Smart grids — Why we need smarter power grids and how battery storage systems support them

5 mins

Mastering the energy revolution in Germany requires a fundamental restructuring of our energy infrastructure. Because our energy supply is changing: By switching to renewable energy, we are also switching to a volatile and decentralized power supply, which presents our networks with new, complex challenges. It requires that consumption, generation and networks be intelligently linked together in order to continue to ensure a resilient electricity infrastructure. The concept of smart grids is often regarded as a prerequisite for switching to renewable energy sources.

What are smart grids?

Smart grids (in German “intelligent power grids”) are a modern power grid that uses technology and automation to make the flow of electricity more efficient, reliable and secure. It links all components of an energy system together, i.e. power producers, consumers, storage and the power grid itself, and creates a continuous exchange between them. By using digital communication and information technologies, smart grids can coordinate electricity demand and power generation in real time and react dynamically to peak loads, weather forecasts or disruptions. The data-driven control system thus ensures a stable and reliable power supply, which is particularly necessary for fluctuating renewable generation sources. In addition to the normal power grid, an additional data network is being created, which is used by communication and information technologies.

Today's power grid is not designed to integrate renewables

The power grid as we know it today is subject to a centralized system that generates energy from power plants and distributes it to end users over long transmission lines. It is designed to flow energy evenly. This also made sense for fossil energy generation, as it was operated for decades, because the electricity generation of the existing power plant park followed consumption. There were few overloads.
But it is precisely this premise that is being reversed due to the increasing share of wind and PV and is now presenting the power grid with major challenges. And it stands out: The power grid was not designed to integrate renewable energies!
In the future, the number of decentralized power generators will continue to grow, which in addition will not always feed a constant amount of electricity into the grids. This is because renewable energy sources are not based on our electricity requirements. In the past, conventional power generation required comparatively low power to ensure a very continuous flow of electricity. However, today, a significantly higher installed capacity is required to meet energy demand, as renewable energy sources are volatile and have a lower number of operating hours at full load than conventional systems. At the same time, the expansion of renewable energy sources means that during peak periods of renewable power generation, there is a significant overproduction of electricity, which depresses the power grid. The result is a high synchronicity factor, which increasingly leads to congestion in the network. The only solution left at these hours is to switch off renewables. At the same time, electricity consumption is also changing as a result of the electrification of various sectors and in the future, more and more electricity will be required at the same time.

Smart power grids have a portfolio of flexibility technologies and can facilitate and accelerate the transition to a renewable energy supply. In doing so, they are primarily involved in the areas of integrating renewables, flexible load management, efficient storage, increasing demand flexibility, but also promoting energy efficiency and optimising network utilization.

What role do battery storage systems play in the smart grid and how can the power grid benefit from them?

In the smart grid, generation and demand should be coordinated dynamically and in real time. As a result of the increasing share of renewable energy, driven by Germany's climate goals, energy storage is also playing an increasingly important role. This is because volatile power generation from renewable energy sources must be balanced with the load at all times. Storage therefore assumes central functions in smart grid concepts, primarily by counteracting volatility and network congestion by introducing flexibility.

One option is to use them as a buffer between generation and consumption to compensate for fluctuations in the power supply. When there is excess power generation, for example on days with lots of wind and sun, the additional electricity is diverted from the smart grid and stored by battery storage systems. In this way, line overloads can be prevented and any feed-in management avoided. In the opposite scenario, the storage system then feeds the additional power back into the power grids at a later point in time as needed. With intelligent electricity meters and measurement technologies, the power grid would ideally know exactly when demand occurs and could explicitly control the storage systems accordingly. In this way, the storage systems act not only in surplus management but also in load shifting and contribute to stabilizing the grid overall.
At the same time, the storage systems can also be used to reduce load peaks. If large amounts of energy are consumed in times of high demand or bottlenecks in the grid, which will increasingly be the case in the future as a result of sector coupling, battery storage systems can provide additional energy for a short time to reduce the load and maintain grid stability. This helps to reduce the load on the grid and increase supply security.
Both applications are already being served today by our battery storage systems at Kyon Energy. The storage systems recognize periods of high demand and provide the grid with the additional energy needed at short notice to reduce peak loads. This network-service service is also recognized by network operators, at least in part. Because there is currently no clear regulatory framework here. On the one hand, there is no follow-up regulation from 2023 to continue using battery storage systems sensibly to buffer peaks in demand, but on the other hand, there is also a transfer of which explicitly to renewable energy sources so that battery storage systems can buffer maximum generation peaks in addition to peak demand in order to serve the grid. In the future, it will not only be the reduction of load peaks that will be an important issue, but also the buffering of overproduction. Battery storage systems offer great potential here, but are still far too little in the focus of the debate.

The power grid benefits from the integration of battery storage systems in that, on the one hand, the storage system offers enormous relief opportunities for the grids and stabilizes them, creates supply security when integrating volatile renewable sources and, on the other hand, also provides flexibilities that enable faster responses to changing conditions. As a result, both the need for conventional expansion of the power grid and investment costs can be reduced. Overall, battery storage systems therefore enable a more efficient, reliable and cost-effective use of our network infrastructure.

What challenges does Germany face when introducing smart grids?

The introduction of intelligent power grids in Germany requires several factors and measures.
On the one hand, the existing infrastructure must be significantly renewed and technologically expanded. A wide range of technologies, such as sensors, communication networks, data analysis software, and control systems, are necessary to collect, analyze, and manage data. The integration of intelligent meters, which make it possible to measure and monitor power consumption in real time, is also necessary. Because this is the only way that all participants in the power grid can communicate their consumption and generation with each other. For implementation, the “Digitalization of the Energy Transition” Act was passed back in 2016, which was renewed again in January 2023 in the sense that processes should be further accelerated and simplified. The law provides for a mandatory rollout of smart meters by 2030.
At the same time, there must be a clear regulatory framework to promote investments in smart grid technologies and at the same time make cooperation between energy suppliers, regulatory authorities, technology providers and end users possible in the first place. This includes creating incentives for network operators to invest in smart grid technologies and creating standards for interoperability and interconnectivity of smart grid systems.
Overall, however, the implementation of smart grid systems requires significant amounts of investment in infrastructure, technology and research and development. The investment amounts must be differentiated into those for network expansion in general, which forms the basis for setting up smart grids. And then, in the following step, investments in additional technologies, for example in areas of communication and data analysis, in order to intelligently optimize load transfer potential (demand-side integration) through generation and consumption.

So are smart grids just a dream of the future?

Smart grids play an important role in modernizing power grids and increasing the use of renewable energy, increasing energy efficiency and making the power grid more stable at the same time. They are therefore already being used in model regions (e.g. in SINTEG projects), are being tested and showing their immense potential in reality. It is also clear that the energy revolution and a transition to 100% renewable energy in our power supply over the long term will not be successful without smarter power grids.

But as effective as smart grids are the solution to the energy revolution, the hurdles to implementation are just as great. This is because the transit from central systems to fluctuating, decentralized systems while maintaining grid stability is a major challenge for network operators. This requires comprehensive modernization and digitization of the power grid, and this entails enormous investment costs. According to the Federal Network Agency, network expansion must first be driven forward, in particular the expansion of north-south power lines.

How quickly Germany can therefore develop from a central power grid to an intelligent power grid remains to be seen. From a technological point of view, we are on a very good path. Politics and regulations are therefore required to significantly accelerate current processes in order to be able to achieve the goals of an almost greenhouse gas-neutral energy supply in 2035. Because the players have long been ready to put theory into practice on a large scale.

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