It has been looking increasingly likely that we're in for a Super El Niño in present summer. In last May, and temperatures are already approaching 30 degrees in Korea. Fears of an "all-time heat wave" are growing, and electricity prices have recently increased. A "cooling bill bomb" could be a reality, a season two of last winter's heating bill bomb. Large-scale power outages (blackouts) due to temporary increases in electricity demand are another issue to prepare for.

Heat wave concerns aren't just a localized, one-off event; the problem grows every year around the world. The Wall Street Journal recently advised U.S. citizens to "stock up on emergency generators in case of a heat wave." In South Asia, 300 million people have suffered from power outages due to heat waves.

Smart grids are a promising solution to this crisis. It is a technology that integrates IT or artificial intelligence (AI) technology into the existing power system to significantly increase reliability and efficiency. Increasing the efficiency of the power system alone can lead to huge energy savings. According to global market research firm Juniper Research, smart grid deployments alone can reduce energy use by enough to power more than 42 million soccer matches.

What’s SmartGrid ?

The word grid, as used in smart grids, is a dictionary definition of "grid," like the grid of a checkerboard. It's a word used in many fields, including design and urban planning, but in the context of the electricity system, it refers to the "grid" that delivers electricity.

A smart grid is literally a power grid that is smarter than a traditional power grid. The current power grid goes through a three-step process: generation → distribution and transmission → use. Electricity is generated at a large power plant and travels to a substation. Substations are responsible for lowering the high voltage of the electricity and sending it through distribution lines to transformers near electricity users. The transformers then lower the voltage back down to the 220 volts that we use and deliver it to our homes.

Electricity generation is centralized around large power plants, and there is no communication between users and producers. Electricity producers generate electricity in anticipation of demand, and users use electricity when they need it.

A smart grid combines this one-way power grid with technologies such as IT, artificial intelligence (AI), and energy storage (ESS). It is characterized by enabling communication between producers and consumers about electricity usage by utilizing various technologies. Electricity usage can be measured in real time, and users can also understand the price and usage status of the electricity they receive. By being able to understand in detail where the supply and demand of electricity occurs, accidents can be predicted, and even if an accident occurs, it is possible to recover quickly.

Why is SmartGrid needed ?

There is an ongoing effort around the world to replace the traditional grid with a smart grid. This is because the existing grid we use is about 100 years old.

When electricity first appeared, there were a lot of small power plants and electricity companies, each of which provided electricity to users, and the power system was different for each company, so some appliances couldn't be used on other companies' power systems.

It took a man named Samuel Insull, Edison's secretary, to unify them. Samuel Insull, played by Tom Holland in the movie "Courageous," about the rivalry between Edison and Tesla, envisioned a monopoly on electricity by unifying the decentralized grid and transforming it into a form of large-scale power generation.

Here's an excerpt from his obituary in the Berkeley Daily Gazette.

"Samuel Insull controlled more than 6,000 electric utilities and employed 72,000 workers to run them, with a population of 10 million people served by them."

Samuel Insull's experiment was a success and set the standard for the rest of the world. But the explosion of electricity use in the second half of the 20th century created many problems. Chief among them is climate change. Carbon-driven power generation has led to resource depletion and global warming, and many countries are now attempting to transition their energy systems with the goal of becoming carbon neutral. According to the World Bank, carbon prices have been imposed on about 21.5% of global greenhouse gas emissions as of 2021.

The European Parliament passed a bill last year to introduce a carbon border control system, which would include the carbon generated in the process of generating electricity used to produce products, and it's not just about reducing carbon to protect the environment, but also to increase the viability of industries.

The problem is that the current grid is a centralized thermal power generation system. With the spread of electric vehicles, electricity usage is expected to increase rapidly in the future. As renewable energy sources become more abundant, it is inevitable that we will see more micro-grids, where power plants are installed in various locations, rather than a centralized power generation system. This makes it very difficult to predict the supply and demand of electricity, which is why large-scale power outages caused by heat waves are common around the world. The impact of these outages can be severe for businesses and consumers alike. In 2019, a 28-minute power outage at Samsung Electronics' Pyeongtaek plant cost the company about U$50 millions.

The state of smart grid technology

At the heart of smart grid technology is information exchange. It is important to identify and data the production and usage of electricity in real time. In addition to large thermal power plants, renewable energy, ESS, and electric vehicles can now act as small power plants to provide electricity. The business of collecting and software-managing their electricity data and providing it to the existing power market is called a virtual power plant (VPP).

Traditional electricity distributors, such as KEPCO, will aggregate the power from VPPs and conventional coal and nuclear power generation to deliver electricity to consumers. Another difference in the smart grid is that consumers can also become producers of electricity. As Zero Energy Buildings (ZEBs) are mandated, large buildings will be self-generating, and many homes and factories are now self-generating, such as solar. They become prosumers, selling electricity back as they use it. The process of providing electricity back to KEPCO through the VPP is necessary.

There are many companies pioneering services in the smart grid market at different stages. Sidewalk Infrastructure Partners, founded by Google's parent company Alphabet, has invested $1 billion in a virtual power plant construction project in California, USA. In Korea, SK Group is building virtual power plants. SK Energy plans to collect small-scale distributed power sources, including solar, to secure 20 MW of power generation capacity. Hyundai Motor Company is developing vehicle-to-grid (V2G) technology. V2G is a technology that supplies surplus electricity from electric vehicles to the grid. In other words, electric vehicles are utilized as small-scale ESS.

Related startups are also growing rapidly. GridWiz is the first in Korea to operate a grid service that sells electricity using electric vehicles. It is a structure in which the power exchange requests customers who use electric vehicle chargers to reduce their electricity consumption, and if the customer accepts the request, it pays a settlement amount equal to the reduction. It is a typical demand response (DR) service that is possible because the supply and demand of electricity can be observed in real time.

Enlighten, an energy startup, is working to collect and integrate various energy sources such as solar power plants and electric vehicle chargers across the country and utilize them for power trading. Last year, it signed a third-party power trading agreement (PPA) with Naver and KEPCO, the first in Korea. Others are focusing on building energy efficiency.

Kevin Lab, a startup, is building a system that can measure and efficiently manage electricity use in apartments, zero-energy buildings, and factories in real time.

Growing to a $214 trillion market by 2030

The global smart grid market is growing at a rapid pace. It is expected to grow at an average annual growth rate of 18.2% from $36 billion (KRW 48 trillion) in 2021 to form a market of approximately $160 billion (KRW 214 trillion) by 2030.

The domestic market is also expected to grow steadily. Last year, the market size was estimated to be around U$ 3.3 billions, and the government's investment and promotion plans are also actively underway. The Ministry of Trade, Industry and Energy announced at the '2050 Carbon-neutral Green Growth Committee' held on the 14th that it will invest about U$3.7 billions in the intelligent power grid sector over the next five years. Specifically, a virtual power plant incorporating IT technology will be piloted in Jeju later this year and then expanded nationwide by the end of 2025. By 2024, it plans to complete the construction of an intelligent meter reading infrastructure (AMI) for low-voltage, centered on the public, and by 2027, it aims to have 20,000 DR customers who are prosumer-type electricity consumers.

Generating new energy means we can consume more electricity. But getting that energy isn't easy, and you may need to spend more resources on new capital investments and technology development. In fact, the International Energy Agency (IEA) estimates that energy efficiency improvements will contribute more to carbon neutrality in 2050 than renewable energy sources. As we head into another hot summer, we'll be worrying about our electricity use again, but hopefully, as smart grid technology improves and becomes more integrated into our daily lives, we'll be worrying less and less.

Resource: Taeho Kim, Hangyoung Economy News