Generation Z and the smart grid

The transition to a Smart Grid presents some immediate challenges but it will also provide unprecedented business opportunities for suppliers, consumers and product developers – if they are ready for it.

The 'Smart Grid' is heralded as one of the keys to reducing carbon dioxide (CO2) emissions, making our power supply more stable and reliable, and lowering our power bills. You will see it illustrated by diagrams of windmills and solar panels feeding into an interconnected mesh of houses, factories, power stations and transmission lines - surrounded by lush green fields and grazing cows.

The intention is to convey the impression of a clean, green ecosystem that is making our world a better place to live. It is an ideal that is popular with environmentally conscious Generation Z, but difficult to envision for the Generation X and Y sceptics among us. In practice, it is actually well on the way to being made a reality.

What do we mean when we talk about a ‘Smart Grid’?

The ‘Grid’ refers to the network that carries electricity from the plants where it is generated to consumers. It includes transmission lines, substations, transformers, circuit breakers and the control and metering equipment needed to control how all of these interact.

In the same way that a ‘smart’ phone means a phone with a computer in it, a Smart Grid can be thought of as a ‘computerised’ electricity network. It uses two-way digital communication with intelligent electronic devices to instantly diagnose problems, continuously balance power production and consumption, and direct power flows in order to maintain a stable, reliable and efficient power supply.

An important feature of a Smart Grid is the ability to capture, analyse and understand the huge amount of operational and non-operational data that is now available from smart devices.

A 2012 report published by the University of Auckland Business School  indicated that a $5.5 billion investment in smart grid technology could save New Zealand $23 billion over the next 20 years.

But there are some  challenges

Regulators and consumers are pushing for more transparency and lower energy prices, while insisting on the same or better levels of reliability. But much of the existing electricity supply infrastructure, all over the world, dates back to the 1960s or earlier and is reaching the end of its useful life. Sometimes it blows up.  Much of it needs to be replaced.

But if you replace it you need (a) the justification (particularly if the equipment is feeding a few hermits at the end of a 50km long, No. 8 wire transmission line), and (b) the money.

To prepare for a Smart Grid, electricity suppliers need funding to invest in intelligent field devices, new communication and control systems, software and information management systems that can gather, analyse and utilise the vast amount of data that will be generated. But they will struggle to find funding to develop Smart Grid technology while there remain conflicting demands on capital.

Exacerbating the problem, uptake of household solar power may increase dramatically as prices come down. Electricity suppliers still need to maintain a sound network for cloudy days, but if revenue shrinks, so does their investment fund. And if they increase prices, it will encourage even more uptake of solar.

In its latest asset management plan, Unison Networks says: “A Smart Grid provides the means for electricity utilities to respond to these drivers (referring to the global drive for lower CO2 emissions and more efficient electricity networks), but will require significant investment and innovation at a time when existing infrastructure is reaching the end of its life. The step changes in terms of asset management practices, utilisation of new technology and engagement with consumers are major challenges facing the industry.”

Electricity suppliers are addressing some of these challenges by developing new tools to help prioritise spend, and using risk-based assessment techniques to identify projects that can be safely deferred (such as replacement of the No. 8 transmission line mentioned above).

They are also considering using standby power and load-shifting technologies to remove the need for immediate network upgrades.

Ultimately the Smart Grid will help with this by providing opportunity to better balance load flows and improve the utilisation factors (the ratio of demand divided by capacity).

What are the opportunities for electricity suppliers?

  1. Smart Grids provide an opportunity for suppliers to involve consumers in helping to address network problems. Household appliances can be switched or temperature-moderated remotely or alternatively managed by smart phone, PC or cloud-based applications that constantly track usage and hourly tariffs. Generation Y, (the I-Pod generation), love this kind of stuff.
  2. Consumers will also be increasingly involved in energy generation and storage, helping to instantaneously balance electricity supply and demand while reducing transmission losses. Generation X might be interested in this to supplement their retirement money, Generation Y to reduce power bills, but Generation Z (our ‘screenagers’), will love it because of its potential to save the planet.
    Electricity suppliers are uniquely positioned to be the managers and facilitators in such an ecosystem.
  3. Overall demand growth is flat at present, with more energy-efficient lighting and appliances, and better-insulated homes. But eventually demand will have to increase to cater for an increasing population, especially if uptake of electric vehicles accelerates, as many think it will. This has the potential to be a significant growth market and electricity suppliers are ideally positioned to service it.
  4. Saving energy doesn’t just advantage customers. It also allows the electricity suppliers to operate more efficiently and effectively, creating productivity improvements that benefit us all.
  5. One of the most exciting opportunities lies in what we can do with the vast amount of data that is going to be generated by the Smart Meters and intelligent field devices. Data can be shared and used collaboratively to develop new services and new products that haven’t even been thought of today.

Electricity suppliers could become to the electricity industry what the internet has become to the telecommunications industry – a catalyst, platform and facilitator for a complex interconnected ecosystem that utilises every connected network and consumer asset to provide secure, reliable and efficient power.

But they need to be preparing for it now. There is a great deal of work to be done in developing information management systems, standardising telecommunication and SCADA systems, understanding Gen X, Y and Z behaviour and modelling the likely future uptake of edge technologies such as electric vehicles and home energy solutions.

What are the opportunities for consumers?

Industrial and domestic consumers are going to have much more choice about who they buy electricity from and how they use it. They will have real-time price and usage information and be able to use inexpensive automation systems to optimise power use – minimising cost without unduly affecting production schedules or, in the case of domestic consumers, lifestyle.

Consumers will have the option of contributing to the stability of the Grid by being able to offer increments of interruptible load – and get paid for it.

There will be mechanisms for owners of embedded generators to sell power back to the Grid or to nominated individual buyers.

The challenge, particularly for industrial consumers, is to ensure that switching and control facilities are future-proofed, i.e. able to take advantage of the features of the Smart Grid in order to reduce costs and create opportunities to generate supplementary income. Some of these opportunities exist now.


The electricity supply industry is at the cusp of significant change.  While the change to a Smart Grid will ultimately result in a more efficient, reliable power supply, and considerably more choice for consumers; the immediate challenge for the industry is how to negotiate the transition while controlling cost and maintaining current levels of service.

It is a complex task requiring overarching coordination, agreement on the technology and data standards that are going to apply and, for consultancies, thinking beyond traditional design service offerings and applying their expertise to a much wider range of problems.

Thinking beyond the immediate challenges, the Smart Grid offers some amazing business opportunities for switched-on electricity suppliers, consumers and product developers.

It’s time for a systems readiness check: are we doing everything we can today in order to be prepared for tomorrow?

Ignite Your Thinking

What Do You Think?

Bryan Leyland · 17/08/2015 10:00:04 AM
Andrew, if you looked at the evidence, you would see that the world has not warmed significantly for 18 years. www.climate4you.com

Also read the comments on the sceptical science article you quote. Anyway, sceptical science is hardly a valid scientific reference. Temperature records are.

And if the heat mysteriously disappeared into the deep ocean, how on earth did it get there? There was no surface warming and so it couldn't have come from that, what magical mechanism do you propose?

But if heat really disappears into the deep ocean then I can credibly argue that the period of warming from 1976 to 1998 was caused by heat coming out of the ocean.

But if the climate models were any use, they would have been able to predict that the heat would disappear into the ocean and they would have been able to predict that was going to come out again. Not a word from the modellers as far as I can see! As Feynman said, if the evidence does not match the theory, then the theory is wrong.

The reality is that there are 29 – or is it 52 – more or less incredible explanations for the lack of warming. But if you take the simplest one there is no problem – the climate changes naturally and we do not understand how it works. Ever heard of Occam's razor?

Andrew Thorpe · 17/08/2015 9:14:02 AM
Bryan Leyland perpetuates the myth that "the world has not warmed for the last 18 years". This is an example of cherry-picking data and logical fallacy and these are common among climate change deniers. 1998 was a hot year for global surface temperatures, well above the trend line, and denialists like to cherry-pick year that because it makes the continuing global warming seem less. The global surface warming trend for 1997–2012 is approximatley 0.11 to 0.12°C per decade. Further, this data set does not include deep ocean warming which continues to absorb heat at a rate equivalent to four Hiroshima bombs every second. If you would like to know more, please check out http://www.skepticalscience.com/global-warming-stopped-in-1998.htm.

Greg Williams · 16/07/2015 11:55:34 AM
I don't understand why utilities need to invest in smart grids or what the $5.5bn investment buys? Consumers can already opt for a "smart tariff" by being on wholesale spot prices (if they have a TOU meter) and buy piggy back plugs that allow them to wirelessly control appliances. If there are opportunities for companies to make money by aggregating consumers together then let's see that happen organically. I'm not in favour of granting utilities huge amounts of money to do it.

George Horvath · 10/07/2015 4:49:11 PM
It's interesting how far we have come with "smart communications" over the last ten or so years, compared with "smart grids" where not much has been done. Both ideas rely on the same technologies and have been around for about the same amount of time.

Is the market in "smart technology" telling us something here? There are consumers and a business model for iPhones, but is the same true for smart grids?

John Fallow · 4/07/2015 4:45:46 PM
It’s interesting where this discussion has gone… much is about the Pros or Cons of using solar and batteries, but the fact is the “smart grid” is about so much more. Being an engineer is about solving problems and making continual improvements to what has been done before. The ‘Smart Grid’ is in reality nothing more than that. It’s using the existing infrastructure and combining it with new technology and using smart data to improve how we run and operate our electricity network, both now and in the future - regardless of the technology.

In some ways, the ‘Smart Grid’ is the electricity industry's version of the Internet. Think of all the new services and technologies it has and will enable. Take traditional television content as an example; No longer do I need to watch content when it's ‘on air’. Instead, using the likes of Netflix, I now stream the content when I want and without the frustration of ads. Yes - just like Solar - it might cost a little extra but that’s the consumers' choice to make weighting up what is important to them.

While the “Smart Grid” might not be as ‘in your face’ as the Internet, it should, none-the-less, provide the same sort of benefits and choices to the public. Eric’s five areas listed above clearly demonstrates some of the key opportunities for us as an industry. Let’s embrace this challenge and just get on with doing what we do best – Improving things!

Richard Balkin · 4/07/2015 3:49:20 AM
Excellent article! Some times I wish I had studied electrical engineering instead of chemical...
The technology required is by no means the stuff of dreams. There are some great, concrete developments in this space which should be hitting commercialisation soon. Check out Solantro http://www.solantro.com/products/semiconductors.html and see what they're up to for nanogrids. With regards to the solar power generation I am not buying any panels until these bad boys (http://morgansolar.com/about-sun-simba/) are on the market. Their $/kWh installed cost will be a huge improvement on the current best available . Coupled with cheap efficient storage - check out http://www.hydrostor.ca/applications/ or http://www.electrovaya.com/products/master/Default.aspx - existing technology where the cost per stored kW will come down as the manufacturing volumes increase. Cheap and reliable renewable energy is real and on its way to a grid near you.

Bryan Leyland · 3/07/2015 8:49:46 AM
I prefer reality to dreams.

The reality is that wind and solar power only exist because of the very large direct and indirect subsidies that are based on a false assumption that they will make a substantial reduction in carbon dioxide emissions which in turn is based on a blind belief that man-made carbon dioxide causes dangerous global warming – in spite of the fact that the world has not warmed for 18 years.

Given that a number of organisations – including the British Met office – are warning that we are likely to be entering into a new ice age caused by natural climate cycles and solar effects there is a good chance that the whole renewable energy business will soon collapse.

According to a paper presented at the Electricity Engineers Association conference last week the cost of a charge/discharge cycle on a Tesla power wall is something like $.60. If you reduced the cost by a factor of 20, it would still be expensive. Especially as it represents throwing good money after bad.

Don't dream, look at the evidence and analyse it. And whatever you do, don't believe what other people say. Not even me.

All you have to know is that the cost of a 10 kWh power wall is $3500, that you have to add the installation cost and the cycle life is something like 1000 – 2000 cycles. (It is down to 70% capacity after 500 cycles.) Go figure!

Bryan Leyland · 2/07/2015 3:05:37 PM
Sadly, Powerco are in the minority. Just look at em6live.co.nz on a peak evening.

Richard Kingsford · 2/07/2015 2:25:54 PM
I think the most exciting aspect of the smart grid is it's ability to enable other technologies to effectively be used on the network. Batteries and solar are getting cheaper every year - a tipping point is approaching. The use of smart grids, smart meters and technology will enable batteries and solar to lower the costs of power distribution when peaks are chopped.
In 10 or 15 years our traditional power flow from huge power stations across transmissions lines and to power users may be consulted to the large power users. During summer at least, future power supplies to residential customers could be from localised generation and storage. This has been talked about for decades but the constant exponential improvement of PV and battery technology has brought us to the cusp of change. Smart grids, better network control and different network protection are all key enablers.

Exciting times for power engineers!

William Pearce · 2/07/2015 1:38:13 PM
Ripple Plants - lack of knowledge here - Powerco for one has just replaced 9 Ripple Control Plants with new equipment. Not obsolete technology and very much in use.

Eric Wolters · 2/07/2015 1:04:09 PM
This is an engineering problem, not a philosophical one.

Developing smarter grids doesn't mean endorsing wind or solar. While the drivers remain in place for uptake of those technologies, misguided or not, their impact needs to be managed. So do the impacts of other edge technologies like electric vehicles, home automation systems and micro-grid communities. So does customer demand for more price visibility and control.

All of this represents enormous industry change. We can try to deal with it all by building more conventional poles and wires. But why not use the power of computers to optimise power flows, continuously balance supply and demand, and reduce losses?

Using its Transform Modelling tool, EA Technology has predicted that UK networks and consumers could save up to £10 billion in the period up to 2050 by deploying smart grids to deal with these issues. (http://www.prnewswire.co.uk/news-releases/ea-technologys-transform-model-predicts-uk-smart-grid-savings-of-10billion-253175781.html)

Mark Sprawson, Head of Advanced Network Solutions at EA Technology, said: "As an example, if every UK network operator used the smart technology recommended by the Transform Model, Britain would avoid laying 28,000km of cable by 2030 - the equivalent of laying a cable from the UK to Australia and back again."

I would like to hear from others on this topic. What do you think?

Bryan Leyland · 2/07/2015 10:57:09 AM
Why will wind and solar generation stay when they are more expensive than conventional power generation and they are intermittent and unpredictable? They impose considerable additional costs on the rest of the system – for which they do not pay – and if they get above a level of about 20% require expensive storage technologies to store the energy that is generated when it is not needed.

Worse still, the subsidies they attract are added to electricity costs so wind and solar power transfer wealth from the poor to the rich. I find this disgraceful in the extreme and I cannot understand how anyone would support policies and technologies that make life more difficult for poor people.

In developing countries, many of the people are deprived of electricity – or an adequate supply – because so-called environmentalists lobby against building fossil fuel power stations. So people die from cold, from excessive heat, and most of all from breathing the smoke from indoor cooking fires. Is this what you want?

Carbon dioxide brings a huge benefit in that it promotes plant growth. And that is all it does.

BTW Grids have always been smart. But smart metering is neither smart nor economic.

To claim that smart metering will make grids more stable is nonsense. Grids were very stable until the advent of large amounts of wind and solar power. The new smart technologies try to overcome a problem caused by technologies that we would be better off without.

You are probably not aware that 30 years ago ripple control could hold the New Zealand load constant from 8 AM until 8 PM on a peak demand day. The electricity market destroyed ripple control and now we are spending millions of dollars on ineffective "demand side management".

All the stuff comes at a huge cost and there is no chance that it will lead to lower prices.

Engineers are trained to be pragmatic and to look at the evidence objectively. I suggest you do just that.

Eric Wolters · 2/07/2015 9:56:59 AM
One of the drivers for a smarter grid has been to reduce CO2 emissions. But there are many other unrelated benefits. A smarter grid will lead to lower losses, more customer choice, more stable, reliable power; and the ability to better utilise existing assets by improving load factor. All of that should ultimately result in more efficient power supply and lower prices.

Wind and solar generation, whether misguided or not, are here to stay, and their impacts on the network, especially the intermittency, have to be managed. A Smart Grid can provide the means to do so.

Bryan Leyland · 2/07/2015 9:21:58 AM
Correction - ..the world has NOT warmed...

..for hundreds - maybe thousands...

Bryan Leyland · 2/07/2015 9:17:34 AM
Coincidentally, I published a paper and made a presentation at the Electricity Engineers Association conference. You can find both at http://www.bryanleyland.co.nz/power-industry-stuff.html

One of the main points I made – and it was confirmed by several other papers and conference – is that solar power is hopelessly expensive and only exists because of huge subsidies by overseas governments and consumers. The other point I made was that the world has warmed for the last 18 years and this – and many other items of hard evidence – tell us that dangerous man-made global warming is the biggest hoax in the history of the world. At the conference, one of the speakers asked the audience if they believe in dangerous man-made global warming. 50% did and 50% didn't.

All over the world, power prices have increased dramatically because of a belief in dangerous man-made global warming and an even crazier belief that wind and solar power are an effective way of reducing carbon dioxide. If you do want to reduce carbon dioxide, switch from coal to gas or build nuclear stations. The world has more fossil fuel resources then it can ever use. Anyway, nuclear power can provide the energy we need 400 – maybe thousands – of years. Both are cheaper and more predictable than wind and solar power.

Sometime in the future we may see houses supplied at 300 V DC and 24 V DC, interconnected HV DC links, and the US system changed from distribution at 110/220 V.

Kirsty Johns · 1/07/2015 10:35:14 AM
Really interesting article, thanks Eric. This is something that I wasn't aware of at all.