Smart grids: what are they and how do they save energy?

Estimated reading time: 4 minutes, 45 seconds

What is a smart grid? How do they work, what is their purpose and what are the advantages in terms of energy savings? We will try to answer all of these questions.

smart grid is literally an “intelligent” electricity grid. In fact, its primary feature is to automatically gather information on variations in operating conditions and parameters such as voltage and consumption for different nodes connected to the grid. This is enabled by cutting-edge digital technology that not only allows the grid to gather information but also to process it and react accordingly via distribution of energy between the various nodes connected.

This is the second key feature of a smart grid: the ability to automatically redistribute electricity amongst the various nodes as required. The advantages of this type of solution are clear: management of resources is immediately more efficient and optimised, as the grid is capable of preventing overvoltages, voltage fluctuations and supply outages, reducing load when necessary.


Smart grids and renewables

Smart management of energy with smart grids becomes essential with the expansion of green energy that often requires specific measures to achieve correct management of resources and avoid unnecessary energy losses.

Consider solar panels and their function: generation of electricity depends on the presence and intensity of the sun’s rays. On very sunny days, solar panels can achieve their maximum capacity in terms of energy production. However, when it is cloudy, this capacity is reduced and at night electricity production drops to zero.

It is therefore clear that there are times when panels produce more energy than needed and others when there is no production at all: balancing out this situation is fundamental to avoid energy wastage and to always have the right amount of energy available to power your property or business. This is where smart grids come into play, enabling the correct allocation of excess generation and management of under-generation.


From centralised energy to distributed energy

To understand the full potential of a smart grid, we need to consider the difference between a centralised grid and a decentralised grid. Traditionally, electricity is produced by power stations, that may use fossil fuels or renewable sources, and then distributed via pylons, cabinets and cables across the country. The flow of electricity is unidirectional: energy passes from the power station towards peripheral nodes but does not travel in the other direction, creating what is called a “centralised grid”. In this scenario, production of electricity is planned beforehand and continually issued to consumers (dispatching) at certain levels regardless of their actual energy requirements and consumption. This type of system obviously generates wastage: where does electricity go that is produced by power stations but not consumed by recipients in their homes? To put it simply, it is dissipated within the grid, often travelling significant distances, and therefore with significant losses, without any way to recover it at a later stage.


From passive consumer to Prosumer

With the traditional energy-management system, we can clearly see the lack of an exchange between producer and consumer, as power distribution flows are unidirectional down through the system structure.

Meanwhile, a decentralized grid is the complete opposite. This solution is only possible when the grid is managed with intelligent systems, using a smart grid equipped with necessary sensors and tools, and above all with algorithms powered by artificial intelligence. In this scenario we talk about a decentralised market because we no longer simply have a large power station providing consumers with energy, but also individual citizens and families who are themselves energy producers through their solar panels and the possibility to store and redistribute energy provided by the smart grid.

With this model, we really begin to see the exchange of energy between different parties: when the consumer generates energy directly, this can be injected into the grid and made available to third parties, transforming the “passive” consumer into an active player, capable of directly participating in the system of generation, storage and distribution of energy. This gives rise to the category of “prosumer”, a hybrid figure that is both a consumer and a producer. Another important distinction in this sector is between a “standard” prosumer and prosumers that are equipped with a storage system, (we call them “proconstomers”). These figures are active, central players in smart grids. Yet simple consumers can also play a role by being more aware of their consumption (and wastage) and above all identifying when consumption is cheapest.


In conclusion, what are the advantages of smart grids?

The advantages of smart grids are easy to imagine. Considering the individual, the primary benefit is certainly lower energy costs, which decrease exponentially both due to less energy withdrawn from the national grid in the case of domestic generation and storage, and due to trading within local grids, with lower transport losses and improved dispatching capabilities.

Greater savings and greater energy efficiency for individuals… but it doesn’t end there: the environment also benefits, as smart grids are essential to drive increased use of renewable energy, which is by nature more difficult to programme. Today, it is increasingly important to take action to protect the environment and consider how we can contribute with each little decision in our daily lives.

A decentralised and distributed system based on efficient management of generation and distribution of renewable energy has lower environmental impacts: there will be lower wastage and lower damaging emissions, e.g. CO2.

And just imagine if all of this was scaled up. Solar panels on rooftops are now a common sight, but imagine a future where all buildings were entirely covered in solar panels, even on the walls. And imagine a future where each building was perfectly integrated into a grid that connected all citizens: a gird in which everybody could input and withdraw clean energy, without waste, in a virtuous circle that benefits everyone… and above all benefits the environment.


The transition from a large-scale, concentrated energy model to a small-scale, distributed model represents a complete paradigm shift, with huge benefits for everybody. Regalgrid has been focused on making this transition as simple and smart as possible ever since it was founded. All of our patented proprietary algorithms have been developed precisely to allow the network of consumersprosumers and proconstomers to act automatically and beneficially, trading energy between users and providing distributed storage that significantly increases the return on investment for those that purchase such systems and also cuts bills for standard energy consumers. Today Regalgrid’s portfolio includes many different solutions both for “one-to-many” scenarios, as typical in apartment buildings, and for “many-to-many” set-ups such as in energy communities, for individual citizens, businesses, and public authorities alike.