Presentation on theme: "Smart Grids and Smart Metering a key for a low carbon energy future"— Presentation transcript:
1 Smart Grids and Smart Metering a key for a low carbon energy future Péter KaderjákDirectorRegional Centre for Energy Policy ResearchMarch 20, 2013
2 Outline of the presentation Traditional electricity networksThe vision of smart gridsWhat is smart metering?Costs and benefitsRegulatory challengesBasic market modelsAppendix: pilot projects
3 1.Traditional electricity networks CharacteristicsLarge, centralised electricity generationUni-directional flow of electricity, informationPassive customersRare communication between system operator and system users
4 Challenges to traditional networks Customers become electricity producersThe spread of Decentralized GenerationMotivation: technology development (gas based microgeneration) and renwables penetrationReverse electricity flow in the networkCustomers can provide electricity storage servicesBatteries of electric vehiclesDevelopment of electricity marketsHourly electricity price signalsMore flexible reaction to prices from customers becomes possible – can shift electricity use towards low cost periodsHelps system management by reducing peak demand at low cost21st century IT developmentFast and flexible communication of system operator and its users
5 2.The vision of smart grid infrastructure CharacteristicsDecentralised generationBi-directional flow of electricity & informationActive customersActive communication of system operator and system users
6 Smart grids for a better energy sector The future grids (electric, gas, etc.) need to facilitate:Energy efficiency:to change consumer behavior and fend off “rebound effect”Renewables and e-mobility:intermittent and distributed production and consumptionThe grids also need to be more cost-efficient and reliable.4A transition towards smart grids, in which smart metering is to play an important role.
7 Main smart grid initiatives in the EU Smart Grid Task Force set up by the European Commission to outline expected services, functionalities and benefits of smart grids:4direct interaction and communication among consumers, suppliers and market players 4direct control of consumption patterns; backbone of decarbonized power systems 4integration of RES and EV 4maintaining availability for conventional power generation and system adequacy 4new market in engineering, electronics and IT sectors can enhance worldwide competitiveness of EU companies 4etc.Smart grid priorities of the EC:Developing common European standardsAddressing data privacy and security issuesEstablishing a regulatory framework to provide incentivesGuaranteeing an open and competitive retail marketContinuous support for innovation and its adaptation
8 Smart grids: EU tendencies Between , €5.5bn invested in about 300 smart grid projects in Europe (of which €300mn from EU budget)But, e.g., still only about 10% of households have smart meters, and most do not utilize their full capabilitiesAbout ¾ of investments in smart meters; second largest category is investments in integrated systemsOther main project categories: power storage, home applications, distribution automation, transmission automationLargest project in Europe: Italy’s smart meter roll-outA change in the composition of investments is expected: the EC forecasts that 15% will be spent on smart metering deployment and 85% to upgrade the rest of the system.Smart metering may not prove the most expensive part of the system, but it will be a precondition for the whole system to operate
9 3. What is smart metering (SM)? Smart metering is more than just smart meters:Electrical meters – instead of traditional electromechanical onesRelated hardware equipment (e.g. home displays)Communications networkData management and control centerconsumption dataSmart meter(s)Utility / Service providerremote load controls / disconnectionreal-time informationenergy reporting, dynamic energy tariffs, energy analysis & adviceComputer / web interface / mobile / home displayA scheme of smart meteringBuilding control centerheating, cooling, ventilation, electrical appliances
10 What is smart metering (SM)? (cont’d) Although smart metering is most often envisaged as a part of a smart grid (or “smart homes”), it can also contribute to a greener, more efficient and more stable energy sector in itself by:4showing data to the consumer to induce more energy consciousness4allowing time-of-use tariffs for demand-side management and peak-demand shaving4allowing continuous diagnostics of the grid and observing electricity theftBut smart meters alone cannot do the job:4a complex solution including the hardware and software, and also an appropriate selection of tariffs and services (e.g. data analytics and advisory for customers) is needed.
11 Requirements for smart metering Interval meter data:Load profile measurement for intra-hour intervalsRemote meter reading and data processingRemote meter management:Power reduction, disconnection, demand managementMeasurement of consumption and generation by distributed unitsAbility to manage multiple tariffsRemote message transfer from market players to consumers and generators (e.g. price signals)Information display for consumption statisticsPower quality measurementContinuity of supply and voltage qualityBidirectional communication (via PLC, GSM, GPRS, etc.)Not just for electricity: also for gas, water, district heating, appliances.
12 Privacy and security issues Privacy of consumers:4ensuring that consumers are not subjected to unwanted targeting, profiling and marketing activityData safety for competing suppliers:4ensuring the security of sensitive business data4multi-utility systems are especially exposed to this problemData security:4protection against hackers (and stealing consumers)EU recommendations:4standardization is needed4distinguishing personal and non-personal data4the Netherlands: roll-out delayed due to privacy issues
13 4.Potential benefits of smart metering 4Savings on bills4Quicker and easier supplier switching4Increased competition among retailers4More accurate billing4Prepayment options4Increased level of services4Remote connections and disconnections4Faster fault location and reconnection after outages4More accurate calculation of network losses and reactive power4More accurate monitoring of continuity of supply and voltage qualityConsumersDSOsMetering companiesEnergy retailers4Cost savings by avoiding manual meter reading4More accurate data4Better input data for designing pricing options and energy management services4Reduction in costs of managing queries regarding bills4Reduced theft4Reduced bad debt costs by allowing remote disconnection and prepayment options4Cost savings on the administration of supplier switching4Better planning for balancingGovernment / society4Overall energy savings4More cost-efficient energy sector4Support of distributed generation and the integration of renewables
14 Costs of smart meters Costs can arise from a variety of sources: Largest part is usually the initial cost of installationSome variable costs can increase: e.g. maintenance and data management costsNew cost item: the variable cost of communicationSmart metering devices likely consume more power than traditional meteringCosts arising from security and safeguarding data privacyA multi-utility system can result in savings compared to parallel individual systems4common optimization of meter reading and maintenance costs, e.g. by shared communication system and display
15 5. Regulatory challenges Smart grid deployment is a regulation-driven process4Regulatory support in remunerating investments is crucial.Commonly a separate metering charge is included in energy bills:1. Smoothed charge:4for long-term cost recovery2. Annually varying charge:4reflects the relation of costs and benefits for each year3. Upfront charge, followed by a lower regular charge:4upfront charge for investments, regular charge for operation4An important question: what share of the costs can or should be passed on to consumers?
16 6. Basic models of smart metering Three basic models of smart metering can be differentiated:Distributor (DSO) modelTrading company (retailer) modelIndependent metering company modelGeneratorWholesalerTSOTraderDSOEnergy chainData centerFinancial linkSmart metering deviceInformation flowConsumer
17 SummarySmart metering must be a complex solution involving “smart” services and tariffs – ideally pointing towards a smart grid with renewables integration, energy efficiency and increased security of supplyDeployment of smart metering solutions always boils down to a question of costs and benefitsA major challenge for regulators is the remuneration of investments as costs often emerge at different actors than most benefitsPrivacy and data security is crucial. So is the protection of vulnerable householdsFor different markets, different solutions: pilot projects are necessary before widespread roll-out
20 Pilot projectsBefore large-scale deployment, usually pilot projects – regional or nationwide – are carried out in most countries. The aims of pilot projects are usually threefold:Research of technologyAnalyzing consumer behaviorTesting cooperation among utilitiesall three in a context of a cost-benefit analysisThree examples:4the United States, Italy and Ireland
21 Pilots: United StatesBy May 2012 already 36mn meters installed, 65mn expected by late 20152008 Stimulus Bill gives a significant tax advantage for installing smart meters and gridsFinancing: utilities typically seeking guaranteed cost-recovery with distribution-based surchargeA key question is rate decoupling: removing utilities’ incentives of selling as much energy as they canIn California, a USD 1.7bn undertaking by PG&E since 2006As a result of state-wide policy, but remote meter reading, remote disconnections and outage management were also important factorsPilot results show that most consumers have very low demand elasticity and do not change their consumption patterns much – but all of them pay for the programMost utilities can report economies of scale when installing smart meters for both electricity and gas with a common communication system
22 Pilots: United States (cont’d) In standalone gas smart meter deployments a very low NPV and no significant demand response was reported ⇒ consumer protection group Ratepayer Advocate filed protest, seeking least-cost alternatives to smart metersQuestions remain about the impact on low-income consumers: potential effects depend strongly on different climates, price zones and customer demographics (e.g. peak-time air conditioner usage among the elderly is not everywhere a problem)The role of smart tariffs deemed important: “There is no point in having smart meters if you’re still going to have dumb rates.” (a representative of the Washington, D.C. Public Service Commission)Cost savings in smart metering operations remain ambiguousRegulatory challenge of default service policies: in case of volatile intraday end-user electricity prices, how will essential electricity services remain affordable?
23 smart meters & data concentrators Pilots: ItalySmart metering deployment in electricity by Enel since 1999 – an evolution into a smart grid envisaged betweenUniquely large-scale project: 33mn meters have been installedReturn of investments estimated in 5 years after deploymentCost structure:73%smart meters & data concentrators20%installation7%systemLargest cost savings in field operations and logistics:Reduced failures of meters, outage & quality of supply monitoring, practically no on-site reading (99% less), much lower logistics costs due to standardization of metersSubstantial savings in energy losses:More accurate fraud detection: up to 50% more theft detectedModerate savings due to less bad loans
24 Pilots: IrelandNational pilot project in electricity and gas, nationwide deployment to take place betweenOverarching objective: measurable change in consumer behavior to reduce peak demand and overall energy usage when smart metering is coupled by DSMIn electricity: time-of-use tariffs together with detailed feedback to the consumer in their billsMain results so far: a reduction of 2.5% in electricity consumption and 8.8% in peak demand91% of consumers reported they found home displays effective in helping them reduce their peak loadsFuel poor households’ behavior matched that of the average consumerIn gas: Bi-monthly changing tariffs led to a 2.9% reduction in overall gas usageMost smart metering options considered exhibit an investment with a positive NPV