The US has initiated work on developing smart grid to optimise energy consumption and reduce its dependence on conventional fuels. Mohinder Sawhney explains how this move will create new jobs and investments.
The US plans to implement smart grid technology to reduce the national energy demand by 20 per cent, improve system efficiency by 40 per cent and incorporate 20 per cent renewable sources into the total electricity capacity by 2030. The smart grid impleÂmentation is driven by its ability to reduce greenhouse gas (GHG) emissions. Smart grid is estimated to reduce the carbon footprint of the electric power system by 25 per cent, through the integration of power generated from renewable resources into the grid, while it also reduces power loss over transmission and distribution lines, making the grid more energy efficient.
The US has initiated work on developing smart grid in order to optimise energy consumption and reduce its dependence on conventional fuels. The ability of the smart grid to integrate alternative energy sources has made it possible to substitute a significant part of fossil fuel sources with more eco-friendly alternatives.
More jobs: The smart grid rollout is receiving significant support from the US government as it is expected to generate a considerable number of jobs through grid upgrades and allied services. Given the kind of smart meter installations expected to happen in the next couple of years, this is expected to improve contract job opportunities, as well as equipment manuÂfacturing jobs. The indirect job creation potential of smart grid is estimated to be significant and will be beneficial to the US economy during the current period of austerity. The US government and industry assoÂciations are encouraging greenfield ventures related to smart grid and its enabling technologies–this is further expected to fuel job growth in the US.
The investment plan: Various ventures have been initiated in segments such as cabling technologies, sensing and measurement technologies, and customer interface technologies, in order to aid the development of smart grid. The US first showcased smart grid as a solution for energy issues, and other countries, including Brazil and India, are looking to the US before initiating their own smart grid deployment.
Half of all American homes will have smart meters by 2020, according to a recently updated Institute for Electric Efficiency (IEE) estimate. Currently, the peneÂtration of smart meters in the US is about 6-8 per cent. The US has been the leader in terms of installations and projects undertaken in the major smart grid technologies such as integrated communication technologies, cabling technologies and consumer interface technologies. UtiÂlity companies in the US have plans to install netÂworking technologies during 2011-2020 to support their smart grids programs under the American Recovery and Reinvestment Act (ARRA) of 2009 and are actively undertaking projects for the installation of smart meters with the support of the ARRA.
The Federal Energy Regulatory Commission (FERC) recently issued an interim rate policy, by which investÂments in smart grid will be included as recoverable costs in the utility’s regulated rates. To create a smart grid collaÂborative of regulators at the state and federal level, FERC has also partnered with the National Association of Regulatory Utility Commissioners (NARUC).
In 2011, the US Commerce Department’s National Institute of Standards and Technology (NIST) and the EU’s Smart Grid Coordination Group (SG-CG) agreed to collaborate on smart grid standards development, joining smart grid standards between the two continents to ensure that smart grid devices and systems can be used together globally.
The drag factors: The US smart grid industry still has some restraints hampering its growth, like IT security, standardisation and interoperability issues and the slow economic growth. Government initiatives have defined the primary requirements for smart grid systems to proÂtect against known vulnerabilities, but with the increÂaÂsing sophistication of technology it is difficult to predict the effectiveness of these measures against illegal hacking.
The conversion of the legacy grid into a smart grid is hampered by a lack of standards to guide the process of implementation. The integration of alternative sources and advanced technologies into the grid system requires proper monitoring and a standard protocol.
The economic crisis in the US may negatively impact upon smart grid development. Long-term borroÂwing will therefore prove difficult, and a lack of investments required for power infrastructure may lead to risks of delays and even discontinuation.
The author is Clean Technology Analyst, GBI Research.
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