Man

age
men
t
Info
rma
tion
Syst
em
Ashwini Anand

1st SEM MBA ‘A’

Case
Group 10
study

What’s
the
buzz on
Smart
grids?

Introduction.
Smart grids are different than the electricity infrastructure currently used in that a smart
grid uses digital technology to deliver electricity from the supplier to the consumer. This use
of digital technology saves energy, reduces costs, and is much more reliable. Because smart
grids allow information to flow from the consumer to the electric providers, better decisions
can be made by both parties regarding production, consumption, and pricing. Another
difference is that smart grids are able to quickly and precisely detect the source of power
providers.
One of the issues that should be considered when developing a smart grid is the cost.
Estimated costs are running as high as $75 billion and the cost of each meter is estimated to
costs from $250 to $500. Before spending this much money, energy companies must
consider the consumer’s willingness to pay the bill.

Now not only India, China, South Korea, Malaysia and Indonesia are also moving towards
implementing Smart Grids.

Analysis and Interpretation:

A smart grid delivers electricity from suppliers to consumers using digital technology to
save energy, reduce costs, and increase reliability and transparency.
The smart grid enables information to flow back and forth between electric power
providers and individual households to allow both consumers and energy companies to
make more intelligent decisions regarding energy consumption and production.
Information from smart grids would show utilities when to raise prices when demand is
high and lower then when demand lessens.
Smart grids would also help consumer’s program high-use electrical appliances like
heating and air conditioning systems to reduce consumption during times of peak usage. If
implemented nationwide, proponents believe, smart grids would lead to a 5 to 15 percent
decrease in energy consumption.
Electricity grids are sized to meet the maximum electricity need, so a drop in peak demand
would enable utilities to operate with fewer expensive power plants, thereby lowering costs
and pollution.
Another advantage of smart grids is their ability to detect sources of power outages more
quickly and precisely at the individual household level. With such precise information,

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utilities will be able to respond to service problems more rapidly and efficiently.
The existing electricity infrastructure in the United States is outdated and inefficient.
Energy companies provide power to consumers, but the consumers are using that energy,
making it difficult to develop more efficient approaches to distribution.
The current electricity grid offers few ways to handle power provided by alternative energy
sources.

SWOT:
Strength –
 Greater the volume greater the
advantages.
 Size advantages where qualitative
factor lead to decrease in cost.
 Superior technology allows Smart
Grids to meet the requirements which
competitors can’t imitate.
Weakness –
 Weak R&D of Smart Grid will have
long term negative impact.
 Weak brand name may harm Smart
Grid in charging consumers for
goods and services.
 Lack of scale means cost per unit of
output is very high.

Opportunity –
New products can help to expand
business.
Financial leverage will add values and
will have positive impact long term.
New market at global level will help
to expand business all over the world.
Threat –
 Bad economic condition can hurt
business by diminishing business
customers.
 Politics can affect business by
changing rules and regulations.
 Volatile cost effective market where
Smart Grid has to plan for future.

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Question and answers:

1. How do smart grids differ from the current electricity infrastructure in the
United States?

Answer:
Current electricity grids do not provide any information about how consumers actually use
energy. That makes it difficult to develop more efficient approaches to distribution. The
current system offers few ways to handle power provided by alternative energy sources.
Without useful information, energy companies and consumers have difficulty making good
decisions about using energy wisely.

A smart grid delivers electricity from suppliers to consumers using digital technology to
• save energy
• reduce costs
• increase reliability and transparency

The smart grid enables information to flow back and forth between electric power
providers and consumers and:-

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• allows both consumers and energy companies to make more intelligent decisions
regarding energy consumption and production.

• provides information that would help utilities raise prices when demand is high and lower
them when demand lessens.

• helps consumers program high-use electrical appliances like heating and air conditioning
systems to reduce consumption during peak hours.

• could possibly lead to a five to fifteen percent decrease in energy consumption.

2. What management, organization, and technology issues should be

considered when developing a smart grid?

Management: Information feedback would allow consumers to see how much

energy they are consuming at any moment and how much it’s costing them. That
would allow them to make better decisions about using appliances like air
conditioners and furnaces. They could potentially lower their energy bills. However,
governments and energy companies need to help consumers overcome the intrusive
feelings associated with the technology. Dashboard monitoring software must be
easy for consumers to understand and use.

Organizations: There are many disincentives for energy companies associated with
smart grids. Operating budgets and profits would be severely impacted if consumers
greatly reduced their energy consumption. Implementation costs would be
extremely high, even with federal government assistance. Consumer backlash is
already evident in the few experimental cases to date. Without properly structuring
the implementation, that backlash could grow against the energy companies.

Technology: Networks and switches for power management, sensor and monitoring
devices to track energy usage and distribution trends; systems to provide energy
suppliers and consumers with usage data, communications systems to relay data
along the entire energy supply system, and systems linked to programmable
appliances to run them when energy is least costly, are all expensive and time-
consuming to retrofit into all the homes across the nation. Basically, the entire
energy infrastructure would require retrofitting.

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 3. What challenge to the development of smart grids do you think is most likely
to hamper their development?

Answer:
Some challenges to the development of smart grids include:
• Changing the infrastructure of the entire electric grid across the nation

• Installing two-way meters that allow information to flow both to and from homes and
businesses

• Creating dashboards that are user-friendly

• Extremely high costs of retrofitting the entire grid infrastructure, estimated to be as high
as $75 billion

• Potential intrusiveness of new technology

• Perceived and real loss of privacy

• Potential economic impact on energy companies.

4. What other areas of our infrastructure could benefit from ‘smart

technologies? Describe one example not listed in the case.

Answer:
One example that could benefit from smart similar to the proposed electric grids is
monitoring water usage in homes and businesses.
Smart technologies could allow water utilities and consumers to
• Monitor water flows much like electric usage
• Turn off lawn sprinklers during the heat of the day or based on predetermined schedules
• Use monitors in lawns and around plants and shrubs to prevent over- or under-watering
• Monitor evaporation rates
• Monitor pools fountains, and other water features for usage.

5. Would you like your home and your community to be part of a smart grid?
Why or why not? Explain

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Reference should be made to the following issues:

• How would individuals use the smart grid to reduce energy consumption?

• What kind of software would customers be willing to install and use?

• Would users be willing to absorb some of the costs, all of the costs, or none of the costs
associated with retrofitting homes, buildings, and appliances?

• How much information would individuals be willing to share with the energy companies
and potentially, local, state, and federal government agencies?

• If customers weren’t part of a smart grid, would they be willing to pay more for energy or
would they balk at differing rates?

Summary:

By means of Smart Grids we can modernise the conversation system & efficient
utilisation of energy.
Increases in both general and peak electricity demand, the integration of intermittent and
distributed generation, and developments in communications technology have all enabled,
as well as necessitated a more advanced electricity network. This moves away from the
traditional unidirectional grid, with central generation and one-way communications. As
such, utilities have seen Smart Grids as an answer to the need for greater grid capacity, as
well as allowing transmission and distribution infrastructure upgrade deferral. According
to the Electric Power Research Institute (EPRI), a Smart Grid “integrates and enhances other
necessary elements including traditional upgrades and new grid technologies with
renewable generation, storage, increased consumer participation, sensors, communications
and computational ability”.

1. Reduction in peak demand – energy storage as a cost-effective and reliable alternative to

network capacity expansion
2. Improvement in network reliability/voltage/power factor/power quality – cost-
effectiveness and value of energy storage

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3. Energy supply during peak price events – net benefit to retail sector
4. Minimisation of customers’ energy bills – with innovative tariffs e.g. time of use together
with energy storage.
5. Combined benefit between consumer, retail and network sectors
6. Investigation of large capacity (~1MVA) storage – extra cost and other benefits compared
to smaller capacity storage
7. Intermittent generation support – optimisation of renewable energy sources value.

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