The Architecture of Electricity is Evolving: What does this mean for investors?

We have talked about how technology is disrupting the power industry through distributed generation and in this article we’ll explore how advances in technology are creating profitable opportunities to invest in energy storage and how the smart grid will change the power industry as we know it.

Energy storage is a set of technologies capable of storing previously generated electricity and releasing that energy at a later time. This is useful for a number of reasons:

  • A disruption in one section of the grid would affect a smaller portion of users and an alternative supply source would be available to limit power interruptions.
  • Renewable energy such as solar and wind could be stored for later use, providing backup support in the event of a power failure and helping to optimize transmission and distribution systems. In addition, stored energy would help stabilize throughput, keeping the grid efficient through both peak and off-peak periods, (see chart below).
  • In a world of aging infrastructure, power storage could also help manage voltage fluctuation and respond to demand without wearing down the grid.

Kensington believes there are profitable investment opportunities developing in energy storage and will continue to look at opportunities in this developing area.











Source: Alberta Electric System Operator, (March 16, 2015)

Smart electricity grids are also changing the power industry in that they are more stable, increase efficiency and will allow machine-to-machine communication. Similar communication already exists on a smaller scale, but smart grids would connect more devices, allowing a more effective integration of transmission and distribution systems.

Distributed generation, a more decentralized model, is one method whose value increases immensely with machine-to-machine communication. The concept envisions much of the grid’s power generation capacity as smaller in scale but located closer to consumption centres.

Machine-to-machine communication not only allows for automation of the grid but also facilitates better planning and improved management of electricity demand.

As technology continues to disrupt the power industry, Kensington is seeing more opportunities for investors to get involved in a stable and growing industry that is becoming more and more reliant on private sector investments.

As the smart electricity grids become a reality and energy storage becomes profitable, Kensington will be at the forefront of smart alternative opportunities.


Power is generated at a central station and is sent through high-voltage transmission lines to a substation closer to consumers, where the voltage is lowered.

The electricity then travels across lower-voltage lines to transformers, which convert it to an even lower voltage before it is delivered to households and businesses.

This is a hierarchical, one-way transmission and communication system. In contrast, smart grids act as an enabler, bridging a host of other technologies to slowly convert the power grid from a hierarchical transmission system to one that is increasingly bidirectional.