presentation by Colette Lewiner, Global Leader Energy, Utilities & Chemicals Practice, Capgemini, May 2011

1. Smart electrical grids challenges and opportunities
Colette Lewiner, Energy and Utilities Global
Leader at Capgemini
SGPARIS 2011
Paris, 24-26 May 2011

2. Agenda
Energy Markets Outlook
Grid management new paradigm
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
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3. Agenda
Energy Markets Outlook
• Security of supply
• Renewable energy generation
• Grid regulations
Grid management new paradigm
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
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4. Electricity security of supply is threatened when
exceptional weather situations occur
Real margin vs. theoretical margin (2009)
In 2009-2010, the
exceptionally cold
weather threatened
electricity supply in a
few countries.
In France, in December
2009 and early January
2010, temperature was
6-8 C below normal.
Electricity peak went up
to a record of
92,400MW. France had
to import up to 8,000MW
from its neighbors during
many days in a row.
This import level was
near the upper possible
limit of 9,000MW.
Source: ENTSO-E, EirGrid, National Grid – Capgemini analysis, EEMO12
Certain countries as France need more peak power generation. In all cases
increasing cross border interconnections will improve security of supply
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5. Balancing Peak Time Load is complex
• Peak load demand is nearly the
double of low periods load (in
France)
Yearly load curve in France
• During tense situations, grid
management is critical
• At peak time, all domestic generation
plants that are available and
connected are utilized
• In addition, electricity is imported from
neighboring countries
• Demand response programs allow
lowering demand at critical moments:
• They are usually in place for large
customers
• More has to be done for small
businesses and residential customers
including:
Information, messaging
Smart metering equipment, smart
home devices Demand response is one of the key
Time of use rates answers to peak load management
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6. EU Climate-Energy legislation
Primary Energy Consumption
In 2007 the EU adopted the Climate Energy
package with three 2020 objectives:
• 20% reduction of GHG emissions (compared to 1990).
Thanks to the economic crisis and to the plants’
delocalization, this objective should be met.
• Primary consumption reduction of 20% compared to
2005. It is a difficult but achievable goal especially if
consumer’s awareness is increased
• Renewables: The 20% renewable shares target is
challenging. To get there, renewable energies
generation growth has to be accelerated. In 2009 RES
generation continued to grow: 15% for wind and 53% for Renewable Energy
solar PV. Wind power is today the first source, PV
comes second, with 5.5 GW.
• The intermittency of RES generation poses problems in
countries where their share is significant. It calls for:
• back-up power plants
• improved generation simulations and modeling
• grids able to smartly balance supply and demand
• merit order & trading rules changes: e.g. wholesale
spot prices at zero in Spain and even negative in
Germany
Source: Eurostat, EEA, BP statistical review of world energy 2010, European
Commission – Capgemini analysis, EEMO12
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7. Utilities are divesting from their grid assets
Many Utilities are going through divestments
in order to restore the balance sheet.
Networks, having long term recurrent
Hong Kong
revenues, are attractive for funds. Consortium (headed
Utilities would comply with the third EU by Li Ka-Shing)
directive
• E.ON sold its electrical transmission grid to TenneT £5.8bn €885M
(NL) for €885m
• Vattenfall Germany sold its electrical transmission
grid to Elia (BE)/IFM for €810 m £4bn €810M
• RTE, French electrical transmission grid: 50%
stake transferred to the French nuclear French nuclear
decommissioning fund decommissioning
• GRTGaz, French gas transportation grid: CDC and fund
CNP should take 25% shares
• ENI (IT) plans to sell stakes in two major pipelines
(Transitgas and TENP). Value estimated at €1.5bn
• ENEL sold 80% of its Endesa gas distribution grid
to 2 Goldman Sachs’ infrastructures funds for
€800m
• EDF Energy UK electrical distribution networks
sold to a Hong Kong consortium for £5.8 bn
• E.ON sold its UK distribution electrical grid to TENP
PPL (US) for £4 bn
€1.5bn
€800M
Funds are expanding in the energy
infrastructures domain. Are they
willing to invest as needed?
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8. Agenda
Energy Markets Outlook
Grid management new paradigm
• Grid balance inherent complexity
• Aging Infrastructure and aging workforce
• New Consumption patterns
• Renewables and distributed generation
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
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9. Grid management: inherent complexity
• Need to balance instantly the grid:
• As electricity is not storable, at each moment, the
grid needs to be balanced: the sum of the power
generated has to be equal to the sum of the power
consumed.
• If the power consumed is too high, the current
intensity will increase and the alternator’s
frequency will decrease
• This is done in each voltage level dispatching
• The needed power is forecasted on a yearly,
monthly, weekly and daily basis
• In the dispatching rooms the controllers adjust
instantly generation to demand
• Grid collapse risk:
• On the mesh grid, electricity path is not always
predictable: it will follow the lowest impedance
route
• If a line is overloaded, it may disconnect and Big collapses happened in the US
electricity will flow through the others in 1978, in France in 1979, in the
• If the grid is saturated, the lines will fall one after East coast region, in Germany and
the other as in domino plays and the grid will
collapse North of France in 2007
• To avoid this catastrophic scenario, the dispatchers
will cut-off from the grid some customers
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10. Aging Infrastructure and aging workforce
Aging Infrastructure
Much of the transmission and distribution infrastructure is more than 50 years
old
For many years, utilities typically underinvested in the grid infrastructure (ex
€8bn investment needed in the French distribution area)
Aging Workforce
A significant percentage of the current utility workforce is nearing the age of
retirement, creating a loss of operating and network knowledge.
It will be necessary to capture this information and be able to communicate it to
the new workforce.
This is also compounded by the fact that the current generation has been raised
on a different communication media.
This change is driving up the need to provide data to the
field workforce at a rapid rate
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11. New Consumption patterns
Peak load, generation capacity and electricity mix (2009)
Residential electricity
consumption still
increases, peak loads
are increasing
Consumers expect
higher quality for the
electricity they receive
both voltage stability
and wave spectral
quality
Harmonics and other
power quality issues
that were confined to
the industrial segment,
are now distributed all
over the network which
makes the grid
management more
complex
Source: ENTSO-E, BALTSO, Nordic Energy Regulators – Capgemini analysis, EEMO12
Increased request for power quality and security of supply
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12. Renewable Energies impact on the Grid
Wind farms: dealing with variability is tough
Existing systems cannot predict what the output of wind power will be 24-48h in advance.
New systems have to be installed to support this kind of forecasting
Forecasting this output is critical, as it determines when to trigger dams or fossil plants to support days
The grid operator has to be ready to react to changes in power output on a very short timeline
To date there are no good answers for massive storage
Growth rate of renewable energy sources
(2008 for Waste, hydro and Biomass and 2009 for Wind and Solar PV)
These
problems are
the root cause
of the 2007
blackout in
Germany and
North of France
Source: Eur’Observer barometers – Capgemini analysis, EEMO12
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13. Wind Power: the Spanish Example
August 27, 2009 November 8, 2009
Source: Enagas, Outlook for LNG
More flexible consumption patterns (i.e. demand response) would
allow customers to take advantage of low costs generated by a
sudden increase of wind power.
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14. Distributed Generation
Distributed generation and renewables
create problems for the distribution network
Harmonics, reactive power, and power
quality are harder problems.
• The transmission operators manage reactive
power thanks to sensors on their networks
• Capacitor banks are helpful in managing
reactive power, but they do not exist out in
the distribution network
• Harmonics and power quality for the smaller
customer to date have been ignored as too
expensive for the benefits delivered.
Integration of many generation sources into existing Energy Management
and Distribution Management Systems, as well as developing the operating
rules is another chunk of work.
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15. Agenda
Energy Markets Outlook
Grid management new paradigm
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
| Energy, Utilities & Chemicals Global Sector
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16. A grid with more intelligence
A grid with more intelligence has to be designed. The challenge is very clear; the old
electro-mechanical network cannot meet the needs of the new digital economy.
The future grid should be able to produce faster fault location and power restoration,
hence lesser outage time for the customer and manage many small power
generation sources.
The system network architecture will need to change to incorporate multi-way power
flows, and will be much more intelligent than a series of radial lines that just open
and close.
The future data volumes will require large data communications bandwidth and
communication network technology
The key is to build a vision and architecture that allows them to
leverage today’s investment while maintaining flexibility to evolve the
Grid as technology advances.
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17. From “Electromechanical Grid” into
“Digital Smart Grid”
Two-way communication
One-way communication Accommodates distributed
Built for centralized generation
generation Network topology
Radial topology Monitors and sensors throughout
Few sensors Self-monitoring
“Blind” Semi-automated restoration (self-
Manual restoration healing)
Check equipment manually Adaptive protection and islanding
Emergency decisions by Monitor equipment remotely
committee and phone Decision support systems,
Limited control over power predictive reliability
flows Pervasive control systems
Limited price information Full price information
Few customer choices Many customer choices
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18. Smart Grid: The Process
Interrelated Cycles / Loops
Physical 1Min
Grid Asset 1 Day
1 Month
Control Measurement
OBJECTIVES & CONSTRAINTS
systems & monitoring
Activity Data
management transmission 1 Hour
DATA, TRIGGERS, ETC.
Decision
Decisions
Data
& Plans
management
Data
management
Integral
management Data
Decision processing
support 1 Min
Analysis
Uncertainty tools
analysis
Interpretation
& modeling
Model
visualization
Model
management 1 Sec
1 ms
Models
Adapted from presentation POSC SIG - L. Dodge, S. Daum, 22 May 2003 London
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19. Grid Hardware
Sensors on existing hardware on the grid, from meters at the home to reclosers
and sectionalizers, transformers and substations will need to be deployed in a
prioritized fashion. The key is to understand which sensor readings can bring
operational value to your smart grid effort.
Control
Regulators - Power Flow Alarm Notification
Load Management Capacitor Bank Remote Fault Anticipators
Second Generation Remote Operators Device - Self Reporting
Load Control Devices Management of Supply Fault Detecting and Reporting
Appliance Reporting Remote Sensors – Wireline, Wireless
Device to Manage Load Broadband over Power Auto Sensing Voltage Sag
Shapes - Remote Control Line Correctors
Intelligent Building SCADA Network Auto Sensing Grid
Grid Hardware
Penetration Segmentation
Capacitors Switched
Distributed Revenue Metering
Resource Smart Metering - Fixed Protection
Distributed Read System, Fixed Capacitor Protection
Resource Network, Networked, Circuit Breakers for Feeders w/Automatic
Interconnection Broadband Sensing & Re-closing
Low cost DG Metering - Two Way, Re-closer, Single Phase
Interconnect Kit Pre Paid
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20. Communication Backbone
To support all those data sources on the grid, a communication infrastructure must
be in place. A wide range of wired and wireless communications technologies are
available to transport.
Any smart grid initiative will have to pick 2 or 3 communications methods and mix
and match as required to get to the level of coverage required
Transport - Wireless
Networks Transport - Wired
Mobile Radio (RF) – 800/900
WAN: Wide Area POTS (Plain Old Telephone MHz Bands
Communication
Network System)
Cellular Technologies
Backbone
MAN: Metropolitan Area PSTN (Public Switch (GSM/GPRS)
Network Telephone Network)
Wireless LAN (WiFi)
LAN: Local Area DSL (Digital Subscriber
Wireless WAN (WiMAX)
Network Line)
ZigBee
VAN: Vehicle Area Fiber Optic
Network Free Space Optical (FSO)
PLC (Power Line Carrier)
Satellite
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21. Agenda
Energy Markets Outlook
Grid management new paradigm
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
| Energy, Utilities & Chemicals Global Sector
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22. Smart Metering: North American Market
• North America has 158 million metered electricity customers. Annual demand for
electricity meters is in the range of 10–15 million units.
• Penetration for smart meters, providing comprehensive functionality was 10% at the
end of 2009. By 2015, the rate should increase to 45%, driven by large rollouts by
leading utilities
• The average capital expenditure per metering point is in the range of US$ 200–250
for medium to large projects. The aggregate investment cost for the deployment of
63 million smart electricity meters between 2010 and 2015 is thus projected to
around US$ 13.4 billion.
• Communication will account for 25% of total costs. IT-related costs for system
integration, meter data management systems and similar account for around 30%
of a typical project budget
Smart Metering capital expenditure by category (North America 2009-2015)
35%
25%
10%
30%
Source: Berg Insight
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23. Europe: 80% of the population should benefit from
smart metering by 2020 Electricity
Source: ESMA, GEODE - Capgemini analysis, EEMO12
Uncertainty created by the Gas
value chain unbundling
lead to an uncertain ROI.
This explains the slow
adoption in Europe.
Country by country
situation:
• Italy and Sweden are
leading the adoption of
smart meters in Europe with
full installation in 2009.
• Large experiment in France
(300,000 meters) launched
in 2008. After return of
experience, compulsory
deployment of smart meters
for 95% of citizens by 2016.
• New legislation is expected
in Netherlands, Ireland
and Norway
• The UK government
decided to introduce similar
requirements, but financing
is unclear presently
Total expenditure on smart metering will reach €2.8 billion by 2014. 20% will be
for system operation and communication services.
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24. Smart Grid Investments
Smart grid investments Communication
• Worldwide: from 2008-2015: Technologies
$200bn ($53bn in the US). Network Device and
Events Ops Management
(Pike Research).
• US stimulus grants: $3.4bn
• Europe: € 1bn EU funds Back Office Applications
ICT systems: Cisco sees $15-
20 bn investment opportunities
Renewables
to link smart grids with ICT
systems over the next 7 years. Advanced
Metering
John Chamber, Cisco CEO,
Enhanced Power Grid
says that it might be bigger Digital Communications and Control
Plug-In
than internet. Hybrids
Smart Meters &
Control Building Automation
Interface
However it’s not going to happen overnight. A lot of regulatory and
standardisation issues have to be worked out.
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25. Agenda
Energy Markets Outlook
Grid management new paradigm
Smart Grid and Smart Metering solutions
Market opportunities
Key success factors
| Energy, Utilities & Chemicals Global Sector
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26. Key success factors (1)
• Smart grids implementation will necessitate new investments:
• The transmission and distribution tariffs will have to increase and by
consequence the electricity prices.
• Regulators, governments and customers will have to accept these
prices increases.
• Industrial R&D is needed to develop new equipments (as large
competitive storage) or improve existing ones (as HVDC
connections).
• Communication standards are crucial:
• US is mobilized at the government (Department of Energy) and
equipment manufactures levels
• Europe is not considering seriously enough this question
• Equipments conceived with the internationally adopted standards will
have a clear advantage
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27. Key success factors (2)
• Efforts on simulation and modelling are needed:
• For the transmission grid there is a need to build a new European
High Voltage grid management model.
• On the distribution side, the retail market has to evolve and
modelling is needed. Interesting experiences initiated by regulators
and involving all stakeholders (Utilities, equipment manufacturers, IT
service companies, local authorities..) have been launched in Victoria
(Australia), Texas (USA) and France.
• Next steps for Utilities:
• Establish their vision on the technical, economical and management
future models as smart grid implementation will change drastically their
management mode.
• Launch prototypes with part of the financing coming from the EU or
Member States.
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28. About Capgemini
Capgemini, one of the world's foremost providers of consulting, technology and
outsourcing services, enables its clients to transform and perform through technologies.
Capgemini provides its clients with insights and capabilities that boost their freedom to
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Present in more than 35 countries, Capgemini reported 2009 global revenues of EUR
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With EUR 1.13 billion revenue in 2009 and 12,000 dedicated consultants engaged in
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Capgemini's Energy, Utilities & Chemicals Global Sector serves the business consulting
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More information about our services, offices and research is
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