Thursday, 8 March 2012

A methodology to quantify smart grid projects and their benefits

A paper detailing a methodology to quantify smart grid projects in Europe and interpret the results has been developed by the European electricity sector industry association, Eurelectric. The document, The Smartness Barometer, is based on a previous paper by the EPRI (Electric Power Research Institute) developed to estimate the costs and benefits of smart grid demonstrations. The Eurelectric version is adapted to the smart-grid work underway in Europe.

The Eurelectric paper details the challenge facing the electricity industry in evaluating smart grid investments, both small-scale projects and evaluations and large-scale deployments. It explains the need for a consistent framework for evaluation and cost-benefit analysis so that informed decisions can be made on the benefits and effectiveness of a ‘smart’ investment.

The proposed evaluation methodology consists of seven steps:

  • Characterization of the project:

    Step 1 – Describe the technologies, elements and goals of the project

    Step 2 – Identify the smart grid functionalities

  • Quantification and monetization of benefits:

    Step 3 – Map each functionality onto a standardized set of benefit types

    Step 4 – Establish the project baseline

    Step 5 – Quantify and monetise the identified benefits and beneficiaries

  • Comparison of costs and benefits:

    Step 6 – Quantify and estimate the relevant costs

    Step 7 – Compare costs to benefits.

The paper describes each step and then gives practical examples from the InovGrid project, an open platform integrating end users, public standards and vendors’ interoperable solutions, led by the Portuguese distribution system operator EDP Distribução.

The report maintains that the methodology can help electricity companies and regulators evaluate and compare different types of ‘smart’ investments, communicating their results and developing investment strategies. The methodology can also help show which technological solutions work and which do not and allows for meaningful comparisons between different types of projects installed in different systems across Europe

Where it breaks down is that the methodology provides no clear answer as to how, when individual project results have been evaluated, their combined contribution can be extrapolated to national and European levels.

Eurelectric says the methodology is now being further developed by the European Commission’s Joint Research Centre.


As Eurelectric points out “realistic business cases based on intensive pilots are vital to raise awareness of smart grid investment needs among public and private stakeholders at national and European level.”

If it also helps to allay fears about the costs and the benefits (a big issue in the UK in particular) it can only be a good thing, although it sounds as though there is still some work to be done. The sooner the better, given the potential importance of smart grids to helping us move to a more sustainable energy infrastructure. The IT industry has a lot riding on their implementation as well, not just in building the things but in the technology that is likely to hang off of smart grids in the future.

© The Green IT Review

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