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Management

Information
System
Case study

What is the buzz on Smart


grids?
Introduction.
Smart grids are different from 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 both parties regarding production, consumption, and pricing can
make flow from the consumer to the electric providers, better decisions. 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 consumers 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 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 consumers 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 size 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, 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States is outdated and inefficient.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 efficient approaches to
distribution. The current electricity grid offers few ways to handle power provided by
alternative energy sources.

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

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

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.

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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 its 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. The entire energy infrastructure would require retrofitting.

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.

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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

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 werent part of a smart grid, would they be willing to pay more for energy or
would they balk at differing rates?

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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
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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