In the decades to come the functioning of energy distribution networks will change dramatically. Firstly, power distribution infrastructure throughout the whole of europe will become outdated and its maintenance require considerable investment. Secondly, growth of centralized energy sources will increase the need for flexible sources producing energy during peak demand. Thirdly, the steady demand growth for electricity will increase load on the existing networks.
The energy sector will be significantly affected by increasing share in power supply system of renewable energy sources (RES). As a result of European Union policies and observed price increase of dwindling energy resources it is expected that the share of renewable energy sources and distributed energy production in global energy supply will increase considerably. Renewable and distributed energy sources differ fundamentally from traditional, centralized power plants:
they are controlled by end users not by professional energy suppliers;
they are connected to distribution networks not transmission lines;
power is not supplied continuously and its level is not entirely predictable;
power generated by RES may be prioritized over conventionally produced energy;
the number of energy sources will exceed 1000 or even 1 million in longer perspective;
Above mentioned changes will require large investments in power distribution networks over the next decades. The International Energy Agency (IEA) report from 2003 estimates that investment in power supply networks in Europe will reach 390 million EUR over the next three decades. Similar investments will be necessary to replace and increase energy production capacity.
Due to the need for such large investments European utilities providers, manufacturers and scientist established SmartGrids European Technology Platform. With the support from the European Commission the platform formulated a common vision for future operation of transmission and distribution networks. The vision’s foundation assumes that the European networks must simultaneously be:
flexible – to meet the needs of end users and to be prepared for the upcoming changes and challenges;
available to all network users especially in case of renewable energy sources and high efficiency local sources;
reliable – to provide and increase energy supply safety and quality according to current standards;
effective – through innovation, improved power management, ensuring fair competition rules and regulations.
European Technology Platform SmartGrids claims that investment in information and communication technology (ICT) as well as automation are becoming cheaper alternative to investments in network hardware. Therefore, EPT SmartGrids concludes that distribution networks should gradually switch from passively to actively managed. It means that power generation and distribution should not be controlled at the transmission networks level only but also at the distribution networks level. Tasks associated with system running are assigned not just to a transmission system operator (TSO) but also to a distribution network operator. Therefore a distribution network operator becomes a distribution system operator (DSO). That means that a DSO is responsible for management of energy transport in a distribution network. To achieve that a DSO needs to control – to some extent – distributed energy resources production located throughout the distribution network as well as end users energy demand.
Today’s operation of distribution networks seems to be far from the concept of active management. However, more and more smart devices have started to operate within energy distribution networks in recent decades. Just to mention SCADA network monitoring and security systems which independently respond to local current and voltage changes. Additionally several experiments in Europe have showed that desired control over a network is possible using currently available automation technologies and can contribute to overall supply reliability improvement.
Technologies similar to the European ones have been designed and tested In the United States under initiatives of Intellgrid and Gridwise. The Obama administration has published ambitious plans to support implementation of smart networks consisting of co-financing installation of smart meters and development of the smart grid standards by the National Institute of Standards and Technology (NIST).
The first implementations of smart networks are already taking place both in and outside Europe. Depending on an area, a degree of integration with the infrastructure but also a company implementing the concept such solutions are also called SmartCity or SmartRegion.