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Smart Grid Solutions( June 2012) my presentation from 2012 on state of smart grid solutions. I tried to identify 5 areas of technology most interesting for VC(cleantech one) within next 5 years. My intended 20m presentation turned into 80m discussion. Looking at it from 2014 some interesting things happened. I identified 5 interesting technology areas: Data management(Big data), AMI, Home automation, Cyber security and substation automation. I looked at grid scale energy storage because everyone wanted it badly but no one could figure out way for it to work at scale. So what happened since 2012. In home automation coolest company was NEST and their main innovation was that they made thermostats consumer product. That was not obvious to everyone at the time. But we discussed investment in NEST, it not so easy though as NEST had enough cash, and you need take into account fund's life cycle. In January 2014 Google acquired NEST for $3.2B. Also at the time smartphones and technology made home automation relatively affordable and there was need for platform to control it. Microsoft was working on Home OS, software platform and interface to control home automation devices. In 2014 Apple announced HomeKit, platform to control home automation devices. Data management - Big data started to become buzz word and companies using billions of sensors accumulated ton of date but most of them never used it. in 2014 Hadoop is standard and companies find very creative ways to use data. AMI - i expected that we will have smart meters everywhere. 2014 I overestimated it. Though cool company Opower who found create way to use data from smart meters to create social platform for neighbors to compare their energy usage and compete to reduce it, had it successful IPO. Cyber Security. I focused on grid security because with all smart in grid you have shift from analog to digital and risk of cyber attack. Also Cyber security for grid became mandatory by law in USA. in 2014 it is very hard to dig up data on grid but everywhere else there were huge cases of cyber security attack. Now people aware of it but still underestimate its threat. Huge but sensitive and complex market. Grid storage. Elon Musk announced Gigafactory. It is very hard to use battery technology used in cars and smartphones on grid. Scalability is an issue. We actually did small exercise to check. My boss took his blackberry and disassembled it. We look at numbers at battery, made calculations, added cost, estimated watt needs for grid storage one, added manufacturing, environmental risks and concluded that it will not work for some time. But China announced that they will use lithium ion for storage so everyone else paid attention. It was fun to do this research and talk to smart people. I had discussion with execs from ABB Technology ventures, VC, McRock Capital, professors from MIT, ETH. I talked to CTO of IBM's big green innovation, and my fav author James Utterback. I was great pleasure.
Citation preview
Market Adoption of Smart Grid
Solutions
Berik Dossayev
Image source: G. Moore “Crossing the chasm”
| 0
Agenda
| 1
① Smart Grid Definition
② Smart Grid as Critical Infrastructure
③ Smart Grid as High Reliability Organisation
④ Technology Adoption Rate/Methodology
⑤ Discussion and Conclusions
①Smart Grid Definition
② Smart Grid as Critical Infrastructure
③ Smart Grid as High Reliability Organisation
④ Technology Adoption Rate/Methodology
⑤ Discussion and Conclusions
| 2
Smart Grid Definition
| 3
“Smart Grid is a set of solutions which add
intelligence to the electrical grid improving its
quality, observability, controllability and reliability”.
Own definition.
Smart Grid Holistic Definition
| 4Source: World Economic Forum, Smart Grid investment report 2009
Transition to Smart Grid
| 5Source: World Economics Forum, EPRI, M.Jelinek and M.Ilic
Important: proprietary standards open standards
Drivers
Transition from commodity provider to
higher–value service provider
Operational and maintenance savings
Fulfill carbon goals and regulations
Accommodate renewables and EV
Development of new products
and services
Improved understanding of
consumer behavior
Return on investment
Energy and bill savings
Smarter energy usage
Desire to be greener
Additional services
Deregulation of power industry
Carbon abatement scheme
Push for open standards
Jobs creation
Innovation
Government and Regulators Utilities
Vendors Consumers
| 6
Barriers
Technology challenges
Lack of common standards
Skill crisis
Return on investment
Policy and regulations
Technology challenges
Resistance to proprietary
standards
Access to capital
Skills crisis
Global market differences
Lack of knowledge
Fear about cost increase
Privacy issue
Behavioral change
Vested interests and influence
of power industry
Resistance to open standards
from incumbent
Complexity of regulation
process
Government and Regulators Utilities
Vendors Consumers
| 7
Smart Grid Patents with Graph
| 8
Source: US patent office
① Smart Grid Definition
②Smart Grid as Critical Infrastructure
③ Smart Grid as High Reliability Organization
④ Technology Adoption Rate/Methodology
⑤ Discussion and Conclusions
| 9
Smart Grid as Critical Infrastucture
| 10
Characteristics:
• Very complex interdepencies
• Change in one agent has an
impact on whole system
• Strict regulatory environment
• Many stakeholders and
interests
Source: Steven M. Rinaldi, James P. Peerenboom, and Terrence K. Kelly, IEEE control systems magazine 2001
Electric grid is most important
critical infrastructure
① Smart Grid Definition
② Smart Grid as Critical Infrastructure
③Smart Grid as High ReliabilityOrganization
④ Technology Adoption Rate/Methodology
⑤ Discussion and Conclusions
| 11
Power Industry now vs. Airline Industry before
| 12
Similarities:
• Strictly regulated environment
• Vested interest
• Zero tolerance to failure
• Limited storage capacity
• Few big players
• Was based on guaranteed rate of return
• High dependency on fossil fuels
• High fixed cost base
• Before 1978 US airlines industry almost came to bankruptcy
• Deregulation saved airline industry from bankruptcy brought competition,
reduced prices and increased innovation
Source: M.Jelinek, M. Ilic source image:local.wasp.uwa.edu.au, soil-net.com
① Smart Grid Definition
② Smart Grid as Critical Infrastructure
③ Smart Grid as High Reliability Organization
④Technology Adoption Rate/Methodology
⑤ Discussion and Conclusions
| 13
Evaluation of Technology Adoption Rate
| 14
>To calculate Technology adoption rate we multiple each criterion impact level to corresponding criterion
influence. Sum of all criteria gives us Technology adoption rate.
Method
List
Discuss
Refine
Select Criteria
Selection
• Literature inspiration
• 5 brainstorming sessions 2-3 people within Company
• Expert interview
• Frequent feedback within company and ETH network
Likert Scale:
Criteria selection
validation within Emerald
• Scale 1 (Lowest)-10(Highest)
• Industry experts
• Academia Experts
Evaluation of Criteria
impact level
• 6 areas of technologies
• Selected by Emerald
Selection of investigated
areas
• +1 – accelerate adoption rate
• -1 – slow down adoption rate
• 0 – no impact
Evaluation of criteria
influence
Technology Adoption Rate excel file
| 15
• Assumption is that criteria
impact level is SAME for all
investigated technologies
Influence on adoption rate is
different for any combination
of technology, customer and
region
Segments selection
From about 40 technology segments in Smart Grid space 6 where selected for evaluation
Selection was based on
• Capital intensity
• Technology maturity
• Relative importance of technology
• Indicated by experts and industry partners
Home automation Energy storage
Cyber Security Data Management
Substation Automation Advanced Metering Infrastructure
Region: USA, California
Customer: Utility
| 16
Criteria Impact Level
| 17
Technology adoption rate: Results
| 18
Technology area Technology adoption rate Capital intensity
Home automation 62.4 Low
Cyber Security 70.5 Low
Substation Automation 58.4 Low
Energy storage -16.2 High
Data Management 70.8 Low
Advanced Metering
Infrastructure
44.3 Low
• Market size and market growth are very important measures
but difficult to find reliable data.
• Capital intensity allows easily to evaluate investment potential
Smart Grid Investment matrix
| 19
Technolo
gy a
doption r
ate
Capital intensity
HighLow
Low
High
Energy storage
Data management
Cyber securityHome automation
Advanced metering infrastructure
Substation automation
Evaluation of the method
| 20
+ Covers important areas of technology adoption
+ Can be used for different industries
+ Takes into account different user habits and specifics of the market
+ Gives simple visual feedback
+ Can be used as check list to facilitate discussions
- Input is subjective
- Applicable to current situation only
- Can take a lot of time
- Complex interactions not taken into account
- Score depends on clear common understanding of definitions
Can be used as quick evaluation method
Most useful to encourage right questions
Recommendations and Conclusions: part 1
Investigate deeper Cyber Security
• Is compulsory in US
• Pushed by regulators, underestimated by Utilities
• Several big players, most others provide services and
customer relations
Look for Black Swan or system innovation in storage
• People really want storage to happen so they will invest anyway
• With proper incentives good solutions can come faster
• Storage management is more interesting at current state
Home automation is getting consumer
• Easier to track, interact and buy
• Smartphone as perfect remote
• Technology is smarter
• Potential for big energy and bill savings
• Smartphones, internet shape applications
| 21
Recommendations and Conclusions part 2
Data management is the biggest buzzword(Big Data)
• Only few vendors have expertise
• Core engine could be open source(Hadoop)
• Privacy and data ownership are big issues
• Most of technology is software based
• Data is not used in most cases
AMI will be everywhere
• Most widely adopted element of smart grid
• Very case specific implementation
• GSM seems as most robust solution for communication
• Enabler for social
• Innovation will be in software and usage
not hardware
| 22
Backup Slides
| 23
Smart Grid technologies
| 24
Smart Grid Patents
| 25
Appendix table 6-69
Region/country/economy 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
World 295 289 295 312 304 277 316 305 350 305 288 384 360 385 378 528
United States 140 153 160 178 160 158 186 174 195 172 162 226 218 248 230 303
EU 40 36 47 42 69 51 48 63 57 42 47 43 45 50 59 81
France 13 10 9 3 15 6 8 9 12 4 9 2 8 5 7 15
Germany 11 7 13 17 19 19 13 20 20 14 14 11 13 20 25 29
Italy 1 1 1 2 3 4 3 3 4 8 7 8 6 4 2 4
Netherlands 0 0 0 2 2 0 1 0 1 2 0 1 0 1 2 0
Sweden 5 8 16 7 22 8 10 17 10 3 6 7 5 5 2 12
United Kingdom 8 9 8 11 8 10 10 10 6 6 1 10 7 5 10 7
All others 2 1 1 1 1 4 4 4 5 5 11 4 6 10 11 15
Japan 93 77 65 59 52 43 54 41 52 42 31 53 40 36 33 66
China 0 0 1 0 0 0 2 0 1 0 1 1 1 4 6 5
Asia-8 4 6 3 9 6 5 9 6 13 10 12 22 20 15 20 24
India 0 1 0 1 0 0 1 1 1 2 1 2 3 2 1 4
South Korea 2 2 1 8 4 3 6 3 5 5 3 14 10 6 14 9
Taiwan 2 3 2 0 1 2 2 1 6 3 8 6 6 7 4 10
All others 0 0 0 0 1 0 0 1 1 0 0 0 1 0 1 1
All others 18 18 19 25 18 20 19 21 33 38 34 40 36 33 30 50
Central Asia and Europe 1 0 0 0 0 1 0 1 1 0 0 0 0 1 1 0
Russia 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0
All others 1 0 0 0 0 1 0 1 1 0 0 0 0 0 0 0
Middle East and North Africa 1 1 1 1 0 1 0 1 2 2 5 6 3 5 5 8
Israel 1 1 1 1 0 1 0 1 2 2 4 6 3 5 5 6
All others 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 2
South and Central America 0 1 0 2 0 0 0 0 3 1 1 1 0 0 1 3
Argentina 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0
Brazil 0 0 0 2 0 0 0 0 1 1 0 0 0 0 0 0
Mexico 0 1 0 0 0 0 0 0 1 0 1 1 0 0 0 3
All others 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0
Sub-Saharan Africa 0 1 0 0 1 0 0 0 0 0 0 0 1 0 1 1
South Africa 0 0 0 0 1 0 0 0 0 0 0 0 1 0 1 0
All others 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1
All others 16 15 18 21 17 18 19 19 27 35 28 33 32 27 22 38
Australia 1 1 1 2 1 2 0 1 3 5 4 4 3 0 2 3
Canada 7 7 8 10 11 5 11 13 15 19 12 19 23 21 14 29
Switzerland 8 7 7 8 2 8 8 4 10 7 9 10 5 5 6 4
All others 0 0 3 2 3 3 1 1 0 4 3 0 1 2 0 2
USPTO patents granted in smart grid technology, by region/country/economy: 1995–2010
EU = European Union; USPTO = U.S. Patent and Trademark Office NOTES: Technologies classified by The Patent BoardTM. Patents fractionally allocated among regions/countries/economies based on proportion of residences of all named inventors. United States includes Puerto Rico. EU includes 27 member countries. China includes Hong Kong and Macau. Detail may not add to total because of rounding or minor discrepancies. See appendix table 6-62 for full list of countries by region. SOURCE: The Patent BoardTM, Proprietary Patent Database, special tabulations (2011). Science and Engineering Indicators 2012
New architecture for electrical grid
| 26
Figure 3: Opportunities for Alternative Architectures for the Electrical Power Industry
Arrangements
Existing Power Grid
Institutional
Structure Regulations on Pollution,
Recoverable Costs
Technology Coal, Nuclear or Oil Fired,
Centrally-Generated &
Transmitted
New Technology Set
New Institutional Set
Alternative Power
Generating
Some Architectures for Electric Energy in the Future:
Opportunities exist to make strides in all areas affecting the electric power industry, as shown in
Figures 3 and 4. On the technological dimension, serious R&D (into to the new types of energy sources,
energy storage, technologies for cost effective customer choice) to support systematic understanding of the
role of transmission providers offers potential. So, too, does the promise of flexibility in power delivery to
facilitate the needs of the competitive supply/demand markets. IT deployment affects all these forces, by
offering new ways of providing products and services under competition, reacting to information
instantaneously. Temporal and locational aspects of demand and supply make this effort particularly
challenging. In what follows we highlight both such challenges and some emerging alternative solutions.
Before we do so, however, a summary of the shortcomings of the existing technologically based
paradigm of today’s power industry is in order. The existing paradigm fails when
a) The new environment is more complex and more complexly linked than in the past;
b) The old regulatory regime fails to address urgent questions that arise;
c) Technological possibilities not hitherto envisioned undercut the old regime; and
d) Former externalities demand attention.
8
Source: jelinek, ilic
Improtant events
Energy Independence and Security Act of 2007
• Smart Grid definition
• Smart grid vision
American Recovery and Reinvestment Act of 2009
• 3.4 billion investment into smart grid technology
The Federal Energy Regulatory Commission (FERC)
• main regulatory body of power industry in USA
The National Institute of Standards and Technology (NIST)
• standards
| 27
Inducement and blocking mechanisms of
innovation
| 28
Sourse: Anna Bergek, PhD thesis
Criteria Impact Level
| 29
8.2
6.57.2 7.3 7
3.5
6
Exis
tin
gIn
frastr
uctu
re
Scala
bili
ty o
fdis
trib
ution
Refe
rence
custo
me
r
incen
tives
Regu
latio
ns
Netw
ork
exte
rnalit
ies
Ca
pital in
ten
sityC
rite
ria i
mp
act
level
Market category
Criteria Impact Level
| 30
6.37.8 8
6.6 6.7
Te
chn
olo
gy
ma
turi
ty
Relia
bili
ty
Ben
efit
Never
be
fore
se
en
fu
nction
alit
y
Inte
rdep
end
ency
of te
chn
olo
gy
Cri
teri
a i
mp
act
level
Product category
6.27.6
5.6
Beh
avio
ral
ch
an
ge
Ris
k a
vers
ion
Hype/P
ublc
ity/P
re
stige
Cri
teri
a i
mp
act
level
People category
Very smart meters
•Smart meter
•Social app
•Interaktive web portal
For utilities
•Cusotmer retention
•Differentiation
•Added value
| 31
Energy efficiency
Consumption feedback
Psicology
Game mechanics
Customer engagement
•Trying to enter area where utilities have
least experianse
•Experienced team with full support from
ETH
•Customers in Switzerland with expansion
in EU
| 32
Nest - not your average boring thermostat
Learns over time that you don`t have to
Remote control
Easy to use
Saves energy and money
Innovation: thermostat as CONSUMER PRODUCT
| 33
Adoptation of major technologies
Source: Harvard Buseiness Review| 34