Smart Grid, Smart City

Smart Grid, Smart City
National Cost Benefit Assessment
27 November, 2014 – Smart Energy Forum
Newcastle Institute for Energy and Resources
Bob Bosler, Senior Consultant, Energeia
Ranelle Cliff, Senior Project Manager, Arup
© Energeia 2014. All Rights Reserved

• Approach to Smart Grid, Smart City National Cost Benefit Assessment
• Outlook and technology optimisation results
• Strategic Context
• SGSC Report Conclusions and Recommendations
• Transitioning to a Smart Grid Future
• Developments since SGSC and implications
Overview

Energeia
• Founded in 2009 in Sydney, now largest specialist consultancy in Australia
• 15 full-time experts based in Sydney, with network of distinguished experts
• We seek out transformative projects which, by their nature:
• Are technically high risk
• Have high strategic value
Confidential

What is our independent, informed assessment of
the Business Case for the deployment of an
integrated Smart Grid in a national context?

Integrated Benefits Model
Network Model
Customer
Behaviour
Model
Tech Costs
Year n
(PV, CHP
Storage)
DC
Network
Price
Impact
Electricity
Price &
Tariff
Structure
Sample
NMI 19
Sample
NMI 20
……
Sample
NMI 3
Sample
NMI 2
Sample
NMI 1
Δ Load
profile 19
Δ Load
profile 20
…..
Δ Load
profile 3
Δ Load
profile 2
Δ Load
profile 1
Diversity
Model Forgone Network
Revenue
Avoided
Network
Costs
Storage
Algorithms
Age,
Utilisation,
Replacement
Period
AEMO
Forecasts
(Peak, Off
Peak
growth)
Feeder
Zone Sub
Wholesale
Price
Impact
Retail
Price
Impact
Wholesale Market Model
Tech Costs
Year n
(SFM, FDIR,
AVVC)

Model Scope
• Six states
• Three scenarios (H,M,L economic growth)
• 5 time intervals (2014 to 2034)
• 1.5 weeks per model run
• 18 virtual machines (courtesy of Ausgrid)

Smart Grid Technologies Assessed
Pre-Payment Plan
Critical Peak Pricing
Seasonal Time of Use
Capacity Tariff
Direct Load Control
Retailer
Solar PV
Fuel Cells (CHP)
Battery Storage
EV Smart Charging
Consumer
Active Volt VAr Control (AVVC)
Fault Detection, Isolation and Restoration (FDIR)
Substation and Feeder Monitoring (SFM)
Network
Smart Meter
Infrastructure

Business as Usual
Inclining Block Tariffs
Retailer
Solar PV
Fuel Cells (CHP)
Battery Storage
EVs Unconstrained
Consumer
No change
Network
Accumulation
Meters*
* Victoria assumed SMI

Medium Scenario
Outlook

11
252
15,745
855
3,635
796 354 (4,981)
(164) (1,334)
(99) (2,514)
(333) (265)
15,235 27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SMI Enabled SMI Enabled
Benefits Costs Total
Present
Value
($M
2014
Real)

12
1
230
21 0 24
139
88
0
50
100
150
200
250
300
350
Seach Costs VCR Load Surveys PQ Surveys SFM Opex SFM Capex
Benefits Costs SFM Net
Benefit
Present
Value
($M
2014
Real)
Substation and Feeder Monitoring

13
4
15,741 24 1,310
14,411
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Seach Costs VCR FDIR Opex FDIR Capex
Benefits Costs FDIR Net Benefit
Present
Value
($M
2014
Real)
Fault Detection, Isolation and Restoration

14
9
846 98
1 756
0
100
200
300
400
500
600
700
800
900
1,000
Avoided Line Losses Peak Benefits Capex Opex
Benefits Costs AVVC Net Benefits
Present
Value
($M
2014
Real)
Active Volt VAr Control

15
252
(164)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)
Contribution to National Net Benefit

16
252
15,745
(164) (1,334)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

17
252
15,745
855 (164) (1,334)
(99)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

18
252
15,745
855
3,635
(164) (1,334)
(99) (2,514)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

19
252
15,745
855
3,635
796
(164) (1,334)
(99) (2,514)
(333)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

20
252
15,745
855
3,635
796 354
(164) (1,334)
(99) (2,514)
(333) (265)
27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

21
252
15,745
855
3,635
796 354 (4,981)
(164) (1,334)
(99) (2,514)
(333) (265)
15,235 27,183
0
5,000
10,000
15,000
20,000
25,000
30,000
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
SFM
FDIR
AVVC
Dynamic
Tariffs
SMI
EV
Charging
DG
&
DS
Present
Value
($M
2014
Real)

22
Total DGDS Capacity (NEM exc large ind)
0
5
10
15
20
25
30
2014 2019 2024 2029 2034
BAU
Capacity
(GW)
Cumulative Solar (GW) Cumulative Battery (GW) Cumulative CHP (GW)
0
5
10
15
20
25
30
2014 2019 2024 2029 2034
SG
Capacity
(GW)
Cumulative Solar (GW) Cumulative Battery (GW) Cumulative CHP (GW)

23
Change in Peak Demand
0
5
10
15
20
25
30
35
40
45
2014 2019 2024 2029 2034
Peak
Demand
(GW)
Peak demand - BaU (GW) Peak demand - SG (GW)

24
Change in Consumption
0
20
40
60
80
100
120
2010 2015 2020 2025 2030 2035
Consumption
(TWh)
Consumption BAU Consumption SG

25
0
5
10
15
20
25
30
35 12:00:00
AM
1:30:00
AM
3:00:00
AM
4:30:00
AM
6:00:00
AM
7:30:00
AM
9:00:00
AM
10:30:00
AM
12:00:00
PM
1:30:00
PM
3:00:00
PM
4:30:00
PM
6:00:00
PM
7:30:00
PM
9:00:00
PM
10:30:00
PM
12:00:00
AM
Demand
(GW)
2014 BaU 2034 SG 2034
NEM Peak Day

Page 26
Strategic context

Page 27
Strategic context
Australian Government & COAG Energy Council
• Review of RET Development of new Energy White Paper
• Aust Govt and jurisdictional policies COAG Energy Council priorities & work streams
AEMC
• Power of choice program Expanding competition in metering & services
• DNSP pricing arrangements Retail competition review …… and LOTS more
AER
• Better regulation reform program Cost allocation guidelines
• Service target performance incentive scheme (STPIS) review
AEMO
• Value of customer reliability
• Distribution network annual planning reports

Page 28
COAG Energy Council
Strengthening Network Regulation
• Fairer network rules
• A stronger AER
• Improvements to the appeals
mechanism
Empowering Customers
• Strengthening opportunities for
consumer engagement
• Enhanced access to better consumer
data
• Opt-in TOU pricing
• Greater demand side participation
opportunities
• Enhanced consumer protection
Enhancing Competition and Innovation
• Greater retail competition and
innovation
• ‘Fair and reasonable’ return for all
microgeneration
Ensuring Balanced Network
Investment
• A national framework for reliability
standards
• Investigating demand responsiveness of
the regulatory framework
• Ensuring efficient transmission
investment

Page 29
Stakeholder priorities
Network
impacts
Market
impacts
Consumer
impacts
Greenhouse
gas impacts
Price
impacts

Page 30
Conclusions and
recommendations

Page 31
High level strategic themes
Existing COAG
Energy Council
market reform
program
Cost reflective
pricing for
consumers
Jurisdictional
government
and industry
leadership
Consumer
education and
industry
training
Innovation in
technology and
product
deployment
Need for
interoperability
standards

Page 32
Fault Detection, Isolation & Restoration FDIR
• has the potential to deliver significant economic
benefits
• heavily dependent on the value of customer
reliability (currently being reviewed by AEMO)

Page 33
Smart Meter Infrastructure (SMI)
• Two value propositions modeled:
• Full deployment, termed stand-alone
• Customer-led, with the smart grid
case assuming uptake with
installation of DG or DS
• Enabling infrastructure

Page 34
SMI – (stand-alone or full deployment)
• Not yet economic (with the exception of some
long-rural network topologies in some states)
• Avoided billing, metering and customer service
costs for urban and short rural network not
sufficient to offset capital costs for SMI

Page 35
SMI + Dynamic Tariffs + Cust Feedback
• Clear positive economic case for immediate
deployment of dynamic tariffs in Australia
(requiring SMI)
• If dynamic tariffs are voluntary, not all
customers will adopt the offer

Page 36
SMI Deployment Predictions
-
2
4
6
8
10
12
14
16
18
2014 2019 2024 2029 2034
Meters
(Millions)
Spinning Disc Full Deployment VIC Rollout Customer Led

Page 37
SMI + Dynamic Tariffs + Cust Feedback (2)
• Without dynamic tariffs customers will be presented
with a strong financial incentive to install larger
distributed generation systems
• If inclining block (or flat) tariffs are maintained in
Australia it is unlikely that distributed storage will be
deployed due to a lack of financial incentives

Page 38
Customer Research Survey Results
Key findings relating to dynamic pricing
• High satisfaction with SGSC Customer Applications network
& retail products
• Most popular trial products involved discrete peak events
• BudgetSmart also popular
• Financially vulnerable customers derived more benefit and
satisfaction from products than other households
Engagement with feedback technology vs. overall
savings
0.54
0.3
0
0.2
0.4
0.6
Daily or 2-3 times per
week
Weekly or less often
Overall
savings

Page 39
DG + DS + SMI + Dynamic Tariffs
• Dynamic pricing drives the deployment of smaller
solar PV systems and CHP compared to BAU
• Balanced by the deployment of around 3.5 GW of
storage capacity
• Under BAU, negligible storage is likely to be
deployed

Page 40
Electricity bill impacts (residential)
$1,712
$244 $47 $2,003
$156 $2,159 $420
$332
$1,407
0
500
1,000
1,500
2,000
2,500
3,000
SG Bill
Customer with
DG/DS
Cost of DG/DS Cross Subsidy
SG
SG Passive SG Benefits BAU Passive
Customer
Cross Subsidy
BAU
Cost oF DG/DS BAU with
DG/DS
Annual
Bill
Impact
($)
Average Bill - SG Average Bill - BaU

Page 41
Electricity bill impacts (business)
$8,390
$1,711
$3,083 $13,184
$2,108 $15,292 $9,251
$2,620
$3,421
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
SG Bill
Customer with
DG/DS
Cost of DG/DSCross Subsidy
SG
SG Passive SG Benefits BAU Passive
Customer
Cross Subsidy
BAU
Cost oF
DG/DS
BAU with
DG/DS
Annual
Bill
Impact
($)
Average Bill - SG Average Bill - BaU

Page 42
Transitioning to a smart grid
future

Page 43
Transitioning industry and consumers
• Balancing:
• Risks and opportunities from new smart grid
investment
• Financial, reliability and environmental benefits
and issues
• People
• Industry and electricity consumers -
understanding, education and change

Page 44
Maximising the benefits and opportunities
• Need for interoperability standards
• Managing greater volumes of distributed generation
and introducing distributed storage
• Examining the business case for:
• Cost reflective consumer prices
• In-grid smart grid technologies
• Consumer feedback technologies
• Key costs and risks of inaction

Post SGSC Developments

Post SGSC Developments (1/2)
• AEMC Metering Contestability Rule Change (Ongoing, Draft
Determination due March 2015)
o Likely to be retailer lead
o Minimum functional spec likely to require smart metering
o New and replacements likely to include smart meter functionality
o Where there is a business case, retailers can roll out smart meters
• AEMC Distribution Network Pricing Draft Rule Determination (Aug 2014)
o Requires tariffs to be based on LRMC
o Networks already moving to capacity based tariffs (SA Power
Networks, Energex)

Post SGSC Developments (2/2)
• AEMC Distribution Reliability Measures (September 2014)
o AER to develop reliability guidelines
o MAIFI increasing from 1 minute to 3 minutes
• AEMO Value Customer Reliability (October 2014)
o Residential values have not changed substantially since 2007/08
o Commercial values notably higher

Thank You
Arup Energeia
Level 10
201 Kent Street
Sydney NSW 2000
Level 23 Gold Fields House
1 Alfred Street
Sydney NSW 2000
P +612 9320 9647
E ranelle.cliff@arup.com
W www.arup.com
P +612 8097 0070
E bbosler@energeia.com.au
W www.energeia.com.au

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