Smart Grid Ahead
Buffett’s Smart-Grid Idea Takes over
Your Washing Machine, Posted on
December 19, 2014 Written
by bloomberg.com
(Bloomberg)
— Vincent Thornley, head of Siemens AG’s U.K. smart-grid research, talks
about the role of smart grids in the future of energy where a network can run
household appliances when power is abundant and cheap. He spoke with
Bloomberg’s Alex Webb in Newcastle, England. (Source: Bloomberg)
FA Note: The Smart Grid is promoted
as consumer choice. Yet as this article states plainly consumers must learn
to “either use appliances themselves at optimum times, or let
the system decide that for them.”
Warren Buffett wants to tell
you the best time to wash your clothes. Or at least his energy company in the
U.K does. Buffett’s Northern Powergrid Holdings Co. is working with Siemens AG (SIE) to test a
so-called smart grid that has the ability to control when consumer appliances
will be used in the home.
Being able to better manage when electricity flows
allows utilities to lower consumer costs by reducing the need for new equipment,
and to better handle surges and gaps from intermittent sources such as wind
and solar. The pilot program, known as the Customer-Led Network Revolution,
involves just 12,000 households in the U.K. and is one of only a few such
projects being tested worldwide.
America’s Power Grid
“This sort of technology is really important to the
future of energy,” said Vincent Thornley, head of Siemens’s U.K. smart-grid
research, in an interview. “Rather than building new cable networks and
putting in new transformers, we can make better use of” existing systems
by using automation.
A four-year trial for the system ends this month in northeast
England. It complements the $15 billion
investment Buffett has already made in wind and solar power in the U.S. that
he said in June he’s ready to double. His MidAmerican Energy Co. is the
largest U.S. owner of wind capacity among rate-regulated utilities.
Utilities worldwide are already using smart meters to collect
data on customer behavior, and some notify consumers about optimum times to
use power. The 54 million-pound ($85 million) trial by Buffett’s U.K.-based
system goes a step further. It gives people a choice, allowing them to
either use appliances themselves at optimum times, or to let the system
decide that for them.
Behavioral Shift
“Customers can work with us to use their energy in a different
fashion, by a range of techniques,” said Ian Lloyd, head of network technology
research at Buffett’s Northern Powergrid Holdings Co. The program encourages
people to use power in a way that “complements the running of the distribution
network.”
This behavioral shift will be more important as wind and
solar power becomes more common, requiring utilities to manage generating
systems that don’t produce power on calm days or at night. Wider adoption of
renewable power will also involve incorporating many local, disparate
energy sources, from large-scale windfarms to residential rooftop solar
panels.
In Germany,
for instance, there were 1 million separate energy producers last year, up
from 1,000 power plants in
1990, Lisa Davis, the head of Siemens’s energy operations, said in a Dec. 9
presentation in Berlin.
Grid Spending
Spending on smart grids will climb to $25.5 billion in
2019 from $16.6 billion this year, according to estimates from Bloomberg New
Energy Finance. China
has installed about 250 million smart meters, and Europe is expected to have 185 million by
the end of the decade, from about 55 million now.
Europe will more than triple spending by 2019, to $7.6 billion,
mainly driven by the need to integrate renewables and utilities rolling
out smart meters, said Colin McKerracher, a senior analyst on smart technologies
at New Energy Finance.
“To integrate renewables in a cost-effective way, you need
to integrate both grid-level technologies and end-user facing technologies,”
he said in an interview.
The U.K. project, which is partly funded by the British government,
is one of a handful using similar technology. Alstom SA’s Nice Grid trial
in France will end in 2016, and Australia’s Ausgrid ran a A$100 million
($83 million) project.
The Northern Powergrid system was able to reduce energy
consumption 10 percent at peak times by encouraging customers to use electricity
when it was cheaper, while cutting overall use by 3 percent.
It may be implemented on a broader scale as soon as next
year. U.K. regulator Ofgem has called on utilities to lower the cost of
delivering renewable energy to customers. The technology is also generating
interest from the energy division of Buffett’s Berkshire Hathaway Inc. (BRK/A)
“They’re investing very heavily in low-carbon technologies,”
said Northern Powergrid’s Lloyd. “So there’s significant interest about
what we’re trying to do here.”
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