What is the Smart-Grid, and what does it mean for South Africa

Presented byDr. Minnesh Bipath

Senior Manager Energy Infrastructure and End UseSenior Manager, Energy Infrastructure and End Use

South African National Energy Research Institute

Purpose of the PresentationPurpose of the Presentation

• Discuss electricity sector realities and the need for changeg

• Discuss the smart grid• Reflex on what it means for South Africa• Reflex on what it means for South Africa• Conclusions

Electricity has revolutionised the world

A whole new opportunity came into view and electricity has become the life blood of the South African economy

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Today’s Grid…an engineering y g gmarvel

4

Eskom 2008/9 annual report

Electricity Sector Realitiesy

• During the 20th century the electric power sector was During the 20 century , the electric power sector was dominated by the pursuit for ever-lower commodity costs.

• Lower costs (using a cost leadership strategy) • demand growth, • economy-of-scale advances • economy-of-scale advances • production and delivery technology• led to electricity cost reductions.

• Vertically integrated, • monopoly enterprise• monopoly enterprise• regulated • balance between utility and consumer value.

Electricity Sector Realities

• Obligation-to-serve Obligation to serve • embedded in this regulatory compact • achieved a level of investment

d d f f• standard of performance • low-cost “entitlement”• taken for granted.g

• Declining cost has come to an end. • Diminishing economy-of-scale returns

i i d d th • increasing demand growth, • higher fuel costs, • rising environmental requirements, • converged to challenge the traditional declining cost-commodity business

model and structure of the electric utility industry.

• Competitive restructuring• No “silver bullets”

Electricity poised to change the y p gworld again

Th El t i it I d t i St t f FlThe Electricity Industry in a State of Flux.

8Adapted from: G, Johnson and K, Scholes, “Exploring corporate strategy” 1997

StrategyStrategy

“If you don’t know where you are going than If you don t know where you are going than it does not matter which path you take”

Alice in Wonderland

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The Smart Grid: The Smart-Grid: Enabling the 21st Century South African Economy

Source: IEA Enard

Smart Grid Definition Smart Grid Definition

The Smart Grids European Technology Platform defines Smart Grid “as an • The Smart Grids European Technology Platform defines Smart Grid “as an electricity network that can intelligently integrate the actions of all users connected to it-generators, consumers and those that do both, in order to efficiently deliver sustainable, economic and secure electricity supply”y , y pp y

• A Smart grid is defined as a broad range of solutions that optimise the electricity value chain(Electricity advisory committee, USA, Dec 2008).

• US DOE: “ Grid 2030 envisions a fully automated power delivery network that monitors and controls every customer and node, ensuring two-way flow of information and electricity between the power plant and appliance, and all points in between”EPRI “Th t S t G id f t d i ti f th l t i it • EPRI: “The term Smart Grid refers to a modernisation of the electricity delivery system so it monitors, protects, and automatically optimises the operation of its interconnected elements – from the central and distributed generator through the high voltage network and distribution system, to g g g g y ,industrial users, and building automation systems, to energy storage installations and to consumers and their thermostats, electric vehicles, appliances and other household devices”

What is the smart gridWhat is the smart grid

Information and Telecommunications infrastructure 

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Sma t G id Ma ket D i e sSmart Grid Market Drivers

Driver Issues

Growing energy demand •Increasing demand for energy•A dire need for energy efficiency/conservation to counteract the pace of global energy demand

Energy independence •National security•Rising/volatile fuel cost

GHG Reduction •Increasing awareness of environmental issues, including global warming g , g g g•Social pressure•Optimised distribution and control of power results in overall system efficiencies and reduced GHG emissions

h b /b ( h l d f h lEconomic growth •Job creation/business opportunities (the renewal and re‐invention of the electric power infrastructure)•Blackout/brownouts hurts GDP considerably•Rising asset cost (cost of capital, raw materials,  and labour have all spiked)•Ageing infrastructureg g•Ageing workforce

Policy and regulation •REFIT•EE and DSM targets•Copenhagen targets

Source: GTM Research

Smart Grid Market Drivers for change

Driver Issues

Technology advancement •Smart Grid can be seen as the convergence of IT, telecoms and energy markets•Rapid innovations in technology over past decade allow a range of new products and solutionssolutions•Significant amounts of venture capital investment in Smart Grid technologies and solutions

Increased efficiency through grid optimisation

•Multiple integration points for intelligent hardware and software from transmission to consumption•Embedded sensors and monitoring capabilities•Deployment of advanced two‐way communications networks•Growing supply of renewable and distributed generation and storage •Intelligent support for multiple forms of intermittent renewable power sources (centralised and distributed)(centralised and distributed)

Advanced consumer services •Robust, simple consumer energy management platforms•Networked devices within the ‘smart home’•New, efficient pricing models for electricity usage (Real time pricing)•A more active role in efficient power usagep g

Infrastructure Reliability and security •Network/systems tolerant of attack or natural disasters•Ability to anticipate and automatically respond to system disturbances•Asset management

Power quality •Delivering power that is free of sags spikes disturbances and interruptionsPower quality •Delivering power that is free of sags, spikes, disturbances and interruptions

Source: GTM Research

Th G id T d TThe Grid: Today vs. Tomorrow

T d Ch t i ti TToday Characteristic Tomorrow

Responds to prevent furtherdamage. Focus is on protection of

f ll i f l

Self heals Automatically detects and respondsto actual and emerging transmissiond di ib i bl F iassets following system faults and distribution problems. Focus is

on prevention. Minimises consumerimpact.

f d d i d i l d h f d l d dConsumers are uninformed and non‐participative with the power system

Motivates and includes the consumers

Informed, involved and active consumers. Broad penetration of demand response.

Vulnerable to malicious acts of Resists attacks Resilient to attack and naturalVulnerable to malicious acts of terror and natural disasters.

Resists attacks Resilient to attack and natural disasters with rapid restoration capabilities.

Focused on outage rather than Provides power quality for 21st Quality of power meets industryFocused on outage rather than power quality (PQ) problems. Slow response in resolving PQ issues.

Provides power quality for 21century needs

Quality of power meets industry standards and consumer needs. PQ issues identified and resolved prior to manifestation. Various levels of PQ at various pricesPQ at various prices.

Source: NETL modern Grid initiative

The Grid: Today vs. TomorrowySmartGrid characteristics

Today Characteristic Tomorrow

Relatively small number of large

generating plants. Numerous obstacles

exist for interconnecting DER

Accommodates all generation and storage options

Very large numbers of diverse distributedgeneration and storage devices deployedto complement the large generationplants Plug and play convenienceexist for interconnecting DER plants. Plug and play convenience.Significantly more focus on and access torenewables

Limited wholesale markets still working to Mature wholesale market operations inLimited wholesale markets still working tofind the best operating models. Not wellintegrated with each other. Transmissioncongestion separates buyers and sellers.

Enables markets

Mature wholesale market operations inplace; well integrated nationwide andintegrated with reliability coordinators.Retail markets flourish where appropriate.Minimal transmission congestion andconstraints.

Minimal integration of limited operational Optimises assets and operates efficiently Greatly expanded sensing andg pdata with asset management processesand technologies. Siloed businessprocesses. Time based maintenance.

p p y y p gmeasurement of grid conditions. Gridtechnologies deeply integrated with assetmanagement processes. Effectivelymanage assets and cost. Condition ‐basedmaintenancemaintenance.

Source: NETL modern Grid initiative

One of the key problems of the y ptraditional grid

The future gridThe future grid

Participatory Network Enables:Participatory Network Enables:

Taxonomy of a smarter grid

Key success factorsKey success factorsThe grid must be more reliable A reliable grid provides power• The grid must be more reliable. A reliable grid provides powerdependably, when and where its users need it and of the quality they value.It provides ample warning of growing problems and withstands mostdisturbances without failing. It takes corrective action before most users aregaffected.

• The grid must be more secure. A secure grid withstands physical andcyber attacks without suffering massive blackouts or exorbitant recovery

I i l l l bl l di dcosts. It is also less vulnerable to natural disasters and recovers morequickly.

• The grid must be more economic. An economic grid operates under thebasic laws of supply and demand resulting in fair prices and adequatebasic laws of supply and demand, resulting in fair prices and adequatesupplies.

• The grid must be more efficient. An efficient grid takes advantage ofinvestment that leads to cost control, reduced transmission and distribution,electrical losses, more efficient power production and improved assetutilisation. Methods to control the flow of power to reduce transmissioncongestion and allow access to low cost generating sources includingrenewable and energy storage will be availablerenewable and energy storage will be available.

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Key success factorsKey success factors

Th id t b i t ll f i dl A• The grid must be more environmentally friendly. Anenvironmentally friendly grid reduces environmental impactsthrough initiatives in generation, transmission, distribution,storage and consumption. Access to sources of renewableenergy will be expanded. Where possible, future designs forSmartGrid assets will occupy less land reducing the physicalpy g p yimpact on the landscape.

• The grid must be safer. A safe grid does no harm to thepublic nor to the grid workers and is sensitive to users whopublic nor to the grid workers and is sensitive to users whodepend on it.

• The nation’s grid should be a SmartGrid not byrandomly gathering a group of interestingtechnologies and calling them smart, but rather byfirst building a vision and the framework that enablesgthat vision.

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B i t th d l t f S tG idBarriers to the development of a SmartGrid

Th th t id i t i i kl• There are many reasons the smart grid is not emerging more quickly.Fundamentally, no single business owns or operates the grid.Individual players have little incentives to risk major change. With somany players in the grid system finding a common vision for changemany players in the grid system, finding a common vision for changeis difficult but imperative.• The benefits are so broad and far reaching that perhaps only

government can account for the cumulative societal valuegovernment can account for the cumulative societal value.Longer term financial incentives are needed to enable the largerinfrastructure investments needed for the SmartGrid

R l t d l i l ti b i h t t t li d• Regulatory and legislative barriers – change statutes, policy, andregulation to eliminate those that inhibit progress and create thosethat encourage progress and create a ‘win-win’ scenario for allstakeholdersstakeholders

• Culture and communication – increase the understanding andawareness of stakeholders on the value of the SmartGrid andencourage them to embrace the needed changes within theirencourage them to embrace the needed changes within theirorganisational cultures

B i t th d l t f S t G idBarriers to the development of a Smart-Grid

I d t i l b i d fi th f h th ‘b i • Industrial barriers – define the case for change, the ‘burning platform’, and provide the necessary incentives to engage industry on the smart grid. Industry will respond when it understands there is a profitable market for smart grid technologies and servicesis a profitable market for smart grid technologies and services.

• Technical barriers – need to increase the speed of research, development and deployment.

f d h d l d• Increase funding to support research, development and deployment for those technologies that are needed for the SmartGrid

• Work more closely with academia to develop the new human resources with skill needed for the SmartGrid

• Apply more priority and resources to the development of needed standards.

• Clarify the pathway to the SmartGrid by developing a transition plan that shows the intermediate milestones for achieving its p gvision

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Key Smart Grid BenefitsKey Smart Grid Benefits

O ti l Effi i E ffi iOperational Efficiency• Integrates distributed generation• Optimises network design

bl b l d l

Energy efficiency• Reduces system and line losses• Enables DSM offerings

l d d• Enables visibility and control• Improves asset and resources

utilisation

• Improves load and var management• Complies with government EE

policies

Customer satisfactionR d t f d

Green agendaR d GHG i i i DSM • Reduces outage frequency and

duration• Improves power quality

Empo e s the cons me

• Reduces GHG emissions via DSM, peak shaving and electrification of public transportation

• Integrates renewable energy • Empowers the consumer • Enables customer self services• Reduces customer energy costs

• Integrates renewable energy generating assets and energy storage

• Complies with GHG legislationp g• Enables wide adoption of EV/ PHEV

Smart Grid InitiativeSmart Grid InitiativeDevelop a vision of the SmartGrid create the vision and define it through• Develop a vision of the SmartGrid – create the vision and define it throughthe grid’s principal characteristics and key technology areas

• Perform gap analysis – determine the technology and research gapspreventing realisation of the smart-gridpreventing realisation of the smart grid

• Identify needs – identify technologies and processes needing assistance inwidespread deployment and areas of research that require increased focus

• Conduct advanced technology projects – demonstrate integratedCo duct ad a ced tec o ogy p ojects de o st ate teg atedtechnologies and processes that have the potential to achieve the principalcharacteristics

• Evaluate project results – appraise project results and benefits at local orregional level and then extrapolate to the national level

• Stimulate deployment – turn lessons learned from projects into businesscases that include societal benefits and provide position papers to stimulateactionaction

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Proposed SANERI SmartGrid VisionProposed SANERI SmartGrid Vision

“To revolutionise the South African electric system by 2030 by integrating 21st century technologies to

hi l ti d li d d th t achieve seamless generation, delivery and end-use that is flexible, scalable and adaptable and benefits the

South Africa nation”

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ConclusionsConclusions

St ti ith th S tG id i l t ti • Starting with the SmartGrid implementation, government will put its electricity industry

t t i l t id restructuring plans on steroids. • Since the 98 energy white paper, a lot has

changed in the industry, therefore needing an urgent review before we finalise the large capex plan for the industry.

• Consumer participation in the industry p p ytransformation is seen as key to the industry success

QuestionsQuestions