smart communities, smart choices, smart business · pwc september 19, 2011 smart grid update...

Smart Communities, Smart Choices, Smart BusinessAn Introduction to "Smart Grid"

Andrew J. RoehrDirector

www.pwc.com/br

Setembro de 2011

PwC

September 19, 2011

Smart Grid Update – What Have We Learned?

• The Smart Grid is a series of business transformations across the energy industry that will change how we create, deliver, manage and charge for energy while creating an eco-system of new market participants

• The Smart Grid is a custom designed program for each utility.

• The Smart Grid is not an IT project, simply screwing in systems does not solve anything. This means technology led Systems Integrators have their place, but cannot effectively design and lead such a program.

• The Smart Grid is not a technology project, it is a business transformation that will impact every aspect, and will then be enabled by a combination of Operations and Information Technology, combined with business process optimization, new policies and procedures and a relentless focus on asset optimization and management

• The “Science Projects” are over. We have spent billions of dollars on pilots that often lack scale, and simply demonstrate technical abilities. Now is the time to turn the discussion on its head

- What outcomes are we interested in creating?

- What are we trying to achieve for our communities?

- What impact are we willing to make on our ecology?

- What role do we see government playing in the evolving ecosystem

- What technologies, deployed in what scale and order, will enable the results we desire?

• Smart Grid needs a single executive sponsor and coordinating business executive who can drive the business vision

• Smart Meter (AMI) is an element of a SG program. Leading with Smart Meter without a broader SG strategy leaves you sub-optimized for important benefits like Volt/Var, distribution automation, home energy management, distributed generation management.

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Smart Communities, Smart Choices, Smart Business • An Introduction to "Smart Grid"

PwC

September 19, 2011

What is a “Smart” Grid?

US Department of Energy

- Enables Informed Participation by Customers

- Accommodates All Generation and Storage Options

- Enables New Products, Services, and Markets

- Provides the Power Quality for the Range of Needs in the 21st Century

- Optimizes Asset Utilization and Operating Efficiently

- Addresses Disturbances –Automated Prevention, Containment, and Restoration

- Operates Resiliently Against Physical and Cyber Attacks and Natural Disasters

A Working Definition

- A Smart Grid represents the convergence of the communications and electrical infrastructure to increase efficiency, improve reliability and support the next wave of “Electrification”

A Utility’s/Community’s definition

- Will be different

- Will reflect local challenges and priorities

- Should focus on leveraging digital information to remotely manage devices based on an information intensive operating model

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PwC

September 19, 2011

A Quick View of a Power Grid

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The fundamentals of Grid Design have not changed in 100 years

- Central generation

-One way electricity flow (“Down”)

Power Flow

PwC

September 19, 2011

A Brief History of “Grids”

• Beginning in the 1800’s, most power was “Direct Current”, generated at the same voltage the consuming entity needed. This was Edison’s basic invention. Tesla gave us the theory and reality of poly-phase alternative current, which became the basis of modern transmission and distribution.

• DC was unable to transmit long distances, so generation started off looking like today's “Distributed” or Community generation models, small power stations and/or industrial co-located stations.

• Moving to AC current allowed the “Step up/down” of voltages, allowing for a single generation/transmission infrastructure with voltages changed in line by the use of transformers

• This drove the creation of centralized generation, which improved the aggregate “load factor”, an important element of system efficiency, improved use of capital and facilitated rapid expansion around urban clusters and industrializing communities

• Nothing changed…. For a long, long time….

• Starting in the 1990’s, new technologies, combined with an increasing sensitivity to environmental impacts and a huge need for capital upgrades caused us to “rethink” the grid.

• Society’s were getting more dependent on electricity at large per-capita rates (US per capita electrical consumption is about 6x Brazil’s), reflecting:

- Wealth. As wealth increases, sq/ft of homes increases, use of AC increases, use of lighting increases, use of digital equipment, time saving appliances, etc. increases

- GDP source evolution – Moving from an agricultural to industrial to services economy tends to drive higher per capita use

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PwC

September 19, 2011

Past meets Future: Energy Networks + Communications Networks

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NIST, 2009

2 way flow of information and electricity

• The Communications NW is the KEY element to long term investment

• Distribution Assets will have shorter lifetimes

• More automation, less human intervention

PwC

September 19, 2011

The Evolving Grid – “The Marginal Megawatt”

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Utility-scale

Renewable

Generation

(DC)

Premise/Community

Distributed Generation

Preserve

Central

Generation

Sensor Driven Operations• Transformer Monitoring

• Substation Automation

• Volt/Var control

• Smart Meters

• Demand Response

• Capacity Banks

• Reclosers

Smart Homes

Cellulosic Ethanol

Methane

PwC

September 19, 2011

Smart Grid Conceptual Architecture

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Legacy Market Interaction Model

New Market Iinteractions – The Connected Customer

PwC

September 19, 2011

Smart Grid Conceptual Architecture – Customer Domain

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A New business that needs• Controls• Compliance• Design• New Financial Operations• New Business processes• Complex forecast/analytics

New Business opportunities for • Utilities• Non-traditional service players• Global players

PwC

September 19, 2011

Smart Grid Conceptual Architecture - Distribution

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• Intermittent Generation challenges Stability/Reliability• Fine grained control needed, automation, reaction

PwC

September 19, 2011

Smart Grid Conceptual Architecture - Markets

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New Challenges for • Energy Trading/Risk Management• Supply optimization• Regulatory forecasting/tariff development• Virtual Power plants and Demand Response

PwC

September 19, 2011

Smart Grid Conceptual Architecture – Service Provider

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If 3rd party Service Providers emerge (e.g. premise solar suppliers)• New needs for mature customer engagement • New revenue opportunities for utilities and others

PwC

September 19, 2011

Smart Grid Conceptual Architecture – Bulk Generation

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PwC

September 19, 2011

A Connected Industry

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PwC

September 19, 2011

Why a Smart Grid? Issues and Drivers

• Energy Security

- Use of domestic controlled resources to insulate from instability of hydro-carbon source countries, possible conflict between large/growing consumers (e.g. China)

• Economic Distortion

- In Q1 2011, petroleum imports comprised 65% of the US trade deficit

• Need for Efficiency/Increasing Demand

- The capital cost of delivering 1MW of conservation is 1/3 the cost of delivering a MW of generation (BGE study, 2009)

- Brazil’s distribution loss is about 14%, better than 2x the OECD average and almost equivalent to the forecast demand increase between 2011 – 2015 (IEA)

- Rio in one case has an estimated 40% “non-technical loss”

- China’s coal-fueled economic growth will radically increase the output of mercury, CO2 and other GHG , with a high energy intensity with global impacts unlike any previously seen

• Increased Consumer Involvement

- Consumers are better educated and want more control

- Consumers are not willing to accept the costs of unbridled growth (habitat destroying dams, high emission coal, uncontained nuclear)

• Evolving Technology

- Premise/community solutions remove generation from the high capital construction and governmental ownership models

- Digital electronics and communications create new capabilities for real time control, new market opportunities

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PwC

September 19, 2011

Smart Grid Challenges

Changes in Customer Relationships

- New investments require a new discipline in credit, collections and billing which can be politically sensitive

- In many countries, traditional policy has left large amounts of consumption unbilled or highly subsidized, which diverts needed capital

- As distributed generation becomes more practical, there are fears that high consumption individuals will reduce grid consumption, with associated stranded costs

- Competitive retail, where allowed, demands extensive customer engagement, as well as new capabilities in offer/service development

Changes in Governmental/Regulatory Roles

- Smart Grid platforms may allow new players into the market with previously unknown services like solar leasing or premise device services

- Regulators will be hard pressed to redefine their role in arbitrating between utility and customer, and will need significant education to participate effectively

- Technical innovation is outpacing regulatory evolution, potentially leaving Regulators/Legislators a the bottleneck to improvement and innovation

- “Lines and Wires” companies will need to be re-examined to see if they best serve as a municipal service, enabling energy innovation by private firms on top of a common infrastructure

New Assets, More Assets/More Complexity

- Electro-mechanical and similar analog devices are replaced by digital equipment, providing more flexibility, but more complexity

- Asset management becomes a mixture of financial and operational characteristics, borrowing characteristics of ITIL

- Asset operations becomes real time across a vast number of devices communicating, arbitrating and adjusting at the speed of light

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PwC

September 19, 2011

Smart Grid Challenges

Data Volumes and Timing

- Data Volumes are anticipated to increase by 10 – 50x or more, overwhelming existing operations and reporting approaches

- Data moves to real – time to handle impacts of renewables/DG/ new loads and provide reliability/quality and balance in the grid

- Connected Analytics, crossing business domains to correlate and rationalize information management will separate failure from success

New Technologies

- Existing Operations and Information Technology platforms will be inadequate

- Current SCACA and OMS will not scale to handle the pervasive asset monitoring model

- The rate of technology innovation will accelerate, forcing constant retraining, supply chain/inventory innovation, and grid redesign as digital assets are deployed

- Distributed Generation capabilities disrupt the grid, demanding increased automation, deployment of dispatchable storage and new commodity management practices

New Operations Models

- Conventional modes of monitor/response are abandoned in favor of real time models

- Central command/control gives way to distributed and autonomic models in which edge devices are empowered to act within rules when conditions occur without going to the center for human intervention

- Increased capital deployment for both Information and Operations technologies, delivering new systems, new customer communications channels, new control capabilities and new visibility into the Grid’s operations

New Staff Needs

- Fewer low-level staff (e.g. meter readers), more analysts and operations staff and a culture of retraining and job role flexibility

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PwC

September 19, 2011

Where Can PwC Help?

• Connected Analytics: A platform with template dashboards, reports and KPI libraries to accelerate analytics deployment and innovation

• Customer Engagement/Operations Programs: Organizational design, market segmentation, voice of the customer, all design to move from an operationally driven organization to a customer centric business

• Smart Grid Architecture/Roadmaps: A comprehensive, accelerated program to identify outcomes and match SG program elements/priorities to those to deliver a multi-year business and technology transformation roadmap

• Meter-Cash (AMI) Accuracy/Integrity Assessments: Testing of meters, validation of deployment and inspection at all points in the journey from meter to cash to validate technology, algorithms, process and results to make sure there are no consumer surprises

• Application Implementation (OMS, MDMS, Work Mgmt, GIS, DRMS, DMS, ETRM, EAM, etc.)

• Network Operations Center Design: Designing the cross-functional operation center needed to manage a digital utility, the data flows and the interdependencies that new processes create

• Business Process Design (based on our process library)

• Enterprise Data Management strategies

• Organizational Design

• Human Capital Management

• Capital Projects Management

• Program Management and Oversight

• Tax/Capital Optimization

• Customer Program Design

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PwC

September 19, 2011

How to Reach Andy

Andrew J. RoehrManaging Director - Smart Grid SolutionsUS [email protected]+1 512.656.4341

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mailto:[email protected]

smart communities, smart choices, smart business · pwc september 19, 2011 smart grid update...

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