart grid solution from the meter up to the smart grid operation centre. This first important step was to get everything interlinked and the overall system working. There aren´t many companies today that have complete portfolios, and I would say this is world market leadership on the technical side. For sure, we will invest very significantly to further improve and to add more portfolio elements.

I think one big area in the next few years is electric vehicle infrastructure. It’s a new application field with some specifics and the market is developing very quickly and there are a lot of new ideas out there. For example, there are companies that believe strongly in swapping batteries rather than charging them overnight at homes and we are working on technology for battery swapping stations. At the other end you have simple, low cost charging spots that you can install at home, and in between you have public spaces where you need to think about billing, roaming, etc.

As a final question, can you predict what the home of 50 years time is going to look like?
If you look back maybe 10-15 years, a typical home had multiple energy sources, maybe an oil burner for heating, gas in the kitchen, and electricity for light and air conditioning. I would predict in the future that we have one and only one system to connect to – the electrical grid, and every energy need will be electric driven.

Why am I convinced that this is part of the vision of the future? I take as example my own country, Germany, which in winter is quite cold. The new houses are highly insulated so that in winter the heat pump system, which is fully electric, is largely sufficient to heat the home, and one can throw out the old coal, gas or oil heating system. Think about the electric car. Today you have the model with gasoline or other fossil fuel, but most likely it’s going to be all electric in the future.

As for the details, there will be more intelligence in the home, for sure. Are we going to have DC in the home? For sure. And I’m pretty much convinced that a portion of one’s electricity needs one will generate oneself or within the nearby local neighbourhood with intelligent photovoltaic systems or some other systems.

Interesting times we’re living in, that’s for sure!
That’s why we call this the new electricity age. Think about the challenges of CO2 and where the future energy comes from, typically from a renewable source – so we’re going to decrease the use of all the fossil fuels and have more electrical storage facilities. It’s going to be all electrical – and much smarter. That is our vision of the new electricity age.

Thank you!