"Without a smart grid, electricity prices will soar"

Global Smart Grid Federation chairman Guido Bartels says revolutionizing the power supply is a necessity, not a luxury.

Electricity prices in Western countries will soar 400% in the next 30 years if electricity grids do not become smart grids, according to Dr. Guido Bartels, chairman of the Global Smart Grid Federation (GSGF) and general manager of IBM's Global Energy and Utilities Industry.

Bartels came to Israel last month as a guest of the Israel Smart Grid Consortium. The first step that will be taken in Israel towards introducing a smart grid will be a pilot scheme starting at the end of the year among 2,500 households in Binyamina. This is an initiative by Israel Electric Corporation (IEC) that involves installing systems that will provide running information on the Internet about electricity consumption, and that will enable IEC and the consumer to plan the homes consumption, with a view to making it more efficient. In the future, all 2.5 million electricity meters in Israel are planned to be replaced by smart meters that enable remote reading, at a total cost of NIS 3 billion.

Governments around the world have pledged $15 billion in incentives for smart grid ventures. The task of a Federation like ours is to create a vision 20-30 years ahead for these governments, Bartels says. In the US, we managed to persuade the administration to allocate $4.5 billion to this issue out of the incentives package for 2009, there are projects in California, and in Denmark they want to charge electric vehicles using wind. In Malta, the first pilot on a nationwide-scale is being carried out over five years, from 2009 to 2013. Malta stands in great need of energy for water desalination, and the goal is to reach a saving of 5-15% on peoples electricity bills.

It pays off in the long term

Last year, the New York Times reported on research conducted by the US Electric Power Research Institute (EPRI), which found that introducing smart grid technology around the world could lead to a cumulative saving of $1.3-2 trillion over the next twenty years. To achieve such a saving, the developed nations need to double their planned investment in power grids to an aggregate $338-476 billion. Bartels points out that this is a small sum compared with the saving that will be made. The question though is who will pay? The researchers say that in order to realize the smart-grid vision, the regulator will have to recognize the required investment in the electricity tariff. In other words, the bill will be paid by electricity consumers.

Does the requirement of raising electricity prices to finance the smart grid seem realistic to you?

Its not an easy decision politically, certainly not in countries that have elections every two or four years. Im often asked, Who will pay all these billions, the poor consumer? I answer: And who will pay if we dont do the smart grid? As far as electricity consumers are concerned, the investment in a smart grid pays off handsomely in the long term. We estimate that if the current grid is not upgraded, electricity tariffs will be 400% higher by 2050. Introducing a smart grid makes it possible to reduce this rise to just 50%. The reason is that, without a smart grid, the reliability of the electricity grid will decline: the infrastructure is getting old, and introducing renewable energies will require massive investment, because the grid isnt sufficiently flexible.

What in fact is a smart grid?

The truth is that Im tired of hearing definitions of a smart grid. There as many definitions as definers. When I was growing up in Holland, we had two television channels, and, as a viewer, I was completely passive. Today, viewers can not only choose, they can also create, they can be interactive and tailor packages of broadcasts that match their personal needs. The same process has happened in telecommunications, with usage packages for the mobile telephone, and the same is about to happen in electricity. The world of electricity will switch to a digital environment. Electricity too will have to enter the world of ICT. We will have a generation of consumers who will not agree to be passive. They will want green energy, to control consumption times, and to generate electricity themselves. They will take this for granted, but it will require the system to be much more flexible. So the existing power grid has become obsolete?

I have huge respect for what the power industry has done. The power grid is perhaps the largest and most sophisticated system that human beings have constructed. In a space of 100 years, we have brought power supply everywhere, and it has become a foundation stone of society as we know it today. But for the industry to continue fulfilling this important role, it has to renew itself, because the world around us has changed. The system that worked so well was centralist: power flowed one way from the power plant, via the national grid, to the consumers home. It was fairly easy to balance supply and demand.

We are moving to a different world, one in which we have to worry about the environment, and not be dependent for energy supplies on unfriendly countries. So we get to renewable energies, electric vehicles, and wiser use of electricity. That leads to many small sources of power production. Some of these are at the end point, the consumers home, which means instability in the system of power production and transport, and bi-directional flow of electricity. The challenge for the smart grid is to maintain and improve the reliability of the power supply, and to do it at low cost.

And how will this happen in practice?

In order for the grid to work bi-directionally, it will be necessary to install protection and sensor systems, and a lot of information systems. As an example, you can take what has been done in telephony. The bottom line is that this revolution strengthened the consumer.

Published by Globes [online], Israel business news - www.globes-online.com - on March 7, 2012

Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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