Smart Grids Smart Grids

What is a Smart Grid?

A Smart Grid is an electricity network that can cost efficiently integrate the behaviour and actions of all users connected to it – generators, consumers and those that do both – in order to ensure economically efficient, sustainable power system with low losses and high levels of quality and security of supply and safety [EC Directorate-General for Energy 2011].

To do so, smart grids coordinate the role of stakeholders involve in the electricity supply chain including generators, grid operators and end users taking into account their needs and capabilities. [International Energy Agency 2011].

The main smart grid applications are: 1) the optimization of grid monitoring and control; 2) consumer enabling to contribute to grid management and 3) improve the physical capacity and flexibility of the network.

The Smart Grid concept deployment is driven by three technologies; distributed generation (DG), energy storage systems (ESS) and the demand side management (DSM). These three technologies grouped under the name of Distributed energy resources (DER) are changing the operation paradigm of the electricity grid [SETIS 2014].

Under the concept of DER, Smart grids have changed the traditional role of final users becoming into the so-called "prosumers" able to both produce and consume electricity [SETIS 2014].

As smart grids allow the integration of decentralised renewable energy resources as well as electric vehicle recharging services, they are essential to ensure energy security, economic development and climate change mitigation. The integration of energy production and consumption component through the smart grid concept enables increased demand response and energy efficiency.

Additionally, the concept of Smart Grids enables new products, services and markets. On one hand, active users or "prosumers" have the opportunity to choose services depending on their own role in the system and based on the information available. On the other utility companies will be able to offer more efficient services. So, the concept offers opportunities all along the value chain.

Finally, Smart grids will also contribute to the development of a new generation of intelligent appliances able to decide when to consume leading to a reduction in the peak load demand, which has a major impact on electricity generation costs. [Luthra et al. 2014]

Further information on wind energy can be found at the Strategic Energy Technologies Information System (SETIS):

Technology facts

Smart Grids ensures an efficient, sustainable electricity supply, with lower losses and greater reliability and security [SETIS 2014].

Smart meters

Key elements to deploy the concept of smart grids.

45 million of smart meters have been already installed in three MS (Finland, Italy & Sweden), 23% of envisaged installation in the EU by 2020 [European Commission 2014].

By 2020, the installation of 200 million of smart meters for electricity will be installed (72 % of European consumers) with an associated investment of EUR 45 billion [European Commission 2014].

France will install 35 million meters by 2017, Spain 28 million by 2018 and the UK will install 56 million by 2019. [Lacal-Arantegu et al. 2014]

Cost per metering point: EUR 223 ± EUR 143. Benefit per metering point: EUR 309 ± EUR 175. [European Commission 2014]

Electric vehicles

In the frame of Smart Grids, electrical vehicles may act as storage element flatting the daily consumption load curve.



[EC Directorate-General for Energy 2011] EC Directorate-General for Energy: Standardization Mandate to European Standardisation Organisations (ESOs) to support European Smart Grid deployment. Available at:

[International Energy Agency 2011] International Energy Agency: Technology Roadmap

[SETIS 2014] SETIS: Smart Electricity Grids: Technology Information Sheet

[Luthra et al. 2014] Luthra S, Kumar S, Kharb R, Ansari MF, and Shimmi SL: Adoption of smart grid technologies: An analysis of interactions among barriers. Renewable and Sustainable Energy Reviews 33 (554–565). DOI:10.1016/j.rser.2014.02.030

[European Commission 2014] European Commission: Benchmarking smart metering deployment in the EU-27 with a focus on electricity

[Lacal-Arantegu et al. 2014] Lacal-Arantegu R, Jäger-Waldau A, Bocin-Dumitriu A, Sigfusson B, Zubi G, Magagna D, Carlsson J, Perez Fortes M del M, Moss R, Lazarou S, Baxter D, Scarlat N, Giuntoli J, Moro A, Padella M, Kousoulidou M, Vorkapic V, Marelli L, Steen M, Zucker A, Moya Rodriguez J, Bloem H, and Moles C: 2013 Technology Map of the European Strategic Energy Technology Plan (SET-Plan). JRC 86357/EUR 26345 EN. Publications Office of the European Union, Luxembourg


What are the barriers and needs of the Smart Grid concept?

The main barriers and needs facing the sector are shown in Table 1.

Table 1. Challenges & needs to deploy the Smart Grid concept.[Luthra et al. 2014]

Key Aspect




Lack of financial resources. Investment payback period is relatively long comparing against high initial investment.

Despite benefits arising from the implementation of the smart grid concept, governments need to have sufficient proofs for justification for high investment and ensure guaranteed return to systematic payback scheme supported by public incentives and subsides.


Market uncertainty. Lack of long-term stable policies and regulations for free market tariffs.

Standards and business models of smart grids have to be defined in order to stablish global standardized regulatory definitions to generate revenue.


Lack of regulatory framework. Most of electrical systems were conceived under a traditional paradigm long back ago and based on obsolete regulation.

Power utility related policies and procedures may be framed to assure compliance with legislative or regulatory requirements for smart grid technologies implementation.


Low public awareness and engagement. Reluctance of public for the adoption of smart grid installations.

Efforts need to be allocated to educate general public. Raise awareness about benefits and technical aspects on the usage of smart grids is required.

Economic & Social

Lack of innovativeness in the industry. Reluctance of the industry for the introduction of new methods maintaining traditional for safe and guaranteed return for investment.

A combination of financial support, stable legal regulation and education in the industry may lead to transform traditional industrial operation into new innovative processes, solutions and finally products.


Lack of infrastructure

Additional infrastructure is required including amongst others a well-defined communication infrastructure, sensors, intelligent electronic devices, distributed energy resources, cyber security devices, advanced metering systems and other end-user devices.


Technology immaturity

Standards are required to assess features of solutions brought into the market. These standards and further validation of solutions will allow the ancillary facility to cop up with market requirements.


Integration of the grid with large scale renewable generation. Lack of coordination between electric energy and telecom agencies.

An integrated complex system is required to guarantee the appropriate interconnection amongst large number of dissimilar distribution networks, power generating sources and energy consumers.

Technical & Social

Potential weaknesses concerning worms, viruses, malware, etc. in the smart grid communication system.

Safe communication systems have to defined and implemented to ensure privacy of users across the supply chain.


[Luthra et al. 2014] Luthra S, Kumar S, Kharb R, Ansari MF, and Shimmi SL: Adoption of smart grid technologies: An analysis of interactions among barriers. Renewable and Sustainable Energy Reviews 33 (554–565). DOI:10.1016/j.rser.2014.02.030


What are the industry and the EU doing about Smart Grids?

To assess what the industry is working on and taking into account the multi-approach on the smart grids theme, a European project review may offers a clear vision on the status of the market and actors involved.

With some sporadic activity before 2005, smart grid projects multiplied swiftly from 2006 onward, being 2009 the booming year in the series. Together with the number of projects, also the size of them has increased rapidly with budget over EUR 20 million [Covrig et al. 2014].

In the period 2008-13, investment in smart grid projects was consistently above EUR 200 million per year, reaching EUR 500 million in 2011 and 2012.

Projects could be classified into two main categories: Research & Development (R&D) and Demonstration & Deployment (D&D). Total budget distribution based on project typology, and geographical approach is as shown in Figure 1.

In term of countries efforts, the total budget is breaking down as presented in Figure 2. If these total figures are divided by the total amount of electricity consumption in each country the picture varies substantially.

Based on this index, Denmark has the highest level of investment per electricity consumed, accounting for a EUR 6.5/MWh followed by Slovenia (EUR 2.88/MWh), Belgium (EUR 1.57/MWh), UK (EUR 1.49/MWh) and Portugal (EUR 1.35/MWh).

Figure 1. Total budget of European smart grid projects (up to and including 2014). [Covrig et al. 2014]

Figure 2. Percentage from total investment per country [Covrig et al. 2014]

Regarding sources of funding they could be classified into five general types: private funding (own resources), European funding (EC), national funding, regulatory funding (including specific smart grid programmes managed by regulators to support innovative smart grid projects) and unclassified funding (2 % of total budget). Figure 3 shows private capitals account for 50 % of total investment (37 % in D&D projects) which reflects existence of a market.

Figure 3. Investment distribution by stage of development [Covrig et al. 2014]


European Projects' Overview:

- Projects:

459 projects in 47 countries with duration of 33 months on average.

287 national projects (73 with more than one partner)

172 multinational projects (6 countries per country on average)

- Budget:

EUR 3.15 billion. (EUR 7.5 million on average per project).Larger investors: France and UK.

- Organisations:

1 670 organisations being universities, research centres, consultancies and distribution system operators the most active.

 700 organizations involved in more than one project) with 2 900 participations.

- Implementation sites:

578 sites in 33 countries. Germany (77) and Italy (75) countries with more sites



[Covrig et al. 2014] Covrig F, Catalin A, Ardelean M, Vasiljevska J, Mengolini A, Fulli G, Amoiralis E, Jiménez MS, and Filiou C: Smart Grid Projects Outlook 2014


What is the current and future potential place of Smart Grids in the energy system?

The complexity of the smart grid concept makes difficult the definition of scenarios for its development and deployment.

Aspects such as age of the electric infrastructure, demand growth, generation evolution and regulatory and market structures determine strongly the deployment of smart grids. Additionally these aspects may vary significantly from one region to another; so many scenarios could be built up.

The key elements that determine the deployment of smart grids in the future are: annual demand evolution, electric vehicle (EV) deployment and peak demand as a function of EV deployment, demand response potential, electricity use in buildings and penetration of smart metering infrastructure.

Taking into account trends shown in Figure 4 and other specific aspects such as the old European infrastructure together with the deployment of the DER, it is set the ideal scenario to keep on deploying of smart grids across Europe.

Figure 4. European electricity and peak demand projection [International Energy Agency 2011]

Key points. Smart grids deployment

All regions will need smart grids to enable the effective integration of significantly higher amounts of variable resources to their electricity grids.

Smart grids encompass a variety of technologies that span the electricitysystem.

[International Energy Agency 2011]



[International Energy Agency 2011] International Energy Agency: Technology Roadmap


Who is/should be involved in Smart Grids?

Based on the identification of projects, organisations involved in smart grids could be classified as: distribution system operators (DSO), transmission system operators (TSO), universities, research centres and consultancies, IT and telecom companies, manufacturers/engineering services/contractors/operators/manager companies, energy companies/utility companies/energy retailers/electricity service providers, generation companies, municipalities, public authorities and government, associations and other organisations.

The share in terms of budget allocation per type of organisation is as follows.

Figure 5. Distribution of investment by stage of development and organisation type [Covrig et al. 2014]

The Universities/Research centres/Consultancies category is involved in over 31 % of the projects and as expected they are the main players in the R&D scene. The DSOs are engaged in over 22 % of the projects (particularly in Demo & Demonstration projects), followed by Energy companies/Utility companies/Energy retailers/Electricity Service providers (over 15 %, mainly in Demo & Demonstration projects) and Manufacturers/Engineering services/Contractors/Operators/Manager companies (over 14 %). TSOs are involved in around 6 % of the projects.

In terms of geographical distribution, in most of the EU countries budget allocation has been mapped.
From Figure 6, a number of ‘hot-pots’ are identified. Paris (FR), Rome (IT), Vizcaya (ES) and London (UK) gathers more than EUR 100 million. With more than EUR 50 million other regions from Germany (Karlsruhe and Düsseldorf), Belgium (Antwerpen), Netherlands (Gelderland - Arnhem), Denmark (Copenhagen and Sydjylland), Spain (Madrid), Austria (Vienna) and United Kingdom (Cornwall and Tees Valley) represent most advanced regions in terms of smart grid investment.

Figure 6. Source of funding per region (NUTS) [Covrig et al. 2014]

At the regional level, several regions have included smart grids as a policy priority under the capability of 'Energy Production & Distribution'

Table 2. List of European regions with smart grids as priority. [Eye@RIS3 2015]

Region / Country Name Description Capability Capability (Sub) Target Market Target Market (Sub)

AT Oberösterreich

Energy (energy efficiency in manufacturing, decentralised systems, smart grids, smart meters, smart village, monitoring energy supply, renewable energy, biogenic processes, building and construction technology)

Energy production & distribution


Energy production & distribution


BE Flemish Region

Smart grids. part of 'Sustainable living' smart specialisation domain.

Energy production & distribution

Energy distribution

Energy production & distribution

Energy distribution

 CZ Moravskoslezsko

Smart grids and smart cities with utilisation of specificities of the Moravian-Silesian Region during a process of changes of its technological profile - geothermal energy, methane, co-generation and accumulation, underground infrastructure

Energy production & distribution

Energy distribution

Energy production & distribution

Energy distribution

DE Weser-Ems

Energy. Bioenergy, Wind energy, Gas, Storage technology, Photovoltaics, Smart grids

Energy production & distribution


Energy production & distribution


ES Comunidad de Madrid

Smart grids

Information & communication technologies (ICT)


Energy production & distribution


ES Andalucía

Promotion of Renewable Energies and Energy Efficiency - generation and integration systems of renewable energies. smart energy networks (smart grids): capture, transformation, transport and storage. high capacity energy storage systems. efficient energy management in production activities. energy efficiency in building and restoration. new materials and processes for sustainable building. energy sustainability in rural areas.

Energy production & distribution

Power generation/renewable sources

Energy production & distribution

Energy distribution

FR Rhône-Alpes

Smart grids & energy storage

Energy production & distribution



Energy production & distribution


Smart Grids & Smart Cities

Energy production & distribution

Energy distribution

Energy production & distribution

Energy distribution

NL Eastern Netherlands

promote triple helix partnership for the development of smart grids

Energy production & distribution

Energy distribution

Energy production & distribution

Energy distribution

PL Slaskie

ICT: Cleaner environment & efficient energy networks (e.g. smart grids) (power generation/renewable sources)

Energy production & distribution

Power generation/renewable sources

Energy production & distribution

Power generation / renewable sources

UK Cornwall and Isles of Scilly

Smart grids

Information & communication technologies (ICT)


Energy production & distribution

Energy distribution


[Covrig et al. 2014] Covrig F, Catalin A, Ardelean M, Vasiljevska J, Mengolini A, Fulli G, Amoiralis E, Jiménez MS, and Filiou C: Smart Grid Projects Outlook 2014

[Eye@RIS3 2015] Eye@RIS3. URL:

Events Events

Energy - Smart Grids Workshop: ETIP SNET South Eastern Region

The European Commission's Joint Research Center (JRC), the European Technology and Innovation Platform for Smart Networks for Energy Transition (ETIP...

Smart Grid Challenges and Opportunities in the Baltic Region.

This event is framed within activities of the Smart Specialisation Platform on Energy (S3PEnergy) and is oriented to facilitate cooperation among regions...

Smart Specialisation in Energy and innovation in European Regions

The event aims at reaching a shared vision on knowledge-based energy policy priorities in Member States and regions and will discuss a strategic agenda...
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Publications Publications

Mapping regional energy interests for S3PEnergy

Policy brief Juan Pablo Jiménez, Andreas Uihlein

The Digital Agenda Toolbox

JRC88896 Jens Sörvik and Alexander Kleibrink

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