Smart grid system: funding and regulatory concerns

Smart grid system: funding and regulatory concerns

Interestingly, the recent World Bank study on smart grid modernization presents a unique opportunity for developing countries to progress towards automation. While a gradual transition by implementing the best available technologies is one way of progression to a higher grid modernization level, utilities in developing countries that have not completely set their power systems may choose circumvent some of the traditional modernization steps by leapfrogging directly to latest technology and modern devices.

The situation is ideal for Pakistan. Though some work is being done in Pakistan, the power sector of the country stands at an initial stage of automation. However, moving onto smart grid system would not mean that the industry has to gradually adopt new technology, era by era. Right now the power sector has IP-based automated meters at the generating and distribution companies level. So the system is apparently equipped with the ability to digitally measure the electricity being drawn by the Discos from Gencos. Automated meters are also being installed at feeder level which can help in measuring the electricity drawn from the grid stations.

Needless to say that all of this boils down to investment and regulations; From no automation at all to fully automated controls and continuous monitoring of the entire distribution network, investment and funding needs for transition to smart grid depends on what level of grid modernization a certain power distribution network is.

When developing smart grid plans, the World Bank study suggests that some level of modernization should always be part of capex, and does not require special regulatory treatment. It says, The cost of service regulations should include the cost of proven, lower-risk smart grid technologies as part of utilities regular capital expenditure programs.

For more advanced levels of modernization where the technologies are untested or might have transformational impact, special regulatory and funding treatment is crucial and besides the political will, the special treatment includes, but is not limited to, government grants, subsidies, and a national action plan for power efficiency.

Source: Business Recorder

SMART GRID Bulletin March 2017

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