Op-Ed Contributors

Need for smart electricity grids

By Roberto Bocca (China Daily)
Updated: 2010-09-13 08:17

We are witnessing a trend of government stimulation and industry focus on smart grids and low-carbon technologies as a cornerstone for future industrial strategy. Last year, China alone spent over $7 billion on smart grid developments focused on transmission and distribution - with a vision of building a "strong smart grid" by 2020. The US has directed $4.5 billion of its fiscal stimulus package to smart grid activities. In Europe, Japan and South Korea, significant initiatives are currently underway.

With all this, what are the chances that smart grids will succeed? A World Economic Forum report - "Accelerating Successful Smart Grid Pilots" - outlines the conditions for success and numerous challenges currently faced. The report surveyed more than 50 industry stakeholders and experts engaged to identify the factors that will determine the success, or failure, of smart grid pilots. The report emphasizes the importance of getting a larger number of ambitious pilot projects underway to test new technology and business models.

The investment and time required to deploy smart grids is significant and cannot be underestimated. For them to succeed, the government, regulators and industry players must work together to create the conditions for success by supporting pilot projects and revisiting regulation to ensure alignment with policy priorities.

Most of the regulatory frameworks that currently exist were created during the period preceding the emergence of the low-carbon agenda, with the focus on a low-cost and reliable service. Although many aspects of the regulatory framework are still valid, some actively discourage the changes that are needed to transition the electricity systems toward a smart grid.

To make a smart grid a sound investment for electric utilities and other companies, the business case in many countries must be strengthened - regulation will be the key. Also, there are important issues around setting standards for technology and tackling data security that must be addressed and will determine whether or not smart grids will be a success.

Globally, we are at a critical point where clean energy will play a prominent role. Electricity systems will need to be flexible to allow for the incorporation of new low-carbon technologies, and customers will want more visibility and control of their energy consumption. Smart grids will play an important role in making electricity go smart, but the journey will be long and challenging.

The author is senior director and head of energy industries at the World Economic Forum.

(China Daily 09/13/2010 page8)