Present development & International policies in Smart Grid

Smart Grid Development and Policies of India

India’s Smart Grid policy is an emerging part of its nationwide energy policy. The policy is being jointly developed by a collaborative grouping of central and state governmental bodies and subject matter experts from industry, academia and non-governmental research and development organizations. India’s Smart Grid efforts primarily concern three main issues which are

• Accommodation of load growth in a fast-growing economy
• Extending electricity to rural areas
• Load management and loss mitigation

As a matter of operational services the central government is most actively involved in generation and transmission domains whereas the states control distribution services. This in itself is an important issue in India today as the state of distribution finances are not significant enough to provide for the increased demands which are being requested of them. State governments are looking to the central government to provide funding and resources which will allow for upgrades, expansion and re-engineering at an unprecedented rate. One of the main projects associated with this effort is the rural electrification and modernization project known as RGGVY.

Overall standards for the type of network are being drafted. In 2010 and 2011, India boosted the level of announced expenditures, placing it among the top 10 countries in the world in terms of smart grid spending.

Primary responsibility for the grid in India lies with the Ministry of Power (MOP). Under MOP jurisdiction are the Central Power Research Institute (CPRI), the Central Electric Authority (CEA), and the Power Finance Corporation (PFC). In addition, the government has also created the Smart Grid Task Force (SGTF), an inter-departmental group that not only includes the MOP and its organizations, but reaches out to the Ministry of New and Renewable Energy (MNRE), the Ministry of Communications and Information Technology (MCIT), and the Department of Science and Technology (DST). Like several other countries, India has set up a public-private partnership, the India Smart Grid Forum, which brings together utilities, industry, academia, and others interested groups.

The chronology and lineage of legislative efforts, programs and associated schemes which have led up to the development of a Indian Smart Grid which originate with a fundamental shift towards private involvement in energy production and transmission and the unbundling of the power sector from total government control in the 1990s. The government’s desire to formulate a scheme to encourage greater use of ICT to enable India’s electric grid by make three fundamental improvements to the existing grid:

• Advanced metering to reduce unacceptably high level of losses
• Improving system reliability on a near real-time basis
• Developing a smart grid to manage loads, congestion and shortfall

The Electricity Act of 2003 and National Energy Policy of 2005 established the following national objectives:

• To provide access to electricity for all households
• To eliminate shortages and establish adequate spinning reserves
• To develop standards to address reliability and quality of power
• To increase per capita availability of energy
• To establish minimum 1 unit per household per day consumption level
• To make the power sector commercially viable
• To protect consumers’ interests

The next most important Smart Grid related national energy policy decision occurred in 2008 with the implementation of the Re-Structured Accelerated Power Development and Reforms Program (R-APDRP). This program is designed to take 3-5 years to implement and has several parts. The first part is concerned with the information and communications technology (ICT) enablement of power systems and investments of power infrastructure in an effort to first measure and then mitigate losses associated with operating inefficiencies and energy theft. The primary goal of the program is a reduction in losses, with subsequent portions focusing on physical re-engineering of the grid as indicated by the ICT driven data. Other goals of R-APDRP include:

• Renovation and modernization (R&M) of power plants
• Strengthening and improvement of sub-transmission and distribution networks
• Development of adequate spinning reserves
• Development of power systems automated controls

Besides governmental participants, there are numerous other hybrid-governmental and non-governmental organizations who are vital contributors to the development of India’s Smart Grid vision, and who are also associated with the SGTF and the Forum. The combined work effort of the Smart Grid Task Force and the Smart Grid Forum is divided into 7 functioning workgroups: WG1-Advanced Transmission, WG2- Advanced Distribution, WG3- Communications, WG4- Metering, WG5- Consumption and Load Control, WG6- Policy and Regulation, and finally WG7- Architecture and Design.

India’s Smart Grid vision as expressed by the India Smart Grid Forum includes five fundamental objectives:

• End of Load Sharing- peak load shifting through a combination of direct control and differential pricing (demand response/dynamic (DSM))
• Reliable Power- Robust systems with Self-healing capabilities through monitoring
• Cheaper Power- Dramatic improvement in AT&C losses, real time monitoring load sources
• Shifting the Peak away from Costly Power- Better utilization of Assets
• More Sustainable Power- Integration of green and renewable resources at a massive scale, enough to increase energy independence

Smart Grid Development and Policies of China

Smart Grid Development

In 2010, China announced that construction of a smart grid was a national priority, with completion planned for 2020. Subsequently, the State Grid Corporation of China (SGCC), which controls electricity distribution, announced that construction will begin on major nationwide grid upgrades in 2011. Cost of the projects is estimated to be $100 billion through 2020. As a result of the increased spending, China surpassed the United States in 2010 in total smart grid expenditures, and is anticipated to spend more than any other country on smart grid developments for several years at least. As China establishes standards, seeks equipment, and develops its own technologies, it play a central role in setting the tone of smart grid development worldwide, through the sheer size of its smart grid activities.

Despite China’s centralized structure, a number of government agencies share responsibilities for smart grid development. The State Electricity Regulatory Commission (SERC) oversees regulatory policies and rate structures. The National Development and Reform Commission (NDRC), is the central planning authority for all significant national initiatives of any description. The National Energy Administration has responsibility for administering energy related programs. China’s Energy Conditions and Policies, announced in 2007, established energy policies and targets to be achieved in the 11th Five Year Plan and beyond, as well as a number of measures and targets focused on smart grid measures to achieve policy goals. In addition, like many other countries, China created a hybrid governmental/industrial organization, the China Electricity Council (CEC) to promote research and development of smart grid applications. Operating under the CEC, the SGCC, which controls the T&D network, coordinates and guides smart grid developments in China.

The SGCC, the largest single electric power entity in China, in 2009 announced a multi-stage ten-year plan for the deployment of smart grid. The initial phase of the plan calls for pilot programs and planning initiatives through 2010. The second phase, undertaken concurrently, consists of development of standards through 2014 and construction projects beginning in 2011 and running through 2015. The final phase of the plan focuses on system upgrades that will begin in 2016 and culminate in 2020.

In 2010, China’s smart grid investment surpassed that of the United States to make it the world leader in smart grid spending ($7.3 billion compared to $7.1 billion in the United States). The vast potential of the smart grid market in China has resulted in a number of joint ventures with companies from outside China such as Siemens, General Electric, IBM, Nissan, and General Motors. One indication of the scale of China’s announced plans is the effort to link remote energy resources to energy markets through construction of major transmission lines that will make China the world’s largest consumer of copper.

Smart Grid Policies

Since the 1980s, China’s energy consumption has been growing at an unprecedented rate due to rapid economic development and thus huge CO2 emissions. Between 1990 and 2010, China’s electricity generation increased from 621 to 4,206 Terawatt-hours (TWh), with annual growth rates of electricity demand ranging from 10% to 15%. In 2010, 19% of China’s electricity generation came from renewable resources, second only to Italy among the six countries examined here. China has experienced several major power outages since 2005, and the shortfall in electricity has started to hurt China’s economy. In order to meet the increasing demand and secure economic growth, the Chinese government will invest 286 billion yuan ($45 billion US dollars) in smart-grid deployment between 2011 and 2015. The Amendment of the Renewable Energy Law (2009) urges utilities to develop and apply smart grid and energy storage technologies to improve grid operation and management, and facilitate interconnection of distributed renewable energy. The 12th Five-year Plan, a series of major social and economic initiatives, sets separate targets for energy intensity (16% reduction by 2015), non-fossil fuel energy (11% of the total primary energy consumption by 2015) and carbon intensity (17% reduction below 2011 by 2015). Smart grids and clean energy technologies are seen as effective approaches to achieve these targets. By 2015, several long-distance Ultra High Voltage (UHV) transmission lines and 200 thousand kilometers of transmission lines (333 kV and above) will be constructed.

The Plan also proposes the “Rural Electricity Supply Project” to upgrade rural electric grids and meet the increasing demand of rural areas. Some of the targets include: developing 1000 PV demonstration villages, 200 green energy counties, 300 hydropower and rural electrification counties, and 10,000 MW of small hydropower. The Ministry of Science and Technology released the “Special Planning of 12th Five-Year Plan on Smart Grid Major Science and Technology Industrialization Projects” in May, 2012. It identified nine key tasks, including large-scale grid-connected intermittent renewable energy technology, grid technology for supporting electric vehicles, large-scale energy storage systems, intelligent distribution technology, intelligent grid operation and control, intelligent transmission technology and equipment, grid information and communication technologies, flexible power transmission technology and equipment, and smart grid integrated comprehensive demonstrations. 73 Resource allocation optimization, clean energy development, power system reliability, diverse customer needs, energy efficiency improvement, and technology innovation are the major drivers for smart grid deployment in China. State Grid Corporation of China (SGCC), the largest power company and the major smart grid policy implementer in China, provides services to over one billion customers and covers 88% of the national territory. In May 2009, SGCC announced a plan for developing a “strong and smart grid” in China by 2020. UHV transmission and highly efficient distribution transformer that enables the expansion of transmission and distribution capacity and reduces line losses are key technologies to be developed and deployed. SGCC’s smart grid development plan is distinct in its focus on the transmission, rather than the distribution side, due to the fact that major power generation sources in China, such as coal and hydropower are located in remote areas, and there are huge disparities among power generation in different regions. Other reasons for the focus on transmission might be the relatively primitive structure at the distribution ends, and the unique asset ownership and management structure of utilities and electric markets. With an emphasis on power generation and transmission, the Chinese electricity market still has a long way to develop an effective interaction mechanism between customer and utility companies, such as dynamic electricity prices and demand response programs.

Smart Grid Development and Policies of the United States

Smart Grid Development

The electricity industry spent an estimated total $18 billion for smart grid technology deployed in the United States during the 4-year period of 2010 through 2013 (BNEF 2014). Smart grid investments under the ARRA accounted for nearly half—approximately $8 billion—during the same time frame (DOE 2014a). Annual smart grid spending nationwide hit a high of $5.2 billion in 2011, coincident with peak deployment spending from the cost-shared ARRA projects, and is now declining toward an annual level of $2.5 billion expected in 2014 (BNEF 2014). The decline in investment is largely due to reduced spending for advanced metering infrastructure (AMI), which was heavily influenced by ARRA funding. However, industry analysts expect annual spending on distribution system smart grid technologies to gradually increase from $1.2 billion yearly in 2011 to $1.9 billion in 2017, with decreased spending ($3.6 billion in 2011 down to $1.2 billion in 2017) for AMI (BNEF 2014). In comparison, total capital investments by investor-owned utilities (in 2012 dollars) in electricity delivery systems averaged $8.5 billion annually for transmission system upgrades and $17 billion annually for distribution system upgrades from 2003–2012 (EIA 2014).

As of March 2013, joint federal and private expenditures under ARRA totalled $6.3 billion from the Smart Grid Investment Grants (SGIG), which represent the largest portion of ARRA investments. Between 2009 and 2015, DOE and the electricity industry will jointly invest more than $7.9 billion in the SGIG projects, which involve more than 200 electric utilities and other organizations to modernize the electric grid, strengthen cyber-security, improve interoperability, and collect an unprecedented level of data on smart grid operations, benefits, and utility impacts (DOE 2013a). In the same time frame, an additional $1.6 billion in cost-shared funding will support energy storage demonstrations and regional demonstrations to assess emerging smart grid concepts (DOE 2014a). Another $100 million in federal funding has supported 52 smart grid workforce training projects in the same time frame (DOE 2014a). Estimates of overall spending required to fully implement the smart grid vary. The Electric Power Research Institute (EPRI) estimates that spending of $338-$476 billion over a 20-year period is required to fully implement the smart grid, including preliminary estimates of $82-$90 billion for transmission systems and substations, $232-$339 billion for distribution systems, and $24-$46 billion for consumer systems (EPRI 2011). The Brattle Group estimates that total transmission and distribution investment may need to reach nearly $900 billion (nominal) by 2030 to meet forecast electricity demand (Brattle Group 2008).

Smart Grid Policies

The United States aspires to a low-carbon economy, but its current energy system is carbon intensive. The U.S. is second only to China in total energy-related CO2 emissions – at 5,610 million metric tons (Mt) of CO2 in 2010. On a per capita basis, the U.S. is also highly carbon intensive – averaging 18.1 metric tons per person in 2010. Its CO2 emissions are down from a peak of 6,016 metric tons in 2007 and from 19.9 metric tons per capita in the same year, just preceding the 2008 economic downturn. In his 2011 State of the Union address, President Obama proposed a goal of generating 80% of the nation’s electricity from clean energy sources by 2035; however, only 11% of its electricity currently comes from renewable sources, compared with 27% in Italy and 19% in China. Given the President’s clean energy imperative, the government recognizes that a smarter, modernized and expanded electric system is essential to America’s world leadership in a clean-energy future. Development of policies has occurred at both federal and state levels to facilitate the evolution towards a 21st century grid.

The four types of policies are widely implemented in four states of U.S. [California (CA), Georgia (GA), New York (NY), and Texas (TX)] : net metering policies, interconnection standards and rules, smart metering targets, and dynamic pricing policies.

Net Metering Policies. Net metering allows customers to use a single meter to measure both the inflow and outflow of electricity, thus enabling them to install and interconnect their own generators with utility grids. With net metering, customers can use the electricity generated from their on-site facilities to offset their electricity consumption and sell excess generation to the utility typically at a retail price, thereby encouraging the deployment of customer-owned distributed energy systems.

Interconnection Standards and Rules. Interconnection standards establish uniform processes and technical requirements for utilities when connecting DG systems to the electric grid. It allows DG developers to predict costs and time, and ensure the safety and reliability of interconnection processes.

Smart Metering Targets. A smart meter reader is a device that can measure real-time electricity consumption and communicate the information back to utilities. Smart metering targets typically establish smart meter reader deployment plans for utilities, covering the timeline, and the type and number of smart meters to be installed.

Dynamic Pricing Policies. Dynamic pricing is a market-driven approach to boost demand response in electricity markets. The fundamental idea is to provide accurate price signals to customers, and let them decide whether to continue consumption at higher prices or to cut electricity usage during peak times.