February 9, 2022
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10 key elements of smart grids that will enable smart cities

A new report has found that annual spending on smart city projects will increase from $35 billion in 2021 to $70 billion in 2026. Where will the majority of this spending be directed? 

According to Juniper Research, towards improving grid resilience and intelligence through smart technologies. The report found that smart grid technologies will result in over 1,000TWh of electricity savings in 2026, the equivalent energy required to power Greater London for 5 years. In addition, smart city projects are forecasted to achieve energy savings of up to $96 billion in 2026.

Smart city projects spending and savings
ROI forecasts for smart city projects in 2026

The nascent market for smart grids is therefore expected to deliver a high return on investment in coming years. This is because smart grids not only have the potential to make cities more cost- and eco-efficient, but they also offer lucrative revenue streams for companies that penetrate what some consider to be “the last major untapped digital pathway into our lives”. 

It is no secret that the energy industry has been historically slow to innovate. Now, adding intelligence to the grid will be the turning point that makes smart cities a reality – the obvious reason why so much focus and money will be spent on smart grids in the next few years. 

Smart grids sound great in theory, but what are the concrete steps we can take to ensure their effective and widespread implementation? According to gridX Co-Founder, Andreas Booke, it all boils down to increased interconnectedness and better use of data. 

“Smart devices are everywhere, producing enormous amounts of data. But this data is powerless if it isn’t properly processed and shared. All players along the energy value chain must leverage Cloud and IoT to ensure that assets or systems are working intelligently and in conjunction with each other, rather than in isolation,” he says. 

“We need to pool resources, connect assets, automate optimization, trade energy and empower consumers to adapt their behavior in line with the needs of the grid – ultimately, we must use digital solutions to ensure that each component and system works smarter, not harder,” Andreas summarizes. 

"We must use digital solutions to ensure that each component and system works smarter, not harder."
Andreas Booke, gridX Founder

Here are ten key features beyond smart energy management that we see as the next stepping stones to making smart grids – and thereby smart cities – a reality.

1. Transparent energy monitoring and control for users

In homes and businesses, people are responsible for around 30% of a typical building’s energy system performance. Citizens are becoming increasingly aware of their environmental impact and willing to change their behavior to reduce costs and emissions. To do this, however, they must first understand their energy usage, then have the power to optimize it and be able to see the savings that arise. The easiest way to do this is through intuitive web and mobile apps

2. Energy trading

End users have different consumption patterns. The more connected they are, the more reliable the grid, and less locally-produced clean energy goes to waste. Incentivizing prosumers to buy and sell excess energy through tokenized P2P trading is therefore important to better balance demand and supply. Monetizing and trading the flexibility of distributed energy resources (DERs) on electricity markets with a Virtual Power Plant solution is another key mechanism to stabilize and advance electricity systems.

3. Improved electric vehicle integration

The ability to use electric vehicles (EVs) as a battery through V2G and V2H technologies allows EVs to benefit the energy system by increasing flexibility, rather than acting as a burden. Having a range of smart charging modes – such as proportional charging or solar charging – also better connects the car with other assets, such as a PV system, so that the grid is never overloaded and mobility needs are always met. 

Bidirectional charging

4. Increased electrification and power-to-X

Ongoing electrification of transport and heating through the adoption of EVs and heat pumps is vital to reduce the emissions of these sectors and enable coordinated control of energy assets. Power-to-X enables the conversion of renewable energy to fuel sources such as hydrogen, which can then be stored and converted back into electricity when needed. This added flexibility is an important component of smart grids. 

5. Integration between stakeholders through APIs

Knowledge is power, particularly when it comes to smart energy management. For example, local optimization of energy flows can be improved by dynamically adjusting power limits in response to the state of the grid via our gridX API. This enables quick responses to grid imbalances and ensures optimal utilization of the distribution grid capacity.  

6. Energy forecasting

Taking forecasts of daily production and consumption into account minimizes the amount of curtailed PV power. For example, the maximum battery capacity can be reduced in the morning and specifically charged in the midday period, when the probability of high solar irradiation and production is highest. 

7. Variable tariffs

In  early February, there was a huge imbalance of over €2/kWh in France. This means that anyone who had stopped or delayed charging for an hour, would have saved around €22. By automatically shifting electricity consumption of distributed assets to times with low prices, time-of-use tariffs balance the grid and reduce electricity costs for users and both residential and commercial players. Our Tariff Timer module can also integrate tariff information of EPEX SPOT market prices to further optimize pricing. 

Time-of-use Tariffs

8. Simplified billing, maintenance and support

Smart grids are characterized by their integrated, holistic nature and ease of use along the entire value chain. This means that all processes, such as energy billing, maintenance and customer support should be accessible through a single, intuitive interface and available remotely. This encourages greater customer engagement and swifter resolution of issues. 

9. Cascaded energy management

As smart grids grow in scale, the ability to exchange information and control between multiple areas, or cascaded energy management, is vital to ensure that energy usage is optimized at all levels. Our Multi-Energy Optimizer module allows viewing of clustered devices on a single screen, mapping of complex grid topologies and the integration of residential and industrial areas into a holistic district energy management system. 

10. Increased focus on cybersecurity

The interconnected and digital nature of smart grids makes them more susceptible to cyber threats. We can’t wait for cyber attacks to happen before we take it seriously, we must have the right cybersecurity process and strategies in place to prevent, mitigate and properly deal with risks so that they never affect operations. Learn more about how cybersecurity can act as an enabler rather than a blocker to innovation in energy in our latest report

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Interoperability & cybersecurity in the energy industry
There can be no energy transition without interoperability and no interoperability without cybersecurity.
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