The smart grid will integrate renewable energy and distributed resources into utility grids and improve grid energy utilization to help countries and regions address their energy and environmental priorities. At the same time, the smart grid will employ integrated information and communications technologies to facilitate the best use of these resources and to create innovative energy-related services that engage consumers and businesses in the pursuit of energy-efficiency objectives. While the opportunities are exciting and unprecedented, the smart grid introduces a very complex market and ecosystem. This article will summarize some of the technology, policy and standards considerations entrepreneurs must keep in mind to succeed in the smart grid.
Businesses always need to evaluate their technology opportunities carefully to identify circumstances that could affect time to market, and this will be particularly true for those developing renewable energy technologies for the smart grid. For example, while the smart grid opens up new opportunities to incorporate renewables into the grid, utilities will need to deploy new technologies to facilitate the integration and use of many of these resources.
Residential and enterprise solar projects will become integrated as markets evolve. As the penetration of solar panels increases, utility substations will require new monitoring and control technologies to manage frequent voltage fluctuations and power flows resulting from variations in solar radiation collection during daylight periods. Utilities will install new power electronics technologies through the grid to manage the necessary voltage control. The pace of these deployments may also be influential to the solar markets growth.
Energy storage will become a smart grid requirement. Large-scale energy storage is receiving increased attention for its potential to manage the efficiency and usefulness of intermittent renewable energy sources. Energy storage will become an embedded critical component enabling wide-scale use of electric vehicles and supplying both vehicle and grid storage. For energy storage to be effectively incorporated, utilities will need techniques for interconnecting these components as well as intelligence in the grid to effectively manage these storage systems. As concentrated renewable technologies become practical for utilities (whether from cost or regulatory perspectives), high-voltage long-distance transmission systems with sufficient capacity to support dispersed supply/load scenarios into the grid will be required. As it is now, the geographic areas offering both land and solar characteristics suitable for these technologies are typically remote and served by electric power infrastructure that may not accommodate the additional capacity. A business case for concentrated solar technologies must consider the target utilitys ability to adapt its infrastructure.
Reflecting a regions policies
Businesses will also need to understand regional contexts in which their technologies will be used. While smart grids around the world will be based on standard architectural frameworks, which facilitate creation of products and services for global markets, specific product implementations and technology investments will be influenced by regional and national policies and priorities.
The correlation between policy and implementation is illustrated by experiences in Europe that have helped build a successful wind industry. This has already become evident in Germany, Denmark and Spain. In these countries, renewable energy penetration as a percent of total power generation has surpassed that of the U.S. Long-term energy policies that provide deployment targets and incentives to businesses to invest in renewables have led to this success. Germany is also pushing the use of renewable energy resources more aggressively than others as it has enacted a policy to phase out nuclear plants. As it retires these plants, Germany will need to define incremental approaches to integrate renewable power, improve power plant and transmission/distribution efficiencies, and improve end-user energy utilization awareness and efficiency. These needs represent important smart grid business opportunities.
Europe generally has smart grid policies that are providing distinct incentives for innovation and investment in renewables. The region, for example, is in the early stages of interconnecting all of the national power networks together for a smart grid and it is focusing heavily on developing renewable energy supplies. Numerous regional and national policies address this strategy, including the European Unions 20:20:20 mandate which has led to a wide range of national targets, laws, and regulations. By 2020, the mandate aims to reduce EU greenhouse gas emissions by 20% compared to 1990 levels; provide 20% of the regions energy from renewable resources; and improve energy efficiency by 20%.
Recently, the European Parliament voted in favor of setting a binding renewable energy target for 2030. This should also provide new motivation and direction for product development to meet this target. Europe is also promoting smart cities, which will provide additional opportunities for renewables. The European Commission has launched a Smart Cities and Communities Initiative to support development of low-carbon and energy efficient products and services for urban areas. Within Europe and the U.S., smart grid technologies are also being expanded to other utilities, such as natural gas and water, which will develop even more innovation opportunities.
Collaborations spur opportunities
Some regions and countries are beginning to realize that they have smart grid needs, priorities and challenges that are similar to those of other regions and countries, and that the shared circumstances provide opportunities for collaboration and technology transfer. Businesses should look for these synergies and the opportunities that may result.
For example, the European Union and China have just signed an agreement to explore working together on smart grid issues, including standards for integration of renewable resources, energy efficiency, and others. The EU and China actually have much in common when it comes to their smart grid strategies and collaboration will make it possible for them to find common solutions to the challenges they share and shorten time-to-market for technology deployment.
China and Germany have also found that they have similar strategies to reduce their reliance on stationary power sources and transition their economies to use more renewable resources. For example, China seeks to integrate new storage technologies to incorporate renewable resources into the grid and to reduce the countrys carbon footprint and it will build ultra-high voltage transmission lines to distribute power from these energy sources to consumers throughout the country. Chinas strategy is similar to Germanys plans to phase out more traditional power generation and to integrate renewables and storage technologies and to transmit power from on- and offshore distributed resources to population centers across the country. The similarities in the two countries strategies should create many new and important business opportunities for entrepreneurs.
Leverage technology standards
Standards are needed to coherently build or transform markets and this will be particularly true with the smart grid because it is creating such a complex industry and ecosystem. Entrepreneurs targeting smart grid markets will need to use and leverage standards if they want their innovations to succeed. Standards make it possible to distribute products to international markets because standards ensure interoperability while allowing adaptation to specific market requirements. Standardization opens doors for international business and trade and reduces business costs as it creates economies of scale. Standardization helps companies expedite product development, and it gives consumers more product choices.
The IEEE Standards Association has more than 100 international standards published or in development that pertain to the power, IT and communications domains in smart grid. These standards will give most companies the technology foundation they need to create interoperable smart grid products for regional and/or global markets.
The IEEE 2030 standard is an architectural framework providing the interconnection and interoperable interface standards for services that will be delivered over the three technology domains and is the worlds only standard facilitating this.
Another very important IEEE-SA standard, which should be of particular interest to businesses pursuing renewable smart grid opportunities, is IEEE 1547. Titled the Standard for Interconnecting Distributed Resources with Electric Power Systems, IEEE 1547 will serve an international role as utilities from around the world integrate renewable energy sources into the smart grid. The IEEE-SA has made IEEE 1547 available to IEC. IEEE is collaborating with many standards organizations on technologies that will be relevant to businesses pursuing smart grid opportunities in Germany and Europe. The IEEE-SA is working with the Society of Automotive Engineers (SAE) on auto-grid interconnectivity standards that will be important for the incorporation of electric vehicles into the smart grid. IEEE has developmental efforts aligned with the ITU that address a wide range of communications technologies, and it maintains developmental alliances with ETSI, IEC, and ISO. Moreover, the IEEE-SA has established relations with national communities, such as DIN and DKE in Germany, as well as communities in Japan, China, Korea, and India, to collaborate on technology development and to ensure the development of technology frameworks that support future markets.
Numerous European standards organizations are pursuing initiatives to address regional needs for smart grids. The European Committee for Standardization (CEN), the European Committee for Electrotechnical Standardization (CENELEC) and the European Telecommunications Standards Institute (ETSI) are working together through the EU Coordination Project to develop smart grid standards that will be used to meet European Commission standardization mandates.
Many renewable energy products will involve machine-to-machine communications and businesses will want to apply relevant standards. IEEE-SAs broad standards portfolio and coordination via the IEEEs 45 technical communities and industry will allow the community to expand and support technologies across the ISO seven-layer stack. For one, IEEE-SA is positioned to complement and supplement technology communities formed by other standards, such as oneM2M telecommunications and service layer architecture that ETSI is focusing on, and application-level intelligent transportation standards pursued by SAE. For M2M, the IEEE recognizes the imperatives to globally integrate all levels of the technology stack to provide a complete horizontal and vertical service layer structure for M2M communications, services, and device support.
Bolstering chances of success
We are entering a critical stage in the evolution of smart grid. The business opportunity is substantial and the business model is expansive. Yet the challenge of integrating the many technologies and industries into a smart grid is quite complex. If you have not thought about standards before, I urge you to now because technology standards are necessary for market development and can facilitate product acceptance. Standards make it possible to distribute products to international markets because standards ensure interoperability while allowing adaptation to specific market requirements. Standardization opens doors for international business and trade and reduces business costs because it creates economies of scale. Smart grid technology, markets, and government are becoming a triad that supports future innovation and businesses must understand these integrative and synergistic trends. Standards organizations, such as the IEEE, will become the mechanisms businesses rely on to translate technology to the global marketplace, but it is incumbent upon innovators to stay abreast of these trends.
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