Energy Management in Smart Grid

By Claude Ziad El-Bayeh and Khaled Alzaareer

The integration of highly fluctuated distributed generations (such as PVs, wind turbines, electric vehicles, and energy storage systems) threatens the stability of the power and distribution systems. The main cause is that the power ratio between the supply and demand may not be balanced. An excess/shortage in the generation or consumption of power may perturb the network and create severe problems such as voltage drop/rise and in severe conditions, blackouts. To increase the balance between the supply and the demand in an efficient way, and to reduce the peak load during unexpected periods, energy management systems are utilized. Energy management can be divided into two main categories. The first one is on the side of the supplier such as electric utility, in which some generators are turned ON or OFF to follow the fluctuation of the load demand. The second category is on the consumer side and it is called demand-side management. In demand-side management, the consumers manage their energy consumption in order to meet the available power from the generation side. The main goal of using energy management is to reduce the cost of operation and consumption, reduce the energy losses and increase the reliability of the network. Energy management has many barriers and limitations. However, it has a prominent future in which most of the current research is focused on developing sophisticated algorithms and models to better manage the energy on the grid.

Why is Energy Management Important?

In a world where the energy demand is on the rise, the power generation should also increase to satisfy the user needs and improve their daily life. However, because the number of consumers is raising, and also because of the unpredictability nature of the electric load, power demand may cause challenges to the electric utilities and system operators. High peak demands have a great probability to occur in many periods and may be a threat to the system functionality. To resolve this issue, the electric utility and system operators have two choices available:

  • Increase the size and dimension of the network which is costly and requires time to implement
  • Utilize energy management in order to reduce the possibility of high peak demand during peak hours

The second solution sounds more reasonable; however, it requires sophisticated algorithms and methods to be capable of managing energy. Energy management is considered a must for a smarter grid for many reasons:

  • It is automated and does not require direct intervention from human beings
  • It gives accurate results and predictions
  • It helps the electric utility to better optimize the functionality of its generation units and reduce the generation cost
  • It helps the system operator in reducing the energy losses on the network and lines, which may reduce drastically the indirect distribution electricity cost
  • It helps the end-users to better manage their load demand and reduce their electricity bill
  • It increases the load factor, in which the power profile becomes smoother and less fluctuating
  • It increases energy efficiency
  • It conserves the resources
  • It reduces pollution and protects the climate

Where is Energy Management Applicable?

Energy management can be divided into two major categories. The first one is from the electricity supplier’s viewpoint, while the second one is from the electricity consumer’s viewpoint.

  • The electricity supplier (such as electric utility, power plant operators and production units) can use the energy management to control its generation units in an efficient way. For example, to meet a certain power demand of the consumers, using energy management, the electric utility can turn on some generators, which may have the least operation cost, while the generators with high operation cost are left to supply extra load demand in specific peak periods. In this way, the electric utility is trying to minimize the operation cost of its generation units
  • The system operator (such as transmission and distribution systems) can use energy management to regulate the power flow in a way to minimize the energy losses on the network and increase the penetration level of renewable energy sources (such as PV and wind farms) in an efficient way
  • The end-users (such as householders, residential and commercial buildings, industries, faculties, etc.) use energy management to minimize their electricity bill and schedule their load demand in an efficient way.

What are the Tools Used for Energy Management?

Traditionally, the control of the generation units and electric appliances was manual or some basic control systems were used. In modern time, with the development of computer-based control systems and highly efficient smart algorithms, and with the integration of the information and communication technologies into the power grid, it becomes easier to control the load. Some of the most used control systems can be cited as follows:

  • PLC (Programmable Logic Controller)
  • SCADA (Supervisory Control and Data Acquisition)
  • EMS (Energy Management System)
  • BMS (Building Management System)
  • Automation Systems (including home automation systems, etc.)

These are computer-based control systems, which require software and hardware to work. The software is usually programmed by engineers, software developers or specialists. The hardware usually contains inputs and outputs in which the system can turn on or off some of the connected elements or control their power demand.

Electricity Tariff System

The main goal of applying energy management is to minimize the economic cost and losses. For this purpose, the management cannot be efficient without changing the electricity tariff system. In most of the countries, the traditional fixed tariff is mostly used, in which the tariff of a kWh is fixed in different hours of the day. A progressive tariff system is also common in many countries and regions in which the tariff of energy increases with the increase in consumption. The increase is decomposed into many slices and each slice is for certain energy consumption. For example, a tariff of 0.1$/kWh is for slice 1 (0-100kWh of energy consumption), 0.2$/kWh is for slice 2 (101-200kWh), etc. However, the traditional tariff system is not sufficient to improve energy management and reduce the electricity bill. For this reason, many sophisticated tariff systems of electricity are proposed such as Demand Response Programs (DRPs) in which the electricity tariff becomes variable in time. Moreover, the users are penalized if they consume more than a certain limit or rewarded if they respect a certain limit.

Current Situation and Barriers

The process of moving from one technology to another requires time and effort. The implementation of energy management is in progress. However, many limitations can delay its integration in the market, which can be summaraized as follows:

  • The cost of implementing energy management systems is high. However, in the long term, the return on investment is low.
  • The electricity tariff should be variable in time. It is not easy for the electric utilities and electricity retailers to shift from a traditional tariff to a newer one.
  • The network’s infrastructure should be upgraded, which may cost lots of money to the system operator.
  • Bidirectional power flow is still in the research phase, which may delay the ideal energy management.
  • The awareness of the population plays a big role in determining how fast the implementation will be.
  • Global warming and climate change can be the main reason to shift from the traditional system to a smarter one. However, there are always parties who do not benefit from the transition to cleaner energy and sustainable environment.


The future of implementing energy management is prominent. However, it takes time and money to shift from a conventional grid to a smarter one. Energy management plays a central role in increasing the efficiency and the reliability of the power and distribution systems. To do so, smart algorithms and advanced control systems are used to optimize and schedule the load demand in an efficient way. Energy management allows a reduction in the electricity cost by about 20 to 30% which is remarkable and beneficial in the long term. For a better future, it is recommended to have some standards and laws that oblige users to install energy management systems in order to reduce as much as possible the waste of energy and pollution. 

 For a downloadable copy of August 2019 eNewsletter which includes this article, please visit the IEEE Smart Grid Resource Center.

Claude Ziad El-Bayeh

Claude Ziad El-Bayeh (S’16, M’18) received a B.Sc. degree in electrical and electronic engineering from the Lebanese University Faculty of Engineering II, Lebanon, in 2008. M.Sc. degree in Organizational Management from the University of Quebec in Chicoutimi, Canada, in 2012, and a Master of Research degree in Renewable Energy from Saint Joseph University, Beirut, Lebanon, in 2014. In July 2019, he received his Ph.D. degree in Electrical Engineering at the University of Quebec - Engineering School (École de Technologie Supérieure), Montreal, Canada. His research interests include Smart Grid, Energy Management, Renewable Energy, Power and Distribution Systems, Optimization, Operations Research, and Smart Buildings.

Khaled Alzaareer

Khaled Alzaareer received the B.Sc. and M.Sc. degrees in electrical power engineering from Yarmouk University, Jordan, in 2010 and 2012, respectively. He is currently a Ph.D. student in electrical engineering at University of Quebec - Engineering School (École de Technologie Supérieure), Montreal, Canada. His research interests are smart grids, Renewable energy Integration, Energy Management, voltage stability, and control.

IEEE Smart Grid Newsletter Editors

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