There is now serious concern that even these targets will not prevent an increase in global temperature by 2 degree Celsius and prevent devastating climate outcomes. This is the benchmark that has been set as the point of no return, a limit directly or indirectly agreed to by negotiators at international climate talks. Now the outcome of recent research on climate change suggests that this figure has been set too high.

The Electrical Utility business is at the eye of the storm because it is the major contributor to CO2 emissions which result in global warming and at the same time is proving to be the most vulnerable to the damage it causes.

Returning the transmission and distribution network back to normal service with a little tweaking on its demand response performance is clearly at best only a short term solution; but at the same time the grid cannot be sufficiently hardened to withstand the forces of another Hurricane Sandy.

Much can be done to make the grid more robust, and decentralized energy does this by creating redundancies in the power system and at the same time reduce transmission losses; and with it CO2 emissions. This requires the present model of Central Generation and Distribution to gradually morph into a Decentralized Power Grid Architecture, which is the favored approach for generating and distributing electrical power in new “Smart Cities”.

Changing an existing system to the new model is more difficult requiring a major upheaval to current regulations and practices. The technology is in place but there will be much resistance to changing the status quo by the current electrical utility companies because they would need to take on a different and more challenging role.

Distributed Power can make a serious contribution to both delivering electricity at current market prices and reducing CO2 emissions but it requires the utilities to buy into this new model and at the present time they are reluctant to accept or pursue this possibility.  They want to continue with the central model of large scale production and distribution a one way flow of electricity from them to the consumer. They are embracing smart meters as the first plank in their Smart Grid strategy.  This gives them information on domestic consumption, demand patterns and the possibility to smooth demand by variable pricing and more importantly to them, automatic billing which will give them a direct return on their investment. Making the Distributed Network smart and investing in Communication Networks to deliver an “Internet of Energy” providing value add services that would ultimately deliver revenues possibly greater than supplying electricity are of significant interest to them. However they want this within their time frame and control.

A recent report by Memoori http://memoori.com/smart-buildings-2012 shows how the interfacing and integration of Smart Buildings with Smart Grid opens up major benefits for both the building owner / operator and the utility. They are already interconnected through Smart Buildings consuming approximately 40% of electricity generated and delivered through the grid network. These facts make it imperative that they are connected in such a way that they can achieve the maximum benefits in reducing energy consumption and at the same time for Smart Buildings to feed clean energy back into the grid to meet the utilities need to reduce its CO2 emissions by gradually closing down its central fossil fired generating plants.

It does not require a fully comprehensive Smart Grid with ADR (Automatic Demand Response) to be operational, although this would make the interface a much more elegant solution. It can therefore go ahead now and as the investment is relatively small and the ROI attractive this business opportunity has no major obstacles to overcome. The Smart Building specialist controls and software companies such as Siemens, Schneider Electric, Honeywell and Johnson Controls will take a big share of this market both through supplying and installing the systems and delivering them through their EMSCO services.

It does not require vast sums of money to bring it about; we estimate approximately 1% of the total Smart Grid investment budget. The opportunity is here now but the resistance to the development of a decentralized model is holding up the developments of automatic demand response and the delivery of virtual power.

It would seem that in most countries, as long as Utilities continue to deliver a reliable supply of electricity to both domestic and industrial users they can be assured that they will keep control of setting the policy and timetable for Smart Grid. But Hurricane Sandy has delivered a resounding message that we can not leave them to just get on with the job.