executive summary - smart grid

1

Smart Grids The Power Grid of Tomorrow

An Extract

Smart Grids. The Power Grid of Tomorrow – An Extract

2

Thanks to its early installation of more than 32 million automated smart meters, Italy finds

itself in a particularly favourable position to take advantage of the development of intelligent

electricity networks. This evolution in the overall electricity network is a necessary step in

order for the nation to be able to equip itself with an infrastructure capable of managing the

new challenges the energy system faces, such as a greater production of energy from

renewable sources, an increase in energy efficiency and the reduction of emissions of climate-

altering gases.

The entire electricity system is in fact on the point of being invested by what might well be

described as a “storm of innovation”.

This innovation is not only going to affect electricity systems, i.e. distribution and transmission

networks, but will also have a significant impact on the development of renewable energies. In

fact, the generation of electricity, traditionally carried out in large, centralised sites connected

to transmission networks, is engaging to an ever-greater extent small- to medium-sized plants

in the vicinity of users, who – once the plants have been connected up to distribution

networks - then become “prosumers”: producers and consumers at one and the same time.

Moreover, the distribution networks of the future will make it possible for small consumers to

participate more actively in the market, providing them with instantaneous, detailed

information on consumption levels as well as access to channels of communication with a

multiplicity of subjects (energy suppliers, service aggregators, network managers). The new

uses that will be made of electricity – such as electric cars and heat pumps for heating – will

in their turn have a significant impact on the distribution network, obligating it to assume a

greater degree of dynamism and flexibility.

And nor is this “innovation storm” limited to smart grids. Rather, it is heading directly towards

the heart of the electricity system as a whole. In fact, it would be much more accurate to

speak of a revolutionary shift towards a new “smart power system”.

Put in other words - and as is in fact made explicit in the preface to the book - “The future

that awaits us is a future with more electricity and less primary energy”.


3

This booklet offers a summary of the themes that are dealt with in the book Smart Grid. Le

reti elettriche di domani. Dalle rinnovabili ai veicoli elettrici il futuro passa per le reti intelligenti

(Smart Grids. The power grid of tomorrow. From renewables to electric vehicles the future

passes through intelligent networks) published in May 2011 and presented in Palazzo Marini in

Rome (the Italian lower house of parliament).

The idea of extracting a brief summary from the longer document arose out of a desire to

make available to a wider public an insight into the extensive and detailed investigation that

the Milan-based foundation Fondazione EnergyLab has been carrying out in relation to the

theme of smart grids in Italy. In particular, the booklet reproduces the preface and

introduction of the original text.

The work is the product of the combined efforts of a group of experts that gravitate around

the Laboratorio Smart Grid (Smart Grids Laboratory), a project conceived of, developed and

promoted by Fondazione EnergyLab. The contents of the booklet fully express the multi-

disciplinary approach characteristic of the work of the laboratory. The research in question

lasted for over a year and the final result is the fruit of a highly articulated and carefully

orchestrated effort that engaged a range of figures from various areas of the academic,

government and business worlds.

In particular, the protagonists included professors from Milan’s five universities and various

research centres – members of the foundation – as well as a range of people from the

government and business worlds.

Editors

Maurizio Delfanti Politecnico di Milano

Andrea Silvestri Politecnico di Milano

Authors Giuseppe Buglione IEFE – Università Commerciale “L. Bocconi”

Massimo Bogarelli Politecnico di Milano

Antonio Capone Politecnico di Milano

Michele De Nigris Ricerca sul Sistema Energetico – RSE

Davide Falabretti Politecnico di Milano

Massimo Gallanti Ricerca sul Sistema Energetico – RSE

Luca Lo Schiavo Autorità per l’Energia Elettrica e il Gas

Marco Merlo Politecnico di Milano

Valeria Olivieri Politecnico di Milano

Clara Poletti IEFE – Università Commerciale “L. Bocconi”

Mauro Pozzi Politecnico di Milano


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The EnergyLab Foundation was founded in

Milan in 2007 with the goal of creating a

network of actors in the energy field

including universities, the business world

and regional and local government. It is a

non-profit organization whose members

include Milan’s 5 major universities. The

foundation promotes research and

innovation in all areas of the energy sector,

operating by way of 6 laboratories focusing

on different themes: Renewable

Energies, Smart Grids, Nuclear

Security, Electric Mobility, Energy

Efficiency and Access to Energy in

Developing Countries.

The foundation’s legal status as a

participatory foundation makes it possible

for it to undertake non-profit activities,

furnishing support to its members and

present and future partners.

The Scientific Members

Università Commerciale “L. Bocconi”

Università degli Studi di Milano Bicocca

Università Cattolica del Sacro Cuore

Politecnico di Milano

Università degli Studi di Milano

RSE – Ricerca sul Sistema Energetico

To Contact Us:

The EnergyLab Foundation

Piazza Trento, 13

20135 Milan (Italy)

Phone +39 02 7720.5265

Fax +39 02 7720.5060

[email protected]

www.energylabfoundation.org


5

Preface An “innovation storm” for the entire

electricity system

by Luca Lo Schiavo1

The European targets of producing a

greater quantity of electricity from

renewable sources, increasing energy

efficiency and reducing emissions of

climate-altering gases (the so-called “20-

20-20 by 2020” package) entail – in order

for these goals to be actually achieved - a

very substantial change both for

European electricity networks in general

and Italian networks in particular.

And nor is that all. In addition to the

modifications in network design and

management necessary to allow for a

1 The Executive Office of the Autorità per l’Energia Elettrica e il Gas (Regulatory Authority for Electricity and Gas). The opinions expressed in this preface are the personal opinions of the author. They do not represent the official positions of the Electricity and Gas Authority and do not commit it to any course of action in the future.

development of distributed generation

sufficient to meet the objectives laid

down in the European directive on

climate change), it is also necessary to

take into account the implications of the

objectives fixed by the directive for the

internal market for electricity - an integral

component of the so-called “third energy

package”, which points all European

countries in the direction of smart

metering as a necessary path to pursue -

once an appropriate costs/benefits

analysis has been conducted – in order to

extend the benefits of liberalisation to all

users.

And even that is not the end of the story.

In the not too distant future the

commercial distribution networks of the

world’s biggest automobile manufacturers

are going to introduce into the market

plug-in electric vehicles that will result in

new loads for the electricity network. At

the moment, from the point of view of

the amount of power that will be

absorbed, these loads remain extremely

difficult to predict, even though in all

probability they will be fairly limited vis-à-

vis the total demand for energy and in

any case very efficient in terms of the

overall quantity of primary energy used

for individual mobility compared with

traditional vehicles with internal

combustion engines.

What is involved, then, has three facets:

the development of distributed generation

and its consequential integration -

notwithstanding its traditional reputation

for being made up of sources that are not

amenable to programming - not only into

distribution networks but also into the

electricity market thanks to the

development of advanced forecasting


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technologies and models; the widespread

adoption at the European level of smart

metering (an area in which Italy is a

global frontrunner) and the opportunities

this offers to end-users as well as new

market subjects such as demand

aggregators capable of commercialising

demand-response services; and, lastly, in

a by-now imminent future, electric

vehicles driven by “mobile electricity

consumers”, not just furnished with the

freedom to chose their own supplier, just

like the more traditional “fixed electricity

consumer”, but also protagonists bearing

a new need: access to recharging

facilities not only in private locations like

the garages of family homes and

company premises but also in public

places or at least in places open to the

public. Thus, the challenges for the

electricity networks of the future are truly

immense, so much so that a recent study

in Britain (the LENS project - Long-term

Electricity Network Scenarios) conducted

on behalf of the Office of the Gas and

Electricity Markets (OFGEM, the British

regulatory authority) has defined as

“unprecedented” the degree of innovation

that electricity systems will either have to

face up to in the very near future or that

they are in fact already in part

experiencing. In this phase of massive

and in part unpredictable innovation the

role of regulatory authorities will be

crucial not only in order to furnish the

correct stimuli for investment in smart

grids but also – as is correctly suggested

in this book in the chapter dedicated to

regulation – in order to adjust all those

regulatory frameworks that have anything

to do with this out-and-out “storm of

innovation” that is very shortly going to

invest the entire electricity system. From

this point of view, one could even argue

that smart grids run the risk of being a

misleading brand, given that what is

required are not (just) intelligent

networks but (also, and above all)

network users capable of exploiting the

opportunities that the technological

innovation makes available, appropriately

adapting their own production and

consumption plants. In short, this

impending “innovation storm” does not

stop at smart grids but rather goes right

to the very heart of the electricity system.

Indeed, it would be much more accurate

to speak of a “smart power system”.

There is no doubt that the role of the

enabling technology for this new smart

power system will be played by

information and communications

technology (ICT) but equally clear is the

fact that the developments in technical

regulation will be just as important not

just in the traditional sector of

electrotechnics (handled at the European

level by European Committee for

Electrotechnical Standardisation

(CENELEC)) but also, and to a more

decisive extent for the success of the

changes taking place, in the

communications applications to be put in

place (to be based on standard protocols

and hence of an open and non-

proprietary type) to guide the definition

of technological solutions in such a way

as to leave the market as free as possible

and to minimise the costs and

technological complexities that users of

the intelligent network will have to

confront.


7

In view of these considerations it is

important to make clear that the

transition towards a smart power system

goes well beyond the phase of

automating the networks, a phase that

has already been set in motion in Italy

over the last decade by distribution

companies as a consequence of the

encouragement provided by a regulatory

framework incentivating service quality.

In certain respects this phase has already

involved the adoption of very advanced

solutions, ranging from the widespread

use of HV-MV transformer automated

control to the automatic search and

identification of malfunctions. In fact, if

the problem consisted only in the

automation of the network, non-

proprietary communications protocols

(like those used up to now by the major

distribution companies) would not

constitute a problem, given that such

applications do not require any

interaction with active and passive

network users.

But the real benefits of incorporating an

ICT layer into an electricity system can be

obtained only if the end-users too, both

those that immit power and those that

extract it, are connected up with this

layer and are able to modify their own

behaviour in accordance with the

electronic information made available - be

it economic (related to the market) or

technical (related to the efficient working

of the distribution network and, more

generally, to a better management of the

overall electricity system). The need to

involve network users so as to exploit to

the maximum the potentialities deriving

from making the system “smart” is

therefore the obvious reason why it is no

longer possible to use non-proprietary

protocols, as in the case of the mere

automation of networks. Instead, it is

essential to use open protocols that

network users are able to adopt on their

own interface devices in correspondence

with the distributor offering the lowest

price.

It is also the responsibility of the energy

regulator to ensure that, on the one

hand, there are no practices or

requirements on the part of network

managers that result in complications or

costs for network users that are not

strictly necessary and that, on the other

hand, the users of the network respect

the technical stipulations necessary for

the correct working of the network. In

this regard it is worth noting the work

that the Electricity and Gas Authority has

carried out over the past few years to


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eliminate the great variety of technical

stipulations used by the various

distributors – particularly well-known

were the norms of the “DK” series

implemented by Enel distribuzione (ENEL

Distribution) – and to replace them with a

single set of technical connection rules

defined by the authority on the basis of

the technical work carried out by the

Comitato Elettrotecnico Italiano (the

Italian Electrotechnics Committee, the

national organ for standardisation) in

collaboration with the offices of the

regulatory authority itself together with

various independent technicians (the so-

called Norma CEI 0-16). This project has

already been completed for high and

medium voltage distribution networks,

whereas it is still underway – but should

be completed very shortly, certainly

before the end of 2011 – for low voltage

networks. In fact, the work that the

authority has requested the CEI to

conduct on these latter networks is by

now more or less complete (the new

norms for low voltage networks should go

under the name CEI 0-21).

Apropos of the need for open protocols in

smart grids and in particular the need to

avoid generating unnecessary costs for

network users, it should to be underlined

that among the requirements necessary

to have access to the incentives provided

for by the Electricity and Gas Authority’s

Resolution ARG/elt 39/10 in respect of

pilot projects in the field of smart grids is

that of the use of public domain

communications protocols. Even though

the concrete results that the authority’s

decision has had in Italy to stimulate

experimental smart grid projects are

extensively described in this book, it is

nonetheless well worth mentioning some

of the reasons that have led the authority

to move in this direction.

In the first place, it is necessary to recall

that starting out from 2004, i.e.

immediately after the major blackout that

struck the Italian electricity system in

September 2003, the Electricity and Gas

Authority progressively introduced a

series of feed-in-tariffs to promote

“strategic” investments in electricity

networks (subsequently these were

extended to gas networks as well). In a

second phase of regulating electricity

networks, the so-called 2nd Regulatory

Period (2004 – 2007), these incentives –

which take the form of an increase in the

weighted average cost of capital (WACC)

- were initially limited to investments

provided for by the Piano di sviluppo della

rete di trasmissione nazionale (RTN)

(Development Plan for the National

Transmission Network) but by the 3rd

Regulatory Period (2008 – 2011) they

were also extended to a certain number

of special investments in distribution

networks, including experimental projects

in the area of “active networks”. The

underlying idea has been that some

investments are not adequately promoted

by output-based incentives relating to

service quality parameters (SAIDI and

SAIFI+MAIFI) but that these nonetheless

warrant attention in that their failure to

materialise could act as an obstacle to

innovation or damage consumers.

In the second place, it is by now a well-

established principle that electricity

systems need to evolve in the direction of

a management of an active type. This

evolution is necessary in order to achieve

a number of important objectives,


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including the following (in order of the

urgency of the need):

an increased possibility of connecting up

units of distributed generation,

guaranteeing a better contribution (today

absent or negative) on the part of such

units to the security of the overall

electricity system;

the introduction of techniques of load

control on the part of the system;

the introduction of greater opportunities

for end-users (in the future also mobile

end-users) to participate in the electricity

market by way of making use of

electronically conveyed information in

relation to prices.

All these objectives can be realised only

by way of introducing suitable

communications systems that will bring to

completion existing electricity networks.

In a very simplistic manner it is possible

to describe this evolution by saying that

distribution networks must to some

extent resemble transmission networks.

In Italy for many years now the latter

have been completely automated and

subject to control as well as furnished

with communications systems capable of

exchanging appropriate electronic signals

with network users.

The necessary gradualness of the action

to be taken has led operators to focus

attention (since as early as 2007, in the

form of the Electricity and Gas Authority’s

Resolution 348/07) on “medium voltage

active networks”. This concern later

found expression in the determination,

formalised in the authority’s Resolution

ARG/elt 39/10, to limit the pilot projects

eligible for incentives to MV distribution

networks in which there occurs for at

least 1% of a given year/a given year-

long period/an annual period an inversion

of the flow of power from medium to high

voltage in consequence of the surplus

power/an excessive amount of power

introduced by distributed generation in

respect of/compared with the load in that

fraction of time. This focus on problems

deriving from flow inversion in the

context of the existing system of

protections finds its roots in its turn in the

studies commissioned by the authority

from the Politecnico di Milano between

2006 and 2008, the results of which were

published as Appendix B of Resolution

ARG/elt 25/09 (in Chapter 3 of this book

a detailed explanation is provided of

these research results and their partial

extension to LV, as illustrated in this case

in the Appendix to Resolution ARG/elt

223/10). Basically, the idea was to

confront the major problems already in

part evident by selecting pilot projects for

the “smartisation” of medium voltage

distribution networks in contexts where

the penetration of distributed generation

had already reached levels such as to

require new technologies and new

techniques for the “active” management

of the networks and to do this with an

adequate degree of involvement on the

part of the users of the networks (all the

while, as has already been explained,

limiting as much as possible the costs of

modifying the plants of active and passive

users by way of using standard and non-

proprietary communications protocols).

It is important to underline that these

experimental projects, although of limited

dimensions, are moving in the same

direction that is being pursued by the

European Commission with its recent

industrial initiative the European


10

Electricity Grid Initiative (EEGI) put in

place by the Directorate-General for

Research as part of the Strategic Energy

Technology Plan (SET): to pass from a

phase, by now fairly well-established, of

carrying out research projects in the

laboratory (i.e. in test facility plants) to a

new phase - without doubt more critical –

of conducting experiments in the field

with “real clients, real plants and real

voltages”. This approach has also been

proposed in the position paper of the

European Regulatory Group for Electricity

and Gas (ERGEG), published in July 2010

and frequently referred to in this book.

This publication also discusses the reason

why the Electricity and Gas Authority

introduced the reference to medium

voltage (MV: 1-35 kV) as an essential

requirement for the pilot smart grid

projects to be selected for admission to

the special fedd-in-tariff programme

consisting in an increase in the WACC of

2% for a period of 12 years. In fact,

three quarters of the renewable energy

produced in Italy is generated on MV

networks. The problem of integrating

massive quantities of power generated by

renewable sources – a process likely to

be characterised by “intermittent

immission”, which may provoke excessive

variations in voltage along transmission

lines – arises prevalently in relation to

medium voltage networks. By contrast, so

far as high voltage networks are

concerned (at least at the national level),

technologies for the remote control of

production plants are already available.

The problems present in high voltage

networks in some parts of Italy need to

be related back more than anything else

to the size of the network as opposed to

its smartisation.

From a more long-term point of view, it

will eventually be necessary to extend the

process of smartisation to LV networks, to

which much larger numbers of users are

connected. So far as these networks are

concerned, the fundamental challenge in

Italy is to take as much advantage as

possible from the investments that have

already been made in smart metering. To

this end the Electricity and Gas Authority

has made it obligatory to use bihourly

energy prices in respect of all users. This

requirement has been in place for

domestic users since 1st July 2010 and

will by fully phased-in by the end of 2011.

What is involved is probably the biggest

experiment in the world of differentiated

prices on the basis of the time of use.

The authority intends to monitor the

effect of this experiment very carefully,

taking advantage amongst other things of

the financial assistance furnished by

Ricerca di sistema. The aim of the

initiative is to introduce electricity prices

that reflect costs (cost-reflectivity) in such

a way as to furnish users – and,

indirectly, the makers of electrical

appliances – with information as to the

economic value of the consumer choices

that are made. The Italian smart


11

metering system constitutes the only

system in the world catering for 30

million users. In fact, this unique

opportunity to operate in the field on

such a vast scale has made us the envy

of the rest of the world. Great interest

has been provoked, for example, by the

decisions the authority has taken in

relation to the passage to the regime of

an obligatory bi-hourly price for clients (a

service offering a greater degree of

protection) or in relation to the use of the

capabilities of electronic meters to furnish

a minimal, indispensable service even in

the event of a failure on the part of

domestic electricity consumers to meet

payment requirements (the management

of failure to pay/late payment). The

authority has chosen to follow the

strategy of extracting the highest possible

value from the investment in electronic

meters. This investment is being

recuperated by way of an increase in the

component of tariffs corresponding to

capital investment. By the same token,

however, the initial investment has

already made it possible to render more

exacting the efficiency factor (the X

factor) which governs the reduction of

the operating costs of distribution

companies according to the logic of a

price cap, introduced in Italy by the law

establishing the Electricity and Gas

Authority (Law No. 481/95).

There is little doubt that, if someone were

to design a smart metering system today,

they might well make choices different to

those that were made some 10 or more

years ago in Italy. The configuration of

the system of remote control that is

currently in place does not provide for a

real real-time control of the end-point

objects, something which, for that

matter, is not even necessary for the

objectives that guided the decision to

develop remote control meters towards

the end of what we might now refer to as

“last century”. The principal objectives at

the time were: to read data on

consumption at a distance - be it

periodically or on request - for one-off

operations, for example, in the event of a

user switching from one supplier to

another; and to remotely control

operations like connecting and

disconnecting the power supply or setting

the maximum amount of power available.

Turning our attention towards the future,

a connection between an electronic meter

and Internet, for example, would make it

possible to offer real-time services that

are not yet available. It is quite

legitimate, then, to laud the

foresightedness of the people who

gambled on the introduction of remote

control meters. It is no less legitimate,

however, to begin to work on the second

generation of meters (the Electricity and

Gas Authority has fixed a useful technical-

economic life of 15 years for the current

electronic meters, and we are by now

well into the second half of this period),

identifying new services that might

benefit users and deriving from these the

technical characteristics that the new

meters will require (in line with a model

that makes use of the Quality Function

Deployment Methodology).

The vigorous encouragement that the

European Commission has given to the

spread of smart metering systems in EU

member countries both by way of the

norms contained in the so-called “3rd

Energy Package” and by way of the


12

emission of mandate M/441 to the

European standardisation organisms

(CEN, CENELEC and ETSI) has recently

provoked an important change in the

direction of the opening of

communications protocols: the

establishment of the consortium Meters

and More, which has made possible the

disclosure of the communications protocol

used in the major European initiatives in

the area of the remote control

management of low voltage meters (in

Italy, with Enel distribuzione, and in

Spain, with Endesa). The availability of

this protocol in a non-proprietary form

will constitute an important step towards

the possibility of home and building

automation, which, as has been

demonstrated by the most successful

initiatives up to date especially in the

United States, lie at the basis of energy

saving in the domestic use of electricity.

Distributed generation and smart

metering, then, are two key factors in the

evolution of electricity networks towards

smart grids. This evolution, however, is

going to intersect with other crucial

developments such as energy efficiency

in respect of end uses and most

importantly the electrification of individual

transport. Since these themes are the

object of other parallel initiatives

currently being undertaken by Fondazione

EnergyLab, they are dealt with only

partially in this book.

The future that awaits us is a future with

more electricity and less primary energy.

The electrification of individual transport

in particular (i.e. road-bound vehicles)

will bring with it over the next few

decades a change in the logic of energy

consumption which will in all probability

assume the contours of an out-and-out

change of paradigm. The current studies

in nanotechnology could well lead to the

development of industrial applications in

systems for the accumulation of energy

such as to provoke a total change in the

composition of the stock of road-bound

vehicles in the course of just a few

decades. The increase, on the one hand,

of the capacity of on-board vehicle

batteries – all the time maintaining their

high performance and limited size - and

the reduction, on the other, of recharging

times to times that are compatible with a

brief stay at an electric car power station

(without, then, having to effect a long

stop-over to recharge the battery but

only a brief stop) are the two factors

which will determine the speed of the

electric mobility revolution.

The perspective within which to correctly

frame the “innovation storm” that is

about to hit the electricity sector, then, is

more general. It does not relate just to

electricity networks in the strict sense but

rather invests the entire system, including

the end uses of energy, not least those

that as of today are not yet practised

other than in a extremely limited manner,

such as electric mobility (individual and

commercial).

It is to be hoped (and realising this hope

is the job of the regulator) that the whole

evolution of this process, destined to

unfold over a very extended period of

time, unerringly attributes a central role

to the end-user of the system. The need

for a user-centric approach was, for that

matter, the principal methodological

recommendation advanced by the

European Association of Energy

Regulators (ERGEG) in its consultation


13

document on smart grids published at the

end of 2009. This approach must remain

the cornerstone not only of the action of

the independent energy regulation

authorities of the various EU member

states but also of the network operators

that are planning investments and the

various market actors who – thanks to a

network that is more open, more efficient

in furnishing services and better equipped

with “intelligent” technology – will be able

to obtain economic and environmental

benefits superior to the admittedly

substantial costs that are necessary in

order to confront the upcoming “storm of

innovation” with the right combination of

vision towards the future and

responsibility in relation to the existing

service.

Introduction

by Maurizio Delfanti and Andrea Silvestri

After the revolution that led from vertically

integrated utilities to a management on the

basis of market models, electricity systems

in the majority of both European and non-

European countries are currently passing

through a new phase of transition. A

rethinking is taking place of the best way to

manage networks, especially distribution

networks, which need to pass from a

“passive” to an “active” mode. This

evolution (with technical implications of

unprecedented complexity) is referred to at

the international level by way of the

expression “smart grid”. This term alludes

to highly innovative structures and

operating modalities which, as well as

guaranteeing a high level of security and

reliability in the overall system, are also

able to deal with the many problems tied to

the management of distributed generation,

to the possibility of controlling loads, to the

promotion of energy efficiency and to a

greater involvement of active and passive

end-users, not least in respect of the

electricity market.

This transformation, which involves the

entire electricity system, does not seem to

have either a definite form or precise

confines. Today it is no longer enough just

to satisfy the growing demand for

electricity (which up to now has always

been the principal, if not only, objective of

electricity networks); it is also necessary to

respond to new needs not confined – and

above all not amenable to satisfaction –

exclusively within the “electricity world”, a

world which, as a consequence, will have to

interact with other worlds such as, and

above all, the “world of information and

communications technology (ICT)”.

The challenge, then, is immense and by

now very much present. Ideas on the

subject, however, are still rather confused

– and not just in relation to the more

technical or detailed matters. In fact,

although smart grids have been at the

centre of debate on electricity systems for a

number of years, it is still difficult at the

present time even to identify a single and

generally accepted definition. Instead, it

seems easier from one moment to the next

and depending on the context to place the

emphasis on some specific point, with the

risk, however – and this is the real danger -

of generating still more confusion.

The result has been the spread of an

excessively trusting approach: thanks to

smart grids, a valid solution for every

national context (from the most advanced


14

countries like those of Europe to developing

countries) and to be implemented in its

entirety (from transmission networks to low

voltage networks), it will be possible to

solve every problem in the electricity

sector, from the limited efficiency of the

markets to the improvement of service

quality for end-users, obviously entrusting

a determining role in the exercise to a

vaguely defined research activity.

This book by The EnergyLab Foundation

has been conceived with the aim of

providing a more concrete and technical

vision of the evolution underway and of its

real underlying causes. Obviously, it runs

the risk – a risk that we have taken on

quite deliberately – of providing only a

partial vision of the problem. In order to

achieve our aim it has been necessary to

narrow the focus down from the

international context to a European one

and ultimately to the case of Italy and that

of a specific Italian region. But it has also

been necessary to examine the various sets

of problems involved in terms of successive

future time frames, without, however,

directing attention too far ahead (is it really

a purposeful exercise, for example, for

people who are dealing with electricity

systems today to try to imagine - at times

with extraordinarily passionate involvement

- what is going to happen in 2050?).

Initially, then, this study concentrates

attention on the European scene. So far as

this broad context is concerned, it is

beyond doubt that the principal causes at

the basis of the revolution underway are to

be found in the development of distributed

generation. There is an urgent need to

connect up the rapidly growing number of

distributed generation units, guaranteeing a

real contribution on their part to the

security of the overall electricity system

(today, in fact, non-existent or negative)

and to its management and control.

Distributed generation is in fact the only

way possible to reach the goals of an

increase in the production of electricity

from renewable sources and a reduction in

the emission of climate-altering gases, key

components of the so-called “20-20-20 by

2020” package. This reading is born out

further by an important initiative promoted

by the European Commission, the NER300

Call for Proposals, which defines among

other things the criteria and the parameters

for the funding of three pilot projects for

the management of decentralised

renewable energies (smart grids).

According to this call for proposals, the

increase and development of renewable

energy sources (RESs) connected to the

network represents the principal benefit to

be expected from smart grids. In other

words, smart grids are indispensable in

order to enable the inclusion or better the

real integration of renewable energy

sources into the electricity sector.

At a national level too recent regulatory

provisions (both on the part of the

Electricity and Gas Authority and the

relevant government departments) have

confirmed this link: smart grids in Italy are

destined to develop in close connection

with distributed generation.


15

But the European goals for 2020 also

necessitate the active involvement of the

end-users of energy networks. Over the

long-term, then, it will be necessary to

introduce greater opportunities for such

end-users (in the future quite probably

“mobile” as well, in the form of owners of

electric vehicles) to have access to and

make use of electronic conveyed

information in regard to price/the market

(demand response), for example, by way of

implementing intelligent meters (smart

meters, which not by chance are

extensively discussed in this book).

The focus of the book then narrows down

to concentrate on the Italian context. This,

however, does not by any means constitute

a reductive choice, for it so happens that

Italy is at the very forefront of

developments in the field. This position of

pre-eminence has come about thanks to

the initiatives that were taken some time

ago by the relevant operators. A number of

examples might be cited: the project

Telegestore, for example, boldly conceived

of by ENEL and to date the only initiative of

its kind on such a vast scale in the entire

world; or the overall conception and

development of the transmission network,

today unified under the ownership of

Terna; or, finally, (and most importantly

from a long-term point of view) the

courageous regulatory policies set in place

by the policy-makers of the time. Smart

metering distributed on a mass scale and a

modern transmission network (which might

already be classed as “smart”) are in our

view the major distinguishing features of

the Italian case in the European context.

On the basis of these considerations, it is

reasonable to claim that in Italy the

principal driver in the direction of active

networks is constituted today by the

massive presence of distributed generation

on distribution networks.

But what are the major problem areas for

Italy and what are the priorities and time

scales that have been fixed up to now to

confront them? Still in terms of the specific

guidelines cited above, the authors of the

book have succeeded in drawing out from

the pathway traced out by the Regulatory

Authority for Electricity and Gas a range of

highly illuminating perspectives. As Luca Lo

Schiavo has clearly pointed out in his

preface to the book, attention has first

been focused on the problems deriving

from the massive presence of distributed

generation on distribution networks,

especially in the medium voltage (MV)

sector. Distributed generation on medium

(and low) voltage networks brings with it a

number of significant problems, principally

tied to the inversion of flow and to the

performance of the systems of protection

that cater for active users. The Electricity

and Gas Authority’s Resolution ARG/elt

39/10 has traced out a possible evolution in

distribution networks - in particular in those

that are characterised by a significant

amount of distributed generation (inversion

of flow in 1% of annual working hours) -

towards an active mode.

By pursuing this logical path - limiting

attention to Italy (an extremely significant

case at an international level) and

establishing a temporal horizon of just a

few years - it has been possible to

delineate in this study (fruit of the

collaboration of a wide range of highly

qualified experts in the field) a highly

plausible future evolutionary trajectory for

smart grids.

This, then, is the principle objective of this

book: to investigate and to trace out in a

concrete and clearly defined manner the

future prospects for the evolution of smart


16

grids in a strictly Italian context and to do

so not only at the level of research,

identifying problems and possible solutions

both of a technical and regulatory nature,

but also at a more practical level,

describing the pilot projects currently

underway and the benefits that are

expected to derive from them.

In keeping with what has just been said,

the sequence of the six chapters of which

the book is made up (and the structure

with which they are dealt with) can be seen

from two points of view:

• in relation to the geographical context

(from international/European to

national, even up to the specific case of

an experiment currently taking place in

Milan in the Region of Lombardy);

• in relation to future time horizons (from

long-term evolutions to the time span

on the national level of the next few

years, even down to that of initiatives in

the field that have already got

underway).

Underpinned by this interpretative

framework, Chapter 1, an introduction to

the entire study, illustrates the fundamental

features of smart grids. After listing a series

of factors that are leading to their

increasingly extensive implementation in

the electricity systems of various European

and non-European countries, the authors

offer a definition of smart grids capable of

effectively establishing their peculiarities

and objectives even over the very long

term. These objectives are then explicated

in terms of the functions that smart grids

make available. A description is provided

not just of the services, solutions and

support infrastructures that smart grids

offer but also of the principle actors

involved in the revolution underway, from

the suppliers of the services to the subjects

who are expected to benefit from them. In

order for the newly implemented

technologies (in particular in the field of

ICT) to make it possible to overcome the

current limitations of smart grids and make

provision for their concrete and full

development - all the while maintaining at

a high level the security and reliability of

the overall system - it is necessary for there

to take place a parallel evolution in both

the regulatory framework (with implications

essentially at the national level) and the

normative framework (of a technical

nature, with not just national but also

international implications).

So far as the modification of the regulatory

framework is concerned, Chapter 2

investigates the national and international

scene with a view to identifying and

distinguishing between those areas not

covered by any regulatory provisions at all

and those covered by regulations, norms

and requirements that could prove to be no

longer valid in the context of a distribution

network (especially a MV network) that is

evolving into a smart grid. In fact, it is

vitally important to analyse all the system

conditions that it is necessary to put in

place in order that investment in smart

technologies can effectively give play to its

full potential. In this chapter the authors

discuss the conditions under which it is

possible to manage in a “smart” way first

the supply and then the demand for

electricity at the level of the market, the

purchase/sale of energy and power delivery

services, referring in particular to the role

that distribution companies will have to

assume in the future and paying special

attention to the national context, i.e.

offering a specific treatment of the

regulatory framework in Italy in relation to

distributed generation and the incentives


17

provided for to support pilot projects on

active networks.

Still in relation to the Italian context but

with particular reference to the modification

of the technical-regulatory framework,

Chapter 3 describes in a detailed manner

the impact of distributed generation on the

overall electricity system and in particular

on Italian distribution networks. In fact,

although the incentives and the policies in

support of RESs will make it possible –

albeit in a manner that falls short of an

ideal solution – to reach the “20-20-20 by

2020” objectives a few years ahead of

schedule, there is a need for the networks

to be able to cope with this increasing

quantity of energy. Through an analysis of

hosting capacity, effected on a very

extensive sample of MV networks, the

authors of this chapter have been able to

determine that the most severe limits to

the amount of power that can be installed

depend on a set of phenomena (voltage

regulation, problems tied to interface

protections, thermal limits on lines) that are

all related to the question of power flow

inversion. This factor, in fact, constitutes

the principle indicator of “activity” on

networks. Because of this it will be

necessary in the near future to develop

technologies and solutions that make it

possible to implement smart grid

prototypes based of the use of

communications technology.

As of today these technologies, often

referred to by way of the acronym ICT and

extensively discussed in Chapter 4,

represent the only approach capable of

resolving the new problems associated with

energy networks. In fact, it is only by way

of an intelligent use of communications

systems that it will be possible to overcome

the current limitations of distributed

generation and make provision for a real

and substantial increase in its contribution

to the electricity system, all the while

maintaining at a high level the degree of

security and reliability of the system as a

whole as well as the quality of service

offered to users. In the course of this

chapter, then, the authors offer a

description of all the communications

technologies that can immediately be

applied to monitor, control and co-ordinate

electricity networks. In addition, an

illustration is provided of some possible

future forms of interaction between the two

systems, with particular attention to smart

metering, a key element - over the long

term - of the new architecture, capable of

actively involving the end-user in the

management of the smart grid.

In order to achieve real progress in the

direction of the networks of the future, all

possible solutions need to be tested on real

networks with both end-users and active

users (loads and generators). Today there

is a growing number of projects on smart

grids that deal with a wide range of

problems in a diversified and detailed

manner. These go from activities to

promote the comprehensive development

of the network in the direction of more

advanced standards by way of co-operation

and the sharing of research resources and

extend to experimental projects aimed at

implementing and integrating into the


18

electricity system particular types of RES

plants, to programmes to promote the

spread of smart metering and energy

efficiency. The scale of these initiatives

varies widely. Some involve industry

subjects, operators and research

institutions at a global as well as national

level (extensively dealt with in Chapter 5);

others, instead, are more limited in their

scope but very significant numerically even

though they relate just to the Italian

context. In fact, it is for this reason that it

was decided to offer an account of a

specific initiative underway in Milan in the

Region of Lombardy (Chapter 6).

Thus, in the course of Chapter 5 the

authors describe a number of the major

initiatives in the field of smart grids,

following a logical order that gradually

shifts towards focusing on the Italian

context.

Attention is first directed towards initiatives

of a broader international character, with

an analysis of the principal projects

underway outside Europe, and then, the

perspective being narrowed down to the

continental scene, an account is given of

the various initiatives promoted or financed

by the European Commission, be it either

those in the ambit of research institutes or

those that involve the direct participation of

European distribution system operators

(DSOs) and transmission system operators

(TSOs). Finally, a description is given of the

Italian scene, which is without doubt at the

very forefront of the energy revolution.

Following this path, we arrive finally at the

last chapter. In this the authors offer a

detailed description of a specific project,

endeavouring to illustrate the ideas and

principles in question in terms of real and

concrete actions and solutions.

Focusing its attention on a specific

geographical context (Italy, and in

particular the Region of Lombardy) and on

an immediate temporal horizon (the years

between now and 2015), the protagonists

of the project Milano Wi-Power, developed

in collaboration with A2A, are implementing

directly in the field solutions to the most

urgent problems provoked by the

penetration of distributed generation in

Italian distribution networks. The evolution

proposed consists in a new network

automation system furnished with a

suitable channel of communication between

the the DSO Primary Cabin protections and

the units of distributed generation that

pertain to it with a view to resolving a

series of problems relating to flow inversion

and in particular to the current interface

protection systems of active users and

thereby allowing for an immediate increase

in distributed generation in view of the

future development of smart grids. But

here too we trust that in capturing the

detail we have not lost sight of the overall

picture. In fact, the in-principle solutions

demonstrated with reference to this

particular case (the project focusing on

Milan) are in the process of being

incorporated into many of the smart grid

initiatives that the Electricity and Gas

Authority has recently (February 2011)

recognised as being eligible for inclusion

under the incentivation measures provided

for by the above-mentioned Resolution

39/10.

Let us conclude this introduction with a

caveat. We have endeavoured to provide in

a simple and direct manner a certain

number of instruments that might prove

helpful to understand the new frontier of

smart grids. What is involved, however, is a

frontier beyond which it is already possible

to see an infinite number of possibilities still

waiting to be explored. Even more, at the

very moment in which this book is being


19

printed a number of important initiatives,

especially on the regulatory front, are in

the process of being perfected. In

particular, an examination is being carried

out of a set of legislative initiatives which

have the potential to influence in a decisive

manner the development of active

networks in Italy. These very recent

initiatives as well as others (quite possibly

of a technological character) presently

underway suggest that we would be well-

advised to consider this book simply as an

expression of the current “state of the art”

of a science that (to our good fortune)

continues to evolve with great ferment and

rapidity.


20

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