Developments in M2M set to speed up smart grid deployments. By making the electricity grid ‘intelligent’ and adding telecoms to it, the power will eventually move away from the electricity companies and be directed towards the customers, who will be able to control their energy consumption through sensors, M2M devices, and the internet of things (IoT). Europe and North America are rated as the most advanced adopters of smart grid and smart metering technology, but the market is expected to shift increasingly towards Asia and the developing world.

Smart’ means real hardcore communication infra (not some fancy mobile gadgets & 5G apps), and since many countries are currently addressing their broadband networks it would be a clever move to roll out fast broadband infrastructure in combination with smart grids and, wherever applicable, other smart infrastructure. In that way, energy efficiency measures can be implemented throughout society and throughout the economy (buildings, transport, cities) with a minimum of extra infrastructure, as a trans-sector approach is based on sharing the infrastructure.

Unfortunately, one of the major obstacles to smart grid uptake continues to be the lack of good government policies. With all the knowledge we now have, it would almost amount to a criminal offense if this generation were to allow vested interests to prevent us from developing trans-sector policies and holistic initiatives to address energy and environmental concerns. We need to break down those silos and force cooperation between the sectors wherever possible.

Significant progress has been made within the industry in Australia in relation to the deployment of smart technologies that, over time, will create a smart national grid. The past five years have seen confusion, resistance and the lack of a strategic approach towards a holistic policy aimed at creating a smarter energy structure that could reduce energy usage by 30%-40% without having a major impact on people’s lifestyle, just by being smarter. But all of the electricity companies in Australia are now involved in the implementation of smart grids – a process that will take a decade, or perhaps several decades, to complete.

In the future some $200 billion will be invested overall in the national energy structure (not just smart grids). The first results from projects such as Smart Grid, Smart City indicate that the results greatly exceed expectations; the same applies to companies involved in the smart meter rollout in Victoria. However a holistic government policy continues to be the key to success, rather than the current hodgepodge of policies. Energy is heavily influenced by government regulations and unless these are sorted out it will be difficult for the industry to develop cohesive strategies that will see a more comprehensive approach towards a smarter energy system for the country.

With a better understanding of the complexity involved in the transformation of the electricity industry the words ‘smart’ or ‘future’ energy are becoming more prominent. The term ‘smart grids’ is too narrow and that eventually ‘smart energy’ will become the accepted terminology – especially once the communications developments in national mobile and fixed broadband networks start to converge with global smart grid market developments. As well as this, smart grids have unfortunately become synonymous with smart meters, again leading to too narrow a view of this market.

Smart energy signifies a system that is more integrated and scalable, and which extends throughout the distribution system – from businesses and homes and back to the sources of energy. Developments at the edge of the network will increasingly determine its future direction. A smarter energy system has sensors and controls embedded into its fabric. Because it is interconnected there is a two-way flow of information and energy across the network, including information on pricing. In addition to this it is intelligent, making use of proactive analytics and automation to transform data into knowledge and interpretation, and to efficiently manage resources.

This links with the telecom development known as M2M or IoT. For this to happen various functional areas within the energy ecosystem must be engaged: consumers; business customers; energy providers; regulators; the utility’s own operations; smart meters; grid operations; work and asset management; communications; and the integration of distributed resources.

With energy consumption expected to grow worldwide by more than 40% over the next 25 years demand in some parts of the world could exceed 100% in that time. This will produce an increase in competition for resources, resulting in higher costs. In an environment like this energy efficiency will become even more important.

Quite apart from any increased demand for energy in specific markets, the move to more sustainable technologies – for example, electric vehicles and distributed and renewable generation – will add even more complexity to operations within the energy sector. And, as was mentioned at the COP20 in Lima, technological innovations will have to play a larger role in climate change adaptation.

Concerns about issues such as energy security, environmental sustainability, and economic competitiveness are triggering a shift in energy policy, technology and consumer focus. This, in turn, is making it necessary to move on from the traditional energy business model. Renewable energy, linked to distributed energy systems and battery storage, is going to be the game-changer here.

As a consequence, electricity utilities could end up in a ‘spiral of death’ situation similar to that of the companies that invested in the building of the internet infrastructure. They may own the means of delivering electricity and associated services, but may not be able to take advantage of the new business opportunities that will arise. This will limit their opportunities for future growth. To avoid this companies should develop a ‘vortex of opportunities’.

Another problem will surface when, due to users reducing consumption and producing energy themselves through energy efficiency strategies, the traditional pricing models become inadequate in terms of maintaining the energy infrastructure.

The potential for transformation of the energy industry to smart energy is still at a very early stage. Valuable advances have already been made in some areas but consensus needs to be reached regarding a collective approach to interoperability and technical standards.

Smart Grid, Smart City – Key findings, recommendations and comments

The Smart Grid, Smart City (SGSC) project, which ran from 2010 to 2013 in Newcastle and Sydney CBD areas, was funded by a $100 million injection from the federal government and around $390 million ‘in kind’ or otherwise from the project’s other contributors, which included entities such as Ausgrid, Energy Australia, IBM Australia, the CSIRO and several local councils.

Part of the recommendations were that the broader industry should be involved and that the outcomes would be shared.

The project was launched in 2010 and is perhaps the most comprehensive smart grid demonstration project undertaken anywhere in the world. The report, published in mid-2014, presents three very detailed smart grid scenarios towards the year 2034. It trialed a range of in-grid and consumer-based smart technologies with electricity suppliers for 17,000 households in order to determine whether there was an economic benefit attached to deploying the technologies across Australia.

The overarching outcome of the project is that under a medium scenario smart grids can deliver a national net benefit of $27 billion by 2034 through the development and deployment of smart grid technologies, changing consumer behaviour, energy market reform, and ‘cost reflective’ electricity pricing such as dynamic tariffs.