Upload
others
View
11
Download
0
Embed Size (px)
Citation preview
1
Copyrigth 2009 Electric Power Research Institute 1
Smart Grid Demonstration Cost/Benefit Analysis
Bernie NeenanTechnical [email protected]
EPRI Smart Grid Advisory MeetingAlbuquerque, New Mexico
October 14, 2009
Copyrigth 2009 Electric Power Research Institute 2
Outline
A. Cost and Benefit Analysis (CBA) DefinedB. What constitute Smart Grid Benefits?C. Measuring Smart Grid ImpactsD. Monetizing Smart Grid BenefitsE. The Cost to Realize Smart Grid BenefitsF. CBA Application to EPRI Smart Grid
Demonstration
2
Copyrigth 2009 Electric Power Research Institute 3
Cost and Benefit Analysis (CBA) Defined
A
Copyrigth 2009 Electric Power Research Institute 4
Cost and Benefit Analysis (CBA) – Design Principles
• Adaptable to all Smart Grid demonstrations• Provides for a consistent and fair
comparison of alternative Smart grid technologies and systems
• Adaptable to new findings and expanded applications
• Identifies all attributable benefits• Minimizes redundancy in benefit attribution• Distinguishes benefits according to:
– Level (how much)– Distribution (who is the beneficiary)– Timing (when they are realized)
Intelligent Transmission and Distribution Automation
Microgrids, Islanding, Switching, Sectionalizing
Intelligent Transmission and Distribution Automation
Microgrids, Islanding, Switching, Sectionalizing
Intelligent Transmission and Distribution Automation
Microgrids, Islanding, Switching, Sectionalizing
Distributed Generation and StoragePV, Wind, Micro-Turbines,
CAES, Flywheel
Distributed Generation and StoragePV, Wind, Micro-Turbines,
CAES, Flywheel
In Premise Networks, Automated DR, Integrated Demand-Side Resources
In-Premise NetworkIn-Premise Network
Demand Response & Control
In Premise Networks, Automated DR, Integrated Demand-Side Resources
In-Premise NetworkIn-Premise NetworkIn-Premise NetworkIn-Premise Network
Demand Response & Control
RF Tower
Advanced Metering Infrastructure
Reading, Remote Disconnect, Capacitor Controls, Sensors,
Wastewater
BPL PLCRF Mesh
RF Tower
Advanced Metering Infrastructure
Reading, Remote Disconnect, Capacitor Controls, Sensors,
Wastewater
BPL PLCRF Mesh
RF TowerRF Tower
Advanced Metering Infrastructure
Reading, Remote Disconnect, Capacitor Controls, Sensors,
Wastewater
BPLBPLBPL PLCPLCRF MeshRF Mesh
3
Copyrigth 2009 Electric Power Research Institute 5
A Useful Semantic Distinction
• The first order, and therefore defining, impact of Smart Grid technology is a change in the technical performance of the electric system
• The term benefit connotes a monetary result• A transformation function is required link the two• An important distinction is:
– Impact (cause) = the first-order impact of the investment on the system (what aspect of service or performance changed?)
– Benefit (effect )= the monetary equivalent of the impact
Copyrigth 2009 Electric Power Research Institute 6
Defining and Categorizing Smart Grid Benefits
B
4
Copyrigth 2009 Electric Power Research Institute 7
Benefits 1st Order Distinction
• Operating cost savingsthat result from increased productivity attributable to the investment
• Operating costs savings (relative to what is incorporated into existing rates) provide a stream of funds that can be used by the utility to service the Smart Grid investment carrying costs.
• These benefits inure directly to consumers and are:• Speculative, subjective, and challenging
to monetize • Not necessarily evenly distributed
among consumers
• Societal Benefitsthat inure to consumers, but in less obvious ways
• Avoided capital and operating costs result in rates that are lower than they otherwise would have been
• Consumer cost avoidancefrom reduced generation, transmission, and distribution investment or operational requirements
Copyrigth 2009 Electric Power Research Institute 8
< 15 min
Energyefficiency
Price-Based Demand Response
DA-RTP RTPTOU
Years
System planning
Months
Operational planning
Day-ahead
Scheduling
In-day
Dispatch
< 15 min
Systemmanagement
action
Time scaleRT balanced
and regulated system
Induced Demand Response
ICAPKWH
BiddingEmer DR
DLCI/CLoad
Many Benefits Originate at Wholesale and Flow to Retail
5
Copyrigth 2009 Electric Power Research Institute 9
Smart Grid Benefits Categorization
Smart Grid Benefits
Lower Utility Operating Expenses Avoided Consumer Costs Better Societal Resource
Utilization
EquipmentMaintenance
Operating Cost
Others
Avoided Costs Improved Reliability
Gen Capacity
Energy Generation
Ancillary Service Capacity
T&D Assets
Reduced Outages
Improved PQ
Improved National Security
Better Environmental
Efficient Economy
T&D Asset Operation
Copyrigth 2009 Electric Power Research Institute 10
Things that appear to be left out – based on typical list of benefits
• Impact on electricity markets– More efficiency market
operations– Flatter load profiles– Reduced LMP/MC volatility
Impact on System Operations– Integration or renewable
generation resources– Optimized PHEV
charging/discharging– Better unit operating efficiency
• Customer impacts– Lower electricity rates– End-use and premise load
control– More consumer choices
• Externalities– Lower emissions form renewable– Achievement of RPS goals
• Impact on electricity markets– More efficiency operations– Customer participation– Flatter load profiles– Reduced LMP/MC volatility
• Customer impacts– Lower electricity rates– End-use and premise load
control– More consumer choices– Lower electricity consumption
6
Copyrigth 2009 Electric Power Research Institute 11
Smart Grid Benefits – Collateral ImpactsSmart Grid
Benefits
Lower Utility Operating Expenses
Avoided Consumer Costs
Better Societal Resource Utilization
EquipmentMaintenance
Operating Cost
Others
Avoided Costs Improved Reliability
Gen Capacity
Energy Generation
Ancillary Service Capacity
T&D Assets
Reduced Outages
Improved PQ
Improved National Security
Better Environmental
Efficient Economy
T&D Asset Operation
Fewer rollouts
Competitive Markets
Fewer outages
Enable Renewables
Copyrigth 2009 Electric Power Research Institute 12
Some Puzzlers• Devices and controls specifically added to mitigate the adverse
impact of distributed PV which itself is claimed as a benefit– Is that a benefit to consumers? or– A reduction in the value attributed to PV?
• Reduced cost of Smart Grid elements due to economies of scale– Is this attributable to the SG? or– Just the way of the world, a coincidental, not attributable, benefit?
• Improved perception of utilities, other entities – who gains from good will, and what is it worth to monopoly entity?
• Enabling more retail competition, – Is the real benefit measured already in induced kW and kWh changes?
• Horizontal and vertical expansion of utility economic activity– If utilities provide PHEV charging service, offer HAN systems, who gains
and how , especially if those are regulated services? Does this restrict their competitive supply that might be cheaper or more robust?
7
Copyrigth 2009 Electric Power Research Institute 13
Summary
• The DOE/EPRI CBA framework provides a foundation for consistent and credible evaluation of Smart Grid benefits
• Some adaptations improve its suitability– A functional definition of benefits– Methods for measuring the benefits by category– Monetizing the benefits– Clear linkage of cause and effect
Copyrigth 2009 Electric Power Research Institute 14
Measuring Smart Grid Impacts
C
8
Copyrigth 2009 Electric Power Research Institute 15
Metrics for Utility Expense Reduction
• Impacts that are direct measures of benefits:– Reduced expenses
• Lower theft losses• Reduced outage restoration expenses• Lower maintenance expenses• Lower system dispatch costs
– Increased net revenues (another source to offset investment costs)
• Prepaid service enabled• Seasonal shut off • Reduced read-to-pay time• Fewer estimated bills• Faster account service initiation/termination• In-home device monitoring services
Data Sources• Utility customer billing
records• Utility general accounts• Department account
records• Cost of service studies• Customer
demographics• Estimates of new
service enrollment and usage
Copyrigth 2009 Electric Power Research Institute 16
Metrics for Avoided Costs
• Avoided capital costs– Reflect the reduction in the
cost to serve load• Generation plant investments• T&D investments
– Generally measured in terms of kW avoided
• Avoided energy costs– Reflect the cost of operating
cost of the generation unit that otherwise would have been
dispatched
• Measurement issues– How is capacity adequacy
affected (kW impact)?– What generation units are
not built• Peaking• Base load• Cycling
– How is total dispatch effected?
– Are ancillary services requirement affected?
– Impact of market structure
9
Copyrigth 2009 Electric Power Research Institute 17
Baselines
• A baseline establishes:– For a specific impact– The level of impact that would have otherwise realized– But for the Smart Grid investment– Need to forecast outcomes (baseline) over the SG
investment lifetime to account of base dynamic influences• Perspective
– Marginal perspective- how did things change– Measures temporal and spatial changes– Historic data generally used to establish the basis for impact
measurement, but may have to model the baseline in some cases
– Dynamic adjustments if investments system usage changes would been made (occurred) anyway
Copyrigth 2009 Electric Power Research Institute 18
Baseline for Measuring Impacts Attributable to Smart Grid Investments
• Asset performance– Measures of currently generation efficiency (unit and
portfolio)– Measure of today’s T&D system performance
• Consumer behavior– What would consumption otherwise have been?– What is today’s level of reliability? Service quality?
• Economic activity– Oil consumption for generation– Character of electricity sector
• Expenditures by sector• Labor multipliers
Area of active inquiry
Needs
devlopment
10
Copyrigth 2009 Electric Power Research Institute 19
Who is Responsible for, or Concerned about, Demand Response EM&V Protocols?
Technology Firms
CSPs
FERC
Utilities
ISO/RTOs
PSCs
NAESB
IRC
NARUC
State
Agencies
EPRI
EVO
LBNL
North American Energy Standards Board
National Associate of Regulatory Utility Commissioners
ISO/RTO Council
Public Service Commissions
Federal Energy Regulatory Commission
Curtailment Service Providers
Lawrence Berkeley National Laboratory
Public Service Commissions
Efficiency Valuation Organization
Copyrigth 2009 Electric Power Research Institute 20
How demand response product performance is measured
kW
Time
FPL
ICD
FPL
Event
Metered
Non -compliance
Pre-Specified CBLkW
Time
CBL
Event
Metered
Non -compliance
Deemed Device ResponsekW
TimeEvent
Metered
DeemedResponse
ImpliedLoad
Event-Driven CBLkW
TimeEvent
Metered
Prior Days
Non -compliance
Event CBL
kW
Time
Metered Output
Event
Non -compliance
MeteredOutput
TypicalOutput
11
Copyrigth 2009 Electric Power Research Institute 21
Metrics for Improved Reliability
• Outage Mitigation – Fewer outages– Shorter duration outages– Increased outage notice
• Power Quality Improvement– Reduced voltage sags and
spikes– Harmonic stability
• Measurement issues – What constitutes an
outage?– Impacts of sags on
premise service– Spatial and temporal
measurement requirements
• Premise• Circuit• Network
Copyrigth 2009 Electric Power Research Institute 22
Metrics for Better Societal Resource Utilization•National security
– Reduced imported oil consumption for generation•Better environment
– Lower net emissions from electricity generation•Efficient economy
– Employment• Net job creation, character of the jobs• Wages
– Economic output – GNP – Social welfare
• Economic measure of resource productivity
Most are difficult to quantify, but methods have been developed
12
Copyrigth 2009 Electric Power Research Institute 23
Monetizing Smart Grid Benefits
D
Copyrigth 2009 Electric Power Research Institute 24
All Roads Lead to Demand Response
Household-level Benefits of Demand Response
$0
$50
$100
$150
$200
$250
$300
$350
DRTOU
RTP
Feedback
CO2 credit
Nat' Sec
High
Low
On Average, 34% of Attributed Smart Meter Benefits are Societal
(Customer)
Operational and Societal Benefits (%) Attributed to Smart Metering
0%
20%
40%
60%
80%
100%
SCEPG&E
SDG &ECon Ed
Energy E ast
Cen Main e
Vermont
O regon (a)
O regon (b)
ComE d
SocietalOperational
Revised 0721.08
13
Copyrigth 2009 Electric Power Research Institute 25
What is the Value of Demand Response?
• Demand response is a change in the consumption of electricity due to a change in the price paid, or another inducement to do so
• The value of such changes depend on:– Economic outcomes
• Market price changes• Dispatch costs
– Reliability conditions• Value of reliability
• Net demand response benefits
Copyrigth 2009 Electric Power Research Institute 26
Lots of Demand Response AlreadyDR Resources by Type
Distribution of Demand Response Resources by Category
4% 3%
12%
17%
68%
12%12%
73%
12%14%
57%
17%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Capacity Ancillary Services Energy-Price Energy-Voluntary
ISO/RTO Total (23,129 MW)
United States (20,864 MW)
Canada (2,265 MW)
14
Copyrigth 2009 Electric Power Research Institute 27
IRC Estimates of DR Resources as Percentage of Peak
Demand Response Reources as Percentage of System Peak by ISO/RTO - Summer 2007
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
CASIO
ERCOT
ISO-NE
MISO
NYISO
PJM
SPP
Mean
ISO/RTO Council, Markets Committee. October 16, 2007. Harnessing the Power of Demand. Available from www.isorto.org.
Copyrigth 2009 Electric Power Research Institute 28
How DR Generates Value
• Product design determines how the demand response program is activated and produces benefits– Autonomous. The consumer decides at what price it changes
consumption– Directly dispatched. An external entity has the ability to curtail a device’s
usage – Self-dispatched the consumer controls the response decision
• Market or enterprise circumstances determine when an event is manifested– Prevailing energy prices– Level of system operating reserves– Demand response provider’s internal value
• Value is determined by how markets and consumers are impacted– Wholesale value is transparent– Vertically integrated utility value is like administratively determined
15
Copyrigth 2009 Electric Power Research Institute 29
Modified NERC and NAESB characterization to accommodate retail pricing structures
Demand-Side
Demand Response
Energy Efficiency
Dispatchable Resource
Customer Choice & Control
Reliability Economic
Capacity
Emergency
Ancillary Services
Energy Bids
DynamicPricing
Fully Hedged
UniformPrice
StepRates
Demand & Energy
Time-of-daySchedule
StreamingPrices
Call Options
DayAhead
RealTime
Copyrigth 2009 Electric Power Research Institute 30
DR Program Features
Participation
Number of Customers and their load basis
Response
Load reduction undertaken (MW,
MWH)
Valuation ($/MW, $/MWH)
Plan Features and ProvisionsProduct Features
• Term
• Caps and floors on enrolled load
• Instrumentation requirements
Benefits• Option/availability payment (+)
• Event performance payment (+)
• Overall performance payment (+)
• Non-compliance penalties (-)
• Transaction costs (-)
Event Characteristics• Notice
• Duration
• Frequency
• Total Exposure/yr, /contract period
• CBL determination
16
Copyrigth 2009 Electric Power Research Institute 31
Dynamic Pricing Participation
• Residential Dynamic Pricing– EDF = 75% or more on dynamic TOU rate– Salt River and APS + 20% or more on TOU rate schedule– Gulf Power = 30% of target on TOU/CCP– CA pilots estimate
• ~30% predicted acceptance• 5% actual participation
– Pilots report 20-25% subscription rates for pilots• Target recruiting• Participation incentives
Copyrigth 2009 Electric Power Research Institute 32
Simulated DR Plan Participation Rates
RTP VPP TOUDefualt
ResCom
Ind0
1020304050607080
Participation %
Pricing Plan
Class
Pricing Portfolio Participation
ResComInd
17
Copyrigth 2009 Electric Power Research Institute 33
Potential Benefits Attributable to Residential RTP
Potential Residential RTP Benefits- Scenario-W eighted 7 Yr. Average
$0$5
$10$15$20$25$30$35$40
Seven Year Avg. Real-Time ResponsePrice
Doubled Elasticity
$ M
illio
n/Yr
.
Non-ParticipantsParticipantsTotal Res idential
Copyrigth 2009 Electric Power Research Institute 34
Reliability Improvements
• Smart Grid provides for more localized measurement of individual premise service status
• If this information is integrated into restoration systems, the duration of outages may be reduced, which translates into more value to consumers
• Such an analysis requires:– Identifying changes in CAIDI that would be attributable to Smart
Metering– Estimating customer outage costs
Change in Outage Duration
Outage Cost Smart Metering Premise-level Reliability ValueX =
$5.45$0.01Marginal Cost per CAIDI Minute
$295 - $475$5.73 Baseline Cost per OutageSmall CommercialResidentialOUTPUT
18
Copyrigth 2009 Electric Power Research Institute 35
Improved Utilization Efficiency- Feedback
Feedback Studies - % Electricity Savings; Direct and Indirect Feedback
0
5
10
15
20
25
30
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Study #
% S
avin
gs
....
• A wide variety of studies have been conducted over the past 20 years to quantify the impact of information on electricity consumption:
• Indirect feedback – provides consumers with more detailed and in-depth analyses of billing information
• Direct feedback – provides consumers direct access to the meter contents
• The reported impacts over both feedback types, reductions in total kWh consumed, range from zero to 25%
• Electronic display results also exhibit a wide range of energy reduction values
• Most studies involved only very few (under 150) participants for a year or less.
Feedback Studies - % Electricity Savings - Electronic Display
0
2
4
6
8
1012
14
16
18
20
2 6 9 10 17 18 19 20 21 23 24 25
Study #
% S
avin
gs
....
Pre-paid metering
Copyrigth 2009 Electric Power Research Institute 36
Feedback Impacts
Metastudies• Darby 2001, 2006
• Fischer 2007
• Abrahamse, et al., 2005
Pilots• Before and after 2000
• Direct vs. indirect
• Slow vs. fast feedback
• North America, Europe0
25%
20%
15%
10%
5%
30%
% Reduction in HH Energy
19
Copyrigth 2009 Electric Power Research Institute 37
Feedback Hierarchy
“Direct” Feedbackprovided as consumption occurs-
“Indirect” Feedbackprovided after consumption occurs
Information availability
Cost/Effort to implement Low High
• Darby provided an important distinction; indirect vs. direct
• EPRI added a functional hierarchy
EnhancedBilling
2
Tips on how to save
StandardBilling
1
Monthly invoice (actual or estimated
usage)
EstimatedFeedback
3
Tailor audits
and advice
Daily/Weekly Feedback
4
Periodic reports on
actual usage
Real timeFeedback
-
5
Readily available
usage data
Real-timePlus
6
Real – tie data plus controls
Feedback Hierarchy
Copyrigth 2009 Electric Power Research Institute 38
EfficientBuildingSystems
UtilityCommunications
DynamicSystemsControl
DataManagement
DistributionOperations
DistributedGeneration& Storage
Plug-In Hybrids
SmartEnd-UseDevices
ControlInterface
AdvancedMetering
Consumer Portal& Building EMS
Internet Renewables
PV
Smart Grid & Smart Pricing- Example Application
• Thermostat receivesday-ahead hourlyprices
• Consumer sets upperand lower limits
• Thermostat “learns”thermal, consumerand weather impacts
UtilityCommunications
DistributionOperations12
Midnight12
Midnight12
Noon
Demand
PreCool
Clip
Recover
20
Copyrigth 2009 Electric Power Research Institute 39
Smart Charging: Key to Reducing PHEV Impacts
July 27th 2007 24 hr: Total Loading for the Feeder Under Study
4000
5000
6000
7000
8000
9000
10000
11000
12000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Hours
Tota
l Loa
ding
at S
ubst
atio
n (K
W)
Base Load Scenario
PHEV Case 3:- (240V, 12A) Diversified Charging @9pm-1am Penetration=10%
Added peak load without PHEV charging integration
Added off-peak load with smart PHEV chargingoff-peak load
off-peak load
Copyrigth 2009 Electric Power Research Institute 40
Comparison of DR Plan Event Impacts
Source: Faruqui, April 20008
• Differences among pricing structures are largely due to event price differences, not elasticity differences
• Participation levels and sustainability is highly speculative
10%
20%
30%
40%
50%
60%
% Im
pact
on
Loa
d
:
TOU
CPP
PTR
CPP with enabling
techTOU with enabling
tech
10%
20%
30%
40%
50%
21
Copyrigth 2009 Electric Power Research Institute 41
Valuing Demand Response Benefits - An Elemental Method
Basic Program Characterization• Participation rate• Reference load profiles for target customers• Price change
– Event prices, penalties– Reference price
• Price response– Event load– Level of price response– Event/Peak coincidence
• Avoided cost – Energy– Capacity
• Reliability benefit• Costs of program implementation
Participation
Elasticity
Generation Capacity & Energy Values
Price Change
X
=
X
X
Benefits
Usage and Coincidence
Participation
Elasticity
Generation Capacity & Energy Values
Price Change
X
=
X
X
Benefits
Usage and Coincidence
For Smart Metering business cases, the frame of reference is incremental; how does Smart Metering enhance the levels of key parameters?
Copyrigth 2009 Electric Power Research Institute 42
An Illustrative Example
Assumptions• Perfect foreknowledge of when the system peak occurs• Avoided capacity cost = $100/kW year• 20 year lifetime for Smart Metering • 100,000 households• Average 14,000 kWh/yr• 65% coincidence of peak energy and system peak kW• System cost - $20 million (NPV)
• An example of a specific demand response product illustrates the assumptions required and their implications for the resulting level of benefits
• The Peak Time Rebate (PTR) serves to illustrate the methods and implications
• PTR is assumed to be deployed to reduce coincident peak demand and thereby reduce capacity costs
• PTR Events are declared each year to coincide with the system peak load
Peak Time Rebate• Participation is voluntary• Utility determines when to
declare an event• Participants that reduce
load are paid the Rebate price
• No penalty for failure to respond
22
Copyrigth 2009 Electric Power Research Institute 43
NPV 20-Year Value at Higher Buy-back Rebate
NPV 20-Year Value at Buy-back Rebate 8 times Standard Rates
0.025 0.05 0.1 0.15 0.175 0.2 0.2510% 872,603$ 1,745,205$ 3,490,411$ 5,235,616$ 6,108,219$ 6,980,822$ 8,726,027$ 20% 1,745,205$ 3,490,411$ 6,980,822$ 10,471,233$ 12,216,438$ 13,961,644$ 17,452,055$ 30% 2,617,808$ 5,235,616$ 10,471,233$ 15,706,849$ 18,324,658$ 20,942,466$ 26,178,082$ 40% 3,490,411$ 6,980,822$ 13,961,644$ 20,942,466$ 24,432,877$ 27,923,288$ 34,904,110$ 50% 4,363,014$ 8,726,027$ 17,452,055$ 26,178,082$ 30,541,096$ 34,904,110$ 43,630,137$ 60% 5,235,616$ 10,471,233$ 20,942,466$ 31,413,699$ 36,649,315$ 41,884,932$ 52,356,164$ 70% 6,108,219$ 12,216,438$ 24,432,877$ 36,649,315$ 42,757,534$ 48,865,753$ 61,082,192$ 80% 6,980,822$ 13,961,644$ 27,923,288$ 41,884,932$ 48,865,753$ 55,846,575$ 69,808,219$ 90% 7,853,425$ 15,706,849$ 31,413,699$ 47,120,548$ 54,973,973$ 62,827,397$ 78,534,247$ 100% 8,726,027$ 17,452,055$ 34,904,110$ 52,356,164$ 61,082,192$ 69,808,219$ 87,260,274$
ParticipationElasticity
• Lightly shaded (green) cells exceed the Smart Metering capital cost of $20 million.• Participation rate of at least 30% (corrected value)• Elasticity of at least 0.10
• The dark shaded (black) cells exceed the capital cost plus the participant incentives• Participation of at least 50% (corrected value)• Elasticity of at least 0.175
• Values assume that only one event is called per year to achieve the peak reduction. If more events are required, then the net benefits are less.
What some pilots exhibited
Not yet demonstrated
Copyrigth 2009 Electric Power Research Institute 44
Externalities
• Externalities are costs associated with economic activity that are not included in the price paid by consumers
• As a result, resources are not used optimally from a societal perspective
• Smart Metering may enable changes that reduce externalities– Reduced kWh usage that is oil-based reduces reliance on imports, which may
have implications for national security– Reduced kWh usage that reduces generation carbon emission reduces costs
associated with the associated adverse environmental impacts
• Externalities are sometimes associated with market failure – the missing cost element in the good is an indication that the market is not functioning properly
• But, in the absence of a market, how are such costs monetized?– Cicchetti- implied national security adder = $.057 to $.014 /kWh– Synapse – implied CO2 emissions = $.016 to $.018/kWh
23
Copyrigth 2009 Electric Power Research Institute 45
Different Average Emissions Approaches Yield Different Results
0.75
0.95
0.690.79
0.67
0.85
0.0
0.4
0.8
1.2
1 2 3 4 5 6 7
Tons CO2
MWH
Avg. U.S. Total
Avg. U.S. Non-Base
Avg. Southwest
Total
Avg. SouthwestNon-Base
Avg. State (Arizona)
Total
Avg. State (Arizona) Non-Base
Source: U.S. EPA eGrid Database
Copyrigth 2009 Electric Power Research Institute 46
Macroeconomic Impacts• Disruptive changes in sector spending
behaviorscan trigger beneficial changes in the economy:
– Expanded regional economic activity – Increased employment and wages
• Smart Grid may be the source of such • changes arising from:
– Changes in utility expenditures– Changes in consumer expenditures associated
with • Reduced electricity costs (if applicable)• Purchase of other products and services
• Characterizing and quantifying them involves economic sector macroeconomic (Input/Output) modeling
– Requires using very specialized and generally expensive modeling techniques
– The expenditure changes associated with Smart Metering may not involve substantial changes in expenditure
. Economic Impacts for AMI and Resulting Demand Reduction Programs
AMI Hardware and Software Installation
AMI Investment and Demand Response
Phase I: The Installation
Installation of Customers’Smart Meters
New DirectSpending: Equipment
& Installation
AdditionalIndirect and Induced “Multiplier”Effects
ReducedIndirect and Induced “Multiplier”Effects
Customers’ Increased Utility Bills, no
Change in Electricity Use
Increased Direct, Indirect, and Induced Effects:
Sales, Income, Value Added, Employment
Original Direct Consumption Spending
Reduced Direct, Indirect, and Induced Effects:
Sales, Income, Value Added, Employment
Net Total Effects:Sales,
Income, Value Added Employment
MINUS
Base Scenario, without AMI Investment and Installation
Customers’ Original Utility Bills &Electricity Use
Reduced Direct Consumption Spending
Indirect and Induced “Multiplier”Effects
Total Effects:Sales,
Income, Value Added Employment
AMI Hardware and Software Installation
AMI Investment and Demand Response
Phase I: The Installation
Installation of Customers’Smart Meters
New DirectSpending: Equipment
& Installation
AdditionalIndirect and Induced “Multiplier”Effects
ReducedIndirect and Induced “Multiplier”Effects
Customers’ Increased Utility Bills, no
Change in Electricity Use
Increased Direct, Indirect, and Induced Effects:
Sales, Income, Value Added, Employment
Original Direct Consumption Spending
Reduced Direct, Indirect, and Induced Effects:
Sales, Income, Value Added, Employment
Net Total Effects:Sales,
Income, Value Added Employment
MINUS
Base Scenario, without AMI Investment and Installation
Customers’ Original Utility Bills &Electricity Use
Reduced Direct Consumption Spending
Indirect and Induced “Multiplier”Effects
Total Effects:Sales,
Income, Value Added Employment
24
Copyrigth 2009 Electric Power Research Institute 47
The Cost to Realize Smart Grid Benefits
E
Copyrigth 2009 Electric Power Research Institute 48
Issues to Resolve
• What is the purpose of the CBA?– Calculate demonstration project net benefits– Estimate the net benefits for the project
• Under repeated applications at the same scale• Scaled-up applications
• What costs need to be measured?– All project costs– Distinguish R&D (one-time) from project requirements costs– Today’s cost or cost at full scale and scope– Collateral costs
• Access to pertinent data– Utility– Vendor/contractor
25
Copyrigth 2009 Electric Power Research Institute 49
CBA Application to EPRI Smart Grid Demonstration
F
Copyrigth 2009 Electric Power Research Institute 50
Step-wise process
1. Characterize project outcomes2. Map goals to impacts 3. Monetize estimated impacts4. Estimate costs 5. Establish performance tracking requirement
1. Cost reporting2. M&V protocols3. External variable measurement
26
Copyrigth 2009 Electric Power Research Institute 51
Next Steps
• Develop operational manual to guide protocol application
• Test out protocols on one or more projects• Revise and document protocols
– Application guides for EPRI Smart Grid (and Energy Efficiency) demo
– Coordinate with DOE• Coordinate development of protocols• Share experiences
• Develop analytical tools