Smart Grids Roadmap - Smart Grid Sherpa

commodities such as oil, gas, coal and nuclearfuel. In markets where consumers are billed usingpricing schemes that do not vary based on realproduction costs (flat-rate based pricing), there isno real- or near real-time link to production costsand consumption. Smart grids can help consumersmanage energy use – by taking advantage of loweroff-peak prices, for example – so that even if theprice of electricity is significantly higher duringpeak times, their monthly or annual bills wouldchange little. Technology that can accomplish thisvaries in industrial, service and consumer sectors;some of it is mature and has been deployed formany years, especially in the industrial sectors.Further study is required of the costs and benefitsand behavioural aspects of electricity usage inorder to identify solutions that enable consumersto manage electricity better and minimise costs.The environmental costs and security benefitsto society of the electricity system are notcompletely taken into account in currentregulatory frameworks for production, use andmarket arrangements. Companies typically investlarge amounts of capital to build electricitysystem assets and receive regulated rates ofreturn over a long time period – especially inthe transmission and distribution sectors. In thecurrent technologically mature market, this is alow-risk, low-reward model. Future grid regulation,however, will need to incorporate factors such asgreenhouse gas emission reductions and systemsecurity into operating costs. For smart griddeployment to become a reality, all stakeholdersmust bear their fair share of benefits, costs andrisks – especially end-users, who ultimately payfor the electricity service. This can only happenthrough clever market design and regulation, andsustained stakeholder engagement that will enablenew technology demonstration or deploymentat an acceptable level of risk, taking into accountthe existing status of the system as well asfuture needs. If this is accomplished, the costsand benefits can be rationalised and defended,ensuring the development of a clean, secure andeconomical electricity system.Vision for smart grid deployment to 205029© OECD/IEA, 2010