Smart grid - magic bullet solution

Korea faces pro-or-con choice and decision time approaching

By Kim Yoo-chul

Korea has emerged as a powerhouse in many sectors ranging from shipbuilding, automobiles, steel manufacturing and consumer electronic devices, powered by the nation’s prowess in implementing advanced technology.

With its rapid awareness and the scarcity of natural resources ― Korea imports all of its coal, oil and gas ― the nation is looking to focus on ``energy-saving systems’’ to prevent damage to its global competitiveness from external factors.

One new solution lies in a major initiative in ``smart grid technology’’ in line with the government’s steady spending for green growth.

A smart grid additionally utilizes wind and solar power, allows people to more easily report technical problems such as power outages and defends itself against cyber-attacks.

If there were disruptions to the grid, like a power outage, it would isolate the problem to allow everyone else to get back up and running faster until the issue is resolved

In conjunction with green power sources, smart grids use batteries to provide power during inclement weather.

Korea opened its moves on smart grid businesses in 2008 and the nation is regarded as an ``ideal spot’’ to push related projects as it is one of the world’s most-wired countries.

With the high demand for energy consumption and the plan to reduce the nation’s dependence on natural gas and coal, Korea is taking gradual steps to construct smart grids.

But challenges still lie ahead. Japan, China, the United States and countries in Europe have already achieved advances in developing smart grid projects, while India and Malaysia are also investing more.

``Korea is late to the market and Seoul isn’t being aggressive enough in catching up with the early birds. What Korea needs is to develop profitable business models as early as possible,’’ said Koo Ja-kyun, chairman of Korea’s smart grid association. Koo is also the CEO of LSIS.

No profitable business models

Since 2009, Korea’s leading infrastructure-oriented companies including LSIS, SK Telecom, KEPCO and LG Electronics have been collaborating on smart grid technology. Unfortunately, visible results have yet to be produced.

Though the consortium was desperate to use independent business models, no major exports have been reported since then except for some few small items due to low awareness by consumers of smart grid projects.

``That’s why Korea’s smart grid industry needs more subsidies from the government. For an early commercialization of technology, the government is required to invest more for software projects such as renewable energy systems, rechargers for electric vehicles, demand-response systems and energy management systems (EMS),’’ said Koo.

As Koo pointed out, Korea is still in the ``infant stage’’ of smart grid businesses. Analysts doubt the ongoing project on the southern island of Jeju will be profitable in the foreseeable future.

Korea’s national roadmap breaks these long-term goals into three phases on Jeju.

Jeju will see some $200 million invested between 2009 and 2013. One ambitious aim of the ``Jeju project’’ is to draw conferences and provide in depth demonstrations to outside businesses, governments and universities to highlight Korea’s accomplishments.

So far, the $65 million pilot program on Jeju has a fully integrated ``Smart Grid System’’ for 6,000 households ― wind farms and four distribution lines, according to the government.

In overseas projects, Korea also hasn’t seen much progress. No major talks are under way, though ``working level’’ talks are with government-funded projects in Italy and the United States.

Korea signed an agreement with the US Department of Energy to collaborate on smart grid technology and several other segments of the green-economy.

It has also joined with Italy, in taking the lead in developing a ``Technology Action Plan for Smart Grids’’ for the Major Economic Forum on Energy and Climate.

``It’s not cost-effective and time-consuming. We can’t ride on smart grid businesses, actively, without administrative and financial support from the government,’’ said a senior executive from LG Electronics.

Show must go on

Despite the late response, the government doesn’t have a plan to exit from the smart grid industry. Government officials say more follow-up measures will be forthcoming.

``One of the major challenges facing tech conglomerates today is how to capitalize on the ever-growing demand for the next generation grid with a solid branding strategy,’’ said an official from KEPCO.

KEPCO announced it will help Jeju transform into a ``carbon free island’’ by using various smart grid applications.

Also, KEPCO is in talks with LSIS and other wire- and cable-making companies to improve high-voltage direct current transmission (HVDC) technology with the aim of exporting this.

Additionally, the cities of Busan, Daegu, Jeonju and Cheongju are building their ``green village towns’’ powered by renewable energy.

``This is the way the industry must go,’’ said the KEPCO official.

Korea’s $162 million smart grid technology market is projected to grow at a compounded 12.3 percent annually over the next five years, according to market research firms.

President Lee Myung-bak passed an ordinance in a cabinet meeting November last year, creating a legal framework for electric-car recharging services and power distributors that use smart grid networks. The legislation is the first of its kind in the world.

Korea plans a 30 percent reduction in carbon emissions from expected levels by 2020. Electricity generation accounts for about 40 percent of emissions, according to data from the government. The nation may spend about 27.5 trillion won ($24 billion) by 2030 building smart grids.