How can a smart grid help with peak oil?

Smart-grid people aren’t always peak-oil people, or vice versa. But both have good reasons to back the other, considering how the two issues could increasingly be going hand-in-hand.

The idea behind a smart grid is this: an “internet of things” that connects all the parts of our energy infrastructure — coal-fired power plants, wind farms, homes and businesses (with or without solar panels), cars and more — can help them all work together more efficiently, effectively and automatically.

The idea behind peak oil is this: globally, discoveries and production of oil — a finite resource — are bound to reach a peak at some point, after which the amount of petroleum we can pump out of the ground goes into a gradual (or not) decline.

The connection is obvious: anything that can make our use of energy more efficient is critical if our energy supplies can no longer grow enough to meet demand.

Now, in most developed economies, oil is no longer a major fuel source for generating electricity. Instead, most of our electric power comes from a combination of other fossil fuels — coal or natural gas — and from renewables like wind, solar, hydro and biomass. (There’s also nuclear, the not-exactly-fossil-or-renewable energy source.) The trick, especially if we increase our use of renewables, is keeping the lights on even when the wind isn’t blowing or the sun isn’t shining. And that’s where a smart grid can help.

“Smart grid technology could play a major role in maintaining the reliability of the electricity system in the future by helping to reduce peak demand and to manage fluctuations in renewables output,” noted the UK’s Industry Task Force on Peak Oil & Energy Security in a 2010 report. “There are three key areas for focus in realizing the potential of this technology:

  1. Developing appliances and infrastructure which allow automated demand response.
  2. Finding effective ways of coordinating the various parties involved in smart demand (i.e. customers, suppliers, network operators and generators).
  3. Providing funding for the development of smart networks.

“Energy efficiency and microgeneration can also play vital roles in the policy response.”

The strategy of smarter coordination to manage is demand already helping a country like Denmark make the most of its wind power while ensuring that its households still have electricity when the wind doesn’t blow. A smart grid that’s also a supergrid could do the same across Europe.

“Here’s how Denmark copes with the intermittency of its wind power,” writes UK science adviser David MacKay in his book, “Sustainable energy – without the hot air.” “The Danes effectively pay to use other countries’ hydroelectric facilities as storage facilities. Almost all of Denmark’s wind power is exported to its European neighbors, some of whom have hydroelectric power, which they can turn down to balance things out. The saved hydroelectric power is then sold back to the Danes (at a higher price) during the next period of low wind and high demand. Overall, Danish wind is contributing useful energy, and the system as a whole has considerable security thanks to the capacity of the hydro system.”

While that approach can work well for the electricity grid, it doesn’t currently solve our transport challenges. Oil is still the fuel of choice for transportation. And in that use, it’s also the hardest to replace with wind, solar, coal, nuclear or pretty much any other energy source. That’s why many smart-grid and peak-oil people advocate a shift to electric cars.

As the 2010 peak oil report notes, the electricity grid is “likely to see a significant change in its demand patterns if there is a significant move in the direction of road vehicle electrification.” And that’s where a lot of ground-work remains to be done: electric cars offer a way to reduce our dependence on oil, but they create whole new challenges for the grid, even a smart one.

“The introduction of smart grid technology may alleviate some of this, but the ground needs to be prepared for the introduction of such technology and all the economic and social implications of flexible pricing that are enabled in this scenario,” the peak oil report states.

The economic and social implications, unfortunately, tend to be the ones explored and acted upon by political leaders, a group that these days seems incapable of accomplishing much of anything.

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