Technology Roadmap: Smart Grids

AcknowledgementsThis publication was prepared by the InternationalLow-Carbon Energy Technology Platform of theInternational Energy Agency (IEA) in close cooperation with the Energy Technology Policy (ETP)Division. Ingrid Barnsley, Amanda Blank, DavidElzinga and Marie-Laetitia Gourdin are the mainauthors of the report. Ken Fairfax, former DeputyExecutive Director, and Didier Houssin, formerDirector, Sustainable Energy Policy and Technology,provided valuable guidance and input. Thefollowing IEA colleagues also provided importantcontributions: Jean-François Gagné, SimoneLandolina, Luis Munuera and Simon Mueller.In addition, the publication benefited from theanalytical contributions of Alex Murley from RWENpower Renewables Ltd and of EnerNex.The IEA wishes to convey its sincere thanks to theUnited States Department of Energy (US DOE),the Government of the Swiss Federation, andGeneral Electric for their financial support of theproject. A number of workshops were held togather essential inputs for this publication. TheIEA acknowledges the Mexican Ministry of Energy(SENER), the Sustainable Energy Authority of Ireland(SEAI), the Asian Development Bank (ADB) andthe South African National Energy DevelopmentInstitute (SANEDI) for their support for workshopsheld in 2012 and 2013, as well as all of the industry,government, and non-government experts whotook part in those workshops and commented ondrafts of this publication.The authors would also like to thank John Ormistonfor editing the manuscript, as well as the IEAPrinting and Publication Unit (PPU), in particularMuriel Custodio, Astrid Dumond, Angela Gosmann,Therese Walsh and Bertrand Sadin, for theirassistance with layout and editing, as well as LaurenDrake for her assistance while serving as an intern atthe IEA in early 2015.For more information on this document, contact:International Low-Carbon Energy TechnologyPlatformInternational Energy Agency9, rue de la Fédération75739 Paris Cedex 15FranceEmail: TechPlatform@iea.org OECD/IEA, 2015Finally, the IEA would like to thank numerousexperts who provided the authors with informationand/or comments on working drafts: membersof the IEA Committee for Energy Research andTechnology (CERT), members of the InternationalSmart Grid Action Network ImplementingAgreement (ISGAN), Stephen Hall (Universityof Leeds), Colin McKerracher (Bloomberg NewEnergy Finance [BNEF]), Russell Conklin (US DOE/ISGAN), W-T. Paul Wang (Energy and EnvironmentalResources Group, Limited Liability Company/ISGAN), William Jensen Diaz (SENER), RegisHourdouillie (Ericsson), Klaus Kubeczko (AustrianInstitute of Technology/ISGAN), Daisuke Inaba(Japan Ministry of Economy, Trade and Industry),Jon Stromsather (Enel), Aram An (Korea Smart GridInstitute/ISGAN), Paul Hickey (Electricity SupplyBoard [ESB] Networks, Ireland) and Xiaogang Wang(State Grid Corporation of China).4How2Guide for Smart Grids in Distribution Networks

IntroductionAbout technology roadmapsThe ultimate goal of a technology roadmap is tooptimise the deployment of a specific technology orgroup of technologies. A roadmap is simply a strategy,a plan that describes the steps to be taken to achievethe stated and agreed goals on a defined schedule. Ithelps to identify the technical, policy, legal, financial,market and organisational barriers that lie before thesegoals, and the range of known solutions to overcomethem. Roadmaps can be developed for varying levelsof deployment, such as global, national and regional,and can be sector- or technology-specific.The process of developing a roadmap is asimportant as the final document itself: it representsconsensus among the full range of stakeholdersconsulted in its development, who have consideredpotential barriers to deployment, sought earlysolutions and, in some cases, avoided anticipatedissues altogether. The success of a roadmap is basedon early planning and foresight, establishing acommonly “owned” vision, a full understandingof the national challenges and opportunities,the importance of “champions”, commitment tooutcomes by both public and private stakeholders,and ongoing evaluation and reports on theprogress. Ideally, a roadmap is a dynamic documentthat incorporates metrics to facilitate the monitoringof progress towards its stated goals, with theflexibility to be updated as the market evolves.About the How2Guide for SmartGrids in Distribution NetworksThis How2Guide for Smart Grids in DistributionNetworks (Distribution SG H2G) is designedto provide interested stakeholders from bothgovernment and industry with the necessarytools to plan and implement a roadmap for smartgrid deployment in distribution networks, at thenational, regional or municipal level. This guidedraws on the IEA generic roadmap methodologymanual, Energy Technology Roadmaps: A Guide toDevelopment and Implementation (hereinafter theIEA Roadmap Guide),1 which was released in 2010and updated in 2014 (IEA, 2014a). Figure 1 showsthe general process of developing a roadmap asset out in the Roadmap Guide. In addition, the IEAglobal smart grid roadmap, Technology Roadmap:Smart Grids, was released in 2011.21. The Distribution SG H2G is based on the methodologicalapproach to road mapping in the updated version of the IEARoadmap Guide (IEA, 2014a). It envisages four phases of roadmapdevelopment, as does this H2G. It is arguable that a “Phase 0”of developing a roadmap is to secure a high-level commitmentto the overall process. Guaranteeing support for a roadmap,politically, financially and logistically, can be addressed in a“foresight” stage to ensure that the process will carry forwardwith momentum. This could be strategised through initialrepresentations in a steering group and will likely merge withestablishing the stakeholders in Phase 1.2. It is anticipated that an update of the Technology Roadmap: SmartGrids (IEA, 2011) will be released in 2016.Figure 1: Roadmap development processPhase 1:Planning andpreparationExpertjudgmentandconsensus OECD/IEA, 2015Data andanalysisEstablish steeringcommitteePhase 2:VisioningPhase 3:Roadmap developmentConduct seniorlevel visionworkshop toidentify longterm goals andobjectivesConduct expertworkshop(s) toidentify barriersand prioritiseneededtechnologies,policies andtimelinesDevelop energy,environmentaland economicdata to conductbaseline researchAnalyse futurescenarios forenergy andenvironmentAssess potentialcontributions oftechnologies tofuture energy,environmentaland economicgoals1 to 2 months1 to 2 months2 to 6 monthsDetermine scopeand boundariesSelectstakeholdersand expertsDeveloproadmapdocumentConductreview andconsultationcycleswith keystakeholdersRefine andlaunchroadmap2 to 8 monthsPhase 4: Roadmapimplementation,monitoring and revisionConduct expertworkshop(s) tore-assess prioritiesand timelines asprogress and newtrends emergeUpdate roadmapTrack changes inenergy, environmentaland economic factorsas roadmap isimplementedMonitor progressin implementingroadmapRecurring(1 to 5 years)6 to 18 months totalNote: dotted lines indicate optional steps, based on available analytical capabilities and resources.Source: adapted from IEA (2014a), Energy Technology Roadmaps: A Guide to Development and Implementation, OECD/IEA, Paris.Introduction5

The attention on distribution networks has beenchosen (as opposed to both transmission anddistribution [T&D] networks) because smart gridtechnologies are underutilised in this part ofelectricity systems, and because there is a significantopportunity for an accelerated deployment tosupport the overall development and transformationof the electricity system. However, the applicationof smart grid technologies to whole systems meansthere are unavoidable overlaps of some pointsregarding distribution and transmission networks inthis H2G. Some of the examples and figures providedconsider the entire electricity system (includingtransmission, distribution, generation and end use),but still serve to illustrate practical aspects that canbe applied specifically to distribution networks.Recognising that it would be impractical toattempt to cover every aspect of smart gridtechnology in divergent national cases, examplesof common drivers and barriers are discussedin detail throughout. Selected case studies areincluded to illuminate for the reader the wide arrayof technology applications, along with specificexamples of practical issues and solutions.About smart gridsWhat are smart grids and why arethey important?The term “smart grid” is used in many contexts.Although there are numerous definitions, the IEAhas developed a comprehensive description that hassupported the development of this guide and of theIEA smart grid analysis more broadly (Box 1).A grid does not become “smart” in a single step.This happens over time through an evolutionaryprocess. Incremental changes and improvements inthe system will take place gradually, typically overdecades. Figure 2 highlights the need for smartgrids to be approached as a system rather than inBox 1: IEA smart grid definitionA smart grid is an electricity networksystem that uses digital technology to monitorand manage the transport of electricity fromall generation sources to meet the varyingelectricity demands of end users. Such grids areable to co-ordinate the needs and capabilitiesof all generators, grid operators, end usersand electricity market stakeholders in such away that they can optimise asset utilisationand operation and, in the process, minimiseboth costs and environmental impacts whilemaintaining system reliability, resilience andstability.Source: adapted from IEA (2011), Technology Roadmap:Smart Grids, OECD/IEA, Paris.Figure 2: Electricity system evolutionPastPresentTransmissioncontrol centreSystemoperatorFutureDistributioncontrol issioncontrol centreDistributioncontrol gystorage OECD/IEA, ustomerResidentialcustomerElectrical infrastructureCommunicationsSource: IEA (2011), Technology Roadmap: Smart Grids, OECD/IEA, Paris.How2Guide for Smart Grids in Distribution Networks

an isolated fashion, demonstrating ways to identifynear-term needs in a way that does not negativelyimpact long-term requirements. Such an approachemphasises the importance of long-term planningand thus complements the road mapping processoutlined in this guide. Additionally, when utilisedand considered as a system as opposed to singulartechnologies, smart grids can help shift grid systemsto more holistically integrated functioning systems.Broadly, smart grids can offer the following benefits(adapted from US DOE, 2009):zz e nable informed choices about consumption bycustomerszz accommodate all generation and storage optionszz stimulate new products, services and marketszz optimise asset utilisation and operating efficiencyzz p rovide the power quality required for a range ofidentified needszz p rovide resiliency to disturbances, attacks andnatural disasterszz c atalyse sustainable energy infrastructures forcities, regions and countries.Figure 3 is an illustration of the common challengesenergy systems face and the possible benefits thatsmart grids may bring in response. This figureillustrates what a country can expect from theintegration of smart grids into its electricity system; forinstance, how smart grids can address non-technicallosses (including electricity theft) by providing a toolfor tracking distribution demand and forecastingpossible losses, or how smart grids can address peakloads and the variability of renewable energy sourcesby ensuring flexibility of the electricity system.Smart grid technologies can be equally effectiveinfrastructural tools in developed and developingcountries alike, or more generally, in highly connectedgrid systems or less-extended grids. For emerginggrids in developed and developing countries,smart microgrid configurations often operate in an“islanded” mode, with the option of then later beingconnected to regional or national grids. This openspossibilities for distributed generation (DG) and toutilise high-quality renewable energy resources inlocations far from the main grid, while also providingan efficient approach to grid management that offersboth near- and long-term benefits. In areas isolatedfrom national or regional electricity grids, such as inrural settings or in developing countries that havewide gaps in connectivity to a larger grid, smart OECD/IEA, 2015Figure 3: Energy system challenges and the role of smart grids in responseChallengesin changingenergy systemsSmart grid solutionsRenewable anddistributedgenerationBalancinggeneration anddemand, newbusiness modelsLimited generationand grid capacityLoad managementand peak avoidanceAgeing and/orweak infrastructureReliability throughautomatic outageprevention andrestorationCost and emissionsof energy supplyEfficient generation,transmission,distribution andconsumptionRevenue losses,e.g. non-technicallossesFull transparencyon distribution leveland automated losspreventionSource: Siemens (2013), “The smart grid – Constant energy in a world of constant change: Energy meets intelligence”, presentation byMartin Sanne, IEA workshop, Johannesburg, South Africa, 26-28 February 2013.Introduction7

technologies that can utilise variable renewablesand support microgrid infrastructures may alsospur economic and social benefits because of theintroduction of reliable electricity.The diversity of applications and drivers for smartgrid deployment is further illustrated in a surveyanalysis performed by the International SmartGrid Action Network (ISGAN) in 2014 (Figure 4).This figure shows the top six drivers for smart griddeployment as ranked by 17 developed economiesand five developing economies, respectively.The difference in terms of prioritisation of drivers istelling. Indeed, many Organisation for Economic Cooperation and Development (OECD) countries statedduring the expert workshops for this guide thatintegrating renewables into the grid was a key driverfor the deployment of smart grid technology. In suchinstances, distribution automation and control centresystems will be of the greatest relevance. In anothersetting, developing and emerging economy countriesinvolved in IEA expert workshops appeared to bemore driven by the need to improve the quality andreliability of available electricity and to reduce nontechnical losses, such as electricity theft.It is important to note that not all the characteristicsof the deployment of smart grid technologies thatcan be accomplished will necessarily be neededimmediately or at all in a given electricity system.Technologies can be added incrementally as neededor as able, which means that some investmentscan be made in the near term and some can beconsidered for future deployment. Emphasis is bestplaced on determining technologies that meet aneed or address an objective in a way that providesvalue to the system and its stakeholders. In additionto solutions for an immediate, pressing need, giventhe long life time of grid infrastructure, flexibilityshould be maintained to address possible longerterm requirements that may arise in the future.Drawing on analysis of Figure 4, the integration ofdistributed renewable energy resources may quicklymove up the priority agenda for emerging anddeveloping countries as costs for such technologies(e.g. solar photovoltaics [PV]) continue to decrease.Smart grids can tie together multiple stakeholders’objectives, whether they are societal, regulatory,policy, financial or technology objectives. Theability to link these considerations provides thepotential for both opportunities and concerns fordeployment. If deployed properly, smart grids canprovide a broad range of benefits to the concernedstakeholders. By contrast, deployment of a smartgrid system lacking sound planning may result inunexpected barriers and, ultimately, fail to deliverexpected benefits.Figure 4: Top drivers: ISGAN survey analysis of 22 countries17 developed economies5 developing economiesSystem efficiencyimprovementsRenewable energystandards or targetsEnabling new products,services and marketsEnabling customer choiceand participationReliability improvementsSystem efficiencyimprovementsRevenue collection andassurance improvementsRenewable energystandards or targetsOptimising asset utilisationGeneration adequacyReliability improvementsEconomic advantages02040600481216 OECD/IEA, 2015Source: adapted from ISGAN (2014), “Smart grid drivers and technologies by country, economies, and continent,” ISGAN website,www.iea-isgan.org/index.php?r home&c 5/378 (accessed 29 September 2014).8Why focus on smart grids indistribution networks?The deployment of smart grids throughout anentire electricity system is a very large undertakingthat can take many years to carry out. In recentdecades, the introduction of smart technologies inthe transmission system has progressed at a muchfaster pace than that in distribution networks. Toaccelerate the deployment of smart grid technologiesin distribution networks is one intention of this H2Gfor reasons that are outlined below.How2Guide for Smart Grids in Distribution Networks

Distribution networks are crucial: they make upover 90% of the total electricity system networklength (ABS, 2010) and a very large percentage ofall electrical demand and renewable generation isconnected to the distribution networks, trends thatare expected to continue in the future. The resultingsize and complexity of most distribution networksmeans that under the IEA 2DS3 distribution networkinvestments will have to make up between 65% andmore than 80% of all the network investments to2050, depending on the locations analysed.resulting management of the demand on thesystem can greatly optimise the planning andoperation of electricity systems. Figure 5 providesan overview of the total investments needed for asignificant deployment of smart grids globally anddemonstrates the benefits that can be gained frominvesting in smart grid technologies (light blue) ascompared with the initial cost (dark blue).These metrics reinforce the challenge and need fora targeted consideration of distribution networks.Although the cost recovery for distributiongrids under a business-as-usual scenario is fairlystraightforward, the challenge comes into play withincreased DG and demand-side integration goinghand-in-hand with coupling to other energy sectors(e.g. heat or transport). Delivering “smartness” forimproved asset utilisation, operational efficiencyand flexibility are where particular benefitsare seen with regard to distribution grids. Theinvestment needed to establish and maintain adistribution network will be significant, but the3. The IEA ETP 2DS sets the target of cutting energy-relatedCO2 emissions by more than half in 2050 (2009 baseline),and ensuring that these continue to fall thereafter.This does not mean that the transmission grid– either itself or the related stakeholders – shouldbe ignored. The interface between transmissionsystem and distribution system operation is asignificant challenge. This should be addressedby co‑ordinating efforts on all levels in terms ofplanning, road mapping for smart grids and forother energy or infrastructure technologies, andoperation. Transmission system stakeholdersshould be consulted during the road mappingprocess for smart grids in distribution networksto consider and co-ordinate appropriately theimpacts from investments into and modification ofdistribution networks. A targeted examination ofthe distribution network will moderate the size ofthe roadmap effort and provide the necessary focusto enable practical decisions that can be made toyield benefits in this much needed area.Figure 5: Investments needed to upgrade electricity grid infrastructures6USD trillion420-2-4-6-8minmaxOECD AmericasSmart grid benefitminmaxOECD EuropeminmaxOECD Asia OceaniaSmart grid costminmaxChinaDistributionminmaxIndiaTransmission OECD/IEA, 2015Source: IEA (2012), Energy Technology Perspective

Why focus on smart grids in distribution networks? 8 Overview of types of smart grid projects in distribution networks. 9 The roadmap development process. 12 Phase 1: Planning and preparation. 12 Identifying stakeholders for smart grids in distribution systems. 12 Conducting baseline research for smart grid potential. 17 Phase 2: Visioning. 18