While utility companies may see lower profits after establishing a global smart grid that uses and manages power more efficiently, other companies responsible for applications, devices, data, and building the new infrastructure stand to reap significant financial rewards. Cisco is one of those companies poised to be major player in smart energy.

Phil Smith, vice president of technology for Cisco in Europe notes, “We think routing and switching and apps are a great opportunity. And Cisco hasn’t done too badly there. But the whole metering structure and the way the information is measured is not in place either. There needs to be a much flatter structure that allows energy to be fed in and out of the grid in a much more peer-to-peer basis that would allow storage and microgeneration.”

The cable television industry is currently developing peer to peer, P2P, distribution systems to free up bandwidth and improve delivery efficiency. Based on the technology made famous by Napster, P2P systems connect a file supplier with a recipient who wants to download it.  Despite the legal issues prompted by users’ copyright infringements, the technology itself is a highly efficient distribution method.

“The grid itself is about real-time management that delivers energy when it’s cheapest or most available from a certain areas,” explains Smith. “If you look at utilities companies, they are built in a very traditional model [that] looks like what networks used to be. In the early days, most networks started in the middle. Utilities are the same — they are built on power generation. It’s shared down through a hierarchy through a plug in the wall. Clearly the girds today are not set up to deal with the challenges of today.”

The potential fiscal impact of smart grids is significant. The United States Department of Energy estimated establishing a smart grid would result in a $117 billion savings over the next 20 years. Research from the UK’s Department of Energy and Climate Change concludes the international development of smart grids is creating a exploding global market, estimated to be worth €30 billion, or £27 billion, over the next five years.

“Clearly it’s an attractive modernisation opportunity,” acknowledges Smith. “But I think unless you create a structure… you can’t have a proper smart grid because if you can’t share properly, you can’t do all the things you need to do…You don’t have to build more power stations, as that’s expensive. We can see it evolving through a real-time infrastructure and putting in distributed intelligence at the demand and supply ends.”

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