Smart Grid

You've probably heard of the 'Smart Grid' at least once. It is in the newspapers, on TV and discussed in magazines. Many famous politicians have mentioned the Smart Grid in their speeches as if they were competing with each other to be the official spokesperson, and a fair number of top companies have announced their plans to be part of the Smart Grid.

The Smart Grid has many different definitions, depending on the established goals. There are also many similar proposals with similar names, including Smart Electric Grid, Smart Power Grid, Intelligent Grid, Future Grid and Modern Intergrid.

Overall, the Smart Grid is a new generation of power grid that will replace the current power grid system in the near future. Smart Grid, with new IT equipment, allows power suppliers and customers the ability to communicate with each other in real time.

In principal, the current power grid system spreads power from a few main power generators over a large area, regardless of demand. The Smart Grid is being developed to discern where and when power is needed, and to provide the appropriate capacity to the customer.

Still sounds fuzzy? Then simply assume that the Smart Grid is like the Internet, and the conventional power grid is TV broadcasting. The core of Smart Grid technology is its ability to have two-way communication, whereas the conventional power grid has only one-way communication.

The Smart Grid makes it possible to know when electric costs are the least expensive, so, for example, you can set your washer to run at 4:00 a.m. (assuming it is the least expensive time) and save money.

Why do we need the Smart Grid in the future? Aren't we fine with the current conventional power grid?

As populations grow and technology advances, the demand for electricity has grown rapidly. Computers, air conditioners, refrigerators, dishwashers, and even new green cars, which were not available in the early 1900's, consume electricity directly from the electric grid. While electricity demand has skyrocketed, the amount generated has had a difficult time keeping up. Many underdeveloped countries have a shortage of electricity and it's not uncommon to see blackouts due to excessive power consumption. At the same time, developed cities such as Seoul, Singapore and New York are also feeling the crunch. Briefly, the conventional power grid is struggling to keep up with the demand.

The first reason that the Smart Grid is a necessity is its ability to increase energy efficiency. As you might know, the summer season is the peak period for electricity consumption as commercial and residential air conditioners are needed in warmer climates. Hot summer afternoons can see unpredictable peaks in electricity consumption, often leading to difficulties for the power plant to meet these demands. Not knowing exactly when demand will peak or how high it will go has always been a complicated problem for energy suppliers. Since the Smart Grid charges a graded fee depending on the time, consumers are most likely to use electricity in less expensive time periods, which in turn is likely to make the demand relatively even throughout the day.

The second and third reasons are to decrease greenhouse gas emissions and save money. In the offseason, relatively cheap sources of energy such as nuclear power and/or coal are used to generate electricity. During peak periods, on the other hand, comparatively expensive materials such as gas and oil are used to produce electricity. These pricey materials may cost as much as 2.7 times more than cheaper alternatives to generate the same amount of electricity. Also, these materials produce excessive greenhouse gases when the plants generate an excessive amount of electricity to meet a demand that does not actually materialize.

According to the UK Department of Energy and Climate Change, their electricity supply is generated by gas (46 percent of total output), coal (31 percent), nuclear (13 percent), oil (1 percent), hydro (1 percent) and other forms of fuel (8 percent).

However, green energy sources such as solar power, wind power and tidal power, have their own inherent weakness - irregular electricity generation because of a reliance on direct sunlight and the unpredictable strength of the wind. The Smart Grid, remarkably, is able to harness this irregular energy and merge it with the existing grid so that it may provide a stable energy supply to each household at greatly reduced economic and environmental costs.

Fourthly, the Smart Grid can increase both the quality of electricity and its reliability. The average black out time is 18 minutes in Korea, 68 minutes in the UK and 137 minutes in the United States per annum. When a blackout occurs, the Smart Grid can do a self-diagnostic and semi-automatic revival of services, whereas a conventional power grid requires manual, labor intensive repair.

Fifthly, the Smart Grid is a core infrastructure for enabling the next era of electronic vehicles. There will be increasing demand for electrical chargers for both plug-in hybrids and electric vehicles. Assuming that one-third of the cars in Korea will be electric by 2030, the number will be 6.3 million electric cars, which will require an additional 10,000 mw of electricity. If all cars were to be electric in Korea, it would require at least 2.5 times more than what we currently consume. Electric car owners will benefit from the time-of-use rates the Smart Grid system would provide, making the system much more affordable and attractive to consumers.

Lastly, we need a new engine for economic growth. The Smart Grid is one of the 15 promising green energy industries and is also expected to become a US$3-trillion market according to the IEA. The Korean government plans to establish a nationwide Smart Grid by 2030, the first country in the world to do so. The government expects that the Smart Grid will create half a million jobs and generate 6.8 trillion won in the domestic market by that time.

The Korean government has made some strides toward accomplishing its goal of being the 'World's First Nationwide Smart Grid Operator.' First of all, the government has emphasized that the country has advantageous conditions in that it has a well-developed broadband infrastructure, one centralized electronic power company and a relatively small area of land in which to implement their plans. These circumstances will certainly make it easier to establish a Smart Grid without incurring the hassles of having many parties involved.

This February, the Korean government announced its plan to be the first country to implement a nationwide Smart Grid. In March, the government set up a Smart Grid committee to draft a roadmap for the nationwide Smart Grid. The committee will create a new business plan and perform a cost-benefit study, the specific details to be publicly released this November.

The Korea Smart Grid Association (KSGA), an interest group representing Smart Grid-related businesses, was organized in May. Its members include heavy electric machinery producers such as LS Industrial Systems, Hyundai and Hyosung; electric power companies like state-run Korea Electric Power Corporation and Korea Power Exchange; and even communication firms such as SK Telecom and KT. Car manufacturers and home appliance companies are also participating in the association.

Last June, two business associations, the KGSA from Korea and Gridwise Alliance from the United States, signed a memorandum of understanding to cooperate in technology development for the implementation of the Smart Grid.

While President Lee Myung-bak was visiting the United States, an important ceremony was held with the Korean Minister of Knowledge Economy and the U.S. Secretary of Energy to sign a statement of intent for cooperation on Smart Grid development in both countries.

Prior to this ceremony, the Ministry of Knowledge Economy and the Korea Electric Power Corporation announced its 'Jeju project,' a plan to set up a $65 million Smart Grid pilot project on the country's southern resort island by 2011. The Jeju project aims to save energy and give economic opportunities to companies from both Korea and the United States for the development of advanced technologies. The government expects that the Smart Grid would reduce the country's power consumption by 3 percent by 2030. This partnership will also offer chances for Korean and American companies to access each other's domestic markets.

Han Jin-hyun, Director-General for Energy Industry Policy at the Ministry of Knowledge Economy, said, "To implement the Smart Grid, information technology needs to be added to the current electric infrastructure. The advanced information technology of Korea, coupled with the sophisticated electric technology of the United States, will ensure that the two nations will gain an early edge in the world Smart Grid market."

The U.S. government has plans for a nationwide Smart Grid as well. Nearly $11 billion has been allocated for related projects including tax deductions worth $2.3 billion for those who invest in high-tech energy research, $2.5 billion towards public renewable energy research, and a further $6 billion towards projects that focus on researching renewable energy. The U.S. government expects that these investments will encourage the rapid development of this new market, the value of which is estimated to be in the area of $40 billion.

This aggressive approach by the U.S. government is believed to be, in part, an approach to regain America's position as a leader of the world electric markets. The United States is the country that first harnessed electricity, though European countries currently dominate the world markets. ABB, Siemens, Areva and Schneider account for about 80 percent of the heavy electric machineries market and GE is almost the only American player in the market. Since the Smart Grid promises a reshuffle of the conventional market order, the United States believes it can regain its former status by investing and developing in these systems of the future.

This year's Smart Grid week 2009, an annual Smart Grid conference, is going to be held in Washington, D.C. from September 21-24. The KSGA and three other Korean companies - LS Industrial Systems, Korea Electric Power Corporation and Hyosung will also attend and showcase their high-end technologies.

Park Hong-il, an administrative official at the Ministry of Knowledge Economy, said, "After signing the memorandum of understanding on Smart Grid development between our two countries, follow-up talks and cooperation are continuing to progress. Participating in Gridweek 2009 is one of these cooperation measures. Also, we are considering cooperation with other countries apart from the United States."

India, as one of the fastest growing countries, feels a natural urge to build a modern, intelligent Smart Grid. With a stable, reliable Smart Grid, India can provide an environment that is comfortable for foreign investment and companies. Without it, India will not be able to keep up with its growing electricity needs. The Indian government established the Electricity Act of 2003, aimed at reforming electricity laws and attracting foreign investment. This plan included improving metering efficiency, creating transparency and accountability at the state level and mandating minimum amounts of electricity generated from renewable energy sources.