Series: Powering Change

Smart grids and the digital transformation of the electricity network

Blog #5 – Our final blog in the Energy Transition series explores the role that smart grids can play in delivering more resilient energy infrastructure.

What are smart grids?

Smart grids represent an advanced evolution of traditional electricity networks, leveraging digital technologies, sensors, and sophisticated software. Their primary objective is to dynamically balance the supply and demand of electricity in real time, not only ensuring grid stability and reliability but also optimizing the cost of energy distribution.

These innovative technologies interact seamlessly with the electrical grid, allowing it to respond in a digitally agile manner to the swiftly fluctuating patterns of electric demand. Smart grids empower utilities and consumers alike to make informed decisions about their electricity consumption, enhance energy efficiency, integrate renewable energy sources, and proactively identify and address potential issues in the grid, ultimately paving the way for a more resilient, sustainable, and responsive energy infrastructure1.

smart grid concept

Figure 1: Smart grid concept. Image from https://codibly.com/news-insights/what-are-smart-grids/

Why are smart grids important?

Smart grids are vital in a shifting energy landscape. They help manage increased electricity demand and the integration of renewables, reducing the need for expensive grid upgrades. Their benefits include efficient power transmission, quicker outage recovery, reduced operational costs for utilities, and lower expenses for consumers. In Italy, for example, the deployment of smart meters and network automation resulted in a 20% loss reduction from 2014 to 20222. Smart grids also cut peak demand, integrate renewables effectively, and enhance grid security3.

In the context of initiatives like the EU’s Energy Union4, they support energy diversification, reduce dependency on imports, and stimulate research and innovation for economic growth and competitiveness. As the energy system transforms, smart grids ensure flexibility and intelligence to accommodate diverse energy sources and consumption patterns.

The future of smart grids

As of 2022, the global count of smart power meters exceeded one billion, marking a remarkable tenfold surge since 2010. Similarly, connected devices equipped with automated controls and sensors are poised to reach a staggering 13 billion in 2023, a substantial ascent from less than one billion a mere decade ago. This figure is projected to potentially surpass 25 billion by 20302. Despite these impressive statistics, smart grid technology deployment remains relatively low, particularly in developing nations.

The International Energy Agency (IEA) underscores the imperative for substantial investment in grid infrastructure, estimating that annual average investments need to more than double from approximately USD 330 billion in 2023 to around USD 750 billion by 20302.

Presently, more than 75% of global investments in grid digitalization predominantly target distribution grids, aiming to expand, reinforce, and enhance grid reliability and flexibility. However, concerning trends have developed as investments in grids across emerging markets saw a decline over the past decade. This trend is especially troubling as electricity demand in developing nations is on a trajectory for significant growth.

The hindrances to grid investment are multi-faceted and country-specific. Issues such as high perceived risks, capital costs, and the financial viability of utilities deter investment in grids across many regions. Additionally, the surge in national debt in emerging markets and developing economies over the past two decades has resulted in a corresponding plunge in investments from public-private partnerships (PPPs), which once provided a means to alleviate the mounting national debt. Regrettably, many recent private investments in these regions have favoured power generation over crucial grid enhancements.

annual investment into power sector

Figure 2: Average annual investment in the power sector by geography and category, 2011-2023. IEA2

 

Challenges and potential for innovation

Investment prospects in smart grid technology cover the full spectrum of the electricity grid, extending from high-voltage systems to customer-side applications. These opportunities encompass hardware, software, communication networks, and data management platforms. Investing in decentralized solutions, made possible by digitalization, offers a path to expedite cost-effective electricity access, particularly through off-grid connections.

Over time, these decentralized solutions can be integrated into the main grid, bolstering efficiency and resilience. To realize the capabilities of smart grids, it’s crucial to make investments in fundamental technologies and infrastructure. According to the International Energy Agency2 and the European Commission4, some of the main enabling technologies for the digital transformation of the energy system are:

Figure 3: Technologies needed for a large-scale implementation of smart grids

 

Catalyze can support your innovation

The type of support that is best suited for your plans depends on several factors, such as type and size of organization, location, budget or scope. In fact, there are so many options that it can be difficult to know where to start. Together we can ensure the optimal path for your specific case. We can help with the right funding strategy, application procedures, partnering, and project management. We can even optimize your business case or take a temporary position in your team.

Contact us to discuss the best funding options for your next stage of development.

Funding programmes & open calls

  • (TRL 1-4) EIC Pathfinder (Challenge: Nanoelectronics for energy-efficient smart edge devices) Funding rate: 100%.  Deadline: October 18, 2023. Expected deadlines in 2024: Open Call, 7 March 2024; Challenges, 16 October 2024.  (Learn more)
  • (TRL4-6) Eurostars Funding rate varies per country, in general 40%-60%. Deadlines: 13 March 2024. If you are early in your technological roadmap and looking for international partners to organise collaborative R&D, Eureka Eurostars fits in well. (Learn more)
  • (TRL 5-9) EIC Accelerator Funding rate: 70% +equity investment. Deadlines (Open & Challenges): 13 March 2024, 3 October 2024. If your technology is mature enough and needs further optimization or validation in a relevant environment, EIC Accelerator can be the target. The proposal can either be submitted under the open programme, or the Energy Storage challenge that might be more relevant. (Learn more)
  • (All stages) Horizon Europe calls: your R&D focuses on specific objectives, and benefits from pan-Europe partnerships, there are several opportunities available under the Horizon Europe 2023-2024 work programme (Learn more about Horizon Europe).
  • EFRO: Just Transition Fund: The aim of the Just Transition Fund is to support regions and territories where the economy and employment are strongly dependent on fossil fuels. Deadline full proposal: 31 January 2024. (Learn more)

 


 

Powering Change: Energy Transition series

Blog #1: Innovation Opportunities in the Energy Transition

Blog #2: Low-grade waste heat recovery is a key priority for EU energy transition

Blog #3: Sustainable Hydrogen

Blog #4: Critical Materials

Blog #5: Smart Grids

 


 

References

  1. IEA. Smart grids. IEA https://www.iea.org/energy-system/electricity/smart-grids (2023).
  2. IEA. Unlocking Smart Grid Opportunities in Emerging Markets and Developing Economies. IEA https://www.iea.org/news/power-system-digitalisation-is-crucial-for-clean-energy-transitions-and-security-in-developing-markets-but-investment-is-lagging (2023).
  3. US Department of Energy. Smart Grid: The Smart Grid | SmartGrid.gov. https://www.smartgrid.gov/the_smart_grid/smart_grid.html (2019).
  4. European Commission. Digital Transformation in Transport, Construction, Energy, Government and Public Administration. JRC Publications Repository https://publications.jrc.ec.europa.eu/repository/handle/JRC116179 (2019) doi:10.2760/689200.

 

 


 

This article was written by Aurelio Negri.

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