Smart Grids Roadmap - Smart Grid Sherpa

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Box 3. Smart communitiesSeveral concepts are emerging that extend the reach of the smart grids from electricity systems tobroader energy and societal contexts. One of these is the smart community or smart city. A smartcommunity integrates several energy supply and use systems within a given region in an attemptto optimise operation and allow for maximum integration of renewable energy resources – fromlarge-scale wind farm deployments to micro-scale rooftop photovoltaics and residential energymanagement systems.This concept includes existing infrastructure systems, such as electricity, water, transportation, gas,waste and heat, as well as future systems like hydrogen and electric vehicle charging. The goals ofsuch integration through the use of ICT include increased sustainability, security and reliability, aswell as societal benefits such as job creation and better services and reduced capital investment.Smart communities are a logical extension of smart grids from electricity systems to other types ofinfrastructure systems, which are ultimately expected to evolve in this direction.Tailoring smart grids todeveloping countries andemerging economiesWhile advanced countries have well-developedmodern grids, many others have grids that do notoperate consistently over a 24-hour period, andstill others have no electricity infrastructure at all.Developing countries and emerging economiesare often categorised by high growth in electricitydemand, high commercial and technical lossesin a context of rapid economic growth anddevelopment, dense urban populations anddispersed rural populations. These aspects presentboth significant challenges and opportunities.Smart grids can play an important role in thedeployment of new electricity infrastructure indeveloping countries and emerging economiesby enabling more efficient operation and lowercosts. Small “remote” systems – not connected toa centralised electricity infrastructure and initiallyemployed as a cost-effective approach to ruralelectrification – could later be connected easily toa national or regional infrastructure.As a means to access to electricity in sparselypopulated areas, smart grids could enable atransition from simple, one-off approaches toelectrification (e.g. battery- or solar PV-basedhousehold electrification) to community grids thatcan then connect to national and regional grids(Figure 9).Figure 9. Example of developingcountry rural electrificationpathwayBattery based and singlehousehold electrificationMicro/mini-grid, stand-alone gridNational gridRegional interconnectionsKEY POINT: Developing and emergingeconomies can use smart grids to build fromhousehold electrification to communityand regional systems.The deployment stages in Figure 9 requirestandardisation and interoperability to be scaledup to the next level with higher amounts of supplyand demand. Each successive step can increasereliability and the amount of power available ifmanaged in a way that allows a seamless transitionfor the community. Roadmaps and targetedanalysis focusing on developing countries andemerging economies should assess what lessonscan be learned from smart grid demonstrationsand deployments in developed countries.Ultimately, the end point of smart grid deploymentis expected to be similar across the world, but theroutes and time it takes to get there could be quitedifferent (Bazilian, 2011).22 Technology Roadmaps Smart grids© OECD/IEA, 2010
Status of electricity systemmarkets and regulationCurrent regulatory and market systems, both at theretail and wholesale levels, can present obstaclesto demonstration and deployment of smart grids.It is vital that regulatory and market models – suchas those addressing system investment, prices andcustomer participation – evolve as technologiesoffer new options.Some markets allow vertically integrated utilities,which own and operate infrastructure assets acrossthe generation, distribution and transmissionsectors. This ensures that costs and benefits fromthe deployment of technology are shared andmanaged efficiently across the various sectors.Vertically integrated structures also allow the mostappropriate and fully integrated investment anddevelopment for the power system as a whole,rather than just evaluating costs and benefits inone part of the electricity system. It can be difficultfor competitors to enter such markets and competewith incumbent players, which could hinderinnovation and increase prices for consumers.However, the climate for competitiveness dependslargely on whether the market is governed byappropriate regulatory structures.“Unbundling” of the electricity system, whichis intended to allow increased competition,has required entities that operated across theentire system to divide into market-based andregulated units, either functionally by creatingseparated operating teams within companies orlegally by selling companies or creating new onesto separate activities. Market-based activitiestypically include the generation sector and theretail sector (Figure 10). In the generation sector,markets have developed in which generatorssell electricity within a structure defining prices,time frames and other rules. In the retail sector,sometimes the distribution system operator stillretails the electricity to consumers and sometimesnew participants enter the market that sell onlyelectricity services.The introduction of market-based activities throughunbundling has brought many benefits to theelectricity sector, primarily a continued downwardpressure on prices, but such objectives can alsobe met in vertically integrated markets. Varyingdegrees of unbundling exist around the world.Unbundling also makes it difficult to captureboth costs and benefits of various technologydeployments on a system-wide basis – especiallywith respect to smart grids. Smart grid investmentsare likely to be deployed more rapidly in verticallyintegrated utilities where the business case canmore easily be made. In the many areas where this isnot possible, more strategic co-operation betweendistribution system operators and transmissionsystem operators is needed.Figure 10. Vertically integrated and unbundled electricity marketsVertically integratedelectric utilityUnbundled electricity marketGenerationMarket activitiesG1G2GnTransmissionTransmissionRegulated activitiesDistributionDistributionRetailMarket activitiesR1R2RnSource: Enexis, 2010.KEY POINT: The unbundling of electricity markets has introduced benefits and complexityto the electricity sector.Smart grid deployment23© OECD/IEA, 2010
Page 4 and 5: Table of contentsForeword 1Table of
Page 6 and 7: AcknowledgementsThis publication wa
Page 8 and 9: IntroductionThere is a pressing nee
Page 10 and 11: Figure 2. Smart grids can linkelect
Page 12 and 13: Electricity system needs for today
Page 14 and 15: line rating special protection sche
Page 16 and 17: Figure 6. Example of a 24-hour elec
Page 18 and 19: Adequacy concerns introduced by the
Page 20 and 21: cable or telephone), support data t
Page 22 and 23: Table 3 highlights a number of hard
Page 26: Vision for smart grid deployment to
Page 29 and 30: Interpreting results and furtherana
Page 31 and 32: commodities such as oil, gas, coal
Page 33 and 34: operators have made it clear that m
Page 35 and 36: Interoperability Framework for smar
Page 37 and 38: Electricity system and market opera
Page 39 and 40: This roadmap recommends the followi
Page 41 and 42: zzzzHow much time differentiation i
Page 43 and 44: International collaborationThis roa
Page 45 and 46: Conclusion: near-term roadmapaction
Page 47 and 48: GlossaryCritical peak pricing (CPP)
Page 49 and 50: ReferencesBazilian, M. and Welsch,
Page 52: Technology Roadmaps Smart Grids2015

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