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2050204520352040Technology RoadmapSmart Grids

INTERNATIONAL ENERGY AGENCYThe International Energy Agency (IEA), an autonomous agency, was established in November 1974.Its primary mandate was – and is – two-fold: to promote energy security amongst its membercountries through collective response to physical disruptions in oil supply, and provide authoritativeresearch and analysis on ways to ensure reliable, affordable and clean energy for its 28 membercountries and beyond. The IEA carries out a comprehensive programme of energy co-operation amongits member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.The Agency’s aims include the following objectives:n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular,through maintaining effective emergency response capabilities in case of oil supply disruptions.n Promote sustainable energy policies that spur economic growth and environmental protectionin a global context – particularly in terms of reducing greenhouse-gas emissions that contributeto climate change.n Improve transparency of international markets through collection and analysis ofenergy data.n Support global collaboration on energy technology to secure future energy suppliesand mitigate their environmental impact, including through improved energyefficiency and development and deployment of low-carbon technologies.n Find solutions to global energy challenges through engagement anddialogue with non-member countries, industry, internationalorganisations and other stakeholders. OECD/IEA, 2011International Energy Agency9 rue de la Fédération75739 Paris Cedex 15, Francewww.iea.orgIEA member countries:AustraliaAustriaBelgiumCanadaCzech elandItalyJapanKorea (Republic of)LuxembourgNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandTurkeyUnited KingdomUnited StatesPlease note that this publicationis subject to specific restrictionsthat limit its use and distribution.The terms and conditions are availableonline at www.iea.org/about/copyright.aspThe European Commissionalso participates inthe work of the IEA.

ForewordCurrent trends in energy supply and useare patently unsustainable – economically,environmentally and socially. Without decisiveaction, increased fossil fuel demand will heightenconcerns over the security of supplies and energyrelated emissions of carbon dioxide (CO2) will morethan double by 2050. We can and must changeour current path, but this will take an energyrevolution and low-carbon energy technologieswill have a crucial role to play. Energy efficiency,many types of renewable energy, carboncapture and storage, nuclear power and newtransport technologies will all require widespreaddeployment if we are to reach our greenhouse-gasemission goals. Every major country and sectorof the economy must be involved. The task is alsourgent if we are to make sure that investmentdecisions taken now do not saddle us withsub‑optimal technologies in the long term.This roadmap focuses on smart grids – theinfrastructure that enables the delivery of powerfrom generation sources to end-uses to bemonitored and managed in real time. Smart gridsare required to enable the use of a range of lowcarbon technologies, such as variable renewableresources and electric vehicles, and to addresscurrent concerns with the electricity systeminfrastructure, such as meeting peak demand withan ageing infrastructure. Unlike most other lowcarbon energy technologies, smart grids mustbe deployed in both existing systems (which insome cases are over 40 years old) as well as withintotally new systems. Smart grid technologiesmust also be installed with minimum disruptionto the daily operation of the electricity system.These challenges do not detract, however, fromthe opportunity to gain significant benefits fromdeveloping and deploying smart grids.There is a growing awareness of the urgent needto turn political statements and analytical workinto concrete action. To spark this movement, atthe request of the G8, the International EnergyAgency (IEA) is developing a series of roadmapsfor some of the most important technologies.These roadmaps provide solid analytical footingthat enables the international community to moveforward on specific technologies. Each roadmapdevelops a growth path for a particular technologyfrom today to 2050, and identifies technology,financing, policy and public engagementmilestones that need to be achieved to realise thetechnology’s full potential. Roadmaps also includea special focus on technology development anddiffusion to emerging economies. Internationalcollaboration will be critical to achieve these goals.Nevertheless, significant barriers must beovercome in order to deploy smart grids at thescale they are needed. Governments need toestablish clear and consistent policies, regulationsand plans for electricity systems that will allowinnovative investment in smart grids. It will also bevital to gain greater public engagement, and thiswill be helped educating all relevant stakeholders– but especially customers and consumeradvocates – about the need for smart grids andthe benefits they offer. Achieving the vision ofsmartening the grid between now and 2050requires governments, research organisations,industry, the financial sector and internationalorganisations to work together. This roadmapsets out specific steps they need to take over thecoming years to achieve milestones that will allowsmart grids to deliver a clean energy future.To date, much of the of low-carbon technologyanalysis in the energy sector has focused onpower generation and end-use technologies.Nobuo TanakaExecutive Director, IEAERRATAFigure 4, page 11: the values for Africa and Central South America in 2050 have been corrected to 25% and 18% respectively.Page 20: the following paragraph was inserted under the heading “Smart grid demonstration and deployment efforts” following thesecond paragraph and preceding the third paragraph:The Telegestore project, launched in 2001 by ENEL Distribuzione S.p.A. (i.e. prior to the current smart grids stimulus funding) addressesmany of these issues. The project installed 33 million smart meters (including system hardware and software architecture) and automated100 000 distribution substations, while also improving management of the operating workforce and optimising asset management policiesand network investments. The project has resulted in fewer service interruptions, and its EUR 2.1 billion investment has led to actual costsavings of more than EUR 500 million per year. Today an active small and medium scale industry is developing technologies for smart gridsand ENEL is continually enhancing the system by introducing new features, technologies and flexibility. The project clearly demonstrates thevalue of a large-scale, integrated deployment of smart grid technologies to solve existing problems and plan for future needs.Page 21: A row has been added to Table 5 (Italy).This roadmap was prepared in April 2011. It was drafted by the International Energy Agency’s Energy Technology Policy Division.This paper reflects the views of the International Energy Agency (IEA) Secretariat, but does not necessarily reflect those of IEAmember countries. For further information, please contact the author at: david.elzinga@iea.org.Foreword1

Table of contents2Foreword1Table of Contents2Acknowledgements4Key Findings5Introduction6What are smart grids?6Rationale for smart grid technology6Purpose, process and structure of the roadmap8Electricity System Needs for Today and the Future10Future demand and supply10Electricity system considerations13Electricity reliability14Smart Grid Deployment17Smart grid technologies17Smart grid demonstration and deployment efforts20Tailoring smart grids to developing countries and emerging economies22Status of electricity system markets and regulation23Vision for Smart Grid Deployment to 205024Regional analysis and impacts for deployment24Quantification of peak demand and the impact of smart grids24Regional scenarios for deployment to 205026Smart grid CO2 emissions reduction estimates to 205027Estimating smart grid investment costs and operating savings27Technology Development: Actions and Milestones30Development and demonstration30Standards31Policy and Regulatory Framework: Actions and Milestones34Generation, transmission and distribution34Smart grid, smart consumer policies36Building consensus on smart grid deployment40International Collaboration41Expand existing international collaboration efforts41Create new collaborations with other electricity system technology areas41Smart grid collaboration and developing countries42Conclusion: Near-term Roadmap Actions for Stakeholders43Summary of actions led by stakeholders43Glossary45References47List of Relevant Websites48Technology RoadmapsSmart grids

List of Figures1. Smarter electricity systems62. Smart grids can link electricity system stakeholder objectives83. Electricity consumption growth 2007-50 (ETP BLUE Map Scenario)104. Portion of variable generation of electricity by region (ETP BLUE Map Scenario)115. Deployment of electric vehicles and plug-in hybrid electric vehicles126. Example of a 24-hour electricity system demand curve on several dates over the year147. Transmission links between Nordic countries158. Smart grid technology areas179. Example of developing country rural electrification pathway2210. Vertically integrated and unbundled electricity markets2311. Regional smart grids analysis structure2412. OECD North America EV deployment impact on peak demand2513. Regional CO2 emissions reduction from smart grid deployment2814. Smart grid product providers33List of Tables1. Characteristics of smart grids72. Workshop contributions to the Smart Grids Roadmap83. Smart grid technologies194. Maturity levels and development trends of smart grid technologies205. Select national smart grid deployment efforts216. Modelling scenarios for SGMIN and SGMAX257. Increase in electricity demand over 2010 values for SGMIN and SGMAX scenarios268. Increase in peak demand over 2010 values for SGMIN and SGMAX scenarios269. Electricity sector focus for ECG IA's42List of Boxes1. Energy Technology Perspectives scenario descriptions102. Electricity system flexibility153. Smart communities22Table of contents3

AcknowledgementsThis publication was prepared by the InternationalEnergy Agency’s Energy Technology PolicyDivision. Bo Diczfalusy, Director of the Directorateof Sustainable Energy Policy and Technology, andPeter Taylor, Head of the Energy Technology PolicyDivision, provided important guidance and input.Tom Kerr, co-ordinator of the Energy TechnologyRoadmaps project, provided invaluable leadershipand inspiration throughout the development ofthe roadmap. David Elzinga was the lead authorfor this roadmap. Steve Heinen also providedsignificant input and support. Many other IEAcolleagues have provided important contributions,in particular Seul-Ki Kim (with the support of theKorean Ministry of Knowledge and Economy),Yuichi Ikeda, Grayson Heffner, Hugo Chandler,Marilyn Smith, Uwe Remme, Lew Fulton, HiroyukiKaneko, Stefanie Held, Mary Harries Magnussonand Catherine Smith.The volunteers of the smart grids roadmapsadvisory committee have provided guidance overthe course of its development: Guido Bartelsof IBM; David Mohler of Duke Energy and themembers of the e8 technology group on smartgrids; Joris Knigge of Enexis; Laurent Schmitt ofAlstom Power; Michele de Nigris of Ricerca sulSistema Energetico and the Electricity NetworksAnalysis and R&D IEA Implementing Agreement;Hans Nilsson of the Demand Side Management IEAImplementing Agreement; Henriette Nesheim ofthe Norwegian Ministry of Petroleum and Energy;Eric Lightner of the US Department of Energy;and Bartosz Wojszczyk of General Electric. DavidBeauvais of Natural Resources Canada contributedto the development of the smart grid technologies4sections and George Arnold of the National Instituteof Standards and Technology (NIST) contributedto the section on standards. The roadmap wasedited by Andrew Johnston of Language Aid. MurielCustodio and Bertrand Sadin of the IEA providedlayout and graphical design support.This work was guided by the IEA Committee onEnergy Research and Technology. Its membershosted one of the roadmap workshops andprovided important reviews and comments thathelped to improve the document. A number of IEAImplementing Agreement members, as part of theElectricity Co-ordination Group, provided valuablecomments and suggestions. We want to thankthe Norwegian Ministry of Petroleum and Energyand the Japanese Ministry of Economy, Trade andIndustry for support and guidance to the roadmap.Finally, this roadmap would not be effectivewithout all of the comments and supportreceived from the industry, government and nongovernment experts who attended meetings,reviewed and commented on drafts, and providedoverall guidance and support. The authors wish tothank all of those who commented who cannot benamed individually.For more information on this document, contact:David Elzinga, IEA SecretariatTel. 33 1 40 57 66 93Email: david.elzinga@iea.orgSteve Heinen, IEA SecretariatTel. 33 1 40 57 66 82Email: steve.heinen@iea.orgTechnology RoadmapsSmart grids

Key findings Thedevelopment of smart grids is essential ifthe global community is to achieve shared goalsfor energy security, economic developmentand climate change mitigation. Smart gridsenable increased demand response andenergy efficiency, integration of variablerenewable energy resources and electric vehiclerecharging services, while reducing peakdemand and stabilising the electricity system. Thephysical and institutional complexity ofelectricity systems makes it unlikely that themarket alone will implement smart grids on thescale that is needed. Governments, the privatesector, and consumer and environmentaladvocacy groups must work together to defineelectricity system needs and determine smartgrid solutions. Rapidexpansion of smart grids is hinderedby a tendency on the part of governmentsto shy away from taking ownership ofand responsibility for actively evolving ordeveloping new electricity system regulations,policy and technology. These trends have led toa diffusion of roles and responsibilities amonggovernment and industry actors, and havereduced overall expenditure on technologydevelopment and demonstration, and policydevelopment. The result has been slowprogress on a number of regional smart gridpilot projects that are needed. The“smartening” of grids is already happening;it is not a one-time event. However, large-scale,system-wide demonstrations are urgentlyneeded to determine solutions that can bedeployed at full scale, integrating the full set ofsmart grid technologies with existing electricityinfrastructure. Large-scalepilot projects are urgentlyneeded in all world regions to test variousbusiness models and then adapt them to thelocal circumstances. Countries and regionswill use smart grids for different purposes;emerging economies may leapfrog directly tosmart electricity infrastructure, while OECDcountries are already investing in incrementalimprovements to existing grids and small-scalepilot projects. Currentregulatory and market systems canhinder demonstration and deployment of smartgrids. Regulatory and market models – suchas those addressing system investment, pricesand customer participation – must evolveas technologies offer new options over thecourse of long-term, incremental smart griddeployment. Regulatorsand consumer advocates needto engage in system demonstration anddeployment to ensure that customers benefitfrom smart grids. Building awareness andseeking consensus on the value of smartgrids must be a priority, with energy utilitiesand regulators having a key role in justifyinginvestments. Greaterinternational collaboration is neededto share experiences with pilot programmes,to leverage national investments in technologydevelopment, and to develop common smartgrid technology standards that optimiseand accelerate technology developmentand deployment while reducing costs for allstakeholders. Peakdemand will increase between 2010 and2050 in all regions. Smart grids deploymentcould reduce projected peak demand increasesby 13% to 24% over this frame for the fourregions analysed in this roadmap. Smartgrids can provide significant benefitsto developing countries. Capacity building,targeted analysis and roadmaps – createdcollaboratively with developed and developingcountries – are required to determine specificneeds and solutions in technology andregulation.Key findings5

IntroductionThere is a pressing need to accelerate thedevelopment of low-carbon energy technologiesin order to address the global challenges ofenergy security, climate change and economicgrowth. Smart grids are particularly importantas they enable several other low-carbon energytechnologies, including electric vehicles, variablerenewable energy sources and demand response.This roadmap provides a consensus view on thecurrent status of smart grid technologies, and mapsout a global path for expanded use of smart grids,together with milestones and recommendations foraction for technology and policy development.What are smart grids?A smart grid is an electricity network that usesdigital and other advanced technologies tomonitor and manage the transport of electricityfrom all generation sources to meet the varyingelectricity demands of end-users. Smart gridsco-ordinate the needs and capabilities of allgenerators, grid operators, end-users andelectricity market stakeholders to operate all partsof the system as efficiently as possible, minimisingcosts and environmental impacts while maximisingsystem reliability, resilience and stability.For the purposes of this roadmap, smart gridsinclude electricity networks (transmissionand distribution systems) and interfaces withgeneration, storage and end-users.1 Whilemany regions have already begun to “smarten”their electricity system, all regions will requiresignificant additional investment and planningto achieve a smarter grid. Smart grids are anevolving set of technologies that will be deployedat different rates in a variety of settings aroundthe world, depending on local commercialattractiveness, compatibility with existingtechnologies, regulatory developments andinvestment frameworks. Figure 1 demonstrates theevolutionary character of smart grids.Rationale for smart gridtechnologyThe world’s electricity systems face a numberof challenges, including ageing infrastructure,continued growth in demand, the integration ofincreasing numbers of variable renewable energysources and electric vehicles, the need to improvethe security of supply and the need to lower carbonemissions. Smart grid technologies offer ways notjust to meet these challenges but also to develop acleaner energy supply that is more energy efficient,more affordable and more sustainable.1 Smart grid concepts can be applied to a range of commodityinfrastructures, including water, gas, electricity and hydrogen.This roadmap focuses solely on electricity system concepts.Figure 1. Smarter electricity systemsPastPresentFutureTransmissioncontrol centreSystemoperatorDistributioncontrol issioncontrol centreDistributioncontrol ialcustomerResidentialcustomerElectrical infrastructureCommunicationsSource: Unless otherwise indicated, all material derives from IEA data and analysis.KEY POINT: The “smartening” of the electricity system is an evolutionary process, not a one-time event.6Technology RoadmapsSmart grids

These challenges must also be addressed withregard to each region’s unique technical, financialand commercial regulatory environment. Given thehighly regulated nature of the electricity system,proponents of smart grids must ensure that theyengage with all stakeholders, including equipmentmanufacturers, system operators, consumeradvocates and consumers, to develop tailoredtechnical, financial and regulatory solutions thatenable the potential of smart grids (Figure 2).The main characteristics of smart grids areexplained in Table 1.Table 1. Characteristics of smart gridsCharacteristicDescriptionEnables informedparticipation bycustomersConsumers help balance supply and demand, and ensure reliability by modifyingthe way they use and purchase electricity. These modifications come as a result ofconsumers having choices that motivate different purchasing patterns and behaviour.These choices involve new technologies, new information about their electricity use, andnew forms of electricity pricing and incentives.Accommodates allgeneration andstorage optionsA smart grid accommodates not only large, centralised power plants, but also thegrowing array of customer-sited distributed energy resources. Integration of theseresources – including renewables, small-scale combined heat and power, and energystorage – will increase rapidly all along the value chain, from suppliers to marketers tocustomers.Enables newproducts, servicesand marketsCorrectly designed and operated markets efficiently create an opportunity forconsumers to choose among competing services. Some of the independent gridvariables that must be explicitly managed are energy, capacity, location, time, rate ofchange and quality. Markets can play a major role in the management of these variables.Regulators, owners/operators and consumers need the flexibility to modify the rules ofbusiness to suit operating and market conditions.Not all commercial enterprises, and certainly not all residential customers, need theProvides the power same quality of power. A smart grid supplies varying grades (and prices) of power.quality for the range The cost of premium power-quality features can be included in the electrical servicecontract. Advanced control methods monitor essential components, enabling rapidof needsdiagnosis and solutions to events that impact power quality, such as lightning,switching surges, line faults and harmonic sources.Optimises assetutilisation andoperating efficiencyA smart grid applies the latest technologies to optimise the use of its assets. Forexample, optimised capacity can be attainable with dynamic ratings, which allowassets to be used at greater loads by continuously sensing and rating their capacities.Maintenance efficiency can be optimised with condition-based maintenance, whichsignals the need for equipment maintenance at precisely the right time. System-controldevices can be adjusted to reduce losses and eliminate congestion. Operating efficiencyincreases when selecting the least-cost energy-delivery system available through thesetypes of system-control devices.Provides resiliency to Resiliency refers to the ability of a system to react to unexpected events by isolatingdisturbances, attacks problematic elements while the rest of the system is restored to normal operation. Theseand natural disasters self-healing actions result in reduced interruption of service to consumers and helpservice providers better manage the delivery infrastructure.Source: Adapted from DOE, 2009.Introduction7

Figure 2. Smart grids can linkelectricity system stakeholderobjectivesSocietalRegulatoryand policyFinancialTechnologyPurpose, process andstructure of the roadmapTo provide guidance to government and industrystakeholders on the technology pathways neededto achieve energy security, economic growth andenvironmental goals, the IEA is developing a seriesof global low-carbon energy roadmaps covering arange of technologies. The roadmaps are guidedby the IEA Energy Technology Perspectives BLUE MapScenario, which aims to achieve a 50% reductionin energy-related CO2 emissions by 2050. Eachroadmap represents international consensus onmilestones for technology development, legal andregulatory needs, investment requirements, publicengagement and outreach, and internationalcollaboration.The Smart Grid Roadmap aims to:zz I ncrease understanding among a range ofstakeholders of the nature, function, costs andbenefits of smart grids.zz Identify the most important actions required toKEY POINT: Smart grids providean opportunity to link societal, financial,technology and regulatory and policy objectives.develop smart grid technologies and policies thathelp to attain global energy and climate goals.zz D evelop pathways to follow and milestones totarget based on regional conditions.The roadmap was compiled with the help ofcontributions from a wide range of interestedparties, including electricity utilities, regulators,technology and solution providers, consumerTable 2. Workshop contributions to the Smart Grids RoadmapDateLocationEventWorkshop topic28 April 2010ParisENARD/IEA Joint WorkshopElectricity Networks: A Key Enabler ofSustainable Energy Policy20-21 May 2010ParisJoint GIVAR/Smart GridRoadmap WorkshopDefining Smart Grid Technologies andRD&D needs8-9 June 2010ParisCERT MeetingRole of Government and Private Sectorin Smart Grid RD&D23-24 September 2010 Washington, DC GridWise Global ForumSmart Grid – Smart Customer Policy28-29 September 2010 MadridENARD/IEA Joint WorkshopFinancing the Smart GridKorea Smart Grid WeekDeveloping Country and EmergingEconomy Smart Grid Perspectives8-9 November 2010Jeju Island,KoreaNotes: ENARD refers to the IEA implementing agreement on Electricity Networks Analysis, R&D, (www.iea-enard.org). The ENARD/IEAworkshops are part of the implementing agreement work plan and, although highly complementary, not directly tied to the smart gridroadmap initiative.The IEA Grid Integration of Variable Renewables (GIVAR) project is a multi-year initiative that is assessing and quantifying approachesto large-scale deployment of variable renewable generation technologies.CERT refers to the IEA Committee on Energy Research and Technology.8Technology RoadmapsSmart grids

advocates, finance experts and governmentinstitutions. In parallel with its analysis andmodelling, the Smart Grid Roadmap teamhas hosted and participated in several expertworkshops (Table 2).This roadmap does not attempt to cover everyaspect of smart grids and should be regarded as awork in progress. As global analysis improves, newdata will provide the basis for updated scenarios andassumptions. More important, as the technology,market and regulatory environments evolve,additional tasks will come to light. The broad natureof smart grids requires significant collaborationwith other technology areas, including transportelectrification, energy storage, generation andend-use. The roadmap provides links to furtherbackground information and reading.The roadmap is organised into seven sections.The first looks at the challenges facing grids todayand the benefits that smart grids offer, includingelectricity reliability. The second describes thecurrent deployment status of smart grids, alongwith smart grid costs and savings and marketand regulatory considerations. The third sectionoutlines a vision for smart grid deployment to2050 based on the Energy Technology Perspectives2010 (ETP 2010) BLUE Map Scenario, including ananalysis of regional needs. The fourth and fifthsections examine smart grid technologies andpolicies, and propose actions and milestones fortheir development and implementation. The sixthsection discusses current and future internationalcollaboration, while the seventh section presentsan action plan and identifies the next steps thatneed to be taken.Introduction9

Electricity system needs for today and the futureBox 1: Energy Technology Perspectivesscenario descriptionsThe ETP BLUE Map Scenario aims to ensurethat global energy-related CO2 emissions arereduced to half their current levels by 2050.This scenario examines ways in which theintroduction of existing and new low-carbontechnologies might achieve this at leastcost, while also bringing energy securitybenefits in terms of reduced dependenceon oil and gas, and health benefits as airpollutant emissions are reduced. The BLUEMap Scenario is consistent with a long-termglobal rise in temperatures of 2oC to 3oC,but only if the reduction in energy-relatedCO2 emissions is combined with deep cutsin other greenhouse-gas emissions. TheBaseline Scenario considers the business-asusual case, not reducing emission levels toany predetermined goal by 2050. The BLUEMap and Baseline Scenarios are based onthe same macroeconomic assumptions.Over the last few decades, generation and networktechnology deployment, market and regulatorystructures, and the volume and use of electricityhave changed significantly. This transformationhas largely been managed successfully, but ageinginfrastructures mean that further changes couldaffect system stability, reliability and security.Smart grid technologies provide a range ofsolutions that can be tailored to the specific needsof each region. The primary global system trendsand the role of smart grids are illustrated in thefollowing sections using the Energy TechnologyPerspectives (ETP) Baseline and BLUE Map Scenariosdeveloped by the IEA to estimate future technologydeployment and demand (Box 1).Future demand and supplyIncreased consumptionof electricityElectricity is the fastest-growing component of totalglobal energy demand, with consumption expectedto increase by over 150% under the ETP 2010Baseline Scenario and over 115% between 2007and 2050 under the BLUE Map Scenario (IEA, 2010).Figure 3. Electricity consumption growth 2007-50 (BLUE Map Scenario)600%500%400%300%200%100%0%OECD North OECDAmerica rAfrica Central and MiddleSouth America Eastdeveloping Asia

emissions reduction from smart grid deployment 28 14. Smart grid product providers 33 List of Tables 1. Characteristics of smart grids 7 2. Workshop contributions to the Smart Grids Roadmap 8 3. Smart grid technologies 19 4. Maturity levels and development trends of smart grid technologies 20 5. Select national smart grid deployment efforts 21 6.

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