Editor’s note: The following is a guest commentary by Hermione Crease, marketing and communication manager for Sentec, which provides products and consulting services for smart metering and energy management.

Can you remember a time before the internet? Those long-gone days when information gathering meant a day in a library or mass communication meant hundreds of letters. It’s hard to believe we ever managed to run businesses or social lives without it.

And now the energy markets are set for a similar, seismic transformation. The smart grid — aspects of which are powered by exactly the same technology that underpins the internet — will change the way we see energy provision forever.

Put very simply, the smart grid is a network that is differentiated from the existing grid through a number of improvements:

• It enables greater consumer participation thanks to two-way information about energy use and pricing incentives. This gives the motivation to change behaviours.
• It will help to incorporate greater levels of energy storage and distributed generation to help balance the disparities between supply and demand.
• It will be far more resilient as intelligent sensors throughout the grid will give us a much clearer picture of what is happening, so if one portion of the grid goes down the sensors will spot the incident and divert electricity from an alternative source to fill the gap.

Not surprisingly, this intelligent, interconnected network is by no means a straightforward proposition. It has a lengthy ingredients list, and so requires extensive deployments to make it work:

• The most obvious component is the smart meter, which stores detailed data on energy usage and transmits and receives information, acting as the communications “gateway” into the home.
• On top of this, a new communications network needs to be built. Operating in parallel with the electricity grid, this network distributes data between all elements of the new intelligent grid.
• In the distribution and transmission network, advanced utility sensors and control systems need to be deployed in wires and substations. Such a network then provides the sensors and controls that will improve the system’s resilience.
• The final element is software. This is required to present, interpret, analyse and react to the huge amount of data that will consequently be flowing through the system.

The functionality we put in place now is only the start of a whole swathe of potential applications in the future. The biggest challenge is that all these elements need to work together and there are a multitude of interdependencies that must be identified, understood and negotiated.

All of this suggests great expense. Italy has already spent €2 billion simply on installing smart metering. The natural question therefore follows of how the costs of all this will be met? This is a key reason for consumer concern, because of fears that the costs involved will result in severe hikes to energy bills. However, the smart grid will not arrive in one piece and many uses of the smart grid provide utilities with internal cost savings that mean prices do not need to be raised to justify the investment.  Utilities will see efficiencies and cost savings derived from reducing periods of unprofitable downtime, fault elimination, unmanned intervention and asset utilisation.

And, the UK has set up a committee to investigate smart grid options abroad, which means there are opportunities to look for examples of success and failure.

Other new applications will give consumers a chance to use energy in a way that should directly offset price rises: even at their simplest, smart meters will give consumers a far clearer picture of their energy usage and will give them the information they need to change the way they consume this energy. Future smart grid applications may allow consumers to set an energy budget for the year, buying (and selling) energy from the grid at a price that meets their requirements.

Despite the challenges ahead, the smart grid will transform the way energy is produced, bought, sold and consumed. Once in place, we will look back and try and recall what the energy industry was like before. And, just like modern technology in almost every other sphere, we will scratch our heads in wonder at how we ever coped without it.

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