Smart grid is an essential part of getting large amounts of distributed generation (DG) on the electricity grid. The grid as it is doesn’t have unlimited capacity to have distributed generation added to it. If the grid is upgraded, which most utilities are seeing as essential, the capacity for DG will increase.
Adding generation points at almost any location in the distribution part of the grid wasn’t originally designed into the grid. The original design looked at electricity flow being one way, from generation to consumption. Now with ever cheaper and efficient solar PV panels, DG is and will become increasingly more widespread. With this new source of electricity, the grid needs to be smarter, so it can use the energy being put in the distribution part of the grid. So to get a lot of PV on the grid from many diverse sources, the grid has to be upgraded so it can handle it.
Another challenge to renewable energy and the grid are the ‘cliffs’ of generation. One minute the sun is shining and your PV panel is producing electricity, the next, clouds have come over and your panel’s output drops significantly. This ‘cliff’ is difficult to deal with in a system that is trying to maintain an relatively even amount of electricity on the grid at all times. The other side of a cliff is when large generation sources come online, like when the wind starts blowing at a wind farm. These ‘cliffs’ are what make the storage of electricity essential to renewable energy being a viable part of the generation of electricity on the grid.
The car makers are also making a potential problem for the grid. Now with some of the large car makers making electric only vehicles, they will start to become more ubiquitous. This challenge is interesting. If you plug in 5 electric cars on one block, you will probably not have enough power available to charge them all and maybe even blow a transformer. The flip side of it is, these electric cars are essentially batteries on wheels, so there is quite a bit of storage capacity here as well. If we could marry the renewable energy ‘cliffs’ and the need for charging electric vehicles, we could kill two birds with one stone.