lobal Trends in the Political Economy of Smart Grids

Cherrelle Eid, Rudi Hakvoort, and Martin de Jong


The global transition towards sustainable, secure, and affordable electricity supply is driving changes in the consumption, production, and transportation of electricity. In the past decade there has been a dash for ‘smart’ in power systems, resulting in a consensus that a ‘smart grid’ will pave the way to decarbonization, reliability, and efficiency in the electricity sector. On the basis of the terminology alone, smart grids have received a lot of support in government policy for the theoretical benefits implementation might bring.

Smart grids can be defined as electricity networks that enable two-way communication and power exchange between electricity consumers and producers, utilizing information and communication technology (ICT) to manage demand, and ensure safe and secure electricity distribution (DOE 2006; Hall and Foxon 2014). A smart grid can support the reliability of the grid with the penetration of distributed generation and electric vehicles (EVs), and can deliver possibilities for real-time management of electricity demand, production, and storage.

However, the smart grid concept is both broad and vague, allowing actors to adopt a strategic position, but not to systematically favour the emergence of a shared vision for a smart grid (Tricoire 2015). Within the subjectivity of the term (nobody would support a ‘dumb grid’), the assumption exists that tradeoffs between sustainability, affordability, and security of supply would be reduced with the transition towards a smart grid. It can be observed that the political economic context influences the motives for investing in smart grids. Nonetheless, not each investment necessarily contributes to the sustainability and affordability objectives from a greater social perspective. The conflicts between different policy objectives and the interests of the actors involved present an interesting point for research. In this chapter, the authors clarify which (set of) goal(s) are emphasized by smart grids in the United States (US), Europe, and China according to industry structure, regulatory context, and the power of energy policy.

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