Smart Grid - Developments and Implementations Prof. Gady Golan – HIT, Israel Dr. Yuval Beck – HIT, Israel 14-11-2012, Electricity 2012, Eilat

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Smart Grid Cost and Benefit

Smart Grid - Developments and ImplementationsProf. Gady Golan HIT, Israel

Dr. Yuval Beck HIT, Israel

14-11-2012, Electricity 2012, EilatHiT

Smart Grids Future Therell 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 ????????????

3Key reports and playersDOE and EPRI- Electric Power Research Institute and the Department of Energy-USA

JRC- Joint Research Center-Europe

4Some numbers- EPRI 2004Early 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 ; 5Some 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 ;62011 report

Benefits significantly worth the cost ;Investment level of $17 to $24 billion a year in the next 20 years ;7What is included and excluded in- cost ?Covers costs for Smart Grid ;

Includes the infrastructure for full customer connectivity ;

Excludes the cost of generation transmission ; 8What 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.9What 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 ;10Examples of benefits :Lower electricity costs to consumers. lower transmission and distribution (T&D) losses. Lower operation and maintenance costs. Reduced transmission congestion costs. 11Examples 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 ;12Who 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.

13Who are the beneficiaries ? (cont.)Consumers:

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

14Who 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 ;

15Who are the beneficiaries ? (cont.)More effective infrastructure.Effective development.effective maintenance.Effective operation.

16Who are the beneficiaries ?Society:More reliable supplies ; Consistent power quality for both domestic customers and all industrial sectors ; Manufacturing bodies ; Service providers ;

17Total BenefitTotal 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 !!!

18 Smart Grid Cost-Benefit complexityInvolves 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);19Risk Factors in Smart Grid ProjectsThe Impact of a Smart Grid projects 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.20Ten-Step Approach for Cost-Benefit Analysis- By EPRICharacterize the ProjectProject elements ;Functions Identify the Smart Grid functions ;Characteristics Assess the Smart Grid Principal Characteristics that are reflected in the project ;21Ten-Step Approach for Cost-Benefit Analysis (cont.)Estimate BenefitsBenefits Map each function onto a standardized set of benefit categories ;Baseline Define the project baseline and how it is to be estimated ;Data Identify and obtain the data needed to estimate the baseline and to calculate each type of benefit ;Quantified benefits Calculate quantitative estimates of the benefits ;Monetized benefits Use economic conversion factors to estimate the monetary value of the benefits ;22Ten-Steps Approach for Cost-Benefit Analysis (cont.)Compare Costs to Benefits

Costs Estimate the relevant costs ;

Cost-Benefit Compare costs to benefits ;2324


SummeryCost and benefits were defined.The mythology of assessing a Smart Grid project was presented.


27 Thanks !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 technologiesWhat 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 beneficiariesPositive and negative experiences in implementing Smart Grid projects and pilots.Integration of Smart Grid components.Sources available for raising financeInnovative finance options



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