Mobility Energy and Transportation
Smart Grid Technology
18 Apr 2024

Smart grid is the concept of evolving the electricity grid using advanced automation, control, IT, and IoT systems that enable real-time monitoring and control of power flows from generation to consumption. It comprises a set of technologies such as advanced metering infrastructure (AMI) or smart meters, AI and ML tools, and energy storage systems (ESS). These technologies help to optimize electricity generation, improve distribution efficiency, and support informed decision-making for consumers. 
In the past, we relied on a traditional electricity grid model which consisted of a few large-scale power stations, typically fueled by fossil fuels, that transmitted power over extended distances. However, these traditional electricity grids operated on a demand-driven basis with no storage capabilities. Moreover, the control or decision-making power was concentrated in the hands of these few power plants (Exhibit 1). This structure contrasts with the more interconnected, dynamic nature of smart grids.

The traditional approach often led to inefficiencies and lacked the flexibility afforded by the smart grid. A smart grid offers a decentralized electric network that integrates many sources of power, including renewable energy sources, and enables two-way communication between consumers and utilities (Exhibit 1). Smart grids can provide consumers with real-time information on their energy consumption and support pricing that reflects changes in supply and demand. 

Integration of smart grid technologies can play a vital role in addressing energy challenges from reducing transmission and distribution losses to managing peak loads (Exhibit 2).

Key components of a smart grid

1. Technology: Various AI and ML tools can be leveraged to enhance the efficiency of the electricity grid. These tools aid in optimizing performance across each stage of the value chain (Exhibit 3).
2. Energy storage: Energy storage systems (ESS) are vital for stabilizing electricity grids by managing the balance between demand and supply (Exhibit 4). ESS stores surplus energy during low-demand periods and releases it during peak demand. This reduces strain on the grid and prevents blackouts, a process also known as peak shaving. This approach enhances grid reliability and optimizes energy distribution, contributing to a more efficient and resilient power infrastructure.
Additionally, ESS enables the effective integration of renewable energy sources into the grid. As renewable energy generation fluctuates due to weather conditions, ESS can store surplus energy when generation exceeds demand and release it when generation is low. This ensures a more consistent and reliable supply of renewable energy.
The total requirement of ESS for grid support is expected to reach ~209 GWh by 2032. However, the sector has not seen the progress and growth it requires (Exhibit 5). Adoption of ESS has slowed due to lack of commercial viability. Raw material prices for battery storage systems and the initial capital cost of pumped hydro storage systems are prohibitively high. This increases the cost of setting up hybrid-renewable energy projects.
3. Advanced metering infrastructure or smart metering: A smart meter is an advanced energy meter that obtains information from the end users’ load devices and measures the energy consumption of the users. They relay this information to the power utilities. Smart meters are installed at the distribution junction which enables real-time communication (Exhibit 6).
Utilities use this information for various applications such as accurate billing, service monitoring, and planning or forecasting energy requirements.

The adoption of smart meters has been the primary focus for policymakers and DISCOMs to solve the issue of commercial losses. Private and public entities have initiated programs aimed at accelerating the smart meter rollout. Smart Metering National Project (SMNP), an initiative undertaken by the Government of India, aims to shift the energy sector’s dependency from traditional to smart meters. It aims to roll out 250 million smart meters and save the energy industry about INR 11 trillion in commercial losses by 2031-32. Currently, ~9 million smart meters have been installed throughout India (Exhibit 7).
4. Maintenance and reliabilityAdvanced analytics and ML algorithms allow utilities to predict potential failures before they occur. Predictive maintenance optimizes energy efficiency by minimizing downtime, optimizing maintenance schedules, and improving equipment performance (Exhibit 8).
A key advantage of predictive maintenance is enhanced reliability. It enables proactive addressing of potential issues before they lead to power outages or disruptions, ensuring a more reliable electricity supply for consumers. Conventional power grid relies on reactive maintenance that could result in slower response time and higher maintenance costs.

The current scenario in India

National Smart Grid Mission (NSGM) was launched by the Government of India in 2015 to plan and monitor the implementation of policies and programs related to smart grid activities in India. NSGM envisages capacity-building initiatives of the distribution sector personnel in the field of smart grids.
11 smart grid pilot projects have been completed so far and 2 NSGM projects are ongoing (Exhibit 9).
The adoption of smart grids in India has been heterogeneous due to demographic and governance variables. Certain utilities have adopted the latest technologies while some are struggling to maintain existing assets and provide a reasonable quality of services.                                             
Opportunities for stakeholders

Adoption of smart grid technologies would create opportunities for key stakeholders across the energy sector value chain, which include, power producers, DISCOMs / TRANSCOMs, investors, and consumers (Exhibit 10).

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