//The Smart Grid Takes Shape in Germany with E-Energy Plan

The Smart Grid Takes Shape in Germany with E-Energy Plan

The new age of green electricity is beginning to take shape in Germany under the name E-Energy. The plan is a vision to create a giant renewable energy grid using inputs as diverse as huge offshore wind farms, gigantic solar farms in the deserts and mini-powers plants located on the roofs and in the basements of homes and offices. Smart appliances like washers and dryers will communicate with each other in order to wash or dry when electricity is cheapest.

This new smart electricity generation and grid test will begin in six German regions, involving several cities and tens of thousands of homes and hundreds of businesses will begin in earnest this month. Research will be conducted into the possibility, for example, of homes that can largely produce all the electricity required by a household, as well as energy exchanges that enable consumers to sell any excess, self-produced and environmentally friendly electricity at a profit back to the energy grid.

Participating firms include Siemens, SAP, IBM and energy giants like EnBW, RWE and Vattenfall, Germany’s economics and environment ministries have already mobilized €140 million for the development of the associated technologies and the tests. The government has provided €60 million and the industrial partners are raising the rest together with public utilities and smaller, innovative technology partners.

This is all part of an accelerating trend with number of recent developments suggesting the energy revolution is at hand:

  • Companies like Munich Re, Siemens, Deutsche Bank, E.on and RWE, are working together under the name Desertec, want to build giant solar power plants in Africa’s Sahara desert to feed the European grid.
  • Car parts maker Bosch acquired solar cell manufacturer Ersol in 2008 and, rumors suggest, is currently working to designs for solar powered car components.
  • Carmaker Volkswagen, together with ecologically friendly energy utility Lichtblick, wants to install 100,000 mini power plants directly in consumers’ homes.
  • In mid-September, the German federal government agreed to the massive expansion of power generation through large offshore windparks.
  • Google (GOOG) is also trying to get in on the smart grid action. The US company is developing software to allow consumers to track their electricity usage in real-time over the Internet.
  • Cisco is working with one large European electricity grid provider to create a smart power grid of the future. By mid-2010, the company wants to equip power lines, substations and transformers with information technology.

Energy and IT markets are drawing closer together and the automobile industry will likely follow soon. A new business sector born from the amalgamation of these three immense sectors could create new opportunities for partnerships and change the economic landscape. It will open up new business opportunities for the automobile sector, power and IT companies as well as innovative start-ups, providing vast growth opportunities.

Residents of the cities of Karlsruhe and Stuttgart, where a government pilot E-Energy project is being tested, are already experiencing what it is like to be part a smart grid. There, 200 homes and companies have been equipped with photovoltaic systems and CHPs or fuel cells.

This model transforms the consumer into a producer who can make some money in the energy market. They are also testing a pricing model in which electricity rates depend on supply and demand. If the amount of available energy goes down, the rates go up correspondingly. Users can monitor the system on an Internet portal and generate energy whenever the price peaks, thereby also stabilizing the overall supply.

The true environmental revolution will happen from the bottom up, through mini power stations in basements of private homes, that generate both heat and power, as well as solar panels that can cover the electricity needs of factories. In future, energy will be supplied from millions of networked mini power plants rather than from relatively few centralized sources.

Volkswagen and utility company Lichtblick launched their first major offensive on the people power grid in September. The two companies intend to install up to 100,000 combined heat and power units (CHPs) in the basements of apartment buildings. They will initially be fired by natural gas, later on possibly by biogas. The basement power plants will heat the homes while simultaneously producing electricity and sending precise data to the companies. The companies believe the total investment in the project will come to €2 billion.

Right now it is nearly impossible for consumers to see much electricity they are using on a daily basis, but there are devices now being made that will give homes and businesses a more accurate idea of the energy they are consuming. The smart grid would tell consumers how much electricity each appliance is using. And consumers will be able to do a lot more to determine at which prices they consume electricity. Customers will be able to cut their electricity bills, moreover, by pinpointing off-peak hours to run their energy-intensive machines

A household’s smart devices would be controlled by so-called home management systems. In the city of Mannheim, also home to an E-Energy pilot project, companies like Papendorf Software Engineering are developing related hardware and software under the “Energy Butler” label.

In addition to smart meters, a number of other potential growth markets are being tested as part of the E-Energy project. German household appliance maker Miele, for example, is supplying hundreds of homes in the Ruhr region with intelligent washing machines that provide exact details about usage and can be either programmed or operated remotely to automatically turn on and do their work at times of the day when electricity is cheapest. Other companies are building adapters that can turn older machines on and off, based on energy prices.

This sort of energy management—that can switch appliances on and off depending on the amount of energy available from wind farms and solar plants—is the main prerequisite for a power grid running largely on renewable energies. Supply and demand have to be tightly controlled to keep the grid from crashing.

Innovative energy storage systems are also intended for the system. Batteries up until now have proven too expensive and in some cases too inefficient for the task. Now scientists are looking into other ways of storing energy, and new concepts are being tested in the German port city of Cuxhafen.

During peak times, the region is able to produce more than 80 percent of its needed electricity using wind turbines, but when the wind dies down, so does the capacity to supply electricity. “To make up for fluctuations,” said project leader Wolfram Krause, “cold stores could be cooled more than needed or swimming pools overheated. If less electricity is available later, cooling and heating devices could be temporarily turned off until the energy buffer has been used up.”

Storage solutions could also play a special role in electric cars in the future. In one E-Energy project in Germany’s Harz mountains region, they serve as reserve batteries from the regional power net. If electricity supplies are low, cars not in use can also feed energy back into the grid.

If millions of small power stations are feeding the mains with a fluctuating quantity of electricity, and millions upon millions of terminal devices and home management systems are transmitting energy consumption data or receiving commands, the grid operators’ systems could go haywire. The power transmission has to be continually adjusted at millisecond intervals. And it’s a process that can only be achieved if it is highly automated.

That’s why setting up such an intelligent power grid, that can manage this mass of data across the country, is probably the biggest challenge of the new electric age. “The deployment of all modern energy technologies will rise or fall based on the construction of a communications network that can deal with mass amounts of real-time data and transport them using Internet Protocols,” said Ingo Schönberg, the head of Power Plus Communications (PPC), a company that is producing such technologies. “A smart grid is the backbone of the new infrastructure.”

It’s also one of the most lucrative emerging business opportunities. The hitherto dominant energy giants are suddenly faced with new and formidable foes: technology groups keen on seizing control over energy supplies on the Internet. Siemens CEO Peter Löscher puts the volume of the smart grid market at €30 billion by the year 2014. In September, the company said it was planning to invest €6 billion in this area over that period.

“We are calculating a future annual market potential of $20 billion,” said Cisco SmartGrid executive Christian Feisst. He believes that within 10 years the technology will be deployable on a mass scale. And PPC’s Schönberg believes that smart grids will be available in some cities in the next few years and that they will be available to the masses by the middle of the next decade. He said the first aim must be to automate as many measuring and control processes as possible in order to reduce the increasing levels of complexity. Cisco is currently conducting pilot tests of smart grids, but the company said it would like to provide an entire region with intelligent electricity by mid-2010.

Companies including Siemens, ABB and IBM are developing central system platforms that can collect all the data on decentralized energy production and consumption. The systems also calculate electricity prices based on fluctuations and pass this information back to consumers using broadband connections or by mobile radio. Together, these technologies will create an energy market place in which consumers themselves can buy and sell power.

A market in which energy is traded according to supply and demand will provide immense opportunities for service providers and startups. Some are developing systems to predict rate fluctuations based on weather forecasts and behavioral statistics. Start-ups can also come up with business innovations for a new version of the energy grid. The foundation of this new smart grid is cheap, ubiquitous microchips embedded in devices that use energy, store energy and devices that consume energy and a vast network of interconnected computers, otherwise known as the internet to manage them all.

Image by Schwarzerkater