Prof. Dr. Rafael Leal-Arcas

We are witnessing a paradigm shift in energy access. Energy security governance is decentralizing. Electricity consumers are becoming prosumers, namely consumers who are also producers, of (renewable) energy and using that energy in a smarter and more efficient manner. In other words, citizens are starting to become less dependent on energy companies for energy security. This change will likely be the megatrend of the twenty-first century, leading to a paradigm shift in global environmental governance.

This paradigm shift is evident in the increase of subnational actors in the United States. Through their mayors and governors, cities and states are determined to implement the Paris Agreement on climate change, despite the Trump administration’s decision to withdraw from the Agreement. Similarly, private organizations like the United States Climate Alliance or America’s Pledge are playing an important role in climate change by taking real, on the ground action that addresses the challenges of climate change. The multiplicity of these actors demonstrates the rapid shift from the core, a centralized approach to climate governance, to the crowd, a more decentralized and self-organized approach to fighting climate change.

This assortment of actors and the resulting transition will likely result in an increased deployment of smart grids. The existing twentieth century electrical grid currently has three main components: 1) power plants that produce electricity, 2) transmission lines that carry electricity across distances, and 3) distribution networks that deliver electricity to end users.[1] However, this grid is ill-equipped for a shift to clean, renewable energy that accommodates the fluctuations of distributed solar and wind energy. Therefore, the twentieth century grid, designed for one-way transmission of electricity from reliable fossil fuel-fired plants to consumers, needs to be updated.

The smart grid, which is “a digital refashioning of the traditional grid with the needs of a clean energy economy in mind,”[2] engages in two-way communication between the supplier and the consumer of energy to predict and adjust power supply and demand. Thanks to the internet, intelligent software, and responsive technologies, it is now possible to manage the electricity flow.

As more private actors become involved in fighting climate change, many are installing private means of producing energy, such as installing solar panels. By doing so, individual electricity consumers are also becoming producers, signaling a growing shift in the global fight against climate change.

One great advantage of smart grids is that they can reduce energy consumption while turning away from centralized fossil fuel power plants that produce greenhouse gas (GHG) emissions. Demand for electricity is variable depending on the season and the time of day, usually peaking in the late afternoon and in the hottest and coldest months of the year. Smart grids could help match supply and demand by controlling different loads more intelligently. In several European countries, this practice is being implemented successfully.[3] For example, the charging of plug-in electric cars could be activated at night when demand is lowest, instead of simply whenever their owners plug them in.

An enormous investment will be required, but GHG emissions reduction, financial savings, and grid stability will more than offset such costs. In the United States alone, an investment of $338 billion to $476 billion in an intelligent grid system is estimated to provide a net benefit of $1.3 trillion to $2 trillion over twenty years.[4] According to the International Energy Agency, smart grids could also help reduce annual GHG emissions by 0.7 to 2.1 gigatons of carbon dioxide by 2050.[5]

The low-carbon transition has been based on the proliferation of solar and wind energy. However, the intermittent and distributed nature of those technologies makes them a poor fit for today’s one-way and top-down electric grid.[6] The decentralization and democratization of energy production has great potential, but realizing such a revolution will require investment in smart grids to ensure that new prosumers are able to take advantage of the benefits they provide. Fortunately, that investment is likely to pay off in a more reliable grid and reduced GHG emissions.

About the Author

Dr. Rafael Leal-Arcas is the Jean Monnet Chaired Professor of International Economic Law at Queen Mary University of London (UK) as well as Visiting Professor, New York University Abu Dhabi and Sorbonne University Abu Dhabi (UAE).

Endnotes

1. Paul Hawken, ed., “Coming attractions: Smart grids,” in Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming, (New York, New York: Penguin Books, 2017), p. 209.

2. Ibid.

3. Rafael Leal-Arcas et al., The Great Energy Transition in the European Union, Volumes 1 and 2, (Eliva Press, 2020).

4. Michael Kanellos, “Smart grid price tag: $476 billion; benefits: $2 trillion,” Greentech Media, April 8, 2011, https://www.greentechmedia.com/articles/read/smart-grid-price-tag-476-billion-benefits-2-trillion#gs._aWoaGw.

5. IEA, World Energy Outlook 2010, IEA, Paris, https://www.iea.org/reports/world-energy-outlook-2010.

6. Robert Fares, “Renewable Energy Intermittency Explained: Challenges, Solutions, and Opportunities,” Scientific American, March 11, 2015, https://blogs.scientificamerican.com/plugged-in/renewable-energy-intermittency-explained-challenges-solutions-and-opportunities/.