Q UA R T E R LY R E V I E W N o.

3 8 / Ja n u a r y 2 0 1 1

Smart Grid as New Big Opportunity of

Information and Communication Technology
Kazuyoshi HIDAKA
Affiliated Fellow

and refrigerators) and “electricity consuming

1 Introduction artifacts” such as light fixtures: all of these will be
connected to the network and constitute new elements
The next generation power supply system, holding that exchange information as along with consuming
the promise of gaining higher reliability, lower cost, electricity.
and reduction of load on the environment by utilizing In line with the global trend toward a low-carbon
Information and Communication Technologies (ICT), society, the effort to save energy has become a
is often referred to as the Smart Grid. The smart grid ubiquitous need in all areas of our activities including
may have a greater significance if viewed as an arena our personal lives, business operations, and local
for the next stage of developments in ICT industries, societies. The trend has also been giving support
providing a new social and economic infrastructure. globally to accelerate research and development
Major differences between the conventional electric toward commercial realization of the smart grid.
power system and the smart grid are shown in Fig. The reason underlying this trend is that, for social
1.1,[3] The conventional electric power system consists implementation of renewable energy sources (e.g.
of three components: generation (concentrated photovoltaic generation, wind-power generation)
fire/water/atomic power generation), distribution and sources expected to effect substantial reduction
(power transmission and distribution), and power of CO2 emission (i.e. PHEV), a high-level control
consumption by the customers. The flow of electric system is needed to coordinate these new sources
power is unidirectional from upstream: generation, with conventional ones. In addition, further pursuit
transmission, distribution, and then consumption. in saving energy requires visualization of electricity
Advanced power systems, such as implemented in consumption, introduction of market mechanisms, and
Japan, provide a flow of information, mainly used for power supply control from the supply side, and all of
detecting failures in the sections from generation to these need higher-level control such as provided by the
transmission. smart grid.
The smart grid has additional system elements,
e.g. distributed power sources that utilizes renewable In the United States, where the power system is
energy such as solar power and wind-power becoming decayed and outdated, introduction of
generation, and stored power sources. On the customer the smart grid is an urgent necessity for enhanced
side, they not only consume electricity, but also reliability (electric outage prevention), promotion of
generate and store electricity using solar photovoltaics. demand control (saving energy), and introduction of
New vehicles with electricity generation and storage distributed electric sources. Special emphasis here
functions, as well as electricity consumption, (such is placed on the demand control facilitated by the
as the Plug-in Hybrid Electric Vehicle (PHEV)) will implementation of smart meters (see the discussion
become involved in the distribution system. Two-way below). This approach is expected to have a substantial
flow of electric power and information will take place effect at a cost smaller than total renovation of the
among these constituent elements. outdated distribution system,[4] and it also would
A still more importance change in the smart grid contribute to the construction of a new social service
comes from electric appliances (e.g. air conditioners infrastructure.

23
 SCIENCE & TECHNOLOGY TRENDS

In Japan, not a few people have a skeptical view not an erroneous view, but we should not overlook
toward the U.S.-led way in which the smart grid the potential expansivity of the areas that seem to
implementation is promoted. One major reason for be a subsidiary to the main stream. That is, let us
this is the fact that, in decisive contrast to the situation not lose sight of the potentiality that a much scaled-
in the United States, Japan currently has a very up version of a communication network – many-fold
stable power supply situation[6] and infrastructure greater in scale than the current Internet – is expected
supporting it. The move toward introduction of the to emerge, having a huge impact on the technological
smart grid in Japan is motivated by the desire to and industrial aspects of our society in the future.
implement a management system that coordinates
conventional power systems with the new array of Especially in the United States, the move toward the
next-generation environment/energy technologies smart grid has been gaining great momentum both
such as photovoltaic power generation, wind-power in the government and industrial sectors. A group
generation and PHEV. Concerns on environmental of leading companies in the ICT industry – Google,
issues, such as the reduction of CO2 emission, are AT&T, Cisco, Oracle, and IBM – has entered into the
likely to add momentum toward a wider utilization of technical development and business in this field. The
these technologies, but the subject of to what extent current situation indicates that the economic circle in
these motivations will affect the development of the the United States sees this field as a coming important
“smart grid” is still controversial. market for the ITC industry.
The original idea of the smart grid was to supply The smart meter, slated to be installed in households
stable and environmentally-friendly electric power. in coming years to bring the smart grid to practical
It is quite understandable, therefore, that we often use, will likely serve the role of an interface for
try to find the key to our future evolution in new connecting a variety of electric appliances and sensors
electric power technologies and industries that are to the external communication network, leading these
related – especially in conjunction with renewable “electricity consuming artifacts” in each household
energy and secondary batteries - to electric power more and more into the arena of Internet connectivity,
generation, transmission, and power storage. This is in addition to the heretofore actor, i.e. “people.” As

&ůŽǁŽĨĞůĞĐƚƌŝĐŝƚLJ
&ůŽǁŽĨŝŶĨŽƌŵĂƚŝŽŶ ůĞĐƚƌŝĐŝƚLJĐŽŶƐƵŵŝŶŐ

;ƵƐƚŽŵĞƌͿ
ĂƌƚŝĨĂĐƚ

ůĞĐƚƌŝĐŐĞŶĞƌĂƚŝŽŶ dƌĂŶƐŵŝƐƐŝŽŶ ŽŶƐƵŵƉƚŝŽŶ

;ĨŝƌĞͬǁĂƚĞƌͬĂƚŽŵŝĐƉŽǁĞƌͿ ͬĚŝƐƚƌŝďƵƚŝŽŶ ;ŚŽƵƐĞ͕ďƵŝůĚŝŶŐ͕ĨĂĐƚŽƌLJͿ

ƵƌƌĞŶƚWŽǁĞƌ^LJƐƚĞŵ
ůĞĐƚƌŝĐŝƚLJĐŽŶƐƵŵŝŶŐ

ZĞĂůŝnjĂƚŝŽŶŽĨ
ĞŶĞƌŐLJƐĂǀŝŶŐ ;ƵƐƚŽŵĞƌͿ
ŽŶƐƵŵƉƚŝŽŶͬŐĞŶĞƌ
ĂƌƚŝĨĂĂĐƚ

ůĞĐƚƌŝĐŐĞŶĞƌĂƚŝŽŶ dƌĂŶƐŵŝƐƐŝŽŶ ĂƚŝŽŶͬƐƚŽƌĂŐĞ

;ĨŝƌĞͬǁĂƚĞƌͬĂƚŽŵŝĐ ƉŽǁĞƌͿ
;ĨŝƌĞͬǁĂƚĞƌͬĂƚŽŵŝĐƉŽǁĞƌͿ ͬĚŝƐƚƌŝďƵƚŝŽŶ ;ŚŽƵƐĞ͕ďƵŝůĚŝŶŐ͕ĨĂĐƚŽƌLJ͕
;ŚŽƵƐĞ ďƵŝůĚŝŶŐ ĨĂĐƚŽƌLJ
ǀĞŚŝĐůĞͿ

ŶŚĂŶĐĞĚƌĞůŝĂďŝůŝƚLJ

/ŶƚƌŽĚƵĐƚŝŽŶŽĨ
ƌĞŶĞǁĂďůĞĞŶĞƌŐLJ 'ĞŶĞƌĂƚŝŽŶͬ^ƚŽƌĂŐĞ
;WŚŽƚŽǀŽůƚĂŝĐ͕ǁŝŶĚ͕E^Ϳ

;ŝ ƚ ŝď ƚ Ě
;ŝƐƚƌŝďƵƚĞĚ
^ŵĂƌƚ'ƌŝĚ ƉŽǁĞƌƐŽƵƌĐĞͿ

Figure 1 : Smart System vs. Current System

Prepared by STFC based on Reference[1,3]

24
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

exemplified by the high expectation that “replacement

of all 2.7 billion domestic power meters with smart 2 Global ICT Related Smart Grid
meters will create a huge market for the semiconductor Market
manufacturers,” [4] it is important to understand
that it will spur the growth of a huge ICT market The global size of the ICT-related smart grid market
for semiconductor and communication equipment is around 89 billion USD (about \9 trillion) as of
manufacturers, as well as for the software and related 2010, and is forecast to continue a 20% growth rate
services used in these devices and instrument. into a size of 170 billion USD (about \17 trillion) in
This report covers current developments of the smart 2014 (Fig. 2: a document from Zpryme research &
grid from the perspective of ICT. consulting). Market size analysis of smart grid related
element technologies forecasts 18% yearly growth in
the sensor and device sector, 21% in the IT software
and hardware (computer) sector –used to administrate/

Ψ
ϭϴϬ ϭϳϭ ϰ
ϭϳϭ͘ϰ

ϭϲϬ ϭϱϭ

ϭϰϬ ϭϯϬ͘ϱ

ϭϮϬ ϭϭϬ ϭ
ϭϭϬ͘ϭ

ϭϬϬ
ϴϵ͘ϳ

ϴϬ
ϲϵ͘ϯ

ϲϬ

ϰϬ

ϮϬ

Ϭ
ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ ϮϬϭϯ ϮϬϭϰ

Figure 2 : Global Market Forecast: Smart Grid Related ICT

Prepared by STFC based on Reference[19]

^ŵĂƌƚŵĞƚĞƌŝŶŐ
ϲ͘ϰ
ŚĂƌĚǁĂƌĞͬƐŽĨƚǁĂƌĞ
ϭϵ
hƉƉĞƌ͗&zϮϬϬϵ
>ŽǁĞƌ͗&zϮϬϭϰ
ϭϬ
dĞůĞĐŽŵŵƵŶŝĐĂƚŝŽŶ
ů ŝ ŝ
Ϯϳ͘ϰ

ϭϱ͘Ϯ
/dŚĂƌĚǁĂƌĞͬƐŽĨƚǁĂƌĞ
ϯϵ͘ϰ

ϯϳ͘ϲ
^ŵĂƌƚƐĞŶƐŽƌͬĚĞǀŝĐĞ
ͬ
ϴϱ͘ϱ

Ϭ ϮϬ ϰϬ ϲϬ ϴϬ ϭϬϬ
Ψ
Figure 3 : Global Market Forecast: Smart Grid Related ICT (Sector by Sector)
Prepared by STFC based on Reference[19]

25
 SCIENCE & TECHNOLOGY TRENDS

control the entire system, 22% in the communication ・Makes the grand objective attainable (i.e. 20% of
related sector, and 24% in smart meters. The first energy will be supplied from renewable sources)
three sectors combined - sensor and device, IT ・Creates jobs for several tens of thousands of workers
software and hardware (computer) to manage/control ・Induces 4.7 billion USD of investment from private
the entire system, and communication – make up 89% sectors
of the entire smart grid related market. In view of the
economic situation in recent years and the fact that 3-1-2 Coalition among Utility and ICT Companies,
there is scarcely any sector capable of achieving 20% Un i ve r s i t i e s , a n d P u b l i c R e s e a r c h
yearly growth, the smart grid and related ICT sectors Organizations
represent a growth market of primary importance. Table 1 shows the list of major projects to be
The number of smart meters on a global installation undertaken in line with the grand program.
base will grow from 7.6 million in 2009 to 210 million Utility companies, in coordination with major
in 2014.[3] The penetration rate of the smart meter is players in the IT industry, are approaching projects
estimated to reach 18% globally in 2015, and in North in such areas as dynamic management, price
America, the rate is forecast to grow from the current setting, automation, surveillance, and network
5% up to 55%.[3] management. The venues for implementation and
tests for these projects are provided mainly by schools
3 Trends in the United States and and universities. For example, the project carried
Japan out by Florida Power & Light Company aims at,
using smart meters, developing a more stable and
3-1 Trends in the United States intelligent power supply, and a test will be performed
3-1-1 Scale of Government Investment and its on the photovoltaic generation platforms installed
Estimated Effect in universities and schools. Three hundred units of
In the United States, investment in smart grid related PHEV will be introduced to universities (Miami Dade
fields is quite active centered on modernization of the College, Florida International University, and the
power system led by the diffusion of smart meters. University of Miami) on a trial basis, and around fifty
The federal government has invested 4.5 billion USD charging stations will be installed to support them.
in the smart grid accompanied by the enforcement, in Other development objectives include: household
2009, of the American Recovery and Reinvestment energy displays, power saving devices for automatic
Act (ARRA). selection of low-consumption mode at the time of peak
Out of this investment, 3.4 billion USD is allotted to demand, programmable thermostats controlled by a
the ground programs, which serves to build facility smart meter, and demand management and demand-
infrastructure for enhancing the reliability of the response software to control household appliances and
power network and promotion of demand control. lighting fixtures. These development efforts will be
Under the plan, this investment has an effect of carried out in cooperation with IT companies.[22]
introducing smart meters to 40 million households, Table 2 shows the list of major projects carried out
roughly one-third of all households in the United based on the regional feasibility program. Coordinated
States. groups of utility companies, ICT companies,
Aside from this, 6.2 billion USD is allotted to universities, and public research organizations are
regional demonstration programs and energy storage approaching specific demonstration themes, where
demonstration programs, where introduction of a special focus is placed on gathering basic data
distributed power sources plays a central role.[3] supposed to have increased importance in the future
The effect obtained from these 3.4 billion and 6.2 - relation between human activities and energy usage,
billion USD investments is estimated as follows:[3] and cyber security. For example, the demonstration
・Lowers the frequency of electric outages, reducing project of Los Angeles Water and Electricity Bureau
loss by 150 billion USD in a year (500 USD per selected a university campus as the site of regional
capita) infrastructure feasibility studies, the results of which
・Reduces peak demand by 1400MW or more (capital may be applied to commercial, medical, retailer,
cost 1.5 billion USD) and lowers the power charge and industrial areas. In this project, the plan also

26
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

includes advanced research and development in the trying to enter into this market, targeted at general
broad context of information technology, as well as consumers. Take, for example, that AT&T aims at
that directly related to information equipment such expansion of wireless networks, Cisco Smart Grid
as: a comprehensive analysis of human activities Solution supports household IP networks, Cisco
and energy usage as affected by the construction of is geared toward establishing building energy
information infrastructure, a feasibility study of the management infrastructure, Oracle is trying to open
next generation server security technology, and usage energy management systems to general consumers,
pattern analysis of electric vehicles operated by users Google takes sight of household energy management
without charging equipment.[23] (Google Power Meter) and other emerging businesses
in this line, and Microsoft is developing a household
3-1-3 Active Moves of ICT Companies energy consumption management system taking
In addition to the familiar players in the electric advantage of cloud computing.[2]
power management market such as GE, IBM, and Some information companies are trying to take
Accenture, a growing band of IT companies is equipment directly related to power monitoring into

Table 1 : Major Granted Programs

Federal grant, State granted,
Utility Company Target IT company
Number of smart meters
More than 550 sensors, automatic I B M , G E , I t r o n
Central Point Energy 200 mil. USD. Texas, 220 mil.
switch QuantaServices
Expanding program capabilit y for
Baltimore Gas & Electric 200 mil. USD. Maryland, 110 mil. dynamic charge setting and direct load (N/A)
control.
Dynamic charging program, two-way
D u k e E n e r g y B u s i n e s s 200 mil. USD. North Carolina, 140
communication, advanced automatic Cisco, Echelon
Services mil
distribution applications, PHV
9,000 intelligent distribution
Florida Power & Light GE, Cisco, Sliver
200 mil. USD. Florida, 260 mil equipments and advanced monitoring
Company Spring, SunPower
equipments.
Progress Energy Services 200 mil. USD. North Carolina, 16 mil. IMB,Telvent
Prepared by SFTC based on Reference[3]

Table 2 : Major Projects Included in the Regional Demonstrative Program

University, IT
Government grant
Demonstrative Project Content Utility company enterprises, and
Target region
others
・Two-way communication (dispersed
sources, secondary battery, source Tw e l v e u t i l i t y
University: UW, WSU
Northeast Pacific Coast 88 mil. USD of demand, existing grid) companies in Battle
Enterprise:IBM, 3tiers,
Demonstrative Project Washington ・Implementation of SG c ost- gain Memorial Institute
Netzza, QualityLogics
calculation region.
・Interconnectivity, security
・Demonstration of 13 technologies Researc h Institute:
(automated distribution, smart meter EPRI, PNNL
O h i o G r i d S m a r t 75 mil. USD Columbus Southern
equipment, Home Area Net work Enterprise: Bat tele,
demonstrative project Ohio Power Company
(HAN), PHEV, storage, renewable GE, Silver Spring,
energy, etc.) Lockheed Martin
・Demonstration within premises of
Los Angeles Water
universities L o s A n g e l s
and Electricity Bureau 60 mil. USD University: USC,
・Energy usage of general consumers, Department of Water
regional demonstrative California USLA, CalTech
c y b e r s e c u r i t y te c h n o l o g y, a n d & Power
project
integration with PHV.
・Security, peak demand reduction, University: EPRI,
Demonstration of open enhanc ed reliabilit y (renewable Columbia
45 mil. USD Consolidated Edison
grid with safety and e n e r g y, g r i d m o n i t o r i n g , E V, Enterprise: Boeing,
New York Company of NY
interconnectivity automated transmission, consumer Pros ser, CA LM
system) Energy
・Fr o m t r a n s m i s s i o n /d i s t r i b u t i o n
system to smart devices. Southern California University: USC, EPRI
I r v i n e d e m o n s t r a t i ve 40 mil. USD
・Fo c u s o n i nte r c o n n e c t i v i t y a n d E d i s o n ( S C E ) , Enterprise: CE, Cisco,
project California
security PG&E IBM, Boeing

Prepared by SFTC based on Reference[3]

27
 SCIENCE & TECHNOLOGY TRENDS

their own businesses. For example, IBM provides a District, Powerful, and lnfluential Leadership.[10] In the
solution utilizing a smart meter, or a household power background of the growth of Silver Spring Network
meter with an embedded two-way communication lies the company’s policy to embrace all aspects of
function and PC capabilities (Fig. 4). The provision the business (i.e. providing solutions and services
of this solution is a part of its strategy to construct the as well as products), and its success in establishing
Intelligent Utility Network (IUN), which serves as a collaborative relationships with various companies
transmission and distribution system with enhanced in diverse fields (demand-response, distributed
efficiency.[7] power sources, electric vehicles, home networks,
Google, on the other hand, developed a suite of communication, and software) seems also to have
software called Google PowerMeter and distributes given the company an edge (see Table 4).
it through the Internet. This software allows access GE, accompanied by four venture capital
by way of Internet browsers. The PowerMeter allows corporations, unveiled its plan to set up a fund of
obtaining power consumption information from the 200 million USD to promote the development of
contracted utility company for easy monitoring at smart grid related new technologies.[24] Such a fund
home and in the office. Visualized monitoring of could induce further new entries and encourage new
electricity consumption is expected to have an effect businesses.
toward saving energy. The software also enables the
consumer to obtain information, through the network, 3-1-5 Standardization and Legislative Preparation
from a clip-on power meter that allows installation on The basic idea underlying the smart grid technology
a distribution board. development in the United States is to secure
interoperability.
3-1-4 Emergences of New High-Tech Companies The Internet represents, just as the word consists
In the United States, it is also to be noted that a new of “inter” and “net,” a network that provides
breed of advanced companies, different from those interconnection among networks. By the same token,
described in the previous section, is emerging aiming the basic idea of the smart grid is to provide a “grid
at the new businesses that have evolved accompanying between grids,” or a grid connecting various types of
the smart grid. These include new starters as well grids.
as emergences from different fields. For example, If there were standardization work to be done by
Silver String Network, Itron, and Landis+Gry provide the state for the realization of the smart grid, it would
demand side equipment used in Advanced Metering be the establishment of a protocol for securing grid-
Infrastructure, Comverge and EnerNoc provide to-grid interconnectivity. In the United States, this
demand-response instruments, and GridPoint provides
equipment related to household networks.[9] Many of
these started business around 2000 or later, mainly in
the field of meter-related equipment manufacturing,
and are geared to cultivate a new smart grid business
by linking their products to the network. As seen from
Table 3, these companies have steadily or dramatically
expanded their sizes and sales.
For example, Silver Spring Network, a spin-out
venture from Google, was established in 2002 and
now has a workforce of about 200 employees,[9]
and it has already gained major utility enterprises
as customers in and outside of the United States.
The customers include American Electric Power,
CitiPower&Powercor Australia, Florida Power &
Light, Jemena, Modesto Irrigation District, OG&E
Electric Services, Pacific Gas and Electric Company,
Pepco Holdings, Sacramento Municipal Utility Figure 4 : A Smart Meter from IBM[7]

28
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

Figure 5 : A Screen Display from Google PowerMeter[8]

Table 3 : New Entries into The Smart Grid Related Fields

Enterprise Home city Established Overview
Itron Liberty Lake, WA 1977 ・Released the first product in Idaho in 1977
・Acquisition of Schlumberger Advanced Metering (2004) and Actaris
(2007)
・Customers include more than 8,000 utility companies. AMR*, AMI**
etc.
・Sales: 664 (2006), 1,464 (2007), 1,910 (2008) (mil. USD). Payroll ≥
8,500.
Landis + Gyr Switz. 1886 ・Purchased by an Austrarian investing company in 2004.
・Has sold more than 300 million meters.
・Sales: 1,364 mil. USD. Payroll: 5,070.
Sensus Raleigh, NC 2003 ・Established in the late 19th century as a meter manufacturer in
Pittsburg. Assumed current trade name after undergoing several
acquisitons (by Rockwell and others).
・AMR*, AMI**, etc. Payroll: 3838. Sales: 633 (2006), 694 (2007), 671
(2008) (mil. USD).
EnerNOC Boston, MA 2001 ・Customers include 1,650 commerce/industrial businesses. Supplies
up to 2050MW of electricity.
・Sales increasing: 26 (2007), 61 (2007), 106 (2008) (mil. USD).
Echelon San Jose, CA 1988 ・Provides Networked Energy System.
・Payroll: 325. Sales: 137 (2007), 134 (2008) (mil. USD)
Comverge E a s t H a n o v e r, 1997 ・Established by a merger between PowerCom and a Lucent business
NJ unit (1997). Acquired a business unit of Scientific Atlanta (1999) and
Sixth Dimension (2003). IPO in 2007.
・Has sold more than five million units of equipment. SDGE (CA),
Public Services Company of New Mexico, PacifiCorp, New England
ISO etc.
・Sales: 34 (2006), 55 (2007), 77 (2008) (mil. USD).
Ambient Newton, MA 1996 ・Internet based smart grid (AMR* inclusive).
・Sales: 2.3 (2006), 12.6 (2008) (mil. USD). Payroll: 38.
Silver Spring Re d wo o d Cit y, 2002 ・Internet based AMI** and demand handling.
Networks CA ・Major customers: Florida Power & Light, PE, Pepco, Jemena,
Electricity Networks, and United Energy Distribution.
T r i l l i a n t Re d wo o d Cit y, 2004 ・Predecessor established in 1985. Current business started in 2004.
Networks CA ・AMI**. Has distributed more than a million meters. Customers include
more than 200 electric power businesses.
Prepared by SFTC based on Reference[2]

29
 SCIENCE & TECHNOLOGY TRENDS

Table 4 : New Entries into The Smart Grid Related Fields

Technology Cooperative firms
Advanced Metering Elster, GE Energy, Itron, Kinects Solutions, Landis + Gyr, Nansen, PRI
D e m a n d R e s p o n s e / E n e r g y Comverge, EnerNOC
Management
Distribution Automation ABB, DC Systems, S&C Electric Company
Electric Vehicles ClipperCreek
Home Area Networks and Devices Arch Rock, Carrier Corporation, Control4, Energate, Exegin, Invensys, LS
Research, Onzo, Radio Thermostat of America, Tendril
Networking Cisco, Digi International, Sierra Wireless
Software eMeter, Freestyle Technology, GEEnergy, GridPoint, Itron, OSIsoft, Oracle
Prepared by SFTC based on Reference[10]

standardization work is being undertaken by the islands undertaken by Okinawa Electric Power
National Institute of Standards and Technology Company, Incorporated,[12] a smart grid demonstrative
(NIST), an organization under the Department experiment in Rokkasho village that introduces
of Commerce. The standardization work will, in wind-power,[13] and a demonstrative experiment for
the future, guarantee interconnectivity among the the optimization of a next generation transmission/
advanced technology grids with different origins, thus distribution system[14] – a joint project participated in
allowing independent development efforts. by Tokyo University, Tokyo Institute of Technology,
In line with the stipulations of the Energy and many electricity enterprises.
Independence and Security Act (EISA) established The new Energy and Industrial Technology
in 2007, the U.S. federal government invested a 500 Development Organization (NEDO) has organized
million USD budget into NIST for the development a smart grid demonstrative experiment under the
of standards to secure total operation of the smart initiative of Japanese enterprises in New Mexico in
grid in terms of ICT, and maintenance of security. the United States. Various legislative controls in Japan
As aptly described in the notes of a NIST report – often make technological experiments difficult, but
“protocols and standards for information management these can be carried out relatively free of constrains
for interoperability of smart grid devices and systems” in the United States. In the background of the project
– the work places a focus on standardization for also lie such factors as: the state of New Mexico
information exchange. In the background of these has differentiation from other states in mind by
standardization activities lies, according to some introducing Japanese companies’ technology, and
reports, an implicated strategy – “The Obama New Mexico is especially suited for photovoltaic
administration has a strategy to eventually gain global power generation experiments due to it having the
supremacy on the smart grid market, by first investing highest level of insolation among all states. Note,
massively in this field for the development and however, that this project is heavily concentrated on
commercialization of related technologies, and to push experiments related to photovoltaic and secondary
up the level of U.S. companies in this field.”4] In the battery technologies, thus information technology is
United States, a bill stipulating mandatory provision not one of its major concerns.
of real-time smart meter information to customers was The Next Generation Energy and Social System
introduced to Congress11], indicating that legislative Council – a cross-sectoral project team in the
preparations are also under way to activate smart grid Ministry of Economy, Trade and Industry (METI)
operation. – has decided to carry out a domestic experimental
implementation of a “smart community” aiming
3-2 Trends in Japan at creating the next generation urban area utilizing
Several demonstrative projects have already innovative ICT, energy, and traffic systems. In
begun in Japan as well. These include: a smart grid concrete terms, Yokohama city (Kanagawa pref.),
experiment using 3,000 power meters undertaken Toyota city (Aichi pref.), Keihanna science city (Kyoto
by Kansai Electric Power Co. Inc., Demonstrative pref.), and Kitakyushu city (Fukuoka pref.) have been
new system energy introduction project for isolated selected as the sites for this project.

30
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

In another development, the “smart community demand side. Introduction of these dispersed power
forum” – a forum for gathering and discussion sources will make the entire system drastically more
between the smart grid and smart community complex and will require a much higher level of
related enterprises under the secretariat of METI – system control. In addition to the functions provided
was inaugurated in 2009. The ideas underlying this by conventional ICT, a higher level of data collection,
forum are: pursuit of action possibilities undertaken transmission, storage and processing will be required
by the demand side, sharing of a smart community to cope with the enormous information flow incoming
vision as it ought to be, clarification of the proper from generators, transmission/distribution systems,
system architecture and individual elements, and and distributed power sources. Functionality for
establishment of alliances and strategies for overseas surveillance, control, and support for decision-making
deployment as a system.[15] As one outcome of based on the flow of information will also be required.
this forum, the “smart community alliance” was The smart grid will also call for new technological
established, in June 2010, based on 352 impeller developments for the demand side – typically the
enterprises, under the secretariat of Endowing, and in Advanced Metering Infrastructure (AMI), where
line with the concept of this alliance, working groups Building Energy Management System (BEMS) and
for international strategy, international standardization Home Energy Management System (HEMS) play a
and roadmaps for smart houses have started their central role.
activities. Examples of ICT introduction to electric power
The Japanese cabinet approved the New Growth systems in Japan include the case where Tokyo
Strategy in June 2010. The “green innovation” project Electric Power Company embedded a communication
– one of the priority areas of the strategy – endorses function in almost all of the power lines upon
realization of the smart grid. installation, enabling hazard detection both in the
In and around the 1990s, Japan had a project called backbone and distribution networks. As a result, the
OpenPLANET, undertaken by Shikoku Electric yearly average of blackout time per household in Japan
Power Co., Inc, which did not gain widespread has been reduced down to 16 minutes, proving the
momentum. The lack of success is ascribed to the superior effect of the control system construction (See
following reasons: communication infrastructure in Fig.7).
those times – such as power line communication (PLC) Advanced use of the control system will be required
and PHS – was still in an immature state, and there for the introduction of renewable energy to each region
was no way to propose such new household services and household. As supply and demand must always
that benefited from CPU-installed power meters.[16] As be balanced in an electric power system, conventional
illustrated by this example, the success of the project power systems have the ability to boost output in quick
seems to depend largely on the proposal of “killer response to an increase in demand. Renewable energy
applications.” sources (e.g. photovoltaic generation, wind-power
generation) depend largely on the weather, resulting
4 ICT in Smart Grid in fluctuation of power output. An advanced power
system is required for the existing power systems to
4-1 The Role of ICT accommodate the power fluctuation. In Japan, METI
Figure 6 illustrates the role of ICT in the smart announced the introduction plan of photovoltaic
grid. The following research and development have power generation of as much as 53GW by 2030, but
already been under way and have attained a certain the Federation of Electric Power Companies – a joint
level of realization: a supervising system for power council of ten power utilities – estimated the upper
generation, supply and demand control system for limit as 10GW. The reason underlying this upper limit
optimum power generation, coordinated system is the fact that photovoltaic power output fluctuates
surveillance/control and an automatic distribution substantially, having a serious effect on the operating
system for stable power transmission and distribution. quality of the system. Introduction of a management
Meter-reading has already been automated in part. system based on the smart grid is expected to alleviate
As described earlier, the smart grid provides power this deleterious effect.[3]
generation and storage functions additionally to the In the United States, research and development

31
 SCIENCE & TECHNOLOGY TRENDS

invest ment on the management system, for importance in the system is the smart meter, or the
coordinating the power system with local/home power meter with communication capabilities for data
networks, has been gaining momentum. In view of input from and control over the household appliances.
the situation that the introduction of renewable energy Addition of a wireless communication function to
into social networks will still take a while, industrial the conventional power meter provides connectivity
sectors are giving priority to home networks as the with household appliances (e.g. air conditioners,
platform for technological development and social lighting fixtures) and sensors such as thermometers,
implementation.[3] The management system is realized enabling it to collect information such as power
by implementing Advanced Metering Infrastructure consumption and temperature. As the smart meter is
(AMI) – a monitoring/control system for demand also connected to the external network, all household
side instruments, which consists of management appliances, sensors and power meters in the world
systems for smart meters, home appliances, and become communicating agents of the Internet via the
communication, and the Home Energy Management networks.
System (HEMS). The component of special One of the merits of introducing a smart meter into

&ůŽǁŽĨĞůĞĐƚƌŝĐŝƚLJ
&ůŽǁŽĨŝŶĨŽƌŵĂƚŝŽŶ
^ŵĂƌƚĐŽŵŵƵŶŝƚLJ

ĚǀĂŶĐĞĚDĞƚĞƌŝŶŐ/ŶĨƌĂƐƚƌƵĐƚƵƌĞ
䊶ƵŝůĚŝŶŐĞŶĞƌŐLJŵĂŶĂŐĞŵĞŶƚ;D^Ϳ
 ŝůĚŝ ƚ ;D^Ϳ
䊶,ŽŵĞĞŶĞƌŐLJŵĂŶĂŐĞŵĞŶƚ;,D^Ϳ
䊶ĞŵĂŶĚͲƌĞƐƉŽŶƐĞ;ZͿ
^ƵƉƉůLJĂŶĚĚĞŵĂŶĚĐŽŶƚƌŽůƐLJƐƚĞŵ;ƉŽǁĞƌ ŝƐƚƌŝďƵƚŝŽŶĂƵƚŽŝŵŵƵŶŝnjĂƚŝŽŶ
ŐĞŶĞƌĂƚŝŽŶŽŶĚĞŵĂŶĚͿ ƐLJƐƚĞŵ
WŽǁĞƌƉůĂŶƚŵŽŶŝƚŽƌŝŶŐƐLJƐƚĞŵ ^♽⛔⋙ⷞ೙ᓮ䉲䉴䊁䊛
^LJƐƚĞŵŵŽŶŝƚŽƌŝŶŐͬĐŽŶƚƌŽů
ƚ
♽⛔⋙ⷞ೙ᓮ䉲 ŝƚ ŝ ͬ ƚ䊛 ů

ůĞĐƚƌŝĐŝƚLJĐŽŶƐƵŵŝŶŐŐ
ƐLJƐƚĞŵ ;ƵƐƚŽŵĞƌͿ
ŽŶƐƵŵƉƚŝŽŶͬŐĞŶĞ
ůĞĐƚƌŝĐŐĞŶĞƌĂƚŝŽŶ dƌĂŶƐŵŝƐƐŝŽŶ

ĂƌƚŝĨĂĐƚ
ƌĂƚŝŽŶͬƐƚŽƌĂŐĞ
;ĨŝƌĞͬǁĂƚĞƌͬĂƚŽŵŝĐƉŽǁĞƌͿ ͬĚŝ ŝď ŝ
ͬĚŝƐƚƌŝďƵƚŝŽŶ ;ŚŽƵƐĞ͕ďƵŝůĚŝŶŐ͕ĨĂĐƚŽƌLJ͕
ǀĞŚŝĐůĞͿ
/d /d

ŽůůĞĐƚŝŽŶͬƚƌĂŶƐĨĞƌͬƐƚŽƌĂŐĞ
ͬƉƌŽĐĞƐƐŝŶŐŽĨŝŶĨŽƌŵĂƚŝŽŶĨƌŽŵ
ǀĂƌŝŽƵƐŶĞƚǁŽƌŬƐ;ĚŝƐƚƌŝďƵƚŝŽŶ͕ 'ĞŶĞƌĂƚŝŽŶͬ^ƚŽƌĂŐĞ
ĚŝƐƉĞƌƐĞĚƐŽƵƌĐĞƐĂŶĚĐƵƐƚŽŵĞƌƐͿ͘ ;WŚŽƚŽǀŽůƚĂŝĐ͕ǁŝŶĚ͕E^Ϳ
DŽŶŝƚŽƌŝŶŐĂŶĚĐŽŶƚƌŽůďĂƐĞŽŶƚŚĞ
ŝŶĨŽƌŵĂƚŝŽŶ͘ ;ŝƐƚƌŝďƵƚĞĚ
;ŝ ƚ ŝď ƚ Ě
ƉŽǁĞƌƐŽƵƌĐĞͿ
ĨĨŝĐŝĞŶƚĐŽŶƚƌŽůŽĨ
ĚŝƐƉĞƌƐĞĚƐŽƵƌĐĞƐ
;ŽůĚĨĂĐĞŝŶĚŝĐĂƚĞƐŶĞǁƚĞĐŚŶŽůŽŐŝĞƐͿ

Figure 6 : Roles of ICT in a Smart Grid System

Prepared by SFTC based on Reference[1,3]

h͘<͘ ϭϬϬ

&ƌĂŶĐĞ ϱϳ

'Ğƌŵ ϯϳ
ĂŶLJ

hŶŝƚĞĚ^ƚĂƚĞƐ ϭϲϮ
;Ϳ

hŶŝƚĞĚ^ƚĂƚĞƐ ϭϮ
;EzͿ

:ĂƉĂŶ ϭϲ
ŵŝŶƵƚĞƐ

Ϭ ϱϬ ϭϬϬ ϭϱϬ ϮϬϬ

[6]
Figure 7 : Yearly Blackout Hours in Major Countries (See Reference for the year)
Prepared by SFTC based on Reference[6]

32
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

a household is visualization of power consumption 4-3 Elements of ICT Underlying the Smart Grid,
status, promoting a spontaneous power-saving attitude and Their Standardization
in every household. Monitoring of electric appliances Table 5 shows a list of element technologies
and implementation of an on/off control function underpinning the smart grid (compiled by the United
enable the demand side to have the management States Department of Energy).
capability for more efficient power usage. In addition, In this classification, importance is placed on two-
the supply side (utility companies) will be able to way communication technology to make the smart
exercise forced supply control at the time of peak grid an efficient and reliable real-time system. A
demand. In the future, when photovoltaic generation two-way communication architecture - based on the
becomes a common practice in every household, and concept of Plug-and-Play that guarantees expandability
trade of redundant electric power becomes widely and ease of modification - must be established to realize
available through, for example, the introduction mutual compatibility. Next comes the need for control
of PHEV, the smart meter is expected to play an technology supported by state-of-the-art algorithms,
important role as an access point to guarantee used for handling the vast amount of information
stability of the power market, which is dynamically incoming from smart meters and intelligent home
driven based on market principles. It is also probable appliances, and for control/diagnostics/price setting
that an array of new businesses will be created by and resource management. Emphasis is also placed on
grasping lifestyles based on the detailed power usage the interface and decision-making support system that
information provided by the household. However, enable efficient and accurate operation, as well as the
privacy protection will remain an important issue in sensor and measurement technology.
this future society. In terms of two-way communication, drastic
upgrade of short-distance wireless communication
4-2 Emergence of a Giant Network technology and its widespread implementation are
In the future, millions of smart meters, water heaters, expected. This includes such technologies as ad-hoc
household appliances and a vast number of sensors networks, mesh networks, and sensor networks that
will be connected to the existing social infrastructures support multi-hop communication and networking
(i.e. the power system, renewable energy system, gas household appliances. The development of distributed
supply system and water supply system), causing the control systems is also a must for controlling them.
emergence of a far-flung, global network much larger As an example, ZigBee (a short-range wireless
in size than the current Internet. When this situation communication standard based on IEEE 802.15.4,) is
becomes a reality, robust networks and advanced receiving attention for monitoring and controlling the
information processing systems are required to networks because of its capability to construct multi-
collect and analyze the vast amount of data from the mesh networks and lower power consumption than
connected devices for controlling them. Underlying WiFi and Bluetooth. The ZigBee Smart Energy Profile
these networks, architectures and information security specification has been set out in recent years, which
technology will play a critical role for interconnecting stipulates the method for reading a meter, controlling
various types of dissimilar nodes. instruments, real-time calculation of electric charges,
In contrast to the Internet as we know it today, where transmitting text messages, data encryption, and unit
only abstracted trains of bits (0101…) are transmitted, authentication.[2,20] In addition, to facilitate the move
newly emerging networks transmit physical entities as toward the smart grid, a communication standard,
well, causing a substantial increase in the complexity Smart Utility Network (SUN), has been established
of the networks. In the newly emerging networks, just as a part of standardization efforts around IEEE
as is the case with the current Internet, such functions 802.15.4g. IEEE 802.15.4g is expected to be the
as collection, transfer, storage, processing, search, wireless network standard in the age of the smart
and presentation of data, security, and protection of grid: it allows consolidating information collected
privacy will be required. from multiple home networks (within a radius of
several hundred meters to several kilometers) into an
information gathering facility of utility (electricity and
gas) companies, and also enables two-way control.[21]

33
 SCIENCE & TECHNOLOGY TRENDS

It is very likely that a variety of smart appliances (1) Information System Architecture
(household appliances with ICT capabilities) will be The information system architecture must be so
developed in the future. The standard that stipulates designed that it an optimized connectivity within and
the interface for connecting a smart appliance and a outside the home network, paying due attention to
smart meter already exists, i.e. OpenHAN. Much of the roles played by the smart meter and home server.
the standardization efforts for OpenHAN have been There must be a thorough discussion as to which of the
undertaken by major electric power businesses such two - the home server (computer) and the smart meter
as Pacific Gas & Electric Co. (PE&E) and South – is more desirable, or both hand in hand, to serve as
California Edison Co. (SCE), and American Electric the home gateway connecting all of the household
Power.[2] instruments. The choice is important, because it
determines whether a utility firm or the home server
4-4 Issues Concerning the Smart Grid in Japan: A provider (communication company, home appliance
view from ICT manufacturer, housing manufacturer, ICT service
The Smart Community Forum, held under the provider, and other energy related businesses) carries
auspices of METI, summarized the issues around out the task of collecting power usage information and
the smart grid as viewed from ICT as described controlling household instruments.
below, and made them public in June 2010.[15] In It is critical for the architecture to provide sufficient
Japan, although there have been discussions toward compatibility between openness and reliability of
realization of smart communities, research and the home network. Openness of the interface is
development investment has been focused mainly on required for the home appliance network so that it
renewable energy (e.g. solar power) and secondary will not, for the convenience of the user, tend to be a
cells. Efforts toward enhanced research, development, manufacturer specific interface. On the other hand, it
and commercialization of ICT around the smart grid must impose a certain level of discipline on connected
have not been sufficiently activated nor have they devices (e.g. authentication) to maintain reliability.
taken a concrete shape yet. Therefore, the architecture must provide a balance.

Table 5 : U.S. Department of Commerce Counts On The Following Element Technologies for Establishing Smart Grid
Technology Examples
integrated two-way communication ・An open architecture creates a plug-and-play environment that
Two-way communication makes the Smart Grid a dynamic, securely networks grid components and operators, enabling
interactive, real-time infrastructure. them to talk, listen and interact.
advanced components ・Next-generation FACTS/PQ (power quality) devices
Advanced components play an active role in determining the ・Advanced distributed generation and energy storage
electrical behavior of the grid, applying the latest research in ・Plug-in hybrid electric vehicles (PHEVs)
materials, superconductivity, energy storage, power electronics ・Fault current limiters
and microelectronics to produce higher power densities, greater ・Superconducting transmission cables
reliability and power quality. ・Microgrids
・Advanced switches and conductors
・Solid-state transformers
advanced control methods ・Data collection and monitoring of all essential grid components
Advanced control methods monitor power system components, ・Data analysis to diagnose and provide solutions from both
enabling rapid diagnosis and timely, appropriate responses to deterministic and predictive perspectives
any event. They also support market pricing, enhance asset ・“Diagnosis” and subsequent appropriate action processed
management and efficient operations, and involve a broad autonomously or through operators (depending on timing and
application of computer-based algorithms. complexity)
・Provision of information and solutions to human operators
・Integration with enterprise-wide processes and technologies
sensing and measurement technologies ・Smart meters
Sensing and measurement technologies enhance power ・Ubiquitous system operating parameters
system measurements and facilitate the transformation of data ・Asset condition monitors
into information to evaluate the health of equipment, support ・Wide-area monitoring systems (WAMS)
advanced protective relaying, enable consumer choice and help ・Advanced system protection
relieve congestion. ・Dynamic rating of transmission lines
improved interfaces and decision support ・Data reduction
Improved inter faces and decision suppor t will enable grid ・Visualization
operators and managers to make more accurate and timely ・Speed of comprehension
decisions at all levels of the grid, including the consumer level, ・Decision support
while enabling more advanced operator training. Improved ・System operator training
interfaces will better relay and display real-time data to facilitate:
Prepared by SFTC based on Reference[17]

34
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

The following factors, in concrete terms, will be (3) Establishment of Rules for Gathering/
required: standardization and openness of home server Managing/Utilizing Household Information
APIs, standardization of home server middleware, On the flip side of the various beneficial effects,
and standardization of communication interfaces for there can surface an array of problems such as that the
connectivity with household appliances. need for establishing rules that govern the activities
In terms of connection between an external and a to gather/manage/utilize household information
home network, the communication scheme for network (sensitive personal information may be contained) has
construction has to be determined. Eligible candidates been pointed out. It is considered appropriate that the
include power line communication (PLC), wireless following items are included in these rules: explicit
communication (3G/LTE, WiMAX, PHS, multi-hop indication of the intended purpose and use of data,
communication), and wired communication (optical and the name and substance of the agent that collects
fiber ADLS, cable television). Who incurs the cost of data, obligatory feedback of household information to
network construction and how to guarantee security the user, secured information portability, conditions
pose another issue. Regarding this connection, a to allow access to the home gateway, security
decision has to be made as to the transmission scheme requirements for networks and home gateways, and
by which the network is constructed. The options conditions to prevent information leak and illegal
for this decision are: an indiscriminate transmission access.
scheme (or Internet scheme) with a cost advantage,
and a specific application priority scheme (guaranteed (4) Other suggestions
transmission scheme) with higher reliability. Many other suggestions and opinions were put
forward and discussed by the members of the Smart
(2) Creation of New Services That Utilize Community Forum. Among these, ICT related
Availability of Household Information subjects are summarized, based on the reference
Availability of visualizable household energy material,[15] in Table 6.
information is expected to promote the creation of new
services, for example, that make the user more energy- 5 Predictable Future
saving conscious by presenting visualized energy
information. Other examples include the creation 5-1 Global Competitiveness of Smart Grid Related
of optimum energy management services, where ICT Industries
feedback information from power usage monitoring As I reported above, the smart grid is expected
is used for effective use of renewable energy and to provide a huge growth field for ICT industries.
expulsion of adverse effects on the system, or local Especially from the viewpoint of ICT, however,
management of the charging schedule for electric the efforts toward research, development, and
vehicles is utilized to optimize energy management commercialization in Japan have not yet been brought
and guarantees successful changing service within a well into shape.
given system capacity. Figure 8 shows schematically the differences in
Other candidates of new services include: future international deployment strategy between the
whereabouts/failure detection and remote repairing/ United States and Japan, as viewed from investment
maintenance of household appliances, information activities in technological development. The area of
sourcing for the development of new products, on- technological development can be broadly classified
demand home delivery service, and utilization of into three sectors: conventional power generation and
television sets as a household gateway monitor transmission, renewable energy, and ICT. In the figure,
(provision of administrative information and on- the darker the color of the item, the higher the stage of
line administrative procedures, TV conferencing development, and the lighter, the less developed.
for teleworkers, and information exchange among In the United States, investment pervades every
neighborhood residents). sector of industry. This will likely promote, in
the United States, the evolution of systems with
expandability and mutual compatibility in the near
future, where coalition among ICT, renewable energy

35
 SCIENCE & TECHNOLOGY TRENDS

Table 6 : Issues discussed in the Smart Community Forum

1) The need for investigation on economic efficiency and from consumers is needed as to the software (e.g.
the mechanism of cost sharing charging menu) from the viewpoint of best protecting
2) The importance of priority definition: domestic and consumer interests.
overseas deployment requires different models and 24) A thorough investigation is needed as to the cost
strategies burden and return on investment toward commercial
3) For overseas deployment, localized strategy is realization of the smart community.
important, taking into account the local needs 25) Careful distinction should be made as to the
(including climate and cultural background) differences in services and cost burden in and
4) A view toward creation of new businesses should be outside of the smart community.
included: preoccupation with the discussion of energy 26) In conjunction with meter replacement for higher
supply and demand will not be enough. functionality, the time required for replacement and
5) The importance of maintaining balance between the effect it may have on metering performance
human control and utilization of natural force should be taken into consideration.
6) The importance of open/black-box strategy: the key to 27) Extended utilization of the smart meter should be
the success of overseas deployment investigated in the future (the possibility of application
7) The importance of total smart grid design for proper specific charges)
coordination between the distribution system and 28) Both the public and self-initiative nature of the
trunk power transmission system business should be considered, as well as regional
8) The importance of investigation as to how Japanese characteristics and the facilities it possesses, before
element technologies will be fit into the unstable introducing smart meters.
systems in Asian developing countries 29) The information handled in the home network should
9) The need for discussion toward construction of be classified from the viewpoint of security (open or
information strategy and business models in closed system).
conjunction with the deployment of the smart grid. 30) To gain overseas presence for the projects, thorough
10) The system must have added values from the investigation of the regional legal system and local
viewpoint of users. problems is needed, in addition to the enhancement
11) The need for urgent demonstrative implementation of of applications.
the smart grid driven by public-private partnership. 31) The importance of thorough explanation of the merits
12) The government is expected to develop the global on the side of the users, and gaining understanding
deployment strategy, with an eye toward the market of the cost burden.
situations in developing countries. 32) The importance of the discussion, from the viewpoint
13) The systems to be exported must be tailored to the of the users, on how to draw incentives and
situation of the target country (geographical, historical encourage actions.
background, and needs) 33) The utilization of existing infrastructure should be
14) The need for discussion as to the proper selection accounted for in the construction of the smart
and coordination of the smart meter and household community.
controller (home server). 34) To gain global presence, the smart community system
15) The need for discussion toward proper ownership and to be exported must comply with the regional market
installation of the smart meter. pattern.
16) The merit of introducing smart meters in the case 35) To help the private sector join an overseas project,
charging scheme must be switched for mobile and government intervention is important to establish
house applications: usage of electricity is expected to inter-government coordination.
extend to mobile (EV) applications. 36) The smart community project should be pushed
17) The need for the review of security and the mechanism forward as a combined and coordinated effort among
to share the cost, especially for controlling household environmental technology, financial technique, and
appliances. public policy.
18) The need for an autonomous and effective network for 37) The concept of specific districts will play an important
the smart grid, when viewed as an entity that includes role for overseas deployment.
demand side users. 38) System thinking is always important: preoccupation
19) The need for the construction of the user participatory with the performance enhancement of individual
energy/social system. equipment will produce Japan-specific products.
20) The smart community presents a concept for 39) For the commercial realization of the smart grid, an
municipal organization (Machizukuri) by providing alliance between the public and private sectors, under
“shared” space connecting “nature,” “place to live,” the initiative of a government-led strategic framework,
and “energy.” is most important, while maintaining ample scope for
21) Connecting household appliances to the smart grid voluntary activities of the private businesses.
will dramatically evolve an ordinary house into a 40) Patent strategy plays a key role in standardization
theater of service provision. strategy (i.e. open or closed system).
22) The key points of discussion directly related to the 41) “Componentization” is also an important issue to be
introduction of smart meters: 1) the extent of functions discussed, as well as system standardization.
that a smart meter should provide, 2) the issue of 42) Europe provides an eligible option when Japan
networks accessed (how the utility company network contemplates international standardization.
and public network should be compartmentalized), 43) Thorough investigation should be made as to which
and 3) the level of openness that the public network item should be completed by when, and it is important
should provide (scope for utilization of various to define the time schedule based on this. Discussion
communication providers). should be made as to how to evaluate risks from a
23) Recipiency on the side of the consumers to demand- medium- and long-term prospect, and how to share
response services: a thorough understanding the burden with the government.

36
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

and power systems will be realized. Expandability the future smart grid, the following items were
and mutual compatibility are the enablers to promote pointed out in the Smart Community Forum in Japan
technology export to other countries, likely to provide described in the previous section.[15]
the United States-bred renewable energy and ICT with ・As the world of the information network, hitherto
a strong global competitive edge in the future. a closed network relating only to PCs and cellular
On the other hand, Japan possesses a highly phones, will extend itself to home networks that
sophisticated electric power system, at least at present, include household appliances, energy equipment, and
and investment in technical development is focused automobiles, it will promote the emergence of the so-
mainly on renewable energy and storage. This called “Internet of Things.”
situation in Japan is likely to promote development ・Remote operation of demand-response, output
in renewable energy technology, and the element control of photovoltaic generation, and charging time
technologies will have a global competitive edge. allocation of electric vehicles will become everyday
However, it is also likely that they will be exported matters, and utility companies’ information control
as “components” to be incorporated into a upper networks are connected to every household. This
systems. will promote a fusion of information networks and
The value of a technology can be enhanced only energy equipment (i.e. a smart house).
when it is properly positioned and developed in the ・These will promote the emergence of such systems
grand design. Especially, ICT can be considered as a as the new information network (2nd Internet), novel
vehicle to bring the grand design to reality. In terms of information networks connecting things to things
the smart grid, and from the viewpoint of ICT, being and things to people, and systems that integrate
left behind in the train of research and development energy equipment and information networks.
and the move toward standardization may isolate That is, the world of “Internet of Things,” previously
Japanese ICT from the mainstream of the smart grid discussed with the words of RFID and IPV6, will
market, just as was the case with the mobile phone. further extend itself to include household appliances
and automobiles accompanied by the smart grid,
5-2 Toward the world of “Internet of Things” enabling the emergence of a new network where all
It would be worth mentioning that, in regard to objects (people, things, and energy) are connected

hŶĚĞƌĚĞǀĞůŽƉĞĚŽƌ
'ůŽďĂů ŶŽǁ ĚĞǀĞůŽƉŝŶŐ
ŶŽǁĚĞǀĞůŽƉŝŶŐ
ĚĞƉůŽLJŵĞŶƚ
ĞǀĞůŽƉĞĚ
ƚƉƌĞƐĞŶƚ EĞĂƌĨƵƚƵƌĞ

/d /d

ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ
/ŶǀĞƐƚŵĞŶƚ ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ

ŽŶǀĞŶƚŝŽŶĂůŐĞŶĞƌĂƚŝŽŶ͕ ŽŶǀĞŶƚŝŽŶĂůŐĞŶĞƌĂƚŝŽŶ͕
 ƚŝ ů ƚŝ
ƚƌĂŶƐŵŝƐƐŝŽŶƐLJƐƚĞŵ ƚƌĂŶƐŵŝƐƐŝŽŶƐLJƐƚĞŵ

:ĂƉĂŶ :ĂƉĂŶ
/d

ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ

'ůŽďĂůŶĞǁďƵƐŝŶĞƐƐĞƐ

/d /ŶǀĞƐƚŵĞŶƚ /d /d

ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ
ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ /ŶǀĞƐƚŵĞŶƚ ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ
hƉŐƌĂĚŝŶŐŽĨŐĞŶĞƌĂƚŝŽŶ
ĂŶĚƚƌĂŶƐŵŝƐƐŝŽŶ͕ĂŶĚ
ŽŶǀĞŶƚŝŽŶĂůŐĞŶĞƌĂƚŝŽŶ͕ /ŶǀĞƐƚŵĞŶƚ ŽŶǀĞŶƚŝŽŶĂůŐĞŶĞƌĂƚŝŽŶ͕ LJ
ŝŶƚƌŽĚƵĐƚŝŽŶŽĨŶĞǁƐLJƐƚĞŵƐ
ƚƌĂŶƐŵŝƐƐŝŽŶ
ŝ ŝ ƚƌĂŶƐŵŝƐƐŝŽŶ
ŝ ŝ
hŶŝƚĞĚ^ƚĂƚĞƐ
hŶŝƚĞĚ^ƚĂƚĞƐ hŶŝƚĞĚ^ƚĂƚĞƐ
/d

ĐĐĞůĞƌĂƚĞĚŐůŽďĂůĚĞƉůŽLJŵĞŶƚŽǁŝŶŐƚŽƚŚĞ
Ő Ɖ LJ Ő ZĞŶĞǁĂďůĞĞŶĞƌŐLJ͕ƐƚŽƌĂŐĞ
ƐLJŶĞƌŐLJĞĨĨĞĐƚŽĨ/dĂŶĚƌĞŶĞǁĂďůĞĞŶĞƌŐLJ ŵĞƌŐŝŶŐͬĚĞǀĞůŽƉŝŶŐ
ĐŽƵŶƚƌŝĞƐ

Figure 8 : Global Deployment Forecast of Technologies in Smart Grid

37
 SCIENCE & TECHNOLOGY TRENDS

through information. This can be viewed as the concept of Smarter Planet can be viewed as a more
popularization of informatization that takes place generalized and expanded version of the Smart Grid.
in the immediate vicinity of our lives, and has the In the background of the strategy lies a concept that
potential of bringing major change in our society. The “information itself can set social and economic reality
merit of this change resides in the fact that we will be in motion.” The concept underlying this strategy is a
able to realize a nearly totally optimized world, owing totally new thinking of “informatization”: intimate
to the establishment of infrastructure that enables us to attachment of digital infrastructure to the real world,
grasp all of the information regarding the instruments and actions based on efficient information gathering
and objects in our home and society such as location/ and analysis will actually set the society and economy
availability/resource consumption, and it will give us into motion.
the ability to control them as well. On the other hand, Since the advent of computers, ICT has undergone
there is a concern over the occurrence of security and an evolution supported by dramatic growth of such
privacy problems, hitherto being confined within the entities as semiconductors and computer networks,
community of networked computers, in such daily and it is now stepping into a new stage where ICT
objects as air-conditioners, refrigerators, and lighting creates tangible values in society and economy. The
fixtures. objectives of the Smart Grid constitute one of the
IBM defines it latest business strategy as the regions where the real-life challenges of ICT are
realization of a “Smarter Planet.” Smarter Planet is tested.
a concept aiming at realizing social and economic
innovation by integrating physical phenomena, Acknowledgement
physical infrastructure, and digital infrastructure, In writing this report, the author is deeply indebted
by means of ICT, that surround every aspect of to useful discussions and cooperation from the
society - electric power, water, traffic, finance, following colleagues: Mr. Tagui Ichikawa (METI),
logistics, and medical care. IBM predicts that Smarter Mr. Norio Murakami, Mr. Koichi Fujii (Google), Mr.
Planet is capable of providing concrete solutions to Kazuo Iwano, Mr. Hideyuki Kawai (IBM Japan), Mr.
such social and economic issues as saving energy, Yoshizumi Serizawa (Central Research Institute of
water shortage, traffic congestion, financial risk, Electric Power Industry). The author expresses deep
lacking parts, and coordination of medical care. The appreciation to all of them.

References

[1] Yoshizumi Serizawa, “Outlook on the next generation smart grid,” an abstract from SPI forum “Truth and
Myth about the Next Generation Power Grid Initiative, or the Smart Grid,” May 2010
[2] Tagui Ichikawa, “Recent trend around the industrial structure and standardization in the United States: a report
from New York,” JETRO, 2009
[3] Tagui Ichikawa, “Recent trend around the smart grid: a report from New York,” (IPA) Special issue May 2010,
JETRO, 2010
[4] “Smart Energy,” Nikkei BP, May 5, 2010
[5] “Proceedings of Smart Energy Symposium,” 2010, Nikkei BP
[6] “Current Status of Electric Power Industry,” Federation of Electric Power Companies,
[Link]
[7] Best Source home page, [Link]
[8] Google home page, [Link]
[9] “Smart grid policies and standardization trends in Europe, United States, and Japan,” Impress R&D
[10] Silver Spring Network home page, [Link]
[11] “Obligatory provision of smart meter information to customers: the bill is sent to Congress,”
[Link]
[12] Demonstrative new system energy introduction project for isolated islands,
[Link]

38
 Q UA R T E R LY R E V I E W N o. 3 8 / Ja n u a r y 2 0 1 1

[13] Demonstrative experiment of smart grid in Rokkasho-village,

[Link]
[14] Demonstrative project for optimum control of the next generation transmission/distribution,
[Link]
[15] Issues and Proposals in Smart Community Forum, METI, June 2010,
[Link]
[16] Eiichi Nakanishi, “Shikoku Electric Power’s smart meter project ‘OpenPLANET’: Why it did not turn out as
expected,” Tech-On,
[Link]
[17] “WHAT THE SMART GRID MEANS TO AMERTCA’S FUTURE,” US. Department of Energy,
[Link]
[18] NIST Framework and Roadmap for Smart Grid Interoperability Standards, NIST Special Publication 1108,
US Department of Commerce
[19] Zpryme document, [Link]
[20] N. Sato, K. Hukui, ”Utilization of wireless sensor networks in smart energy,” OKI Technical Review, April
2009/ No.214, Vol.76, No.1
[Link]
[21] “Hearing investigation: Standardization trends of 802.15.4g (SUN) geared to realize the smart grid,” http://
[Link]/feature/20100113/771
[22] News Release, City of Miami Office of Communications,
[Link]
FTNAL_4_20_09.pdf
[23] NEWS from Los Angeles Department of Water and Power, [Link]
[24] “GE establishes a fund of 200 million USD for the development of smart grid technology,”
[Link]

Profile

Kazuyoshi HIDAKA
Affiliated Fellow
Professor at Graduate School of Innovation Management, Tokyo Institute of Technology
At IBM Research (Tokyo), the author performed research on optimization technology, discrete
algorithms, mathematical analysis technology, business solutions, mathematical organization
theory and others. He was a project leader in some of the research. He also performed research
at the IBM Watson Research Center (strategy section). He is a councilor in the Japan Society of
Industrial and Applied Mathematics, a member of the Information Processing Society in Japan,
and a member of the Operations Research Society of Japan. He joined the faculty of the Japan
Advanced Institute of Science and Technology in August 2009. Doctor of Philosophy (science).

(Original Japanese version: published in August 2010)

39