In a traditional utility chain, power generation takes place in large and centralised power plants. This dispatchable generation is fed into the transmission system, after which it reaches end-users via the distribution network. The retail segment delivers and bills the electricity and the end-user consumes it as per the requirement. However, this utility chain – comprising generation, transmission, distribution, retail and customers – is being disrupted by a host of factors.
Over the years, individuals’ electricity consumption has increased significantly. One of the reasons for this is the emergence of new avenues for electricity consumption, like district heating and heat pumps. In addition, electricity consumption can now be monitored at lower costs as a result of the reduced costs of communication and the digitisation of grid equipment, among other factors.
The increase in electricity demand has increased the pressure on scarce resources and resulted in greater competition for limited stock. This, coupled with the lower costs of solar photovoltaic units and the emergence of energy storage units, has facilitated the shift towards low-carbon alternative fuels. At the same time, electricity consumption from independently operated microgrids, off-grid communities and campuses, and distributed generation has also gained momentum. These forces have cumulatively led to the disruption of the traditional utility chain. The traditional grid is managed actively only in the transmission and generation segments. In contrast, the smart grid, comprising bulk generation, renewable generation, storage, transmission grid, etc., can be dynamically managed. Bulk generation, together with distributed generation, enhances the quantum of power supply. In a smart grid set-up, distributed generation from different sources like microgrids, off-grid communities and renewable energy sources feeds into the grid at various points.
Smart grid architecture
Smart grid architecture for a particular region can be custom-made to suit its requirements. The types of architectures include traditional smart grids, distributed smart grids, localised smart grids and supergrids. A traditional smart grid encompasses generation from fossil fuel sources, along with limited generation from renewable energy sources. However, in a distributed smart grid, distributed generation works in tandem with the existing large-scale generation and the transmission grid to meet the requirements of the region. In a localised smart grid, the energy from microgrids and markets is meshed together and there is no need for a separate transmission and distribution network. The supergrid, another type of smart grid, is typically deployed for transmission of renewable energy over continental distances, from the source to the point of use.
In Africa and Southeast Asia, a traditional smart grid is used along with a localised smart grid. This is primarily due to the growing energy demand in the region, the large number of power thefts, and the need for reliable power supply for investment support. Meanwhile, in China and Europe, a supergrid, coupled with a traditional smart grid for the former and distributed smart grid for the latter, is deployed. This combination (supergrid and distributed smart grid) is best suited for Europe’s distribution network, which is marred by congestion and ageing infrastructure. North America has opted for a traditional smart grid, together with a distributed smart grid and a localised smart grid. This aids in the management of peak power demand in the region and keeps a check on the system average interruption duration index and the system average interruption frequency index.
Models for smart grid deployment
Smart grid deployment can be technologyled, business caseled or business modelled. In the technology-led approach, research and development forms the crux of smart grid deployment, and the strategic view of the smart grid model is ignored. Some examples of this are the trialling of smart metering communication technologies, the trialling of new feeder automation technologies, etc. The business case-led approach targets the integration of solutions across utility departments and is based on a business case that is formulated on the basis of the technology-led project. This approach entails a change in both process and technology, such as non-technical loss reduction through smart metering data analytics and the deferral of system reinforcement by utilising automated demand response.
In the business model-led approach, a new business paradigm is identified and the business model that corresponds to the paradigm is deployed. Technology upgradation, along with organisational changes, forms the backbone of this approach. The utility first needs to understand the future market paradigm, based on which it formulates a model to meet product and service requirements. On the whole, the business model that provides adequate returns on investment will interest the investor. Despite this, in the deployment of smart grid technology, utmost care needs to be taken to ensure that the technology roll-out benefits the consumer.
Based on a presentation by Debasis Mohapatra, Senior Manager, PricewaterhouseCoopers, at the India Smart Grid Week 2015