The smart grid pilot will also make more efficient use of renewable energy resources, including solar cells, and a combined heat and power plant, and reduce each local area’s reliance on reserve capacity.

In the current pilot, Cisco and Yello Strom have collaborated to enable 70 selected homes and businesses to communicate intelligently with the local power grid and power sources over an internet protocol (IP) network. Customers will use Yello Sparzähler online (a smart electricity meter) to receive information about their electricity consumption in real time. Meanwhile, a home energy management system will allow customers to set appliances such as washing machines to operate during off-peak periods, via the use of smart plugs.

Cisco’s vision is for networking technology to provide a highly secure and intelligent end-to-end electrical infrastructure that helps enable the entire electrical system to be managed as a single integrated entity from generation to use in business and the home. Thanks to its inherent intelligence, such a network would be able to actively sense and respond to changes in power supply and demand, improving the security and reliability of energy delivery while optimizing operational costs.

“Innovative communication technology is the core of the smart grid. Without it, the vision of an intelligent electricity supply would remain utopian,” notes Michael Ganser, Cisco’s senior vice president for Germany, Austria, Switzerland, and the chairman of the board at Cisco Germany.

“The control of electric current is very similar to the management of information flow, so smart grids operate on principles similar to those behind the Internet,” explains Christian Feisst, industry lead for utilities within the Cisco Internet Solutions Business Group. “The exception is that electricity systems have a much greater number of nodes. This is where we are able to apply our expertise, integrating and processing crucial information that helps enable electricity consumption to be optimized.”

Yello Strom specializes in optimizing electricity systems, enabling customers to use their electricity as efficiently as possible and, ultimately, to profit financially from new tariff deals.

Says Martin Vesper, managing director of Yello Strom: “We are convinced that smart grid technology, based on IP, is the best solution for customers, effectively allowing them to become part of the intelligent network. This means they can control and optimize their own electricity usage and power generation via smart meters, with direct personal benefits.”

Surveys have shown that such technology can reduce energy consumption by around 10%, while reductions of more than 15% can be achieved if electrical items (such as dishwashers or washing machines) are time-delayed.

Over time, the resulting reduction in power consumption peaks is expected to help tackle the capacity shortfall predicted for the German electricity market. Reserve capacity could then be rolled back. Traditionally, this has been provided by gas- or oil-fired power stations. With a smart grid system in place, however, this reserve supply could be provided, at least in part, by consumers. The cost of the electricity system as a whole would then fall, with benefits for both energy providers and consumers.

Cisco is a US-based company that designs, manufactures and sells IP-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use.

Yello Strom is a Germany-based electricity company.