Smart grids

Tracking Clean Energy Progress

More efforts needed

Although smart grid investments rose 10% in 2018, these technologies still represent a small share of all investment in network infrastructure. Furthermore, despite the initial enthusiastic response to smart grids, many signs now point to a slowdown: funding for microgrids and virtual power plants did not expand in 2018, and investments in blockchain technology plummeted. Further efforts are needed to implement regulatory frameworks that recognise and reward investment in new digital technologies and in other ‘non-wire’ alternatives to traditional electricity grid extensions.

Luis Munuera
Lead author

Investment in smart grids by technology area

	Rest of networks	Power equipment	Smart meters	Smart grid infrastructure	EV chargers	Share from digital grid infrastructure
2014	139.29	114	11	12	0.91	8.466159768
2015	148.27	121	11	11.90	1.39	8.285231976
2016	149.35	126	16	12.54	1.88	9.937560765
2017	130.52	135	18	12.67	2.16	11.11699481
2018	127.01	131	19	12.62	3.40	12.10211248
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Back to Energy integration sector | TCEP overview 🕐 Last updated Wednesday, June 5, 2019

Tracking progress


Smart grids comprise a broad mix of technologies to modernise electricity networks, extending from the end user to distribution and transmission.

Not only can better technologies for monitoring, control and automation stimulate the development of new business models, they can unlock system-wide benefits including reduced outages, shorter response times, deferral of investments to the grids themselves and distributed energy resource integration.

At the end-user level, smart grids can enable demand flexibility and consumer participation in the energy system, including through demand response, electric vehicle (EV) charging and self-produced distributed generation and storage.

Demand flexibility can increase the overall capacity of the system to integrate variable renewables while accelerating the electrification of heating, cooling and industry at a lower cost. Deploying a physical layer of smart-grid infrastructure – underpinned by smart meters – can help unlock these benefits.

Smart meters

Smart-meter deployment has advanced considerably in recent years in several key regions.

China is approaching full deployment, and Japan, Spain and France are poised to achieve full rollouts in the next few years.

In the United States and the European Union, smart meters have been deployed in over half of the market.

Progress in India and Southeast Asia has been slow to date, but plans are in place to achieve strong growth to 2025. Recent cost reductions in advanced metering infrastructure and lessons learned from large-scale installations in other regions could accelerate smart meter deployment in emerging markets.

Distribution

At the distribution level, making energy systems ‘smarter’ through ICT can make it easier to optimise grid monitoring and control. Data and analytics systems especially enable real-time monitoring of conditions, making it possible to predict failures and carry out remote maintenance.

Better and more affordable sensors are improving oversight of grid conditions, allowing the physical capacity of the network to be increased. Overall, however, digital energy networks reduce the need to build new power lines and invest in physical network assets.

Investment in distribution network monitoring and automation has been increasing in recent years, but growth was modest in 2017 (3%) with nearly USD 13 billion in investment concentrated in China, Europe and the United States.

Transmission

At the transmission level, new high-voltage technologies permit greater network interconnections as well as the connection of remote energy resources.

Digital smart-control technologies allow transmission networks to operate at higher capacities, closer to their physical limits. They can also improve management of interconnections among regions and countries.

Investments in interconnecting transmission systems increased significantly in 2017, as annual line-kilometres tripled from 2016.


The transition to a smarter grid requires the deployment of new power infrastructure along with various kinds of devices (e.g. electronic sensors and computer systems) throughout the electricity system, and their interconnection via high-speed communications networks using standardised protocols.

While new distribution-level technologies such as solar PV, EVs and storage are challenging the traditional functions of distribution system operators, smarter grids will also lead to more consumer involvement. Electricity network roles and responsibilities will therefore need to evolve progressively to accommodate these changes.

Regulatory progress made in recent years to develop and deploy enabling policies needs to be amplified, and creating more interoperability and common standards for smart-grid technologies is also a key area to enable further progress.

Empower DSOs to manage distributed energy resources

Governments, regulators and utilities should facilitate the adoption and use of novel assets for distribution network owners and operators (DSOs), including technical options such as:

  • advanced voltage and reactive power control
  • closed-loop operations
  • non-wire alternatives such as distributed static storage systems.

They should also explore advanced tools for cost-benefit analysis of investments in managing distributed energy resources. Focus should be placed on developing ‘future-proof’ grid codes that exploit the full capabilities of smart inverters, active power control and other measures for managing distributed energy locally.

Encourage emerging business models

Governments, regulators and utilities should also define the roles and operational boundaries of aggregators and VPPs.

Governments can collaborate with equipment manufacturers, network owners and operators, utilities and third parties to create sandbox environments in which new distributed energy business models can be operated in real-world conditions to identify the least-cost options to integrate them and scale up operations.

Advanced forecasting and control capabilities

Governments, utilities and system owners and operators should focus innovation activity on developing tools that enable energy monitoring and management at more granular scales, including production and load forecasting.

Network stakeholders at all levels should develop joint platforms for technology appraisal, standard-setting (for physical and digital assets) and for exploring potential grid governance conflicts at different levels, particularly in the link between distribution and national network owners.

While market structures vary, it is necessary to revise roles and responsibilities as data and physical systems become more granular and distributed, and as more participants become involved.

Improve interoperability and standardisation

Standards and interoperability are also a key area needing further attention. Central to smart grids is the capability for technologies to be deployed in one part of the energy system and interact with elements in different sectors and geographies, and be used by different stakeholders along the electricity value chain.

Lack of interoperability among the various elements (e.g. charging infrastructure, smart metering infrastructure, remote monitoring and control equipment) is often the main stumbling block to scaling up and transferring solutions that have been proven in a given network, city or system.

Additional resources