Thursday, February 11, 2010

EU Smart Grid Initiative for Total Renewable Energy Conversion

The European Union (EU) could meet an initiative of effectively utilizing 90 percent renewable energy, only, by 2050 via adding intelligence to its existing grids and building a cross-border infrastructure, also known as a smart grid, according to a study by Greenpeace and the European Renewable Energy Council (EREC), an industry group. The report published last week states that with the appropriate policy, Europe’s grid infrastructure could be improved to incorporate clean, renewables on a much wider scale. Previously, the EU's Renewables Directive approved a binding goal requiring 20 percent of the bloc's energy supply to be derived from renewable sources by 2020. Regardless, Europe's electricity grids, as in most other parts of the world, were originally built to handle large centralized power plants rather than large amounts of decentralized or distributed power produced by smaller-scale sources.

Digital smart grid systems that gauge and match supply and demand at the generation station and consumer end, respectively, would be required for new, advanced power transmission and distribution infrastructures that are capable of incorporating renewables in a streamlined manner. The EU's blueprint for financing its Strategic Energy Technology SET Plan estimated that €2 billion of investment in grids will be needed over the next 10 years in order to integrate renewable energy and operate half of the networks according to "smart" principles. In addition, the EREC study estimates that the cost of upgrading interconnections and building new super grid connections to supply Europe securely would cost 209 billion euros by 2050. It will be difficult to foster the public support for this amount of investment, as these countries deal with ballooning national debts, as in the United States.

The annual investment in Europe is expected to be approximately €5 billion, which equates to about five euros per household per year, according to Greenpeace International. However, besides the cost issues, there are other concerns facing smart grid initiatives. Risk-averse electric utilities are leary of adopting new technologies in the next five years while regulators have not authorized permanent incentives. Power consumers are also sensitive to the rollout of smart meters of energy usage, as they fear that their privacy might be compromised by power utilities. Stimulus funding in the U.S. has been utilized in nearly all 50 states for the distribution of millions of smart meters to consumers, as has been done in solar-oriented states such as Arizona, which will mainly lead to energy conservation, as users can monitor energy costs in real time, as opposed to waiting to view their monthly statement.

Interestingly enough, nine North Sea countries announced in December 2009 initiatives for constructing a North Sea grid. Typically, most smart grid demonstration projects globally are on a much smaller, city-scale, but ultimately, ones such as the North Sea project will be the most relevant for building continental systems capable of enabling a national renewable energy portfolio standard, as may be authorized in the U.S. According to a study by Zpryme, a Texas-based research firm, smaller nations than the U.S. such as France and Great Britain will spend less money on smart grid projects, but are nonetheless currently more advanced in smart grid infrastructure.

In comparison, the Chinese government will invest more money in smart grid technology than the U.S. in 2010. China will spend more than $7.3 billion in the form of stimulus loans, grants and tax incentives this year, compared to $7.1 million by the U.S. Information technology companies have a tremendous business opportunity at hand, since much of the network requires products and services from these types of companies. China’s emphasis on conversion to a renewable energy economy and a more efficient electricity grid has attracted the attention of major U.S. companies, including General Electric, IBM, American Superconductor and Hewlett Packard, among others, whom are gauging on how to capitalize on that investment. Last month, G.E. announced a partnership with the city of Yangzhou to develop a smart grid demonstration center to promote its technology in the Chinese market.

The global cleantech race requires a smart grid infrastructure, which is in and of itself a major market, comprised of numerous products and services that will be exported readily to less developed countries in the field. For states with world-class solar power climates like Arizona, a continental smart grid will facilitate the transfer of renewable energy from sparsely populated desert regions to dense metropolitan areas across the country.

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