1. A COMPARATIVE STUDY OF S MART G RID DEVELOPMENT IN DEVELOPED AND DEVELOPING COUNTRIES ­­­­ CMI Conference 2014: Mobile communications in developing countries Wireless@kthÓscar Álvarez, Amirhossein Ghanbari, Jan Markendahl

2. Outline Context of the study Research questions Study Technology development Public initiatives Regulator policies Economic situation/Business perspective of the country Conclusions 2

3. Context of the study Forecasts fast growth in M2M connections Internet of Things vision Ericsson vision: more than 50 billion connected devices by 2020 Everything that will be benefit from being connected will be connected Source: 2014 Cisco report

4. Context of the study Within M2M, Smart Grid offers business opportunities for classical telecom actors: MNO´s and Telco vendors Main barrier: Lack of regulation and business models The need of research seeking to define suitable business models and regulations appear naturally Goal of the techno-economic study: Providing insights on Smart Grid development from developed and developing countries Country selection: Australia, Sweden, Brazil, China

5. Research questions What are the commonalities for Smart Grid communications development in developing countries? And in developed countries? What is driving Smart Grid communications development in developed countries? And in developing countries? How can the different Smart Grid communications development affect business strategies for utilities in different countries?

6. Description of the study Four different aspects are considered on this study: Technology development. Smart Grid state of the art in the country. Public initiatives. Existence or not of Smart Grid public plans and drivers and motivations behind them Regulator policies. Regulation status in the country, level of liberalization Economic situation/Business perspective of the country. Macroeconomic analysis of the country and its energy sector

7. Technology development Smart meter penetration. Percentage of smart meters installed. Relevant pilot projects divided in five categories:  Pilot project on Smart Metering.  Pilot projects on Integrated Systems. Focuses on the integration of different Smart Grid technologies and applications, for example projects including smart metering and substation automation.  Pilot projects on Home Application. Includes projects which address new applications at home or directly involved users.  Pilot projects on Transmission and Distribution automation. Refer to projects dealing with automation upgrades of the electricity grid, at the transmission and distribution level.  Pilot projects on Others. Smart cities, Renewable energy or Electric vehicle projects Classification framework from Virginia Tech Clearing House and EUUS council and used by the JRC-EU. Relevant pilot projects from Smart Grid Global Report 2013.

8. Technology development *Siemens ** Brazillian roadmap ***Ericsson **** IEEE Classification framework from Virginia Tech Clearing House and EUUS council and used by the JRC-EU. Relevant pilot projects from Smart Grid Global Report 2013. 8 Technology developmentAustraliaSwedenBrazilChina Smart meters installed23 %100% 7,5 % (2014 prediction) 27% Nª of pilot projects125 11 Pilots projects on Smart Meters2063 Pilots projects on Integrated Systems 2462 Pilots projects on Home Application1000 Pilots projects on Transmission and Distribution Automation 0004 Pilots projects in Others7102

9. Public initiatives To understand what are the motivations and drivers for Smart Energy in every country, which will be different and have implications when analyzing Smart Grid development and defining business strategies.  Existence of Smart Grid public programs or roadmaps  Identification of the main drivers 9

10. Public initiatives 10 Public initiatives Australia SwedenBrazilChina Smart Grid Public programs Yes Main motivation (s) Renewable energy and Energy efficiency Renewable energy, improved services and energy efficiency. Development of the power grid, energy efficiency and avoiding fraud. Renewable energy, development of the power grid state and energy efficiency

11. Regulator policies Energy is a highly regulated sector:  Public vs Private market shares (Generation and Distribution)  HHI Herfindahl index. (Generation and Distribution)  Description of retail market Herfindahl index: measure of the size of companies in relation to the industry and an indicator of the amount of competition among them. Possible range of values: 0 = Perfect competition 10000 = Monopoly 11

12. Regulator policies 12 Regulator policiesAustraliaSwedenBrazilChina Market Power shares (public vs private) Generation: 90-10 Distribution: N/A Generation: 66-34 Distribution: N/A Generation: 90-10 Distribution: 36-64 Generation: 96-4 Distribution: 100-0 HHI Index Herfindahl Generation: 3147 Distribution: N/A Generation: 2569 Distribution: 621 Generation: 1085 Distribution: 655 Generation: 306 Distribution: 6400 RetailFull competition Full competition market Free-trade environment No competition market

13. Economic situation/Business perspective Gathering of different relevant macro-economic aspects in order to analyze and understand the economic situation and the business perspective in these four countries. GDP: Evolution, forecasts and per capita Energy consumption: Overall, industrial and per capita 13

14. Economic situation/Business perspective 14 Sources: World Bank database, International Energy Agency Economic situation/Business perspective AustraliaSwedenBrazilChina GDP (billion dollars)1,5055572,2429,181 GDP per capita (dollars)64,863 57,909 11,310 6,747 Average GDP annual growth predictions 2015-2020 (%) 2,832,641,56,16 Average GDP Annual growth 2003-2012 (%) 3,0042,143,7510,21 Overall Energy consumption (gWh)1,117,22290,160400,0005,256,064 Industrial Energy consumption (gWh)432,77738,228150,000 (2009)3,900,000 Industrial Energy consumption (%)38,742,437,574,2 Energy consumption per capita 2009- 2013 (MWh/capita) 10,5514,032,443,3 Energy consumption world rank1726101

15. Main conclusions on country analysis: Mainly driven by public policies and roadmaps (in some cases private players are also key actors). Development starts with Smart Metering and finishes with Integrated Systems and Transmission and Distribution automation. Different development stages should be considered when defining business and regulation strategies. Different motivations in different countries. Different drivers define the development and its focus 15 Conclusions

16. Commonly highly regulated in the generation and distribution side, liberalized retail sector High state control and big energy companies with slow technology adoption. Collaboration and flexibility for new actors (MNO´s and Telco vendors) is a key aspect 16 Conclusions

17. Thank you! 17