Smart Grid - Developments and Implementations

Prof. Gady Golan – HIT, Israel

Dr. Yuval Beck – HIT, Israel

14-11-2012, Electricity 2012, Eilat

HiT

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Smart Grids Future

•There’ll be new developments to add benefits to the power grid ;

•Cost vs. Benefit analysis must be performed for real implementation ;

•Is it worth it ?•Who is going to pay ?•What are the technological challenges ?•Can we fail ?•???????????

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Key reports and players

•DOE and EPRI- Electric Power Research Institute and the Department of Energy-USA

•JRC- Joint Research Center-Europe

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Some numbers- EPRI 2004

•Early studies (2004) showed that Smart

Grid will require $160 billion in net

investment with benefit to cost ratio of

4:1 ;

•Reduce overall CO2 emissions by 2030 by

58% by the electric sector ;

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Some numbers- EPRI 2004 – cont.

•Cost of power disturbances in all business

sectors: $104-$164 billion a year –

outages ;

•$15-$25 billion due to power quality ;

•Blackout = $10 billion per event ;

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2011 report

Benefits significantly worth the cost ;

Investment level of $17 to $24 billion a year in the next 20 years ;

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What is included and excluded in- cost ?

•Covers costs for Smart Grid ;

•Includes the infrastructure for full customer connectivity ;

•Excludes the cost of generation transmission ;

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What is benefit ?Benefits are outcomes which have value for someone

!

• Types of Smart Grid benefits :

▫Economic-reduced costs, or increased production at the same cost, that results from the improved utility system, efficiency, and asset utilization.

▫ Reliability and power quality - reduction in interruptions, service quality, assistance improvement, and power quality events.

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What is benefit ? (cont.)

▫Environmental- reduced impact of climate change and effects on human health due to pollution ;

▫ Energy independency- reduced oil and gas dependence ;

▫ Safety and security- increased cyber security and reductions in injuries, loss of life and property damage ;

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Examples of benefits :

•Lower electricity costs to consumers.

• lower transmission and distribution (T&D)

losses.

•Lower operation and maintenance costs.

•Reduced transmission congestion costs.

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Examples of benefits (cont.)• Reduced cost of power interruptions ;

• Better power quality ;

• Reduced damages from greenhouse gas

emissions.

• Extension of the life of both central stations

generating equipment, and T&D equipment ;

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Who are the beneficiaries ?

•Consumers: ▫ Can balance or reduce their

energy consumption with a real-time supply of energy.

▫ Variable pricing will provide consumer incentives to install their own in-home infrastructure that supports the Smart Grid development.

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Who are the beneficiaries ? (cont.)•Consumers:

▫The smart grid information and communication infrastructure will support additional services - not available today.

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Who are the beneficiaries ?

• Utilities (generators, transmission system operators, distribution system operators and suppliers): ▫Can provide more reliable energy ;

▫ Particularly during challenging emergency conditions ;

▫Manage their costs more effectively ;

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Who are the beneficiaries ? (cont.)

▫More effective infrastructure.

▫Effective development.

▫effective maintenance.

▫Effective operation.

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Who are the beneficiaries ?

•Society:

▫More reliable supplies ;

▫Consistent power quality for

both domestic customers and

all industrial sectors ;

▫ Manufacturing bodies ;

▫ Service providers ;

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Total Benefit

•Total benefits are the sum of the benefits to utilities, consumers and society at large –

except that any transfer payments between these beneficiary groups must be taken into account !!!

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Smart Grid Cost-Benefit complexity•Involves a large number of technologies,

programs and operational practices;

•Impacts on all the operational areas of the electricity value chain in an interlinked way (transfer of costs and benefits);

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Risk Factors in Smart Grid Projects• The Impact of a Smart Grid project’s scale and

complexity – Uncertainties create a financial risk - a smart

meter plan may prove to be less than the stated projections.

• The “Systems Integration” Effect –

• The costs and benefits of a partial, “stand alone” Smart Grid

implementation might be less attractive than the costs and

benefits of a broader, holistic program.

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Ten-Step Approach for Cost-Benefit Analysis- By EPRI

•Characterize the Project1. Project elements ;2. Functions – Identify the Smart Grid

functions ;3. Characteristics – Assess the Smart Grid

Principal Characteristics that are reflected in the project ;

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Ten-Step Approach for Cost-Benefit Analysis (cont.)

• Estimate Benefits4. Benefits – Map each function onto a standardized set

of benefit categories ;5. Baseline – Define the project baseline and how it is to

be estimated ;6. Data – Identify and obtain the data needed to

estimate the baseline and to calculate each type of benefit ;

7. Quantified benefits – Calculate quantitative estimates of the benefits ;

8. Monetized benefits – Use economic conversion factors to estimate the monetary value of the benefits ;

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Ten-Steps Approach for Cost-Benefit Analysis (cont.)

•Compare Costs to Benefits

9. Costs – Estimate the relevant costs ;

10.Cost-Benefit – Compare costs to benefits ;

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Summery

•Cost and benefits were defined.•The mythology of assessing a Smart

Grid project was presented.

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• Thanks !

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Subjects for Discussion • New developments in Smart Grid architecture.• What are the major challenges ahead?• What are the Smart Grid essential Components?• Investing in new technologies• What is the challenges which implementation of Smart Grid

projects face? • Smart Grid Cost and benefits.• Smart Grid importance as viewed by Israeli Government and

the Electric Company.• Key drivers, experiences and beneficiaries• Positive and negative experiences in implementing Smart

Grid projects and pilots.• Integration of Smart Grid components.• Sources available for raising finance• Innovative finance options