Smart grid market players are initiating many different demonstration projects in the hopes of developing lucrative business models. Along with technology assessments, the formation of solid and profitable business models will determine whether future business plans are successful in the smart grid arena.

Korean market players in particular are discussing and developing business models that focus on the smart grid as an efficient solution. Creating a cohesive strategy and enterprisewide model, a supporting business case, and a capital investment plan for the Korean smart grid is a complex and time-intensive endeavor. The question that Korean players are asking is: Which business models will generate the lucrative revenue streams needed to enter the global smart grid markets?

The K-MEG (Korea Micro Energy Grid) project could be their first attempt at answering this question. K-MEG aims to construct realistic and practical business models by integrating the technological scope of the smart grid and existing energy management solutions in industrial and commercial spaces, especially buildings. Korean players formed a consortium of over 125 companies and selected the finalists for the K-MEG R&D project designed by the Korean government at the end of 2010. The finalists include GS Construction, Samsung Corporation, SK C&C, and DaeWoo Information Systems.

The main practice fields of the K-MEG project include:

• Integration of BEMS (Building Energy Management Systems) and DERs (distributed energy resources)

• Provision of DC electricity for EV charging and DC electricity compliant equipment in home and building spaces

• Deployment of “Electricity Marketplaces” in building areas (building owners could buy and sell electricity via the virtual marketplace)

• Development of intelligent automation and control systems for building spaces

• Development of “plug-and-play” components and control systems for commercial installations

Most of the conceptual structures that are being developed as a result of the project are similar to the conventional “microgrid.” However, K-MEG expands the scope and includes total energy solutions that cover electricity, thermal, gas, and water consumed in specific places such as buildings, communities, and industrial complexes. This project focuses on integrating and converging two technology practices related to the smart grid: microgrids and energy management systems. Consider the following “formula”:

K-MEG = Microgrid + Energy Management Systems

An Energy Management System could be HEMS (Home Energy Management Systems), BEMS (Building Energy Management Systems), or FEMS (Factory Energy Management Systems).

Pike Research’s definition of a “microgrid” can be summed up as follows: an integrated energy system consisting of DERs and multiple electrical loads operating as a single, autonomous grid either in parallel to or “islanded” from the existing utility power grid. In the most common configuration, DERs are tied together on their own feeder, which is then linked to the larger grid at a single point of common coupling.

The HEMS model is a general and concrete service structure for individual consumer premises. An operator offers total management and power-saving programs and services to help users reduce energy consumption in the home environment. Thanks to HEMS service offerings, consumers can view and pay bills, improve home energy management, and manage an expanded number of smart home devices remotely.

The BEMS and FEMS models and service structures are similar to HEMS, but have a wider scope. They target buildings, plants, farm, schools and university campuses, and various other C&I (commercial and industrial) clients.

In Korea, specific service categories have not been determined yet. The main service format is to offer energy conservation programs based on individual lifestyles that support demand response programs. More specific models could be generated as a result of the K-MEG project.

Korean market players assert that K-MEG could also address specific issues related to the smart grid and economic development in various global regions, including:

• Green buildings, BEMS, or Energy Zero Building in developed regions

• FEMS and industrial microgrid applications in emerging countries

• Energy resources for isolated communities in underdeveloped countries