Wednesday, January 06, 2010

Smart Grids, Smart Meters, and the complexity of the power grid market

Voltalis sell energy management device to curb energy consumption. It can reduce the energy bill by up to 10% by switching on an off appliance, the aim is to reduce the demands at peak time. It allow energy producer to avoiding using expensive energy production systems to cope with the demands. And reduce the customer bill by reducing their energy consumption when the price is at its highest.

A couple of month ago I saw a very interesting news about this smart grid startup:

The judgement created quite a turmoil however a lot of people complaining didn't understand very well the mechanism of the electricity grid and its market and jumped to the easy conclusion that the french regulator and EDF was trying to eliminate green competitor.However the reality is a little bit more complex...

Voltalis get (very well) paid when a energy provider ask them to reduce the energy consumption of some of its customers in order to ease the pressure. However when Voltalis does the same when it is not requested it is required by law that the company responsible for this reduction must either pay a compensation or consume the energy that was not consumed ( hard to do ).

Why is the law like that? Simple. You cannot just fire up or shut down a nuclear power plant like that. Increasing or decreasing energy production is a slow and expensive process . As a result energy providers try to match / predict the consumption to limit the waste. By reducing the energy consumption voltalis disturb the systems and in fact make it a lot more inefficient in a certain way ( the electricity is produced but not consumed).

Solving this issue would require Voltalis and the different actor to share information in order to optimize the system efficiency. However i suspect that the reactivity of the Volatlis system is an order of magnitude faster than the one the energy provider can have with their production systems. I think as long as the systems is not fully integrated with the energy production regulation it is basically just a way to exploit fail in the systems coated with the cloak of sustainability ( yes the customer consume less but the energy is still produced and wasted..)