A few weeks ago the University of Bremen put out a damning press release on smart meters, which are intended to save power and to balance out supply and demand.
Scientists at the University of Bremen looked at how markets and the power grid would react to their use. Since 2010 these smart meters have been mandatory for new buildings and for those being renovated. The meters are designed to recognize the lowest electricity rates and thus allow programmable appliances to switch on automatically.
The press release writes:
Scientists at the Institute for Theoretical of the University of Bremen, however, are expressing doubts that the approach will actually deliver what it promises – namely reducing power fluctuations in the grid. They simulated a market that uses intelligent power meters and have reached a surprising result: The intelligent power meters will produce an artificial power market that – as is the case with all markets – that can also produce bubbles and even crashes. The Bremen physicists published their results in the largest and oldest physics journal of the world, the Physical Review of the American Physical Society.”
As more and more solar and wind energy gets fed into the European power grid, the power fluctuations have become more pronounced. The smart grid and meters are intended to even out the fluctuations. The University of Bremen press release writes that when the wind blows, the extra power added to the grid will make the prices fall and thus lead to more appliances turning on to take advantage of the low rates. For example a homeowner will have the possibility of programming his washing machine to turn on as soon as a certain low price level is reached. Thus theoretically the market will be ruled by the economic law of supply and demand. Sounds good.
But Professor Stefan Bornholdt of the Institute for theoretical Physics of the University of Bremen sees major obstacles and warns that it will not be that simple, saying “the standard theory of supply and demand is however incomplete when a huge number of consumers compete at the same time for the best price.“ Their computer simulations show things likely will not happen like as they should. The press release writes:
They simulated the competition between consumers with the computer and discovered that in this newly created power market segment things could become ‘chaotic, wild and fidgety’ – just like in the financial markets.”
They provide an example:
‘When there is little power in the grid and the price as a result is high, then washing will simply be put off. But that cannot be the case forever because washing is a basic necessity,’ explains Stefan Bornholdt. ‘The more preprogrammed machines you have waiting for their start, the greater the potential demand rises: A demand bubble forms.’ And it pops as soon as the price again drops a bit more: Because many consumers will suddenly start countless washing machines all at once because they will have reprogrammed upward because of they will have reached their threshold of pain with backed up washing needs. ‘This will spark a collective avalanche mechanism that will burden the power grid extremely – blackouts due to unexpected overloads cannot be excluded,’ says the Bremen physicist.”
The team of physicists says that the massive use of new intelligent power meters was “a hasty decision that had been poorly thought through“.