Connecting key smart grid components to create new added value

The current challenges in changing energy markets worldwide are large in scale and diverse in nature. In this blog article, I will discuss the energy system of the future and outline an initial approach that shows how these challenges can be mastered even today. The principal challenges concern topics such as grid stability, volatility of energy supply, and the sustainability and environmental compatibility of the overall system.

How can connecting key components in the smart grid allow energy businesses to implement major requirements and master challenges? And what potential for added value is created by connecting these components?

I will talk here specifically about the following three key components:

  1. Efficient plants for power generation
  2. Smart metering technology for gathering feed-in and consumption data and how to make intelligent use of the data
  3. Virtual power plants (VPPs) to optimize energy systems on a defined level and balance power supply and demand (e.g. energy autonomy in micro-grids)

Accordingly, the structure of my argumentation (production – metering and controlling – optimization) corresponds to a portion of the overall energy value-added chain.

Figure 1: The energy added-value chain; source: Bosch Software Innovations, 2014

Efficient plants for power generation

Why are combined heat and power (CHP) plants a key component in the energy system of the future?

  • Cogeneration in a CHP plant is significantly more efficient than producing heat and power separately. In a sample calculation (see figure 2) – with an energy input to supply a house’s energy needs of 100% for CHP compared to a required input of 157% for separate heat and power production – the primary energy saved by using CHP amounts to 36% (source: In other words, the yield is significantly higher.
  • CHP plants can be run as base load because their output is not volatile (in contrast to resources like solar and wind energy). In this way, CHP plants support the goal of decentralized autonomy, making them an important part of the smart grid.
  • CHP plants, running on biogas, produce carbon-neutral heat and power, so they are absolutely in line with efforts to make energy systems sustainable and environmentally compatible.
  • Production (of both heat and power) in CHP plants is relatively easy to manage. Most of the energy produced is used locally. Both of these criteria – ease of management and the increase of own consumption – relieve the grid and are important for grid stability. In addition, own consumption has the economic benefit of avoiding grid charges.
Figure 2: Combined heat and power compared with separate heat and power production. Source: 2012 (original graphic in German)

Figure 2: Combined heat and power compared with separate heat and power production; source: 2012 (original graphic in German)

Summary: CHP plants are key components in an efficient energy system. And they can push efficiency levels even higher if operators integrate them – in the context of portfolio management – via VPPs into a future overall energy system.

Smart metering technology

Now we need to consider the consumption side of the equation if we are to integrate CHP plants effectively into an overall system. For this purpose, smart metering technology is already available to gather feed-in and consumption data and ultimately to manage these factors as intelligently as possible. The comprehensive roll-out of this technology is imminent. In Germany, it is primarily the TR-03109 guideline and the Metering System Ordinance (Messsystemverordnung), which is drafted on the basis of this guideline, that lay down the requirements for the gateways that will be responsible for administering the meter data gathered. The security requirements (en-/decryption, certificates, etc.) are an important issue here. Because many questions are still unresolved, it is important for any organization that plays the role of smart meter gateway administrator (SMGWA) to be able to swiftly implement future changes to systems. On top of this, it is equally important for administrators to build on solutions that demonstrably fulfill all current requirements in their entirety.

All this effort to introduce new smart metering technology and integrate it into a future overall energy system also presents opportunities, first and foremost when it comes to automating as many related processes as possible – everything from the recording, encryption, sending, receiving, decryption, and further processing of meter data all the way to invoicing.

In addition to feed-in and consumption data, network voltage data is also measured. This data is important for targeted measures to ensure grid stability.

Summary: Smart metering technology is a key component in the energy system of the future in order to use meter data as intelligently as possible.

Virtual Power Plants

The role of VPPs is to enable a large number of independent plants to reach a common goal working together as one (see blog article on Demand Response). The new generation of VPPs required in an overall energy system of the future will be able to quickly and securely integrate and control a wide variety of plants (from a few big centralized plants to many small decentralized ones).

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Figure 3: Different flexibility profiles, taking the example of wind and solar plants, CHP plants, and electric cars that are also capable of storing energy; source: Bosch Software Innovations, 2014

The more plants with different flexibility (“flexibility profiles”: see figure 3 for examples of different assets) that are pooled together in a VPP, the easier it is to achieve an overall optimum from both technical and commercial perspectives (ensuring grid stability, generating profits from energy trading). Because a VPP takes into account the operating profiles of the individual plants it pools, it can very quickly and efficiently optimize a large number of plants.

Summary: The VPP is the key component of this optimized overall energy system of the future. It uses SMGWA to directly integrate a large number of mostly small plants such as CHPs – with no “detours” through energy providers’ control room solutions (see figure 4).

Figure 4: Many small plants can be efficiently integrated and optimized – at both the feed-in and consumption ends – via a VPP with integrated SMGWA: CHP, solar, wind, charging infrastructure, storage facilities, and others; source: Bosch Software Innovations, 2014

Power utilities that manage to connect these three key components along these lines will find themselves presented with whole new opportunities in the changing energy market. As a result, they will be able to transform challenges into new lines of business that strengthen their ability to create added value.

Stay tuned: In a series of energy blog articles, we will be highlighting specific new business segments and models in the smart grid that are already very much a reality in the market. In addition, we will be discussing the topic of virtual power plants in more depth and explaining why analysts think the market needs a new generation of VPPs.

Learn more about a real virtual power plant project

About the author

Stefanie Peitzker

Stefanie Peitzker

I have a graduate degree in management with a specialization in geography (University Augsburg, Germany). Since 2003, I work for Bosch Software Innovations: I have built up marketing for Visual Rules, our Business Rules Management System and contributed in winning customers around the globe. Since January 2009, I run the Marketing Solutions team at Bosch Software Innovations, an agile team of currently seven associates, all trying to permanently learn more about the customers´needs and market trends - focused on making software solutions a real experience. I have been writing for different technology magazines (e.g. JavaMagazine). When I don't work, I love to spend time - leisure as well as action - with my kids and in my running shoes around the Lake of Constance.