INFRASTRUCTURE & GOVERNMENT. Smart Grid in India Overview, Status and Challenges ADVISORY / BPS. Metering India 2008, Mumbai, India.

INFRASTRUCTURE & GOVERNMENT Smart Grid in India Overview, Status and Challenges ADVISORY / BPS Metering India 2008, Mumbai, India 15 October 2008

Presentation Structure 1 Smart Gird: Overview What is Smart Grid? Key Drivers of Smart Grid Why Smart Grid? 2 Smart Gird: Status Technological Advancements Status of Smart Grid - Globally Status of Smart Grid in India 3 Smart Grid: Challenges Barriers to implement Smart Grid Challenges specific to Indian Utilities 2

Presentation Structure 1 Smart Gird: Overview What is Smart Grid? Key Drivers of Smart Grid. Why Smart Grid? 2 Smart Gird: Status Technological Advancements Status of Smart Grid - Globally Status of Smart Grid in India 3 Smart Grid: Challenges Barriers to implement Smart Grid Challenges specific to Indian Utilities 3

What is the Smart Grid? Smart Grid is defined as the application of digital information technology to optimize electrical power generation, delivery and end use Different nomenclatures of Smart Grid exist such as Smart Grid, Intelligent Grid, Intelligent Utility Network etc. which are all based on EPRI s vision for Intelligrid. Key features of a Smart Grid Automated Transmission and Distribution System operating in coordinated and reliable manner Handles emergency situations with self healing actions Has intelligent communication infrastructure Self healing occurs by Fault Detection, Isolation and Restoration (FDIR) of the un-faulted sections Smart Grid is the integration of Electrical Infrastructure with Information and Communication Infrastructure In a conventional power grid, the grid observability is limited up to SCADA end points, which are high voltage or medium voltage substations, whereas in a Smart Grid, it is extended up to the individual end consumers through smart sensors and smart meters with two way communication capabilities While High Voltage transmission network is intelligent to a certain extent, Smart Grid is more about building an intelligent Low Voltage network 4

Some defining functions of a Smart Grid include The grid will be self-healing Sophisticated grid monitors and controls will anticipate and instantly respond to system problems in order to avoid or mitigate power outages and power quality problems The grid will be more secure from physical and cyber threats The grid will support widespread use of distributed generation Deployment of new technology will allow better identification and response to man made or natural disruptions Standardized power and communications interfaces will allow customers to interconnect fuel cells, renewable generation, and other distributed generation on a simple plug and play basis The grid will enable customers to better control the appliances and equipment in their homes and businesses The grid will interconnect with energy management systems in smart buildings to enable customers to manage their energy use and reduce their energy costs The grid will achieve greater throughput, thus lowering power costs Upgraded grid will increase the throughput of the transmission network and optimize power flow. It will reduce waste and maximize use of the lowest-cost generation resources 5

Key drivers of Smart Grid in an upcoming business environment Customer Satisfaction & Expectations Power Quality Aging Workforce Operational Excellence Operational Efficiency Demand Response Supply Reliability Reliability & Quality of Supply SMART GRID Business Environment Renewable Resources Aging Greenhouse Infrastructure Gases these forces are increasing the need for greater network reliability, efficiency, flexibility and observability requiring improved enterprise integration and information transparency 6

Increasing customer expectations are forcing utilities to adopt Smart Grid. In the Past Changing Customer Behavior Now & Evolving Passive Rate Payer High tolerance for outage No choice of supplier Interaction limited to once in month Indifference to climate concerns, fuel type etc. Only buys power Empowered Consumer Low or practically No tolerance for outage Open access provides freedom of choose Connected home with digital appliances Consumers expect utilities to lower GHG emissions Can buy and sell Evidence of changing consumer attitudes established through a survey conducted in the summer of 2007. The survey interviewed almost 100 utility executives and 1900 households and small businesses from the U.S., Germany, Netherlands, England, Japan and Australia. Consumers are awakening to the concept of choice, and they welcome it. Some interesting findings: 83% of those who cannot yet choose their utility provider would welcome that option Roughly two-thirds of the customers that do not yet have renewable power options would like the choice Almost two-thirds are interested in operating their own generation, provided they can sell power back to the utility 7

Smart Grid of the future Changing Grid Behavior 20 th Century Grid 21 st Century Grid Electromechanical One way communication (if any) Built for centralized generation Radial topology Few sensors Prone to failures and blackouts Limited price information Emergency decisions by committee and phone Digital Two-way communications Accommodates distributed generation Network topology Monitors and sensors throughout Adaptive protection and islanding Full price information Decision support systems, predictive reliability Grid 2030 Vision of US calls for the construction of a 21st century electric system that connects everyone to abundant, affordable, clean, efficient, and reliable electric power anytime, anywhere. 8

Building blocks of Smart Grid Regulatory & Market Incentives Environment Conservation Reliability Organizational Capabilities Business Processes Roles & Responsibilities - Skills Technology Supply Side Distributed & Demand-Side Resources Interconnections and Micro-Grids Power Delivery Network Design Protection and Control Strategies Asset Management & Utilization Information Technologies Data Communications Data Management Enterprise Level Integration and Interoperability Intelligent Applications Policy People & Process Technology Regulatory Incentives Organizational Capabilities Business Processes Systems and Data Integration / Interoperability Data Processing, Analysis & Intelligent Applications Grid Design & Data Communications Configuration Intelligent Devices; Metering. Protection, Control & Monitoring Equipment Demand-Side Distributed Generation Automation Technologies 9

Key benefits of Smart Grid Reduced Capital Expenses Reduce per unit capital expenses through increased utilization of the components Slow peak demand growth by using smart meters to implement time-of use tariffs Support distributed generation with remote asset monitoring and control Reduced Operating Expenses Reduce theft and improve revenue collection with automated meter management Avoid emergency maintenance and replacement of assets with remote asset monitoring Improved Reliability More accurately forecast demand to improve real time configuration of the network, allowing components to operate within their actual capabilities Leverage detailed, real time information to prevent blackouts whenever possible, and to keep them as short as possible when they occur Avoid sudden price shocks from unanticipated network failures Improved Business Case for Infrastructure Upgrade Win the approval of regulators by convincing them that prudent investment decisions are being made Defer infrastructure investment by using smart meters to implement time of-use tariffs 10

Witnessing continuous technological advancements Continuous technological advancements led to: Low cost of electronic equipment Multiple Communication Options Earlier: utilities had to rely on self owned communication systems (PLCC, Fiber etc.). Now: shared public digital network (CDMA, GSM, GPRS, internet etc.) can be leveraged for utility applications Advancement in IT and automation technologies faster processors, smart meters, smart sensors, digital relays etc. Areas of Technological Advancements Distributed Resources Power Grid Management Customer Power Management Distributed Generation Interconnection Energy Storage Integration Real Time Monitoring Transmission-distribution Demand Response Automation Communication Networks Smart Meters Smart Buildings/ Equipments Smart Appliances Voltage Regulation there is thus an increasing need for graduating to Smart Grid and there are technologies that can facilitate this transformation 12

Status of Smart Grid Globally Even for advanced utilities in the developed countries, a fully operational Smart Grid is still 3-5 years away Globally, several utilities are implementing Advanced Metering Infrastructure (AMI), which is the first step to Smart Grid. Who is working on it in US? GridWise Alliance The GridWise Alliance aims to lead a national development and deployment effort for innovative smart grid technologies. The Alliance works in coordination with the GridWise Program in the U.S. Department of Energy s (DOE) Office of Electricity and Energy Assurance. Intelligrid Other Efforts This is an effort to develop software architecture for the smart grid undertaken by the Electric Power Research Institute (EPRI). Intelligrid products are already being used by the Long Island Power Authority, Electricite de France and the California Energy Commission. DOE is also undertaking related efforts to accelerate energy storage, superconductivity and other grid technologies. The Power Systems Engineering Research Center joins 13 universities (including Washington State University) in collaborative research aimed at solving grid problems. 13

Grid 2030 Vision of US Vision Statement Grid 2030 energizes a competitive North American marketplace for electricity. It connects everyone to abundant, affordable, clean, efficient, and reliable electric power anytime, anywhere. It provides the best and most secure electric services available in the world. A sample of potential products and services made possible by progress toward the vision 14

Status of Smart Grid in India EHV Grid India can boast of a fairly advanced High Voltage grid compared to many developed countries. However, integration of different systems continues to be an issue. Power system is operated as five regional grids, which are now being interconnected to form a national grid. This system deploys most advanced control systems. However, the real time information collected by the control systems are not available for the power market to operate efficiently. Thus, the grid operating systems and the individual business systems (demand supply forecasting, trading and financial settlement systems) are not integrated. On the Low Voltage side, distribution utilities (mostly state owned) are still grappling with basic challenges of containing network losses, increasing network reliability and quality of supply etc. Some of the utilities, particularly in the metros have implemented automation and IT systems, which again are functioning as independent islands Implementation of automation and IT solutions and its integration is still a far distant away for the Indian utilities. In developing countries utilities which have implemented various automation and IT systems in the last few decades are now struggling to integrate these systems. The same asset has different nomenclature in databases of each application. In India, most distribution utilities have insignificant automation and IT systems and are therefore, in a position to leap-frog straight to Smart Grid technologies through an integrated approach. 15

Barriers to Smart Grid across the World Having established the case for Smart Grids, following are the potential barriers in implementation of the same across the World: Cultural barriers to change Costs of development and implementation High levels of uncertainty Regulatory risk Perceived complexity Risks from Cyber crime Burden of operating and maintaining the solutions Vested interests 17

Certain challenges are specific to the Indian Utilities Monolithic applications, particularly SCADA systems, non-standard and non-normalised data models, rudimentary user interfaces etc. are some of the issues in interconnection of grids. Proprietary standards and protocols adopted by equipment manufacturers (meters, relays, sensors). Financial Viability of Utilities. Regulatory approvals for capital investments Skill gap in utilities for evaluating and adopting appropriate systems, operating, and maintaining the systems 18

Grid 2030 Vision document (US) summarizes the challenges in achieving the vision Overcoming Inertia Attracting Resources Developing Better Technologies Finding Profitable Business Model Addressing Customer & Public Needs Developing Better Public Policies Fragmented industry subject to balkanization Low level of R&D spending Attitudes resistant to change Slow turnover of the capital stock Lack of success in some markets Capital investment Education, training and development of workforce Unobtrusive power lines Lower cost storage Long distance superconducti vity Clean power generation Real-time information systems Advanced composite conductors Monetizing revenue streams Matching rewards to risks Testing Versions Demand-side participation In power markets Workably competitive market design NIMBY Federal-state cooperation Market power of incumbent suppliers Public purpose programs Stable regulatory framework Sustained R&D funding 19

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Presenter s contact details Name: Siddhartha Mathur KPMG Advisory Services Pvt. Ltd. Phone: +91-9811064848 Email: siddharthamathur@kpmg.com www.in.kpmg.com 20