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Smart Power Grid Benefits And Implementation

Smart Power Grid Benefits And Implementation: The term “smart grid” is used in many contexts.

A smart grid is an electricity network system that uses digital technology to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end users.

Such grids are able to co-ordinate the needs and capabilities of all generators, grid operators, end users and electricity market stakeholders in such a way that they can optimise asset utilisation and operation and,

in the process, minimise both costs and environmental impacts while maintaining system reliability, resilience and stability.


Although there are numerous definitions, the IEA has developed a comprehensive description that has supported the development of this guide and of the IEA smart grid analysis more broadly.

A grid does not become “smart” in a single step. This happens over time through an evolutionary process. Incremental changes and improvements in the system will take place gradually, typically over decades.

Figure 2 highlights the need for smart grids to be approached as a system rather than in an isolated fashion, demonstrating ways to identify near-term needs in a way that does not negatively impact long-term requirements.

Such an approach emphasises the importance of long-term planning and thus complements the road mapping process outlined in this guide.

Smart Power Grid Benefits And Implementation

Additionally, when utilised and considered as a system as opposed to singular technologies, smart grids can help shift grid systems to more holistically integrated functioning systems.

Broadly, smart grids can offer the following benefits:

  • enable informed choices about consumption by customers
  • accommodate all generation and storage options
  • stimulate new products, services and markets
  • optimise asset utilisation and operating efficiency
  • provide the power quality required for a range of identified needs
  • provide resiliency to disturbances, attacks and natural disasters
  • catalyse sustainable energy infrastructures for cities, regions and countries.

Figure 3 is an illustration of the common challenges energy systems face and the possible benefits that smart grids may bring in response.

This figure illustrates what a country can expect from the integration of smart grids into its electricity system; for instance, how smart grids can address non-technical losses (including electricity theft) by providing a tool for tracking distribution demand and forecasting possible losses, or how smart grids can address peak loads and the variability of renewable energy sources by ensuring flexibility of the electricity system.

Smart grid technologies can be equally effective infrastructural tools in developed and developing countries alike, or more generally, in highly connected grid systems or less-extended grids.

For emerging grids in developed and developing countries, smart microgrid configurations often operate in an “islanded” mode, with the option of then later being connected to regional or national grids.

This opens possibilities for distributed generation (DG) and to utilise high-quality renewable energy resources in locations far from the main grid, while also providing an efficient approach to grid management that offers both near- and long-term benefits.

In areas isolated from national or regional electricity grids, such as in rural settings or in developing countries that have wide gaps in connectivity to a larger grid, smart technologies that can utilise variable renewables and support microgrid infrastructures may also spur economic and social benefits because of the introduction of reliable electricity.

Smart Power Grid Benefits And Implementation

The diversity of applications and drivers for smart grid deployment is further illustrated in a survey analysis performed by the International Smart Grid Action Network (ISGAN) in 2014 (Figure 4).

This figure shows the top six drivers for smart grid deployment as ranked by 17 developed economies and five developing economies, respectively.

The difference in terms of prioritisation of drivers is telling.

Indeed, many Organisation for Economic Co-operation and Development (OECD) countries stated during the expert workshops for this guide that integrating renewables into the grid was a key driver for the deployment of smart grid technology.

In such instances, distribution automation and control centre systems will be of the greatest relevance.

In another setting, developing and emerging economy countries involved in IEA expert workshops appeared to be more driven by the need to improve the quality and reliability of available electricity and to reduce non-technical losses, such as electricity theft.

It is important to note that not all the characteristics of the deployment of smart grid technologies that can be accomplished will necessarily be needed immediately or at all in a given electricity system.

Technologies can be added incrementally as needed or as able, which means that some investments can be made in the near term and some can be considered for future deployment.

Emphasis is best placed on determining technologies that meet a need or address an objective in a way that provides value to the system and its stakeholders.

In addition to solutions for an immediate, pressing need, given the long life time of grid infrastructure, flexibility should be maintained to address possible longer-term requirements that may arise in the future.

Drawing on analysis of Figure 4, the integration of distributed renewable energy resources may quickly move up the priority agenda for emerging and developing countries as costs for such technologies (e.g. solar photovoltaics [PV]) continue to decrease.

Smart grids can tie together multiple stakeholders’ objectives, whether they are societal, regulatory, policy, financial or technology objectives. The ability to link these considerations provides the potential for both opportunities and concerns for deployment.

If deployed properly, smart grids can provide a broad range of benefits to the concerned stakeholders. By contrast, deployment of a smart grid system lacking sound planning may result in unexpected barriers and, ultimately, fail to deliver expected benefits.

Smart Power Grid Benefits And Implementation

Why focus on smart grids in distribution networks?

The deployment of smart grids throughout an entire electricity system is a very large undertaking that can take many years to carry out. In recent decades, the introduction of smart technologies in the transmission system has progressed at a much faster pace than that in distribution networks.

To accelerate the deployment of smart grid technologies in distribution networks is one intention of this H2G for reasons that are outlined below.

Distribution networks are crucial: they make up over 90% of the total electricity system network length and a very large percentage of all electrical demand and renewable generation is connected to the distribution networks, trends that are expected to continue in the future.

The resulting size and complexity of most distribution networks means that under the IEA 2DS3 distribution network investments will have to make up between 65% and more than 80% of all the network investments to 2050, depending on the locations analysed.

These metrics reinforce the challenge and need for a targeted consideration of distribution networks.

Although the cost recovery for distribution grids under a business-as-usual scenario is fairly straightforward, the challenge comes into play with increased DG and demand-side integration going hand-in-hand with coupling to other energy sectors (e.g. heat or transport).

Delivering “smartness” for improved asset utilisation, operational efficiency and flexibility are where particular benefits are seen with regard to distribution grids.

The investment needed to establish and maintain a distribution network will be significant, but the resulting management of the demand on the system can greatly optimise the planning and operation of electricity systems.

Figure 5 provides an overview of the total investments needed for a significant deployment of smart grids globally and demonstrates the benefits that can be gained from investing in smart grid technologies (light blue) as compared with the initial cost (dark blue).

This does not mean that the transmission grid – either itself or the related stakeholders – should be ignored. The interface between transmission system and distribution system operation is a significant challenge.

This should be addressed by co‑ordinating efforts on all levels in terms of planning, road mapping for smart grids and for other energy or infrastructure technologies, and operation.

Transmission system stakeholders should be consulted during the road mapping process for smart grids in distribution networks to consider and co-ordinate appropriately the impacts from investments into and modification of distribution networks.

A targeted examination of the distribution network will moderate the size of the roadmap effort and provide the necessary focus to enable practical decisions that can be made to yield benefits in this much needed area.

Smart Power Grid Benefits And Implementation

Overview of types of smart grid projects in distribution networks

As previously explained, the number of individual smart grid technologies is vast, and each technology cannot be fully considered in an isolated manner.

Individual technologies are often packaged with hardware, communications infrastructure, software and training into various types of smart grid projects, adding intelligence or smartness to the grid in a targeted fashion.

Throughout this guide, the term “project types” is thus used to refer to the grouping of technologies into a single type of project for the deployment of smart technologies into the grid.

Of course, each project will have detailed variations depending on the particular objectives or barriers – political, technical or otherwise – that smart grid deployment in a country is aimed to address. Similarly, project types may be cross-cutting and interrelated.

Advanced metering infrastructure (AMI), for example, will typically include some items that form part of a project concerning control centre systems. Smart grids that use combined heat and power (CHP) have the potential to provide additional benefits of more efficient heat use.

Based on a review of existing projects and feedback received during the four workshops held for this report, the project types summarised in Table 1 are divided into ten categories and outline the vast suite of technologies and options for project applications. (Technology descriptions can be found in Annex 3.)

Developing a strong vision for smart grids that encompasses how they can improve multiple aspects of a distribution network is essential to utilising the full potential of the technologies, and thus helping countries identify areas in which smart grids could address issues in ways not previously considered.

Smart grids stand out because they can often solve more than one problem at once or enhance an energy system in unexpected ways.

Drivers for the deployment of smart grids in distribution networks

The main drivers for smart grid deployment can differ greatly from one country or region to another.

The benefits that can be derived from these technologies are often a concrete response to one or more national or local needs, whether related to technical improvement of the grids or economic, social and environmental advantages.

The identification and prioritisation of the drivers for smart grid deployment go hand-in-hand with determining the goals of a roadmap and identifying appropriate smart grid technologies to address these goals.

Prioritisation of drivers should help develop a roadmap vision for smart grid deployment that is both comprehensive and realistic.

Typically, drivers for smart grids can be categorised as follows and as detailed further in Table 4:

  • reliability (e.g. power quality improvement for electricity grids and risk for loss of load)
  • grid efficiency (e.g. management of technical and non-technical electricity losses for smart grids)
  • economic (e.g. reducing operation and distribution/transmission costs and opening revenue streams for new producers/consumers, including energy affordability)
  • environmental (e.g. reduction of CO2 emissions through efficiency gains, shifting peak loads and integrating low-carbon technologies)
  • security (e.g. technology to mitigate and isolate power outages)
  • renewable energy integration (e.g. enabling grid integration of the generation from variable renewables)
  • safety (e.g. reduction of accidents to utility workforce)
  • cross-cutting (e.g. rural electrification, EV integration opportunities and increased consumer involvement).

The list in Table 4, originally developed with inputs from over 20 developed and emerging economies by ISGAN, an IEA Implementing Agreement and initiative of the Clean Energy Ministerial, is not intended to be all-encompassing.

Additionally, some of the metrics will spread across other parts of the electricity system, including generation and transmission. This is due to the interrelated nature of the electricity system as a whole.

Great care is therefore required to target metrics that are tailored to measuring progress against the roadmap’s specific vision and objectives. However, it is useful to address persistent methodological issues with metrics.

For instance, system average interruption frequency index (SAIFI), system average interruption duration index (SAIDI) and momentary average interruption frequency index (MAIFI) are not measured in the same way across markets, and making comparisons among them can be challenging.

Stakeholders who develop smart grid roadmaps may want to consider standardising the methodologies used for the metrics (to the extent possible under law/regulation).


Finally, Table 5 shows the primary, secondary and tertiary links between drivers and various kinds of smart grid projects. This can serve as a starting point for identifying the kinds of smart grid technologies or projects that could address the key drivers within a country or region.

As this table shows, some project types will address more than one driver, and, notably, many drivers will result in cross-cutting applications.

This is an important message because, although some drivers may not be of immediate relevance, it is worth considering the incremental cost of adding functionality to a project at the outset to address a potential driver that may be more relevant in the future.

The Infrastructure UK and Leeds University’s iBuild project termed this type of option-enhancing planning as “passive provisioning” and can be defined as the facilitation of real options within an investment opportunity action.

An example of passive provisioning is to design smart grid projects with the flexibility to upgrade technologies or system management strategies in the future to deal with more or less severe impacts of climate change.

Such long-term planning is particularly relevant in the context of roadmap development and energy system investment because of the dynamic nature of local needs.

Project types

This subsection describes network issues that are frequently faced by countries or utilities and that often serve as drivers for the deployment of smart grid projects.

The drivers and potential response actions that can be provided by a suite of smart grid technologies are further illustrated by way of three case studies.

Customer-oriented projects

Examples of smart grid projects that are primarily customer-oriented include AMI, DER projects and customer-side systems provides an illustration of the outlook for the AMI technology roll-out in Europe in the second quarter of 2014, which shows the relatively high level of European engagement with the implementation of customer-oriented projects, such as AMI technologies.

For such projects, it is important to engage with a broad set of customer-focused stakeholder groups and to pay particular attention to barriers that may impact these stakeholders.

Such stakeholders likely include customer groupings and/or customer advocacy organisations, billing and customer service entities, energy retailers and a regulator or regulating body.

In customer-oriented projects, the key barriers are likely to concern security and privacy, legal and regulatory (especially tariff setting and reliability or service considerations), and project planning and delivery issues.

Pilot projects in which existing customers can use and experience the technologies or implement a project on a temporary basis provide valuable input for the full-scale project design.

Positive experiences from existing customers may also provide comfort to new customers. In this area, pilot projects can be important for furthering the knowledge of customer behaviour and technology practicalities.

To facilitate learning applicable to the broader propulsion of smart grid technologies, customers should be deliberately prepared beforehand and surveyed after participating in any pilot study.

Another key solution is communication and education to help stakeholders understand the changes and benefits. Dedicated events and workshops can be useful in this instance. Although customers may not always be in favour of such changes, adequate time for end users to prepare may help to prevent negative responses.

Moreover, if a strong rationale is clearly communicated why the changes must occur or why smart grid technology deployment is sought, there may be a higher likelihood of acceptance.

System infrastructure-focused projects

System infrastructure-focused projects have a greater impact on system operators and their respective staff and employees. Projects that typically fall into this category include those for distribution system automation, substation automation, control-centre system improvements and asset management (Tables 1 and 5).

Changing the organisational and methodological management in energy infrastructure is often a key challenge and yet is very important as these projects significantly affect how electricity systems are operated and maintained, as well as ongoing planning and expansion.

The regulator still plays an important role in determining how this will affect electricity system customers, but the involvement of senior-level management within the DSO is essential. The overall acceptance and participation of all actors in the DSO can determine whether the goals of certain project types are realised.

The solutions to barriers in these types of projects frequently focus on developing an adequate business case for project deployment and on determining ways to finance this through savings in the operation of the system and/or increases in the base rate.

Often long-term discussions with regulators, combined with significant analysis as to the needs, benefits and risks of the project, are essential.

In such instances, regulators still play an essential role in consumer protection, particularly when rate recovery is used to cover the costs of grid investments, because benefits need to be able to be delivered (directly or indirectly) to the consumers.

Cross-cutting projects

Some technologies can have cross-cutting applications and impacts. The introduction of ICT and a communication infrastructure, for example, can enable multiple other project types, as well as enhanced security, privacy and system planning (Tables 1 and 5).

Key barriers to these types of projects often relate to perceived costs and benefits, as well as to privacy issues. Costs for such projects may exceed the benefits if they are not leveraged across various projects carried out over a multi-year plan.

Sometimes, the projects themselves may not offer significant benefits but build the foundation for future projects.

Stakeholder groups essential to the successful implementation of cross-cutting projects include the regulator as well as senior decision makers and government officials who can influence and approve expenditures that have both short- and long-term impacts, but that can also be the investment of least regret.

Addressing the barriers in cross-cutting projects often require somewhat “out of the box” solutions. For example, addressing communication technology deployment issues from cost, security and privacy perspectives requires collaboration with non-energy system stakeholders, such as telecommunication companies.

This may not be a common approach with energy companies that prefer to maintain operation and control of their system in house; however, such partnerships may offer costs savings and expertise not found internally.

Addressing drivers through three case studies

The following three case studies illustrate distribution network restraints that can be addressed through the response actions of smart grid technology, in particular:

  • addressing technical and commercial distribution losses and electricity theft
  • harnessing the cross-cutting benefits of smart grid infrastructures to catalyse sustainable urban electricity systems
  • using a suite of smart grid technologies to improve efficiency and security of supply for both customers and distributors

Loss reduction programme (Mexico)

Description: In the past, the Mexican electrical utility Comisión Federal de Electricidad (CFE) regularly experienced substantial distribution system losses. In 2011, over 11% of the electricity generated was lost, with approximately 79% resulting from technical losses and 21% resulting from commercial losses or electricity theft.

These losses represented USD 2 446 million in decreased revenue. The strategy to reduce losses, introduced in 2011 with actions to 2026, combines smart grid technology with a systematic evaluation mechanism to make improvements in both infrastructure and operational procedures.

Objectives: Reduce technical and commercial losses in the distribution network, while improving the overall infrastructure and optimal functionality.

Main actions:

  • systematic field assessments looking for irregular connections, tampered or damaged meters and unmetered consumers (both customers and irregular users)
  • use of boxes to seal customers’ connections
  • construction of distribution networks less vulnerable to tampering and irregular connections
  • replacement of obsolete meters
  • monitoring public lighting systems
  • AMI project reconfiguration of distribution networks
  • analysis of distribution feeders with the highest losses
  • reactive compensation
  • demand management in distribution transformers
  • development of a master plan and efficient planning of electrical system
  • construction of substations.

Outcome: The long-term strategy to 2026 to reduce commercial and technical losses estimates that targeted investments and planned actions can reduce losses by over 50%.

Smart grids for smart cities (China and Korea)

Incorporating smart grids into sustainable city planning has the potential to take advantage of the majority of the cross-cutting benefits that smart grids are capable of providing, from integrating renewable energy into microgrids to enabling V2G technologies.

Smart grid technologies can be used as a sustainable energy infrastructure that facilitates the transformation of the energy sector. The Tianjin eco-city project in China and the Jeju demonstration project in South Korea are evolving models of cutting-edge technologies that support advanced, sustainable city planning.

Sino-Singapore Tianjin eco-city project (China)

Description: The Sino-Singapore Tianjin smart grid demonstration project is being constructed in Tianjin (southeast of Beijing) co operatively by the Chinese and Singapore governments, and covers 34.2 square kilometres.

Objectives: The objective is to build an ecological city in which 350 000 inhabitants will live in a friendly environment and harmonious society, frugally using resources while being a model of a developed economy. The role of the smart grid is to provide a sustainable and advanced infrastructure system to support a high-functioning society.

Main actions:

The completed projects as of 2014 include:

  • a 4.5 megawatt (MW) wind farm and two distributed PV systems with 5.66 MW and 4.089 MW connected to the power grid
  • a microgrid composed of a 6 kW wind turbine, a 30 kW PV system, an energy storage system (15 kW for 4 h) and 15 kW loads
  • a 110 kV smart substation
  • two double-loop network structures, including 82 switching stations and
  • 22 distribution automatic lines
  • a total of 10 000 electricity users in
  • 19 communities installed smart meters, which realised remote meter reading
  • a large EV-charging station, which can realise the charging requirements of eight electric buses at the same time
  • an optical fibre communication network was built, and the optical fibre was connected to each meter of end-user
  • building of an intelligent community, which can achieve remote control for users’ appliances and electricity consumption analysis.

Outcome: The project includes 12 completed subprojects aimed to promote energy efficiency and strengthen data application. The eco-city project will be complete in 10 to 15 years, while the smart grid demonstration project was completed in 2011 and has been stably operated since that time.

Jeju Smart Grid Demonstration project (Korea)

Description: The Jeju Smart Grid Demonstration was established in Gujwa-eup, the northeastern region of Jeju Island, Korea, in December 2009. The project was completed in May 2013 as a precursor to nationwide smart grid implementation. It was designed to promote the commercialisation and export of smart grid technologies.

Objectives: The all-encompassing objective is to build the world’s best nationwide smart electricity grid and realise a low-carbon, green growth society.

Main actions:

  • Smart power grid: real-time power grid monitoring and usage of digital technology to optimise operation of distribution system.
  • Smart place: power management of intelligent homes and increased choice of supply options and tariffs for consumers.
  • Smart transportation: build and test EV-charging facilities and operate vehicles as a pilot project.
  • Smart renewable: operate and expand the use of microgrids to connect DG, power storage devices and EV.
  • Smart electricity service: facilitate greater consumer choice of electricity rates and opportunities to produce and sell renewable energy.

Outcome: The Jeju project is part of a 20 year vision to develop a nationwide smart electricity system, which is characterised by self-recovery of grids in the event of failures, zero energy homes and buildings, increased sophistication of the system, increased consumer choice and involvement, and market operation towards optimisation.

A total of USD 250 million was invested between 2009 and 2013 and the test bed was completed in 2013, with the input of the ten consortiums who participated in testing and developing business models.

Even with significant investment recently injected into the Tianjin project, the eco-city still only maintains an occupancy of around 8%, which draws attention to the need to involve users and communities in the design and operation of smart grid projects at the distribution grid level.

The usability of these technologies is a key measure of the project success and highlights the need to include all stakeholders, such as those consumers who will be using the technologies, in the phases of roadmap development and preparation.

Electricity Supply Board smart green circuits (Ireland)

Description: “Smart green circuits” were developed and demonstrated in Ireland, and enabled operational efficiency, monitoring of line conditions, loss reduction and protection.

These efficiencies were the main drivers of the demonstration project in Ireland, as the size and scale of the country’s electricity distribution system presents unique challenges in terms of maintaining continuity of a high standard of supply to customers and ensuring that network losses are minimised.

The Electricity Supply Board (ESB) conducted tests on four distribution circuits, three in rural applications and one in an urban setting.

Objectives: Improve the operational efficiency and monitor the capabilities and integration of DG with technologies that reduce the carbon footprint of the distribution network.

Main actions: A number of systems and applications were evaluated to help create efficient, cost effective and “self-healing” circuits, including:

  • A smart fault passage indicator system was added that locates and analyses faults and communicates information to network operators via a general packet radio service that facilitates a quick response. Fault notification is sent to the mobile devices of network technicians.
  • An arc suppression coil protection system was installed on ESB’s 20 kV circuits. This protection system is designed to: carry earth faults safely while continuing to supply customers; explore and test multiple resources and technologies for reducing losses; explore how DG can be utilised to reduce the carbon footprint of a green circuit; and develop and test new algorithms for estimating the load flows, losses and voltage drops on rural feeders while examining the impact and benefits of voltage control in the efforts to reduce the carbon footprint.

Outcome: The self-healing circuit has operated successfully in over 12 separate incidents of faults. On all occasions, a faulted section of the network was isolated and supply was recovered for the remaining customers within seconds.

The success of the trial led to plans to change the weakest performing network sections in the country into self-healing circuits. Sixty such schemes that entail the installation of 300 devices were planned and rolled out in 2012.

The performance of the arc suppression coil protection system, complemented by a range of earth-fault management facilities in operation on ESB’s 20 kV network, has proved successful.

ESB achieved cost reductions; fault-finding time was reduced by 84%; and the measured continuity of performance improved by 100%. The change in circuit voltage resulted in significant reductions in energy demand.

The conversion of networks from 10 kV to 20 kV resulted in a 75% reduction in network losses, an improvement in voltage dropped by a factor of four, and network capacity increased by more than 100%.

The potential to reduce distribution system losses and to improve the efficiency and security of supply to customers has been explored through pilot trials of a range of systems and technologies within three rural distribution networks that are representative of Irish circuits.

The implementation of self-healing loops and distribution automation, coupled with a higher resolution, highly accurate down-line measurement and enhanced communications, are enabling an improved security and control for consumers and operators alike.

Moreover, “self-healing” circuits create more efficiency for the management of key infrastructural components of the distribution system, improving organisational management practices with added technologies, as well as improving service reliability for customers.