Electrical Business


Smart Grids For Energy Distribution

October 24, 2010 | By Anthony Capkun

October 24, 2010

How having access to data in real time can create new opportunities

A large-scale implementation of a smart grid network offers enormous potential for greater energy efficiency. Much of the optimism surrounding this potential comes from the possibility of having real-time data about energy production, transmission, distribution and consumption.

Submitted by Martin Jetté, OSIsoft Canada

A large proportion of the North America energy distribution network is over 50 years old. Such a situation is not common in this remarkable era of rapidly evolving technologies. It is not surprising then that, under such circumstances, the network is known for inadequacies such as meter readings done every 30 days or more and the poor quality of manually collected data.


Nonetheless, change is coming. The implementation of smart grids has slowly begun in places all over the world, and significant investment will soon be a common theme. Gladly, according to many indexes, the economic situation is increasingly favourable to the carrying out of large-scale projects. In Canada, for example, retail sales and industrial production are on the rise, and some indications are pointing toward the GDP growing by 6.2% in 2010 and 3.9% in the following year.

In an era that favours sustainable development, the smart grid gains approval by including a variety of renewable energy sources and by recruiting governments and all members of the population to participate. When the existing electrical network represents the greatest industrial machine ever created and implemented by man, then the smart grid will be, without question, the biggest sustainable development project in North America in the next decade. To illustrate, it could cost more than one billion dollars for the initial implementation of such a system across a network as large as Quebec’s.

Such an investment will yield substantial improvements. One of those being the ability to get data readings on production, transmission, distribution and consumption within minutes—perhaps even seconds—thus generate enormous benefits for consumers and electricity distributors, big and small. In fact, thanks to an automatic data collection and processing system integrated into the network, we can analyze energy data from the moment it is generated to its delivery to the power outlet at a consumer’s home.

Let us take the example of Hydro-Quebec, which has a network that includes over 3.7 million meters throughout the province. Suppose there are 10 variables to read for each meter. That makes a total of 37 million variables that must be read at short intervals. This extraordinary amount of information, when collected instantaneously, would allow for a close monitoring of operations, and for adjustments to be made when necessary. By 2015, it is estimated that the data storage requirements will reach 35 petabytes per year in North America. This very same data could even be used for many other value-added applications.

Among other possibilities, demand could be linked to actual production by determining the source of the power being used (i.e. a hydroelectric dam or wind farm). The distributor would then be able to help clients who—for political or environmental reasons—would prefer to use renewable energy sources. Let us also point out that automated data collection and processing systems have been used successfully in (mainly) industrial sectors for many years.

Among the advantages for electricity distributors is easier billing, which can be more precise and, when necessary, more frequent. Users can even consult their consumption online in almost real time.

Furthermore, we must not overlook the benefits of being able to detect power outages as they happen. For many distributors, waiting for clients to raise the alarm is still the easiest way to determine whether there has been a power outage. With a smart grid, this method would evolve: the detailed information provided by the automatic data collection and processing system allows distributors to accurately and quickly locate a power outage.


It should also be noted that, with a smart grid, it would be easier to prevent and detect energy theft or losses, thanks to the tracking of power being generated and transmitted. Yet another added advantage is the more flexible management of consumption during peak hours and the diversification of energy sources that smart grids already afford.

Components and other advantages of the smart grid
Let us begin with a quick overview of what this digital and interconnected network—or smart grid—actually comprises. It consists of five basic components, the most central of which is an intelligent infrastructure that acts as the spinal cord of the system, essentially permitting the system to process, validate, report and archive meter data.

The second component is smart meters, which allow us to measure, transmit and automatically store this data, and to establish two-way communication between the distributor and the consumer. It is thus possible to send instructions to the meter and, by the same stroke, to the consumer. This functionality would permit certain customers participating in a special project to regulate use from a distance, such as remotely controlling the activation of appliances or heating systems to regulate use during periods of high energy demand and, ultimately, pay a lower price for the electricity. Another example would be the use of this functionality to facilitate and expedite the necessary transfer operations when a consumer moves.

The replacement of traditional meters with smart meters has begun, most notably in Quebec, where hundreds of thousands of smart meters have already been installed. Although readings on these new meters are still being taken by an employee who must go house-to-house, it is foreseeable in the very near future that readings will be taken from a distance, thereby enabling these employees to be assigned to other more strategic and productive tasks.

The third component, called ‘smart generation’, allows the smart grid to easily assimilate significant quantities of renewable energy—solar, wind, geothermal—generated by commercial or residential sources. The Ontario Power Authority (OPA) provides a compelling example of the opportunities that this proposes, with a program that pays individuals or small companies producing solar power a higher rate than the actual cost of electricity (between $0.4-0.8 per kW), guaranteed by OPA for a period of 20 years.

By its very nature, renewable energy is intermittent, and can only account for a small percentage of distribution networks, making it generally more expensive to generate and integrate into existing networks. As a result, we must rely on other sources of energy to compensate for reduced production caused by weak winds or cloud cover over solar panels. A smart grid can assist in managing and planning for these very situations, thanks to its ability to provide real-time data. For example, industrial sites that produce large quantities of thermal or electric power can become an integral part of the global distribution network by forming an industrial micro grid. In providing energy on demand, these sites could contribute to help reduce the impact of intermittency of renewable energy sources.

The fourth basic component of the smart grid is the ‘smart consumer’. With such easy access to their own consumption data, consumers can play an active role in ensuring an efficient and well-managed grid, especially during peak periods when the grid is put under intense pressure. For example, on the morning of January 16, 2009, as the temperature dipped to -31.8ºC Celsius in Quebec, Hydro-Quebec reached a record load of 37.3 GW of energy. The previous record was 36.2 GW, recorded back in January 2004.

During these periods of very high demand, users of the smart grid can more easily regulate their energy consumption, and thus create more benefits for everyone. Currently, numerous electricity distributors use the media to encourage the population to reduce their consumption during peak periods. However, the smart grid has two-way communication, which is a much more efficient way to get users actively involved in optimizing their consumption. This opens up great potential for significantly changing consumer behaviour.

The fifth and last component comprises smart devices, such as equipment that can be controlled remotely via two-way IP communications, as well as smart timers, thermostats and energy storage systems. An increasing number of new technologies are slowly being added to this list.


In the same vein, the day will soon come when energy can be stored in the network, only to be used when demand is greater or to compensate for alternate energies that are, by nature, sometimes intermittent. Energy could be stored in the form of compressed air, in banks of batteries or in flywheels.

New business opportunities
An interesting example comes from an American company, Ice Energy, and its revolutionary energy storage system for commercial buildings. At night, when demand for electricity is at its lowest, the system produces ice. During the day, these units then deliver power to the air-conditioning system. That is, the A/C for the building is powered by ice produced during the night. The cycle of ice production automatically begins once more at the predetermined time.

This process provides relief to the overworked system during peak periods, when demand for A/C is highest and the cost of electricity high. In the southern United States, the use of A/C can account for up to 30% of demand in peak periods. Ice Energy monitors the units for its clients; they also allow clients—and electricity distributors—to start the units up remotely, according to demand.

Energy distribution in the future
A smart grid enables greater collaboration between consumers and providers, opening the door to more efficient management of energy resources, significant savings, better preservation of the environment and operating a more reliable network. This represents huge progress over the current situation, in which we can adequately control the production of energy, but are unable to control or even accurately predict consumption.

With an increase in the number of energy-generation methods and a more sensible use of electricity in general, we can avert or, at the very least, delay the building of new dams and the activation of new power plants, as well as avoid the economic, ecological and political issues that inevitably come with such projects.

Based on the principles of sustainable development—which are crucial in the evaluation of any new project nowadays—the advent of the smart grid is near. The advantages it can deliver in terms of greater efficiency and cost savings will undoubtedly create new business opportunities. For example, the rise of micro-networks will permit industrial companies to sell back-up energy to help distributors manage demand during local peak periods. This could lead to more attractive rates for industrial clients, based on their participation in the micro-network.

The smart grid’s ability to collect a vast quantity of strategic data within a few seconds, gathering information from it’s generation to it’s consumption, opens vast new horizons for the energy sector.

Martin Jetté is the general manager, OSIsoft Canada. CLICK HERE for OSIsoft.

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