1. 1 21st May 2014 Smart Grids: Increasing energy flexibility John Scott john.scott@chilternpower.com Economic and Policy Forum Meeting

2. 2 Very briefly My background:  Electricity Distribution & Transmission planning and operations  Manager of the UK National Control Centre  Engineering Director of National Grid Company in UK  Technical Director for Ofgem, the GB Energy Regulator  Director, Network Innovation for KEMA Consulting Ltd  Independent Consultant, Chiltern Power Limited  IET: Institution of Engineering & Technology – Energy Policy Panel

3. 3 What characterises today’s power grid in GB ?

4. 4 GB Electricity Transmission Commodity type Market Customers (homes)~28m Generation Capacity76 GW Peak Demand~60 GW Annual electricity consumption~ 300TWh Regulated Networks Transmission Max Voltage 400 kV 1 System Operator + 3 Trans. Owners Distribution Max Voltage132kV 14 Licenced Distribution areas (6 companies)

5. 5 GB Electricity Distribution Network Owners 2013 6 Owners but 14 Licensed DNOs Electricity distribution carries electricity from the transmission system and delivers it to consumers. Typically, it includes 132kV, 33kV and 11kV power lines, substations and transformers, and low-voltage (230/415 V) distribution wiring. In GB it does not include meters.

6. 6 BUSINESS AS USUAL Home Local Commercial Regional National Largely passive, domestic users Few intelligent appliances LESS DATA, LESS INTELLIGENCE, LESS CONTROL Good sensors Real time data Advanced processing 2 way data Sparse sensors Limited data Limited processing Limited two-way data Sensors hr data 1 / 2 Retail processing Limited one-way meter reading No sensors Fit and forget No electronic data transfer Manually read dumb meters No electronic data transfer One-way power Two-way power flows Transmission and Systems Regional distribution Commercial Properties Local distribution Homes Transmission is a well-instrumented active network © The Institution of Engineering and Technology 2011

7. 7 It’s all well established, so what’s changing, why are ‘smarter grids’ on the agenda? Note - Google offers 3 million references for ‘smart grid’ (and 35 million for ‘smart meter’)

8. 8 The great centralised grids of today… are largely‘one-way’ systems RESIDENTIAL DEMAND DISTRIBUTION NETWORK TRANSMISSION NETWORK CENTRALISED GENERATION DISTRIBUTION NETWORK DISTRIBUTION NETWORK RESIDENTIAL DEMAND RESIDENTIAL DEMAND RESIDENTIAL DEMAND One-way power flows Remote generation Little communications Limited automation A mainly passive network Delivering electricity to passive consumers The traditional paradigm: “Generate what is Consumed” acknowledgement Generation must always match Demand: there is no storage in the networks

9. 9 The great centralised grids of today… the challenges ahead acknowledgement Off-shore and on-shore wind generation Distributed Generation: central & dispersed Ageing networks EV charging PV small and large scale Heat Pumps & Air Con Energy losses Quality of supply & resilience Customer energy efficiency & smart meters New hydro & marine New nuclear with larger single loss risk Demands AND sources Network loading & voltage limits Less- predictable loading Less- predictable generation More complex system balancing Two-way power flows & raised FLs Loss of demand diversity Network stable operation Lower inertia power system Larger single loss Larger single loss: 1320 (Size B) increased to 1800 for new nuclear

10. 10 The great centralised grids of today… the solution opportunities ahead Smart Vehicle Charging Home automation Plus Hearts & Minds….. But now, within a new paradigm: “Consume what is Generated” acknowledgement Power Electronics Active Distribution Networks Real time ratings Condition Monitoring ‘DR’ Demand Response Smart metering & displays Electricity Storage Synthetic Inertia New materials Aggregation & VPP DC embedded & interconnection Demands AND sources Network loading & voltage limits Less- predictable loading Less- predictable generation More complex system balancing Two-way power flows & raised FLs Loss of demand diversity Network stable operation Lower inertia power system Larger single loss Generation must match Demand

11. 11 Demands AND sources Network loading & voltage limits Less- predictable loading Less- predictable generation More complex system balancing Two-way power flows & raised FLs Loss of demand diversity Network stable operation Lower inertia power system Larger single loss A new architecture for the power system Smart Vehicle Charging Home automation Plus Hearts & Minds….. Power Electronics Active Distribution Networks Real time ratings Condition Monitoring ‘DR’ Demand Response Smart metering & displays Electricity Storage Synthetic Inertia New materials Aggregation & VPP DC embedded & interconnection Networks for sustainability & security.… the smart grids of tomorrow acknowledgement Customer Engagement The Smart Grid Concept Bi-directional power and information flows

12. 12 How might these flexible ‘smart grids’ interact with the Built Environment?

13. 13 Network Solutions - all voltage levels A Wide Range of Potential Solutions: Built Environment linkages are highlighted here The Smart Grid Concept Bi-directional power and information flows 1.D-FACTS, STATCOMS, power electronic controllers for voltage management 2.Solid State tap changers (inc 11kV/LV) 3.Interconnection of D-STATCOMs to create a controllable DC network overlay 4.DC networks in homes and buildings, grid networks with multi-terminal systems 5.Superconducting and other designs of fault current limiters 6.Soft Open Point power electronics at LV 7.Intelligent switching logic and adaptive protection and control 8.Power electronics for synthetic inertia 9.Solid State transformers 10.Smart EV charging for homes, streets, car parks, intelligently co-ordinated 11.EV charging: contact-less & mobile 12.Cyber-secure communications and interfaces 13.Waveform cleaning and phase balancing 1.D-FACTS, STATCOMS, power electronic controllers for voltage management 2.Solid State tap changers (inc 11kV/LV) 3.Interconnection of D-STATCOMs to create a controllable DC network overlay 4.DC networks in homes and buildings, grid networks with multi-terminal systems 5.Superconducting and other designs of fault current limiters 6.Soft Open Point power electronics at LV 7.Intelligent switching logic and adaptive protection and control 8.Power electronics for synthetic inertia 9.Solid State transformers 10.Smart EV charging for homes, streets, car parks, intelligently co-ordinated 11.EV charging: contact-less & mobile 12.Cyber-secure communications and interfaces 13.Waveform cleaning and phase balancing 14.Electricity storage: interfaces, home and community scale 15.Potential for hydrogen production and storage 16.Microgrids for storms resilience with intentional islanding utilising DERs 17.Phasor Management Units (PMUs) and 18.Wide Area Monitoring, Control and protection (WAMPACs) 19.Forecasting, modelling and visualisation for planning /operational timescales 20.State Estimation for network observability 21.Active Network Management (ANM) 22.Home/Building Energy Management Systems, Smart Meters & Displays 23.Custom Private Networks 24.Hybrid technologies including hydrogen, heat and gas 25.Smart Communities, Smart Cities and the Internet of Things 14.Electricity storage: interfaces, home and community scale 15.Potential for hydrogen production and storage 16.Microgrids for storms resilience with intentional islanding utilising DERs 17.Phasor Management Units (PMUs) and 18.Wide Area Monitoring, Control and protection (WAMPACs) 19.Forecasting, modelling and visualisation for planning /operational timescales 20.State Estimation for network observability 21.Active Network Management (ANM) 22.Home/Building Energy Management Systems, Smart Meters & Displays 23.Custom Private Networks 24.Hybrid technologies including hydrogen, heat and gas 25.Smart Communities, Smart Cities and the Internet of Things

14. 14 However, there is another pressing agenda for the power grid…

15. 15 Adequacy of GB generation capacity?  Closure of non- FGD coal stations  New nuclear build still not confirmed  Renewables are incentivised  EMR not yet complete  Barrage / Lagoon proposals  De-mothballing?  New CCGT??  Shale gas???  National Grid contingency actions (i.e. WITHOUT RENEWABLES)

16. 16 Renewable power sources?  Renewables are growing in total capacity  Some 20GW peak  In 2013 renewables delivered 14% of GB energy use  Today, dependent on the wind and sun  Importance of forecasting, interconnectors, geographic spread and, in the future, demand flexibility and storage.

17. 17 Will Smart Grids and new flexibility really happen, do the costs/benefits stack up?

18. 18 Developments in GB: The Smart Grid Forum Shaping a shared Stakeholder View The DECC/Ofgem Smart Grid Forum was established in April 2011 DECC – the UK Department of Energy & Climate Change Ofgem – the GB electricity and gas regulator Identify future challenges for electricity networks; Guide the actions of Government/Regulator; Identify actions to facilitate the deployment of smart grids; Facilitate the exchange of information and knowledge; Help stakeholders better understand future developments; Track smart grid initiatives in Europe and elsewhere.

19. Smart Grid Forum Workstream 3: Evaluating Conventional and Innovative solutions To develop and populate a model that demonstrates the value of smart grid innovative solutions in distribution networks to address a range of low carbon scenarios The model is generic - it does not know network connectivity or calculate load flows or voltages It does reflect the characteristics of the DNOs networks across GB It does examine alternative investment strategies Many modelling parameters are user-definable The model is generic - it does not know network connectivity or calculate load flows or voltages It does reflect the characteristics of the DNOs networks across GB It does examine alternative investment strategies Many modelling parameters are user-definable

20. The Headline modelling results 20 Smarter strategies appear most cost effective Summary of Present Value of gross totex of distribution network investment (2012-2050)

21. 21 ‘No Clustering’ could reduce costs by 60% 2 nd generation EVs could increase costs by 50% A 5% change in the reinforcement threshold could increase costs by 40% Some Sensitivity Cases

22. 22 But….

23. 23 The IET’s warning flag… … and its challenges to the power sector

24. 24 The IET Position Statement  The December 2013 Position Statement summarises ground- breaking work  A classic problem of an ‘invisible’ risk because it grows incrementally  There is evidence already of changing GB system behaviours - hence The IET’s call for action  This is not a panic message, but solutions will require sustained effort and fresh thinking  Indeed, a ‘shock to the system’ after 80yrs of grid development  The work here is at a scoping level, not determining solutions. The Power Network Joint Vision (PNJV) Position Statement and Report are available at www.theiet.orgwww.theiet.org

25. 25 The GB view: Material Changes Ahead  The graphic summarises the rising complexity anticipated for our power networks  The scale of change is no longer incremental and will move the power network significantly beyond the bounds of its original Systems Engineering  Best practice in other sectors ensures a ‘Whole Systems’ approach through the role of a System Architect  But no party has this role in today’s industry

26. 26 What is Ofgem doing to incentivise network innovation? Answer: more than any regulator world-wide!

27. 27 The Low Carbon Networks Fund A new regulatory incentive to stimulate smart grid deployment Tier 1 funding of £16m per year is allocated between all DNOs (according to customer numbers) on an annual basis. This allocation will allow each DNO, with minimum bureaucracy, to undertake several small scale projects. Customers will fund a maximum of 90% of the cost of projects. £500m over 5 years (2010-2015) for bold network innovation projects Tier 2 funding a significant amount comprising £64m p.a. to encourage a small number of ‘flagship’ projects. Funds will be held centrally, with DNOs competing for funding. After 2015, these incentives will become the NIA Network Innovation Allowance, and NIC Network Innovation Competition After 2015, these incentives will become the NIA Network Innovation Allowance, and NIC Network Innovation Competition

28. 28 European Comparators Smart Grid Projects 2012 Excellent messages for GB’s positioning in Europe A strong platform for innovators, exports and growth?

29. 29 A Practical Example of smart grid innovation

30. An example: UKPN ‘Flexible Plug & Play’ Ackg’t: Sotiris Georgiopoulos, UKPN (33kV network)

31. An example: UKPN ‘Flexible Plug & Play’ Ackg’t: Sotiris Georgiopoulos, UKPN An Active Network Management system (ANM)

33. 33 Where might all this be leading? Is this in fact pointing to bigger changes than smart and flexible electricity….

34. 34 The Direction of Travel? Smart Community Smart Grids Smart Transport Smart Customers Smart Buildings E-Health Care Energy Storage

35. 35 The Direction of Travel? Communications Everywhere Intelligent Processing Big Data Analytics Peer to Peer “The Internet of Things” Sensors Everywhere Communities & Collaboration …Digital Cities …Intelligent Cities …Smarter Planet (IBM) …Digital Urbanism (CISCO) …Sustainable Cities (Siemens) Producer/Consumers Prosumers Producer/Consumers Prosumers

36. 36 The Consequences? Connecting Everything with Everybody Massive cost savings, new services and convenience Plus some new risks and opportunities for misuse…. “The Internet of Things” Nearly Free Goods and Services: ”Close to Zero Marginal Costs” Nearly Free Goods and Services: ”Close to Zero Marginal Costs” If so, our traditional economic model (competition by price) can no longer be dominant ‘Nearly Free’ is already with us: Non-profits, publishing, communications, information, 3D- printing, on-line higher education (MOOCs), Apps for smart phones, car sharing, spare room sharing…..renewable energy A New Economy is ahead: A hybrid of Collaborative Commons + Capitalism. What impact for Business? A New Economy is ahead: A hybrid of Collaborative Commons + Capitalism. What impact for Business? 1 2 Communications Everywhere Intelligent Processing Big Data Analytics Peer to Peer Sensors Everywhere Communities & Collaboration Producer/Consumers Prosumers Producer/Consumers Prosumers

37. 37 The Characteristics “The Internet of Things” Communications Everywhere Intelligent Processing Big Data Analytics Peer to Peer Sensors Everywhere Communities & Collaboration Producer/Consumers Prosumers Producer/Consumers Prosumers SHARING ON A MASSIVE SCALE ENERGY LOGISTICS COMMUNICATIONS MORE ABOUT ACCESS THAN OWNERSHIP BUILDING SOCIAL CAPITAL ENTREPRENEURIAL OPPORTUNITIES SUSTAINABLE QUALITY OF LIFE OPEN & DISTRIBUTED BUSINESS MORE ‘QUALITY of LIFE’, LESS ABOUT ‘GDP’ ‘NET NEUTRALITY’ OPEN, DISTRIBUTED, COLLABORATIVE ACCESS FOR ANYONE, ANYWHERE, ANYTIME

38. 38 A growing body of work… Watch his lecture from the RSA in London: http://www.thersa.org/events/audio-and-past- events/2014/a-world-beyond-markets Delong & Summers, The New Economy Univ of California, Berkeley, 2001 http://ideas.repec.org/a/fip/fedkpr/y2001p1 1-43.html

39. 39 These changes may take decades, but they are fundamental. Q – do the construction, engineering, and technology sectors have insights to offer? If so, they must ‘reserve their rights to play’. But, do they currently have sufficient influence?

40. 40 Some key messages to summarise

41. 41 In Summary The landscape for power grids is set to change: Disruptive challenges are ahead: smart solutions will be needed 1 Whole-systems thinking is needed: a System Architect for the grid? 3 Consumer & business engagement will be key to the changes 2 We can expect Near-Zero Marginal Prices: changes ahead for our economy 4 … real impacts for business and wider society.

42. 42 Smart Grids: Increasing energy flexibility Thank you for your attention Discussion John Scott, Director, Chiltern Power Ltd. www.chilternpower.com +44 (0) 7771 975 623

43. 43 Spare Material

44. 44 Is today’s framework creaking already? Fundamental design changes require a whole-systems view: but no one has accountability as the System Architect Rising inter-dependencies and complexity: electricity, heat, gas, comms, big data, transport, and consumers at scale The skills deficit: future support for customers, clients and supply chains The consultation burden from DECC and Ofgem (now 1/week from DECC, 4/week from Ofgem) Short termism: electoral cycle times & the Senior Civil Service rotational system Is there sufficient strategic capability?

45. 45 Hannah Nixon (Joint Chair) Ofgem Sandy Sheard (Joint Chair) DECC Mike Calviou National Grid Dave Openshaw UKPN (DNO) Steve Johnson ENWL (DNO) Phil Jones CE Electric (DNO) Mark Mathieson SSE (DNO & TO) Chris Harris RWE nPower Ashley Pocock EDF (Supplier) Tim Rotheray CHP Association John Scott Chiltern Power Judith Ward Sustainability First Jim SutherlandScottish Power (DNO) Robert SymonsWPD (DNO) An open selection process for membership was run by the Government/Regulator jointly Membership List (by invitation) at April 2014 Yselkla Farmer BEAMA Chris Welby Good Energy John Mulcahy British Gas Gavin Jones Electralink Duncan Botting PB Power Steve Unger Ofcom Nick Jenkins Cardiff University Ben Davison OLEV (EVs) Sarah Bell DSR Coalition