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Government Responsibilities in Smart Grid Development in China

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How to treat the development of smart grid and what roles government should play in the respect of enhancing the development of smart grid, are still in question.



Government Responsibilities in Smart Grid Development in China

Yu Yanshan



Since last year, smart grid, together with low-carbon economy, climate change and new energy resources, has become a hot topic in all circles. However, how to treat the development of smart grid and what roles government should play in the respect of enhancing the development of smart grid, are still in question.



Views on Smart Grid


Smart grid is a direction of power grid development in the future and developing smart grid will be the main tendency. The concept of “smart grid” is not developed without foundation, but derived from the needs of electric power diversification with the socio-economic development in Europe and America.


While smartmeters have been applied massively in some countries and districts, smart grid, as a whole, is still in the phase of frame construction and technical R&D. Its technologies yet have lots of unsolved problems, not even to mention the sustainable business operation model. Now, the conditions of massive substantial smart grid construction are not ready.


The US is the first country suggesting the concept, “smart grid”. American smart grid is still in the start-up period, mainly includes the R&D and application of AMI. California, Pennsylvania, Texas... more than 10 states are in the front rank in the US.


Smart grid in China hasn’t required the qualification of massively substantive planning and construction. Technical maturity is only one respect and the more important is that the whole scene of smart grid development is still not clear.


First, what problems can be solved eventually by developing smart grid? Where is the need? Can it solve the extensive connection problem of renewable wind and electric power? Or increase consumers’ selection rights and allow users to deal with their management problems of demands side, such as quantity of electricity management? Or improve the large grid’s safe reliability and automatic level?


Second, the existing electric power system and the operation model of electric power enterprises don’t support the development of smart grid. Within the existing electric power regulation framework, it’s still not clear that what elements stimulate power grid enterprises to participate zealously in the construction of smart grid.


Third, smart grid needs heavy investments. Once the investments take place, due to capital’s specialty, there will be “technological lock in” effects in the next decades, and all the investments and costs will be eventually undertook by electric power consumers.


Fourth, smart grid hasn’t changed the basic attributes and functions of power grids. Even though there are some disputes on the definition of smart grid, smart grid is still based on physical networks, and doesn’t change the basic qualities and functions of existing power grids. The basic attribute of power grid is its natural monopoly. The basic function of power grids is electric power “super highway” and the exchange platform between g generators and users.



Government Responsibilities of Smart Grid Development


Based on the above views, I argue that the government should bear the responsibility to develop smart grid. The responsibilities of the government mainly includes,


First, the government should take a clear stand to support and encourage the research and exploration of smart grid technology, because developing smart grid is the direction and tendency. In this year’s government work report, Prime Minister Wen raised clearly to develop smart grid.


Second, the government ought to evaluate smart grid independently beyond special interest, organize experts judgment attentively, research and enact the strategy and planning of smart grid development, make clear with the problems of China’s smart grid to be solved eventually, goals to be reached and the relative road map. The government should be especially wary before the enactment of evaluation and strategic planning, and doesn’t need hurry to state its position and put forward with policies. The development of smart grid is not only a technological problem, but also relate with the overall reform of electric power system, heavy investments, national energy sources strategies, technology norms, electric power market, electric power regulation, multi-industries collaboration and many other problems. Historical experience tells us that a bad policy is worse than no policy.


Third, investors, consumers, academic groups and governments need to master accurate information in order to make the right choice. But it’s difficult to get real independent statistics. Now every stakeholder is quite active to do numerous researches and release lots of information. This is good, but benefits entanglement also exists. Some people even intentionally provide some unfair information with the purpose to influence government’s policy making to let the government enact some policies that can benefit them. Therefore, we need pay attention to statistics, but the more important thing is to make sure that the statistics are independent and transparent, and allow everybody to have the access. In this respect, the national level science and research institutions, such as Chinese academy of sciences, Chinese academy of engineering and Chinese academy of social sciences, should play an important role. The government needs to create conditions for them.


Fourth, theoretically, developing smart grid can bring with positive externalities. Therefore, the government has the responsibility to offer financial support to develop smart grid. Smart grid industry in our country is still in the starting phase. At the beginning of industrial development, the government needs to support and guide by means of systematic and assorted policies. Especially on the investment of important technological projects, project approvals, rule-making, electric price mechanism, revenues and so on, the government needs to provide necessary policy support and stimulation orientation to enhance the whole industrial development. American government’s large investment on smart grid is a valuable reference for us.


Fifth, the government must execute the responsibility of supervision on the investment construction on smart grid. Because smart grid doesn’t change the basic qualities and functions of traditional power grid, governmental supervision is indispensable. The governmental supervision responsibility mainly includes:


1. Supervise on the investment on smart grid. Developing smart grid must pay attention to economical efficiency. Smart grid construction needs large investment. Who pays during the development of smart grid? How to apportion costs? This is the first thing we need to know. Meanwhile, the government must consider the bearing capability of national economy and people’s wealth. The profit margin of the majority manufacture enterprises in China is just 3%-5%. The enterprises are extremely sensitive on prices of energy resources and electric power. For the development of smart grid, The Government needs cost-benefit analysis and strengthens investment restriction and supervision.


2. Make sure the openness of the construction of smart grid. Smart grid relates with various technologies and covers a large scale of circles, so the government need have an open mind. Developing smart grid is not one or several departments can do well, but need wide participation of all the society, and need to construct an open mechanism under one uniform criterion.


3. Supervise the security of smart grid, especially Internet information security.


Sixth, the government needs to play a vital role on the international cooperation to enhance the R&D of smart grid. Since 1882, when Edison established the first power plant in Manhattan, New York, the technology models in every country’s electric power industry are basically the same. The development points and road maps in every country’s smart grid can be different, but the technology is the same. The implementation of international cooperation by the government is significantly important for the smart grid in developing countries. We can yield twice the result with half the effort.


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