There’s a huge difference in what different countries need in terms of investment in the power grid over the next decade. Simply put, while the U.S. lags in infrastructure investment, and Europe faces challenges in integrating wind and solar -- and, for countries like Germany, cutting out nuclear power altogether -- many developing nations suffer from having no grid at all.
That’s a brief snapshot of the data coming out of three reports out this month on the status of the world’s power grids, broken down by global regions. Think of them as technology and investment strategy road maps for the utility and energy industries, including the smart grid -- each with very different pathways to delivering economic and social value.
- First, to the United States, where a recent Associated Press report finds that U.S. utility customers are paying about 43 percent more today than they did a decade ago in costs associated with power infrastructure. At the same time, outages have actually increased in duration over that time, the report finds -- a sign that grid investments are facing diminishing returns.
The news may not come as a surprise, given that it’s just the latest in a long list of reports despairing of the status of U.S. grid infrastructure investment and maintenance. Still, it’s noteworthy in that AP actually enlisted the help of Ventyx, the software arm of grid giant ABB, and utility consulting firm PA Consulting Group to calculate its reported cost and reliability figures, surveying 210 utilities across twenty-four categories of local distribution equipment.
Ventyx isn’t the only grid giant applying software and data analytics to critical grid investment and return calculations, of course. General Electric’s new Grid IQ Insight platform has been used by several utilities in a pre-deployment fashion, allowing them to predict costs and benefits of a multitude of potential smart grid projects and pick those that best fit their own long-range plans. Some of the other big companies involved in this kind of utility enterprise architecture and engineering-type work for the smart grid include IBM, SAP, Accenture, CapGemini, SAIC, Lockheed Martin and Alstom, to name a few.
While most investor-owned utilities get to claim a fixed rate of return from capital investments like grid improvements, they also have an obligation to make sure that money is spent as efficiently as possible. Technology that delivers quantifiable, auditable data on just how much bang for the buck can be expected out of a long menu of smart grid investment options, over a whole set of different timespans, could be valuable for U.S. utilities facing increased scrutiny from state regulators on fixing infrastructure while keeping down costs.
At the same time, reliability issues are starting to come to a head for U.S. utilities. In the wake of Hurricane Sandy, New York and New Jersey regulators have both released rules that will bring increased scrutiny to outage detection and restoration performance by their utilities, as well as hardening the grid against ever more extreme weather events. The Obama administration has made critical infrastructure protection (CIP), which includes the nation’s power grid, a focus of its regulatory efforts.
- Meanwhile, over in Europe, utilities and grid operators are facing a different reliability challenge, one being forced on them by their status as the world’s leading wind and solar power integrators. The European Electricity Grid Initiative (EEGI), a European Union entity tasked with “integrating new technologies under real-life working conditions and validating the results,” just released an updated version of its research and innovation (R&I) roadmap through 2022 -- and it’s expecting that budget to add up to just €1 billion ($1.3 billion) over that time.
The EEGI’s plan (PDF) separates Europe’s grid into transmission system operators (TSOs), which move power over long distances and across borders like ISOs and RTOs do in the United States, and distribution system operators (DSOs), which deliver power to end users. Each will need research into a combination of power technologies (€350 million), network operations (€125 million), asset management (€135 million), market design (€75 million) and grid architecture (€70 million) as well as Joint TSO-DSO R&D activities (€250 million).
That’s a pretty hefty R&D budget, but as the report notes, it pales in comparison to the estimated €104 billion in infrastructure investments called for in the EU’s Ten-Year Network Development Plan, or the European Commission’s estimate of €1 trillion in energy system investments the continent will need by decade’s end. That includes the massive transmission needed to bring North Sea wind power to shore, but it also includes lots of technology to integrate distributed resources -- rooftop solar panels, combined heat-and-power systems, energy storage and virtual power plant architectures, etc. -- into the mix.
- While the European grid tackles the problem of a surfeit of green power, the developing world is suffering from a lack of any power at all. This adds up to inadequate healthcare for 1 billion people worldwide, according to a report (PDF) released last week by non-governmental organization Practical Action, which found lack of power -- or, critically, unreliable power -- playing a negative role in healthcare from India and Kenya to South Africa and Peru.
Absent or unreliable power can force hospitals to postpone surgeries until daylight hours, or cut critical refrigeration power for vaccines and other medical supplies. In Kenya, only one-quarter of healthcare facilities have reliable power, but blackouts still hit for an average 4.5 hours duration about six times a month, The Guardian noted in a story last week. In India, nearly half of all healthcare facilities, serving 580 million people, have no power at all.
New York Times green reporter Andrew Revkin noted that the same lack of power problem afflicts schools and other social support organizations in the same countries, and highlighted U.N. Secretary General Ban Ki-moon’s new Sustainable Energy for All program as one international effort aimed at addressing the issue. At the same time, countries like India, South Africa and Brazil are seeing significant, if still limited, investment into smart grid technologies that could help address these problems.
Microgrid technologies are one area of focus for markets where so many potential customers have no grid connection at all. We’ve seen major corporations and social-justice-focused entrepreneurs launch products and services aimed at helping off-grid villages and facilities do everything from charge cell phones from solar power to digest agricultural waste for biogas.
Even grid-connected customers are looking at becoming energy-independent, given the unreliability of the grid in India, Africa and parts of South America. We’re seeing power independence being pursued by showcase technical campuses like Cisco and Wipro's Lavasa City “e-city” project outside Mumbai. Commercial-scale business offerings like Echelon’s smart-metered residential microgrid in Hyderabad, which uses on-site diesel generators, but asks residents to save as much power as possible when forced to do so -- and prices it accordingly.
Perhaps emergency backup power systems for remote or poorly served hospitals, clinics and other critical healthcare facilities could serve as the backbone of a broader power management network? Of course, countries like India also have macro-issues of energy supply and regional grid management to worry about, but as with the leapfrogging of cellular communications over landlines, they are also places where distributed energy could serve a truly transformative social purpose -- and that’s something worth investing in.