Electricity demand is rapidly growing across the globe. We see that global investment in electric utilities is increasing with almost 7% annual growth to ~$1,500 billion in 2030. These investments in electricity sector worldwide, particularly the push for greener energy, stands out as a crucial driver behind the demand for smart grid infrastructure. Green power generation including solar, wind, hydro, and geothermal power generation will account for nearly 1/3rd of total investments. As we integrate more renewable sources like solar and wind power, their fluctuating output challenges grid stability. Smart grids with advanced technologies can seamlessly integrate renewables with existing grids while ensuring grid stability. Additionally, increasing demand for EVs and charging infrastructures all over the globe is also creating opportunities and demand for smart grids.
Smart grids play a crucial role in this transformation to green power. The traditional one-way flow of electricity from power plants to consumers is evolving into a smarter and more efficient system. A smart grid is defined as a power grid that can not only deliver electricity but also collect real-time data on energy usage, identify inefficiencies and malfunctioning equipment in grids, and optimize its operations. It utilizes (1) a combination of sensors, (2) communication technologies, and (3) software to create a two-way flow of information between utilities and consumers. These key elements of a smart grid provide numerous advantages for both utilities and consumers.
Components of smart grids such as advanced metering infrastructure (AMI) which include a combination of sensors with a two-way communication network improve efficiency by enabling real-time data analysis to identify and address energy losses within the grid, leading to overall efficiency gains. It also empowers consumers by providing access to real-time usage data, enabling informed decisions about energy consumption and potential benefits from dynamic pricing plans that reward off-peak usage. Additionally, advanced sensors throughout the grid and analytical software help to monitor and visualize various parameters like voltage fluctuations, flow current, and equipment health, enabling early detection of potential problems. Overall, it improves efficiency and reliability in the electricity grid leading to a sustainable future.
In recent years, technology providers have seen high demand and experienced a surge for smart grid solutions. For instance, as shown in Exhibit 1, Honeywell in the U.S. is experiencing a surge in demand for their smart grid solutions, particularly those focused on grid stability and distributed energy resource management systems (DERMS) which helps utilities integrate renewable energy sources and other distributed power sources. Similarly, ABB is seeing strong growth in their microgrid solutions with growing demand for distributed energy sources such as rooftop solar panels. Other smart grid solution providers like Siemens, Itron, Schneider, and Cisco are also witnessing increasing demand for their smart grid solutions.
Exhibit 1: Industrial players reporting demand growth for smart grids.
Electric utilities globally are rolling out smart grid infrastructure across their electricity networks through diverse initiatives. These initiatives include the installation of smart meters and automation devices and utilizing analytics software and visualization systems. Exhibit 2 outlines examples of initiatives by electric utilities. For instance, TNB in Malaysia and Adani Power in India are installing smart meters in their distribution network across the nation. Another example is ENMAX in Canada, which implemented analytics software to reduce unwanted maintenance and repair to improve reliability in their distribution network.
Exhibit 2: Example of smart grid-related initiatives by electric utilities.
To deploy and manage smart grid systems, electric utilities across the globe are collaborating with OEMs and smart industrial solution providers. Exhibit 3 summarizes current collaborations and partnerships. These collaborations and partnerships include various services such as hardware product supply and installation, managed services, and software implementation and integration with the grid. For example, TenneT in Germany has collaborated with Hitachi for SF6-free switchgear technology. Similarly, Northern Power Grid in the UK is using ABB’s SafePlus medium voltage switchgear under their plan of decarbonizing the grid. There are many other partnerships and collaborations such as Trilliant which is partnering with TNB for the deployment of smart meters across its network in Malaysia, Siemens is providing network management solutions to AEP in the U.S., Schneider is collaborating with PG&E to deploy DERMS in their network.
Exhibit 3: Partnership and collaboration between industrial solution providers and
electric utilities.
Smart grids represent a significant leap forward in the way utilities manage and deliver electricity. By harnessing the power of data and technology, they can create a more efficient, reliable, and sustainable energy system. As smart grid technologies continue to develop, they will play a crucial role in enabling a clean energy future.
– Bhautik Gajera
ADI Analytics is a prestigious, boutique consulting firm specializing in oil & gas, energy transition, power, and chemicals since 2009. We bring deep, first-rate expertise in a broad range of markets including electric utilities, digital automation in energy, and energy management, where we support Fortune 500, mid-sized and early-stage companies, and investors with consulting services, research reports, and data and analytics, with the goal of delivering actionable outcomes to help our clients achieve tangible results.
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