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Way forward for Smart Grid in India
Rakesh Kumar GoyalRitesh Kumar SinghTetra Tech ES India Limited
New Delhi India
2nd Feb 2011
October 26-29, 2010
The Facts
-About 50000 villages are still un electrified.
-There is about 11% demand supply gap.
-In some of the States peak shortage is about 30%
-In last ten five years plans generation targets were never met.
-AT&C losses are about 27%
-Total annual subsidy in power sector is about $ 10 billion.
--Consumers hate to pay electricity bill
-Employee motivation is a big issue in all state owned utilities
-India’s installed thermal power generation capacity represents 70% of net generation
capacity and 57% of greenhouse gas emissions. Based on current plans, this scenario
will likely continue until 2020
The Challenge
The link between electricity and economic growth remains unbroken so the challenge
is much the same i.e. adequate supplies of reliable electricity at low cost. But:
• Economic expansion and population growth are driving electricity demand.
• An increasingly digital world has amplified the need for high-quality electricity.
• A global construction boom is underway, increasing competition for resources.
• The link between scale and cost / kWh for generation has been loosened
• Meanwhile, some potential game changers are developing
- Smaller-scale generation
- Renewable energy
- Storage
- Electric vehicles
Meanwhile, the long-term trend for the cost of electricity has turned up and a climate
emergency demands more efficient use of natural resources.
Thus, business as usual is not a sustainable option.
So what’s the Big Picture?
Add capacity, strengthen networks and
reduce carbon while minimizing cost :
•Build new generation and T&D: High-
growth requires base load capacity, but
today that’s not enough.
•Increase demand response and energy
efficiency : Proven techniques and
technologies can help get more output
for each unit of input of least-cost
energy.
•Expand use of renewable energy:
Solar, hydropower, wind energy and
other forms of RE are growing rapidly.
•Implement ‘Smart Grid’ concepts to
use energy more effectively: Smart grids
can help to optimize the network,
minimize T&D losses and reduce O&M
costs while helping customers minimize
their total costs.
The journey to a Smart Grid will be evolutionary
Manual Meter Reading
Automatic Meter Reading
Advanced
Metering
Smart
Meters
Features of the Utility of the Future
• Energy management
services
– Residential, commercial
• Home area network
gateway
– PLC
– RF
• Major superconductors
• PHEV Vehicle support
• Renewable energy
optimization
• Remote energy storage
• Web-based applications
– Demand response
– Prepayment
– Load control
– Revenue protection
– Web move in/out
• Distribution
– Load profiling & control
– Transformer
optimization
– Loss optimization
• Transmission
– FACTS
– Managed flows
• Solid-state platform
• Integrated communications
• Integrated/ Remote connect
& disconnect switch
• Current readings
• Power factor
• Frequency
• Detailed power outage
• Remote upgradeable
• Internal expansion port
• On-demand reads
• Programmable load
intervals
• Bi-directional and net
metering
• TOU, RTP, CPP pricing
options
• Demand response
• One-way or two-way
• Monthly kWh reads
• Interval data
• Basic theft detection
• Outage/restoration
detection
• Monthly kWh
reads
Manual
Station
Automation
Station & Field
Automation
• Mapping
• Switching
• Restoration
• OMS
• Asset management for
stations
• Voltage control
• SCADA• Phase balancing
• Dynamic Volt/Var and
loss reduction
• Transformer loading
Grid
Automation
• Self healing Grid
• fault anticipating relaying
• Dynamic line ratings
The Smart Grid Maturity Model
Step 1
Step 2
Step 3
Step 4
Step 5
Optimization:
– Capability of real-time optimization of distribution network performance
– Decisions based on near real-time information, no longer only historical data
• Analytical infrastructure:
– Development of new data analysis capabilities
– Increased ability to display information (in form of dashboards, etc.)Integration:
– Corporate IT systems integrated to allow rapid processing of data
– Open architecture based design to facilitate sharing of information
Mat
uri
ty
Capability
• Intelligent devices infrastructure:
– AMI, or ‘Smart Meters’
– Distribution Automation Devices
– Demand Response Devices
– Substation IED Controllers
• Communications infrastructure:
– Enterprise communication system for rapid and accurate transmission of data
– Integration of fiber and mesh broadband networks
Adapted from IBM
But the pace of change is accelerating
• $4.5 billion in federal stimulus
funding and a total of $7.1 billion
funding has spawned many pilot
projects in the USA.
• At an estimated $7.3 billion in
Smart Grid investment, “China's
investment in smart grids and
related technologies already
exceed investment in power
generation.”- Mark Ishac, Zpryme Managing Director
(Going Green Practice)
• $ 45 Million in RAPDRP C
The Unforeseen
• New technology involves a venture into the unknown.
• An interesting example is the introduction of materials
requirements planning (MRP) systems in the 1970s
• MRP systems were supposed to reduce inventory
levels
• But inventory levels increased – often significantly –
after installation of a new MRP system. Why?
• Because the system did what it was supposed to do,
i.e.
– It “filled up” under-stocked items
• What will be the unforeseen outcomes for Smart Grid?
• Should that shape a utility’s Smart Grid preparations?
True Believers vs. Skeptics
• When personal computers were first introduced, the world split into two camps
– True Believers held that PCs would unleash great productivity and creative advances
– Skeptics argued that the observable and measurable (early) benefits did not offset the costs
• The same argument is being waged over the Smart Grid
– Some believe Smart Grids will revolutionize the business
– Others say the claimed benefits for the brave new world of smartgrids are overstated and the costs are understated
• The heart of the issue is cost-benefit analysis
• One key factor is that electric companies have regulators and/or government officials to persuade
Technology can enable improvements in many areas
Availability Reliability Reduce operating costs
Reduce commercial
losses
Increase electricity supply
CRM applicable
Automated meter reading
� � ��
Remote disconnection and reconnection
� �
�
Outage monitoring and evaluation � �
Mini-SCADA � � � �
DSM and LM � � �
Renewable energy � �
Distributed, standby and off-grid generation
�
�
Time-of-use tariffs � � �
Islanding � � � �
Capacitor control � � �
Demand response � � �
Phasor Measurement Unit
� � �
Potential benefits
• Peak load reduction. TOU price signals offer potential.
• Technical and commercial loss reduction. This is a major commercial and regulatory consideration.
• Self-healing. A smart grid automatically detects and responds to routine problems and quickly recovers, minimizing downtime and financial loss.
• Consumer motivation. Smart grids give consumers visibility into pricing offers an opportunity to control usage
• Attack resistant. Smart grids have security built-in from the ground up.
• Improved power quality. A smart grid helps provide power free of sags, spikes, disturbances and interruptions.
• Accommodation of all generation and storage options. Enables interconnection to distributed sources of power and storage
• Enabled markets. Supports investment and innovation.
• Optimized assets and operating efficiently. Lowers new infrastructure needs and enables the sale of more power through the existing system.
Service benefits
• Improved reliability. Enables major improvements in power quality and reliability. Smart meters allow utilities to confirm more easily that meters are working properly. Two-way communications across the grid let utilities remotely identify, locate, isolate, and restore power outages more quickly without having to send field crews on trouble calls. A smart grid can eliminate up to 50% of trouble calls in a mature power sector.
• Increased efficiency of power delivery. Up to a 30% reduction in distribution technical losses is possible from optimal power factor performance and system balancing.
• Consumption management. Advanced meters tell consumers how energy is used within their home or business, what that usage costs them, and what kind of impact that usage has on the environment. Customers can manage use interactively or set preferences to adjust automatically.
• Improved system security. Security of supply and cyber security.
• Enhanced business and residential consumer service. Allows automatic monitoring and proactive maintenance of end-use equipment, which can be an avenue for energy savings and reduced carbon emissions.
Risk factors
• The Impact of a Smart Grid project’s scale and complexity –
Uncertainties create a financial risk that actual benefits from a smart
grid 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 notably
less attractive than the costs and benefits of a broad, holistic
program.
• Accelerated depreciation of technology – The technological and cost
curves for computers are very different from equipment historically
used in the electric industry. If advanced metering systems exhibit
technological and cost behaviors similar to those of computers, their
useful lives may turn out to be shorter than estimated.
• Risk of stranded assets – This could involve equipment that was, at
the point of installation, state-of-the art but before it reached the
end of its useful life it was eclipsed by newer technology costing less.
Cost-benefit analysis warrants a broad approach
• Societal benefits and externalities should be included as well as the
costs and benefits of conventional investment proposals.
• This will require a delicate balance, but the transformational
potential of the smart grid vision warrants it.
– A reduction in carbon emissions will improve public health.
– Smart grid projects can create employment, enhance agricultural
security, stimulate economic growth or provide other benefits outside
the boundaries of conventional projects.
– These should be taken into account.
• Such benefits are difficult to measure, but that shouldn’t deter
policy makers and regulators from devising a methodology.
Smart Grid : Financing Models
Issues
� Huge Investments Huge Benefits
� Technology Risks
� Technology has a low life span
� Utility does not have money !!
� Financial Institutions are hesitant to lend money to utilities
� Stakeholders are eager to participate in Smart Grid Program but ambivalent to move with
State owned Utilities
� Participation of societal stakeholders in investment is a challenge
� Assets ownership
Possible Financing Models
• Using the Regulatory Tools
• Government Contribution toward deployment
• Public Private Partnerships (PPP)
• Build and Operate
• Franchise to operate Micro grids
Smart Grid :Policy
• Sections of EA Act require tuning to address issues of Smart Grid
• Revision of Tariff Policy and Electricity Supply Code.
• It is a bottom up approach to ultimately make national grid smart --Integration
need to be addressed through proper protocols and Standards-Network,
metering, software, system control etc.
• Up dating of Grid Code to include smart distribution grid as well.
• Sharing of Communication infrastructure
• Involvement of societal stakeholders
Smart Grid :Regulatory
• Is investment Prudent enough to pass through to consumer?
• What is suitable incentive to consumer to shift its demand from peak to off peak ?
• Should retail tariff design be left to utilities? Regulators provide peak tariff?
• What should be the suitable compensation to consumer for using his captive generation by utilities ?
• What will be road map for infrastructure improvements to implement smart grid–metering, network and system operation?
• How to fully involve Consumers in the process?
• Should utility testing new technology be not be provided with higher rate of return ?
• What should be encouraging feed in tariff for RE ?
What to do while you’re waiting for the Smart Grid
• Three issues that should be addressed before pursuing a
Smart Grid implementation include:
– Develop your vision of the Smart Grid, then a plan
– Evaluate the processes that will be affected
– Address the organization’s readiness
Many business processes will be affected
• One client discovered it had 80 business processes
that would be affected by their AMI deployment
• As with enterprise systems, any business process
redesign is best done first
• The “Ready, Fire, Aim” syndrome has already begun
to crop up in smart grid initiatives
Where is the organization’s institutional know how?
• Many utilities will retire
25% of their staff in the
next 5 years.
• Technology and business
is growing faster than the
organization’s ability to
keep pace.
• Training and a focused
change management
program can make a big
difference.
• We are for consumers.
• Outsourcing smart grid
operation
You may need to rebuild the ship, but you can’t stop
sailing
• There is much unfinished business to be taken care of before adopting advanced smart grid features on a broad scale, but action should not be delayed.
• Transitioning to a smart grid vision tailored to India’s unique circumstances would include:
– Develop a national vision and a flexible plan to pursue smart grid benefits
– Build on R-APDRP & RGGVY and link service quality improvements to measurable KPIs
– Develop smart grid pilots to reinforce operational efficiency at discoms
– Conduct customer and marketing surveys to refine the understanding of what drives
customer satisfaction
– Craft policies and regulations to create a more receptive environment for smart grids by
encouraging innovation, establishing interoperability standards, and allowing more
market-oriented and entrepreneurial solutions.
– Implement techno-commercial “proof of concept” pilot projects for initiatives that have
potentially high impacts, including those that can be implemented independently of the
grid.
Summary of suggested smart grid elements
and components for India (2010-2020)Adoption Level
Element Components Timing National Utility Customer
1. Develop National Smart Grid Vision
Set up a smart grid task force (multidisciplinary, with major ICT focus) 1 �
Confirm target loss reduction curve for AT&C losses at discoms 1 �
Confirm impact estimates for renewable energy, carbon emissions, cost reduction and service quality improvement 1 � �
Conduct customer and market surveys to confirm objectives and get feedback from key reform participants 1 � �
Draft proposed vision and indicative plan identifying roles and responsibilities 1 � �
2. Develop Flexible Smart Grid Approach for India
Link R-APDRP to service quality improvements to service quality & operational improvements demonstrated by KPIs 2 � �
Identify smart grid elements for introduction to the discom business model and internal operations program using KPIs 2 � �
Foster partnerships between ICT and power sector players 2 � �
3. Develop Legal and Regulatory Framework
Amendments in Electricity Act 2003, National Tariff Policy and National Electricity Policy1 � � �
Regulatory approach for energy security and societal value 2 � �
Higher return to utilities for higher risk and use of cutting-edge technology efficiency and better service delivery 1 � �
4. Support Development of Smart Grid Infrastucture
Develop a policy approach for cost recovery 2 � � �
Identify funding source for ICT backbone infrastructure for qualified projects 2 � �
Identify funding source for electric grid infrastructure for qualified projects 2 � �
Develop standards and protocols for interoperability 2,3 � �
5. Conduct Techno-commercial Pilot Projects
Confirm and rank order commercial viability and environmental impacts and launch projects with strong monitoring and verification protocols 2 � �
Develop case studies, customer education and outreach to all major stakeholders to build commitment 3 � � �
Timing/Phases: 1 – Immediate / as soon as feasible; 2 – As soon as preconditions are met; 3 – Continuous
Techno-commercial pilots can serve as proof of
concept
• Thus, the first priority should be to identify ways to help reduce
AT&C losses.
• Other priorities include:
– support to demand response / energy efficiency
– enhancing customer value
– easing the demand for electricity on discoms to facilitate
improvement in their commercial / financial position
• A basic requirement should be that each possible pilot mitigate
carbon emissions.
• Another consideration would be pilot projects that help to
accelerate the pace of reform.
• The following slide shows a sample of possible pilots
• This is followed by one-page summaries of two possible pilots
Smart grid focus areas in India-Pilots
Possible Pilot Project/Study
Reduce AT&C Losses / Improve Efficiency
Reduce / Mitigate Carbon Emissions
Improve Service Quality / Enhance
Transparency
Facilitate Demand Response
and Energy Efficiency
Reduce Demand
on Discoms
Transform the Biz Model /
Accelerate Reform
1. Link R-APDRP to measurable service-quality KPIs
� � �
2. Smart green apartment complex� � � � �
3. PHEVs� � �
4. Replacement of small- scale gensets with renewable energy
� �
5. Off-grid renewable energy for irrigation pumping
� � � � �
6. Smart grid pilot in BESCOM� � � �
7. Wastewater methane generation� � � �
8. Distributed RE generation in remote rural villages
� � �
9. TOU rate pilot project� � � � �
10. Advanced Volt/VAR support� � �
11.Direct debit delivery of subsidies coupled with cost-based tariffs
� � � �
� High potential impact � Contributing impact � Enabling precondition
Business Case
Many of India’s 10,000,000 irrigation pumps are powered by electricity that is provided free or at a nominal tariff. These dysfunctional but politically correct tariffs have caused the wasteful use of water and electricity. Underground aquifers are being depleted at an ever-increasing rate and estimates of electricity used for irrigation pumping range from 20 to 30% of total. Distributed renewable energy (e.g., wind, solar) could be used to provide power to operate pumps that could irrigate fields directly or pump water to storage tanks for later use or, alternatively, energize batteries. A one-time capital grant to offset the installation cost of such a system might be justified in terms of the value of subsidies to the power sector that could be discontinued. This could be integrated as part of an ESCO Agricultural DSM solution as is being tested at Doddaballapur, Karnataka or with other models considered (e.g., farmer cooperative), including the franchise model to improve the economic viability of franchises with significant agricultural demand.
Implementation Approach Key Challenges and Questions
• Analyze EA03 and state regulations to identify preconditions • Survey RE and high-efficiency pump manufacturers to identify the technology options and estimated costs
• Study the results of Ag DSM pumping pilots and franchise pilots
• Develop an economic model, evaluate costs and benefits, and assess funding options
• Plan demonstration pilots for several regions with different RE.
• A intensive program to educate farmers will likely be required• Regulatory approval and assent by a discom may be required if anESCO (with a contract with the local discom) will own the RE source
• Vested interests who get free electricity under Ag tariffs may oppose something that reduces the known benefit they now receive
• The economic viability of the program might require metering andpossibly a cost-recover mechanism, e.g., tariff.
Benefits Costs
• Reliable electricity for irrigation pumping• Enhanced control of ability to irrigate crops for farmers • Improved agricultural outcomes, i.e., crop quality, farmer incomes
• Reduction in power sector subsidies
• The initial capital cost could be significant • Installation and O&M costs are unknown.
Off-Grid Renewable Energy for Irrigation
Pumping
Conclusions
• Electricity is morphing from a commodity into a premium form of energy
• Demand for more high-quality electricity will continue growing unabated
• The link between economic prosperity and quality electricity is tightening
• Traditional fossil fuels will be increasingly scarce, expensive and polluting
• The smart grid vision offers unique solutions to customers’ and society’s
need for a sustainable, high-growth, low-carbon economic model
• For India, the smart grid may offer a unique opportunity to leapfrog into
a vastly improved electricity environment.
• There is enormous potential for gain, but also some significant risks.
• The best course of action is to proceed with deliberate speed with a
program that emphasizes front-end analysis, planning and goal setting.