BUS604: Innovation and Sustainability

The supply of sustainable energy is one of the greatest challenges modern society faces. On the one hand traditional sources like oil, coal, and gas are limited and polluting, and contribute to the heating-up of the earth. On the other, nuclear energy remains disputed, because of safety concerns and the problem of radioactive waste (even if nuclear is sometimes termed, by China, "renewable"). Governments, universities and industries are cooperating intensively to develop sustainable energy sources that will meet future requirements.

Many sustainable sources, such as sun, wind and hydro energy, produce energy in the form of electricity. A great advantage of electric energy supply is that it can be transported easily over large distances. It is widely recognised that the development and integration of sustainable resources also requires innovation in the electrical grid and associated technologies for generation, transmission, distribution and energy storage systems. The present electrical system is based on a model of large and centralized electricity generators (large-scale plants based on fossil fuels) whereas the future electrical system will be based on a large amount of smaller, local generators (solar panels, wind turbines). Changes in renewable energy generation will induce big changes in the management and distribution of electrical energy because of their unpredictability. The present electrical system has to be made smarter in order to accommodate and balance supply and demand on the local, regional, national and transnational levels.

The International Energy Outlook 2013 reports that the world's net electricity generation could increase by 93 percent from 20.2 trillion kilowatt hours in 2010 to 39.0 trillion kilowatt hours in 2040. Electricity supplies an increasing share of the world's total energy demand and is the world's fastest-growing form of delivered energy. World electricity delivered to end users is projected to rise by 2.2 percent per year from 2010 to 2040, as compared with forecast average growth of 1.4 percent per year for all delivered energy sources. In general, projected growth in OECD countries is slower than in non-OECD countries, where at present many people do not have access to electricity.

Beginning in the early 2000s, high fossil fuel prices in combination with concerns about the environmental consequences of greenhouse gas emissions provoked interest in developing alternatives to fossil fuels. The long-term global prospects for generation from renewable energy sources continue to improve, making them the fastest-growing sources of electricity with forecast annual increases averaging 2.8 percent per year from 2010 to 2040 (see figure 1). In particular, non-hydropower renewable resources are predicted to be the fastest-growing sources of new generation in both OECD and non-OECD regions. Non-hydropower intermittent renewables, which accounted for 4 percent of the generation market in 2010, could increase their share of the market to 9 percent in 2040.

The successful integration of renewable energy sources and implementation of smart grid technologies will require a holistic analysis and design process. Grid project investments in Europe currently amount to more than €5 billion and are estimated to reach €56 billion by 2020. An evaluation by the European Commission of European smart grid projects showed that it is very difficult to grasp technological and non-technological key characteristics of this complex system: the difficulties encountered during the data collection process; the lack of quantitative data to perform analyses; the recognition of the higher complexity of the system and the lack of proper integration; the difficulties with the setting of business models; the lack of consumer involvement; the need for proper ICT infrastructure; the need for better data protection and security; and the need for a legislative framework to ensure proper division of responsibilities. The EC report high- lights that "a scan of the collected projects seems to suggest a lack of specific attention to the social implications of Smart Grids". In our view, a sustainable energy system needs innovation in three basic areas:

(a) development of sustainable energy sources;

(b) development of smart grids to accommodate production and consumption of energy under market signal incentives;

(c) development of models to understand the non-technological aspects of the production and consumption of energy, e.g. social and ethical questions. In addition, these non-technological aspects have to be integrated in the design of sustainable sources and smart grids.

In this chapter we will focus on the smart grid as an innovation. To understand the importance and the main characteristics of these grids we will give an overview of the most important sustainable energy sources. After that, we will discuss what is required with respect to the electrical infrastructure. Finally, we will examine theoretical models to understand the complexity of sustainable energy and electricity systems in general and smart grids in particular.