NetZeroCities

Smart grid is the concept that describes the evolution of power systems to integrate and utilise techniques to adjust the flow of power to optimise the match between electricity supply and demand. The term "smart grids" is used to define the integration of new technologies and methods, often data-driven, in existing power system infrastructure. Sensing infrastructure, smart metering, information and communication technologies (ICT), such as sensing devices and smart metering; techniques such as novel optimisation methods and control architecture for managing power flow, energy management systems, load aggregation techniques; and new business model and end-user participation schemes - all these technical concepts fall within the field of Smart Grids. Therefore, such a broad field offers many different opportunities and solutions for various challenges with electricity generation, transmission, distribution, and consumption. According to (1), such challenges can be classified in terms of their domains - the actors involved and main stakeholders, in zones, and their interoperability layers with several cross-cutting issues.

The SGAM framework and the different domains, zones, and layers that compose smart grid solutions (1)

In the context of smart city solutions, a smart power grid is mostly related to the:

efficient integration of clean and renewable energy generation and energy storage systems;
efficient consumption of electricity;
reliable availability of electricity supply and grid operations;
effective business models that incentivise active participation of new market players, such as aggregators, energy companies, or citizens in demand response and flexibility provision;
safe, reliable, efficient, and secure management of data related to critical infrastructure (2, 3, 4).

The European Union has invested heavily on the research and development of smart grid technologies, with approximately €1 billion invested in research in smart grids and energy technologies in the Horizon 2020 and Horizon Europe programmes (5). Smart grid solutions are key enablers for the transformation of the European energy system towards decarbonisation and resilience, and thus are listed as one of the priorities of the European Green Deal (6).

The plans of the REPowerEU actions (7) strive to bring the total renewable energy generation capacity installed in europe to 1236 GW by 2030, a measure that is only feasible with the implementation of distributed generation actions supported by smart grid technologies. Specifically, the EU Solar Energy Strategy (8) aims at increasing the installed capacity of solar photovoltaic in 2030 to twice the levels found in 2023. Such rapid increase in the integration of distributed generation is bound to cause grid congestion and power quality issues, mitigated by smart grid technologies.

An important sub-field of smart grids is on the design and operation of microgrids and energy communities, a particularly relevant concept in the context of smart cities and buildings (9). Microgrids are local electricity grids that can operate either independently (off-grid, or islanded mode) or connected to larger smart grids. Microgrids can range from district-level to individual building-level (nano-grids). The concept of microgrids support the implementation of wider smart grid concepts in smaller locations by reducing the scope and costs of implementation projects (10).

The main purpose of this document is to provide knowledge, information and a reference for the decision makers, city authorities, utilities, planners and building professionals to consider the suitable use cases and the potential implementation of smart grid solutions to support smart buildings and cities.

Overview of the Smart Grid Architecture (11)

Economy:

Job Creation Labour productivity, Better working conditions. Since the concept of smart grids is so broad, it is difficult to measure specifically how many jobs are created from related projects in accurate detail. However, with the development of smart grid services, there is a clear need for engineering service provision and for power system operation services. These two sectors compose the majority of the job creation opportunities with smart grid projects. Indirectly, there is a significant amount of jobs created with the implementation of renewable energy generation and energy storage installation projects (12, 13)

Economic risks mitigation:

Energy security and Safety and Security (Reduced energy poverty, Increased access to clean, affordable, and secure energy): Smart grid solutions support the integration of clean and renewable energy generation resources in power systems, both in centralised power plants and distributed generation. Energy storage solutions are also further enabled by the concept of smart grids. The efficient coordination between electricity availability and demand in the power system supports the increase in grid reliability, reducing the risks of outages and loss of capacity. Smart grid solutions such as utilising power quality measurement data from power system infrastructure to forecast grid faults and perform predictive equipment maintenance has the potential to reduce the expected energy not served (EENS) values, thus reducing the amount of economic damages incurred to end-users (calculated with the Value of Lost Load, VLL).

Health:

Access to clean and reliable electricity is a factor that contributes to higher quality of life and health standards (14, 15). Smart grid solutions can support the integration of clean energy resources and energy storage, increasing grid reliability and decreasing the interruption of supply periods.

Environment:

Environmental risks mitigation: Reduced ecological footprint: The more effective and efficient integration of renewable energy generation technology, energy storage, and demand response results in decreased emissions and a more efficient energy usage, resulting in fewer environmental impacts and a reduced ecological footprint from the generation, transmission, distribution, and use of electricity.

Climate resilience: climate adaptation: Reduced vulnerability to natural and climate hazards, heat waves and extreme climatic events.

Preconditions:

Smart grid solutions are suitable for all climactic zones of Europe, but when considering how smart grids can serve as enablers for flexible energy resources, areas with higher renewable energy potential tend to benefit more from these applications. Moreover, regions that have been impacted by climatic events such as storms and heat waves may benefit further from projects that increase the grid flexibility and reliability.

The specific design should follow the local grid requirements and should be fitted to the local needs. Design and planning teams must identify the most appropriate use cases and necessary smart grids solutions to maximise the cost-benefit of smart grid solutions.

Existing grid equipment and communication infrastructure must be analysed and considered when designing the implementation of smart grid use cases. The capabilities of existing infrastructure need to be taken into consideration when identifying potential investments and retrofits. Considerations on e.g., power line and substation transformer capacities must be taken into account, as well as the pre-existence of data collection devices (e.g. smart meters at consumer sites).

Specific Preconditions:

Climate and geography: Smart grid solutions can be implemented under all climatic conditions, with different use cases being suitable for different weather conditions. For instance, grid fault detection caused by icing on power lines is a use case that is only suitable in low-temperature locations.

Policy and regulatory/legal framework: Existing policy framework supports the large-scale integration of renewable and distributed energy resources, with focus on e.g. electric vehicles and solar power. These incentives will lead to a strong need in modernising the electricity grid through the implementation of smart grid solutions in Europe. City authorities and utilities should consider the specific challenges that arise in their own specific conditions, identifying issues such as grid congestion, power quality issues, or reliability issues.

Funding and financing:

Financing for smart grid projects depends on their scope and solutions proposed. For smaller-scale projects with use cases reaching higher technology readiness levels, financing may typically come from own investments from utilities and grid operators, which are in turn shared with customers through grid tariffs. Nevertheless, there are still many opportunities for public funding and grants for smart grid-related projects. Europe (16) and the United States (17) for example have declared investment programmes aimed at revitalising and modernising their grid infrastructure through smart grid applications.

Cities and regions can partner with utilities and technology providers for the design and demonstration of smart grid solutions. Co-financing alternatives are available from several energy-related European initiatives.

The high cost of implementing smart grid solutions is a major barrier for the wider integration of smart electrical networks (4). Given that power systems are considered critical infrastructure, the cost-benefit ratio for the implementation of new methods and approaches needs to be very advantageous to utilities and grid operators. With the rising penetration of renewable energies, the deployment of solutions to effectively plan and manage electricity systems becomes more crucial, and thus the benefit of smart grids becomes more prevalent. Moreover, aspects such as electricity pricing and capacity availability also play an important role in cost-benefit analysis for smart grid projects.

There is a significant range of technical and technological smart grid solutions that are yet to be fully realised, such as (i) fast, secure, and reliable data communications from sensing infrastructure via wired or wireless communications; (ii) energy management systems at distribution system level; (iii) grid congestion management systems; (iv) fast techniques for data processing at the edge; (v) predictive maintenance of grid infrastructure, fault detection and fault localisation; (vi) effective demand response participation incentives for end-users; among others. Although a significant amount of research and development has been placed into different fields of smart grids, and there are already plenty of implementations worldwide of systems that can be classified as "smart grids", there are still many development aspects that need to be considered.

A significant barrier for the implementation of smart grid solutions lies in ensuring a safe and reliable data communication between the sensing infrastructure, including smart meters and grid sensors, and centralised/edge control systems. Data communication reliability and data security are critical aspects in the operation of power system infrastructure.

Hierarchical model for the barriers to adoption of smart grid technologies (4).

Energy Impact:

The energy benefits of smart grid solutions are heavily dependent on the use case, scope of the project, and operational conditions. The impacts are typically associated to increased energy efficiency and reduction of grid losses; to the integration of more sustainable and green energy generation resources; or to the increase in grid reliability and availability of electricity access.

Demand response and peak shaving applications can greatly impact the grid operations and thus their reliability and resilience. Smart grid projects also have the potential to impact energy use and distribution through the implementation of projects focusing on energy management systems for the coordination between availability of generation capacity and the electricity consumption at the end-user side.

Provide Comfort:

Smart grid solutions provide comfort to end-users by ensuring a more reliable and sustainable supply of electricity. Advanced energy management systems and aggregation methods can also provide comfort to users through the automated operation of consumer devices to maximise their flexibility potential while ensuring no-harm-done and no loss of comfort to end-users.

Examples of proposed indicators to measure the impacts of this solution:

Electricity pricing (€/MWh or €/kWh) can be used as a measure to identify the impacts of smart grid solutions; initial pricing tends to be higher to account for potential grid investments and to supplement the investment costs partaken by utilities and grid operators, but with the integration of renewable energy and energy storage resources, electricity pricing tends to drop in smart grid projects.

System average interruption duration index (SAIDI), system average interruption frequency index (SAIFI), customer average interruption duration index (CAIDI) can be used to measure the increase in grid reliability and electricity supply access

Educational/ Capacity building

Trainings: Training of policy makers, technology developers (software, hardware), energy engineers, power system engineers, electrical technicians, on the optimum design and implementation of different smart grid solutions.

Informative/ Awareness raising

Workshops and Awareness Campaigns: Organised discussions with electrical utilities and energy companies to identify opportunities and bring awareness to the possibility of implementing smart grid solutions.

Planning

Integrated action plans: Implementation of an integrated action plan to increase the energy conservation and the use of renewable energies in the built environment. Promote and plan the use of electricity and thermal energy storage in buildings.

Financial/ Fiscal

Grants/subsidies: Provide reasonable subsidies to investors on positive energy buildings and CO2-based taxation of energy carriers for heating. Provide financial support to supplement general pricing and regulatory policies. Provide subsidies for the implementation of efficient electricity and thermal storage in buildings.

Regulatory

Promote the use of energy efficiency measures in buildings, and renewable energy generation integration to buildings and as stand-alone power plants.

Define minimum energy efficiency standards for existing buildings.

Set maximum values for the loss of energy in transmission and distribution processes. Define maximum electricity distribution interruption durations that are stricter than the current standards to promote higher reliability in the power system.

Efficient pricing and regulatory instruments must be defined and implemented now to limit the electricity costs for society.

Promote the implementation of electricity storage systems in buildings and sector integration (with thermal, transportation) solutions for power-to-X and X-to-power solutions.

Technical

Provision of energy efficient products and services: Set appropriate standards on the implementation of energy efficiency, power quality monitoring, and renewable energy/energy storage systems in local grids.

Implementation of smart metering infrastructure.

There are many smart grids projects implemented worldwide, with varying topics and use cases (i)-(v). Specific use cases are demonstrated to be very cost-effective and to increase grid reliability. Grid investments are still needed to support the development of digitalisation solutions and the connection of renewable energy generation.

The rollout of smart metering in the European Union can be considered as one of the largest smart grid-related projects in the world, with a massive investment in grid infrastructure at the consumer end-point. (18)

SINCROGRID is one of the most relevant smart grid projects in Eastern Europe, with investments in grid infrastructure and grid intelligence in Slovenia and Croatia. The project has focused on use cases related to the integration of energy storage systems, power quality compensation, and grid management systems for the monitoring and control of power flow between regions.

DanubeInGrid is a project between Slovakia and Hungary focusing on grid investments to support the integration of renewable energy resources and optimal coordination between market regions. The project also focused on the interaction between transmission and distribution system level and on cyber security applications in smart grids.

From use case analysis to the development of smart grid solutions utilising the SGAM framework

The active involvement of citizens in smart grid projects typically is related to the participation in demand response initiatives. Robust value-creation and value-sharing methods, including the economic and social value of demand response, must be in place to incentivise the participation of end-users.

Critical ICT infrastructure is needed as a backbone for smart grid deployment. Data platforms, management systems, communication standards and cyber security procedures must be in place to ensure the necessary reliability of data communications and control systems in smart electricity networks. Concerns about data ownership, specifically when considering electricity consumption data from end-users, is due to become a key aspect in demand response and load flexibility actions.

Several stakeholders must be involved in the deployment of smart grid solutions. Grid operator and utilities are the main drivers of such efforts, but local governments, municipalities, citizen representatives, and technology providers are key players in smart grid projects and their involvement is critical.

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