Smart Grids Will Keep An Eye On How People Consume Their Energy, But Are They Viable?

The U.K. 's largest energy supplier Centrica is this year to start monitoring the behavior of 14,000 electricity customers in a smart grid trial project that will also test the impact on the grid of adding low-carbon energy technologies such as electric cars and solar panels.

The three-year project, which Centrica is conducting in partnership with distribution network company CE Electric and Durham University, aims to help homes and businesses cut their energy use and speed up the integration into the grid of technologies such as ground source heat pumps and combined heat and power boilers. These will supply power back into the system and also test the network.

It's one of several smart grid trials taking place across Europe as the region targets big increases in energy efficiency in efforts to meet stringent European Union 2020 climate change targets. The smart grid is unlikely to play a huge role in meeting the 2020 targets, but it will be essential if countries are to meet their more ambitious 2050 targets.

"You can't move to a low-carbon economy without changing how the networks work, and you can't do that without changing the way that customers consume and you can't do that without effectively making this [the grid] a data economy," says Petter Allison, managing director of technology and innovation at Centrica's retail arm British Gas.

According to consultant Accenture's recent Carbon Capital report, a smart grid with smart meters deployed in households could save a whopping €87 billion ($122 billion) in energy costs across Europe by 2020.

But energy efficiency doesn't come cheap: According to Accenture's report, about €552 billion will need to be invested in smart grids and meters from now until 2020 for this to be possible.

The introduction of smart grids would bring two-way communications to the networks and allow people to see how much energy they're consuming via their 'smart meter'. It will also give them the choice to consume energy at a time when demand is lower and tariffs are cheaper.

The increase in energy usage data will also allow electricity companies and network operators to see, for the first time, when and where energy is consumed down to the micro-level of a neighborhood, street or even a house, enabling them to see bottlenecks and use assets more efficiently.

Currently, most of the high-voltage transmission networks across Europe have such data systems providing them with information about the big industrial users. But the low-voltage distribution networks are mostly "blind" and only have information on how power is consumed on a small scale from sample surveys.

"The distribution network is lagging behind at the moment and it's a big challenge," says Amy Cooke, business development director from global telecoms company Cable&Wireless Worldwide, which has a £207 million contract to provide and run a dedicated network for U.K. power grid operator National Grid.

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"There are in excess of 500,000 mid-voltage substations in the U.K. that will need some kind of communications applied to them through the smart grid rollout," Ms. Cooke says.

Italy has made the most progress in this area in Europe and has already upgraded and automated around a third of the substations in its distribution network, allowing smart meters to communicate with the grids.

Aside from technological challenges and the huge investments required in smart grids, one of the main obstacles has been consumers fears of the 'Big Brother' network operator reaching into their houses and turning off fridges and washing machines in mid-cycle at times of peak demand.

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