smart meters in 2015. In the tariff policy approved by Government of India in January 2016, it is envisaged to bring all customers with monthly consumption of 200 kWh and above under smart metering by December 2019. Accordingly, the Central Electricity Authority (CEA) issued detailed technical specifications and rollout strategies for smart metering in August 2016. It is expected that smart metering projects with millions of smart meters will be announced in 2017. While these countries demonstrate that new opportunities exist for electricity companies, the reality is that they are difficult to realise. There are several reasons for this. In most countries, either directly through ownership or indirectly through regulations, governments have a dominant influence on the sector. A lack of political vision and leadership and an inability of regulators to step in are a serious hindrance to settling on the direction of the industry. At the same time – based on industry practices and the very long-term investment cycles that have dominated the sector for decades – the industry is risk-averse and led by management that in most cases is unable to seize the new opportunities that are becoming available within an increasingly disruptive environment. Furthermore, the transition from the old silo-based energy economy to the new open-ended, interconnected one is very complex, and this transition will be messy. Most governments and incumbent industry players around the world are grappling with these issues. Where we do see leadership and innovation is in places where cities are still operating their own electricity networks. As a consequence of all of the above, changes will happen. It is hard to predict exactly how it will work out, but there are several trends and developments under way that will have a profound impact on the shaping of the industry. These include: n Disruptive (often unexpected) developments from companies and their customers operating in the digital/ sharing/networking economy outside of the industry n In cases where there is a continual lack of national political leadership, the electricity sector will be forced to step up its role in new developments. n Smart energy developments will increasingly be community/city-driven, with developments such as microgrids, community storage, solar and wind farms, (smart/wi-fi-driven), LED street lighting. Disruption is happening and the challenge for the industry is to run with it. However, in some cases it is hard for the industry to take a leadership role because of current government policies, regulations and its own out-dated business models. So changes, innovation, new business models and new value-added business opportunities will arrive from outside the industry. Some of the electricity companies will be able to break through this and participate and thrive in the new digital sharing and networking economy. Prof. Dr. Ronnie Belmans is Executive Director of GSGF (Global Smart Grid Federation). Smart moves There is no doubt that we are in the midst of an energy revolution. Not only is the nature of energy changing from fossil-generated energy to renewable, there is a total change in the distribution structure occurring with less focus on centralisation, economy of scale, and more on distributed energy economy of scope by harvesting local resources. By making the electricity grid ‘intelligent’ and adding telecoms to it, the power will eventually shift away from the electricity companies and to the customers, who will be able to control their energy consumption through sensors, machine-to-machine (M2M) devices, and the Internet of Things (IoT). Europe and North America are rated as the most advanced adopters of smart grid and smart metering technology, but the market is now shifting more and more towards Asia and the developing world. ‘Smart’ means communication, and since many countries are addressing their broadband networks, the smart thing to do would be to roll out fast broadband infrastructure in combination with smart grids and, wherever applicable, other smart infrastructure. In that way, energy efficiency measures can be implemented throughout society and throughout the economy (buildings, transport, cities) with a minimum of extra infrastructure, as a trans-sector approach is based on sharing the infrastructure. From many different directions – political, environmental and economical – the industry is under pressure and it has no choice but to change. This, of course, is far more easily said than done. Unlike the telecoms industry, which faced significant changes a few decades ago, there is no new product on its way for the electricity companies to tap into. The telcos developed mobile, broadband and ICT services, but it is much harder for the utilities to come up with replacement services. While one obvious direction is to develop new businesses around renewable energy, micro-grids, smart street lights, EV, etc., the problem will be that once such models become successful the question will arise as to whether they should be delivered through the monopoly model of the utilities or through the market. We already see in some of the European countries that the regulator has stepped in on the request of other market parties and ruled that, for example, the operation of EV loading stations should be left to the market. Both the social and economic benefits will be significant as these new businesses will add new jobs, will save consumers money (energy efficiency), will be environmentally friendly and will be far more sustainable long-term. This future energy model will also be a key driver for much broader innovation and will be a key infrastructure element for the emerging smart cities. A number of examples illustrate some of the developments in a global playing field. France: Since 2008 and till 2014, the development of smart grids in France has given rise to 121 experimental projects (demonstrators and associated R&D), each oriented to a specific technology/issue of smart grids: €508 million has been invested, which is why France is the leading country in the European Union in terms of R&D. A number of key topics could be identified: network management 29 per cent, smart homes 24 per cent and integration of renewables 21 per cent. Since 2016, France has been deploying smart grids on a large scale in three regions: in the southeast (Flexgrid project), in the west (Smile) and in the north (You&Grid). “Linky” smart meters have been progressively installed since 2010 and by 2021 will replace 35 million traditional meters. Turkey: In the Turkish electricity sector, a transformation of the electricity distribution network infrastructure has started along with major changes like privatisation, unbundling of distribution companies and supply/ retail companies and a liberalisation of the market completed in 2013. Twenty-one electricity distribution companies started this transformation on different levels, with modernisation of grid elements as well as using information and communication technologies in grid operations with high investments. Currently, consumers use three types of meters: smart; electronic; and mechanical meters totaling about 38 million. Meters installed since 2013 are now owned by the DSO; previously they were consumer owned. Following a decade of transformation, Turkey is getting ready to pass another major milestone with the Turkey Smart Grid 2023 project (TAS2023). Within the scope of the project – under areas such as smart grid management, smart embedded systems, smart customers and tariffs with smart system integration – many smart network technical domains like renewable energy integration, smart meters, demand side management, advanced network management systems (SCADA/DMS/OMS etc.) are found. Geographical information systems (GIS), IT systems and integration, cyber security, storage systems, electric vehicles, communication technologies are studied as well. South Korea: Since the development of power and IT convergence technology in 2004, South Korea has been promoting related industries for around 10 years. These efforts were recognised when it was designated as a leading country in smart grid technology by the UN’s MEF (Major Economies Forum on Energy and Climate) in 2009. Initially, the government divided the smart grid industry into five sectors based on large-scale businesses – smart consumer, smart transportation, smart renewable, smart electricity service and smart power grid. Visions and roadmaps were developed in three stages: first, build a smart grid test-bed city by 2012; second, deploy smart grids for wide areas by 2020; and ultimately, establish a nationwide smart grid by 2030. Based on the first stage of this national roadmap, Jeju Island, the biggest island in South Korea, was selected as a smart grid test-bed. Many kinds of demonstration projects involving various technologies had been tested for the purpose of R&D and commercialisation on the island until 2013. In 2014, a demand-side resources (DR) market opened to promote DR in smart grids. In addition, the government developed and provided National Competency Standards (NCS) for company workers to quickly adapt to and lead the smart grid industry. From 2015, the focus of Korean smart grid industry moved to market expansion and policy development based on selection and concentration of the following three areas: an energy solution converged with electricity, power and ICT; distributed and micro grids; and unit-level businesses. Along with these domestic changes, Korea is also keeping up with global trends as it has carried out the second stage of the national roadmap to “deploy smart grids for wide areas by 2020.” To this end, the Smart Pilot Towns Project was launched in 2016 and eight consortiums (Kepco, KT, Posco ICT, LSIS, SKT, Hyundai AutoEver, GIMCO, SuwanEnergy) are proceeding in 15 cities. India: Today India is pursuing some of the largest transformation projects in history such as building 100 smart cities, adding 175 GW of renewable energy and adding 6-7 million electrical vehicles by 2022. Last year India added 12.5 GW of renewable energy resources against 10.3 GW of conventional generation resources. This trend towards renewables will require smarter systems on the grid. In its journey towards smart grids, the Government of India issued a Smart Grid Vision and Roadmap in August 2013 and also launched a National Smart Grid Mission (NSGM), which will coordinate the implementation of smart grid projects in all the states. India is also executing a few smart grid pilot projects in different states, and five or six of these are expected to be completed in early 2017. The Bureau of Indian Standards (BIS) issued national standards for THE ENERGY INDUSTRY TIMES - MAY 2017 14 Energy Outlook Europe and North America are the most advanced adopters of smart grid and smart metering technology, although the market is now shifting towards Asia and the developing world. But while future opportunities exist, the Global Smart Grid Federation believes these will be difficult to realise. Ronnie Belmans Prof. Dr. Belmans: Disruption is happening and the challenge for the industry is to run with it
Energy Industry Times May 2017
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