Smart electrical grids challenges and opportunities

Colette Lewiner, Energy and Utilities Global

Leader at Capgemini

SGPARIS 2011

Paris, 24-26 May 2011

Smart electrical grids challenges and opportunities

| Energy, Utilities & Chemicals Global Sector

Agenda

� Energy Markets Outlook

� Grid management new paradigm

� Smart Grid and Smart Metering solutions

� Market opportunities

� Key success factors

2


Agenda

� Energy Markets Outlook • Security of supply

• Renewable energy generation

• Grid regulations





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Electricity security of supply is threatened when

exceptional weather situations occur

� In 2009-2010, the exceptionally cold weather threatened electricity supply in a few countries.

� In France , in December 2009 and early January 2010, temperature was 6-8 C below normal. Electricity peak went up to a record of 92,400MW. France had to import up to 8,000MW from its neighbors during many days in a row. This import level was near the upper possible limit of 9,000MW.

Certain countries as France need more peak power ge neration. In all cases increasing cross border interconnections will impro ve security of supply

Real margin vs. theoretical margin (2009)

Source: ENTSO-E, EirGrid, National Grid – Capgemini analysis, EEMO12

4


Balancing Peak Time Load is complex

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• Peak load demand is nearly the double of low periods load (in France)

• During tense situations, grid management is critical

• At peak time, all domestic generation plants that are available and connected are utilized

• In addition, electricity is imported from neighboring countries

• Demand response programs allow lowering demand at critical moments:• They are usually in place for large

customers• More has to be done for small

businesses and residential customers including:� Information, messaging� Smart metering equipment, smart

home devices� Time of use rates

Demand response is one of the key answers to peak load management

Yearly load curve in France


EU Climate-Energy legislation

6

In 2007 the EU adopted the Climate Energy package with three 2020 objectives:• 20% reduction of GHG emissions (compared to 1990).

Thanks to the economic crisis and to the plants’ delocalization, this objective should be met.

• Primary consumption reduction of 20% compared to 2005. It is a difficult but achievable goal especially if consumer’s awareness is increased

• Renewables: The 20% renewable shares target is challenging. To get there, renewable energies generation growth has to be accelerated. In 2009 RES generation continued to grow: 15% for wind and 53% for solar PV. Wind power is today the first source, PV comes second, with 5.5 GW.

• The intermittency of RES generation poses problems in countries where their share is significant. It calls for:• back-up power plants• improved generation simulations and modeling• grids able to smartly balance supply and demand• merit order & trading rules changes: e.g. wholesale

spot prices at zero in Spain and even negative in Germany

Source: Eurostat, EEA, BP statistical review of world energy 2010, European Commission – Capgemini analysis, EEMO12

Renewable Energy

Primary Energy Consumption


Utilities are divesting from their grid assets

� Many Utilities are going through divestments in order to restore the balance sheet.

� Networks, having long term recurrent revenues, are attractive for funds.

� Utilities would comply with the third EU directive

• E.ON sold its electrical transmission grid to TenneT(NL) for €885m

• Vattenfall Germany sold its electrical transmissiongrid to Elia (BE)/IFM for €810 m

• RTE, French electrical transmission grid: 50% stake transferred to the French nuclear decommissioning fund

• GRTGaz, French gas transportation grid: CDC and CNP should take 25% shares

• ENI (IT) plans to sell stakes in two major pipelines (Transitgas and TENP). Value estimated at €1.5bn

• ENEL sold 80% of its Endesa gas distribution grid to 2 Goldman Sachs’ infrastructures funds for €800m

• EDF Energy UK electrical distribution networks sold to a Hong Kong consortium for £5.8 bn

• E.ON sold its UK distribution electrical grid to PPL (US) for £4 bn

Funds are expanding in the energy infrastructures domain. Are they

willing to invest as needed?

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Hong Kong Consortium (headed

by Li Ka-Shing)

TENP

French nuclear decommissioning

fund

€885M

€810M

€1.5bn€800M

£5.8bn

£4bn


Agenda


� Grid management new paradigm• Grid balance inherent complexity

• Aging Infrastructure and aging workforce

• New Consumption patterns

• Renewables and distributed generation




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Grid management: inherent complexity

• Need to balance instantly the grid:• As electricity is not storable, at each moment, the

grid needs to be balanced: the sum of the power generated has to be equal to the sum of the power consumed.

• If the power consumed is too high, the current intensity will increase and the alternator’s frequency will decrease

• This is done in each voltage level dispatching• The needed power is forecasted on a yearly,

monthly, weekly and daily basis • In the dispatching rooms the controllers adjust

instantly generation to demand• Grid collapse risk :

• On the mesh grid, electricity path is not always predictable: it will follow the lowest impedance route

• If a line is overloaded, it may disconnect and electricity will flow through the others

• If the grid is saturated, the lines will fall one after the other as in domino plays and the grid will collapse

• To avoid this catastrophic scenario, the dispatchers will cut-off from the grid some customers

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Big collapses happened in the US in 1978, in France in 1979, in the

East coast region, in Germany and North of France in 2007


Aging Infrastructure and aging workforce

� Aging Infrastructure � Much of the transmission and distribution infrastructure is more than 50 years

old � For many years, utilities typically underinvested in the grid infrastructure (ex

€8bn investment needed in the French distribution area)

� Aging Workforce� A significant percentage of the current utility workforce is nearing the age of

retirement, creating a loss of operating and network knowledge. � It will be necessary to capture this information and be able to communicate it to

the new workforce. � This is also compounded by the fact that the current generation has been raised

on a different communication media.

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This change is driving up the need to provide data to the field workforce at a rapid rate


New Consumption patterns

� Residential electricity consumption still increases, peak loads are increasing

� Consumers expect higher quality for the electricity they receive both voltage stability and wave spectral quality

� Harmonics and other power quality issues that were confined to the industrial segment, are now distributed all over the network which makes the grid management more complex

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Peak load, generation capacity and electricity mix (2009)

Source: ENTSO-E, BALTSO, Nordic Energy Regulators – Capgemini analysis, EEMO12

Increased request for power quality and security of supply


Renewable Energies impact on the Grid

Wind farms: dealing with variability is tough� Existing systems cannot predict what the output of wind power will be 24-48h in advance.

� New systems have to be installed to support this kind of forecasting� Forecasting this output is critical, as it determines when to trigger dams or fossil plants to support days

� The grid operator has to be ready to react to changes in power output on a very short timelineTo date there are no good answers for massive stora ge

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These problems are

the root cause of the 2007 blackout in

Germany and North of France

Source: Eur’Observer barometers – Capgemini analysis, EEMO12

Growth rate of renewable energy sources (2008 for Waste, hydro and Biomass and 2009 for Wind and Solar PV)


Wind Power: the Spanish Example

August 27, 2009 November 8, 2009

Source: Enagas, Outlook for LNG

More flexible consumption patterns (i.e. demand res ponse) would allow customers to take advantage of low costs gene rated by a

sudden increase of wind power.


Distributed Generation

� Distributed generation and renewables create problems for the distribution network

� Harmonics, reactive power, and power quality are harder problems.

• The transmission operators manage reactive power thanks to sensors on their networks

• Capacitor banks are helpful in managing reactive power, but they do not exist out in the distribution network

• Harmonics and power quality for the smaller customer to date have been ignored as too expensive for the benefits delivered.

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Integration of many generation sources into existin g Energy Management and Distribution Management Systems, as well as dev eloping the operating

rules is another chunk of work.


Agenda






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A grid with more intelligence

� A grid with more intelligence has to be designed. The challenge is very clear; the old electro-mechanical network cannot meet the needs of the new digital economy.

� The future grid should be able to produce faster fault location and power restoration, hence lesser outage time for the customer and manage many small power generation sources.

� The system network architecture will need to change to incorporate multi-way power flows, and will be much more intelligent than a series of radial lines that just open and close.

� The future data volumes will require large data communications bandwidth and communication network technology

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The key is to build a vision and architecture that allows them to leverage today’s investment while maintaining flexi bility to evolve the

Grid as technology advances.


From “Electromechanical Grid” into

“Digital Smart Grid”

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� One-way communication� Built for centralized

generation � Radial topology� Few sensors� “Blind”� Manual restoration� Check equipment manually� Emergency decisions by

committee and phone� Limited control over power

flows� Limited price information� Few customer choices

� Two-way communication� Accommodates distributed

generation� Network topology� Monitors and sensors throughout� Self-monitoring� Semi-automated restoration (self-

healing)� Adaptive protection and islanding� Monitor equipment remotely� Decision support systems,

predictive reliability� Pervasive control systems� Full price information� Many customer choices


Smart Grid: The Process

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Integral

management

PhysicalGrid Asset

Models

Decisions

& Plans Data

Analysis

tools

Interpretation

& modeling

Data

processing

Data

management

Data

transmission

Measurement

& monitoring

Model

management

Model

visualization

Uncertainty

analysis

Decision

support

Decision

management

Activity

management

Control

systems

1Min1 Day

1 Month

1 Hour

1 Min

1 Sec1 ms

OB

JEC

TIV

ES

& C

ON

ST

RA

INT

S

DAT

A,

TR

IGG

ER

S, E

TC

.

Interrelated Cycles / Loops

Adapted from presentation POSC SIG - L. Dodge, S. Daum, 22 May 2003 London


Grid Hardware

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Grid

Har

dwar

e

Revenue Metering� Smart Metering - Fixed

Read System, Fixed Network, Networked, Broadband

� Metering - Two Way, Pre Paid

Protection� Capacitor Protection� Circuit Breakers for Feeders w/Automatic

Sensing & Re-closing� Re-closer, Single Phase

Control� Regulators - Power Flow� Capacitor Bank Remote

Operators� Management of Supply

Remote� Broadband over Power

Line� SCADA Network

Penetration� Capacitors Switched

Distributed Resource

� Distributed Resource Interconnection

� Low cost DG Interconnect Kit

Load Management� Second Generation Remote

Load Control Devices� Appliance Reporting� Device to Manage Load

Shapes - Remote Control� Intelligent Building

Alarm Notification� Fault Anticipators� Device - Self Reporting� Fault Detecting and Reporting� Sensors – Wireline, Wireless� Auto Sensing Voltage Sag

Correctors� Auto Sensing Grid

Segmentation

Sensors on existing hardware on the grid, from meters at the home to reclosers and sectionalizers, transformers and substations will need to be deployed in a prioritized fashion. The key is to understand which sensor readings can bring operational value to your smart grid effort.


Communication Backbone

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Com

mun

icat

ion

Bac

kbon

e

Networks� WAN: Wide Area

Network

� MAN: Metropolitan Area Network

� LAN: Local Area Network

� VAN: Vehicle Area Network

Transport - Wired� POTS (Plain Old Telephone

System)

� PSTN (Public Switch Telephone Network)

� DSL (Digital Subscriber Line)

� Fiber Optic

� PLC (Power Line Carrier)

Transport - Wireless� Mobile Radio (RF) – 800/900

MHz Bands

� Cellular Technologies (GSM/GPRS)

� Wireless LAN (WiFi)

� Wireless WAN (WiMAX)

� ZigBee

� Free Space Optical (FSO)

� Satellite

� To support all those data sources on the grid, a communication infrastructure must be in place. A wide range of wired and wireless communications technologies are available to transport.

� Any smart grid initiative will have to pick 2 or 3 communications methods and mix and match as required to get to the level of coverage required


Agenda






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Smart Metering: North American Market

• North America has 158 million metered electricity customers. Annual demand for electricity meters is in the range of 10–15 million units.

• Penetration for smart meters, providing comprehensive functionality was 10% at the end of 2009. By 2015, the rate should increase to 45%, driven by large rollouts by leading utilities

• The average capital expenditure per metering point is in the range of US$ 200–250 for medium to large projects. The aggregate investment cost for the deployment of 63 million smart electricity meters between 2010 and 2015 is thus projected to around US$ 13.4 billion.

• Communication will account for 25% of total costs. IT-related costs for system integration, meter data management systems and similar account for around 30% of a typical project budget

35%

25%

10%

30%

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Source: Berg Insight

Smart Metering capital expenditure by category (Nor th America 2009-2015)

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Uncertainty created by the value chain unbundling lead to an uncertain ROI. This explains the slow adoption in Europe.Country by country situation:• Italy and Sweden are

leading the adoption of smart meters in Europe with full installation in 2009.

• Large experiment in France(300,000 meters) launched in 2008. After return of experience, compulsory deployment of smart meters for 95% of citizens by 2016.

• New legislation is expected in Netherlands, Ireland and Norway

• The UK government decided to introduce similar requirements, but financing is unclear presently

Europe: 80% of the population should benefit from

smart metering by 2020

Total expenditure on smart metering will reach €2.8 billion by 2014. 20% will be for system operation and communication services.

Source: E

SM

A, G

EO

DE

-C

apgemini analysis, E

EM

O12

Electricity

Gas


Smart Grid Investments

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Network Device andEvents Ops Management

Back Office Applications

Enhanced Power GridDigital Communications and Control

Smart Meters &Building AutomationControl

Interface

CommunicationTechnologies

Renewables

Advanced Metering

Plug-InHybrids

Smart grid investments• Worldwide : from 2008-2015:

$200bn ($53bn in the US). (Pike Research).

• US stimulus grants: $3.4bn

• Europe : € 1bn EU funds

ICT systems : Cisco sees $15-20 bn investment opportunities to link smart grids with ICT systems over the next 7 years.

John Chamber, Cisco CEO, says that it might be bigger than internet.

However it’s not going to happen overnight. A lot o f regulatory and standardisation issues have to be worked out.


Agenda






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Key success factors (1)

• Smart grids implementation will necessitate new investments: • The transmission and distribution tariffs will have to increase and by

consequence the electricity prices. • Regulators, governments and customers will have to accept these

prices increases.

• Industrial R&D is needed to develop new equipments (as large competitive storage) or improve existing ones (as HVDC connections).

• Communication standards are crucial:• US is mobilized at the government (Department of Energy) and

equipment manufactures levels• Europe is not considering seriously enough this question • Equipments conceived with the internationally adopted standards will

have a clear advantage

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Key success factors (2)

• Efforts on simulation and modelling are needed: • For the transmission grid there is a need to build a new European

High Voltage grid management model.

• On the distribution side , the retail market has to evolve and modelling is needed. Interesting experiences initiated by regulators and involving all stakeholders (Utilities, equipment manufacturers, IT service companies, local authorities..) have been launched in Victoria (Australia), Texas (USA) and France.

• Next steps for Utilities : • Establish their vision on the technical, economical and management

future models as smart grid implementation will change drastically their management mode.

• Launch prototypes with part of the financing coming from the EU or Member States.

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