Investment in smart grids will ensure financial savings of $290 billion by 2029 from energy and emission costs against $84 million in 2024; benefitting utilities and consumers, according to a report from Juniper Research.
The growth in financial savings from the deployment of smart grids is driven by increasing investment in solutions from governments, including the US, China, and Europe, with BESS (Battery Energy Storage Systems) becoming a focal point for the market.
The market shift to prioritising BESS efficiency and solutions is facilitated by the need to meet climate goals and reduce reliance on fossil fuels.
AI (Artificial Intelligence) applications within the smart grid are expanding. Generative models trained on customer energy data can create scenarios for utilities to develop grid strategies. For instance, calculating energy output requirements based on houses adopting solar technologies allows utilities to plan future grid investments.
Challenges Deploying Smart Grids
High capital costs, grid modernisation, digital transformation, and regulatory uncertainties have been long-term challenges to smart grids, with them offering their own complexities that limit the ability to effectively develop and utilise smart grids.
In recent years, investment costs for grid and related infrastructure have decreased. Despite this, the barrier for entry still requires sufficient capital, especially in regards to renewable energies. As many countries are pushing for the adoption of renewable energy production due to sustainability targets, investments in wind, solar, hydro, and other renewable energy sources are a necessity, and scant few countries offer some form of subsidiaries to help cover the cost for infrastructure.
Given the importance of renewable energy production in smart grids, the slowed rate of investment therefore decreases the rate of which the market at large is able to develop. Countries with non-nationalised energy sectors will require contracts with major technology companies to work on grids which can be incredibly expensive. This in turn can result in a fractured offering, where certain grids will be operated and maintained by certain companies and therefore lacks a holistic consistency across an entire region.
Smart grids are prone to damage from electromagnetic events including geomagnetic disturbances from solar storms or weapons capable of creating electromagnetic pulses. These can disrupt and harm electronics and computers, with the capability of causing significant damage to critical electronic infrastructure within the grid, such as transformers.
Renewable energies sources such as wind and solar can be inconsistent, resulting in a non-continuous production of energy. This is a major challenge for periods of high-energy demand from end users, and thus necessitates the use of real-time energy consumption data to balance supply and demand, forecast generation, and more.
One of the hurdles to the expansion of smart grids is the complexity and integration of various solutions for grids. Integration methods manage the variable production of renewable sources to maintain system reliability, as well as increasing the overall efficiency of systems.
Security
Grid security is a major concern. Cyberattacks in particular can be difficult to deal with; grid systems were formerly isolated from the Internet, but have become increasingly connected in the past two decades, and even more so within recent years due to developments like cloud-based infrastructure.
Despite the normalisation of smart grids and adjacent technology in many markets through the likes of smart meters and other technologies, the understanding of the importance of smart grids in relation to environmental benefits, to the potential financial cost savings is still not perfect.
Emerging markets will require effective educational approaches from government bodies to ensure that misinformation is combatted. More importantly, understanding how data acquired through smart meters and any other monitoring devices is paramount to ensure acceptance to these technologies is sufficiently high.
Benefits of Smart Grid Deployment
There are plenty of benefits to smart grids that warrant persevering through the obstacles. Thanks to its features in the accommodation of RES (Renewable Energy Sources) through its communication capabilities, investing in smart grid deployment yields significant benefits for the environment and society.
Reduction in Financial Cost
The cost for electricity can vary for a multitude of reasons, but are typically a reflection of the cost to build, finance, maintain, and operate generation facilities and electricity grids. Following this, the actual cost of electricity for power companies varies by the minute, based on wholesale energy market prices, the cost of demand, and production, which is affected by season, weather, and even time of day.