India Smart Grid Summit 12 February 2014. Indias Energy Sector is evolving significantly National Priorities Current Situation Implications Meeting Demand

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India Smart Grid Summit 12 February 2014 Slide 2 Indias Energy Sector is evolving significantly National Priorities Current Situation Implications Meeting Demand Shortage Chronic power shortages Rapid demand growth Inadequate energy access Augmentation of generation capacity Power evacuation and grid access Clean Energy Deployment RE capacity increasing ~ 3000+ MW added each year Require smarter systems for power balancing to deal with variability & unpredictability Operational Efficiency Improvement Poor operational efficiency High system losses R-APDRP has provided much needed support Need for ability to control and monitor power flow till customer level Enhancing Consumer Service Standards Poor system visibility Lack of reliability Real time system to enable better system visibility and consumer participation Smart Grids can transform the existing grid into a more efficient, reliable, safe and enable address sector challenges. Evolution has already started. 2 Slide 3 Several Application areas have emerged Key Application Areas Electricity Distribution Electricity Markets Environmental Markets Renewable Energy Energy Storage Transport Industrial Energy Efficiency Building Energy Efficiency Source: http://www.renesas.eu/ecology/eco_society/smart_grid/ 3 Slide 4 Development potential & issues across various application areas Application Area (Current Status) Business Issues Potential/Importance of Smart Grids Distribution Inefficient Huge Theft Poor customer service & reliability Lack of measurements and controls Antiquated technologies Poor business orientation High (can bring rapid technological upgradation) Supports loss reduction and demand response Markets >10% of overall electricity sale Affected efficiency gains Send price signals to consumption (distribution) Poor networks. Problems in open access Inadequate Business Processes and Controls Poor cost signaling High (Open access and controls can be very effectively supported) Industrial Energy Efficiency Improving rapidly Signalled by environmental market Lack of awareness High (SG enables better load management through DSM and DR) 4 Slide 5 Application Area (Current Status) Business Issues Potential/Importance of Smart Grids Environmental Markets (REC, PAT) Nascent, developing fast Closely linked to energy efficiency & renewables Nascent, does not provide confidence to investments Baseline definition issues in (PAT) and monitoring Trading system needs refinement High (SG can provide a strong information and controls base and also enable response to price signals) Renewable Energy Fast developing Fills Indias Energy void Variability management & storage Transmission networks and controls Very High (SG can assist in grid integration, forecasting, balancing and storage) Energy Storage Nascent in India Closely linked to RE & EE Expensive Technological up-gradation Space requirements High (Has applications in energy storage, enabling provision for balancing power & islanding during blackouts) Development potential & issues across various application areas 5 Slide 6 Application Area (Current Status)` Business Issues Potential/Importance of Smart Grids Transport Largest energy sub-sector after electricity Pollution a significant issue Only Hybrid Vehicles (fossil fuel + EV) available Current focus only on mobility and associated environmental issues EVs are expensive Inadequate infrastructure for deployment and proliferation Regulatory Issues High SG can integrate with grid and reduce short term power purchase; use as balancing resource; peak load management) Building Energy Efficiency Fastest growing energy consuming sector Widely varying energy efficiency levels Lack of awareness among builders and consumers High initial cost of EE appliance High. Smart Grid can enable real time consumption monitoring and control;, enabling reduction of wasteful consumption Development potential & issues across various application areas 6 Slide 7 10KW load Mandatory Roof Top Solar for large establishments Total Renewable integration of 80GW; EV charging infrastructure Development of micro grids in total 10000 villages Distribution Automation"> In 2013, Government of India (GoI) has adopted a National Smart Grid Vision for India with following objective: "Transform the Indian power sector into a secure, adaptive, sustainable and digitally enabled ecosystem that provides reliable and quality energy for all with active participation of stakeholders Smart Grid Roadmap provides several targets to be met Key Targets and Highlights are as follows: 12 th Plan13 th Plan14 th Plan Completion of ongoing smart grid pilots Augmentation of data centres and communication network for AMI Roll out Distribution Automation & GIS/Automated distribution s/stns. Development of indigenous smart meter Dynamic tariffs, Sustainability Initiatives promoting distributed generation Development of 50 Smart cities. Mandatory roof top solar Total Renewable integration of 130 GW; 10% EV penetration Nationwide AMI roll out for customers Continuous Research &Development ; Choice of electricity supplier Stable 24X7 power supply Nationwide AMI roll out for customers >10KW load Mandatory Roof Top Solar for large establishments Total Renewable integration of 80GW; EV charging infrastructure Development of micro grids in total 10000 villages Distribution Automation Slide 8 Existing initiatives and activities will need to be scaled up India Smart Grid Task Force (ISGTF) Created under the Ministry of Power (MoP) to provide policy direction to the Smart Grid initiatives in the country India Smart Grid Forum (ISGF) PPP initiative of MoP to support ISGTF, responsible for helping the stakeholders in the deployment of smart grid technologies and undertaking research work for promotion of such technologies 14 Pilot Projects 14 smart grids pilots have been proposed to be implemented across various stages through support from the GoI. There are utilities like BESCOM, Tata Power Delhi Distribution Limited, CESC etc. who have started their own initiatives There are also several additional initiatives that various entities have been undertaking working in their domain for smart grid support and implementation in India- CEA, BIS, CPRI, BEE etc. National Smart Grid Mission aims to further strengthen the above initiatives Slide 9 9 Smart Grids cannot evolve without dynamic, flexible regulation The regulator will be a facilitator to smart grids business Discoms need to demonstrate clear positive benefits to consumers Regulators more than ever need to protect the interests of the consumers Investment Approval Recovery through Tariff Promoting end use Providing Incentives Delivering policy objectives. Ensuring value and protection to customers A conducive regulatory framework will also be critical Slide 10 Regulations will need to deal with multiple aspects 10 Slide 11 Scope of Smart Grid Regulations Approval of Smart Grids investments consistent with the objectives 1 Tariff design for enabling consumers, prosumers and utilities to derive benefits of the SG investments 2 Incentive/dis- incentive design for promoting deployment 3 Adoption of relevant equipment, communication and interoperability standards and codes 5 Security of network operations, particularly with respect of cyber security 6 Protection of consumer privacy, maintaining integrity of data 4 Integration of Renewable/Dist ributed Generation for better grid visibility and efficiency 7 Entities may be required to demonstrate adherence to the requirements stipulated herein through appropriate reporting structures (preferred through automated means with minimum human intervention) Slide 12 Initiative on this has already started A facilitative regulatory framework for promoting smart grid investments and applications is being laid out in India. Through the Ministry of Power and the Forum of Regulators in India, model smart grid regulations are under development. Mr. B N Sharma, Joint Secretary (Distribution), MoP (Chairman) Mr. Pravinbhai Patel, Member (Technical), GERC Mr. Alok Gupta, Member, MPERC Mr. Pankaj Batra, Chief Engineer, I/C, CEA Mr. S A Soman, Professor, IIT-Mumbai Mr. N. S. Sodha, Executive Director, PGCIL Ltd. (Convenor) Draft regulations validated by the Committee has been presented to the Forum of Regulators A Technical Committee constituted by MoP for development of SG Regulations has been formed Slide 13 Thank You Anish De, Chief Executive Officer Mercados Energy Markets India Private Limited 1202, Tower B, Millennium Plaza, Sector 27 Gurgaon, Haryana - 122002, India Tel: +91 124 4241750 | Mobile: +91 9810453776 | Fax: +91 124 4241751 anish.de@afconsult.com | www.afconsult.com | www.mercadosemi.es anish.de@afconsult.comwww.afconsult.comwww.mercadosemi.es 13 Slide 14 Functionalities of SG Utility pilots aim to address several issues plaguing the distribution segment Power Demand Shortage Demand Side ManagementDemand Response Peak Load Management Clean EnergyRenewable Energy IntegrationDemand Response (for balancing) Loss Reduction/ Operational Efficiency Improvement Theft Management & Tamper Detection Asset Monitoring Meter Data Management System Substation AutomationAMI Consumer Service Standards Power Quality Work Force/Crew Management Outage Management Automatic BillingConsumer portal National Priorities Smart Grid Interventions proposed under the 14 GOI Pilots 14 Slide 15 Smart Grid Regulations Coverage Implement specific Tariff Structure to promote deployment Process of tariff setting Tariff Design Product Standards System Standards Performance Standards Network and Communication Standards Customer Data Protection Standards Safety and Standards Review and Approval of Smart Grid Investments Recovery of Costs Role of Smart Grid Consultation Committee (SG- CC) Evaluation, Measurement & Verification Investment Constitution of Smart Grid Cell Appoi