Smart Grids in Europe: The DSO Perspective Gunnar Lorenz Head of Unit - Networks CIRED, 07 June 2011

Smart Grids in Europe:The DSO Perspective

Gunnar LorenzHead of Unit - Networks

CIRED, 07 June 2011

Gunnar Lorenz, CIRED 7 June 2011

At the forefront of the ELECTRICITY INDUSTRY:


Representing the electricity industry at expert, strategic and policymaking levels.

33 FULL MEMBERS

9 EUROPEAN AFFILIATE MEMBERS

7 MEDITERRANEAN AFFILIATE MEMBERS

7 INTERNATIONAL AFFILIATE MEMBERS

9 EI ASSOCIATE MEMBERS25 BUSINESS ASSOCIATE MEMBERS


EURELECTRIC represents the EU electricity industry, across the whole electricity value chain

ENERGY POLICY& GENERATION

ENVIRONMENT& SUSTAINABLEDEVELOPMENT

MARKETS DISTRIBUTION NETWORKS

The voice of the European Electricity Industry in Brussels, the heart of Europe

ENERGY POLICY& GENERATION MARKETS ENVIRONMENT

& SUSTAINABLEDEVELOPMENT

ENERGY POLICY& GENERATION MARKETS DISTRIBUTION NETWORKS ENVIRONMENT

& SUSTAINABLEDEVELOPMENT

DISTRIBUTION NETWORKS MARKETS ENVIRONMENT& SUSTAINABLEDEVELOPMENT

DISTRIBUTION NETWORKS ENERGY POLICY& GENERATION

MARKETS ENVIRONMENT& SUSTAINABLEDEVELOPMENT

DISTRIBUTION NETWORKS


EURELECTRIC’s Structure for DSOs

EURELECTRIC

Board of Directors

Networks Council

WGs

TFs

NEs

Directors’ Gathering

Annual Meeting ofDSOs

Annual Meeting of DSOs: Representatives of European DSOs

DSO Directors’ Gathering: 20 Members elected by Annual MeetingChairman: Jan Peters (Enexis, NL)

Vice-Chairman: Livio Gallo (Enel Distribuzione, IT)

Networks Council: National Representatives Chairman: Peter Birkner (RWE, DE)

Vice-Chairman: Manuel Rodrigues da Costa (EdP, PT)

Plus Working Groups, Networks of Experts, Task Forces etc.


Current EURELECTRIC DSO Working Groups

• WG Distribution Regulation & Policy

• WG Customers & Operation

• WG Smart Grids• WG Standardisation

(plus sub groups)

• TF Electric Vehicles• WG Transmission-

Distribution Interface• WG Transtec• DSO Coordination for

Smart Grids Deployment


EURELECTRIC DSOs core messages

1. DSO are independent market facilitators

2. Ensuring security and reliability of supply by fair regulation

3. The technological shift in networks must be done in the right way

4. Electricity as a solution: Electricity drives cleaner!

8Gunnar Lorenz, CIRED 7 June 2011

Highlights

1. DSOs have a new mission – EURELECTRIC survey shows that the current framework is often lacking right incentives

2. 10 steps to smart grids: EURELECTRIC’s smart grids roadmap

3. Next steps


Highlights



3. Next steps


Tomorrow’s smart system will be characterised by large-scale integration of often intermittent decentralised generation and new types of loads connected by and large to the distribution grid


The main traditional rationale behind regulation is to prevent the abuse of a monopoly position and will have to be extended…Utility Customer/ Network user

Cost compensationInvestment incentiveCover capital cost

Low pricesQuality


…the climate package and the evolving retail market adds elements to the regulatory scope

Utility Customer/ Network user

Cost compensationInvestment incentiveCover capital cost

Low pricesQuality

New Mission (EU market and climate packages):

Supplier Society / Environment

New productsProcesses (Customer switching)

Reduce emissionsRenewables integrationIncrease energy efficiency


Regulatory framework must consider the new mission of DSOs

• Integrating environmental goals on distribution level

• Incentivising smart grids that enable the creation of a better functioning retail market place

• Removing barriers for investing in technological innovation


Investments for smart grids might benefits several parties but are often only done by DSOs

Example for illustration

Source: EURELECTRIC, Regulation for Smart Grids


Only 3 countries offer DSOs strong incentives to investments.



In most of the surveyed European countries the smart meter penetration is still relatively low.

EU target: at least 80 %



A clear mandate and the possibility to recover associated costs are main drivers for the smart meter implementation.

SE

75 % - 100 %

FI

50 % - 75 %

IT



Highlights



3. Next steps


In Europe, over € 5.5 billion has been invested in about 300 Smart Grid projects during the last decade.

Picture 1: Overview of Smart Grid investment and implementation across the EU (source: JRC, IE). Projects represented can span over more than one country and can include more than one category. Three projects are not represented in this Picture: Kriegers Flak project, a Super Grid between Germany and Denmark, total investment of 507 M€; Smart Meter Roll-out and AMI in UK, estimated investment of 11897 M€; and Smart Meter Roll-out in Sweden, spanning in approx. 150 projects and amounting a total investment of approx.1500 M€.

Projects/category Total 277 implementation sites

Investments/category Total 3848.7 M€

Project investments (M€)

75 Investments (M€) / No. of project implementation sites per country Other

Storage

Transmission automation

Home application

Distribution automation

Integrated systems

Smart meters

Source: Smart Grids Communication 12 April 2011; European Commission


Smart Grid Services & Functionalities


DSOs

WHO? DSOs as enablers & facilitators


10 Steps to Smart Grids in 10 Years


Facilitation at both national & EU level


Deployment in the Member States

• With rising share of distributed RES generation, not only power, but also information to flow in both directions to enable DSOs to operate the grid safely


Commercialisation in the Member States

• With the high penetration of EVs, customer participation in the market will become necessary

• Customers will actively control their consumption through display/feedback technologies and automated signals


Highlights



3. Next steps


The IEA estimates 500 bn EUR investments in the distribution grid over the next 25 years in the EU

1 279

164

489

0 200 400 600 800 1 000 1 200 1 400

New plants:

Transmission:

Distribution:

bn EUR

Source: World energy outlook 2010


The European Commission COM (2011)202 intends to concentrate on five actions

Actions

1. Developing Smart Grid standards

2. Addressing data privacy and security issues

3. Developing regulatory incentives for Smart Grids deployment

4. Guaranteeing competitive Smart Grids services to customers

5. Continuing support for innovation and its rapid application

Source: European Commission COM (2011)202


What?

Characteristics/Services of

a Smart Grid

Benefits (e.g.Reduced feederlosses worth $50

per MWh)

Purposes (e.g.Reduces distribution

losses; equipmentFailures)

Smart GridFunction(alitie)s

(e.g.Automatic voltageand VAR control)

Smart GridTechnologies –

Assets - Systems

Methodological approach to compares cost and performance ofDemonstration projects before and after the introduction of Smart Grid Technologies & Systems

Application of developedCBA Methodology

What?Methodological approach to compares cost and performance ofDemonstration projects before and after the introduction of Smart Grid Technologies & Systems

EURELECTRIC is currently testing a cost benefit analysis methodology with the European Commission

Source: EURELECTRIC


EURELECTRIC Recommendations to regulators/Member States

1 > Rewarding and Incentivising Capital Expenditures (CAPEX) in Smart Grids

2 > Improving the evaluation of Operational Expenditures (OPEX)

3 > Incentivising innovation and R&D funding

4 > Clarifying roles and responsibilities

5 > Safeguarding regulatory stability


A Smart Regulation…

…puts a stronger focus on long term overall benefits of DSO investments rather than narrow, short term cost optimization

…encourages innovation, R,D&D expenditures and the use of new technologies with a new risk-reward balance

…encourages capital expenditure on Smart grids in the areas where this approach is preferable to a business as usual approach

…is stable in terms of the principles that underlie it but is capable of adapting to changing circumstances


The EURELECTRIC Report Regulation for Smart Grids has been published on 10

February and is now available on our website

under

www.eurelectric.org

www.eurelectric.org


The EURELECTRIC “10 Steps to Smart Grids Roadmap” provides a common guidance to

policy makers and the industry, as a sound basis for Member States action plans

Available on our website:

www.eurelectric.org/10StepsToSmartGrids


EURELECTRIC DSOs: upcoming Workshops

14 June(Stockholm)

DSO session: EURELECTRIC Annual Convention & Conference 2011

29 June(Brussels)

Grid for Vehicle (G4V) Project, final event

20-21 October(Brussels)

Smart Grids – current status in the EU

Details: www.eurelectric.org -> events


Thank you for your attention !

[email protected]://www.eurelectric.org

Documents

Smart Grids in Europe: The DSO Perspective Gunnar Lorenz Head of Unit - Networks CIRED, 07 June 2011