THE BRAZILIAN ENERGY SYSTEMS AND SMART …...electricity generation and in the eighth position in electricity consumption (EPE, 2013). A large and robust system of generation, transmission

InternationalAssociationforManagementofTechnologyIAMOT2018ConferenceProceedings

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THEBRAZILIANENERGYSYSTEMSANDSMARTGRIDS–ANANALYSISUSINGTHETECHNOLOGICALINNOVATIONSYSTEMSAPPROACH

ALESSANDRODASILVALONGASchneiderElectric,EnergyBusiness,Brazil/CandidoMendesUniversity

[email protected]

CARLOSAUGUSTOCALDASDEMORAESCandidoMendesUniversity–RiodeJaneiro-Brazil

[email protected],[email protected]

ABSTRACT

Although it has one of the largest integrated power generation, transmission and distributionsystemsintheworld,Brazilstillfacesdifficultiesinconsolidatingthevarioustechnologiesthatmakeup Smart Grids solutions and in executing large projects in the sector, especially in distributionmanagement.Currently, someutilitieshavepilotprojects inoperation inasmallnumberofcities,but theseprojects face severalobstacles in the technical, economic,political and legal areas. ThisstudyanalysesthereceptivitytotheSmartGridtechnologiesintheBrazilianelectricsectorcontext,bytheapplicationofaframeworkthatallows:(i)toidentifytheobstaclestotheimplementationofSmartGridprojectsand (ii) topropose recommendations for innovationpolicies.Considering thatthe Smart Grids solution are composed by a wide gamma of technologies, thus study initiallyexaminedthewholesmartgridsolution,andthen focusedonan important technology:AdvancedDistribution Management Software (ADMS). The chosen framework adopts the TechnologicalInnovationSystems(TIS)concept,thatmapsthefunctionalpatternofaTIS,allowingtheevaluationofitsdevelopmentstagethroughtheidentificationofthestrategicpointsrelevanttoitsgrowth.Asa final product of the application of the framework, policy recommendations can be proposed tofosterthedevelopmentofresearch,projects,formationofnationalcompanies,implementationanddiffusionofknowledgeofsmartgridstechnologiesinBrazil.Manyblockingmechanismstobefacedwere identified, such as obsolete regulation contracts; unfavorable tributary environment;bottlenecksintheR&Dnetworkformation;highmacroeconomicinstabilityinthelastyears,causinguncertainty and increasing the risk perception; high cost of the smart grids solutions and ADMS,specifically,and lackofgoodresultsonsmartgridresearches.To leveragesmartgridprojects, thepolicyrecommendationsinclude,amongothers:specificshort-termactions,firstlyconferringanewmodel of regulation of the electric system that allows distributors to make investments. In themedium term, it is necessary to perform a reform of taxes and the way in which services andsoftwarelicensesareimported.Inthelongtermitisnecessarytoinvestineducationandresearch,stimulating the partnership between agencies, companies, universities, institutes and researchcenters.ThestrengtheningofthisnetworkisfundamentalforthedevelopmentofR&DinBrazil.Asaconclusionof this research, itcanbesaidthatBrazilhasaweakfunctionalpatterncombinedwithspecificblockingmechanismsthatweakentheTechnologicalSystemandhamperthedevelopmentandimplementationofSmartGridstechnologies.

Keywords:SmartGrid;ElectricalEnergy;TechnologicalInnovationSystems;InnovationPolicies


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INTRODUCTION

Brazil is in the tenth position among the countries that have the largest installed capacity forelectricitygenerationandintheeighthpositioninelectricityconsumption(EPE,2013).Alargeandrobust system of generation, transmission and distribution of electric energy provides access toelectricity to 99.6% of the population (IBGE, 2013). The Brazilian energy matrix, predominantlyhydroelectric(with65%,complementedbythermoelectricplantswith18%,biomasswith9%,windwith 6%, nuclearwith 2% and solarwith less than 1%),when in normal operation conditions canproduce up to 90% of all the energy needed to supply the cities throughout the 8.5million km2

territory(ANEEL,2016).However,intimesofrainscarcityandlowplantreservoirs,severalgasandcoal-firedpowerplantsmaygo intooperation,causingdamagetotheenvironmentand increasingthepriceofenergyfortheconsumer.

The Brazilian distribution systems,which operate through concessions to private companies sincetheprivatizationprogramsof the1990s, faceseveraloperationaldifficulties,suchastechnicalandnon-technicallosses,highenergyprices,sizeofBrazilianterritory,energythefts,measurementandbilling problems, among others. The distribution systems still do not use the latest technologiesavailableinlargesystemsaroundtheworld.(Preto,2012).

Exceptforpilotprojectsinoperationinasmallnumberofcities,Brazilstilldoesnothavelarge-scalesmartgridprojectsimplemented,unlikecountriessuchastheUnitedStates,China,Germany,Italy,amongothers,whichare the countrieswith the largestelectricity infrastructure in the ranking. Inthis context, through the evaluation of the development capacity and adherence of Smart GridtechnologiesinBrazil,itcouldbepossibletoproposetheimplementationofsmartgridsasapartialsolutiontotheproblemsencounteredbythedistributionconcessionaires.Thisleadstothepurposeofthisstudy,whichistoanalyzethecurrentcontextoftheBrazilianenergysectoranditsreceptivityto Smart Grid technologies, specifically Power Management Software, by applying a frameworkbasedontheconceptoftheTechnologicalInnovationSystems(TIS).

For the development of a complex project in a particular receiver location, such as that involvingSmart Grid technologies, there must be a number of factors that support and stimulate it fromconceptiontocompletion.TheapplicationoftheframeworkbasedontheconceptofTISproposedbyBergeketal.(2008)willbringtogetherthemaincharacteristicsofthereceiver,suchasstructuralcomponents,actors, institutions,research,resources,market,entrepreneurship, incentive/blockingmechanisms,amongothers,andmakepossibletheidenticationofobstaclestotheimplementationofSmartGridprojectsandalsotheproposalofrecommendationsforinnovationpolicies.

GRIDTECHNOLOGIES

ConventionalGrid

In the conventional electrical network, the energy flows from the generating units to the finalconsumer, and there is no exchange of information between him and the generator. Distributorsalso have no real-time information on equipment installed throughout the distribution network,havelowfailurerecognition,andlittlemaneuverabilitythatguaranteesthecontinuityoftheelectricpowersupplyinthefaceofaseriousproblem,beitload,generationordistribution.Ittakesalongtimeforthepointoffailuretobeidentifiedandtheproblemsolved.Inaddition,energyutilitieshavevery little real-time informationonhowconsumersbehave,whether large,mediumor small. This


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lackof iterationshinderstheplanningandthe improvementsthatperiodicallyneedtobemadeinthe electrical networks, besides hampering safety procedures and reliability. Consumers do notreceive timely information on consumption and tariffs. In many countries this panorama haschangedinrecentyearswiththeadventofthesmartgrids(Islametal.,2014).

SmartGrids

The term "Smart Grid" should be understood more as a concept than a specific technology orequipment.Thesmartgridsconsistofanewmodelofelectricalnetworkarchitecturewherethereisthe application of information technology, through the introduction of meters, communicationnetworks,supervisoryandcontroldevices,protectiondevicesandmanagementsoftware,whichareinterconnected and capable of conferring autonomy and intelligence functions to the electricalnetwork, also allowing manual operation of the system when needed. These technologies,combined, will allow consumers, generation, transmission and distribution companies to haveupdated real-time data, making the operation more dynamic, efficient and reliable (Amin andWollenberg,2005;Parketal.,2014;CGEE,2012).

ThevisionpresentedbytheInternationalElectrotechnicalCommission(2010)coverstheconceptofSmart Grid as one of the major trends in technology that comprises the processes from thegenerationofenergytoitsusebythefinalconsumer.Itscompletefunctionalityshouldencompassallpointsoftheelectricalsystemandberesponsibleforcontributingtoitsreliablesupply.ThemainpurposeofSmartGridsystemsistoprovidegeneration,transmissionanddistributioninasafeandefficientwaytoconsumers.

Furthermore, according to Falcão (2009) and Giordano and Fulli (2012), the introduction of theconceptofsmartgridswillproducesasharpconvergencebetweentheinfrastructureofgeneration,transmissionanddistributionofenergyand the infrastructureofdigital communicationsanddataprocessing. In other words, in order to develop smart grid projects, there is a need to integratetechnology-related areas with a receptive local technological and production environment. Thereare significant differences in operation between the conventional power grid and the new smartgrids. The benefits of this smart system deployment directly impact social welfare. Giordano andFulli(2012)alsoarguethat“thedigitalizationoftheelectricitygridopensthewaytobundlevalue-addedservicestotheelectricitycommodity,andpossiblyshiftbusinessvaluetoelectricityservicesinlinewiththenotionsofefficiency,conservationandsustainability”andmay“contributetoreversetheconsumption-drivenparadigmoftheelectricitysector”(p.252).

AdvancedDistributionManagementSoftware

Smartgridmanagementsoftwareapplicationsaredevelopedbasedondataprocessingtechnology,informationtechnologyandelectricityconceptswiththegoalofmanagingenergyprocesses.SmartGridsystems ingeneral,morespecificallydistributionnetworkmanagementsoftwares,areusuallydeployedandoperatedbypowerdistributors.Thesecompanies,asresponsibleforthedistributionofenergytotheenduser,havelargecircuitsmeshedbycities/regionsand,consequently,avariedrangeofactivitiesneedstobedevelopedsothatenergyreachestheconsumerwithquality(Katic,2013).

Currently,energycompaniesfaceseveralchallenges,bothinthemarketandinthetechnicalaspect,such as the growth of regulatory processes, consumer pressures, the need to reduce carbon


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emissions, the adoption of renewable sources of energy generation and storage, meteorologicalproblems,andnetworkfailures.Asthepriceofenergyisregulated,thedistributioncompaniesseekto reduce their cost of operation to themaximum in order to achieve greatermargins, since thetariff adjustmentdependson concession contractswith thepublic regulatory agency (ANEEL) andother aspects. The approval of ANEEL and other institutions such as the CCEE and the Court ofAuditorsisrequired.

Powermanagementsoftware,betterknownasADMS,isanadvancedsoftwareapplicationusedtoimprove the operations of distribution networks. ADMS provides tools for dynamic visualization,monitoringandcontrolofthepowergeneration,transmissionanddistributionnetwork,combinedwith a large number of analysis, planning and optimization tools, with potential for reducingoperatingcosts,andtechnicalandnon-technicallosses(Katicetal.,2010;Katic,2013).

TheADMSisanintegratedsoftwaresystemforcontrolling,analyzingandoptimizingtheoperationoftheelectricitynetwork,meetingtherequirementsofthedistributionutilities,providing:real-timenetwork monitoring and control (SCADA), mathematical network model and power applications(DMS, EMS), incident management in the network (OMS), generation management (MSG) andbetteruseofenergygenerationsources,efficientfaultmanagementandimprovednetworkvoltage,networkanalysis(shortcircuits,protectionofrelays,losses,reliability,yields,etc.),optimizationandreduction of investments in power buildings, automation, etc ., reduction of peak loads in thenetworkandlossofenergy,andimprovementsinenergyqualityandcustomerservice.

From a sustainable perspective, besides the reduction of losses and optimization of the energydistribution process, another expected benefit of the system implementation is the reduction ofgreenhousegasesemission.AccordingtoDiLemboetal.(2009),itispossibletoobtainareductionofapproximately4%inelectriclosses.InBrazil,thiswouldmakeitpossibletoavoidthestart-upofthe standby thermoelectric generators. The distributionmanagement software is also capable ofhelpingutilitiestomanagedistributedpowersystems,suchassolarcellsandrenewablegeneration.

The ADMS solution is said to be partial since it is not capable of solving all the problems ofdistribution systems alone. Concomitant to the implementation of smart grids systems, it isnecessary to adapt and apply measurement, billing, communication systems, redundancy, andnetworkelementsthatcontributetotheoperation.

TECHNOLOGICALINNOVATIONSYSTEMS

This study employs a framework presented by Bergek et al. (2008) and based on the concept ofTechnologicalInnovationSystems(TIS).Theresearchpointsoutthatforthedevelopmentofanewtechnology theremust be a series of environmental TIS factors that, combined, act in its favour.Hekkertetal.(2007)presenttheconceptofinnovationasacombinationofhardware,softwareandorgware,whereorgwarereferstothevariouscomponentsofaninnovationsystem.Therefore,theproduct of innovation and its incentive/blockingmechanisms are intrinsically related. A completeanalysis of innovation in a particular area of knowledge requires that the study extrapolates itstechnicalcharacteristicsandcontemplatesallfactorsthatmayinfluenceitsdevelopment.ThisisthecentralbaseoftheframeworkbyBergeketal.(2008),thatpresentsstepsandfunctionsthatdetaileachstructuralcomponentof thesystemunderstudytobeappliedonSmartGridtechnologies intheBrazilianelectricsector.


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Therefore, Technological Innovation Systems depart from the general definition of systems as agroup of components serving a common purpose and establish amethodology for the completeanalysis of an area of knowledge, product or technology and its environmental TIS factors. Thatmeans that this methodology, presented as a framework, uses a sequence of actions to bedeveloped by researchers and policy-makers in order to identify key issues and to set goals, asshowninFigure1.Inthisway,systemscanbedefinedasthesetofactorsandrulesthatinfluencethe speed and direction that a technological change advances in a specific technological area(Hekkertetal.,2007;Bergeketal.,2008;Bergeketal.,2015).

Figure1:TISSchemeofAnalysis.Source:Bergeketal.(2008).

Thesuccessof innovations is largelydeterminedbythewaytheTIS isbuiltandhow itworks.Thetechnologyor its intrinsic knowledge is hardly incorporatedonly to the infrastructureof a region.However,eachcountryorregionshouldpromotereformstofacilitatethedevelopmentofaspecifictechnology.Inthisperspective,thecharacteristicsoftheBrazilianelectricsectorforthereceptivityto smart grid technologies will be analysed at every step of the model of analysis proposed byBergeketal.(2008),throughaflowchartofresearchandanalysisactivities,dividedinstages,mainlyfocusinginthefunctionalanalysis,aspresentedinTable1.

Table1:DetailingtheFunctionalPatternMappingProcess.

Activity Description

FunctionalPatternMapping

Thisstepaimstodeterminetheextenttowhichfunctionsarefilledin the TIS. Seven functions are listed for the analysis of thefunctionalstandard.

Function1:KnowledgeDevelopmentandDiffusion

This function captures the breadth and depth of TIS's currentknowledgebase,howitchangesovertime,andhowit iscombinedand diffused in the system. It can be expressed in number ofpublications, product launches, universities and research entities,citations, patents and companies of the branch and the learningcurve.

Function2:Influencein This function can be measured qualitatively by beliefs in growth


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thedirectionoftheresearch

potential, price incentives, taxes and subsidies, customerarticulation,andtheextensionofregulatorypressures.

Function3:EntrepreneurialExperimentation

Without vibrant entrepreneurial experimentation, the TIS inquestionwillstagnate.Themappingofthisfunctionisdonethroughthe number of new operators, including an establisheddiversification index, variety of applications, technology/solutionamplitudeandthesituationofcomplementarytechnologies.

Function4:MarketFormation

Generally, the market formation goes through three phases: (1)early stage,where immaturemarkets need to evolve, (2) a bridgemarket is formedwhere there isan increase involumeandactors,(3) a successful TIS ends in a mass market, when there is theexpansion of technology. The function can be expressedquantitatively(customernumbers, financialandproduction indices,etc.) and qualitatively (actors' strategy, current position ofregulation,etc.).

Function5:Legitimation

Legitimacy is a matter of social acceptance and compliance withrelevant institutions, that is, thenew technologyand its advocatesmust be considered appropriate and desirable by relevant actors.The function can be expressed by identifying how legitimacyinfluencesdemand,currentlegislation,theTISlegitimacyandagentsthatinfluencelegitimacy.

Function6:ResourceMobilization

The role can bemeasured in relation to the increasing number ofcapital towards the TIS, increasing the volume of investments andrisk capital, increasing the mobilization of human resources(companiesanduniversities,forexample),amongothers.

Function7:Developmentofexternaleconomies

This function is not independent, since it depends directly on theother six functions presented, since the generation of externalitieswill be influencedby the context of performance of each previousfunction. It can measure qualitatively and quantitatively. Forexample: the emergence of intermediate and complementarygoods, service providers, information flow that help thedevelopment of other technology, among others. Therefore, theanalysis must be made from the capture of the strength of thesefunctionaldynamicsthroughthesearchforexternalgains.

Thesystemfunctionsarenotindependent,butinteractandinfluenceeachother,furtherenhancingthedynamism that shouldbe considered in theanalysis. Forexample,Function3: EntrepreneurialExperimentation is intrinsically linked to Function 4: Market Formation, since for a strongentrepreneurial movement, there must be favorable conditions and a consolidated market. Thiscombination could boost Function 6: Resource Mobilization, since with the growth ofentrepreneurial activity, themobilization of resourceswill be inherent to the research processes,whichrequirefundingandresearchers,directlyinfluencingFunction1:KnowledgeDevelopmentandDiffusionandFunction2:Influenceinthedirectionoftheresearch(Markardetal.,2015).

Therefore, starting fromthepremise thatone functioncan influence theperformanceofanother,the functionalpatternbecomes interconnected,characterizingthe functionsystem,andcreatingavirtuouscycleofinteractions,aspresentedbyNegro(2007),andshowninFigure2.ATISmayhaveagoodfunctionalpattern,but ifsomespecificfunctionnegatively influencesanotherfunctioninthe


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system, it is possible that this could diminish the positive influence of the latter, and even tocompromisethefurtherdevelopmentoftheTIS.

Figure2:Interactionbetweensystemfunctions,Source:AdaptedfromNegro(2007).

METHODOLOGY

Themethodology consists of the application of the framework of Bergek et al. (2008) under theBrazilian context, analyzing the structural components, institutions, actors and networks, laws,norms, standards and rules, taxation, economic model, concession model and operation of theelectric system, educational system and developed research, incentive and blockingmechanisms,goalssetforthenextyears,amongothers.Also,followingNegro(2007),acollectionofchronologicalevents related to the technologyunder studywasperformed.Thisanalysisevaluates theBraziliancontextforimplementationofsmartgridsolutions,andADMSsoftwarespecifically.

Theprocessofmapping the functionsandcollectingdatawillbe implementedthroughaseriesofactivities,withclearlydefinedobjectives,suchasresearchontheacademicliterature,newspapers,websites, reports, magazines and publications on the subject; data collection and classification;allocationofeacheventwithinthestructureofthefunctionalpattern;datasummaryandgraphicalrepresentation;historicalnarrative;and results consolidation.For theanalysis,according toNegro(2007),itisnecessaryaseparationoftheeventscollectedintothecategoriesofthesevenfunctionsoftheframeworkofBergeketal.(2008),andalsotheassignmentofapositiveornegativesignaltoeacheventdependingonitsrelevancetothesystem.SeeTable2.

Table2:ClassificationofthemeasurementschemeoftheSystemFunctions.

Function EventCategories Sign


Conferences,Seminars,Linesofresearch,developmentofstudiesandpublicationsofarticlesandnews. +1


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Function2:Influenceinthedirectionoftheresearch

PositiveExpectationsaboutTechnologyEstablishmentofregulationsNegativeExpectationsaboutTechnologyExpressdeficitsinregulations

+1-1


Initiated/EnlargedProjectInterruptedProject

+1-1


Favorable tax conditions or entrepreneurialenvironmentUnfavorabletaxorbusinessenvironment

+1-1


TechnologylobbyingactivitiesTechnology support from government, academia orindustry.LobbyingactivitiesagainsttechnologyLackoftechnologysupportfromgovernment,academiaorindustry.

+1-1


SubsidiesorinvestmentsLackofsubsidiesorinvestments

+1-1


DevelopmentofpositiveexternalitiesDevelopmentofnegativeexternalities

+1-1

Then,afterthefunctionmappingandassessingprocess,theblockingandincentivemechanismsareidentified. Next, having collected all the information necessary to understand the system, policyrecommendations are presented to face the problems identified through the application of theframework.Thesepropositionsseektoencouragedevelopmentthroughthecorrectionoferrorsandminimizationofthedifficultiescurrentlyencountered.Successmodelsinothercountrieswereusedas a suggestion for specific reforms of Brazilian innovation policy items. Figure 3 summarizes themethodologyusedinthestudy.

Figure3:Studymethodology.

ANALYSIS,RESULTSANDDISCUSSION

In this section are presented the analyses related to each stage of the Technological InnovationSystems framework. From the point of view of a systemic model, the Brazilian technologicalinnovation process has several characteristics that hinder both the research process and thediffusionofnewtechnologies.Understandingthatadjustmentsmadeinspecificpointsofthesystemcanpositivelyalterandenhance the results, the factors that contributenegativelyorpositively tothedevelopmentoftheTIS,andthepropositionstosolvesuchquestions,willbeexamined.

Steps1and2:StartingPointandStructuralComponents

Theconstructionofthefunctionalpatternofthesystemisthemostdemandingstageofthiswork,since it requiresacomprehensive search forevents, selection,arrangementofempiricaldata into


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categories and functions, plotting of the graphics and development of the sequential narrative.However,theframeworkisnotlimitedtothestudyoffunctions,butonthecontrary,functionsarepartoftheframeworkproposedbyBergeketal.(2008)and,therefore,eachstageofanalysiswillbepresented in a specific item. Only at the end of the complete analysis process will the actualrepresentationof theTISbeobtained,whichwillcombineresults fromthestudyof functions, theevaluation and establishment of process goals, the identification of blocking and incentivemechanismsandthedevelopmentofpolicyrecommendations.Table3showsasummaryofthefirststepsoftheframework.

Table3:Summaryoftheframeworkexecutionfirstpart.

Nº Step Description

1 StartingPoint:DefinitionoftheTISinfocus SmartGridsinBrazil/ADMSSystems

2 IdentificationofStructuralComponents

Actors: Regulatory bodies and entities, producingsmart grid technology companies, customers,educational institutions, research institutes,development institutions, government, competitors,suppliersandinvestors.

Ininnovationnetworks,evenifunconsciously,innovationactivitiesarecoordinatedandtheresultofsuchcoordinationisthedevelopmentofinnovativeproductsandservices.Brazilhassomedifficultyinbuildingnetworksandstillreliesexcessivelyongovernmentactionstodeveloplargeprojects.Thisdependence,togetherwiththelackofresourcesfromofthepublicsectortosupportlargeprojects,meansthatthereisabottleneckinthenetworksformed.IncountrieswithlargeStateparticipation,such as Brazil, there is a need for government actions in the areas of regulation, financing,infrastructure, education and the patent system. Presently, the country lacks an effectivegovernmentcommitmenttoimprovementsintheseareas,andstrongersupporttotheformationofnewnetworks.AninstitutionalmodelofnetworksandconnectionsamongactorsisshowninFigure4.

Figure4:NetworkoftheSmartGridInnovationSysteminBrazil


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Step3:MappingtheFunctionalPattern

Through amore detailed and chronological analysis of the functions it is possible to identify thedifferencesbetweenthefunctionalpatternsoftheSmartGridTISasawholeandthemanagementsoftware TIS, specifically, as well as their levels of development. Following the methodologyproposedbyNegro(2007),graphswereplottedcontainingthecompilationofdatacategorizedintofunctionsandgatheredbyyear.SeeFigure5.Theeventsregardingsmartgridsystemspresentedineachgraphwerecollectedfrom2008to2016.Next,theclassificationreferredtoinTable3andthecontextualizationofthesequenceofeventswiththeevolutionofTISweremade.

Figure5:Consolidationofmappedandclassifiedevents

Table4summarizestheresultsobtainedduringtheanalysisofthefunctionalmappingofthesystem.


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Table4:SummaryoftheFunctionalPatternAnalysisResults.


3 FunctionalPatternMapping

ToverifytowhatextentthefunctionsarecurrentlyconsolidatedintheTIS,thatis,toanalyzehowthesystembehavesintermsofafunctionalstandardthatisasetofkeyprocesses.Thisfunctionalpatternmanifestsitselfintermsofsevenfunctionsconsideredintotheframework.

3.1 Function1:KnowledgeDevelopmentandDiffusion

Largenumberofpublications,holdingofvariousforumsandseminars,asignificantnumberofresearchesbeingcarriedoutinthearea.Knowledgeinagooddiffusionstage.

3.2 Function2:Influenceinthedirectionoftheresearch

Positiveexpectationsabouttechnology,expressedlackofregulatory.Increasingresearchfunding.

3.3 Function3:EntrepreneurialExperimentation Severalprojectsstarted.Severalcompaniesinthesegment.

3.4 Function4:MarketFormation

Favorabletaxconditionsforsomecomponentsofthesolution.Unfavorableentrepreneurialenvironment.Implementationofseveralpilotprojects.

3.5 Function5:Legitimation Technologysupportfromgovernment,academiaandindustry.Legitimacydeveloped.

3.6 Function6:ResourceMobilization

Largenumberofcompaniesdevelopingsolutionsandfundingresearch.

3.7 Function7:Developmentofexternaleconomies

Severalmarketsareorganizingtosupplythedemandandenjoythebenefitsofsmartgrids.

4 AssessingFunctionalityandsettingprocessgoals

TheSmartGridTIS,infact,isgrowinginBrazil.However,somefactorslimitthisgrowthandcreateobstaclestothedevelopmentoftechnologyinthecountry,makingthevolumeofnegotiationsandeconomicactivitiesonlyafractionoftheestimatedpotential.

Figure 6 represents the consolidation of the functions in a radar chart. It is possible to verify thelarge incidenceof events allocated in functions F1, F2 and F3. This configurationhelps to identifythat theTIS is in its initial stageandalso the levelofeach function.Not sooftenas the functionsmentioned above, butwith a certain incidence of events, Function 5 - Legitimation demonstratesthatsolutionsarerecognizedinthemarketbetweenpotentialconsumersandentities.


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Figure6:SystemFunctionDynamics.

ATISiscompletelyinfluencedbytheenvironmentinwhichitisinserted.Thus,whenperformingananalysisofthefunctionalpattern,thecharacteristicsofthisenvironmentaremanifestedintheformof mechanisms. These mechanisms may have a positive or negative influence on the TIS.Mechanisms that exert a positive influence can be called incentive mechanisms, whereasmechanismsthatexertnegativeinfluencecanbecalledblockingmechanisms.

This stage of the framework is concerned with identifying mechanisms that induce the TIS, aspresentedinTable5.Fromapolicyformulationperspective,itisimportanttoknowthemechanismsthatcontributetoshapingthedynamicnatureofasystem.Theremaybedifferentfactorsthatblockthedevelopmentof functions,and toachieveahigher functionality, it isnecessary toknowthesefactors and to take actions in the sense ofmitigating the blockingmechanisms and intensify theincentivemechanisms.Therefore,itisquitepossibletoestablisharelationbetweenthemechanismsand functions presented. Since the functions have already been identified and analyzed in thepreviousitems,itremainstolisttheblockingandincentivemechanisms.

Table5:FrameworkFinalSteps


5

IncentiveandBlockingMechanismsidentification

Incentivemechanisms:(1)beliefinthegrowthpotentialandlegitimacyoftechnology;(2)R&DfinancingbyANEEL,privatecompaniesandresearchinstitutes,and(3)articulationofwell-defineddemand.Blockingmechanisms:(1)unfavorabletaxenvironment;(2)unfavorableregulatoryenvironment;(3)lackofknowledgeofthesolutionandfitintotheclients'needs;(4)lowresultfromresearchand(5)fewuniversityprograms.

6 Keypolicyissues

(1)promotetaxreformorchangesinTISspecificlegislation;(2)capacitatelocallabor;(3)lobby(F5)tobedoneintheagenciestoupdatethegoverningenergyconcessionsrules;(4)creationofuniversityprograms,conductionofresearchandtrainingofendusers(clients);(5)improvementofinstitutionalnetworks.


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Figure7 shows the interrelationshipamong the functions, the incentivemechanisms, theblockingmechanisms and the key policies recommendation. In order to face the unfavorable taxenvironment, that leads to high price of smart grid solutions in general and more specifically ofmanagement software, there are two solutions: (1) to promote a tax reform or changes in thespecific legislation for the TIS, like harder regulation on the level of losses, tariffs readjustment,dynamicpricebydemandandconsumption;and(2)traininglocalmanpower.Thefirstsolutionistoreducethetaxratesonimportedproducts,softwarelicensesandservices.Thesecondsolutionaimsto empower the local labor force to avoid such taxes. These actions depend directly on theentrepreneurialexperience, the formationof themarket, theexpectationsabout the solutionandthemobilizationofresources,thesefunctionsbeingthefocusoftheactions.

Theunfavorable regulatoryenvironmentmustbe tackled through lobbying (F5) tobedone in theagencies,toupdatetherulesgoverningenergyconcessions.Thismodernizationwouldbring lowercoststotheconcessionairesand,consequently,tothefinalconsumer,whowouldhaveaccesstoamorereliableenergy.Thisisbecausesmartgridtechnologiesreducelossesfromtechnicalprocessesandtheftofenergy.Thisreductionoflosseswouldcontributetolowertheimplementationcostsonthetariffreadjustments.

Lackofknowledgeaboutthesmartgridsolutionmaybeoneofthecausesofpoorresearchresults,andbothmaybea consequenceofhaving fewuniversityprogramswith specific training in smartgrids. This is a typical example of how interdependencies between mechanisms can generatechainednegativeimpacts.Establishinganationalresearchandknowledgeprograminsmartgridsisone of the actions that would mitigate the negative impact of these mechanisms. This programwould cover university programs, research, and the training of end users (clients). The latter alsoaimstomitigatethepossiblelackoflegitimacy(Function5)amongsomeclients.

Figure7:RelationsbetweenMechanisms,FunctionsandRecommendationsforInnovationPolicies


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About Legitimation, it is important that consumers are engaged in developing smart gridtechnologies. In a scenario where consumers demand distributed generation resources, remotecontroloverelectronicequipment,real-timeinformation,amongothers,utilitieswillneedtoadapttothisnewlevelofelectricitysupply.Fromthisperspective,itispossibletostrengthenthesystemthrough the legitimacy of smart grid solutions in society. The policy-maker can use this systemicfeaturetostrengthenthefunctionalpatternofthesystem(RandelliandRocchi,2017).

FourimportantimplicationscanbeidentifiedforpolicymakerstoleverageTISdevelopment:(i)theexistence of an ambitious and stable long-term policy strategy; (ii) the existence of demandincentivesthroughtariffpolicies(feed-intariffs);(iii)acrediblepoliticalcommitmenttotechnology,ofgreatimportanceforanemergingTIS;and(iv)flexibleadjustmentsoftheelementsofthepolicymix,whichseemsvitaltosustaindevelopmentcontinuityoftheTIS(Reichardtetal.,2015).Figure8presentsamoredetailedplanofactionsonkeypoliciesandthe implicationsthatshouldbetakenintoaccount.

Figure8:BlockingMechanisms,KeyPoliciesanddetailedactions.

DistributionManagementSystemsSpecificStudy

Heretofore,thisstudypresenteditsdevelopmentonsmartgridtechnologies(asawhole)andtheirdeployment characteristics in Brazil. As noted earlier, smart grids are a composite of severaltechnologiesand,consequently,therearemanyinnovationsystems.Whendealingwithsmartgrid,thisstudycouldfocusonlyonapplyingtheframeworkofBergeketal. (2008),complementedbyamethodologyrecommendedbyNegro(2007),andpresenttheresults.Toanalyzemorespecificallythe technologies that compose smart grid solutions there are two options: (1) to elaborate acomplete study encompassing several smart grid technologies or (2) choose a specific technologyandstudyit.Thefirstoptionwouldrequirealargeamountoftimeforitsdevelopment,resultingina


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largerworkthantheoneproposedfortheresearch.So,thesecondoptionwaschosen,focusingonDistributionmanagementsoftwaretechnologyforamorespecificanalysis.Duringthestudyforthetechnologiesofsmartgridsasawhole,theADMSTISeventswerealsocaptured,andtheframeworkfortheADMSwasexecuted,sincetheyareincludedintheSmartGridTIS.

Table6consolidatestheresultsofthetwoinnovationsystemsframeworkconsidered,presentingaparallelbetweenthemintermsofthefunctionalpattern,andrelatingthefunctionalpatternoftheADMS TIS and the practical local characteristics of the system. The distribution managementsoftware TIS in Brazil is in a Formative phase, that is, it is still in the initial phase of systemdevelopment. There is little dispersed knowledge in the society about the solution (-F1); fewcompanies consider that the system is essential for theirdailyoperation (-F5); thereare very fewsuppliersforthissolution(-F3);thetaxconditionsandtheenvironmentforentrepreneursarealsonotfavorable(-F4);therearefewresourcesmobilizedforthisspecificissue(F6);andthepersistentregulatory deficit, as in the SmartGrid TIS, reduces the benefits after the implementation of thistypeofsystem(-F2).

Table6:FunctionalPatternConsolidationComparisonandADMSpracticalcharacteristics

Function SmartGridTISFrameworkOutputs

ADMSTISFrameworkOutputs

ADMSSpecificEventsAnalysis


Largenumberofpublications,holdingofvariousforumsandseminars,agoodnumberofresearchesbeingcarriedoutinthearea.Knowledgeinagooddiffusionstage.

Littlenumberofpublications,littleexposureinforumsandseminars,scarcenumberofresearchesbeingconductedinthearea.Knowledgeatalowdiffusionstage.

Low level of localknowledge for researchdevelopment and evenfor system deploymentgeneratecostincrease.

Function2:Influenceinthedirectionoftheresearch

Positiveexpectationsabouttechnology,expressedregulatorydeficits.Researchfunding.

Positiveexpectationsabouttechnology,expressedregulatorydeficits.Researchfunding.

High level of interestrate discouragesresearchfunding.


Severalprojectsstarted.Severalcompaniesinthesegment.

Nocompleteprojectstarted.Fewcompaniesinthesegment.Onlyanationalcompany.

Highprojectcostmakesproject executionimpossible.The high technologyand consequent highcost of importingservices and licensesdiscouragestheentryordevelopment ofcompanies in thesegment.


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Favorabletaxconditionsforsomecomponentsofthesolution.Unfavorableentrepreneurialenvironment.Implementationofseveralpilotprojects.

Unfavorabletaxandbusinessenvironmentconditions.

High incidence of taxesonservicesandlicenses.High interest rate thatdiscouragesinvestments.


Technologysupportfromgovernment,academiaandindustry.Legitimacydeveloped.

Technologysupportfromgovernment,academiaandindustry.Legitimacyingoodstateofdevelopment.

N/A


Largenumberofcompaniesdevelopingsolutionsandfundingresearch.

Scarcenumberofcompaniesdevelopingsolutionsandfundingresearch.

Highlaborcostandlittlelocal resource forresearch.


Severalmarketsareorganizingtosupplythedemandandenjoythebenefitsofsmartgrids.

Fewmarketsinvolvedinsolutions. N/A

Aspresentedabove,thesystemsareindifferentstages.WhiletheSmartGridTISisintheexpansionphase,theADMSTISisinitsformativephase.BecauseitisasysteminternaltotheSmartGridTIS,theADMSTISreceivesinfluencesfromthesamefactorsthatinfluenceSmartGridTIS.FortheSmartGrid TIS, the obstacles are manifested as technical difficulties and lack of knowledge about thesolution, high implementation cost and long return on investment. The ADMS TIS has the samebottlenecks.Priceisthemainreasonthatdiscouragesutilitiesfromexecutingthistypeofproject.Asshown inFigure9, the largeamountofsoftware licensesandforeignprofessionalsbrought to thecountryresultsinhighimplementationcosts,renderingprojectsnonviable.Thisincreaseinpricesisdue in large part to the high tax burden and to the need to contract foreign exchange hedge tomitigate possible exchange rate variations. Therefore, the lack of a legitimate national solutionpushesupprices.

Figure9:Detailedcompositionoftheprojectcosts.


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FINALREMARKS

Theobjectiveoftheanalysisinthisworkwastosketchandorganizethewayinwhichtheevaluationof technological innovation systems should be done. After the execution of the framework, theentire TIS extract was obtained. The scheme was divided into six carefully executed steps, withdemandingdatasearchandorganizationoftheinformationcollected.Themainadvantageofusingthisschemeisthatthestudyfocusesonwhat iswithinthereachofthesystemortechnology,notgeneralandstructuralattitudes,asitanalyzessystemfailures(intermsofthefunctionalstandardorkeyprocesses)andnotmarketand/orstructuralfailures.

Thus, by analyzing the weaknesses of the TIS functional pattern, identifying the blocking andincentivemechanisms,andmakingtheformulationorpropositionsofpoliciestobedeveloped,theend of the analysis process is reached. Themain application of this scheme is to identify systemfailuresinafunctionalpattern,theirrelationshiptothemechanisms,andtoprovideadevicewherepolicy-makerscanquerytheresults.TheanalysisofaTIScanalsobeperformedviabenchmarking,that is,acomparisonwithotherTISthatcanbringbenefitsandanticipateresults.ThecomparisonbetweenTISisalsoanarduoustaskandservesasasuggestionforfuturework.

Asfortheresults,itwasexpectedthattheTISofsmartgridswasinitsgrowthphase,whiletheTISofmanagementsoftwarewasinitsformativephase.Brazilhasproblemstodevelopresearchinseveralareas,and this isa structuralproblemthat isoftenexternal to the innovationsystem.Thesystemneedstobebuiltandacquiredinaformatthatwillovercomethesedifficulties.

Thepropositionsmademustbeappliedurgently,since,asmentioned inseveralarticles,countriesaroundtheworldalreadydeveloplarge-scalesmartgridtechnologies,whileBrazil lagsbehind.Thestudy shows the specific points that should be prioritized and which actions (public or privatepolicies)shouldbedeveloped.

Attheendoftheimplementationoftheframework,suggestionsforactionsforinnovationpolicieswereproposed. These recommendedpoliciesneed tobediscussedamong regulatory institutions,manufacturing companies, universities, research institutes and utilities. Brazil needs to build anofficialnetworkamong theseagents. Several countriesareeffective inbuildingand strenghteningthesenetworks.

In practice, it is also necessary to have a research incubation program between companies anduniversities.Thecheaperlaborofearly-careerprofessionalsfromeducationalinstitutionscanreducethecostofresearchandengagestheresearcherinthefieldfromtheverybeginningofhisacademicdevelopment. Many universities lack the structure and expertise to conduct advanced research,whichwouldbeachievedbythispartnership.

Thestudy in thispaperpresents theBraziliancaseandhasawideperspectiveofanalysis.Furtherstudies couldchooseoneof the smartgrid technologies, likemeters, telecommunication systems,distributed resources, etc., or apply the framework in another country. Different countries havedifferentincentiveandblockingmechanisms,andtheanalysescouldgeneratebenchmarkstudies.Itwouldbealso interesting to see studies thatuseanumerical approachandcompare them to thetheoreticalrecommendations.


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ACKNOWLEDGEMENTS

The authors are grateful to Schneider Electric for providing technical documents, and non-confidentialinformationonsmartgridsingeneralandonADMSsolution,morespecifically.

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