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EXECUTIVE INSIGHTS

European Smart Grid Challenges


Energy industry leaders share their thoughts on the ongoing transformation of electricity systems.

Welcome to the Ventyx Smart Grid e-Book Addressing European Smart Grid Challenges.
The term Smart Grid has been widely used for several years, but nevertheless its meaning is still disputed within the energy industry. However, there seems to be consensus on some of its key elements: Information and communication technologies will play a more important role in power systems of the future;
Mr. Kreusel is Head of ABBs Smart Grid Industry Sector Initiative and is a member of the European Technology Platform for Electricity Networks of the Future, also known as SmartGrids ETP.

VENTYX AND ABB:


Ventyx, an ABB company, is the leading enterprise software and service partner for the worlds asset intensive industries. We are involved in a host of smart grid projects globally with our ABB colleagues in which we harness our extensive IT experience and ABBs OT know-how to enable transformational productivity improvements and more responsive and agile networks. To find out more: +44 (0) 1483 794080 go-emeia@ventyx.com www.ventyx.com

Integration of highly distributed resources both on the generation and on consumption sides will be key to Smart Grids; Gathering and analyzing an increased volume of data from the grid will be necessary; Ongoing transformation of the electricity systems, caused by various drivers such as new renewables, consumer participation, electric mobility and the challenge to work more efficiently with ageing infrastructure will necessitate a fundamental change in the way these systems are planned, maintained and operated. In particular, because of this last point, we are strongly convinced that developing and shaping the electricity systems of the future requires an intensive collaboration with energy stakeholders, in particular with our customers. We are doing so in numerous Smart Grid pilot projects all over the world by addressing the different regional requirements and Smart Grid drivers. In addition, weve reached out to energy industry experts and asked them about various aspects of the ongoing transformation of electricity systems in order to get insight into the challenges that lie ahead. Their answers, which we have shared with you in this e-Book, are a valuable contribution to this area of ongoing research. I hope it will provide some useful insights for you!

Sincerely, Jochen Kreusel Head of Smart Grid Industry Sector Initiative, ABB

ROLE OF TECHNOLOGY

Roberta Bigliani, IDC Energy Insights

What is the importance of IT/OT integration for smart grid projects?

Mrs. Bigliani has been with IDC Energy Insights since 2007 and is responsible for EMEA research-based advisory and consulting services, which provide full coverage of the energy industry. Her areas of expertise include business and IT issues relevant to the utilities and oil and gas business, as well as stainability, energy efficiency and clean technologies.

The bridging of IT and OT is more than just a step forward; it is the only way forward. While this bridging of data needs to happen regardless of the creation of smart grids, smart grids can only really exist in their truest sense when IT and OT are linked. The leveraging of data within organizations is critical for helping to make informed operational, tactical and strategic decisions. This data needs to be extracted from both the process layer as well as the asset layer and must be shared across business functions. Operational and IT departments will need to work more closely moving forward to ensure the necessary collaboration to make this a reality. There is the belief in the energy industry that Big Data will only come with the implementation of smart meters, but in fact, Big Data is already here but has not yet been harnessed to its full potential. And the challenge with Big Data is not, as many think, the sheer quantity of data but rather the efficient application of business intelligence to extract meaningful information.
ROBERTA BIGLIANI | IDC ENERGY INSIGHTS

MAIN SMART GRID CHALLENGES

Aurelio Blanquet, Energias de Portugal (EDP)

What are the main challenges of securing and delivering smart grid technologies in the EU?

Mr. Blanquet has been working at EDP as Director for Automation and Telecontrol since 2007. He is responsible for Automation, Telecommunications, SCADA/DMS and Critical OT Cyber Security strategies. In addition, he worked as Project Leader for the development of EDPs InovGrid project and is now member of the Steering Committee.

In order to create Smart Grids, DSOs and manufacturers require better standardization. This does not mean that a greater number of standards are required, but rather a more timely standardization process and adequate standards are needed. These standards must provide forward looking Smart Grid concept clarity, technical interoperability and span both the domains of electricity and telecommunications to allow for the synergies necessary to realize true smart grids. Besides regulation, economic levers also play an important role in the uptake of smart grid technologies as the business case for smart grid investments are very different from country to country, even within the EU: the depreciation time for smart meters is still closer to traditional metering systems instead of ICT devices, with higher risk of obsolescence, namely for the communications module. Besides that, Portugal, for example, has an average bill per household per month of 40 Euros. When compared to one of the Nordic countries where the average household bill is around 100 Euros or more per month, how much investment in innovation can realistically be driven forward into a SG platform to incentivize energy efficiency through HAN M2M home automation and better customer engagement? The current international economic climate also affects the uptake of DER which could be used to defer generation and network investments. And a huge increase in microgeneration would require DSOs to move away from a fit and forget network reinforcement approach, which is no longer a viable option, and get them to an Active Distribution System Management solution, a more effective and carbon friendly tool for smooth integration of distributed generation, also applicable to electrical vehicles and other loads.
AURELIO BLANQUET | EDP

HARMONIZATION OF EU SMART GRIDS

Ronnie Belmans, Katholieke Universiteit Leuven (KU Leuven)

What needs to be done to get EU DNOs on a level playing field in terms of smart grid harmonization?

Professor Belmans has been working at KU Leuven as professor since 1995. In addition, he is an Honorary Chairman on the Board of Directors at Elia and Executive Director at Global Smart Grid Federation.

The current distributed generation connection process is often complex and convoluted, making it difficult for customers, particularly domestic customers, to install renewables. There is, in addition, an over emphasis on pricing per kWh. This should be replaced by dynamic meter data which would provide more accurate figures. The link with consumers should mirror the operation of mobile network services in order for distributed generation to be able to move freely within the EU. When they cross borders they should automatically be charged the local partner operator fees, similar to mobile phone roaming charges. They should continue to have the same level of service, rules of engagement and straightforward billing system regardless of their location. This is particularly relevant to electric vehicles as the charging infrastructure and payment mechanisms vary from country to country, and even from city to city, thus weakening the business case for the purchase of electric vehicles. Therefore DNOs should endeavor to do what they can to allow for distributed generation interoperability, namely by standardizing the distributed generation connection process to make it easier for those who wish to get involved in sustainable generation.

RONNIE BELMANS | KU LEUVEN

LEARNING FROM OTHERS

David MacLeman, Scottish and Southern Energy Power Distribution (SSEPD)

What can European DNOs, who are facing ever increasing distributed generation connection requests, learn from SSEPDs Orkney Smart Grid project?

Mr. MacLeman is the R&D Manager for Scottish & Southern Energy Power Distribution. With over 30 years experience in the industry, David has held various positions of responsibility within SSEPD and is presently responsible for delivering SSEPDs transmission and distribution network R&D activities. This covers a wide range of projects and David has managed the delivery of innovative projects such as the Orkney Active Network Management scheme.

SSEPD has operated a smart grid on Orkney, Scotland since 2009. It has done this through the implementation of an active network management system that allows for an increase in renewable generation connections in return for curtailment of generation output when the local distribution network is approaching its limits. Other DNOs can replicate the success of the Orkney Smart Grid project by: Clearly defining the problem theyre trying to solve. Quantifying the true cost of smart versus traditional reinforcement in order to make the business case for smarter alternatives. Understanding the communications requirements for the smart grid technology including level of service, then selecting an appropriate solution and provider. Early engagement with external stakeholders including sharing the projects goals and roadmap. Getting generator buy-in by taking into account their business models and using these to inform the curtailment solution chosen. Not forgetting the fundamentals. First and foremost, the job of a DNO is to keep the lights on and to do so safely. Active network management has to be designed, on fail safe principles, and implemented to operate within this context. Keeping in mind that there is a physical limit to curtailment. A point will be reached where traditional reinforcement can no longer be deferred. When rolling the project out to the rest of the business, ensuring the different departments involved receive appropriate training.

DAVID MACLEMAN | SSEPD

TSOS AND DSOS WORKING TOGETHER

Philip Johnson, National Grid, UK

How will the relationship between TSO, DNOs and suppliers evolve as we move towards a smart grid future?

Mr. Johnson has been working for National Grid since 1985 and is responsible for developing the strategy for how the electricity transmission system will be operated in 2020 with high levels of wind generation, increased interconnection with Europe and increased levels of demand side response.

Although many consider the implementation of SMART metering as a step towards distribution system balancing, it can also be perceived simply as a way to more efficiently utilise distribution network capacity and match electrical demand to renewable generation. Smart domestic appliances, electric vehicle charging and heat pumps will be essential to this time shifting of demand, as they allow for added flexibility. However, even though the future demand profile may be less peaky, the level of overall volume of demand is anticipated to increase over time as the generation of electricity becomes less CO2 intensive and transport and heat transition to increased electrification. Suppliers currently provide their demand forecasts to the TSO as part of the day ahead notification process to feed in to an overall system forecast. Up to now this information has been of limited use as the TSO has found that using its own algorithms to produce a single national forecast as opposed to amalgamating the Supplier forecasts provides a more accurate picture of what demand is likely to be the next day (furthermore, the single national forecast is able to be updated with shorter term weather forecasts during the day). However, if Suppliers start to implement dynamic time of use tariffs so as to match demand to renewable output then the importance of forecasts provided by the Suppliers will become far more useful to the TSO in determining a more dynamic national demand profile. In contrast the variations in customer demand profiles required by DNOs to ensure the distribution network is not overloaded), for example limiting demand to the capacity of the local network, is likely to be a similar action day on day (albeit with seasonal variations). This will be seen as regular patterns in the demand and so will be able to be modeled implicitly in the demand forecasting undertaken by the TSO. Therefore at the moment it is not foreseen that there will be a dependence on the DNOs to provide demand forecast data in operational timescales.
PHILIP JOHNSON | NATIONAL GRID, UK

20-20-20 GOAL CHALLENGES

Rick Nicholson, Ventyx, an ABB company

Conclusion

The interviews featured in this Smart Grid E-Book, we believe, highlight the key challenges faced by the European energy sector as it works towards achieving its 20-2020 goals. The thought leaders interviewed have provided insightful perspectives based on their respective areas of expertise and their deep industry knowledge. The main points to emerge from this engagement are the need for industry-wide standardization, integrate IT and OT systems and the ongoing transformation of the electricity system. Information and communication technologies will play a more important role in power systems of the future. For this to happen it is necessary with an industrywide standardization as was very well pointed out. Finally the amounts of data available will necessitate a structural approach and the use of advanced business intelligence tools to move the Smart Grids into the next generation.. The people at Ventyx, the leading software company for energy solutions, are well positioned to supply solutions to many of these challenges and has a proven track record from Smart Grid pilots in many European countries as well as globally. We hope that you found this e-Book to be as thought provoking and informative as we have.
RICK NICHOLSON | VENTYX, AN ABB COMPANY

Mr. Nicholson is the Vice President of Transmission and Distribution Solutions at Ventyx, an ABB company. He has over 30 years of experience with the intersection of business and technology in the energy industry. He is a recognized and highly respected expert in the alignment of business and technology strategies and the successful deployment of technology to enable business process improvement.