GE Smart Grid Overview

2/8/2010 09:00
GE Smart Grid Technologies Build

Sustainable 21st Century Cities

LONDON--Monday, February 08, 2010-- Technology available today can be employed to create viable,
sustainable, smart cities. That will be the message that Bob Gilligan, vice presidenttransmission and
distribution for GE Energy Services, will deliver to delegates at the Chatham House conference, The
Future of Cities.

More than 100 representatives, technology innovators, academia and business leaders from cities
throughout the world are meeting in London this week to discuss the challenges faced by cities that are
growing at record rates. Mr. Gilligans Feb. 9 keynote address will kick off a day of discussion on city
infrastructure.

With cities using 75% of the worlds energy and global energy consumption projected to triple by 2050,
the choices we make today will determine whether our population centers become sustainable, livable
communities Gilligan said. The good news is that with a worldwide initiative to increase energy
efficiency, control demand and add renewable generation, we can deliver the solutions to meet the needs
of our growing cities.

As the migration from rural areas to cities continues, GE is already deploying solutions that are enabling
growth while reducing carbon footprints on six continents. GEs smart grid solutions are changing the
ways utilities, governments, businesses and consumers interact with energy.

New GE technology breakthroughs in Hawaii are helping increase the use of wind and solar power on
islands with no domestic source of fossil fuels. Australian consumers are making smarter energy
decisions with information transmitted through WiMAX-connected smart meters. In India, power
interruptions are decreasing and resources are being deployed more efficiently, thanks to GEs outage
management systems and advanced geospatial information systems. Also, Energy Smart Florida is on
track to upgrade infrastructure, increase efficiency and add renewable generation throughout Americas
fourth most populous state.

GE is committed to helping shrink carbon production while increasing the energy capacity and reliability
that growing cities need to thrive, Gilligan said. We already are deploying solutions that are making a
difference today, and we have the resources to help cities everywhere plan and implement a healthier
energy future.

Mr. Gilligans address will outline the challenges, solutions and potential for sustainable energy success
through integrating a two-way network of information-rich, flexible smart grid solutions with the current
infrastructure. Attendees will learn how smart grid upgrades enable a host of citywide benefits, including
increased energy productivity, uncompromised energy security, increased use of renewables such as
wind and solar, increased energy efficiency, lower carbon emissions and the ability to manage and meet
growing demand.

About GE
GE is a diversified global infrastructure, finance and media company that's built to meet essential world
needs. From energy, water, transportation and health to access to money and information, GE serves
customers in more than 100 countries and employs more than 300,000 people worldwide.
GE serves the energy sector by developing and deploying technology that helps make efficient use of
natural resources. With 60,000 global employees and 2009 revenues of $37 billion, GE Energy
www.ge.com/energy is one of the worlds leading suppliers of power generation and energy delivery
technologies. The businesses that comprise GE EnergyGE Power & Water, GE Energy Services and
GE Oil & Gaswork together to provide integrated product and service solutions in all areas of the
energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water,
wind, solar and biogas; and other alternative fuels.

For more information, visit the companys Web site at www.ge.com. GE is imagination at work.

October 25, 2010 12:01 AM Eastern Daylight Time

IEEE Defines Energy Storage Systems for Smart Grid with
Launch of IEEE P2030.2
TM
Working Group
Working Group Addresses Integration and Use of Pivotal Energy Storage Systems
within Electrical Power Systems
PISCATAWAY, N.J.--(BUSINESS WIRE)--IEEE, the world's leading professional association for the
advancement of technology, today announced the launch of the IEEE P2030.2
TM
Working Group (WG).
Tasked with facilitating wide-scale, consistent implementation of energy storage systems, the P2030.2
WG will deliver guidelines for discrete and hybrid energy storage systems that are integrated into the
electric power infrastructure.
Energy storage is a top-level priority for the Smart Grid, given increasing energy demand and the value
storage adds to the functioning of the electric grid and to renewable electric power resources, said Mark
Siira, IEEE P2030.2 WG Chair, Manager, Applied Technology, Kohler Company. With the coming growth
and expansion in energy storage technologies and applications, the work of the P2030.2 WG to establish
an effective strategy for integration into the Smart Grid will be critical.
P2030.2 will build on overall Smart Grid interoperability topics being covered in IEEE Standard P2030
TM
,
the industrys first cross-discipline guideline for smart grid interoperability for the power engineering,
communications and information technology industries. The P2030.2 WG will develop a guideline for
discrete and hybrid energy storage systems that are integrated with the electric power infrastructure,
including end-use applications and loads. The Guide for the Interoperability of Energy Storage Systems
Integrated with the Electric Power Infrastructure will help users achieve greater understanding of energy
storage systems by defining technical characteristics. It will also illustrate how discrete and hybrid
systems may be successfully integrated with and used compatibly as part of the electric power
infrastructure.
The standard fills the need for guidance relevant to a knowledge base addressing terminology, functional
performance, evaluation criteria, operations, testing, and the application of engineering principles for
energy storage systems integrated with electric power architectures and systems.
Upon launching the P2030 Smart Grid Interoperability WG, we knew its work would reveal key focus
areas, such as energy storage systems, which will play fundamental roles in the Smart Grid as it moves
forward, said Dick DeBlasio, P2030 Working Group Chair, Chief Engineer, at the National Renewable
Energy Lab facility of the U.S. Department of Energy, and IEEE Smart Grid liaison to the National Institute
of Standards and Technology (NIST). The IEEE was the first standards development organization to
address Smart Grid interoperability and with its thorough breadth of technology expertise and existing
standards work in energy storage and distributed resources like renewables, is perfectly positioned to
lead efforts in this area.
The P2030.2 WG is a priority extension of work being conducted by the P2030 Smart Grid Interoperability
WG, which will be meeting in Las Vegas, Nevada beginning Tuesday, October 26, 2010. The four-day
gathering is focused on comment resolution and writing assignments for critical sections of the IEEE
Guide for Smart Grid Interoperability of Energy Technology and Information Technology Operation with
the Electric Power System (EPS), and End-Use Applications and Loads (P2030) leading to the final
stages of consensus building and balloting expected in 2011. When completed, this standard will be the
foundational, system-of-systems level guide serving as a knowledge base with essential information on
terminology, characteristics, functional performance and evaluation criteria, and the application of
engineering principles for Smart Grid interoperability of electric power systems.
Online registration for the upcoming P2030 WG meeting is now open online at
https://web.memberclicks.com/mc/quickForm/viewForm.do?orgId=iecs&formId=88507 for individuals and
organizations wishing to help shape the future of the Smart Grid. For additional information about the
P2030.2 or P2030 WGs, please visit http://grouper.ieee.org/groups/scc21/2030/2030_index.html.
About IEEE Standards Association
The IEEE Standards Association, a globally recognized standards-setting body within the IEEE, develops
consensus standards through an open process that engages industry and brings together a broad
stakeholder community. IEEE standards set specifications and best practices based on current scientific
and technological knowledge. The IEEE-SA has a portfolio of over 900 active standards and more than
600 standards under development. For information on the IEEE-SA, see: http://standards.ieee.org
About IEEE
IEEE, the worlds largest technical professional association, is dedicated to advancing technology for the
benefit of humanity. Through its highly cited publications, conferences, technology standards, and
professional and educational activities, IEEE is the trusted voice on a wide variety of areas ranging from
aerospace systems, computers and telecommunications to biomedical engineering, electric power and
consumer electronics. Learn more at http://www.ieee.org.

IEEE Approved Standards Related to Smart Grid
Sponsoring Society & SCC Standard No. Title
SCC21 Fuel Cells, Photovoltaics, Dispersed
Generation & Energy Storage 1547-2003 IEEE Standard for Interconnecting Distributed Resources with Electric Power Systems
Generation & Energy Storage 1547.1-2005
Standard for Conformance Tests Procedures for Equipment Interconnecting Distributed Resources with
Electric Power Systems
Application Guide for IEEE Standard 1547, Interconnecting Distributed Resources with Electric Power
Systems
Guide For Monitoring, Information Exchange, and Control of Distributed Resources Interconnected With
Electric Power Systems
SCC22 Power Quality 1159.3-2003 IEEE Recommended Practice for the Transfer of Power Quality Data
Computer/ Local and Metropolitan Area
Networks Committee 802-2001 IEEE Standard for Local and Metropolitan Area Networks: Overview and Architecture
Networks Committee
802.1AB-
2005
IEEE Standard for Local and metropolitan area networks -- Station and Media Access Control
Connectivity Discovery
Networks Committee 802.2-1989
IEEE Standard for Information Technology - Telecommunications and Information Exchange Between
Systems - Local and Metropolitan Area Networks - Specific Requirements - Part 2: Logical Link Control
IEEE Standard for Information technology--Telecommunications and information exchange between
systems--Local and metropolitan area networks--Specific requirements Part 3: Carrier Sense Multiple
Access with Collision Detection (CSMA/CD) Access Method and Physical Layer Specifications
Systems - Local and Metropolitan Area Networks - Specific Requirements - Part 11: Wireless LAN
Medium Access Control (MAC) and Physical Layer (PHY) Specifications
Networks Committee
802.15.1-
2005
IEEE Standard for Information Technology - telecommunications and information exchange Systems
between systems - Local and metropolitan area networks-Specific requirements - Part 15.1a: Wireless
Medium Access Control (MAC) and Physical Layer (PHY) specifications for Wireless Personal Area
Networks (WPAN)
Networks Committee

802.15.4-
2006
Systems - Local and Metropolitan Area Networks - Specific Requirements - Part 15.4: Wireless Medium
Access Control (MAC) and Physical Layer (PHY) Specifications for Low Rate Wireless Personal Area
Networks (WPANs)
IEEE Standard for Local and metropolitan area networks Part 16: Air Interface for Broadband Wireless
Access Systems
IEEE Standard for Local and Metropolitan Area Networks - Part 20: Air Interface for Mobile Broadband
Wireless Access Systems Supporting Vehicular Mobility -- Physical and Media Access Control Layer
Specification
Instrumentation & Measurement
Society/TC-9, Sensor Technology
1588-2008
IEEE Standard for a Precision Clock Synchronization Protocol for Networked Measurement and Control
Systems
Power & Energy/Power Systems
Communication Committee 1675-2008 IEEE Standard for Broadband over Power Line Hardware
Power & Energy/Power Systems
Instrumentation & Measurement Committee 1459-2000
IEEE Standard Definitions for the Measurement of Electric Power Quantities under Sinusoidal Non-
Sinusoidal Balanced or Unbalanced Conditions
Power & Energy/Power Systems Relaying
Committee
C37.101-
2006 IEEE Guide for Generator Ground Protection
Committee
C37.101-
2006/Cor 1-
2007 IEEE Guide for Generator Ground Protection - Corrigendum 1: Annex A.2 Phasor Analysis (Informative)
Committee
C37.102-
2006 IEEE Guide for AC Generator Protection
Committee
C37.104-
2002 IEEE Guide for Automatic Reclosing of Line Circuit Breakers for AC Distribution and Transmission Lines
Committee
C37.106-
2003 IEEE Guide for Abnormal Frequency Protection for Power Generating Plants
Committee
C37.111-
1999 IEEE Standard Common Format for Transient Data Exchange (COMTRADE) for Power Systems
Power & Energy/Power Systems Relaying C37.112- IEEE Standard Inverse-Time Characteristic Equations for Overcurrent Relays
Committee 1996
Committee
C37.114-
2004 IEEE Guide for Determining Fault Location on AC Transmission and Distribution Lines
Committee
C37.115-
2003
IEEE Standard Test Method for Use in the Evaluation of Message Communications Between Intelligent
Electronic Devices in an Integrated Substation Protection Control and Data Acquisition System
Committee
C37.116-
2007 IEEE Guide for Protective Relay Application to Transmission-Line Series Capacitor Banks
Committee
C37.117-
2007
IEEE Guide for the Application of Protective Relays Used for Abnormal Frequency Load Shedding and
Restoration
Committee
C37.118-
2005 IEEE Standard for Synchrophasors for Power Systems
Committee
C37.230-
2007 IEEE Guide for Protective Relay Applications to Distribution Lines
Committee
C37.231-
2006 IEEE Recommended Practice for Microprocessor-Based Protection Equipment Firmware Control
Committee
C37.232-
2007 IEEE Recommended Practice for Naming Time Sequence Data Files
Committee
C37.90.2-
2004
IEEE Standard for Withstand Capability of Relay Systems to Radiated Electromagnetic Interference from
Transceivers
Committee
C37.91-
2008 IEEE Guide for Protecting Power Transformers
Committee
C37.92-
2005 IEEE Standard for Analog Inputs to Protective Relays From Electronic Voltage and Current Transducers
Committee
C37.93-
2004 IEEE Guide for Power System Protective Relay Applications of Audio Tones Over Voice Grade Channels
Committee
C37.94-
2004
IEEE Standard for N Times 64 Kilobit Per Second Optical Fiber Interfaces Between Teleprotection and
Multiplexer Equipment
Committee
C37.95-
2002 IEEE Guide for Protective Relaying of Utility-Consumer Interconnections
Power & Energy/Surge Protective Device
Committee/High Voltage
C62.11-
2005 IEEE Standard for Metal-Oxide Surge Arresters for AC Power Circuits (> 1 kV)
C62.11a-
2008
IEEE Standard for Metal-Oxide Surge Arresters for AC Power Circuits (>1 kV) Amendment 1: Short-
Circuit Tests for Station Intermediate and Distribution Arresters
Power & Energy/Substations Committee 81-1983
IEEE Guide for Measuring Earth Resistivity Ground Impedance and Earth Surface Potentials of a Ground
System Part 1: Normal Measurements
Power & Energy/Substations Committee 81.2-1991
IEEE Guide for Measurement of Impedance and Safety Characteristics of Large Extended or
Interconnected Grounding Systems
IEEE Guide for the Design Construction and Operation of Electric Power Substations for Community
Acceptance and Environmental Compatibility
IEEE Recommended Practice for Data Communications Between Remote Terminal Units and Intelligent
Electronic Devices in a Substation
Power & Energy/Substations Committee 1402-2000 IEEE Guide for Electric Power Substation Physical and Electronic Security
Power & Energy/Substations Committee 1615-2007 IEEE Recommended Practice for Network Communication in Electric Power Substations
IEEE Standard Communication Delivery Time Performance Requirements for Electric Power Substation
Automation
Power & Energy/Substations Committee 1686-2007 IEEE Standard for Substation Intelligent Electronic Devices (IEDs) Cyber Security Capabilities
Power & Energy/Substations Committee C37.1-2007 IEEE Standard for SCADA and Automation Systems
Power & Energy/Substations Committee C37.2-2008 IEEE Standard Electrical Power System Device Function Numbers Acronyms and Contact Designations
Power & Energy/Switchgear Committee 1247-2005 IEEE Standard for Interrupter Switches for Alternating Current Rated Above 1000 Volts
Power & Energy/Switchgear Committee 1325-1996 IEEE Recommended Practice for Reporting Field Failure Data for Power Circuit Breakers
Power & Energy/Switchgear Committee
C37.100-
1992 IEEE Standard Definitions for Power Switchgear
Power & Energy/Transmission &
Distribution Committee 6441994
IEEE Standard Procedures for Measurement of Power Frequency Electric and Magnetic Fields from AC
Power Lines
Distribution Committee 656-1992 IEEE Standard for the Measurement of Audible Noise from Overhead Transmission Lines
Distribution Committee 1250-1995 IEEE Guide for Service to Equipment Sensitive to Momentary Voltage Disturbances
Distribution Committee 1453-2004
IEEE Recommended Practice for Measurement and Limits of Voltage Fluctuations and Associated Light
Flicker on AC Power Systems
Power & Energy/Transformers Committee
C57.120-
1991 IEEE Loss Evaluation Guide for Power Transformers and Reactors
Power & Energy/Transformers Committee
C57.123-
2002 IEEE Guide for Transformer Loss Measurement

IEEE Standards in Development Related to Smart Grid
Sponsoring Society/Committee & SCC Open
Projects
Title
Generating & Energy Storage
P2030 Guide for Smart Grid Interoperability of Energy Technology and Information
Technology Operation with the Electric Power System (EPS), and End-Use
Applications and Loads
SCC31 Automatic Meter Reading & Energy
Management
P1377 Standard for Utility Industry Metering Communication Protocol Application
Layer Standard (End Device Data Tables)
Management
P1701 Standard for Optical Port Communication Protocol to complement the Utility
Industry End Device Data Tables
Management
P1702 Standard for Telephone Modem Communication Protocol to complement the
Utility Industry End Device Data Tables
Management
P1703 Standard for Local Area Network/Wide Area Network (LAN/WAN) Node
Communication Protocol to complement the Utility Industry End Device Data
Tables
Computer/ Local & Metropolitan Area Networks
Committee
P802 IEEE Standard for Local and Metropolitan Area Networks: Overview and
Architecture
Computer/ Local & Metropolitan Area Networks
Committee
P802.11 EEE Standard for Information Technology - Telecommunications and
Information Exchange Between Systems - Local and Metropolitan Area
Networks - Specific Requirements - Part 11: Wireless LAN Medium Access
Control (MAC) and Physical Layer (PHY) Specifications
Communications Society P1901 Standard for Broadband over Power Line Networks: Medium Access Control
and Physical Layer Specifications
Power & Energy/ Power Systems Communication
Committee/ Electromagnetic Compatibility/Standards
Development Committee & Communications Society
P1775 Standard for Powerline Communication Equipment - Electromagnetic
Compatibility (EMC) Requirements - Testing and Measurement Methods
Power & Energy/Energy Development & Power
Generation Committee
P1020 Guide for Control of Small (100 kVA to 5 MVA)Hydroelectric Power Plants
P1595 Standard for Quantifying Greenhouse Gas Emission Credits from Small Hydro
and Wind Power Projects and for Grid Baseline Conditions
P1797 Guide for Design and Application of Solar Technology in Commercial Power
Generating Stations
Power & Energy/Power Systems Communications
Committee
P1777 Recommended Practice for Using Wireless Data Communications in Power
System Operations
Power & Energy/Power Systems Instrumentation &
Measurement Committee
P1459 Standard Definitions for the Measurement of Electric Power Quantities under
Sinusoidal Non-Sinusoidal Balanced or Unbalanced Conditions
Power & Energy/Power System Relaying Committee PC37.104 Guide for Automatic Reclosing of Circuit Breakers for AC Distribution and
Transmission Lines
Power & Energy/Power System Relaying Committee PC37.111 Standard for Common Format for Transient Data Exchange (COMTRADE) for
Power Systems
Power & Energy/Power System Relaying Committee PC37.118 Standard for Synchrophasors for Power Systems
Power & Energy/Power System Relaying Committee PC37.236 Guide for Power System Protective Relay Applications over Digital
Communication Channels
Power & Energy/Power System Relaying Committee PC37.237 Recommended Practice for Time Tagging of Power System Protection Events
Power & Energy/Power System Relaying Committee PC37.238 Standard Profile for Use of IEEE Std. 1588 Precision Time Protocol in Power
System Applications
Power & Energy/Power System Relaying Committee PC37.239 Standard Common Format for Event Data Exchange (COMFEDE) for Power
Systems
Power & Energy/Power System Relaying Committee PC37.95 Guide for Protective Relaying of Utility-Consumer Interconnections

PC62.11 Standard for Metal-Oxide Surge Arresters for AC Power Circuits (> 1 kV)
Committee/Low Voltage
PC62.39 Standard for Test Methods for Self-Restoring Current Limiter Components
used in Telecommunication Surge Protectors
Power & Energy/Substations Committee P81 Guide for Measuring Earth Resistivity Ground Impedance and Earth Surface
Potentials of a Grounding System
Power & Energy/Substations Committee P1031 Guide for the Functional Specification of Transmission Static Var
Compensators
Power & Energy/Substations Committee 1127a
IEEE Guide for the Design Construction and Operation of Electric Power Substations for
Community Acceptance and Environmental Compatibility - Amendment to remove
references to Substation Slide Library
Power & Energy/Substations Committee P1711 Trial Use Standard for a Cryptographic Protocol for Cyber Security of
Substation Serial Links
Power & Energy/Switchgear Committee PC37.13 Standard for Low-Voltage AC Power Circuit Breakers Used in Enclosures
Power & Energy/Transmission & Distribution
Committee
P1250 Guide for Identifying and Improving Voltage Quality in Power Systems
Committee
P1409 Guide for the Application of Power Electronics for Power Quality Improvement
on Distribution Systems Rated 1 kV Through 38 kV
Committee
P1695 Trial-Use Guide for Assessing Voltages at Publicly and Privately Accessible
Locations
Power & Energy/Transformers Committee PC57.123 Guide for Transformer Loss Measurement

THE MANY MEANS OF "SMART GRID"
At Carnegie Mellon, research on the electricity system is being conducted by the campus-wide Electricity Industry
Center (www.cmu.edu/electricity) and by the Electric Energy Systems Group in Electrical and Computer Engineering
(www.eesg.ece.cmu.edu/). Research on information system security is conducted in CyLab (www.cylab.cmu.edu).
July 2009

The many meanings of "Smart Grid"
M. Granger Morgan, Jay Apt, Lester B. Lave, Marija D. Ilic, Marvin Sirbu, and Jon M. Peha

America seems to have decided that a "smart grid" is what we need to solve the problems of our
electric power system. But, what exactly is a "smart grid"?

The answer is that it is many different things. Some of the things that get talked about are
relatively inexpensive and can go a long way toward solving key problems. Others will likely be
very expensive, and at this stage may better be left to the realm of research.

At the level of the customer:
Meters that can be read automatically, without sending a meter reader out once a month.
This can be done in several different ways: with a signal that is sent back to the
transformer or substation over the power line (power line carrier) and then on to the
utility in some other way; by a radio link in the local neighborhood; or by a van that
drives around the neighborhood and asks each meter to give an automatic readout, via
radio links. Systems like this are already widely deployed by many power companies,
and generally pay for themselves through reduced meter reading costs.
Time-of-day and time-of-use meters (there is a difference). Most customers in the USA
today pay a flat average rate for electricity. Some industrial and commercial customers
pay rates that reflect the real cost of generating power, that can be cheap at night and
expensive at times of peak demand when every generating unit is pressed into service,
including old and inefficient ones. Time-of-day meters basically contain a clock and
charge different rates at different fixed times of the day (e.g. "on-peak" and "off-peak").
These meters bill at a higher price at a time-of-day when the demand for power is
typically high, regardless of actual demand on that particular day. A few utilities have
had time-of-day systems in place for both residential and commercial customers for over
50 years.
In contrast, "time-of-use" or "real-time" meters receive signals from the power
company and switch to higher or lower rates as the actual cost of providing power to a
customer goes up and down.
Both technologies are intended to reduce peak loads so that less generation and
transmission capacity is needed. Time-of-use meters can do this more effectively and can
respond in real time to unusual stresses on the system. Research done in Carnegie
Mellon's Electricity Industry Center has shown that in most systems, only about 20% of
the larger and more flexible customers need to be switched from conventional meters to
real-time meters, in order for everyone to get as much as 80% of the benefits that would
be achieved if all customers were on real-time meters. This suggests that today the
THE MANY MEANINGS OF "SMART GRID"

2
optimal strategy is not to give every customer an expensive real-time meter, but rather to
introduce them selectively to the larger more flexible customers.
Meters that communicate to customers. Just as the utility can gain valuable information on
current usage, so can the customer. Today, most customers only receive information
through their monthly bill, which arrives days after decisions such as whether to turn the
thermostat up or down. A display that tells interested consumers their current rate of
electricity use, and its cost, would give customers information to make informed decisions.
Control of customers' loads. Nobody wants to sit and watch the meter all day to see what
the price of electricity is. Adding simple control circuits allows loads like air
conditioners or water pumps to be cycled on and off automatically, without damage to the
equipment and little or no customer discomfort. Often turning off or "shedding" as little
as 5% of the load can halve the need for expensive peaking generation. Since more than
5% of total load is being wasted in lighting unoccupied rooms or cooling unoccupied
residences, or being expended on activities such as washing dishes and clothes that can
easily be shifted to periods when electricity usage is low, the cost to consumers is
minimal.
Implementing such a system requires two engineering design choices:
1. Appliances and other loads must be able to receive the signal to defer use (either
by wire or by wireless connections) and must contain automatic switches that can
turn them on and off.
2. Someone has to choose when to turn loads on and off (see the section below: Who
should be in charge?).

Simple versions of systems in which the utility can connect and disconnect loads are commonly
used with some industrial customers who have "interruptible rates." For 40 years a small number
of utilities have also had systems to control water heaters, air conditioners, and pool pumps.
Today, in a few very limited trials, customers have control of their own appliances in response to
price changes.

In addition to controlling individual loads on the customer side of the meter, these automated
systems can also be designed to disconnect a customer in an emergency (see the section on
distribution automation below) or when customers do not pay their bill.

At the level of the distribution system:
Electric power reaches end customers through the high voltage transmission system (large steel
towers carrying high voltage lines) and then at lower voltage through the distribution system (the
poles along the streets or in underground conduits). When people talk about "smart grid" they
often include several things that can be done to improve the control and operation of distribution
systems. These include:
Distribution system automation. While transmission systems are laid out as "mesh grids"
that interconnect through substations in several locations, most distribution systems are
made up of simple "tree-like" structures called "distribution feeders." In a typical
distribution feeder, all the power enters at one point (the root) and then flows out to the
loads along the branches of the distribution feeder to the customers. If there is a problem
(e.g. a vehicle hits a power pole, or lightening strikes a transformer), circuit breakers may
automatically disconnect the entire feeder. If a feeder can be fed from more than one

3
place (i.e. branches from two separate trees can be connected together), such an incident
need not take down the entire feeder. Some utilities have added sensors and remote
control switches that can isolate and cut off the problem. A number of power companies
have already found it cost-effective to install distribution system automation. While
commercially available, this is a rapidly changing technology, and today is deployed in
only a few areas.
Selective load control. Today, if a system emergency occurs (e.g. a large ice storm,
human error, or a terrorist attack) that reduces electricity supply below demand, all
customers will be blacked out unless sufficient load is shed to have supply match
demand. At present, the only way to do this is by disconnecting entire distribution
feeders. It would be far better to be able to control individual loads along a distribution
feeder so that critical services such as police stations can remain connected, while loads
that provide less critical services can be dropped. With a combination of smart meters
and advanced distribution automation, this is possible, but almost no utilities have
implemented this capability. Part of the reason that this has not happened is that the
benefits of such a capability accrue more to society than to the operating utility.
Once smart meters and loads become widely used, an even more sophisticated
emergency response could become possible, in which individual loads within customers'
premises are turned on or off.
Managing distributed generation and "islanding". Small distributed generators that both
make electricity and produce usable heat energy (to provide water and space heating, run
absorption chillers for air conditioning, etc.) have a number of advantages: they make
more efficient use of the energy of the fuel that is used; they can relieve stresses on
transmission and distribution systems; and, they can increase the reliability of power
supply to local customers. In an emergency, it would sometimes be desirable to be able
to disconnect a distribution feeder from the main power system and run it as an isolated
"island," serving only a few of the most critical loads. For technical, legal, safety, and
regulatory reasons, today's power systems cannot do this. However, with the right
technology, control systems, and regulatory environment, there is no reason why they
could not do this in a safe and efficient manner. Changes in state laws are needed to
allow the development and wider use of distributed generation and small "micro-grids."

At the level of the transmission system:
Electricity generated at large central-station power plants and wind farms is moved to "load
centers" (e.g. cities and major factories) over very high voltage transmission lines. Using high
voltage keeps the current low and so reduces loss (i.e. energy that is wasted heating the wires).
Transmission systems already have some instrumentation that allows control centers to monitor
power flows and open and close circuit breakers at substations. However, there is much more
that can be done.
Measurement of phase and other advanced measurements. While transmission systems
automatically measure power flows and report them back to control centers where human
and computer operators make control decisions, there is additional information that could
be collected to improve dramatically the control and stability of high voltage grids. The
voltage and current in the U.S. power system oscillates at a frequency of 60 cycles per
second (60 Hz). However, current and voltage do not oscillate in phase (go up and down
together). Further, in order to move power over a long line, there has to be a difference

4
in phase between the two ends of the line, but if that difference becomes too great, the
line will no longer transmit power. There are very few measurements of phase being
made across today's transmission systems. With many more measurements at key
locations, and with high-speed communication and advanced control systems to make use
of the data, the efficiency and stability of power system operation could be improved
substantially. Some of these changes are being made, but much more slowly than many
experts believe is socially desirable. More advanced capabilities are also possible, but
funding for such research has been limited.
FACTS and other advanced control devices. Power flows through transmission grids in
accordance with the laws of physics, not the laws of economics. This means that often it
will flow in parts of the network where it is not wanted, and not flow in places that would
be more economically desirable. A family of devices based on solid-state power
electronics can change the electrical properties of lines and make power flow where it is
wanted. These Flexible AC Transmission System control devices are called FACTS
devices (there are a variety of different devices that can all be lumped under this general
name). While FACTS devices are expensive, a few utilities have started to use them
when they are the most cost-effective way to solve a transmission problem (e.g. because
using them is cheaper than building whole new lines, or because such lines simply cannot
be built). The control of FACTS systems requires advanced communication and system-
level control technology. Today, most FACTS devices run on single lines. If FACTS
devices become more widely used, it will become necessary to develop advanced control
systems to deal with the potential interaction between these systems. Again, funding for
such research has been limited.
Distributed and autonomous control. Today, power systems are controlled centrally by
human operators, assisted by advanced computer systems. Only a few elements of the
system (such as protective circuit breakers) operate automatically, and typically these do
not cooperate with each other. It takes time to move information from across a far-flung
system back to central controllers, process it, and make control decisions. That places
limits on how effective power system control can be, especially under emergency
situations. Researchers at Carnegie Mellon and elsewhere have built models that
demonstrate that in some situations distributed advanced automatic control systems
(using computers that take measurements and talk to each other) could do a better job.
As with most of the other technologies and strategies for transmission-system control,
funding for such research has been limited.
In short, many advanced technologies and strategies could be used to turn the high voltage
transmission system into what some have termed a "smart self-healing grid." A few important
things could be done today. However, before the more advance ideas can be implemented,
additional research and small-scale demonstration will be needed.

Who should be in charge?
In considering the control of customer loads and distribution systems, a key policy issue is who
gets to choose when and where to turn things on and off? In the smart grid systems being built in
some parts of Europe, such as the Netherlands, the answer is the utility is in charge. In
emergency situations, that is surely the best arrangement. But, for day-to-day operations, we
believe that it is far better to leave control in the hands of customers, who are free to respond to
price signals. Nobody wants to sit and watch the meter, but in our electronics age there are

5
simple inexpensive devices that can carry out our instructions as electricity prices change (see
the discussion above on time-of-use meters and on control of customers' loads).

What vulnerabilities could "smart grid" create?
All the systems we have described require communication between various components. Some
of this communication will take place over wires or fiber optics. Some of it will involve wireless
connections. All of these communication links introduce vulnerabilities, especially if they can
be accessed over the Internet. We should not build a power system in which a hacker working
for a burglar can tell when you are home by monitoring your control systems or a hacker on the
other side of the world can cause system-wide instabilities and blackouts. Many of the designers
of these systems offer assurances that they are being built in compliance with all the current
security standards. However, such standards have by necessity been developed before a smart
grid existed, or a clear consensus has emerged regarding the nature of a smart grid. Thus, serious
scrutiny is needed to ensure that such standards are truly adequate. The social vulnerabilities that
a "smart grid" may create are receiving far too little attention. Figuring out how to minimize or
avoid these vulnerabilities is an issue in urgent need of study. A good place to start would be
with a request from Congress for a careful study by an expert National Academy committee.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Quick Facts
The smart grid is a concept referring to the application of digital technology to the electric power
sector to improve reliability, reduce cost, increase efficiency, and enable new components and
applications.
Compared to the existing grid, the smart grid promises improvements in reliability, power quality,
efficiency, information flow, and improved support for renewable and other technologies.
Smart grid technologies, including communication networks, advanced sensors, and monitoring
devices, form the foundation of new ways for utilities to generate and deliver power and for
consumers to understand and control their electricity consumption.
Some of the largest utilities in the country, including Florida Power and Light, Xcel Energy, Pacific Gas
and Electric, and American Electric Power, have undertaken initiatives to deploy smart grid
technologies.
Smart grid technologies could contribute to greenhouse gas emission reductions by increasing
efficiency and conservation, facilitating renewable energy integration, and enabling plug-in hybrid
electric vehicles.
Background
The Smart Grid and Its Potential Benefits
The smart grid is a concept referring to the application of digital technology to the electric power sector. It is
not one specific technology. Rather, the smart grid consists of a suite of technologies expected to improve
the performance, reliability, and controllability of the electric grid. Many of these technologies have been
employed in other sectors of the economy, such as the telecommunications and manufacturing sectors.
Smart grid technologies offer several potential economic and environmental benefits:
Improved reliability
Higher asset utilization
Better integration of plug-in hybrid electric vehicles (PHEVs) and renewable energy
Reduced operating costs for utilities
Reduced expenditures on electricity by households and businesses
Increased efficiency and conservation
Support for new components and applications
Lower greenhouse gas (GHG) and other emissions

Digital technologies have been integral to the modernization of many sectors of the economy and have
resulted in efficiency gains, new opportunities, and greater productivity. The electric power sector, however,
has lagged behind. Many utilities still use the same designs as they did when most of the grid was built in
the 1960s and 1970s.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Issues with the Existing Grid
The U.S. electric grid is an enormous and extremely complex system consisting of centralized power plants,
transmission lines, and distribution networks.
1
It is capable of carrying over 850 gigawatts (GW) of power
and continuously balancing supply with fluctuating demand. It does so with remarkable reliability, providing
99.97 percent uptime (when the grid is operational), or about 160 minutes of downtime a year.
2
,
3

However, the traditional electric power grid was designed neither with the latest technology nor with the goal
of supporting a high-tech economy and enabling low-carbon technologies and energy efficiency and
conservation. Some of the grid issues described below are addressed by smart grid technologies but do not
relate directly to GHG emission reductions.
Power outages and power quality disruptions cost more than $150 billion annually.
4
,
5

The power still goes out for customers at an average of 2.5 hours per year, which leads to sizeable
economic losses. Power quality disruptions for ordinary consumers may be no more than lights
flickering or dimming, but for high-tech manufacturing and critical infrastructure that rely on high
quality power (such as communications networks and pipelines), these events can disrupt
operations and collectively can cost millions.
6

The grid is inefficient at managing peak load.
Peak load is the short period when electricity demand is at its highest within a day, season, or year.
Electricity demand is cyclical and variable, and the cost of meeting that demand varies, but because
utilities have limited tools for managing demand, supply must be adjusted continuously to track
demand. In addition, the power grid must constantly maintain a buffer of excess supply, which is
primarily fossil fuel based, resulting in lower efficiency, higher emissions, and higher costs.
The grid does not support robust information flow.
For example, utilities often do not find out about blackouts until consumers call to notify them.
Moreover, consumers have very little knowledge about how their electricity is priced or how much
energy they are using at any given time. This limits the incentives for efficiency, conservation, and
demand response.
Very high levels of renewable energy pose challenges for the grid.
The electricity generation from certain important renewable technologies fluctuates based on the
availability of variable resources (e.g., the wind and sunlight). The ability of the existing grid to
support levels of variable renewable generation in excess of roughly 20 percent of energy is
uncertain.
7

The grid has limited support for distributed generation.
Because the grid was designed for a one-way power flow from centralized power stations to end
users, it has to be upgraded to allow a two-way power flow that supports small distributed
generators. Adding variable generators such as rooftop solar or micro wind makes managing
distributed generation even more difficult for the existing grid.
The grid would be strained by high PHEV deployments.
A significant deployment of PHEVs over the next few decades would represent a major strain on the
electric power system. Due to the nature of the charging cycles of PHEVs, it will be both expensive
and technically difficult to manage the fleets demands through the existing grid.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Description
Characteristics of smart grid technologies enable many functions beyond what the existing grid does. A
smart grid:
Gives the utility actionable information
Instead of estimating network activity or having to send out physical readers to many locations,
utilities receive a constant flow of information about their network, their customers, and their options
for managing their operations.
Gives the consumer actionable information
Customers can be provided with information about their electricity usage patterns and costs. They
can use this information to reduce their energy costs and their environmental impact.
Automates and decentralizes decisions
Instead of forcing centralized system operators and planners to make decisions, a smart grid
automates easy decisions and empowers consumers to take informed actions.
Supports and enhances new technologies
A smart grid provides support for new applications and components, such as smart appliances,
PHEVs, distributed generation, and renewable energy by allowing for better management of their
interaction with the grid.
Key Technologies
The technologies that comprise a smart grid address the existing grids shortcomings by providing actionable
intelligence and enhanced management capabilities that can improve operational efficiency and
performance. These technologies are available now, and some of the largest utilities in the country, including
Xcel Energy, Pacific Gas and Electric (PG&E), and American Electric Power (AEP), have undertaken initiatives
to implement them.
8

According to the National Energy Technology Laboratory (NETL) the smart grid consists of five key technology
areas
9
:
Integrated Communications
High-speed, standardized, two-way communication allows for real-time information flows and
decision-making among all grid components. Several existing technologies, including wide-area
wireless internet and cellular networks, could provide the communications infrastructure needed.
Sensing and Measurement
Sensing and measurement allow utilities and consumers to understand and react to the state of the
electric grid in real-time. For example, households could monitor their energy demand and the
current price of electricity through smart meters, which communicate with home networks that link
smart appliances and display devices.
Advanced Components
Advanced components such as GPS systems, current limiting conductors, advanced energy storage,
and power electronics will improve generation, transmission, and distribution capacity and
operational intelligence for utilities.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Advanced Control Methods
As more information is available to grid controllers and faster response times are required, the task
of managing an electric grid is becoming more complex. Advanced control systems find and process
important information quickly, streamlining operations and providing clarity to human operators.
Improved Interfaces and Decision Support
New tools, such as software to visualize networks at any scale (from an individual neighborhood to
the entire national grid), provide system operators with greater situational awareness and
diagnostics and allow planners, operators, and policymakers to make informed decisions.
Key Applications
The smart grid technologies that form the foundation of a new grid enable new smart grid applications,
including:
Automatic Meter Reading / Advanced Metering Infrastructure (AMR / AMI)
AMR allows utilities to read electricity, water, and gas meters electronically; as opposed to sending a
meter-reader to each house every month. AMI goes the next step, adding 2-way communications that
allow the utility to act on information coming back from meters, adjusting prices and responding to
outages or power quality events in real-time.
Real-Time Pricing (RTP)
RTP goes beyond Time-of-Use Pricing by changing electricity prices dynamically to reflect the realities
of the electricity market. Successful RTP depends on a price-elastic demand for electricity, allowing
markets to clear quickly and keeping prices in a reasonable band for consumers. A smart grid lets
consumers prioritize and monitor their electricity use, resulting in cost-savings and a more
economically efficient electricity market.
Demand Response (DR)
DR allows utilities to reduce demand during periods of peak load and thus avoid dispatching high-
cost generating units which are often among the least efficient and dirtiest. DR can distinguish
between valuable and low-priority electricity uses for example, dimming lights and adjusting air
conditioners without disrupting vital services.
Smart Charging / Vehicle to Grid (V2G)
PHEVs and electric vehicles will greatly increase the load on the grid. A single PHEV can draw more
power than a typical household. Smart Charging devices allow PHEVs to communicate with the utility,
timing their charge cycles to coincide with low prices, low grid impact, and potentially low emissions
periods (when renewable energy sources are available). V2G takes this concept one step further by
allowing PHEVs to feed their power back into the grid to help stabilize voltage and frequency,
reducing the need for spinning reserves and regulation services and thus avoiding emissions from
electric generating units that would otherwise need to provide these services.
10

Distribution Automation
Distribution automation allows distribution systems to reconfigure themselves when a fault occurs,
restricting the problem to a smaller area.
11
This reduces the amount of time that backup generators
(usually diesel-based) operate and cuts total outage time.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Distributed Generation Integration
By providing greater fault tolerance and islanding detection, a smart grid allows for safer and more
reliable connections of distributed generation units such as rooftop solar installations, small natural
gas turbines used for heat and electricity in commercial buildings, and building integrated wind
systems.
12

Environmental Benefits/Emissions Reduction Potential
Smart grid technologies reduce GHG emissions in a number of ways. This paper focuses on three:
Increasing efficiency and conservation
Enabling renewable energy integration
Enabling PHEV integration

The Electric Power Research Institute (EPRI) calculates that a national smart grid could reduce annual GHG
emissions by 60-211 million metric tons of carbon dioxide equivalent (MMT CO2e) compared to business-
as-usual by 2030, an amount equal to 2.5-9 percent of GHG emissions from electricity generation in
2006.
13
,
14

Increasing Efficiency and Conservation
More than half of this potential reduction in GHG emissions would be achieved through energy
efficiency and conservation measures enabled by the smart grid, such as:
o Reducing transmission losses through better management of distribution systems.
15

o Real-time equipment monitoring By having a better understanding of equipment conditions,
utilities can keep vital components operating at high efficiency.
o Managing peak-load through demand response instead of spinning reserves.
o Increasing transparency in electricity prices, helping customers understand the true cost of
electricity. The simple act of giving consumers continuous direct feedback on electricity use
could reduce annual CO2 emissions by 31-114 MMT CO2e/year in 2030 as consumers adjust
their usage in response to pricing and consumption information.
16

Enabling Renewable Energy Integration
EPRI estimated that the increased renewable generation enabled by a smart grid could reduce GHG
emissions by 19-37 MMT CO2e /year in 2030.
17
There are two separate components to better
renewable integration:
o Support for distributed generation
o Control technologies enable safer and more reliable integration of distributed renewable
generation (e.g., rooftop solar)
o More accurate accounting for distributed generation with advanced meters makes net
metering more attractive
o Network-wide resilience to variable renewable supply
o Demand response resources buffer variability in supply
18

o PHEV integration offers distributed energy storage and ancillary services

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December 2009
Smart Grid
CLIMATE TECHBOOK
o Better pricing mechanisms and demand side management can reduce transmission
congestion, allowing more utility-scale renewable projects to connect to the grid
Enabling Plug-in Hybrid Electric Vehicles
One of the largest sources of GHG emissions in the United States is the auto fleet. PHEVs have lower
emissions than traditional automobiles with gasoline combustion engines. EPRI estimated that the
incremental adoption of PHEVs enabled by a smart grid could result in GHG emission reductions of
10-60 MMT CO2e/year by 2030.
19
A smart grid is needed to integrate PHEVs without putting intense
strain on grid resources.
o Smart Charging
Through the use of real time pricing and system-wide price signals, PHEV charging can be done
primarily during off-peak periods, avoiding reliance on costlier and often more polluting peaker
plants.
o Vehicle-to-Grid (V2G)
PHEVs can be used to provide regulation services for the grid instead of relying on fossil fuel
generation such as diesel or natural gas generators.
Cost
The business case for a smart grid can be separated into costs and benefits for three major stakeholders:
utilities, consumers, and society. Unlike some technologies whose primary benefit is direct avoidance of GHG
emissions, the smart grid provides a wide array of benefits beyond helping combat climate change, and also
indirectly reduces GHG emissions to a large degree by enabling other low-carbon technologies. Moreover,
the benefit-cost rationale for smart grid investments is not dominated by GHG emission reductions.
Utilities
Smart grid projects represent large capital expenditures for utilities. For example, an AMI deployment
is estimated to have a cost about $76/meter and a communications cost of $125 - $150/meter.
20

As metering components and communications systems become more standardized costs may come
down. Some metering firms cite a 6-7 year payback time.
21
A recent San Diego Smart Grid study
estimated that a 1.3 million customer deployment would cost $490 million in capital over 20 years
and $24 million annually in operating expenses. The same project would generate $1.4 billion in
utility benefits over the same 20 year time period, from deferred infrastructure growth, meter reading
savings, and cheaper options for meeting peak load.
22

Consumers
Consumers undoubtedly bear much of the cost of smart grid projects through rate increases. At the
same time, consumers who are active in managing their electricity consumption will benefit in the
long-run from decreased peak electricity consumption and a lower total cost of energy. Consumers
also stand to benefit from improved power quality and fewer outages. For example, estimated
incremental monthly costs for consumers of providing advanced meters for every household and
business vary from $1.00 - $2.25 per customer.
21

Society
Society stands to benefit from the environmental benefits of a smart grid, national security benefits,
and other improvements. The San Diego Smart Grid Study estimated $1.4 billion in benefits for
society over the 20 year time span.
22

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December 2009
Smart Grid
CLIMATE TECHBOOK
Current Status
According to NETL, most of the needed smart grid technologies are commercially available now or are
actively being developed.
23
This availability of technology is reflected by the hundreds of AMI projects
currently underway across the country.
24
At least 10 different coalitions exist to promote smart grid
technologies, conduct R&D, and organize standards and interoperability.
25
The market penetration has also
increased, with advanced meters jumping from 1 percent of households and businesses in 2006 to 4.7
percent in 2009.
26
Certain states, such as Pennsylvania, have reached about 20 percent smart meter
penetration. Examples of recent projects include:
Southern California Edison, through its SmartConnect program, is planning to install advanced
meters for all its household and small business customers (approximately 5.3 million meters) by
2009 and initiate dynamic pricing and demand reduction practices; the efforts are expected to avoid
as much as 1 GW of capacity additions and to lower electricity bills for consumers.
27

Florida Power and Light has partnered with General Electric (GE), Cisco Systems, and Silver Spring
Networks in a $200 million overhaul of 1 million homes and businesses with an open-standards,
internet-based smart grid system. The system is expected to save customers 10-20 percent on their
power bills, with half the cost of the smart grid investments paid by the utility and half by the
American Recovery and Reinvestment Act of 2009 (ARRA).
28,29

Obstacles to Further Development or Deployment
Several obstacles prevent the implementation of a nationwide smart grid:
Upfront Consumer Expenses
In the responses of 200 utility managers to a 2009 survey, 42 percent cited upfront consumer
expenses as a major obstacle to the smart grid.
31
These concerns were confirmed by consumer
responses in which 95 percent of respondents indicated they are interested in receiving detailed
information on their energy use; however, only 1 in 5 were willing to pay an upfront fee to receive
that information.
30
Regulatory approval for rate increases needed to pay for smart grid investments is
always difficult, and the receptiveness of regulators varies from state to state.
Lack of Standardization
30 percent of utility managers cited lack of technology standards as a major obstacle to smart grid
deployment.
31
Uncertainty about interoperability and technology standards present the greatest risk
to utilities, who do not want to purchase components that will not work with new innovations down
the road.
32

Regulatory Barriers
Many of the obstacles to a smart grid are regulatory issues. Electric power is traditionally the
regulatory domain of states. The patchwork of regulatory structures and jurisdictions is only loosely
coordinated, and final authority on many decisions can be unclear, as projects are subject to
multiple levels of review. Local (municipality, county), state-level, and federal jurisdictions overlap,
and conflicting decisions can result in regulatory lead times of several years. Some regulatory
decisions can also be challenged in court, resulting in more potential delays at each level. This series
of delays adds significantly to the cost and regulatory risk of pursuing a smart grid project.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Lack of Widespread Understanding
Because smart grid is still a new concept and the technologies that enable it are rapidly evolving,
there is misunderstanding amongst consumers, regulators, policymakers, and businesses about
what its costs and benefits are. Stakeholders that are generally aligned may reach different
conclusions based on a different understanding of the smart grid.
Policy Options to Help Promote a Smart Grid
Develop National Standards
The 2007 Energy Security Act tasked the National Institute of Standards and Technology (NIST) with
developing nationwide standards for smart grid technology in consultation with industry groups, such
as the GridWise Alliance, and other standards bodies, such as the Institute of Electrical and
Electronics Engineers (IEEE). Because technology risk from changing standards represents the
largest risk to utilities, developing and institutionalizing national standards that are available to all
players will greatly accelerate development. Standards would cover such technical areas as
communication among smart grid devices and security.
Provide Federal Funding for Smart Grid
The Energy Independence and Security Act of 2007 (EISA) and the economic stimulus bills of 2008
and 2009 all authorized federal funding for smart grid projects and R&D.
33
The American Recovery
and Reinvestment Act of 2009 (ARRA) directs $4.6 billion to smart grid projects. ARRA also provides
$100 million to smart grid worker training and $10 million to NIST to develop a smart grid
interoperability framework, in consultation with industry groups, which would allow firms to develop
devices and applications that could communicate and interact in a smart grid.
34

Require Greater Reliability
The current power grid meets the industry standard of being 99.97 percent reliable on average,
however this varies amongst utilities.
35
Increasing the requirement for grid reliability or allowing
utilities to offer different tiers of power quality or reliability to customers would encourage utilities to
upgrade the grid and minimize the costs of electricity supply disruptions.
36

Investment Tax Credit for Smart Grid-related Technology
The Federal government could provide a direct incentive to utilities that invest in Smart Grid
technology by providing a tax credit or by reducing the depreciation period for smart grid
technologies to 5 years.
37

Develop the National Communications Infrastructure
Many utilities engaged in smart grid projects find that they are spending significant portions of their
project costs on communications and IT infrastructure rather than physical smart grid components.
Creating a nationwide broadband infrastructure and allowing the smart grid to leverage it could have
benefits for both the communications and electric power sectors.
Provide for Utility Cost Recovery
Because states bear the primary responsibility for approving smart grid projects and cost recovery for
utilities, there is significant disparity in smart grid deployment levels among states. Coupling federal
incentives for smart grid with prudent cost recovery at the state level can help to accelerate
deployment.

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December 2009
Smart Grid
CLIMATE TECHBOOK
Increase Consumer Awareness
Greater educational efforts could be made to inform consumers about smart grid and the
environmental impacts of energy use.
Business Environmental Leadership Council (BELC) Company Activities
ABB
American Electric Power
Deutsche Telekom
DTE Energy
Duke Energy
Exelon
GE
HP
IBM
Intel
Lockheed Martin
PG&E
Whirlpool
Related Pew Center Resources
Climate Change 101: Technology, 2009 .
The U.S. Electric Power Sector and Climate Change Mitigation, 2005
Wind and Solar Electricity: Challenges and Opportunities, 2009
Further Reading / Additional Resources
SMART 2020: Enabling the Low Carbon Economy in the Information Age, The Climate Group, Prepared for
the Global eSustainability Initiative (GeSI), 2008
Edison Foundation , Transforming America's Power Industry: Investment Challenge 2010-2030, 2008
Electric Power Research Institute (EPRI), The Green Grid: Energy Savings and Carbon Emissions Reduction
Enabled by a Smart Grid, 2008
U.S. Energy Information Administration (EIA), Energy in Brief: What Is the Electric Power Grid, and What Are
Some Challenges It Faces?
EPRI, Power Delivery System of the Future: A Preliminary Estimate of Costs and Benefits, 2004

Page | 10
December 2009
Smart Grid
CLIMATE TECHBOOK
The Electricity Advisory Committee, Smart Grid: Enabler of the New Energy Economy, 2008
Federal Smart Grid Task Force
IEEE, Smart Grid Technology Portal
National Energy Technology Lab (NETL), The Modern Grid Initiative
SmartGridNews.com

1
For a useful overview of the electricity grid, see the U.S. Energy Information Administration (EIA), Energy in Brief: What Is the
Electric Power Grid, and What Are Some Challenges It Faces?
2
1. Jon Wellinghoff, Prepared Testimony of Jon Wellinghoff, Commissioner Federal Energy Regulatory Commission, 2007.
3
The Smart Grid - An Introduction (U.S. Department of Energy).
4
ibid.
5
Calculate Your Costs, The Galvin Electric Institute.
6
Power quality is defined as the provision of power with specified voltage and frequency characteristics to the customer. Small
imbalances in the sub-minute time frame between electric supply and demand, and the physical properties of electric generators,
electricity-consuming devices, and the transmission grid itself lead to small deviations (1 to 5 percent) between the expected and
actual voltage and frequency of power delivered, which can cause highly sensitive equipment such as computers to fail. When
electric supply and demand are in balance, these deviations in voltage and frequency are eliminated.
7
20% Wind Energy by 2030 US Department of Energy. July 2008
8
Smart Power Grids - Talking about a Revolution, IEEE, 2009.
9
A Systems View of the Modern Grid, NETL Modern Grid Initiative, January 2007.
10
Spinning reserve is an ancillary service in the electricity market defined as the ability of (usually a generator) to remain on and
ready to start generating given notice over a short period of time (15 minutes to an hour). Regulation refers to an ancillary service
(usually provided by electric generators) to maintain power quality by ramping generation up and down to follow unpredicted minute-
by-minute fluctuations in electric demand.
11
Distribution automation is the use of intelligence to create automated operational decisions in electric power distribution
infrastructure for the purpose of maintaining or restoring power.
12
Fault tolerance allows distributed generation to ride through fault events on the distribution system that would otherwise force it
to disconnect and stop producing power. This allows the distributed generation to be connected for a larger amount of time and
provide a better return on investment for the investor. Islanding detection refers to the ability of utilities to detect unintentional
islanding (or parallel operation) of distributed generation systems, which can result in poor power quality, be harmful to equipment
and dangerous for electricians. Island operation occurs if one or more distributed generators continue to energize a part of the grid
after the connection to the rest of the system has been lost, this can be dangerous to utility workers, the generation equipment itself,
and other equipment connected to the grid.
13
The Green Grid - Energy Savings and Carbon Emissions Reduction Enabled by a Smart Grid, Technical Update (Electric Power
Research Institute (EPRI), June 2008), 1016905.
14
Environmental Protection Agency, 2008, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2006. Table 2-13.
15
Greater information availability about distribution systems will allow utilities to make better decisions about maintenance and
operations. The information allows utilities to make informed decisions about field equipment.
16
EPRI 2008.
17
EPRI 2008.
18
Wind and solar power are both variable electricity generation technologies insofar as they only generation power when the wind is
blowing or the sun is shining, respectively.

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December 2009
Smart Grid
CLIMATE TECHBOOK

19
EPRI 2008.
20
Advanced Metering Infrastructure. EPRI. February 2007.
21
Advanced Metering Infrastructure. Overview of System Features and Capabilities. Chris King. eMeter Corporation. September
2004.
22
Steve Pullins and John Westerman, San Diego Smart Grid Study (University of San Diego School of Law: Energy Policy Initiatives
Center, October 2006).
23
Compendium of Modern Grid Technologies, NETL Modern Grid Initiative, June 2007.
24
Sam Harrison, Smart Metering Projects Map.
25
Profiling and Mapping Intelligent Grid R&D, EPRI, 2007.
26
Buzz grows for modernizing energy grid Paul Davidson, USA Today. January 30, 2009.
27
Amy Abel, Smart Grid Provisions in H.R. 6, 110
th
Congress, Congressional Research Service, Dec 2007
28
Get Smart: GE, FPL Announce Biggest Smart Grid Deal in Miami. WSJ Blogs. Keith Johnson. April 2009.
29
Open standards, as opposed to proprietary standards, allow any firm to develop devices or applications that interface with a
system rather than limiting a system, such as the smart grid or a component thereof, to devices and applications from a single or
limited set of firms. Open standards are thought by many to be more conducive to innovation and flexibility.
30
Ibid.
31
Turning Information Into Power, Survey (Oracle, March 2009).
32
Barriers to Achieving the Modern Grid, NETL Modern Grid Initiative, June 2007.
33
The stimulus bills are the Economic Stimulus Act of 2008 and the American Recovery and Reinvestment Act of 2009.
34
Rick Merritt, Stimulus: DoE readies $4.3 billion for smart grid, E&E Times, February 17, 2009.
35
In addition to raising the reliability standard from 99.97 percent, the minimum outage duration counted against reliability could be
lowered. Currently, reliability standards ignore outages of less than 5 minutes.
36
Policy Principles, Fact Sheet, The Path to Perfect Power (The Galvin Electricity Initiative, 2008).
37
Mission Point Capital Partners, Smart Grid Overview, 2008
1 /
GE /
July 22, 2009
Smart Grid: Standing the test of time
GE Energy
Vision, experience, investments and resources
powering the grid of the 21st century
2 /
GE /
July 22, 2009
Meet the challenges of tomorrow
3 /
GE /
July 22, 2009
with evolving capabilities
4 /
GE /
July 22, 2009
> Transform todays grid to realize benefits NOW
> Ensure full societal benefits for our economy,
environment and energy security
> Focus funding on totality of the solution and benefits
> Technology is ready and available NOW
> Software solutions alongside infrastructure
improvements are critical to delivering the promise of
the smart grid
GEs position focus on the
benefits, not just the infrastructure
5 /
GE /
July 22, 2009
Additional policy needed
Rewards for efficiency
Accelerated depreciation
Time-of-use pricing rates
New business models
6 /
GE /
July 22, 2009
Smart Grid Electricity Advisory Committee
Interoperability & Cyber Security
Smart Grid Standards Roadmap
Industrial Control Systems WG
BOREAS Cyber Security WG
Board of Directors
Interoperability WG
Implementation WG
Legislative and Policy WG
State Legislative and Policy WG
Home 2 Grid (H2G) WG
Business and Policy (BnP)
Smart Grid Task Force
Home Plug Alliance
Standards accelerate Smart Grid
Board of Directors
Power & Energy Society (PES) Past President
PES Intelligent Grid Coordinating Committee
Power System Relaying Committee
Smart Grid Task Force Technology
Smart Grid Task Force Policy
Smart Grid Task Force Standards
Energy Storage Council
Smart Grid Strategic Group 3
US Principle
US TAG
US National Committee (USNC) VP, Technical
Activities
Study Committees
Advanced Metering Infrastructure
NERC
7 /
GE /
July 22, 2009
Importance of the Consumer
Ipsos online US and UK national poll:
Awareness is growing: Top benefits of Smart
Grid from the US and the UK are lowering
electricity bills and becoming energy
efficient
3-in-5 in the US and UK users would change
their electricity consumption behavior with
Smart Grid adoption
More information on smart grid is needed:
73% of US and UK users would like to
know more about smart grid pricing
structure
US users believe GE is the best suited to
develop Smart Grid technologies
Findings based on an Ipsos online survey conducted 6/26/09 6/30/09. A US national sample of 1,093 adults and a UK national sample of
1,034 adults aged 18 and older from Ipsos' online panel were interviewed. Sample is weighted to reflect U.S. and UK adult populations.
Hypothesis: combination of technology and consumer
behavior will expedite transformation
8 /
GE /
July 22, 2009
Educate, Excite and Engage
www.itsyoursmartgrid.com
Burns & McDonnell TECHBriefs 2008 No. 4
A typical electric utility WAN consists of a
high-bandwidth transport backbone network
that backhauls large numbers of channels and
applications from the utility service territory
to the control center(s). Lower-bandwidth
segments, or spurs, connect individual or
small groups of facilities to the backbone.
Fiber optics and/or digital microwave radio
are usually the technologies of choice for
backbone transport, whereas the spurs may
combine these technologies with less robust
alternatives such as copper twisted-pair
wire lines, power line carrier, VHF and UHF
radio links, and unlicensed wireless systems.
Common carrier leased services are used only
sparingly in most cases, for low-criticality
applications in locations where privately
owned alternatives are cost-prohibitive.
These utility WANs have served traditional
applications like SCADA/EMS, distribution
automation (DA)/demand-side management
(DSM) and automatic meter reading (AMR),
now popularly encompassed as part of the
Smart Grid (see Figure 1). The number of
locations requiring communications service
increases and the criticality of each location
to the integrity of the overall grid decreases as
these applications are pushed deeper into the
distribution system (i.e., farther out from the
primary substation and closer to the customer).
Historically, this combination of increasing
costs and decreasing benefits has been the
primary obstacle to deployment of more
feeder-level and customer-level applications
such as DA/DSM and AMR/advanced meter
infrastructure (AMI). When such applications
were deployed, costs were controlled by limiting
communications to one-way systems like
broadcast radio signals or narrowband, high-
latency systems such as power line carriers or
dial-up phone lines.
Networks for the Future
Today, the political and regulatory impetus for
wider deployment of Smart Grid applications,
especially their deployment all the way to the
customer premises, has resulted in pressure on
By James G. Cupp, PE, and Mike E. Beehler, PE
Electric utilities faced with the prospect of
increasing customer rates are seeking solutions
to challenges presented by rising global energy
demand, aging infrastructure, increasing fuel
costs and renewable portfolio standards in light
of climate change. Many consider Smart Grid to
be one such solution.
If we define the Smart Grid as the convergence
of information and operational technology
applied to the electric grid, allowing sustainable
options to customers and improved security,
reliability and efficiency to utilities, then we
must focus on deployment in ways that address
rate and bill impacts. The previous issue of
TechBriefs provided an analysis of the political
landscape, sustainability factors and project
justification points. Here, we will outline the
technical implementation of technologies that
enable Smart Grid practices.
Communications for Data Transport
Electric utilities continue to be among
the largest users of privately owned and
operated wide-area networks (WANs) for
communications. These networks include a
hybrid mix of technologies including fiber
optics, power line carrier systems, copper-wire
line, and a variety of licensed and unlicensed
wireless technologies. The utility WAN is
designed to support applications vital to the
safe and reliable operation of the electric utility
mission-critical infrastructure: protective
relaying for high voltage lines, SCADA/EMS,
mobile fleet voice and data dispatch,
generating plant automation, distribution
feeder automation and physical security.
Rather than relying on public communication
carriers (AT&T, Sprint, Verizon, et al), utilities
justify the costs of building and operating their
own private WANs because of the highly critical
nature of these applications for maintaining
a reliable and secure power grid. Less-critical
business applications such as corporate voice
and data networks are also supported, but
are not normally the driver for private
WAN deployment.
ImplementingSmartGridCommunications
Managing Mountains of Data Opens Up New Challenges
for Electric Utilities
What is needed is a
nearly ubiquitous IP
transport network
operating at
bandwidths robust
enough to handle
traditional utility
power delivery
applications along
with vast amounts
of new data from
the Smart Grid.
TECHBriefs 2008 No. 4 Burns & McDonnell
utility engineers to solve the problem
of establishing robust data transport
WANs to the distribution feeder and
customer level. The proliferation
of information technology utilizing
Internet protocol (IP) transport over
Ethernet has made IP the de facto
standard for data transport. What
is needed is a nearly ubiquitous
IP transport network operating at
bandwidths robust enough to handle
traditional utility power delivery
applications along with vast amounts
of new data from the Smart Grid.
These networks need to be scalable
enough to handle future applications
as they come.
Communications for Smart Grid data transport
require that utilities address both the backbone
and the spur segments. Most electric utility
communications backbones today are based
largely on traditional time-division multiplexing
(TDM) digital architectures. TDM technology,
while highly reliable, was originally developed
for the transport of point-to-point constant-
bit-rate voice communications and is not
necessarily suited to cost-effective transport
of point-to-multipoint bursty data traffic
required in an IP environment. The Smart Grid
will require that these backbones be upgraded
to backhaul Ethernet/IP data traffic at speeds
ranging from one to 10 gigabits per second in
a highly reliable manner. Rather than replacing
their legacy TDM networks, many utilities
will opt initially to overlay these existing
networks by overbuilding gigabit Ethernets
on unused fiber, and licensed or unlicensed
broadband wireless networks over existing
microwave paths.
Last-Mile Challenges
The deployment of spur or last-mile
communications for the Smart Grid, typically
from a backbone node to the customer
premises, offers additional challenges: First,
the network must cover a large area, especially
if coverage of residential customers is to be
provided. This has prompted some utilities to
take a phased approach, deploying the Smart
Grid to large-load industrial and commercial
customers initially, since the bulk of the
benefits of Smart Grid follow the bulk of the
electrical load, while residential applications
may remain on the back burner, waiting for a
clearer quantification of benefits. This balanced
approach may make sense economically but
may have broad ramifications politically as
rates rise and residential customers (voters)
demand relief.
Second, the proper balancing of performance
and cost is less clear for these last-mile
applications. Losing communications with
a small percentage of the DA or AMI for at
time, while undesirable, would pose no real
threat to the safe and reliable operation of the
overall power grid. Communications with a
single customer or residence do not require
the bandwidth and performance needed in the
backbone, so low-speed communication devices
with marginal signal strength that may require
multiple retransmissions to complete a message
can be tolerated. These issues raise questions
like, How reliable is reliable enough? How
fast is fast enough? and At what cost?
The relaxed performance and reliability
constraints in the last mile also mean that the
number of technology options available for
this portion of the WAN are more plentiful.
Technologies like meshed Wi-Fi, packet-
based store and forward radio networks,
and broadband-over-power line (BPL), not
considered reliable or robust enough for the
mission-critical infrastructure backbone, are
viable options for the last mile. Likewise, public
Wide Area Network (WAN):
Integrated Communications for
Data Transport
Power Substation
SCADA
Substation automation
networks
Electrical Power Distribution
System
Distribution automation (DA)
Micro-grids
Customer Premises
Automatic meter reading (AMR)
Home area networks (HAN)
Demand response (DR)
Demand-side management (DSM)
Distributed Energy Resources
Distributed generation
Solar/wind/fuel cell
Off-peak energy storage
Utility Data Center
Data storage and analysis
Utility Control Center
Energy management
systems (EMS)
Grid monitoring and control
applications
Read More
Look for part one of this
Smart Grid series in the
2008 No. 3 issue of
TechBriefs at www.burnsmcd.
com/techbriefs.
Figure 2: A utility WAN under Smart
Grid applications is required to
handle more robust data transport.
Burns & McDonnell TECHBriefs 2008 No. 4
carrier and CATV-based services like broadband
cable modem, digital subscriber line (DSL) and
cellular-based wireless data networks may also
make sense where utilities can negotiate bulk
service rates.
Data Integration and Management
Once the DA or AMI data is efficiently
transported, a completely new set of data
integration and management issues will
challenge utilities technically and culturally.
The Smart Grid will generate billions of data
points from thousands of system devices and
hundreds of thousands of customers. Data
must be converted to information through a
knowledge-management life cycle in which the
data from meters and appliances or substations
and distribution systems are analyzed and
integrated in a manner that leads to action.
A data-to-information-to-action plan will
develop as a better understanding of load
factors, energy usage patterns, equipment
condition, voltage levels, etc. emerges through
analysis and is integrated as functional
information into usable customer programs
and/or operation and maintenance algorithms
that identify, trend and alert operators to
incipient failure.
The first phase of the knowledge management
effort and a key component in the system of
information ecology is data conservation in a
data warehouse. Data storage needs will explode.
Data security will be important, but some of
the best system or customer programs may
result by allowing engineers and operators the
opportunity to freely analyze some or all of the
data. IBM, Oracle and Microsoft recognize the
huge growth potential and are visibly promoting
their solution concepts.
The Smart Grid is expected to be fully functional
by 2030. Data collected, analyzed, visualized and
warehoused from the Smart Grid will contribute
to many new ideas and inventions that can
improve lives.
Dennis M. Klinger, vice president of information
management services for Florida Power &
Light, calls this moving at the speed of value.
In an era of serial rate increases, customers will
demand value, and utilities must deliver that
value. This will be the future of electricity.
Customer Programs
The future of electricity begins with the
customer. Integration and management of
system and customer data can lead to the
ability to analyze warehoused information in
a manner that improves operational efficiency
and reliability, but most importantly, provides
sustainable options for customers. Sustainable
options will include demand response and
demand-side management programs for all
customer classes that include a home area
network (HAN) plan for residential customers,
allowing prices to devices supported by
ultra-simple rate plans. Data will become
information used for action.
Scheduling Savings
The HAN is a computer automation system for
the home (or small commercial business) that
integrates devices through the Internet and
with the electric utility to allow the user to be
proactive in the use or generation of energy. The
HAN will play a major role in making the grid
more efficient and in moderating rate impact
for the customer. The HAN begins on the
customer side of the meter and will be made up
of plug-in hybrid electric vehicles, renewable
and/or distributed generation, HVAC systems,
pool pumps, intelligent appliances and plug-
load consumer devices like MP3 players, cell
phones and iPods authenticated to the electric
utility on a secure network owned by the owner.
The owner will have the ability to control
the operation of devices on the HAN from a
computer to maximize the advantages for
demand response (DR) or DSM rate structures
offered by the electric utility.
Improving Load Factors
DR is a voluntary rate structure that typically
lowers a customers general rate per kilowatt-
hour in return for the utilitys option to
curtail power as needed during system peak
loading events. DSM is the effort to incentivize
customer use through simple time-of-use
rates that generally correspond to the cost
of producing electricity. DR and DSM shift
electric load and improve the electric utilitys
Wide Area Network (WAN):
Integrated Communications for
Data Transport
Power Substation
SCADA
Substation automation
networks
Electrical Power Distribution
System
Distribution automation (DA)
Micro-grids
Customer Premises
Automatic meter reading (AMR)
Home area networks (HAN)
Demand response (DR)
Demand-side management (DSM)
Distributed Energy Resources
Distributed generation
Solar/wind/fuel cell
Off-peak energy storage
Utility Data Center
Data storage and analysis
Utility Control Center
Energy management
systems (EMS)
Grid monitoring and control
applications
James G. Cupp, PE,
is manager of the
telecommunications engineering
department in the Burns &
McDonnell Transmission &
Distribution Group. He graduated
from the University of Missouri in
1984 with a bachelors degree in
electrical engineering. Cupp is a
registered professional engineer
in Missouri and California and a
member of IEEE.
For more information, please e-mail:
jcupp@burnsmcd.com or
mbeehler@burnsmcd.com.
Mike E. Beehler, PE,
is an associate vice president
in the Burns & McDonnell
Transmission & Distribution
Group. He graduated from the
University of Arizona in 1981
with a bachelors degree in civil
engineering. He received his MBA
from the University of Phoenix
in 1984. He is a registered
professional engineer in eight
states and is a fellow in ASCE
and a member or IEEE.
TECHBriefs
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2008 No. 4
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2008 Burns & McDonnell
Marketing, Communications
TECHBriefs
load factor and should not be confused with
energy efficiency programs that reduce load
and, therefore, sales. The current regulatory
construct allows utilities a reasonable rate
of return, or profits, on prudent investments
and the cost to operate and maintain those
investments. Some utilities seek to decouple
their sales from profits since energy-efficiency
programs lower sales as less electricity is
consumed. Decoupled sales and profits
theoretically make the electric utility indifferent
to energy efficiency programs and distributed
generation but remain a controversial issue
in the industry. Cyber security, ownership
of customer data, standardization of device
protocols for low-power personal networks,
customer acceptance of DR and DSM programs
and other issues are also sources of controversy
in HAN build-out.
Where Next?
Regulators and lawmakers are not passively
waiting for utilities to offer solutions to the
serial rate increases that are coming. Regulatory
action is being taken and the desired result is
clear. The Smart Grid must provide sustainable
options to customers. Allowing customers
to make sustainable decisions on the use of
electricity and, ultimately, satisfy regulators
will provide for full rate recovery and return
on investment. That done, utilities can move at
the speed of value to confidently use the Smart
Grid to achieve other security, reliability and
efficiency objectives.
These other objectives may include more
efficient meter reads and billing, better
customer service, theft/tamper detection, turn-
on/turn-off service, advanced pay services, load
forecasting, asset management, transformer
sizing, power quality improvements, and a
myriad of other efficiencies and services that
will be developed in the years to come, when
todays electric grid becomes the Smart Grid.
Allowing customers
to make sustainable
decisions on the
use of electricity
and, ultimately,
satisfying
regulators will
provide for full rate
recovery and return
on investment.
Building Automation Networks for Smart
Grids

Peizhong Yi
Electrical and Computer
Engineering Department
Illinois Institute of
Technology
Chicago, IL 60616
pyi@iit.edu

Abiodun Iwayemi
Technology
Chicago, IL 60616
aiwayemi@iit.edu

Chi Zhou
Technology
Chicago, IL 60616
zhou@iit.edu
ABSTRACT
Smart grid, as an intelligent power generation, distribution and control system, needs various
communication systems to meet its requirements. The ability to communicate seamlessly across
multiple networks and domains is an open issue which is yet to be adequately addressed in smart
grid architectures. In this paper we present a framework for end to end interoperability in home
and building area networks within smart grids. 6LoWPAN and the Compact Application Protocol
are utilized to facilitate the use of IPv6 and Zigbee Application Profiles such as Zigbee Smart
Energy for network and application layer interoperability respectively. A differential service
medium access control scheme enables end to end connectivity between 802.15.4 and IP
networks while providing quality of service guarantees for Zigbee traffic over Wi-Fi. We also
address several issues including interference mitigation, load scheduling and security, and
propose solutions to them.

I. Introduction
The smart grid is an intelligent power generation, distribution and control system. It enhances
todays power grid with intelligence, bi-directional communication capabilities and energy flows
[1]. These enhancements address the efficiency, stability and flexibility issues that plague the grid
at present. In order to achieve its promised potential, the smart grid must facilitate services
including the wide-scale integration of renewable energy sources, provision of real-time pricing
information to consumers, demand response programs involving residential and commercial
customers and rapid outage detection. All these tasks demand the collection and analysis of real-
time data. This data is then used to control electrical loads and perform demand response.
In order to obtain the full benefit of smart grids, their communication infrastructure must
support device control and data exchanges between various domains which comprise the smart
grid. The smart grid must be allied with smart consumption in order to achieve optimum power
system efficiency. This necessitates the integration of smart buildings, appliances and consumers
in order to reduce energy consumption while satisfying occupant comfort. Building automation
systems (BAS) already provide this intelligence, enabling computerized measurement, control and
management of heating, ventilation, air-conditioning (HVAC), lighting and security systems to
enhance energy efficiency, reduce costs and improve user comfort. Buildings consume 29% of all
electricity generated in the United States [2], therefore the ability of BAS to communicate and
coordinate with the power grid will have a tremendous effect on grid performance. Home area
network (HANs) provide similar capabilities for residential buildings. They facilitate the
interconnection of smart appliances with smart meters to automatically regulate residential
electricity usage and respond to pricing signals from the utility [3].
Zigbee is a low cost, low power, low data rate and short range communication technology
based on the IEEE 802.15.4 standard. United States National Institute for Standards and
Technology (NIST) has defined ZigBee and the ZigBee smart energy profile (SEP) as the one of
the communication standards for use in the customer premise network domain of the smart grid
[4]. However due to Zigbees limited transmission range, it must be a combined with longer-range
communication technologies such as IEEE802.11 in order to provide end to end connectivity
across the smart grid.
In this paper, we discuss the different issues relevant to communication infrastructures for
building automation system in smart grid. We begin with an introduction of whole system
architecture of a smart grid system based on a Perfect power system [5] including premises
networks, field area networks and a power system controller. We designed and implemented a
Zigbee based building energy management testbed system. Our system integrates a Zigbee
enhanced building automation system with the smart grid to harness energy management schemes
such as demand response, real-time power pricing, peak load management and distributed
generation. We also propose a quality of service (QoS) aware 802.15.4/802.11 interoperability
framework for home area network and building area network (BAN) which prioritizes wireless
sensor network (WSN) traffic over WiFi networks. In our scheme WSN packets are classified
according to their QoS requirements. They are then aggregated and tunneled over the Wi-Fi to the
BAS server. We also proposed a frequency agility-based interference mitigation scheme to avoid
interference from neighboring WiFi networks. Distributed load scheduling based on optimal
stopping rules [6] was proposed in the paper which can reduce the peak load and adjust utility
operation time based on electricity pricing and waiting time. We also discuss open issues including
security and data compression.
The rest of paper is organized as follows. Section II describes a smart grid system architecture.
In section III, the Zigbee based building energy management system was introduced. Our proposed
QoS-aware 802.15.4/802.11 interoperability framework is presented in Section IV. Frequency-
agility based interference mitigation algorithm is proposed in section V. Section VI presents our
proposed optimal stopping rule based distributed load scheduling scheme. Several open issues
including smart grid security and data compression discussed in Section VII. Finally, the paper is
concluded in Section VIII.
II. System architecture
The smart grid is the convergence of information technology, communications and power
system engineering to provide a more robust and efficient electrical power system [7]. Smart grids
consist of sensing, communication, control and actuation systems which enable pervasive
monitoring and control of the power grid [8]. These features enable utilities to accurately predict,
monitor and control the electricity flows throughout the grid. They also transform the power grid
into a bi-directional power system in which customers can supply as well as receive power from
the grid, converting the grid into a distributed power generation system [10].
The Smart grid utilizes the hierarchical structure detailed in [8] and displayed in figure 1. The
foundation of this structure is the power system infrastructure consisting of power conversion,
transportation, consumption and actuation devices. They include power plants, transmission lines,
transformers, smart meters, capacitor banks, reclosers and various devices. Smart meters enable bi-
directional power flows between utilities and consumers, enabling consumers to produce and
supply energy to the grid thereby becoming prosumers. This development promises significant
improvements in power system reliability, as alternative power sources can supply the grid during
utility power outages. It also increases system efficiency, as line losses due to long distance
transmission are eliminated. These smart grid capabilities will foster greater incorporation of
renewable energy sources such as wind and solar power into the grid, thereby reducing the
dependence on fossil-fuel power generation and reducing greenhouse gas emissions.
The second layer of the smart grid architecture is the sensors. Power system reliability is
significantly improved via embedded sensors distributed throughout nodes within the power
system. These sensors enable real-time fault detection and isolation via bidirectional digital
communication links. They also provide granular system health data that can be used for rapid
system analysis, fault preemption and trending. Smart meters also provide users and utilities with
real-time power consumption data and enable the remote monitoring and control of building loads
and home appliances. Consumers can also receive real time pricing information to facilitate
informed decision-making.
The communications infrastructure is the glue that binds all these various layers together and
consists of wide, local, building and home area networks. They consist of broadband technologies
such as 802.16 WiMAX, 802.11 WiFi, optical fiber, 802.15.4/Zigbee and power line carrier
schemes. Zigbee has found great application in smart metering, home and building automation
control due to its low-cost, flexibility, wide-spread support and inter-vendor interoperability.
At the top of the system is the decision intelligence block which encompasses substation
automation, fault-management, load distribution and other control strategies deployed to guarantee
power system stability and balance power demand and supply.

Figure 1: Smart Grid structure

The smart grid concept has been extended to smaller smart grid networks known as smart
micro grids. A smart micro grid is a localized smart grid covering specific geographical regions
such as suburban neighborhoods or university campuses, and incorporating local or onsite power
generation.
Building Automation systems provide centralized and automated management of major or
critical loads within building. Building automation aims to reduce energy costs, improve energy
efficiency and facilitate off-site building management [11-13]. The primary requirements for
building automation applications are low cost, ease of installation and flexibility/reconfigurability.
III. Zigbee based home automation

3.1 Zigbee/IEEE 802.15.4
Zigbee is a low rate, low power, wireless personal area networking scheme [11] based on the
IEEE 802.15.4 standard. It is designed for short distance communication, and supports a maximum
data rate of 250 kbps without encryption.
Zigbee devices are ideal for smart grid and building automation applications because they are
wireless, low-cost, and robust. Wireless nodes also provide flexibility, easy re-deployment and
reconfiguration. The integration of Zigbee radios with light switches, occupancy sensors,
temperature sensors and smoke detectors enables measurement and control of all the building
loads. The low power consumption of Zigbee is achieved by very low system duty cycles, with
typical Zigbee nodes having duty cycles of less than 5%. The result is significant energy savings
and greater comfort for building occupants [14][15]. Details of Zigbees radio frequency
characteristics, frequency bands and modulation schemes are provided in Table 1.

Table 1. Zigbee Radio Frequency Characteristics

3.2 Home automation system
We developed a Zigbee-based home automation system [18] in order to demonstrate the utility
of Zigbee-based home automation networks. Two-way communication was used to transmit
readings from Zigbee end nodes to a Data Collection and Control Center (DCCC), and to pass
control messages from the DCCC to the end nodes. Each end node is able to relay the collected
data to the DCCC via distributed Zigbee routing nodes. The test bed architecture is shown in figure
2. The Zigbee coordinator aggregates received data for display and processing, and transmit
control signals to the end nodes according to the selected power management strategy.
Frequency Region
Modulation
Scheme
Bit rate
(kbps)
Channels Channel spacing
868 MHz Europe BPSK 20 1 N/A
915 MHz Americaand Asia BPSK 40 10 2 MHz
2.4 GHz Global O-QPSK 250 16 5 MHz
Data Collection and Control Center
Zigbee Coordinator
Demand
Response
Module
Light Sensing
and Actuation
Module
Temperature
Sensing Module
Meshbean Zigbee Module Meshbean Zi gbee Module Meshbean Zigbee Module

Fig 2. Zigbee HAN Demonstration System Architecture

A. The Data Collection and Control Center (DCCC)
The DCCC serves as the system controller, receiving input from the various sensors along with
real time power pricing. It also manages the loads for energy efficiency, demand response, and
cost savings. A screenshot of the DCCCs user interface is shown in figure 3. The DCCC is
developed in MATLAB and utilizes a GUI front end to communicate directly with the Zigbee
Network coordinator and remote actuator modules. The DCCC provides the following functions:
The display of received sensor data (temperature, light levels, room occupancy etc)
Remote control of Zigbee modules
User configuration of timing, pricing and sensor data threshold values
Control of externally connected loads on the basis of user determined price thresholds,
time of day and sensor readings
Lighting control based on room occupancy and other variables.

Fig 3. Perfect Power Controller GUI
B. Hardware System
Our hardware system consists of several Mesh bean Zigbee motes which we programmed to
support the following functions:
Demand response
Lighting control
Ambient temperature sensing and control

Fig 4. Meshnetics Meshbean Module block diagram

As shown in Figure 4, these modules combine a ATMEL 1281V low power microcontroller
with 8K of RAM and 128kB of flash memory, an ATMEL RF230 Zigbee radio, onboard light and
temperature sensors in a single battery powered- module with a USB interface. More details of our
scheme can be found in [18].
IV. Interoperability of Zigbee and WiFi
Building and home area networks are only one of a variety of networks that make up the smart
grid. Due to the multiplicity of networks and protocols within the smart grid, interoperability is a
key issue. The availability of an interoperability framework is essential to end to end
communication across and within smart grid domains, so a significant amount of work is being
invested in interoperability frameworks for the smart grid.
The usage of IP within wireless sensor networks facilitates easy interconnectivity with existing
networks, enables the re-use of existing TCP/IP protocols, tools and programming paradigms and
permits the usage of IP friendly protocols such as BACnet and Modbus over WSN nodes. These
goals sparked research into the use of IPv6 over WSNs, as the ability to connect even tiny
wireless sensor nodes to the internet would facilitate ubiquitous computing in the home and
throughout the smart grid.

Fig 5. Interoperability Network Architecture
Interconnection between WSNs and TCP/IP networks has primarily been by means of
gateways [24], as it had been assumed that TCP/IP was too memory and bandwidth intensive for
usage in resource constrained wireless sensor networks [25]. However, the development of uIP, the
first lightweight IP stack for WSNs [26] demonstrated the viability of IP for wireless sensor
networks and led to a flurry of work into on the use of IP for WSNs. The 6LoWPAN IETF
standard defines a framework for deployment of IPv6 over IEEE 802.15.4 networks [27] by means
of header compression and routing and forwarding at layers 3 and 2 respectively. This work is
extended in [28] to address issues such as link duty-cycling, network bootstrapping and node
discovery to create a complete IPv6 architecture for WSNs.
The primary interconnection schemes proposed for connecting Zigbee WSNs to the Internet
are proxy-based gateways [24], [29][30] and sensor stack schemes [28] [31]. The issue of the
inability of Zigbee to natively support IP is addressed by the compact architecture protocol (CAP)
[32] in which the authors create a framework to enable the usage of Zigbee application layer
protocols over any IP-capable network. We extend their work by creating a framework for
interworking between Zigbee and Wi-Fi networks in HANs and BANs while providing QoS
guarantees. Taking into consideration BAS application requirements, reliability and short delay are
two most important factor related to the performance. In [33] , authors present an architecture for a
medical information system which integrates WLAN and WSNs. In [34], [35], several QoS
enabling mechanism present in the IEEE 802.11e provide us some ideas to design the frame work
of the integration system. A two-tiered WSN and WLAN scheme with QoS guarantees is provided
in [36] but they do not address IP-based interoperability.
4.1Interworking
Interoperability is The capability of two or more networks, systems, devices, applications, or
components to exchange and readily use informationsecurely, effectively, and with little or no
inconvenience to the user [37]. The grid wise architecture council (GWAC) [38] has defined an 8
layer interoperability framework encompassing all the facets of interoperability. Our primary focus
is the 4 lowest layers of this framework (Fig 6) and we utilize it to develop an interoperability
framework for HANs and BANs.
The Internet Engineering Task Force (IETF) 6LoWPAN working group defined the IPv6 over
Low power Wireless Personal Area Networks (6LoWPAN) protocol to facilitate the use of IPv6
over low power and low data rate WSNs [39]. It was initially designed for usage over the
802.15.4 physical (PHY) and medium access layer (MAC) layers but can be extended for use over
other PHY and MAC architectures (Fig 6).
Fig.6 Interoperability Framework

In order to use IPv6 over 802.15.4 networks an adaptation layer between the 802.15.4 data link and
network layers [25] was developed to provide the following functions:
Stateless Compression of IPv6 Headers by means of HC1 compression [27] to reduce
their size from 40 bytes to approximately 4 bytes , thereby reducing transmission
overhead.
Fragmentation and reassembly scheme to support the transmission of IPv6 packets
over 802.15.4 frames. This is required as the minimum MTU of IPv6 packets is 1280
bytes while the maximum size of a 802.15.4 frame is 127 bytes.
The benefits of 6LoWPAN over competing WSN implementations are its ease of connectivity
with IP networks, and its large addressing space (2
128
compared with 2
16
for Zigbee). In addition,
the concept of device roles found in Zigbee is not applicable, with each device serving as a router
for its neighbors traffic. Unlike Zigbee, 6LoWPAN permits duty-cycling of routers, thereby
extending device lifetime. The primary drawback of 6LoWPAN is its incompatibility with Zigbee,
Zigbees significant industry support, and very strong device interoperability guarantees across
multiple vendors. A combination of the flexibility of IP networking and 6LoWPANs power
saving schemes with Zigbees application profiles would marry the best features of both
implementations to provide an industry standard, interoperable framework for HANs and BANs
[40].
The compact application protocol (CAP) details a mapping of the Zigbee Application Layer to
UDP/IP primitives [40][41] , permitting the usage of Zigbee application profiles over any IP
capable network [32]. This removes the Zigbee application layer (ZAL) dependency on the Zigbee
network layer and the 802.15.4 PHY and MAC layers. As shown in figure 7, it preserves the
excellent application layer interoperability features of public Zigbee Application Profiles while
enabling end to end interoperability across the HAN/BAN using Wi-Fi, 802.15.4 and Ethernet.
Rather than transmitting APS frames to the Zigbee network (NWK) layer for transmission to other
nodes across the network using Zigbee addresses, the APS frames are now carried over UDP
frames, necessitating modification to the addressing scheme to support communication with IP
hosts using IP addresses and port numbers.

CAP is composed of four modules which correspond to the Zigbee application support sublayer
(APS), Zigbee device objects (ZDO), Zigbee cluster library (ZCL) and APS security modules. The
lowest layer of CAP is the Core module, which corresponds to the Zigbee APS layer. It frames

Figure 7. Zigbee, 6LoWPAN and CAP Stacks Protocol Stack[19,20]
data packets for transmission across the network, but now APS layer frames will be sent in UDP
datagrams rather than in Zigbee NWK layer frames. In order to achieve this, Zigbee Application
Profiles are re-written to replace each Zigbee short (16-bit) and long (64-bit) address entry with a
CAP address record. This consists of an IP address and UDP port pair, or a fully qualified domain
name and UDP port number.
The data protocol is used to exchange data items and commands between communicating peer
nodes. It encapsulates the ZCL and allows it to be used without modification, providing full ZCL
support. The Management Protocol encapsulates Zigbee device profile (ZDP) command messages
which are handled by the ZDO module, and provides service and device discovery and binding
functionality. The final module is the Security Module which provides the same services as the
APS Security layer, and is used to encrypt APS frames for secure transmission.
4.2 Gateway router
Zigbee networks are primarily used for periodic data collection of low-bandwidth sensor and
alarm data while Wi-Fi networks support a variety of services with varying quality of service
requirements. Based on this a differential service medium access control scheme [33] is required to
guarantee timely and reliable delivery of Zigbee traffic over building Wi-Fi networks. Thus we
design an enhanced distributed channel access (EDCA) based QoS model to achieve this.
Our framework facilitates the interconnection of the WSN to the BAN server via the in-
building Wi-Fi system. This interconnection is achieved using a dual-stack gateway router (GR)
node which performs QoS classification and packet aggregation on Zigbee Application layer
packets before tunneling them to the BAN server over Wi-Fi. As seen in Figure 6, we utilize the
802.11 and 802.15.4 MAC and physical layer protocols in conjunction with 6LoWPAN, the
compact application protocol and Zigbee application layer application profiles to provide end to
end interoperability within HANs and BANs. Physical layer interoperability is provided by
means of the GRs dual stack and 802.11 and 802.15.4 interfaces. Network layer interoperability is
provided using IPv6 and the use of 6LoWPAN to enable the WSN to communicate using IP.
Syntactic interoperability is achieved by the use of the CAP, which allows us to utilize publically
defined Zigbee application profiles such as the smart energy or home automation profiles to
provide application layer interoperability across multi-vendor devices. This frees us to use Zigbee
application profiles across the HAN, on PCs, routers, and over any IP-capable device nodes all
over the home or commercial building, rather than only over Zigbee 802.15.4 networks. In
addition, the ability of our system to schedule 802.15.4 and 802.11 MAC frames enables us to
provide quality of service prioritization to emergency Zigbee traffic.

4.3 QoS of service framework
The GR facilitates interconnection of the 802.15.4 and Wi-Fi networks to enable end to end
communication. The GR contains a MAC scheduler in which can communicate with 802.15.4
MAC and 802.11 MAC layer. On the basis of these assumptions, we divide the queuing model
into three parts. In the first part, traffic from WSN end nodes to the coordinator is considered; in
the second part, packets from the Wi-Fi access point (AP) to the GR are discussed; finally we will
focus on the queuing model of packets sent from GR. In this scheduling scheme, the use of
guaranteed time slots (GTS) can combine the task of scheduling uplink and downlink flows of a
naturally distributed carrier sense medium access with collision avoidance (CSMA/CA)
environment into a central scheduler residing in the GR.
As shown in figure 8, each WSN node has two traffic queues, one for emergency or alarm
traffic and the second for normal traffic [33]. Class 0 (alarm packets) are higher priority
emergency/control data while Class 1 (normal packets) contains routine data. Nodes will typically
transmit two message types. The first are GTS requests to reserve slots in CFP, and the second
types are data packets containing sensor data.

Data frames are assigned to their respective queue and contend for transmission over the
channel. A node contends per information frame and can only send one packet each time. If the
node has an emergency message in its queue, it will request a shorter back off exponent value to
enable prompt transmission of emergency traffic. Nodes which do not have emergency traffic
utilize the regular value of the back off exponent, resulting in longer wait times.
Traffic differentiation at the GR is performed on the basis of destination ports. As seen in figure
9, we use different ports for normal and emergency traffic and map them to EDCA video (AC_VI)
and voice (AC_VO) access categories respectively before transmitting over the Wi-Fi network. A
dedicated BAS server is the final recipient of the entire off network WSN traffic, and this server
filters traffic based on the ports the data is received on.

Due to the significant size difference between 802.15.4 and Wi-Fi frames, traffic aggregation is
required for delay-tolerant traffic while time sensitive WSN traffic is transmitted immediately. The
encapsulation of individual 802.15.4 packets is very inefficient as the Wi-Fi header frame
overhead is often larger than the useful information, necessitating packet aggregation to improve
efficiency.

Fig 8. Queuing model from WSN end nodes to WSN coordinator
Fig 9. Queuing model from Gateway Router to WiFi AP

A hybrid scheduling model is used in the GR as shown in Fig 10. All packets received at the
GR can be transmitted in either contention access period (CP) or contention free period (CFP)
modes. During the CP mode, nodes use a slotted CSMA/CA scheme to compete for the channel with other
nodes. In CFP mode, up to seven GTS can be reserved and allocated by the coordinator. Devices which
require the allocation of a new GTS transmit a GTS request command to the WSN coordinator and
coordinator will assign GTS to each device. Our hybrid scheduling model adopts both EDCA in CP
and point coordination function (PCF) controlled channel access (PCCA) in the CFP to achieve
fairness and provide service guarantees. The GR assigns packets to different MAC schemes based
on message type. Emergency/control messages which need to be sent out immediately will use
EDCA contention access with smaller back off exponent. On the other hand, PCCA is used for
routine messages, as these can wait for aggregation to be performed, and are subsequently
transmitted in reserved times slots.

Routine messages sent from the 802.15.4 PAN to the Wi-Fi access point are initially sent to
the scheduler, where they are enqueued and time-stamped while a countdown timer initialized.
The queue size is set to maximum size of a Wi-Fi payload, and if the queue is filled with routine
messages before timer expiry, the scheduler reserves a GTS, aggregates all the enqueued traffic
and transmits them over the Wi-Fi radio. If the queue is not filled by timer expiry, then the GR
reserves the number of GTSs required to transmit the queue and sends the accumulated data. The
primary benefits of message aggregation with PCCA are collision and delay reduction for routine
traffic.

V. Interference avoidance scheme
Zigbee networks operate in the license-free Industrial, Scientific and Medical (ISM) frequency
band, making them subject to interference from various devices that also share this license-free
frequency band. These devices range from IEEE 802.11 wireless local area networks or WiFi
networks and Bluetooth devices, to baby monitors and microwave ovens. Studies have shown that
WiFi is the most significant interference source for ZigBee within the 2.4 GHz ISM band [42],
[43]. ZigBee and WiFi networks are used extensively for BAN in smart grid applications, leading
to co-existence problems.

Fig 10. Queuing model in the WSN Coordinator

Therefore we have performed a large amount of experiments to identify the safe distance and
safe offset frequency to guide the Zigbee deployment [44]. The performance of ZigBee in the
presence of IEEE 802.11 is defined and analyzed in terms of bit error rate (BER) and packet error
rate (PER) by comprehensive approach including theoretical analysis, software simulation and
empirical measurement. Based on the concepts of safe distance and safe offset frequency, we
propose a frequency-agility based interference mitigation algorithm [45]. PER, Link quality
Indication (LQI) and energy detection mechanisms are used to detect the presence of significant
levels of interference within the current channel. Once interference is detected, the coordinator
instructs all the routers to perform an energy detection scan on channels and then send a report to
the coordinator. The coordinator selects the channel with the lowest noise levels and then requests
all nodes in the PAN to migrate to this channel. In order to improve the detection time and power
efficiency, all ZigBee channels are divided into three classes based on the offset frequency. The
energy detection scan will be performed from high priority class to low priority class channels to
quickly identify the channel with acceptable interference level. The testbed implementation
shows that the proposed frequency-agility based algorithm is simple but efficient, fast, and
practical.

VI. Opportunistic load scheduling
Demand response is the technology that manages customers electricity usage to reduce
electricity expenditure. Since customers are provided with the real-time power price by smart
metering devices, load scheduling must incorporate real price in order to perform load control. The
real-time price is an indicator of the system load. In general, the price is high when the load
demand is high and vice versa. Some level of peak demand reduction may be automatically
achieved by rational customers who aim to minimize the electricity cost. Naturally the customers
will choose to operate their flexible loads when the real-time price reaches the minimum. In this
way, those flexible loads are shifted to the low demand time period, and consequently the peak
demand is reduced.
Nowadays most existing load scheduling schemes are based on the assumption that future
electricity prices as known or predictable. We propose to apply the Optimal stopping rule [46], to
perform distributed load scheduling. Our scheme to determines when to operate the flexible loads
under the assumption that price signals are unknown and considered as random processes Optimal
Fig.11.ZigBeeandWiFichannelsinthe2.4GHzband
stopping rule is proved to perform excellently in communication networks [48].Thus we extend
the application of optimal stopping rule to power grids [55]. The time requirement of the load is
taken into the consideration. If a user does not have time requirement, it will always choose to
operate at the time when the electricity price is the lowest to minimize the electricity cost.
However, many appliances, such as washing machine, are sensitive to the waiting time. Therefore
the spent time (which includes waiting time and service time) must be taken into consideration.
The cost is modeled as the wait cost plus the electricity cost, and the objective is to minimize the
total cost by choosing the best operating time. We show that the optimal scheduling scheme is a
pure threshold policy, i.e., each user needs to turn on the load when the electricity price is lower
than a certain value; otherwise, the load remains idle. Simulation results show that the proposed
low-complexity distributed scheduling scheme can dramatically reduce the cost. In other words,
the loads are effectively shifted to low demand time period. More details can be found in [6].

VII. Open issues and future work
7.1 Smart Grid Security
The Smart Grid requires detailed energy usage information in order to facilitate services such
as real-time pricing and billing, customer energy management, and system load prediction.
Unfortunately, as is the case with many other complex systems, the smart grid falls foul of the law
of unintended consequences. The availability of such detailed usage data from every household
every 5 15 minutes has created a massive security problem [49]. Smart meter data analysis
provides the ability to determine which appliances are in use at any given time period. This has led
to the fear that users can be spied upon by their meters, negatively impacting smart meter
deployment [50]. The networking of smart meters with the electricity grid also raises the specter of
smart meter fraud, and increases the vulnerability of these devices to malicious attacks such as
Denial of service (DoS) attacks.
A. Privacy Issues:
Research into non-intrusive appliance load monitoring technology (NALM) [51-53] has
enabled the identification of appliances by means of their unique fingerprint or appliance load
profiles. By means of software analysis it possible to determine which appliances are in use and
at what frequency. It is provides access to information including the types of appliances a resident
possesses, when he/she has their shower each day (by monitoring extended usage of the heater),
how many hours they spend using their PC, or whether they cook often or eat microwave meals.
This has led to the very valid fear that customers can be profiled, and monitored by means of their
smart meter. In addition, improper access to such data can lead to violations of privacy or even
make one open to burglary.
B. Smart Meter Fraud:
The desire for lower electricity bills provides a compelling incentive for smart meter fraud. The
ability to report inaccurate data to the utility means that customers can reduce their bills by falsely
claiming to supply power the grid, or consume less power than their actually do. The possibility of
commercially available smart meter hacking kits is also a reality [54].
C. Malicious Attacks:
The internetworking of smart meters makes them especially vulnerable to denial of service
attacks in which several meters are hijacked in order to flood the network with data in order to shut
down portions of the power grid, or report false information which can result in grid failures.

D. Smart Grid Security Solutions
Smart grid security issues can only be solved by a combination of regulatory and technological
solutions. A regulatory framework is required to specify who has access to smart meter data and
under which conditions, as well as enforcement of penalties for data misuse [54]. Two
technological solutions have been proffered. The first is to aggregate residential data at the
neighborhood transformer and then anonymize it by stripping it off its source address before
transmitting it to the utility [49]. Kalogridis et al [55] propose the use of a third party escrow
service which receives the detailed meter data, anonymizes it by stripping off any information that
could be used to identify a specific household, then sends the utility the aggregate data required for
billing and monthly energy usage for each customer.
We propose a digital rights management system (DRMS) based scheme which extends that
proposed in [56]. Users license permission to the utility to access their data at varying levels of
granularity. By default the utility would have access to monthly usage and billing data, but
customers have to grant the utility permission to access their data at higher levels of granularity in
exchange for rebates or other incentives. Such a system eliminates the need for an intermediary
between the utility and the consumer, but requires a means of guaranteeing that the utility cannot
access restricted customer data.

7.2 Data compression
Mitigating data surges and traffic congestion due to catastrophic events is an open research
area. When emergencies such as power blackouts occur, hundreds to thousands of smart meter
flood the data collection center with traffic. Reliability is an important issue since the data needs to
be transmitted effectively and efficiently, and Network coding is a promising approach to
improving the reliability of the wireless networks under such conditions. By means of Network
Coding we could potentially introduce intraflow network coding into the data transmission in
Zigbee networks, i.e., routers mix packets heading to the same destination. As a result of this
mixing, each received packet contains some information about all packets in the original file, and
thus, no coded packet is special.
Conventionally, without coding, a transmitter needs to know which exact packets the
destination misses so that it can retransmit them. When the network is unreliable, communicating
this feedback reliably consumes significant bandwidth. In the presence of coding, no specific
packet is indispensable and as a result a transmitter does not need to learn which particular packet
the destination misses, it only needs to get feedback from the destination once it has received
enough packets to decode the whole file. The reader may have noticed that the above applies to
erasure-correcting coding applied at the source too. Indeed, source coding is just a special case of
intra-flow network coding, where the source is the only node allowed to mix the packets in the
flow.

VIII.Conclusion
In order for the smart grid to achieve its potential, we need the resolve the problem of
interoperability between the different communications technologies deployed in the grid. .In this
paper, we proposed a HAN architecture for energy management within smart grid environments.
ZigBee-based building energy management was demonstrated to enhance building automation
systems and permit granular control of electrical and HVAC systems in a smart grid context. An
open architecture of an interoperability frame work for HANs and BANs was presented in the
paper. Physical layer interoperability is provided by means of a router platform with 802.11 and
802.15.4 interfaces. Network layer interoperability is provided using IPv6 and the usage of
6LoWPAN to enable the WSN to communicate using IP. Syntactic interoperability is achieved by
the use of the CAP. In the QoS framework, emergency/control message need to compete with
routine traffic from other nodes. The prioritized contention algorithm ensured the high priority
access the channel for these messages. Use of compression and scheduling increases the efficiency
of the data transferred from ZigBee to Wi-Fi frames. A frequency-agility based interference
mitigation algorithm was introduced in the paper to guarantee the performance of Zigbee and WiFi
coexistence. Optimal stopping rule base load scheduling scheme as a distributed load control was
present in the paper. More open issues including security and data compression were discussed in
the paper.
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.

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2009 Cisco Systems, Inc. All rights reserved. This document is Cisco Public Information. Page 1 of 11

Smart Grid
Leveraging Intelligent Communications
to Transform the Power Infrastructure

Authors
Venkat Pothamsetty
Saadat Malik

February 2009

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Executive Summary
Smart grid is the term generally used to describe the integration of the elements connected to the electrical grid with
an information infrastructure to offer numerous benefits for both the providers and consumers of electricity. It is an
intelligent future electricity system that connects all supply, grid, and demand elements through an intelligent
communication system. The backbone of a successful smart grid operation is a reliable, resilient, secure, and
manageable standards-based open communication infrastructure that provides for intelligent linkages between the
elements of the grid while participating in the decision making that delivers value to the utility and supply and demand
entities connected to it.
The ability of a utility to create ubiquitous connectivity between all of its current data sources and decision-making
points is critical to the success of smart grid. A communication infrastructure that can efficiently move disparate types
of data with varying degrees of transport, security, and reliability requirements is indeed a central requirement.
However, it is the ability of the communication infrastructure to participate and work together with the data providers,
the decision-making entities, and the actuators to achieve the goals of the smart grid environment that truly brings
about the business transformation utilities are aiming for.
Smart grid is a paradigm-shifting transition for utilities. Ciscos ability to transform a utilitys environment from end to
end through a converged intelligent network platform that becomes the fabric that optimally brings together all the
value factors of a smart grid is Ciscos primary differentiator. Cisco has a history of proven commitment to taking
markets through transitions. Data, voice, and now video are examples. With a strong and well-established ecosystem
of partners, Cisco is today committed to becoming the trusted advisor and partner for the utility industry as it attempts
to bring innovation and disruption to an environment ripe for change.
What Is Smart Grid?
The concept of a smart grid emerges from the integration of the power systems view of the electricity grid with its
corresponding information systems view. The combined view that uses the information network to enhance the
functioning of the electricity grid is generally what is called the smart grid.
Power Systems View of the Electricity System
The power systems view of the electric grid describes the electric network in place for delivering electric power from
its producers to its consumers (Figure 1). This network generally supports one of the following functions:
Power generation: Power generation includes the facilities for generating power in central as well as
distributed locations.
Electricity transmission: Electricity transmission refers to the high-voltage network of electric cables used to
take bulk power from generation facilities to power distributions facilities near populated areas.
Electricity distribution: Electricity distribution is the process in which the high-voltage power is down-
converted and disseminated to the consumers through a mesh network of cables reaching all the way to
consumer premises.
Consumption: Consumption refers to either a private or commercial entity that consumes power from the
distribution network. The consumer may also participate in the generation and dissemination of power (such
as through solar-generated power in homes).

In addition, electric trading markets also provide an overlay function that allows for purchase and sale of electric
capacity.

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Figure 1. Physical View of Power Infrastructure (Source: Cisco)

Information Systems View of the Electricity System
Operation of the electrical system today is possible through a series of sensors and devices that collect information
from many different places in the system and pass it onto human and automatic operators (Figure 2). These
operators make decisions based on this information about how to change the state of the system. These decisions
are passed back to the grid where devices convert these decisions into actual changes on the electric grid.
Following are some of the sources of information on the grid:
Generation
Equipment-conditioning information
Information from sensors monitoring the interconnections to the transmission grid
Overall load conditions of the generation equipment
Transmission
Information from sensors monitoring the state of high-voltage power lines
Information from sensors monitoring the state of devices in the transmission substations
Information from phasor measurement units (PMUs) monitoring the state of the transmission grid
Information from workers maintaining the transmission lines
Information from environmental sensors around the transmission grid
Information from sensors monitoring the state of power lines
Information from sensors monitoring the state of devices in the distribution substations
Information from sensors monitoring the state of the feeders

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Information from sensors measuring state and quality of power in the distribution network
Information from workers maintaining the distribution network
Consumer
Overall power-usage information (meter reads)
Power-usage pattern information
Granular information about power usage by devices inside the home
Information from the distributed-generation sources in the home contributing information to the grid
Consumer electric-usage preference information (such as willingness to participate in load-reduction
programs, etc.)

Figure 2. Information View of Power Infrastructure (Source: U.S. Patent 7,188,260 Apparatus and Method for Centralized Power
Management)

Smart Grid: Integration of Power and Information Systems
Smart grid is the integration of power infrastructure with an information infrastructure, combining the maturity of the
electric grid with the efficiency, connectivity, and cost gains brought about by Information Technology (IT). Smart grid
would disrupt the way utilities do business. It would influence the way consumers consume energy and the way they
interact with a utility. Ultimately, it would affect the nation's reliance on traditional energy sources.
Business Dri vers for Smart Grid
Drivers for mart grid vary from one utility to the next, depending on the regulatory framework the utility falls under, the
organizational structure of the utility, and the current state of the utilitys grid operations among other things.
However, at a high level, today utilities are concerned about the following priorities:
Revenue generation, including regulatory compensation and lower total cost of ownership (TCO)
Regulatory compliance
Customer satisfaction and public image
Depending on how the utility is structured and the regulations that govern it, these three elements influence behaviors
that are now moving utilities to embrace smart grid.

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Revenue Generation, Including Regulatory Compensation
Two methods of revenue generation often used in U.S. utilities are affected by regulations either coupling or
decoupling the utilitys revenue from its sales volume. For utilities where the revenue is coupled to sales volume,
there is significant incentive to ensure that the sales volumes do not drop, because a small percentage drop in sales
volume causes a significant percentage drop in profitability. For utilities where revenue is decoupled from sales
revenue, the throughput incentive (to keep sales volumes up) is diminished because the utility is allowed to
compensate itself by charging customers more if the sales volume goes down. The decoupling structures are often
supplemented by regulations that incentivize the utility to conserve electricityand indeed get compensated for
programs put in place to reduce electric consumption.
Irrespective of the type of revenue-generation mechanism a utility is governed by, smart grid allows the utility to meet
its financial objectives more effectively through one or more of the following means:
Not allowing its sales volume to drop below reference test year numbers
Managing its costs at or around the test-year numbers (short-run costs are fairly static)
Allowing it to earn incentive payment for any energy conservation plans that are in place
Reducing costs through intelligent use of IT to help facilitate better communication between the different
stakeholders shown in the traditional physical view, a process that also helps lower operational cost
Regulatory Compliance
Various types of regulations affect utilities, and adherence to them is a success requirement. The regulatory bodies
develop these regulations to ensure that the utilities to provide the cheapest, most reliable, ubiquitous, and cleanest
electricity for consumers. Following are some of the regulations that utilities in the United States must comply with:
Regulations governing operations of the power plants a utility operates
Regulations handed down by the Federal Electric Regulatory Commission (FECR) that control interstate
transportation of electricity
Rules laid out by state public utilities commissions (PUCs) governing rates, planning and spending practices,
customer service, and operating policies
Regulations handed down by the North American Electric Reliability Corporation (NERC)

Similar regulations are in place worldwide through various regulatory bodies, with considerable regional disparity in
the definition but largely aligned to a similar set of business priorities.
All of these regulations affect behaviors, pushing the utilities to adopt aspects of the smart grid that allow them to
comply effectively and efficiently with these regulations.
Customer Satisfaction and Public Image
Customer satisfaction and maintaining a positive public image are of paramount importance to utilities. Utilities work
hard to predetermine potential causes of dissatisfaction, perform root-cause analyses of customer-satisfaction
concerns, and generally expend great efforts to ensure long-term customer satisfaction. Two of the factors behind
this follow:
The utilitys management and employees want the utility to be seen as responsible members of the society.
Poor customer satisfaction can often lead to complaints being lodged with regulatory authorities who have
control over rates of utilities in the United States, potentially making it difficult for a utility with a bad customer
relationship record to continue to be allowed favorable rates of return.

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Given these factors, utilities are keen to adopt smart grid measures that allow them to improve the satisfaction and
experience of their customers with the electricity-consumption behavior.
In addition to the business factors, following are some of the challenges utilities face that have made them explore
smart grid options more proactively:
Load generated by electric vehicles
Management of distributed generation
Greater environmental mandates
Aging power grid
Rising fuel costs
Rising construction costs

The intersection of the electrical grid and IT will certainly have its share of challenges. However, there is concerted
agreement among regulatory bodies, utility companies, and other vendors that investing in smart grids is absolutely
the right direction to pursue. Cisco actively subscribes to this vision.
Mapping Utility Business Dri vers to Smart Grid Functions
Smart grid aligns very effectively with many of the business factors listed in the previous section. Table 1 examines
some of the pains associated with achieving the goals for these business factors and correlates them with smart grid
solutions that alleviate these pains.
Table 1. Smart Grid Solutions
Smart Grid Generation Solutions
Generation Pain Points Smart Grid Solutions
Poor asset conditioning and control Integrated monitoring solutions and reduced grid losses by optimized asset usage
Distributed generation Integration of various solutions to allow a distributed-generation environment to work, and
decrement in future outages achieved by increasing share of renewables
Smart Grid Transmission Solutions
Transmission Pain Points Smart Grid Solutions
Line losses Interconnected line-loss and voltage-control equipment
Theft Physical security and electricity monitoring solutions
Inability to proactively diagnose problems Integrated device monitoring solutions
Transmission system stress due to excessive load Interconnections between distribution and transmission systems
NERC compliance concerns Various types of solutions, depending on NERC regulation in question
Smart Grid Distribution Solutions
Distribution Pain Points Smart Grid Solutions
Inability to isolate faults Integrated monitoring solutions, and real-time information about grid condition around each
primary and secondary substation and pole-top transformer
Electricity theft Integrated monitoring solutions
Copper theft Physical security solutions (access control and video surveillance)
Liability concerns Physical security solutions (access control and video surveillance)
NERC compliance concerns Various types of solutions, depending on NERC regulation
Maintenance Reduction in maintenance problems through integrated device health-monitoring solutions,
and improved manageability by IP end-to-end communication
Lack of trained manpower for maintaining equipment System automation, which allows utilities to use a smaller number of trained manpower
Distribution losses Interconnected loss-reduction systems

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Smart Grid Consumer Solutions
Consumer Pain Points Smart Grid Solutions
Lack of visibility into temporal electrical consumption
for each customer
Advanced metering infrastructure (AMI)
Inability to exert direct control over customer
electricity usage (demand response)
AMI: Demand-response solutions with direct load control
Poor diagnostics, resulting in power-restoration
delays and outages
AMI plus Supervisory Control and Data Acquisition (SCADA) systems around the consumer
premises
Cost of customer provisioning and de-provisioning Demand-response solutions, and reduced cost by remote connects and disconnects
Lack of the consumers visibility into how they are
consuming electricity (for usage reduction or
optimization)
Home-energy-management (HEM) solutions
Inability to offer consumers value-added services HEM, AMI plus future enhancements
Inability to offer customers green alternatives An integrated end-to-end solution
Inability to use distributed generation to best
advantage
Solutions to integrate distribution and generation assets
Outages A collection of smart grid solutions ranging from demand-response solutions to better
equipment monitoring
Expense of adding new customers Improved field technician tools and service vehicles that allow faster integration
Lack of trained manpower for managing customers System automation, which allows utilities to use a smaller number of trained manpower
Customer satisfaction concerns rooted in customer-
response concerns
System automation, which allows early detection or even prevention of problems
Liability concerns System monitoring solutions
Ciscos Intelligent Communications Infrastructure and Smart Grid
This section examines the pivotal role Cisco will play in the transformation of the utility industry. Cisco takes a
systematic approach wherein Cisco analyzes the characteristics the grid of the future must have and how Ciscos
intelligent network platform optimally enables these characteristics.
Intelligent Communications Infrastructure at the Core of Smart Grid
Table 2 describes how smart grid disrupts all departments in a utility and how an intelligent communications
infrastructure is the critical factor for such disruption.
Table 2. Impact of Smart Grid on Utility Functions
Generation
Primary
Functions
Description of Functions How Smart Grid Affects These Functions How an Intelligent Communications
Infrastructure Enables and Amplifies the
Smart Grid Impact
Load control and
dispatch
Economical load dispatch
scheduling and optimization
helps to select the right dispatch
for the right load at the right
time, reducing the cost of
generation (startup, operations,
and wind down).
Smart grid helps with the scheduling of the
committed generating units so as to meet
the required load demand at minimum
operating cost while satisfying all units and
system equality and inequality constraints.
Economic load dispatch during unforeseen
events warrants robust real-time
communication infrastructure between the
demand and the generation functions.
Load shaping Shaping the load during peak
demand times reduces the idle
and standby generation
capacity.
Demand-side management (DSM) helps to
manage and accurately estimate demand
so as to meet demand without extra
generation.
Load shaping with DSM involves reliable
communication between AMI, (CIS (Consumer
Information Systems)), and generation
functions
Distributed,
renewable
generation
Integration of Microgrids as well
as generation at customer
premises with the utility
infrastructure
Smart grid enables distributed generation
and automated adjustment of feed-in tariff
regulation to receive premiums in the case
of forced switch-off of distributed-generation
asset for balancing energy
Infrastructure is needed to confirm, analyze,
and dispatch available load to distribution
generation sources.
Generation
equipment
maintenance
Diagnoses and maintenance of
the generation equipment
reduces faults and prevents
their propagation.
Smart grid helps asset management and
conditioning in preventive maintenance. It
also helps accessing newly sensed data.
Data from turbines needs to be transferred to
the generation control center for better
equipment conditioning and monitoring.

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Transmission
Primary
Functions
Description of Functions How Smart Grid Affects These Functions How an Intelligent Communications
Smart Grid Impact
Transmission-grid
monitoring and
control

Energy Management Systems
(EMS) and transmission
SCADA for data acquisition
needed for the following
functions:
Outage management
Volt/VAR management
State estimation
Network sensitivity analysis
Contingency analysis
Automatic generation control
Phasor data analysis
Automated regulation of load tap
changer and capacitor banks for voltage
regulation.
Wide-area phasor measurement and
control for grid optimization and control
Volt/VAR management using capacitor
switches and controls
Substation automation results in two-way
communication between transmission SCADA
equipment and EMS.
Communication between transmission and
generation units is necessary for automatic
generation control.
Maintenance of
transmission
control center
The transmission control center
is the first layer of defense for
transmission fault detection and
prevention.
Automated operations eliminate human
intervention in fault prevention, detection,
isolation, and correction.
Real-time communication between primary and
backup transmission control center,
transmission, generation, and distribution units
is necessary for control-center operations.
Security technology deployment provides for
secure data sharing between transmission and
other utility functions.
Equipment
maintenance
Maintenance of transmission
equipment, including breakers,
relays, switchers, transformers,
and regulators, prevention of
faults.
Smart grid helps asset management and
conditioning for preventive maintenance.
Data from transmission equipment needs to be
transferred to the generation control center for
better equipment conditioning and monitoring.
Distribution
Primary
Operations
Description of Operations How Smart Grid Affects These
Operations
How an Intelligent Communications
Smart Grid Impact
Feeder voltage
regulation and
phase balancing
Regulation of distribution
voltage to prevent overcurrent
problems.
Maintain phase balance with the
variation of customer load
demand (unbalance will lead to
equipment overloading and
malfunction of protective
relays).
Load consumption information from
customer information systems will help in
phase balancing.
Information from distributed-generation
assets will help with voltage regulation.
Distribution automation through low-cost
Distributed Network Protocol 3 (DNP3) helps in
monitoring and control.
Communications between Distribution
Management System (DMS) and distribution
equipment is necessary for automated
distribution operations.
Trouble call and
dispatch
Analysis of distribution trouble-
ticket analysis and dispatch to
increase customer satisfaction.
Provisioning an automated outage
notification and automated dispatch system.
Equip mobile field force with data.
Real-time data, voice, and video into
distribution trucks resulting in fewer trips and
quicker restoration.
Planned and
emergency
switching
Automation of fault detection
and correction at substations
and feeders.
Automation of switching sequence for
emergency switching.
Provides effective communications from the
relay, breaker, and the feeders to the
distribution control center
Power-quality
maintenance
Maintain the right voltage levels
across the distribution system.
Improvement of power quality by fast and
effective use of information from devices
that cause those events (transformers and
motors).
Real-time communications from transformers
and motors and power analytics systems is
necessary for power-quality maintenance.

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Energy Trading, Consumers, and Others
Other Utility
Functions
Primary Operations Description of
Operations
How Smart Grid Affects These
Functions
Infrastructure Enables and
Amplifies the Smart Grid Impact
Forecasting
Market modeling
Demand-response
programs
Energy trading
Risk management
Energy trading enables a
utility to buy energy to
meet peak demand or to
sell excess capacity.
Smart grid provides real-time
demand and generation information
for energy-trading decisions.
Real-time communications between
analytics, demand, and generation
units is necessary for effective
decision making regarding energy
trading.
Home energy
management
HEM helps users to
monitor and control the
time, amount, type, and
level of energy usage.
HEM data can ride on the
neighborhood area network when
smart grid is employed.
Low-cost backhaul communications
methods are necessary for HEM
traffic.
Metering Meter data is used for
billing purposes.
Advanced Metering Infrastructure
(AMI) allows for remote meter
reads, connects and disconnects
an automated outage detection.
Scalable, reliable, low-cost backhaul
communications methods are
necessary for AMI traffic.
Consumer
Demand-side
management
Management of demand-
side load.
Smart Grid enables sophisticated
demand side managed by
integrating HEM, AMI data with
demand response techniques.
DSM needs communications between
HEM equipment, AMI, and generation
units.
Intergrid
communications
Communication
between regional
coordinators
Coordination is needed for
better information flow
between grids for fault
isolation and prevention of
fault cascading.
Smart grid enables communication
of real-time data between regional
control centers.
Secure communications are needed
for ICCP (Inter-Control Center
Protocol) infrastructure.
Core Infrastructure
Primary Functions Description of Functions How Smart Grid Affects These
Functions
Smart Grid Impact
Preparing, planning, and
designing a network to
support a common,
converged infrastructure
that supports all functions
of a utility with support for
smart grid
Smart grid requires
communications between all
functions of a utility, namely
generation, transmission,
distribution, consumer, and
energy trading.
A highly available common
communications infrastructure is
therefore necessary.
Smart grid can increase the return
on investment (ROI) if all the utility
functions use a common converged
infrastructure with all the advanced
technologies, including:
Unified communications (data,
voice, and video collaboration)
Physical security
Management tools
A secure, scalable, resilient, and manageable
Future Proof network that will be compatible
with future versions is a necessity for the core
infrastructure that supports all smart grid
functions.
Selecting technologies that are common
across utility functions will help in the
manageability of operations.
The result will be reduced operating expenses
(OpEx) to operate the communication system
because the network is IP from end to end.

Ciscos Vision for Smart Grid
Cisco is the world leader in the design and implementation of end-to-end converged intelligent communication
infrastructures. It has a proven track record of helping industries through transitions and possess considerable
expertise in converged networks: data, voice, and now video. Ciscos products deployed at various places in the
network are proven. The Cisco IOS
Software Operating System has formed the backbone of the Internet and has
withstood against attacks. Ciscos secure architectures and rich feature sets support comprehensive security,
resiliency, and manageability. Cisco firmly believes in open standards and interoperabilitycrucial features to meet
the needs of any large-scale infrastructure deployment now and in the future.
Cisco optimally enables the smart grid vision through the core infrastructure design for interoperable communications
between Smart Grid components. As described in the previous sections, smart grid requires transparent information
flow between transmission, distribution, generation, home, and other communication networks such as the corporate
network and the networks used for energy trading.

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This section describes Ciscos vision of the smart grid and how it will make this vision become a reality.
Secure, resilient, and self-healing: Ciscos vision is to build a smart grid of the future that is highly secure,
resilient, and self-healing. The worldwide Internet is perhaps the best example of a large-scale environment
that is truly resistant to a large variety of attacks and can heal itself. Cisco has been the primary enabler of the
Internet and connected networks, and has developed both product and service expertise that allows Cisco to
help its customers and partners build large-scale communications environments that can withstand errors,
flaws, and attacks. In addition, the Cisco
Self-Defending Network philosophy integrates security throughout

the network, allowing attacks to be thwarted expeditiously and effectively. These are some of the reasons
Cisco is uniquely positioned to build a smart grid of the future that can be highly secure, resilient, and self-
healing.
A few examples of how Ciscos IP expertise and breadth of networking products and solutions will help weave
these components into the fabric of the smart grid follow:
Introducing networking equipment and software with built-in and interconnected security
Leveraging time-tested routing techniques to best advantage to ensure resilience and self-healing
Providing protocol and device hardening tools and techniques
Segmenting devices, networks, and functions of a smart grid
Providing secure access control of devices and users into the smart grid
Integrating monitoring and analysis for detecting problems
Efficient and effective operations: Cisco believes that the optimal smart grid functions can be achieved by
building it on top of a communications infrastructure that can carry a wide variety of traffic while effectively
providing the appropriate handling for each type. A fully and properly connected environment with suitable
mechanisms for sharing information allows resources to be recognized and used in the most effective manner.
Focus areas include increased manageability and smooth policy enforcement. Ciscos vision is for transparent
integration of unified communications (voice, video, etc.) and advanced technologies (physical security,
storage, etc.) in a best-of-class network that truly brings about the smart grid transformation.
Ubiquitous reach and inclusiveness: Ciscos vision is one of open and ubiquitous communications between
all the entities legitimately connected to the smart grid, implying that all the departments within a utility must
work together to ensure the build-out of an environment that most efficiently meets their needs. In addition,
Cisco has promoted protocols over the years that, through standardization at the IETF, the IEEE, and other
standards bodies and widespread deployment, have allowed the new information age to emerge without any
barriers. Cisco has this vision for smart grid alsoa smart grid where ubiquitous access to power-related
information and inclusiveness is the norm.
Open and manageable: Ciscos vision for the smart grid is that of an environment that, although very large
and complex, comprises protocols that are known and an infrastructure that is easily managed.
Services: Cisco believes in a smart grid that comprises solutions that meet the overall objectives of smart grid
programs. It believes that a smart grid environment can be best developed and optimally maintained through a
healthy trust-based relationship between Cisco and its utility customers. Cisco believes in providing its
customers with an array of superior services, from planning and business case analysis to operating and
optimizing the environment.

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Business factors: Cisco believes that the true potential of the smart grid lies in its development, which results
from well-researched business goals and objectives of the utilities. It is committed to working with utilities in
determining the business case and ROI for deployment of smart grid functions for their unique environments,
and then partnering with them to help ensure that the development and deployment of the smart grid
infrastructure remains in line with these goals.
An ecosystem of partners: Ciscos vision is for a smart grid for the future that is built through an ecosystem
of partners, each bringing its unique skills and capabilities to garner the most of the smart grid concept. Cisco
believes in creating an open environment of trust and collaboration where the goals and interest of the
customer are of foremost importance at all times.
Conclusion
Cisco's vision is to help create a resilient, self-healing, highly secure, and inclusive grid environment that optimally
combines all the disparate sources of information in the utility environment. This scenario would allow for effective
decisions to be made and timely actions propagated to the most relevant actuation points, resulting in the smart grid
benefits that the utility and its consumers want.
Cisco believes that it can generate great value for Ciscos utility customers through a well-developed strategy for
achieving the greatest value with a smart grid. This strategy is rooted in a business goals-directed approach to the
development of a smart grid in the utility environment. Cisco is well-known for bringing productivity transformation to
entire industries through its unique yet interconnected array of information technologies. The time is right for Cisco
and the utilities to come together and introduce a new era in electricity generation, distribution, and consumption.
References
The Modern Grid Strategy, A Vision for the Modern Grid, Department of Energy:
http://www.netl.doe.gov/moderngrid/opportunity/vision.html
Intelligrid use cases:
http://www.intelligrid.info/IntelliGrid_Architecture/IECSA_Volumes/IECSA_VolumeII_AppendixE.pdf
For More Information
For more information about smart grid, please visit: www.cisco.com/go/smartgrid

Printed in USA C11-532328-00 04/09
innovati n
Interconnection Standards
Guide Integration of Distributed
Energy Resources
Across the United States, energy circles are buzzing about the
promise of the smart gridthe digital electric power system
that holds the potential to reduce greenhouse gas emissions, cut
electricity costs, and improve our nations energy independence
and security. At the National Renewable Energy Laboratory (NREL),
the concept is exciting, but it isnt new. Researchers here have been
laying the foundation for the smart grid for more than a decade.
IEEE 1547: Consensus Standard Paves the Way
NREL researchers have always believed in the power of renewable energy to improve
our countrys future. But they also realized that for renewables to reach their full potential,
a modern paradigm would be necessary for the electric power system at large.
In 1999, NREL began work to accelerate this change via the Institute of Electrical and Electron-
ics Engineers (IEEE). The goal: to create consensus standards with participation from industry,
utilities, government, and others to guide the integration of renewable and other small
electricity generation and storage sources (or distributed resources, a key aspect of the smart
grid) into the electric power system. Over four years, NREL led a group of more than 400 par-
ticipants in the development of IEEE 1547 Standard for Interconnecting Distributed Resources
With Electric Power Systems. IEEE 1547 was approved in June 2003 and became an American
National Standard.
Since that time, IEEE 1547 has become the primary standard for distributed resource inter-
connection. Three-fourths of the states have adopted, referenced, or used IEEE 1547 in the
development of their own interconnection standards, and the Energy Policy Act of 2005 desig-
nated it as the national standard for the interconnection of distributed resources. This national
uniformity has made the interconnection process faster and easier and has encouraged the
integration of many new distributed resource projects.
The whole idea of IEEE 1547 was to provide a national standard for interconnection of
distributed generators with the grid, says Richard DeBlasio, IEEE 1547 chair and NRELs principal
laboratory program manager of electricity programs. It was a major breakthrough because up
until 2000 or 2001, it was extremely difcult to even negotiate an interconnection.
NREL Leads Smart Grid Interconnection Eforts
IEEE 1547 has had a signifcant efect on how the energy industry does business, and it will
continue to infuence the way our electric power systems operate far into the smart grid
future. Following on this success, NREL has continued the development of standards in the
1547 family to further encourage distributed resource interconnection.
NREL is a national laboratory of the
U.S. Department of Energy, Ofce
of Energy Efciency and Renewable
Energy, operated by the Alliance for
Sustainable Energy, LLC.
Through deep technical expertise
and an unmatched breadth of
capabilities, NREL leads an integrated
approach across the spectrum of
renewable energy innovation. From
scientifc discovery to accelerating
market deployment, NREL works in
partnership with private industry
to drive the transformation of our
nations energy systems.
This case study illustrates NRELs
contributions in Systems Integration.
Fundamental Science
Market-Relevant Research
Systems Integration
Testing and Validation
Commercialization
Deployment
The Spectrum of
Clean Energy Innovation
National Renewable
Energy Laboratory
1617 Cole Boulevard
Golden, Colorado 80401-3305
303-275-3000 www.nrel.gov
NREL is a national laboratory of the U.S. Department of
Energy, Ofce of Energy Efciency and Renewable Energy,
operated by the Alliance for Sustainable Energy, LLC.
NREL/FS-6A4-47562 June 2010
Printed with a renewable-source ink on paper containing at
least 50% wastepaper, including 10% post consumer waste.
What Is the Smart Grid?
Youve probably heard about the smart grid.It
represents a transformation of the U.S. electric power
system, and its on everyones minds. President Obama
has made the creation of a new energy economy a
priority for our nations economic recoveryand the
smart grid is the key to making it happen. But what is
the smart grid?
The defnition of a smart grid is broad and encom-
passes many aspects of electric grid operation and
management. The smart grid uses digital technology
to improve the reliability, security, and efciency of the
existing electric power system and enables greater use
of electricity generated from renewable resources.
The smart grid will do these things:
Boost the U.S. economy with an infux of new prod-
ucts, services, and markets
Enable grid integration of large-scale renewable
energy and distributed energy sources
Self-heal in the event of power disturbances
Reduce transmission and distribution inefciencies
Allow consumers to gain greater control over their
energy costs
Supply the high-quality power required by modern
electronic equipment
Provide grid operators with a quantum improvement
in monitoring and control capabilities.
Were on the cusp of this new energy future,said
President Obama in a speech announcing a $4.3-billion
investment into smart grid technologies. In fact, a lot
of it is already taking place. At this moment, there
is something big happening in America when it comes
to creating a clean energy economy.
NREL is paving the way.
To date, three additional smart grid interconnection standards have been passed:
IEEE 1547.1 Standard for Conformance Test Procedures for Equipment Interconnect-
ing Distributed Resources With Electric Power Systems (Approved 2005)
IEEE 1547.2 Application Guide for IEEE 1547 Standard for Interconnecting Distributed
Resources With Electric Power Systems (Approved 2008)
IEEE 1547.3 Guide For Monitoring, Information Exchange, and Control of Distributed
Resources Interconnected with Electric Power Systems (Approved 2007).
Four smart grid interconnection standards are still in development:
IEEE P1547.4 Draft Guide for Design, Operation, and Integration of Distributed
Resource Island Systems With Electric Power Systems
IEEE P1547.5 Draft Technical Guidelines for Interconnection of Electric Power Sources
Greater Than 20 MVA to the Power Transmission Grid
IEEE P1547.6 Draft Recommended Practice for Interconnecting Distributed Resources
With Electric Power Systems Distribution Secondary Networks
IEEE P1547.7 Draft Guide to Conducting Distribution Impact Studies for Distributed
Resource Interconnection.
And Mobilizes for Smart Grid Interoperability
Based on the success of its IEEE 1547 initiatives, NREL expanded its standards leadership
in the smart grid arena. IEEE P2030 Draft Guide for Smart Grid Interoperability of Energy
Technology and Information Technology Operation With Electric Power System and
End-Use Applications and Loads, which NREL initiated in November 2008, will establish
a shared knowledge base to defne smart grid interoperability and the integration of
power engineering, information, and communications technologies.
Like IEEE 1547, IEEE P2030 is likely the frst in a series of related standards projects. I see
this as a tree from which will spring a variety of standards, says DeBlasio, who is also
the IEEE P2030 chair. We want to look at everything from power generation to home
appliances and the useful two-way communications between them.
The smart grid is the integration of power engineering, communications, and
information technologies.
Power Engineering Technology
Information Flow,
Data Management,
Monitoring and Control
Communications and
Information Technology
Bulk Power
Wind
Fuel Cell
Reciprocating Generator
Microturbine
Combined Heat & Power
Load Management
Electric Vehicle
Storage
Photovoltaics
Transmission
System
Substations
Sensors Sensors Sensors
Sensors
Distribution
System
Distributed Resource
Interconnection
4GSmartGridSolutionOverview
1|P a g e
4G Smart Grid Solution

Overview
2|P a g e
TABLEOFCONTENTS
1. SmartGridVision.............................................................................................................................................................3
2. 4GSmartGridSolutionOverview....................................................................................................................................3
3. 4GSmartGridSolutionValueProposition......................................................................................................................4
4. 4GSmartGridSolutionDifferentiatingFeatures.............................................................................................................5
1. MultiLevel,MultiLayerSecurity................................................................................................................................5
2. WidelyAdoptedStandards.........................................................................................................................................6
3. ScalabilityforOngoingInnovationandGrowth..........................................................................................................9
5. 4GSmartGridSolutionDifferentiatingFeatures...........................................................................................................10
1. SmartGridDevices....................................................................................................................................................10
2. PolicyNet:SmartGridNetworkManagementSoftware...........................................................................................11
3. 4GCommunicationsNetworking..............................................................................................................................14
6. 4GSmartGridSolutionKeyFeatures............................................................................................................................15
3|P a g e
1. SMARTGRIDVISION
The Smart Grid is a series of interconnected, interoperable networks of control systems and assetmanagement tools,
empowered by sensors, communication pathways and information tools all designed to help utilities deliver energy
more efficiently to customers. Implementing the Smart Grid requires connecting existing utility grid infrastructure, in
ordertoleveragelegacyinvestments,aswellasenablingfutureinnovationswithadaptablefutureproofinvestmentsin
newSmartGridtechnologies.InsteadoffocusingonsingleSmartGridelements,theentireSmartGridinfrastructureof
hardware, software and communications connectivity architected with the following underlying principles needs to be
takenintoconsideration
SmartGridsolutionsmustbeinteroperable,scalableandflexible,anddesignedusingwidelyadoptedstandards,
sothatutilitiesbenefitfromchoiceofvendorsandlowercostsassociatedwithacompetitivevendorecosystem
SmartGridsolutionsmustpossessthescalability,adaptability,remoteprogrammingandremoteupgradeability
to enable future proofing that anticipates and accommodates innovations in new technologies, services and
capabilities
2. 4GSMARTGRIDSOLUTIONOVERVIEW
The4GSmartGridSmartGridsolutionisanintegralpartoftheSmartGrid.Itsanendtoendsuiteofstandardsbased
intelligenthardware,software,andcommunicationsproductsdesignedtoensurethatutilitiesachievesuccesswiththeir
SmartGridimplementations.Thissuiteincludes:
SmartGridDevicessuchastheGE4GSmartMeter(WXSM),GE4GSmartGridCommunicationcard(WXSGC),
and the GE SmartGrid Router (WXSGR) devices these are designed around open standards and
communicationsprotocolsthatfacilitateeasyintegrationwithotherstandardsbasedSmartGriddevices.
Grid Nets PolicyNet SmartGrid Network Management System (NMS) platform, SmartGrid Network
OperatingSystem,andSmartGridAgentsthePolicyNetsoftwaresuiteprovidesanonline,realtimeviewand
controloftheSmartGridnetwork.PolicyNetsoftwareenablesutilitiestocreate,deploy,andmanageenterprise
policies (or business rules) centrally, enabling a highly distributed, intelligent control system within the
SmartMetersandSmartGridRoutersprovidingunsurpassedscalability,andrealtimenetworkcontrol.
4G/4GSmartGridcommunicationsnetwork,connectingSmartGriddevicesona4
th
generation(4G)wireless
broadband communications platform using licensed spectrum, that delivers a highly secure, scalable, reliable,
available,dedicated(sinceitislicensed),andopenstandardsbasedcommunicationsnetworkinfrastructurewith
guaranteedqualityofservice.
4|P a g e
PolicyNet SmartGrid
Network Mgmt System
(NMS)
AMI / Demand
Response
Billing CIS
Distn
Mgmt
Outage
Mgmt
Policy
Services
Security
Services
IP Network
Services
Field
Ops
DM&C
Smart
Metering
Smart
Home
Field Ops
Communications
Renewables
Distribution
Automation
Smart
Grid
SmartGrid
Network
Operating System
(NOS) for Devices
Smart Grid WSDL (IEC CIM 61968-9) & SCADA Networking
Figure1:4GSmartGridNetworkArchitecture
3. 4GSMARTGRIDSOLUTIONVALUEPROPOSITION
Withthe4GSmartGridSolution,utilitiescan:
Improve energy efficiency, by helping consumers better understanding electric usage and implementing
programstomanagedemandwithflexible,adaptablefutureprooftechnology
Improveoperationalefficiency,byusinganintegrated,standardsbasedsuiteofsmarthardware,softwareand
communications that enable choice in vendors, more costcompetitive solutions, and therefore more efficient
energydelivery
Increase customer satisfaction, with improved service reliability and performance from proven, reliable Smart
Gridproductsandservices
Reduce adverse environmental impact, by reducing or controlling CO
2
emissions that exceed regulatory
requirements
The 4G Smart Grid solution is built using widely adopted, open industry standards that have been developed
and tested over many years in the Internet, enterprise / embedded software and telecommunications
industries. Consequently,utilitiesbenefitfrom millionsofdollarsofongoing investments andinnovationsin
these technologies, as well as the security, reliability and scale that come from proven deployments. In
addition,byadoptingthe4GSmartGridsolution,utilitiesavoidsinglevendorlockinfoundwithproprietary
competitive solutions, and maintain access to future innovations made possible by a vibrant ecosystem of
multiplevendorsadheringtoopenstandards.
5|P a g e
4. 4GSMARTGRIDSOLUTIONDIFFERENTIATINGFEATURES
1. MultiLevel,MultiLayerSecurity
Device,systemandnetworkingsecurityareofcriticalconcernforanylargescale,missioncriticalnetworkinfrastructure.
Since the Smart Grid is perhaps the most complex, missioncritical network of our era, utilities require Smart Grid
technologyanddevicesthataresecure,reliable,andselfhealing.Thatswhythe4GSmartGridsolutioncontainsrobust,
sophisticatedmetersecurity,securedataencryption,andsecuredatatransportviathe4Gcommunicationsnetworkall
built with leading security protocols, standards and methods. Moreover, GE and its partner Grid Net are committed to
continuousinnovation,therebyensuringthatsucceedinggenerationsofPolicyNetwillcontainthelateststandardsbased
securityenhancementsandimprovements.
The4GSmartGridSolutionssecurityismultilevel/multilayerrobust,standardsbasedsecurityhasbeenbuiltinto
its Smart Griddevices (4G SmartMeter and SmartGrid Router), into the data itself, into the4G Smart Grid network, and
into PolicyNet servers and PolicyNet agents resident in 4G SmartGrid Routers and 4G SmartMeters. Moreover, the 4G
Smart Grid Solution Security Architecture supports the cyber security principles of: confidentiality, integrity, availability,
identification,authentication, access control, nonrepudiation, secure operations, andauditing /accounting. Theability
to detect, pinpoint, isolate and neutralize specific security threats to the Smart Grid is essential to its safe and reliable
operation. The 4G Smart Grid solutions security architecture takes into account therisks associated with all aspects of
SmartGridnetworkactivity,including:
Devicepowerup(orfailureandreenergization)andidentification
Networkentryandconnectivity(especiallyimportantintheSmartGrid,anetworkwithoutphysicalsecurity)
Datatransportandnetworkoperations
1. Meter energizes, self-authenticates
Device security via EAP/TLS, IPSec, IKE.,
unique digital signature and hardware-
enforced code signing
PKMv2 (EAP/TLS over RADIUS)
X.509 Certificate, PKI system and AAA
Server
2. Meter authenticated, authorized
by 4G broadband network
EAP-based authentication
AES-CCM-based authenticated
encryption
CMAC and HMAC based control
message protection schemes
3. Meter authenticated,
authorized by PolicyNet
Identity & AAA Services (ITU,
IETF)
Certificate Authority w PKI
AAA Server (RADIUS; EAP/TLS)
4. Secure Smart Grid system
connection established
5. End-to-end data encryption &
transmission
Cipher Block Chaining Message
Authentication Code Protocol
(CCMP)
IPSEC / GRE, TLS, GMPLS
Traffic Engineering: DiffServ,
RSVP
Figure2:4GBroadbandSolutionMultiLevel,MultiLayerSecurityArchitecture
6|P a g e
To proactively anticipate points of vulnerability and mitigate risks, the 4G Smart Grid solution incorporates leading
standardsbased security methodologies and protocols into each 4G SmartMeter and 4G SmartGrid Router, into device
powerupandidentification,intoSmartGridandAMIHeadEndnetworkentry,intodataencryptionandintegrity(while
intransitoratrest),andintoSmartGridnetworkmanagementandmonitoring.Consequently,withthe4GSmartGrid
Solution,ifaspecificdevice(ornetworknode)hasbeencompromised,itisisolatedanddeniedaccessbeforeconnecting
totherestoftheSmartGridnetwork,therebypreventingmassiveSmartGridfailureorbreach.Onlythe4GSmartGrid
Solution delivers this combination of robust, pervasive, standardsbased, yet granular security that is built into every
aspectofitssolution.
2. WidelyAdoptedStandards
The 4G Smart Grid Solution has been built with a standardsbased product development philosophy. Our
approach is to construct marketleading Smart Grid solutions that leverage widely adopted utility, Internet,
software and telecommunications industry standards, and that deliver a number of important advantages to
utilities:
Ensure high performance interoperability with thirdparty party systems and technologies (including
legacy applications and devices), thereby reducing utilities total cost of ownership from existing and
futureSmartGridinvestments
Drive optimal price / performance and offer utilities greater choice of vendors, by participating in a
large,competitiveecosystemofsuppliersthatareincentedtoinnovaterapidlyatthelowestpossible
cost
Futureproof Smart Grid technology by incorporating standards that adapt to change and enable
ongoinginnovationswithouthavingtoripout/replaceexistingsolutions
Grid Nets PolicyNet SmartGrid management software is built on leading telecommunications, IP and
utility industry standards, enabling the efficient and costeffective integration of the software with
other utility operational support and business support systems. The PolicyNet SmartGrid software
data model is based upon the IEC 619689 CIM and emerging XML Schema, the ANSI C12.19 Utility
IndustryEndDeviceDataTables,andnumerousIETFRFCs.
4G networking communications are based on the fourthgeneration, allIP communications standard,
theInstituteofElectricalandElectronicsEngineers(IEEE)802.16.e,anopencommunicationsplatform
currently being deployed throughout the world, on licensed wireless broadband spectrum. Key
standardsincorporatedintothissolutioninclude:
7|P a g e
Utility Industry Standards IEEE, IETF, HAN Standards

ANSI C12.1
ANSI C12.10
ANSI C12.18
ANSI C12.19
ANSI C12.20
ANSI C12.21

IEC 61000-4-4
IEC 61000-4-2
IEC 61968
SEP v2.0
IEEE 802.1X
IEEE 802.3 (Ethernet)
IEEE 802.1q (VLAN)
IEEE 802.1p (QoS)
IEEE P1901 HomePlug AV / HomePlug Green PHY

IPv4 / IPv6 Networking Protocols (DHCP, DNS, ICMP, IGMP, IP, IPSec, NTP,
OSPF, SLAAC, TCP, UDP)

IETF RFC 2474 - Differentiated Services Field
IETF RFC 2616 - HTTP v1.1
IETF RFC 2702 - Requirements for Traffic Engineering Over MPLS
IETF RFC 2784 - COPS
IETF RFC 2865 - RADIUS
IETF RFC 2866 - RADIUS Accounting
IETF RFC 3031 - Multiprotocol Label Switching Architecture
IETF RFC 3060 - PCIM
IETF RFC 3084 - COPS-PR
IETF RFC 3159 - Structure of Policy Provisioning Information
IETF RFC 3280 - PKI CRL Profile
IETF RFC 3579 - RADIUS Support for EAP
IETF RFC 3748 - EAP
IETF RFC 4261 - COPS/TLS
IETF RFC 4346 - TLS v1.1
IETF RFC 4493 - AES-CMAC
IETF RFC 4523 - LDAPv3 / PKI
IETF RFC 4557 - Online Certificate Status Protocol
W3C / OASIS Standards Communications & Security Standards
SOAP 1.1/1.2
SOAP RPC, document/literal
SOAP request-response, one-way
SwA MTOM (streaming)
WS-I Basic Profile 1.0a
WS-Addressing (2003/03, 2004/03,
2004/08, 2005/03)
WS-Discovery
WS-Enumeration
WS-Security (2004/01)
WS-Notification
Access Network Interface:
IEEE 802.16e-2005 (4G)

4G Government-Licensed Spectrum
Frequency Band(s):
2300-2400 MHz
2496-2690 MHz

Security Device Authentication:
EAP-TLS / 802.16.e PKMv2

Network Link Security Protocols:
EAP-TLS / RADIUS

Digital Identity:
x.509 Public Key Certificate
Cryptographic Key Exchange:
TLS: DHS-DSS

Encryption Algorithms:
CCM-Mode / CCM-Mode AES

Secure Communications
Channel:
PKMv2

Security Device Authenticity
Check:
Secure ROM with Hardware-
Enforced Code Signing
8|P a g e
In addition Grid Net and its partners are active participants, technical contributors and / or supporters of a
largenumberofstandardsorganizations,including
The4GForum;http://www.4Gforum.org
HomePlugPowerlineAlliance;http://www.homeplug.org/home
IECTC57WG14(IEC61968,61970,61850)
IECCIM61968(http://iectc57.ucaiug.org/default.aspx)
UtilityCommunicationsAlliance(OpenSG)
ZigBeeHomePlugJointWorkingGroup(http://grouper.ieee.org/groups/1901)
IEEE802.16WorkingGroup(http://wirelessman.org/tgs.html)
IEEEP1901WorkingGroup(http://grouper.ieee.org/groups/1901)
IETFWorkingGroups
DOEElectricAdvisoryCommittee;http://www.oe.energy.gov/index.htm
ANSIC12TaskForce
OASIS(http://www.oasisopen.org/committees/tc_home.php?wg_abbrev=energyinterop)
Inthetelecommunicationsstack,standardsareequallyimportant:
IP Network Model 4G Broadband Protocols / Standards
Air
Cat5 / CAT6
Fiber
Coaxial
3. Network
2. Data Link
1. Physical
7. Application
6. Presentation
5. Session
4. Transport
IP
IPSec
ICMP
IGMP
OSPF
RIP
TCP SCTP UDP
802.16
802.3
802.11
HomePlug
802.15
EAP
TLS
HTTP
SOAP
COPS
IEC/CIM
DNPv3
Figure3:ComparisonofIPvs.4GBroadbandNetworkModels
9|P a g e
3. ScalabilityforOngoingInnovationandGrowth
The Smart Grid offers tremendous promise and potential for utilities to deliver new forms of energy services, and to
developnewwaysforutilitiestointeractingwiththeircustomers.Butsincemanyofthesenewservicesandcapabilities
arejustnowemerging,SmartGridtechnologymustbeabletoadaptandscaletomeetthesechangingneeds,anddoso
seamlessly without requiring disruptions in service or the deployment of new (unforeseen) systems and devices.
EnsuringscalabilityintheSmartGridhasmultipledimensions,including:
SmartGriddevicesmusthavethescaleandcapacity(e.g.,storageandmemory)toaccommodatefuturegrowth
andchangesinSmartGridservicesfunctionalityandoveralldevicecapabilities
SmartGridnetworksmusthavethebandwidthtoscaleovertime,andaccommodatethedeliveryofnewforms
ofenergyservicesandtransactionstoutilitycustomerswithoutcompromisingnetworkperformance
Smart Grid management software must be able to scale to accommodate the creation, management, delivery
and monitoring of new Smart Grid services. Software scaling has two dimensions: scaling vertically (e.g., or
scaling up, by adding resources to a single node within a Smart Grid system, and / or to leverage virtualization
technologymoreeffectively),andscalinghorizontally(e.g.,scalingout,byaddingmorenodes(orservers)toa
SmartGridsystem).
The 4G Smart Grid Solution is the only Smart Grid offering with scalability architected into its devices, its management
softwareandthecommunicationsnetworkitself.Forexample,the4GSmartMeterandSmartGridRouterhaveamodular
architecture, which enables easy upgrades of more powerful microprocessors and memory (without requiring an entire
redesign). At present, these devices contain a secure 32bit ARM9 microprocessor, with 400 MHz clock speed, 512
Mbytes Ram, and 2Gbytes flash memory. The scalable capacity and performance of the 4G SmartMeter and SmartGrid
Routerenablethe4GSmartGridSolutiontodeliverongoinginnovationsinnewSmartGridservicesandfunctionality
PolicyNet software delivers both horizontal and vertical scale capabilities. PolicyNets multiinstance, horizontally
scalablecomponentarchitectureisdesignedtoprovide100%serviceavailability.Allservercomponentsnormallyrunin
multiinstance deep active/active configurations which inherently provide loadbalancing and highavailability. Since
elimination of all singlepointsoffailure is expected in network design, the recommended PolicyNet Database
configuration is active/passive hotstandby with transactional replication. All PolicyNet managed SmartGrid devices are
provisioned with Primary and Secondary server addressing to provide automatic device failover to the DR facility.
VerticalscalingisalsopossibleifPolicyNetcomponentservicesaredeployedonvirtualmachinesoronproductiongrade
hardwareserverswithhotswapcapability.
The4Gnetworkprovidesmassivescalebroadbandnetworking,onlicensedspectrumthatdelivershighbandwidth,high
speed connectivity with guaranteed quality of service (QoS) levels. When compared to proprietary mesh networks, 4G
delivers orders of magnitude increases in bandwidth, scale, reliability and security. Moreover, 4G can be deployed in a
10|P a g e
variety of flexible configurations with exceptionally high fidelity, even in nonlineofsite instances, due to its use of
technologies that include OFDMA Modulation, Dynamic Ranging and Power Control, Sophisticated Error Correction
Algorithms,FrequencySubchannelization,AdaptiveAntenna,andMultipleInputSingleOutput(MISO)technologies.
5. 4GSMARTGRIDSOLUTIONDIFFERENTIATINGFEATURES
1. SmartGridDevices
PolicyNet:SmartGridNetworkManagementSoftware
WXSM Single Phase SmartMeter by GE. The latest addition to GEs advanced electric meter family;
the 4G SmartMeter by GE is the first truly open, 4Genabled residential smart meter available on the
world market. The SmartMeter provides advanced metering, load control, and demand response
functionality,aswellasthedeliveryofSmartGridservicesdirectlytothecustomerpremises.
WXSM Multi Phase SmartMeter by GE. Planned for commercial availability in Q2 2010, the
multiphase 4G SmartMeter by GE provides advanced commercial and industrial realtime metering,
loadcontrol,anddemandresponsefunctionality,aswellasthedeliveryofSmartGridservicesdirectly
tothecustomerpremises.
WXSGR4GSmartGridRouterbyGE.The4GSmartGridRouterbyGEenablestheinternetworkingof
transmission and distribution network devices (i.e., fault monitors, reclosers, switches, capacitor
banks,transformers,meters)sothattheycansecurelycommunicateinrealtimetoeachotherand
totheirrespectiveSCADAmasterstations.The4GSmartGridRouterbyGEcanbeconnectedtoSmart
Grid devices via its DNPv3 serial or Ethernet interfaces, and the router is powered from the devices
powersupplytherebyleveragingsharedbackuppowerwithitsnetworkedSmartGriddevice.
The 4G SmartGrid Router like the 4G SmartMeter, is developed with the Freescale MX258
MicrocontrollerrunningsecureLinuxwithGridNetsPolicyNetpolicybasednetworkoperatingsystem
andagents.TheFreescalechipisthefirstsecurechiptobeleveragedforSmartGridapplicationsinthe
world.Ithasahighassurancebootwithsecurestorage,truerandomgenerator,high/lowtemperature
tamper together with physical tamper detection. The 4G SmartGrid Router provides the same strong
securityandmultivendorinteroperabilitybenefitsofferedbythe4GSmartMeter.Inaddition,italso
provides secure Internet protocol support for tunneling the DNPv3 (Distributed Network Protocol,
version3)SCADAprotocolbetweentheIEDorDAdeviceandtheSCADAMasterStation.
11|P a g e
2. PolicyNet:SmartGridNetworkManagementSoftware
PolicyNet SmartGrid Network Management System (NMS) Software Platform. Grid Nets PolicyNet NMS
platform provides complete lifecycle network management support for the 4G SmartMeter and 4G SmartGrid
Routerdevices.ThesoftwareplatformiscomprisedofthefollowingSmartGridsuites:
SmartGridPolicyServerbasedontheIETFCommonOpenPolicyService(COPS)protocolsandtheIECCommon
Information Model (CIM 61968), the policy server enables a centrally managed, highly distributed model for
advanced metering and distribution automation applications. Using the PolicyNet server, users can create,
deploy,andmanageenterprisepolicies(rules,conditions,andactions)withintheSmartGridnetwork.
PolicyNetincorporatesthetransactional,stateful(e.g.,statusaware)modelfoundwithintheIETFCOPSprotocol,
andprovidesahighlyscalable,realtimeviewofmanagedSmartGridnetworkdevicesandthepoliciesthatthey
enforce to subscribing backoffice systems via its IEC CIM 61968based Web Services Description Layer (WSDL)
interface.
Moreover,PolicyNetenablesutilitiestointeroperatewithexistingbilling,outagemanagement,customerservice
(and other) enterprise applications via its standardsbased WSDL interfaces. The policy server uses an Oracle
RDBMSbackendforitsdatarepository,therebyensuringthehighestlevelsofdatasecurity,integrity,reliability,
availability,replication,anddisasterrecoverysupport.
PolicyNet SmartGrid Security Services Suite based on ITU and IETF standards that meet recommended US
Government NIST and FERC protocols, algorithms, and best practices, the PolicyNet Security Suite provides a
highly granular yet scalable platform for Identity Management, Network Authentication, Authorization and
Accounting, and Password Management. The security services platform comes complete with: an ITU x.509
Digital Certificate Authority with full PKI management, an IETF OCSP Responder, and an IETF EAP/TLS RADIUS
AAAServer.
PolicyNetIPServicesSuitebasedonIETFstandards,theIPServicesSuiteprovidesahighlyscalableplatformfor
IP Address Management (via Dynamic Domain Name System and Dynamic Host Control Protocol servers), and
NetworkTimeSynchronization(viaNetworkTimeProtocolserverandclients).
GiventhePolicyNetSmartGridNMSPlatformsoftwarelicensingmodel,multipleinstancesoftheserverscanbe
installedtosupporthorizontalscaling,newreleasestaging,anddisasterfailoverrecovery,withoutrequiringany
additionalsoftwarelicensefees.Inaddition,theSecurityServicesSuitecanbereplicatedtosupportaRegistered
HANSecurityDomain,whichisfederatedwiththeSmartGridSecurityDomain.
12|P a g e
Figure4:PolicyNetSmartGridNMSArchitecture
SmartGrid Network Operating System The SmartGrid Network Operating System (SG NOS) is based on the
embeddedLinuxkernel,withRouting,Firewall,andIntrusionDetectionnetworkservices.Theoperatingsystem
alsoprovidesanonboardnonvolatilefilestore,securekeyring,andasecureSOAPservice.TheSmartGridNOS
comes embedded within the 4G SmartMeters and SmartGrid Routers, and is remotely upgradeable via the
PolicyNetSmartGridNMSplatform.
PolicyNet SmartMeter Agent Based on the IETF COPS protocols, the ANSI C12.18/.19 standard, and the IEEE
802.16.e standard, the PolicyNet SmartMeter Agent firmware, which operates within the SmartGrid NOS,
provides open standardsbased support for the management and enforcement of advanced metering, load
control,andcommunicationsnetworkingpolicies(whicharecreatedanddeployedtotheAgentviathePolicyNet
SmartGrid NMS server software) directly on the meter. Given the realtime, secure,transactional nature of the
IETFCOPSPR/TLSprotocol,theSmartMeterAgentguaranteestheintegrity,andreliable,timelydeliveryofmeter
datafromthemetertothePolicyNetPolicyServersoftware.TheSmartMeterAgentcomesembeddedwithinthe
4GSmartMeter,anditisremotelyupgradeableviathePolicyNetSmartGridNMSplatform.
PolicyNet SmartGrid HAN Agent Based on the IETF COPS and RADIUS protocols, and the emerging IEC CIM
61968based HAN Services standard, the PolicyNet HAN Agent firmware, which operates within the SmartGrid
NOS, provides open standardsbased support for the management and enforcement of home area network
demandresponsesignals,messages,andservices.LeveragingtheHomePlugHANinterface,theSmartGridHAN
Agent provides support for the mutual authentication and authorization of preregistered HAN Devices to its
ProxyServiceviatheonboardRADIUSClientandthePolicyNetSecurityServerSuite,andanextensibleIECCIM
13|P a g e
61968based SmartGrid Web Services interface via the onboard secure SOAP service web services that can
include the delivery of realtime meter data and events to authenticated HAN device(s). The SmartGrid HAN
Agentcomesembeddedwithinthe4GSmartMeter,anditisremotelyupgradeableviathePolicyNetSmartGrid
NMSplatform.
Figure5:PolicyNetSoftwareBundledwith4GSmartMeter
PolicyNetSmartGridRouterAgentBasedontheIETFCOPSandIKE/IPSecprotocols,theDNPv3standard,and
the IEEE 802.16.e standard, the PolicyNet SmartGrid Router Agent firmware, which operates within the
SmartGrid NOS, provides open standardsbased support for the management and enforcement of distribution
automation, and communications networking policies (which are created and deployed to the Agent via the
PolicyNet SmartGrid NMS software) directly on the router. Given the realtime, secure, transactional nature of
the IETF COPSPR and IPSec protocols, the SmartRouter Agent guarantees the integrity, and reliable, timely
delivery of DNPv3 class and control data from the router to the PolicyNet Policy Server software. The
SmartRouter Agent comes embedded within the 4G SmartGrid Router, and it is remotely upgradeable via the
PolicyNetSmartGridNMSplatform.
14|P a g e
Figure6:PolicyNetSoftwareBundledwith4GSmartGridRouter
3. 4GCommunicationsNetworking
Akeydifferentiatorofthe4GSmartGridSolutionisitsleverageofthe4Gcommunicationsnetworkingtechnology.The
SmartMeterandSmartGridRouterareintegratedwiththenextgeneration4Gcommunicationsstandard,theInstituteof
Electrical and Electronics Engineers (IEEE) 802.16.e, an open communications platform currently being deployed
throughouttheworld,onlicensedbroadbandspectrum.ConnectingSmartGriddevicesviaa4Gnetworkoffersmultiple
benefits,including:
Enhanced nonlineofsite network reach achieved through OFDMA Modulation, Dynamic Ranging and Power
Control, Sophisticated Error Correction Algorithms, Frequency Subchannelization, Adaptive Antenna, and
MultipleInputMultipleOutput(MIMO)technologies.
GuaranteedQualityofService(QoS)algorithms,whichcanbeguaranteedforeachdataflowforlatencysensitive
distribution supervisory control and data acquisition (SCADA) and smart metering demand response / load
controlapplications.
15|P a g e
Stateoftheart,governmentcertifiedadvancedcommunicationsnetworkingsecurityprotocolsandalgorithms.
Broadband network capacity, providing sufficient bandwidth availability for todays and tomorrows Smart Grid
applicationrequirements
Arobust,largeecosystemofover500+contributingcompanies(www.4Gforum.org)providingopenstandards
based,interoperableproductsenablingaheterogeneousSmartGridnetwork.
4G Broadband
for the Smart Grid:
Clear Advantages
Requirements
4G
Broadband
Proprietary
AMI
Narrowband
Security
-
Interoperability
?
Information Sharing /
Data Exchange
Investment Leverage
?
Scale & Flexibility to
Innovate Rapidly
?
Enhanced Grid Reliability
?
Reduce Obsolescence
and Stranded Assets
?
Shovel Ready
Transform / Revolutionize
Customer Relationship
?
Near Real-Time Device
Management / Decisions
?
High Bandwidth Network
?
Network Latency
?
Capacity for Growth
?
CAPEX Cost; OPEX Cost
Higher capex,
lower opex
Lower capex,
higher opex
Benefits
Investment leverage
Future proofing
Risk mitigation
More secure
More scalable
More cost-effective
over a longer time
horizon
Figure7:Advantagesof4GBroadbandvs.ProprietaryMeshNetworks
6. 4GSMARTGRIDSOLUTIONKEYFEATURES
SimpleandComplexMeterConfigurationManagementServices
Meter rate program configuration can be performed on a single meter or on millions of meters in a single transaction,
providing a scalable, efficient, and costeffective method for deploying advanced tariff / rate programs which meet the
customersspecificneeds.Someadvancedfeaturesallowtheutilityto:
Select Demand / Load Profile (LP) or Time of Use (TOU) mode of operation, and use the intuitive program
managerinterfacetocreateandedittariff/rateprogramsfortheselectedmodesofthemeter(s)
Changefactoryprogramdefaultsincludingmeasurementdetents
16|P a g e
Setorchangepowerqualitysagandswellthresholds
DynamicSoftswitchkeymanagement(enablingafullyloaded,licensedasusedmodels
VersatileEnergyPrePaymentandRealPaymentServices
The4GSmartMeterbycanprovidesupportforbothEnergyPrePaymentandRealPaymentServices.Theseservicescan
beofferedviatraditionalmethods(utilitywebserversorCSRs),and/ortheycanbeofferedovertheHANSmartGridWeb
Service interface. The energy prepayment service is valuable to help reduce bad debt and collections expense, and
provide lower income customers with sustainable electric service. RealPayment Service can be used to support Hybrid
Vehicle Charging stations, both within the HAN (or at retail points of sale). The strong security capabilities of the 4G
SmartMeter make it a safe eCommerce transaction pointofsale device, one that can securely accept (and protect)
customercreditanddebitcards.
LoadControlServiceSwitch
The4GSmartMetercanbeorderedwithanintegratedloadcontrolserviceswitch,mountedunderthemeter'scover.This
factoryinstalledoptionmustbespecifiedatthetimeoforder.Thisfunctionalityisidealfor:
Locationswithfrequentmoveins/moveouts,orwhicharecostly/difficulttovisitonsite.Withtheintegrated
energy service switch, the utility can remotely connect or disconnect service and avoid sending a technician to
thesite.
Situations involving slow or nonpaying customers (note: the energy service switch can be programmed to
disconnect if demand reaches above a specified load, thereby enabling regulatory required baseline only
servicestobedeliveredtothesetypesofcustomers).
New services such as demandside management, emergency conservation, prepayment systems, customer
systempremisesprotection,andcontrolledoutagerestoration.
StateoftheArtTamperDetection
Unlike other networked meters, the 4G SmartMeter has a persistent network connection. If there is an unscheduled
removal of the meter (or it becomes unenergized, and there is no outage condition), realtime tamper event messages
arerecordedintheoptionalEventLog,andatamperalarmisautomaticallygeneratedbythePolicyNetMeteringSystem.
IEEEReliabilityIndices
The 4G SmartMeter has an optional power quality feature (activated when the appropriate softswitch is programmed)
that provides support for calculating IEEE reliability indices, such as Momentary Average Interruption Frequency Index
(MAIFI),SystemAverageInterruptionFrequencyIndex(SAIFI),etc.,bycollectingmomentaryandsustainedinterruptions,
andtheaccumulateddurationofsustainedinterruptions.
17|P a g e
AutomatedOutage/RestorationDetection
The4GSmartGridsolutionenablesnearrealtimeoutageandrestorationdetection,therebyimprovingtheconsistency
andquality ofthe utilitys delivery of energy services to its customers. Unlike traditional lastgaspapproaches, the 4G
SmartMeter maintains a persistent (or alwayson) connection to the 4G Smart Grid Network, so that outage and
restoration detection are achieved via the network connection and service accounting subsystem. Deploying the same
technologyusedinthetelecommunicationindustrytosupportnetworkconnectionandserviceaccountingformillionsof
concurrentusers,thePolicyNetSmartGridNMSworksseamlesslywithany4GAccessServiceNetworkGateway(ASNGW)
device to provide near realtime outage and restoration detection notifications (via a standards based (IECCIM) web
servicesinterface)toexistingOMS/DMSsystems.
HomeAreaNetwork
The 4G SmartMeter provides a strong, mutually authenticated secure, IEC CIM 61968based Smart Grid Web Services
interface over its HomePlugAV HAN interface. It has support for the addition of 3
rd
Party communications cards (e.g.,
ZigBee,MeshWiFi)tosupportUtilityHANDevices(e.g.,Gasand/orWaterMeters).
Upon establishing a mutually authenticated and authorized connection with the preregistered HAN Device, the 4G
SmartMeterwillexposeasecureproxyinterface,andasuiteofcustomerspecificauthorizedSmartGridNetworkServices
to the HAN. To support simple demand response programs, such as programmable thermostat setpoints, the 4G
SmartMetercansecurelycommunicatetoindividualHANdevices,aswellasenablingtheutilitytoofferadvancedservices
tocustomerstobettermanagetheirelectricityconsumptionanddemandforalloftheirappliances(washer/dryer,car,
refrigerator,etc).
Available in the 2
nd
generation 4G SmartMeter by GE, a secure, onboard SmartGrid Energy Services Web Server
application will provide any webbrowser enabled HAN Device with a highly intuitive user interface that provides real
timefeedbackonenergyusage.CoupledwithGEsnewCognitiveMeteringapplication,energyusagebymajorappliance
canalsobedisplayedwithoutrequiringanyadditionalHANdevicesand/orcustomerapplianceupgrades.
Inaddition,whenthemetersonboardSmartGridEnergyServicesWebServerapplicationisusedwithanEnergyPortal,
the utility can offer advanced energy services and incentive programs (e.g., energy conservation competitions, online
education,energysavingsproductsandservices).
18|P a g e
Figure8:4GSmartMeterESmartGridEnergyServicesHomePage
BroadbandServicesviaGE4GSmartMeter
An advanced electric meter, the 4G SmartMeter by GE can also serve as a fully functional 4G broadband switch router
withfullQualityofService(QoS),CostofService(CoS),Security,VirtualPrivateNetwork(VPN),andFirewallcapabilities
includingWirelessBroadbandInternetservicesintothehomeviatheHomePluglocalareanetworkinterface.Inaddition,
the4GSmartMetercanbeusedtoproviderealtimedemandresponseandcriticalpeakeventmessagestotheconsumer
directlyfromtheutilitysbackofficesystemsovertheSmartGridnetwork.
4GSmartGridMobileFieldOperations
The 4G SmartGrid network can be built out to support full mobility services on leading personal computing devices,
including 4G VoIP Mobile Phones, 4G Personal Computer Memory Card International Association (PCMCIA) wireless
memory and connectivity cards, Personal Digital Assistants (PDAs), and personal computer laptops with integrated
4G/WiFi capabilities. These products can be used securely in the 4G Smart Grid, to support field operations & repair
crews, telecommuters, and mobile communications all from the same network that provides advanced metering,
demandresponse,anddistributionautomationofSmartGridservices.
GE Energy
imagination at work
Real. Smart. Solutions.
Aloha Renewable Energy
Maui Smart Grid Project to Uncover Answers that Make Wind
and Solar Generation More Viable
As the most remote chain of islands on earth, Hawaii is Americas most fossil-
fuel-energy dependent state. Almost 90%
1
of the islands electricity is generated
fromfossil fuels, mostly oil. And 100%of that oil needs to be brought in by tanker,
mostly fromforeign countries.
Hawaiis oil dependency challenges its economy with costs and uncertainty.
Hawaiis consumers pay nearly three times more for electricity than their
counterparts on the mainland. And that cost could skyrocket every time there
is a spike in oil prices.
GE is finding ways to help. Working with the US Department of Energy, Hawaii
Natural EnergyInstitute, Maui Electric Company, andHawaiianElectric Company,
GE is fine-tuning solutions to integrate more renewable energy into the generation
mix. The ultimate goal is for Hawaii to receive 40%of its electricity fromclean,
local, renewable energy sources by 2030.
>Given its location and climate, why isnt Hawaii already using more solar and
wind resources in its power mix?
Wind and solar generation is unpredictable a passing cloud or a shift in the winds causes
generation to drop rapidly. Then when the cloud clears or the winds re-shift, generation
peaks again. This variability makes it challenging to provide a consistent, reliable stream
of power when a small grid systemincludes very high levels of wind and solar power.
Plus, being totally isolated, Maui cannot build a systemthat uses renewable energy as
available and then fills gaps by buying energy fromother utilities. There are no cables
coming in fromutilities in neighboring states.
>So is the Maui smart grid project simply trying to find ways to level
renewable generation?
Generation is only one part of the complete project scope. Working with our utility and
technology colleagues, GE is deploying a whole host of technologies to help reduce Mauis
dependence on oil for electricity. The projects include reducing and managing peak-
demand loads, efficiently integrating renewable energy, forecasting renewable availability,
better balancing generation with load, and improving ways to store and use excess
renewable generation.
<Maui, Hawaii, USA>
M
a
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Maui's independent power grid
provides about 200 megawatts
of electricity during peak times.
Its largest renewable facility, First
Winds Kaheawa wind plant, can
produce up to 30 megawatts to
help meet that demand. At least
another 40 MWof wind power is
expected on the island, along
with a wave-power plant and
increasing customer-sited
photovoltaic electricity.
A streamof clean, healthy,
efficient growth
The Hawaiian Islands and
Maui Electric Company
have a simple goal with
a complex solution:
40% of electric
sales from
clean, local,
renewable
sources by
2030.
2
>
40%
2030
1
EIA SEDS Database
2
Act 155 of the 2009 Hawaii Legislature
>What is GE doing to help reduce loads?
Were deployingavarietyof GE technologies tohelpreduce andmanage
loads. Ademandoptimizationprogramwill enable the utilitytomonitor
andcontrol devices inhomes andbusinesses, reducingthe power being
drawnat peak times. Well dothat byraisingthermostats onair condi-
tioningunits, cyclingdownpool pumps andcontrollingother big-draw
items duringpeak demandtimes. The change indevice output will be
nearlyimperceptible, but the effect onenergydemandwill be significant.
>What about those smart appliances that are making the
news lately are they part of your solution?
The Maui projects doinclude smart appliances
that canbe monitoredandcontrolledtooffset
peak loads without affectingperformance.
For example, asmart refrigerator would
be instructedtodelayits high-energy-
consumptiondefrost cycle duringpeak times.
Its achange thats invisible toconsumers, but
has agreat benefit for the grid. Consumers
mayopt intothe level of control theyare
willingtoallowthe utilityinexchange for
greater potential energysavings.
>What makes it all work?
The totallyintegratedsystemhas many
important parts, but keytoreducingload
are smart meters onhomes andasmart
DistributionManagement System(DMS)
controllingthe entire energydistribution
network.
>What does the DistributionManagement Systemdo?
Inadditiontocommunicatingwithhouseholdsmart meters, the DMS
monitors andcontrols commercial electrical loads, incomingpower from
windandsolar resources andthe systems tomove andcontrol the energy.
That includes digital substations, capacitor banks, voltage regulators
and battery banks. The DMS will also control and smoothly integrate
nonrenewable energysources intothe mix addingandsubtractingpower
sources as needed. The DMS is, ineffect, the conductor of the entire Maui
energyorchestra, optimizingthe performance of eachelement andcalling
elements intoplayas neededfor anideal compositionof energy
deliveryandefficiency.
Maui
An end-to-end solution to manage supply and demand
OnlyGE has the breadthanddepthof services andexpertise tomake sunand
windpower practical elements of atotal energysolutionfor Maui. From
forecastingrenewable availabilitythat displaces traditional generation, and
distributingenergymore efficiently, tomanagingandloweringdemand, the Maui
smart gridproject treats the islands energychallenges as acomplete picture.
Inthe end, Maui residents andbusinesses will see ashrinkingreliance onimported
oil, more control over their energyusage andcosts, andaninfrastructure that can
support smart, cleangrowthisland-wide. The project mayrewrite the textbooks
onhowtoreliablyintegrate inherentlyunreliable windandpower generationinto
avibrant energyplan.
M
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G
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The Answer Is Blowing In The Wind
Long-range goals Toimprove security,
its economyandthe environment,
Hawaii is movingtonatural, local
resources: wind, solar, ocean, biofuel,
waste-to-energyandmore. The most
aggressive renewable goals inthe US
call for 70%cleanenergyfor electricity
andgroundtransportationby2030
30%fromenergyefficiencyand40%
fromrenewables.
2, 3
Cut Peak
TheMaui smart
gridproject hasa
specificobjectiveto
reducepeakdistribu-
tionloadsby15%.
Demonstrationona
distributioncircuit is
targetedfor 2012.
Clean energy for
electricity and ground
transportation by 2030.
3
Smart meters will give consumers the
ability to control usage and potentially save
money. Theyll help the utility effectively
control demand and improve service.
GEs smart appliances will helpcontrol
peak demandandmanage energyuse
tocontrol consumer costs.
>Is there anythingelse youcandotoreduce demand?
The project is alsointegratingGE VOLT/VARtechnologythat more tightlycontrols the voltage
neededonpower lines tomaintainreliable availability. Byoptimizingvoltage andbetter controlling
power flowinresponse tothe real-time loaddemands, well reduce unnecessarypower loss and
waste intransmissionanddistribution.
>Howmuchrenewable power is this project delivering?
Alot of generationis inplace or under development for anisolatedgridthat peaks at about
200 MWonatypical day. The 30 MWFirst WindKaheawawindplant is inoperationandadding
another 20 MW. Another windplant beingdevelopedwill add20+ MWmore. Maui soonexpects
tohost awave generationpilot project andtofuel existingpower generationfacilities withplants
or algae grownonMaui. Andcountless PVsolar installations are inplace andplannedonresorts,
businesses andhomes. The potential volume of renewable energyis huge.
>Where does forecastingfit in?
Its inevitablethat Hawaiis energywill begeneratedbyamix of renewableandfossil-fuel genera-
tion. Forecasting the availability of wind and solar viability can maximize the efficiency of fossil
fuels usedinthe mix. GEs forecastingtools predict the outlook for volume of renewable energy
at any given time. Then the DMS can call on the minimumnumber of fossil resources needed
to keepthe systemviable.
>Whats the schedule?
The three-year project is beingledbyGE Energyandthe GE ResearchCenter inupstate NewYork
andwas kickedoff inmid-2009.
>Whats the expectedoutcome?
Effectivelyintegratingrenewable energyis atwo-way
proposition. We expect todemonstrate howa
concertedeffort tobalance generationwith
loadcanincrease the practical amount
of renewable generationthat
canreliablywork within
asystem.
15
%
70
%
2012
2
Act 155 of the 2009 Hawaii Legislature
3
Hawaii Clean Energy Initiative, 2008
M
a
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i
S
m
a
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t
G
r
i
d
imagination at work
Its simple: GEs smart gridis real andreadytoday. Andit reallyis asmarter waytoimprove
reliability, extendinfrastructure, increase efficiency, integrate renewable generationandenable
newtechnologies because it is acollectionof complete solutions, rather thanone-off product
sells. The smart gridis nolonger aplanfor tomorrow. Its anecessityfor today.
Holistic Smart GridVisionPoweredbyaComplete Product Suite
GE Energy is joining forces with utilities across the globe to upgrade the ways
we move and consume energy. Our vast experience in every area of energy
fromgeneration, through transmission, distribution and consumer use gives
us understanding and insight available nowhere else. Working with our utility
partners, GE Energy is able to understand, plan, execute, evaluate and con-
tinuously improve the unique smart grid solution set for the unique operating
environment of each individual city, region or country.
Weve assembledthe technologies, expertise, experience andresources tomake
the smart gridwork for smarter communities. This Maui project is another
powerful example of the smart gridat work.
GotoSchool ontheSmart Grid
Technology and solutions powering the Maui smart grid
Hawaii canexpect reliable
sunandwindpower
for the next billionyears.
As GE helps manage that
resource, the islands will have
energythat is trulyfuture proof.
Forecastingwindandsunmaximizes the
efficient useof cleanpower, whilelower-
ingunnecessaryfossil-fuel generation.
For more information, contact your GE Energysales representative or
sendus anemail at: energy.tdsolutions@ge.com
2009 General Electric Company. All Rights Reserved.
GEA17953 (11/09)
Smart Grid Technology from GE
Preparing us for tomorrow, today
Easily integrate
clean renewables.
Maximize life and
performance of
existing grid.
Fuel plug-in cars
without newplants.
Monitor energy
use to reduce costs.
Be better at keeping
the lights on.
Reigning in energy costs will
help Hawaii in two ways
making life more affordable for
citizens and increasing the
competitive viability of the
states number one industry:
tourism.
Findout moreabout howthe
smart gridcanhelpmakeenergymore
reliable, efficient andplanet friendlyat
www.itsyoursmartgrid.com.
Printed on recycled paper.
IEEE Smart Grid IEEE Smart Grid
Satish Aggarwal
Senior Program Manager, US Nuclear Regulatory Commission
Chairman, IEEE Nuclear Power Engineering Committee
Representative to IEEE-SA Standards Board
IEEE Smart Grid:
Helping You Make Sense of the Smart Grid
2
IEEE is leveraging its strong
technical foundation to
develop standards, share
best practices, publish p , p
developments and provide
educational offerings to
advance technology and advance technology and
facilitate successful Smart
Grid deployments worldwide.
IEEE Smart Grid Standards
3
P2030 P2030
3 Task Forces making significant
progress progress
4 P2030 writing meetings held at
NREL, March, May, J une, and Sept
2030/ 3 1 IEEE P2030/D3.1
Plenary meeting held 26-29 Oct 2010
in Las Vegas in Las Vegas
On target for March 2011 sponsor
ballot
Next meeting 22-25 February 2011
New Orleans
IEEE Smart Grid Standards
4
Standards Approved by the IEEE-SA Standards Board Standards Approved by the IEEE SA Standards Board
IEEE P1815, Standard for Electric Power Systems Communications - Distributed
Network Protocol (DNP3)
IEEE PC37 239 Standard for Common Format for Event Data Exchange (COMFEDE) IEEE PC37.239, Standard for Common Format for Event Data Exchange (COMFEDE)
for Power Systems
IEEE P1901, Standard for Broadband over Power Line Networks: Medium Access
Control and Physical Layer Specifications
Projects Approved by the IEEE-SA Standards Board
IEEE P1547.8, Recommended Practice for Establishing Methods and Procedures that
Provide Supplemental Support for Implementation Strategies for Expanded Use of pp pp p g p
IEEE Standard 1547
IEEE P2030.2, Guide for the Interoperability of Energy Storage Systems Integrated
with the Electric Power Infrastructure
IEEE P1901.2, Standard for Low Frequency (less than 500 kHz) Narrow Band Power
Line Communications for Smart Grid Applications
IEEE P1815 (revision), IEEE Standard for Electric Power Systems Communications --
Distributed Network Protocol (DNP3)
IEEE Smart Grid Events
5
IEEE PES Innovative Smart Grid
Technologies (ISGT)
A h i C lif i J 17 19 2011 Anaheim, California: J anuary 17-19, 2011
325 attendees from 5 different countries
IEEE PES Power Systems IEEE PES Power Systems
Conference & Exposition
Phoenix, Arizona: March 20-23, 2011
IEEE International Conference On
Smart Grid And Clean Energy
Technologies
ISGT Conference Europe
Gothenburg, Sweden - October 11, 2010
Technologies
Chengdu, China: August 24-27, 2011
Gothenburg, Sweden October 11, 2010
IEEE Smart Grid Publications
I EEE Power & Energy Magazine
6
I EEE Power & Energy Magazine
IEEE Smart Grid articles are a great
reference including: reference including:
Grid of the future
Phasor Measurements
Security
Energy Storage
Wind power
Large-scale solar
A il bl li Available online:
http://www.ieee-pes.org/images/pdf/2010pe-SmartGrid-all.pdf
IEEE Smart Grid Publications
I EEE Spectrum
7
I EEE Spectrum
Flagship membership magazine
of the IEEE features online focus of the IEEE features online focus
on Energy
The Smarter Grid
Renewables
Policy
N l Nuclear
Fossil Fuels
Environment Environment
Articles, podcasts, blogs
http://spectrum.ieee.org/energy p p g gy
IEEE Smart Grid Publications IEEE Smart Grid Publications
Scientific J ournals Scientific J ournals
8
Scientific J ournals Scientific J ournals
IEEE Transactions on Smart Grid
Editor-in-Chief: Mohammad
Shahidehpour
First issue June, 2010
IEEE Transactions on Sustainable
Energy
Editor-in-Chief: Saifur Rahman
First issue April, 2010
Dedicated to disseminating Smart Grid
d t i bl h d and sustainable energy research and
implementation strategies
Both journals are published quarterly
IEEE Smart Grid Education
9
Workshops and tutorials
Plain Talk Sessions
Smart Grid Boot Camp Smart Grid Boot Camp
Smart Grid Day
Smart Grid Super Sessions
Smart Grid Day at IEEE PES T&D Conference
Smart Grid Communications
Workshop
Webinars
Smart Grid Day at IEEE PES T&D Conference
New Orleans, LA, USA - April 21, 2010
Smart Grid Day Topics
Smart Grid Overview
Webinars
Behind the Meter webinar
More planned in 2011
Transmission and Distribution
Optimization
Cyber Security of T&D Control
System Assets
p
Whitepapers on Smart Grid-related
topics
The Future of Smart Grid
Technology, Policy, Standards
and Consumer Behavior
http://www.ieee-pes.org/2010-transmission-a-
distribution-conference-a-exposition-videos distribution conference a exposition videos
Advancing Smart Grid Requires
Collaboration
10
Collaboration
IEEE is working with NIST and international standards
bodies (IEC, ITU) to support coordination across numerous bodies (IEC, ITU) to support coordination across numerous
Standards Development Organizations
IEEE contributes to the US Department of Energy funded
Smart Grid Clearinghouse portal launched September 2010 Smart Grid Clearinghouse portal, launched September 2010
IEEE, through its Power & Energy Society, has begun
collaboration with GridWise Alliance for global Smart Grid
education and workforce development
IEEE facilitated Smart Grid scenario planning workshops and
schemes with the Edison Electric Institute and EPRI for
utility CEOs
IEEE has a MoU with State Grid Corporation of China (SGCC)
to collaborate on standards and Smart Grid education to collaborate on standards and Smart Grid education
11
IEEE Smart Grid:
Fortune Magazine article
highlights IEEEs role in the
facilitation of Smart Grid
I f ti Information
Knowledge exchange
Standards Standards
Publications
Events
We need relationships that are
global and include stakeholders from
industry, academia, and government
as well as technology standards
i i l i hi h
Education
Collaboration
communitiesrelationships that
enable us to share technology and
move it into the marketplace"
Ch lt Ad J id t Charlton Adams Jr., president
IEEE Standards Association
IEEE Smart Grid Web Portal
12
A gateway to IEEE Smart Grid
information
http://smartgrid.ieee.org
information
Top articles on Smart Grid, Electric
Vehicles, Photovoltaics, Renewable
Energy and more Energy and more
Rich technical content from IEEE Xplore
Continuous Smart Grid News
Public Policy insights
Posting of IEEE conferences and related
events
Smart Grid conceptual framework
107,000+ visitors from 150+ countries
IEEE Smart Grid Newsletter
htt // t id i / bli ti / t id l tt
13
IEEE Smart Grid Newsletter launched J anuary 12, 2011
Monthly publication
http://smartgrid.ieee.org/publications/smart-grid-newsletter
y p
Exclusive content by notable IEEE Smart Grid visionaries and leading
experts, including:
Toward A More Secure, Strong and Smart Electric Power Grid g
by Dr. S. Massoud Amin, chair, IEEE Smart Grid Newsletter; and chair, IEEE
Control Systems Society's Technical Committee on Smart Grids.
The Convergence of High-Tech and So-Called Low-Tech
by Erich W Gunther Chairman of the IEEE Power and Energy Societys by Erich W. Gunther, Chairman of the IEEE Power and Energy Societys
Intelligent Grid Coordinating Committee
Beyond the Meter: Lessons from Commercial and Industrial Sectors
by Tariq Samad, IEEE Smart Grid Steering Committee Member
Cisco Sees Sensing and Automated Response as Key Smart Grid Benefits
by Lee Stogner, Member of IEEE Board of Directors, IEEE Energy Policy
Committee, and IEEE Electric Vehicle Committee
Callingfor authors for future issues of the IEEE Smart Grid Newsletter Calling for authors for future issues of the IEEE Smart Grid Newsletter
IEEE Smart Grid: Social Media
14
Follow IEEE Smart Grid on Twitter:
@ieeesmartgrid
Be part of the Smart Grid discussion by joining the IEEE
Smart Grid LinkedIn Group: Smart Grid LinkedIn Group:
http://www.linkedin.com/groups?mostPopular=&gid=3188262
15
http://smartgrid.ieee.org
Thank you.
2/18/2011
Communi t y research
E U R O P E A N
COMMISSION
European
Technology Platform
SmartGrids
EUR 22040
Vision and Strategy
for Europes Electricity
Networks of the Future
EUROPEAN COMMISSION
Directorate-General for Research
Directorate J Energy
Unit 2 Energy Production and Distribution Systems
Contact: Manuel Snchez-Jimnez
E-mail: rtd-energy@cec.eu.int
Internet: http://europa.eu.int/comm/research/energy
Interested in European research?
RTD info is our quarterly magazine keeping you in touch with main developments (results, programmes, events, etc.).
It is available in English, French and German. A free sample copy or free subscription can be obtained from:
European Commission
Information and Communication Unit
B-1049 Brussels
Fax (32-2) 29-58220
E-mail: research@cec.eu.int
Internet: http://europa.eu.int/comm/research/rtdinfo/index_en.html
European
Technology Platform
SmartGrids
Vision and Strategy
for Europes Electricity
Networks of the Future
2006 EUR 22040
Sustainable Energy Systems
A great deal of additional information on the European Union is available on the Internet.
It can be accessed through the Europa server (http://europa.eu.int).
Cataloguing data can be found at the end of this publication.
Luxembourg: Office for Official Publications of the European Communities, 2006
ISBN 92-79-01414-5
European Communities, 2006
Reproduction is authorised provided the source is acknowledged.
Pictures Belpress.com
Printed in Belgium
PRINTED ON WHITE CHLORINE-FREE PAPER
Europe Direct is a service to help you find answers
to your questions about the European Union
Freephone number (*):
00 800 6 7 8 9 10 11
(*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed.
Table of Contents
Foreword 3
1. Executive Summary 4
2. The origins of SmartGrids 6
3. Driving factors in the move towards SmartGrids 12
4. From today to tomorrow 15
5. Setting up Smart Power Grids 21
6. The Technology Platform 31
List of Acronyms 35
Members of the Advisory Council 36
Foreword
Efficient transmission and distribution of electricity is
a fundamental requirement for providing European citizens,
societies and economies with essential energy resources.
The need to renew Europes electricity networks, meet
growing electricity demand, enable a trans-European
electricity market and integrate more sustainable
generation resources (including renewable sources),
presents major challenges. Research and development have
an important role to play in addressing them.
The move towards a more integrated European Research Area has resulted
in a better pooling of dispersed resources and expertise. Under the EUs Sixth
Framework Programme (FP6), important projects and actions have benefited
from improved information exchange, innovative solutions and co-ordination.
Technological advances in transmission and distribution of electricity supported by
FP6 are not an exception: they are stimulating the generation of new knowledge,
innovation and European integration.
The vision for electricity networks of the future presented here by the Advisory
Council of the technology platform SmartGrids proposes that Europe should
move forward in different ways in these important fields. This vision would lead
to new products, processes and services, improving industrial efficiency and use
of cleaner energy resources while providing a competitive edge for Europe in
the global market place. At the same time, it would ensure the security of the
infrastructure, helping to improve the daily lives of ordinary citizens. All this
makes smart grids an important element for achieving the largest knowledge-based
economy in the world.
In this highly regulated sector, efficient knowledge sharing and the pooling of
research and technological development resources of all disciplines are now critical.
Through co-operative RTD actions, both within and outside the Union, Europe is
creating a critical mass of ideas and solutions strengthening European excellence.
The setting up of this Technology Platform for the Electricity Networks of the
Future is one way of responding to these objectives. It, will hopefully bring together
all parties involved in smart grids to develop a Strategic Research Agenda.
I wish this initiative every success and expect to see the activities of the platform
leading to greater energy sustainability in Europe and beyond.
Janez Potoc nik
Commissioner for Science and Research
3
4
E U R O P E A N T E C H N O L O G Y P L A T F O R M S M A R T G R I D S
Europes electricity networks have provided the vital links between electricity producers and consumers
with great success for many decades. The fundamental architecture of these networks has been developed
to meet the needs of large, predominantly carbon-based generation technologies, located remotely from
demand centres. The energy challenges that Europe is now facing are changing the electricity generation
landscape.
The drive for lower-carbon generation technologies, combined with greatly improved efficiency on
the demand side, will enable customers to become much more inter-active with the networks.
More customer-centric networks are the way ahead, but these fundamental changes will impact
significantly on network design and control.
In this context, the European Technology Platform (ETP) SmartGrids was set up in 2005 to create a joint
vision for the European networks of 2020 and beyond. The platform includes representatives from
industry, transmission and distribution system operators, research bodies and regulators. It has
identified clear objectives and proposes an ambitious strategy to make a reality of this vision for
the benefits of Europe and its electricity customers.
The energy policy context
The European Commissions 2006 Green Paper A European Strategy for Sustainable, Competitive and
Secure Energy emphasises that Europe has entered a new energy era. The overriding objectives of
European energy policy have to be sustainability, competitiveness and security of supply, necessitating
a coherent and consistent set of policies and measures to achieve them.
Europes electricity markets and networks lie at the heart of our energy system and must evolve to meet
the new challenges. The future trans-European grids must provide all consumers with a highly reliable,
cost-effective power supply, fully exploiting the use of both large centralised generators and smaller
distributed power sources throughout Europe.
A shared vision
The SmartGrids vision is about a bold programme of research, development and demonstration that charts
a course towards an electricity supply network that meets the needs of Europes future.
Europes electricity networks must be:
Flexible: fulfilling customers needs whilst responding to the changes and challenges ahead;
Accessible: granting connection access to all network users, particularly for renewable power sources
and high efficiency local generation with zero or low carbon emissions;
Reliable: assuring and improving security and quality of supply, consistent with the demands of the
digital age with resilience to hazards and uncertainties;
Economic: providing best value through innovation, efficient energy management and level playing
field competition and regulation.
The vision embraces the latest technologies to ensure success, whilst retaining the flexibility to adapt
to further developments. Network technologies to increase power transfers and reduce energy losses
will heighten the efficiency of supply, whilst power electronic technologies will improve supply quality.
Advances in simulation tools will greatly assist the transfer of innovative technologies to practical
1. Executive Summary
5
VISION AND STRATEGY I ELECTRICITY NETWORKS OF THE FUTURE
application for the benefit of both customers and utilities. Developments in communications, metering
and business systems will open up new opportunities at every level on the system to enable market
signals to drive technical and commercial efficiency.
Making it happen
Enabling Europes electricity grids to meet the challenges and opportunities of the 21st century and fulfil
the expectations of society requires intensified and sustained research efforts. It is essential that this takes
place in a coherent way addressing technical, commercial and regulatory factors, to minimise risk and
allow business decisions to be made by companies in an environment of stability.
Key elements of the vision include:
Creating a toolbox of proven technical solutions that can be deployed rapidly and cost-effectively,
enabling existing grids to accept power injections from all energy resources;
Harmonising regulatory and commercial frameworks in Europe to facilitate cross-border trading of
both power and grid services, ensuring that they will accommodate a wide range of operating situations;
Establishing shared technical standards and protocols that will ensure open access, enabling the
deployment of equipment from any chosen manufacturer;
Developing information, computing and telecommunication systems that enable businesses to utilise
innovative service arrangements to improve their efficiency and enhance their services to customers;
Ensuring the successful interfacing of new and old designs of grid equipment to ensure inter-
operability of automation and control arrangements.
These and other elements will be addressed through a Strategic Research Agenda that the Technology
Platform will produce in 2006.
Delivering the benefits
The projects resulting from the SmartGrids vision will stimulate innovation in new network and associated
information technologies. The benefits of new technologies will have a positive effect for Europes citizens
and for international business. Job opportunities will be broadened as the networks require workers with
new skills and integration across new technology areas.
SmartGrids will help achieve sustainable development. Links will be strengthened across Europe and with
other countries where different but complementary renewable resources are to be found. An increasingly
liberalised market will encourage trading opportunities to be identified and developed. SmartGrids
networks will, in addition to electricity flows, establish a two-way flow of information between supplier
and user.
For a successful transition to a future sustainable energy system all the relevant stakeholders must become
involved: governments, regulators, consumers, generators, traders, power exchanges, transmission
companies, distribution companies, power equipment manufactures and ICT providers. Coordination
at regional, national and European levels is essential and the SmartGrids Technology Platform has been
designed to facilitate this process.
6
The vision will input into European and national research,
development and demonstration programmes over the
coming years. This will be done via an integrated and
innovative approach to technical, commercial and
regulatory dimensions. The vision will stimulate
constructive dialogue between all stakeholders involved in
the electricity sector and help to ensure the European
public and private investments required for the
implementation of the research and development
(R&D) strategies.
The time is now
The electricity grids that serve European consumers today have evolved over more
than a hundred years. However, new challenges arising from market liberalisation and
technical breakthroughs call for fresh thinking. Current grids have served well but
will not be adequate in the future: grids must ensure secure and sustainable
electricity supplies throughout Europe, take advantage of new technologies and
comply with new policy imperatives and changing business frameworks.
Responding to needs
The electricity sector faces new challenges and opportunities which must be
responded to in a vision of the future:
User-centric approach: increased interest in electricity market opportunities,
value added services, flexible demand for energy, lower prices, microgeneration
opportunities;
Electricity networks renewal and innovation: pursuing efficient asset management,
increasing the degree of automation for better quality of service; using system wide
remote control; applying efficient investments to solve infrastructure ageing;
Security of supply: limited primary resources of
traditional energy sources, flexible storage; need for
higher reliability and quality; increase network and
generation capacity;
Liberalised markets: responding to the requirements
and opportunities of liberalisation by developing and
enabling both new products and new services; high
demand flexibility and controlled price volatility,
flexible and predictable tariffs; liquid markets for
trading of energy and grid services;
2. The origins of SmartGrids
The SmartGrids European Technology Platform for Electricity Networks of the Future began its work in
2005. Its aim was to formulate and promote a vision for the development of Europes electricity networks
looking towards 2020 and beyond. What lies at the heart of this vision and what does it hope to achieve?
SmartGrids mission is to
create a shared vision which:
SmartGrids is a new concept for
electricity networks across Europe.
The initiative responds to the rising
challenges and opportunities, bringing
benefits to all users, stakeholders
and companies that perform efficiently
and effectively.
enables Europes electricity
grids to meet the challenges and
opportunities of the 21
st
century;
fulfils the expectations of society;
strengthens the European busi-
ness context for the electricity
sector and its international
opportunities.
7
Interoperability of European electricity networks:
supporting the implementation of the internal market; efficient management of
cross border and transit network congestion; improving the long-distance transport
and integration of renewable energy sources; strengthening European security of
supply through enhanced transfer capabilities;
Distributed generation (DG) and renewable energy sources (RES): local energy
management, losses and emissions reduction, integration within power networks;
Central generation: renewal of the existing power-plants, development of
efficiency improvements, increased flexibility towards the system services,
integration with RES and DG;
Environmental issues: reaching Kyoto Protocol targets; evaluate their impact on
the electricity transits in Europe; reduce losses; increasing social responsibility and
sustainability; optimising visual impact and land-use; reduce permission times for
new infrastructure;
Demand response and demand side management
(DSM): developing strategies for local demand
modulation and load control by electronic metering
and automatic meter management systems;
Politics and regulatory aspects: continuing
development and harmonisation of policies and
regulatory frameworks in the European Union (EU)
context;
Social and demographic aspects: considering
changed demand of an ageing society with increased comfort and quality of life.
According to the International
Energy Agency (IEA),
European electricity
consumption is projected to
increase at an average annual
rate of 1.4% up to 2030 and
the share of renewables in
Europes electricity
generation will double; from
13% now to 26% in 2030.
SmartGrids is a necessary response to
the environmental, social and political
demands placed on energy supply.
SmartGrids will use revolutionary new
technologies, products and services to
create a strongly user-centric approach
for all customers.
8
A broad spectrum of stakeholders
As markets across Europe become more liberalised and dynamic, an increasing
number of people are implicated in the future of electricity supply. From
government members to everyday users, every stakeholder will help to shape the
SmartGrids system. What are the different needs and responsibilities that will
feed into the project design?
Users: Users needs include quality of service and value for money. In the coming
years, users expectations will broaden and will include value added services, energy
services on demand and total connectivity. They will be asking for connection of
in-house generation, the ability to sell surplus generation back to the grid, real time
tariffs and the freedom to choose their suppliers.
Electricity network companies: Network owners and operators are called upon to
fulfil customers expectations in an efficient and cost effective way. They are required to
undertake necessary investments to guarantee high levels of power quality and
system security, while assuring adequate remuneration for their shareholders.
Investment remuneration and stable regulatory frameworks will be necessary for a
level playing field competition in a liberalised market.
Energy service companies: Companies will have to
satisfy the growing needs of users. Some users will seek
simple turnkey products. Cost efficiencies and savings
will need to be made visible, in monetary terms.
This must be accompanied by an increase in services delivered and a reduction of
intrusion upon the customer, such as for maintenance of the system. In general, a trend
will be observed from the present infrastructure-driven to progressive service-driven
paradigms in the European electricity supply industry.
Technology providers: Significant technology and business changes lie ahead and
equipment manufacturers will be key players in developing innovative solutions and
in achieving their effective deployment by working with the grid companies. As with
grid companies, technology providers will have important investment decisions to
make. A shared vision will be critical to ensuring sound strategic developments that
provide open access, long-term value and integration with existing infrastructure.
Innovation will be needed in relation to networks, demand, and for generation, both
distributed and centralised, as grid system operational characteristics change.
Researchers: The research community has a critical role to play: without research
there is no innovation and without innovation there is no development. Cooperation
among universities and research centres, utilities, manufacturers, regulators and
legislators must be fostered, not only for the successful development of new
technologies but also to overcome non-technical barriers.
Traders: Free trade throughout Europe will be facilitated by open markets, harmonised
rules and transparent trading procedures. Congestion management and reserve power
must be resolved for a fully integrated European market. Customers will benefit from the
opportunity to choose the energy supplier that best suits their requirements.
Customers, providers, researchers and
lawmakers are all implicated in the
future of electricity provision.
9
Generators: Electricity grids are complex, integrated
systems and there is a sensitive interaction between
generators, the grid systems, and the demands. It will
be important for the future to ensure the continuing
close involvement of generation companies,
understanding the electrical characteristics of their
equipment, and their operational dynamics.
Regulators: The European market for energy and related services should be
supported by a stable and clear regulatory framework, with well-established and
harmonised rules across Europe. Regulatory frameworks should have aligned
incentives which secure a grid with increasingly open access, a clear investment
remuneration system and keep transmission and distribution costs as low as possible.
Effective and efficient innovation should be rewarded.
Governmental agencies: Governments and lawmakers will have to prepare new
legislation to take into account apparently contradictory goals. Increasing
competition is expected to keep a downward pressure on energy prices, but a more
environmentally friendly energy mix may bring cost challenges. Legislation will be
affected by innovative technologies, the evolution of grid organisations, the
requirement for greater flexibility and increased cross-border trading and by the need
to ensure economic development, greater competitiveness, job creation and high
quality security of supply (both short and long term) in the EU.
Advanced electricity service and solution providers: New businesses will be
provided with the choice between own (on-site) generation, including sales of
surplus to the grid, and the purchase of electricity from supplier companies.
They will have the opportunity to offer demand side response products and services
to the grid. In the case of electricity-intensive industries, their decisions will be
influenced by market price changes. Thus businesses will be seeking a wider range
of solutions than is currently available.
Preparing adequate workforce and continuous education: Power
engineering is perceived to be old-fashioned. Particular attention will need to be
addressed to solve the shortage of skilled staff with manufacturers, grid operators,
regulators, etc. A multidisciplinary approach (engineering, economic, regulatory-
legislation) has to be envisaged.
Co-ordination between actors is essential in maintaining a secure supply, an efficient
network operation and a transparent market. Common technical rules and tools need
to be adopted by the different players regarding data exchange, modelling grids,
ancillary services and their users. They must also share a vision of electrical system
performance. A pan European approach is essential since, even if the technology is
available and the vision and motivation exist, a smart power grid will not be
implemented unless there can be a collective evolution into the future.
Thanks to SmartGrid technologies,
products and services, European
Companies will be able to get ahead
in international business.
10
Looking to the future
Whilst current networks presently fulfil their function,
they will not be sufficient to meet current challenges
and policy imperatives. It is essential that, right across
Europe, actors are able to agree upon a vision of the
future that will ensure needs are addressed. It is
essential that clear objectives are defined and a
strategy for making vision reality is adopted.
What do the different players hope to achieve?
Todays electricity networks provide an essential service
for society, built to ensure access for every single
electricity customer. They form a vertically integrated
scheme with centralised generation; distributed
consumption; limited interconnection capabilities
between the control areas; and commercial and regulatory frameworks that are not
harmonised for mutual advantage.
In response to new challenges and opportunities, electricity networks have begun to
evolve. The aim is that they accommodate more decentralised generation services,
with many actors involved in the generation, transmission, distribution and operation of
the system. At the same time, centralised generation and high voltage bulk-transmission
of electricity will continue to play a major role for the foreseeable future.
A shared vision
In order to manage changes successfully, a shared vision must be created. This will
encapsulate the possibilities and areas where Research and Technological Development
will bring significant benefits.
A shared vision of the opportunities for all stakeholders remains an essential
ingredient in successfully achieving efficient liberalised markets. Such a vision is fully
compatible with a competitive commercial environment: it reduces investment risk;
SmartGrids: The Vision
Europes electricity networks in 2020 and beyond will be:
Flexible: Fulfilling customers needs whilst responding
to the changes and challenges ahead;
Accessible: Granting connection access to all network
users, particularly for RES and high efficiency local
generation with zero or low carbon emissions;
Reliable: Assuring and improving security and quality of
supply, consistent with the demands of the digital age;
Economic: Providing best value through innovation,
efficient energy management and level playing field
competition and regulation.
Commercialisation, whether in Europe or
internationally, can only take place when
innovation has been proved in the demanding
world of real operational service.
ETP-SmartGrids has been structured to ensure that
cutting edge research is rapidly
evaluated and deployed.
SmartGrids: Objectives
To develop a shared vision for
the future which encourages the
engagement of multiple,
independent parties;
To identify research needs and
build support for an increased
public and private research
effort on electricity networks;
To align ongoing RTD
projects and new European,
national and regional program-
mes on electricity transmission
and distribution systems;
To draw conclusions and
recommendations for follow-up
actions and implementation of
the strategic research agenda
and deployment plan.
KEY AIM: To develop a strategy
for research, development
and demonstration
11
encourages the development of common
technical protocols and standards for open
access; and avoids the likelihood of stranded
assets and technology dead ends.
The vision will be made real using the latest
technologies, within commercial and regulatory
frameworks. The process will require a
trans- European approach along with
harmonised frameworks and standards that
promote innovation and its deployment.
It is important to recognise the scope of the
ambitions for SmartGrids: it is not a purely
technical venture. The overall goal of the
project is to develop a strategy for research,
development and demonstration. This will
empower network companies, allowing them
to respond to the considerable challenges
that they will face in the coming decades.
It is essential to have an integrated approach
covering technical, commercial and regulatory
factors along with the development of a shared
vision. This will minimise risk and allow
business decisions to be made by independent
companies in an environment of stability.
SmartGrids:
Why take action now?
New technologies- for generation, networks, energy storage, load
efficiency, control and communications, liberalised markets and
environmental challenges- require a shared vision and strategic
implementation plan for Europes grids. This will ensure that the
networks of the future meet the needs of tomorrows customers and
a broader spectrum of stakeholders.
The driving factors requiring action now are:
Increasing participation of customers in the energy field;
European and national policies encouraging lower carbon
generation, new and renewable energy sources and more efficient
use of heat energy;
The need to understand and manage the technical challenges and
opportunities for integrating new generation technologies into
Europes grids;
The need for investment in end-of-life grid renewal in an innovative
way to better position the networks for the next 50 years of
operation;
The need to handle grid congestions with market based methods;
The desire to deliver benefits to customers at the earliest opportunity;
The need to reduce uncertainty and risk to businesses making
investment decisions;
The progress in technology, which allows improvements in
operation and new services at reasonable costs.
Successful development and deployment of a vision for electricity grids
has application beyond Europe. There is significant benefit for jobs in
Europe and for European businesses internationally. A prerequisite is
the adequate technical staff trained by high level universities and other
technical schools.
Networks are evolving: SmartGrids
incorporates the latest technologies to ensure
that they will be flexible, accessible, reliable
and economical.
SmartGrids Vision: Recognising its scope
The SmartGrids vision goes far beyond
a technical proposition:
Its not about academic research alone;
Its not a centralised plan for Europes grids;
Its not only concerned with distribution grids;
Its not just about the trans-European
electricity network;
Its not a vision for specific infrastructure projects
or about the details of investment funding and risk
management;
Its not about emission trading markets or
addressing security of primary fuel;
Its not about detailed research
proposals, but is rather about research themes
and topics.
12
The European Internal Market: This market evolution, associated with an
efficient regulatory framework, will promote economic growth and play a key role
in the EUs competitiveness strategy. Increasing competition will encourage
efficiency and spur on technological progress and innovation. As a result, the
internal market is expected to provide benefits to the European citizens such as
a wider choice of services and downward pressure on electricity prices.
Security and Quality of Supply: Modern society depends critically on a
secure supply of energy. Countries without adequate reserves of fossil fuels are
facing increasing concerns for primary energy availability. Furthermore, the ageing
infrastructure of Europe's electricity transmission and distribution networks is
increasingly threatening security, reliability and quality of supply.
It is time to redesign electricity grids which take account of new roles and
challenges. Significant investment will be required to develop and renew these
infrastructures: the most efficient way to achieve this is by incorporating
innovative solutions, technologies and grid architectures.
The Environment: Besides issues of primary energy supply, the major
disadvantage of fossil fuels is that they emit CO
2
, SO
2
, NO
X
and other pollutants
when burnt to generate electricity. The greenhouse gases contribute to climate
change, which is recognised to be one of the greatest environmental and economic
challenges facing humanity. Research is needed to help
identify the most cost-effective technologies and
measures that will enable the EU to meet its targets
under the Kyoto Protocol and beyond.
New generation technologies
Hydro- and nuclear power plants are well established methods of generation with
nearly zero greenhouse gas emissions. Accommodating change may be possible by
incorporating new generation technologies. One successful example of this is the
wind farm and there are many other distributed generation technologies that are
either already commercial or close to being on the market. These have to be
introduced into existing transmission and distribution networks, which were not
initially designed to incorporate these kinds of generation technology in the scale
that is required today.
Global investments required
in the energy sector for 2003-
2030 are an estimated
$16 trillion, according to the
IEA. In Europe alone, some
500 billion worth of
investment will be needed to
upgrade the electricity
transmission and distribution
infrastructure.
The electricity network of the future
must be secure, cost-effective and gentle
on the environment.
3. Driving factors in the move towards SmartGrids
The current climate demands change in the way electricity is supplied. As the internal market
develops, European citizens will start to benefit from greater choice and lower costs. Fossil fuels are
running out and the security of electricity supplies is under threat. Environmental issues have
moved to the fore and the EU must meet targets set. Precisely which factors must future grids
accommodate and how will they do so?
13
These forms of generation have different characteristics from traditional plants.
Apart from large wind farms- possibly off-shore- and large hydropower plants, this
type of generation tends to have much smaller electricity outputs than the traditional
type. Some of the newer technologies also exhibit greater intermittency.
It is difficult to predict the impact of distributed generation on the future energy mix.
However, if EU energy policy continues to promote the increased use of DG there is
an urgent need to transform Europes grids to allow for the larger scale deployment
of these new technologies. Distributed generation can have a material impact on local
grids, causing reversal of power flows and variation of local grid voltages and other
technical parameters necessary for secure operation. Effective and economic
solutions to these issues have yet to be developed.
Targets to be reached
Meeting these challenges requires intensified and prolonged research efforts.
The Lisbon Strategy, a major priority of the European Union, outlined the intention
to boost competitiveness, job creation, social cohesion and environmental
sustainability throughout the continent. Both research and energy are key elements
of this Strategy. The 2002 Barcelona European Council goal of increased RTD
expenditures from the present 1.8% of EU GDP to 3% of EU GDP by 2010, increasing
the private funding proportion from 55% to two-thirds, was put in place to close
the competitiveness gap between the EU and its major competitors.
Liberalisation
Innovation
and competitiveness
Low prices
and efficiency
Primary energy
availability
Reliability
and quality
Capacity
Nature
and wildlife
preservation
Climate
change
Pollution
I
N
T
E
R
N
A
L

M
A
R
K
E
T
S
E
C
U
R
I
T
Y

O
F

S
U
P
P
L
Y
ENVIRONMENT
14
Eliminating uncertainty
There is uncertainty in many aspects of future grids:
In the primary energy mix
In the electricity flows created by the liberalised market
Of the instantaneous power output of many RES
In regulatory frameworks and investment remuneration in innovation
The best strategy for managing these uncertainties is to build flexibility and
robustness into the networks. This will be achieved through the research and
development of SmartGrids and will also allow the identification and address of any
regulatory uncertainty in a systematic way.
A united front
Coordination at regional, national and European levels is
needed to reform and strengthen the public research and
innovation systems; facilitate public-private partnerships;
ensure a favourable regulatory environment; help to develop
supportive financial markets; and create attractive education,
training and career conditions to achieve this goal.
In this way, research and innovation performance will be
boosted and will lead to more growth, jobs and
competitiveness for Europe. In addition, research and
innovation will improve the sustainability of the EU, leading
to win-win solutions for economic growth, social
development and environmental protection.
SmartGrids:
Enhancing grid flexibility & robustness
Create a toolbox of proven technical solutions
that can be deployed rapidly and cost-effectively,
enabling existing grids to accept power injections
from distributed energy resources without
contravening critical operational limits (such as
voltage control, switching equipment capability and
power flow capacity);
Establish interfacing capabilities that will allow
new designs of grid equipment and new
automation/control arrangements to be successfully
interfaced with existing, traditional, grid
equipment;
Ensure harmonisation of regulatory and
commercial frameworks in Europe to facilitate
cross-border trading of both power and grid
services (such as reserve power, for instance Nordic
hydropower), ensuring that they will accommodate
a wide range of operating situations without
creating perverse incentives or other unintended
consequences;
Establish shared technical standards and protocols
that will ensure open access, enabling the
deployment of equipment from any chosen
manufacturer without fear of lock-in to proprietary
specifications. This applies to grid equipment,
metering systems, and control/automation
architectures;
Develop information, computing and
telecommunication systems that enable
businesses to utilise innovative service
arrangements to improve their efficiency
and enhance their services to customers.
Research is needed to help identify
the most cost-effective technologies
and measures. This would enable Europe
to meet its targets under the Kyoto
protocol and beyond.
Coordination across Europe will boost
research and innovation performance,
leading to more growth, jobs and
competitiveness.
15
Todays grids are predominantly based on large central power stations connected to
high voltage transmission systems which, in turn, supply power to medium and
low-voltage local distribution systems. The transmission and distribution systems are
commonly run by natural monopolies (national or regional bodies) under energy
authorities control. In contrast, the generation sector is increasingly competitive.
The overall picture is still one of power flow
in one direction from the power stations, via
the transmission and distribution systems, to
the final customer. Dispatching of power and
network control is typically the responsibility of centralised facilities, controlling
several regions from one place. There is little or no consumer participation and no
end-to-end communications.
Traditional grid design has evolved through economies of scale in large centralised
generation and the geographical distribution of generation resources (locations near
coalfields, cooling water, hydro resources, etc). The grids were optimised for regional
4. From today to tomorrow
Important changes must be incorporated into the nature of electricity supply, as demand rises and
traditional resources are depleted. Major players have been brought together to define a clear vision
of the future, but these ideas must be translated into practical solutions. The present grid system has
served well, so what will be different about the new networks?
Future models for electricity grids
have to allow for changes in technology,
values, the environment and commerce.
Limited cross-border
interconnections
Centralised control
Technology approaching
an age of one century
Large generating stations
Technically optimised
for regional power adequacy
Differing regulatory and
commercial frameworks
The Traditional Grid
or national adequacy. Interconnections were originally developed for mutual support
between countries and regions in emergency situations, but they are increasingly
being used for trading between states.
The transmission grid provides an arena that has traditionally enhanced the overall
reliability of power supply. The existing grid system provides an excellent
foundation from which future challenges and opportunities can be met.
However, the change should be accomplished through an incremental rather than
a revolutionary approach and so the design of a long-term strategy is indispensable.
Future grids
Distribution grids will become active and will have to accommodate bi-directional
power flows. The European electricity systems have moved to operate under the
framework of a market model in which generators are dispatched according to
market forces and the grid control centre undertakes an overall supervisory role
(active power balancing and ancillary services such as voltage stability). Distribution
networks, on the other hand, have seen little change and tend to be radial with
mostly unidirectional power flows and passive operation. Their primary role is
energy delivery to end-users.
16
User specified quality,
security and reliability
of supply for the digital age
Flexible, optimal
and strategic grid
expansion, maintenance
and operation
Flexible DSM and
customer-driven value
added services
Coordinated, local energy
management and full
integration of DG and RES with
large-scale central power
generation
Extensive small,
distributed generation
connected close to end
customers
Harmonised legal
frameworks facilitating
cross-border trading of
power and grid services
Grids of Tomorrow
17
Future models for the electricity grids have to meet the changes in technology,
in the values in society, in the environment and in commerce. Thus security, safety,
environment, power quality and cost of supply are all being examined in new ways
and energy efficiency in the system is taken ever more seriously for a variety of
reasons.
New technologies should also demonstrate reliability, sustainability and cost
effectiveness in response to changing requirements in a liberalised market
environment across Europe.
Future electricity markets
The liberalisation of electricity markets is an important factor to take into account.
It affects the business framework of companies in a fundamental way and, when
implemented well, it can bring the benefits of competition, choice and incentives
for an efficient development.
The change might be better described as a revision of the traditional monopoly-based
regulation of electricity supply. It has been accompanied by a trend towards an open
market in power, meaning free choice of power supplier by electricity consumers.
In addition, liberalisation has separated the responsibility for the secure transmission
and distribution operation from the electricity generation business.
The whole electricity sector business is in a fundamentally changed commercial,
regulatory and environmental context.
Needs must
Liberalisation is not the only challenge for how
networks will evolve in the future. The organisation of
the network in the future will be affected by the
dynamics of energy markets. Scarcity of primary
energy sources on one hand and climate
change on the other is likely to greatly affect decisions on new investments in
generation. It is not so much the case of playing central versus distributed solutions,
but much more to take advantage of a wide energy technology portfolio and the
coexistence of many possible solutions.
How many people in 1960
would have believed that
wind power was to become
an important source of
energy?
Yet, thanks to a combination
of aerodynamic, blade
material and power converter
breakthroughs, this has
become an accepted reality.
And the evolution continues.
As the powers of computers
advance rapidly, new
technologies will be tested,
evaluated and modified
on-line before physical
equipment is constructed.
A wide range of energy technologies
will be employed to meet the
challenges of a liberalised market
and a changing climate.
18
Future networks
A proportion of the electricity generated by large conventional plants will be
displaced by distributed generation; renewable energy sources; demand response;
demand side management; and energy storage.
Additional stand-by capacity might be required, which could be called upon
whenever the intermittent RES ceases to generate power. It may be economically
efficient to seek a European solution for balancing power rather than national ones.
For instance, the massive amount of fast-controllable hydro power in the Nordic and
other mountainous countries of Europe could be used as real-time balancing power
for those areas in central Europe, where a large part of electricity generation could be
provided by non-controllable primary energy. Efficient integration of DG is unlikely to
be made without changes to transmission and distribution network structure,
planning and operating procedures. Indeed it is envisaged that there will be less of
a distinction between these network types, as distribution networks become more
active and share many of the responsibilities of transmission.
Future: Operation of system will be shared between central and distributed generators. Control of distributed
generators could be aggregated to form microgrids or virtual power plants to facilitate their integration both in
the physical system and in the market.
Central power plant
Virtual power plant
Offices
Storage
Micro-
turbines
Houses
CHP
Fuel cells
Wind turbines
Industrial plants
19
Today, most users are passive receivers of
electricity without further participation in the
operational management of the generation
sources and the grid. Each user node is
simply a sink for electricity.
However, in the last decade many countries have started the process of
liberalisation of their electric systems, opening access to transmission and
distribution grids. The process has been accompanied by a rapidly growing
presence of DG of various technologies, some of it in the form of RES.
This responds to the climate change challenge, the need to improve fuel
diversity and provide affordable electricity with high quality of supply.
There has been rapid development of renewable energy technologies and
co-generation and increased interest in other distributed energy resources
and energy storage technologies. Smart metering, with two way
communications capability and greatly improved user information, is now
a reality and deployment is already taking place in some European countries.
Benefits all round
These developments change the trend in
50 years of grid evolution. They present
significant opportunities and challenges for all
stakeholders: for example, multilateral
participation in the real-time balance between
supply and demand.
Conceptually, a demand reduction is equivalent to a generation increase in the
balancing process: avoidance of usage or local generation enables each user
node in the future network to behave as both sink and source. Extending the
definition of generation to commercial and industrial demand customers and
individual households allows demand management to be treated as a form of
indirect generation. This landmark change in the concept of grid operational
management may now become a reality, enabled by modern technological
developments including end user communications access.
5. Setting up Smart Power Grids
Electricity grids of the future are Smart in several ways. Firstly, they allow the customer to take an
active role in the supply of electricity. Demand management becomes an indirect source of
generation and savings are rewarded. Secondly, the new system offers greater efficiency as links are
set up across Europe and beyond to draw on available resources and enable an efficient exchange
of energy. In addition, environmental concerns will be addressed, thanks to the exploitation of
sustainable energy sources. The potential benefits are impressive, but how will they be achieved?
A landmark evolution in the concept
of grid operational management may
now become a reality, enabled by
modern technological developments.
These developments buck the trend of
a 50-year grid evolution. Information
exchange is developed and customers
take on an active role.
20
Future Network Vision
M
.

S
A
N
C
H
E
Z
,

2
0
0
6
HVDC link
Residential CHP
SMES
Thermal storage Micro storage
of electricity
Photovoltac
Small hydro power
Transformer
Underground info
and power transmission
Solar
Hydro power station
Low emission
power plant
Solar power
plant
HP
control
mmunication
21
Biomass
Value added
services
Forecast
information
Off-shore wind
Microgrid Wave energy
Demand side
management
Fuel cells
Compressed
hydrogen storage
H
2
production and
filling sation
22
Across Europe and beyond
Europes future electricity system will provide all consumers with a highly reliable,
cost-effective power supply. Sustainable electricity production will be
achieved through power sources having zero or low emission of greenhouse gases
combined with maximum conversion efficiency. Bulk electricity transport and power
balance will be facilitated by trans-European grids that are developed to recognise the
SmartGrids principles. This will have the potential to exploit fully the use of both
large, transmission connected generators and smaller distributed power sources
throughout Europe.
The aim of SmartGrids is to help achieve sustainable
development and a more efficient transmission grid
will contribute by improving the opportunities for RES
and DG. It will facilitate the interconnection of
regions that have different but complementary
renewable generation resources (such as wind power
and pumped storage hydropower). An increasingly
liberalised market will encourage trading opportunities to be identified and
developed. In addition to energy trades between Member States, it can be expected
that electricity exchange will be provided with systems in the East of Europe and
towards Africa.
An interactive grid
Just like the internet, the electricity grid will be interactive for both power generation
sources and power consumption sinks (loads). In 2020, energy service companies will
let everyone to have access to the provision of electricity supply services such as the
demand management capabilities. Enabled by smart metering, electronic control
technologies, modern communications means and the increased awareness of
customers, local electricity supply management will play a key part in establishing new
services that will create value for the parties involved.
In this context, metering services will represent the gateway for access to the
grid of the future and will have a critical consequence on power demand
evolution. For this reason, electronic meters, automated meter management
systems and telecommunications together with other communications systems
that use electricity supply networks as their delivery infrastructure will serve as
enabling technologies. Information and Communication Technology (ICT) and
business process integration will be valuable tools in the real time management of the
value chain across suppliers, active networks, meters, customers and corporate systems.
Wide area monitoring and protection (WAM & WAP) systems will be applied to
manage the congestions in the transmission systems in a way that improves the
security and reliability of grid operation.
SmartGrids will help to achieve
sustainable development through using
efficient, environmentally-friendly
power sources.
Supporting new initiatives
Distribution companies will deal with customers who are more aware of the
possibilities offered by the market and their on-line response. These include
flexible and competitive tariffs; local generation; supporting schemes for renewable
energies; cost-effective energy saving programs; demand side management and
converging utilities; communication and billing services.
Regulatory bodies will develop harmonised rules to favour competition on a non-
discriminatory basis in the EU context. This will guarantee open access at all levels,
ensuring the removal of unnecessary barriers and
ensure access to common benefits and incentives.
Harmonised regulation will underpin a common
EU energy strategy. This will provide the basis for
establishing a Europe-wide market for energy,
real-time balancing power and ancillary services open
to both power producers and load management operators. Free trade throughout
Europe will be facilitated by standardised, open communication means, transparent
rules and a liquid cross-border trading. Congestion management will be handled by
a market-based system.
Increasing efficiency
Advanced power electronics will allow variable-speed operation of electric generators
and motors to increase the overall efficiency of the electricity supply chain as well as to
increase the quality of the power supply. They may also extend the application of HVDC
lines- for example with superconducting cables- which could enhance transmission and
distribution. Broadband communications will be used to access virtually all power produ-
cers and loads on every power level and with very low cost.This will permit new strategies
to be implemented, such as the realisation of virtual power plants or the establishment of
markets even for small producers or consumers.
Working it out together
For a successful transition to a future sustainable energy system all the relevant
stakeholders must become involved: governments, regulators, consumers,
generators, traders, power exchanges, transmission companies, distribution
companies, power equipment manufactures and ICT providers.
There is a strong need for pilot projects, not only in the technical sense but also at the
markets and organisational level. For example, regulatory regimes should be revised,
based on new knowledge about how regulation should work to provide incentives for
innovation. New organisational structures can be implemented and monitored for the
benefit of all parties, for example allowing network companies to conduct limited
commercial activities with respect to long time investments.
Grids will become intelligent systems
with flexible, controlled power flows
supported by advanced information
technology.
23
24
Grids are being transformed into millions of
interconnected nodes, integrated across Europe at all
levels of transmission and distribution.
Bulk transmission and distributed generation will
coexist on interconnected grids where the distinction
between traditional transmission and distribution is
becoming increasingly blurred. This unified European electricity grid will provide
Europes industry and European citizens with a highly secure electricity supply on a
most cost-effective basis with minimum damage to the environment, in line with
European related policies.
Shaping up for the future
Throughout the development of the new grids, communication at every level is
essential. Effective dialogue between stakeholders will ensure that relevant
information influences the system design. The latest technologies will be
incorporated into the network and the approach will remain flexible to
accommodate further developments. Once the networks are up and running,
two-way flows will exist between provider and user. This type of exchange has
characterised the popularity of the internet- how is SmartGrids preparing
for success?
Many factors will shape future electricity networks and the actions and decisions
taken today will influence longer-term outcomes. It is therefore important to
recognise that a flexible approach and regular interaction with stakeholders is
required to respond to future challenges and opportunities.
Future work should adopt a techno-economic system approach for a trans-European
network. This calls for the development of:
distribution grids accessible to distributed generation and renewable energy
sources, either self-dispatched or dispatched by local distribution system operators;
distribution grids enabling local energy demand management to interact with end
users through smart metering systems;
distribution grids that facilitate dynamic control techniques and high levels of
power security, quality, reliability and availability;
transmission grids with minimum negative side-effects on the environment and
the society;
secure transmission grids that can comply with different forms of generation
including large and small, controllable and non-controllable, variable and
intermittent sources;
transmission grids that can accommodate central and non-central, multi-product
markets.
SmartGrids:
Ensuring success
The ETP-SmartGrids is aware of
the realities facing the
development of a new
electricity supply network.
It has identified the pitfalls it
must avoid:
It will not introduce like-
for-like replacement of time-
expired infrastructure, which is
ineffective in meeting the
needs of tomorrows European
customers and businesses;
It will guard against a lack of
harmonisation of European
technical standards, regulatory
and commercial frameworks;
It will address confidentiality
constraints with insufficient
data transparency;
Since grids are highly complex
with multiple connection
points, it is recognised that
isolated developments will be
ineffective in such complex
value chains;
It will tackle the issue of an
insufficient availability of
skilled staff, particularly to
achieve the development and
deployment of innovative
technologies.
Grids are being transformed into
an elaborate, interconnected
network that will provide European
citizens with a secure and
cost-effective electricity supply.
25
Internet-style inspiration
One possible model for the electricity network of the future would be analogous
to the internet, in the sense that decision-making is distributed and that flows
are bi-directional. Applying this concept to the electricity networks would lead to
control is being distributed across nodes spread throughout the system. Not only
could the supplier of power for a given consumer vary from one time period to
the next but also the network use could vary as the network self-determines its
configuration.
Such a system would require advanced hardware and management protocols
for connections, whether for suppliers of power, for consumers or for network
operators. The market structures and regulatory mechanisms need to be in place
to provide the necessary incentives.
This type of network would ease the participation of DG,
RES, DSM and flexible energy storage and would also
create opportunities for novel types of equipment and
services, all of which would need to respect the protocols
and standards adopted. New business and trading
opportunities can be envisaged- based on new power
sources, new power consumption habits and new
regulation, all of which favour cleaner and more efficient generation and consumption as
well as the development of a flexible, multi-user connected network which establishes
power and communication transfer possibilities among all players.
Keeping it real
It is important to emphasise the role of ICT in particular telecommunications
in adapting electricity networks to the real time actions and managing control distributed
in the network, which may not be fully supported by the present internet generation.
Even if the internet protocol is universal, a serious effort is needed to effectively use
communications equipment for a distributed real-time control of electricity networks.
The real time performance of the internet as communication means is known to be
very difficult to assess and it is critical given the power balance needed at any instant
in time.
It is possible to conceive such a network but the real hardware, protocols,
standards and markets at all levels are more difficult to realise. The question of
international regulation must be addressed, not only at the technical but also
at the political level.
A two-way flow of energy and
information between customer
and supplier will heighten efficiency
and lead to cleaner electricity
generation.
26
A period of transition
In managing the transition to the internet-like model, it may be useful to consider
concepts under development in a number of projects under the European
Commissions Framework Programmes: for example, active distribution networks.
The function of the active distribution network is to efficiently link power sources with
consumer demands, allowing both to decide how best to operate in real time. The level
of control required to achieve this is much greater than in current distribution systems.
It includes power flow assessment, voltage control and protection require
cost-competitive technologies as well as new communication systems with more sensors
and actuators than presently in the distribution system.
The increase in required control leads to a dramatic rise in information traffic
derived from status and ancillary data. This, along with the ability to re-route power,
means that the active network represents a step towards the internet-like model.
Active management
The evolution of active management, summarised in the next figure, can be described
as follows:
Initial stage: Extension of DG and RES monitoring and remote control to
facilitate greater connection activity. Some connections will rely on bilateral
contracts with distributed generators for ancillary services. Rules will have to be
defined to outline physical and geographical boundaries of contracting.
Intermediate stage: A management regime capable of accommodating
significant amounts of DG and RES has to be defined: local and global services
and trading issues, adaptability without information overload, control issues.
Final stage: Full active power management. A distribution network management
regime using real-time communication and remote control to meet the majority
of the network services requirement. The transmission and distribution networks
are both active, with harmonised and real-time interacting control functions and
efficient power flow.
E
m
p
h
asis o
n

In
fo
rm
atio
n
Valu
e
E
m
p
h
asis o
n

In
fo
rm
atio
n
Valu
e
E
m
p
h
asis on
E
n
e
rg
y Valu
e
Tomorrow:
Intergrated secure
network combining
central and DG
Final stage
Intermediate stage
Initial stage
Today:
Highly
centralised power
and little DG
27
When the final stage is achieved, the users of the network will expect a responsive
system. They will experience connection according to simple and defined standards.
They will also expect accurate billing to pay for what they use and to be paid for
what they supply. Plug and play with real-time trading and accounting will result.
New networks, new systems
The realisation of such active distribution network technologies will allow radically
new system concepts to be implemented. The two proposed examples are:
Microgrids
Virtual utilities
These are not fixed, discrete or unique solutions.
Microgrids are generally defined as low voltage networks with DG sources,
together with local storage devices and controllable loads (e.g. water heaters and
air conditioning). They have a total installed capacity in the range of between
a few hundred kilowatts and a couple of megawatts. The unique feature of
microgrids is that, although they operate mostly connected to the distribution
network, they can be automatically transferred to islanded mode, in case of faults
in the upstream network and can be resynchronised after restoration of the
upstream network voltage.
Within the main grid, a microgrid can be
regarded as a controlled entity which can
be operated as a single aggregated load or
generator and, given attractive remunera-
tion, as a small source of power or as
ancillary services
supporting the network.
Virtual utilities (or virtual electricity
market) adopt the structure of the
internet-like model and its
information and trading capability, rather
than any hardware. Power is purchased
and delivered to agreed points or nodes.
Its source, whether
a conventional generator, RES
or from energy storage is determined by
the supplier. The system is enabled by
modern information technology, advan-
ced power electronic
components and efficient storage.
28
Technologies to make it happen
Analysing system architectures is an important early step in setting the direction for
future grid development. Delivering an adequate architecture will require the
development of a number of enabling technologies. Many of these are already
available to some extent; some are currently being employed in other sectors.
Other new technologies currently available are further away from commercialisation
and widespread deployment on grid systems. The resources needed to bring totally
new products into use in grid systems are often significant.
In these situations, success will most likely be achieved through combining efforts
and resources within a co-operative research, development and demonstration
programme. In the absence of a central planning regime, this can only be
accomplished if all stakeholders form a shared vision for future grids and
develop an implementation framework that is consistent with the liberalised
business model.
SmartGrids: Enabling
technologies
Active distribution networks,
revealing characteristics of
todays transmission grids;
New network technologies
that facilitate increased power
transfers and losses reduction
(e.g. GIL, superconductivity,
high operating temperatures,
FACTS technologies, etc.);
Wide deployment of
communications to enable
grid automation, on-line
services, active operation,
demand response and DSM;
Power electronic
technologies for quality
of supply;
Stationary energy storage
devices.
CHP
Households
Industrial & commercial Wind farms
Energy Market
Distribution
System Operator
Transmission
System Operator
29
Points to consider
To enable the concepts for change to be realised and the benefits to become a reality,
the change of the electricity supply structure towards progressively more DG, RES
and active grids requires that a number of wider and disparate factors be addressed.
These include:
Improvements of security standards in the context of critical infrastructures;
Integration of both central and distributed generation;
Integration of innovative technologies into existing grids;
Harmonisation of equipment standards to allow plug-and-play;
Increased funding for large research incentives, including public
and private sharing;
The impact of neighbouring electricity systems on the European network;
Higher education and skills issues.
With regards to education and skills, it is already
evident that an insufficient number of well-trained
engineers are being produced in the power
engineering field. In order to develop, operate and
maintain future networks, cross-functional, intra-
disciplinary educational strategies must be adopted. Recruitment strategies must be
enhanced to meet the skill sets needed. Multidisciplinary curricula should include not
only power engineering and information technologies, but also economics & market,
regulatory & legal and environmental aspects. A skills shortfall is a key risk to the
successful adoption of the SmartGrids vision for Europe.
A flexible framework
The diagram on page 30 summarises the proposed flexible framework approach
that seeks to ensure that the special features of innovation on grids are addressed
in a holistic way. The Framework is designed to ensure that the outcomes of
successful research are, from the start, developed in a way that recognises the
realities faced by grid companies and other parties who have the responsibilities
for adoption of innovation in operational business circumstances.
The diagram shows (in a simplified way) how needs would be matched with
potential innovative solutions. An impact assessment would then be undertaken to
confirm a cost/benefit business case, following which viable solutions would be
evaluated and proven by projects on live operational grid networks.
A holistic approach to energy supply
ensures that all relevant factors are
considered in the system development.
The flexible framework enables
appropriate modifications to be made.
Rules and regulations
A further distinguishing feature of grid innovation, particularly in a liberalised sector,
is the regulatory and legal environment in which grid companies operate.
It is recognised that innovative approaches may from time to time be hindered by
unintended regulatory or legal barriers. To address this aspect, the Flexible
Framework proposes that catalyst projects would be undertaken to address any
barriers to wide commercial deployment.
Successful demonstration and catalyst projects open the way to full deployment on
operational grids. It is only through wide deployment (sometimes called roll out)
that benefits will be seen by European customers and that international market
opportunities will be released.
30
Simplified Representation
of the Proposed Flexible Framework
The R&D process
envisaged
for delivering the
SmartGrids Vision
Network
challenges &
customer needs
Solutions
and strategies
Lighthouse
pilot projects
Catalyst
projects
Matching processes and
feasibility evaluation
Commercial adoption
with benefits delivered to customers
and companies
Key elements of the Flexible
Framework
Future network challenges
and customer needs will be
identified and matched;
Solutions and strategies
technical, commercial and
regulatory will be identified;
Challenges and solutions will
be tested for feasibility and
commercial viability;
Solutions that withstand this
process will be taken forward
as pilot projects with the aim
of widespread adoption;
Catalyst projects will be
undertaken in parallel with
pilot projects to address any
barriers that had been
identified to wide-scale
commercial adoption, such
as developments needed to
regulatory or legal
frameworks;
Techniques such as
showcasing and early
adopter forums will enhance
the perceived value of
deploying successfully piloted
innovative solutions;
Based on early adopter
deployment, real user
experience will be
disseminated to the wider
market place to generate
awareness of and confidence
in new technologies;
The perceived risk of
adopting new technology
will be mitigated and
commercial adoption will
follow when companies
know it works.
31
As in other ETPs, a group of high-level stakeholders came together with one primary
objective: to define a coherent and unified industry-driven approach to tackling
major economic, technological and societal challenges, of vital importance for
Europes future competitiveness and economic growth.
More specifically, an Advisory Council has been established to develop and
consolidate a joint Vision and put forward a Strategic Research Agenda that sets RTD
priorities for the medium to long-term.
Platform objectives
The platform has agreed its initial objectives and is committed to bringing forward
relevant high quality research, combined with mechanisms, to mobilise the private and
public investments required for the implementation of the RTD strategies.
In this respect, integrated research and demonstration projects in electricity networks
are envisaged, as these are key to a successful adoption strategy in the industrial context
of an increasingly liberalised and competitive market.
Platform actions
The primary purpose of the SmartGrids European
Technology Platform is to enhance the level of coherence
between the European, national and regional programmes
addressing the challenges of future networks. This will ensure that the challenges and
opportunities ahead are responded to efficiently for the benefit of all stakeholders in
Europe.
It will do this in a number of ways.
It will propose, promote, discuss and refine a vision for the future development of
Europes grids;
Based on this vision, it will propose a Strategic Research Agenda in 2006 that will
provide an initial framework for future European R&D activities;
It will form links with equivalent bodies in other countries, particularly North America
and Japan, to ensure that international development paths are complementary and
consistent with the development of commercial products;
It will establish Working Groups to focus on specific aspects of system development
and to pursue the goal of R&D coherence at this level;
6. The Technology Platform
Behind the SmartGrids initiative is the SmartGrids Platform. This group of
individuals is working together under the common goal of transforming
electricity provision, from the conception to the realisation of a new system.
In order to achieve its aims, ETP-SmartGrids must ensure widespread
cooperation and sufficient investment to fund extensive research. It is
divided into different bodies, each of which has defined roles. How does
the platform function?
The platform must mobilise private
and public investments to allow
crucial research to be carried out.
SmartGrids: How will
transition be achieved?
Jointly addressing
technical, commercial and
regulatory issues;
A flexible framework
approach that is responsive
to emerging needs,
stimulates R&D and deploys
lighthouse pilot projects to
facilitate innovative
solutions;
A pan-European approach
that maximises the benefits
to European citizens,
including cross border
exchanges of electric energy
and grid services;
A strategic approach to
developing a range of new
and innovative grid
architectures that can be
deployed on distribution
and transmission grids as
the situations demand.
32
It will provide the basis for centres of excellence in
future grid issues and consider how it might best
employ this expertise in the delivery of lighthouse
pilot projects;
SmartGrids will not be a purely technical venture. It is
recognised that commercial and regulatory issues must
be addressed in parallel with technical development
and the challenge of achieving coherence requires
these three elements to be addressed together;
SmartGrids projects will be developed on a flexible basis and particularly will respond
to the unique features of innovation on electricity grids.
ETP-SmartGrids unites high-level
stakeholders in defining a vision of the
future development of grids.
The platform leads the way in
facilitating the construction of a new
and effective network.
SmartGrids: Unique features of grid
innovation
Unlike business innovation, technology
innovation cannot be done in-house;
The supply chain is not the same as
the procurement chain;
By definition it brings risks by and these
have to be managed;
The risk profile varies significantly across
the innovation chain and its stages;
New grid technology cannot be fully
proven in the laboratory or on
a simulator;
Pilot operation, in a controlled
situation on a real grid is a prerequisite
for adoption;
There is little value in one-off new
technology installations;
Wide area adoption, through commercial
mechanisms, is needed to attain
its benefits.
33
GENERAL ASSEMBLY
(Bi-)annual Technology Platform Forum
Member States
Mirror Group
Advisory Council
(Executive Group)
26 membres
Group of
Associations
TP Secretariat
Information
Office
IT Support Service
Network
Assets
Networks
Operations
Demand and
Metering
Generation and
Storage
PLATFORM OPERATIONS
New and on-going projects and initiatives (EC + MS national, regional and local)
The structure of the ETP SmartGrids is shown in the following diagram:
The functions of the key groups are:
Advisory Council: provides guidance, stimulates initiatives and monitors progress;
Mirror Group: enables the involvement of Member States, candidate countries
and associate states;
Working Groups: take responsibility for progressing the work at a detailed level;
Group of Associations: enable participation of associations of stakeholders.
Electricity Networks of the Future Technology Platform
35
AC Alternating Current
CHP Combined Heat and Power
CO
2
Carbon Dioxide
DG Distributed Generation
DSM Demand Side Management
ETP European Technology Platform
EU European Union
FACTS Flexible AC Transmission Systems
GDP Gross Domestic Product
GIL Gas Insulated Line
HVDC High Voltage Direct Current
ICT Information and Communication Technology
IEA International Energy Agency
NO
x
Nitrogen Oxides
R&D Research and Development
RES Renewable Energy Source
RTD Research and Technological Development
SO
2
Sulphur Dioxide
List of Acronyms
36
Christian Sasse
General Manager, AREVA T&D, United Kingdom Chairman
Juergen Schmid
Chairman of the Board, ISET e.V., Germany Vice Chairman
John Scott
Technical Director, Ofgem, United Kingdom Vice Chairman
Yves Bamberger
Executive Vice-President, Head of Corporate EDF R&D, EDF, France
Joo Baptista
Executive Director, ELECPOR, Portugal
Ronnie Belmans
Full Professor and Chairman of ELIA, K.U. Leuven, Belgium
Bern Michael Buchholz
Vice President, Siemens AG PTD, Germany
Maher Chebbo
Vice President Utilities Industry, Europe Middle East and Africa, SAP A.G., Germany
Jos Luis Del Valle Doblado
Chief Strategy and Development Officer, IBERDROLA S.A., Spain
Venizelos Efthymiou
Network Development Projects Manager, Electricity Authority of Cyprus, Cyprus
Livio Gallo
Executive Vice President Business Area Networks, Enel Distribuzione, Italy
Edmund Handschin
Professor, University of Dortmund, Germany
Nickolas Hatziargyriou
Professor, NTUA, Greece
Nick Jenkins
Professor, University of Manchester, United Kingdom
Tahir Kapetanovic
Director Electricity, Energie-Control GmbH, Austria
Urban Keussen
Managing Director, E.O.N. Netz GmbH, Germany
Members of the Advisory Council
37
Nils Leffler
Group Senior Vice President ABB Corporate Research, ABB Power Technologies,
Sweden
Marianne Moscoso-Osterkorn
International Director, REEEP, Austria
Pier Nabuurs
CEO, KEMA, The Netherlands
Jacob stergaard
Professor and Head of Centre for Electric Technology, Technical University of
Denmark
Carlo Sabelli
Director Dispatching Activities, TERNA, Italy
Norberto Santiago Elustondo
President, Grupo ZIV SA, Spain
Paul Smith
Manager, Implementation, Interconnection, Technology and Standards, ESB National
Grid, Ireland
Magdalena Wasiluk-Hassa
Director, PSE Operator, Poland
European Commission
Pablo Fernndez Ruiz
Director of Directorate J, DG RTD
Alfonso Gonzlez Finat
Director of Directorate D, DG TREN
Acknowledgement:
The members of the Advisory Council wish to acknowledge the many comment and
suggestions provided by the Mirror Group members. In addition, the Advisory
Council wishes to recognise the assistance in writing and editing this document
provided by Manuel Snchez and Ana Quelhas from the European Commission,
DG Research.
European Commission
EUR 22040 European Technology Platform SmartGrids
Luxembourg: Office for Official Publications of the European Communities
2006 44 pp. 29.7 x 21.0 cm
ISBN 92-79-01414-5
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Whilst current electricity networks presently have fulfilled their function
effectively, more of the same will not be sufficient to meet current challenges
and policy imperatives. In this context, the European Technology Platform (ETP)
SmartGrids was set up in 2005 to create a joint vision of European networks
for 2020 and onwards. The platform includes representatives from industry,
transmission and distribution system operators, research bodies and
regulators. It has identified clear objectives and proposes a strategy
for the development of future electricity networks.
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vhot |s o $mort Cr|d`
LC1RlCAL lNFRAS1RUC1UR
lNFORMA1lON lNFRAS1RUC1UR
7he integrctien ef twe infrcstructures . te previde custemer vcIue
Increcse energy
preductivity cnd
reIicbiIity
Reduce CD2 emissiens
Mcncging energy demcnd
0emond 0pt|m|sot|on
>lmproved power re||ob|||ty S customer serv|ce
>lncreosed gr|d e|c|ency
>lmproved power quo||ty
.emcwe||n tne Ccnsume|
.emcwe||n tne Netwc|k De|ctc|
Lmpower|ng the Consumer..
> Ronge o Consumer tor|s to |t usoge
> lnte|||gent energy sov|ng consumer dev|ces
> $e|||ng Cenerot|on bock to the gr|d
> 0eto||ed reo|-t|me S h|stor|co| Lnergy usoge |normot|on
> Losy, |ntu|t|ve ond w|th|n the home
> Consumers |n portnersh|p w|th energy prov|ders
Lmpower|ng the Network 0perotor..
> 0eto||ed energy consumpt|on doto |n neor reo|-t|me
> Cenerot|on opt|m|sed to meet octuo| demond
> 3etter |ood|ng pred|ct|ons down to the node
> lmmed|ote |oss o serv|ce detect|on
> lmproved ou|t |mpoct ono|ys|s
0emond 0pt|m|sot|on.summory
Source. fPRl
lntelligrid
> lntegrot|on o unct|ons thot shore the some vo|ues ond quo||t|es
> lnteroc|ng between unct|ons thot ore undomento||y d|erent
> Pro-oct|ve energy strotegy w|th smort gr|d os on enob||ng
techno|ogy
focus, comm|tment
ond o heod stort
- CL |s un|que|y pos|t|oned to
|eod the trons|t|on to $mort
Cr|d
- Techno|ogy |eodersh|p ond
exper|ence to |ntegrote
d|sporote systems
- lnnote understond|ng o
generot|on, d|str|but|on ond
use ot every |eve|
- lnnovot|ng or the uture ot
C|obo| Reseorch Center
- 0ur |rst gr|d |n|t|ot|ve
susto|ned more thon l00
yeors o seom|ess growth
Any uestions.
Thomas J. Gentile
Chair - Energy Policy Committee IEEE-USA
Smart Grid
A Necessary Component in the Remaking of America
2009 IEEE-USA Annual Meeting
26 February - 1 March 2009
Salt Lake City, Utah
Building a Stronger and
Smarter Electrical
Energy Infrastructure
Page 2 .
Changing Regulatory Landscape
Energy Independence and Security Act of 2007 (EISA), Title XIII
Grid Modernization
Title XIII establishes national policy for grid modernization, creates new federal
committees, defines their roles and responsibilities, addresses accountability and
provides incentives for stakeholders to invest
National Policy
It is the policy of the United States to support the modernization of the Nations
electricity transmission and distribution system to maintain a reliable and secure
electricity infrastructure
Accountability
Title XIII holds state regulators accountable by requiring them to consider:
requiring utilities to first look at Smart Grid solutions - including societal benefits
- prior to undertaking investments in non-advanced grid technologies
allowing utilities to recover capital, O&M and other costs
allowing recovery of the book value of technologically obsolete assets
Incentives
The Secretary shall establish a Smart Grid Investment Matching Grant Program to
provide reimbursement of one-fifth (20 percent) of qualifying Smart Grid investments.
For many stakeholders, Title XIII provides incentives that represent a significant level
of funding from federal resources
Page 3 .
Changing Regulatory Landscape
The bill provides $4.5 billion to modernize the nation's electricity grid
with smart grid technology. The bill increases federal matching
grants for the Smart Grid Investment Program from 20% to 50%.
The bill provides $2.5 billion for renewable energy and energy
efficiency R&D, demonstration and deployment activities.
The bill provides $6 billion for a temporary loan guarantee program
for renewable energy power generation and transmission projects
that begin construction by September 30, 2011
The bill provides a three-year extension of the Production Tax Credit
(PTC) for electricity derived from wind facilities through December
31, 2012, as well as or geothermal, biomass, hydropower, landfill
gas, waste-to-energy and marine facilities through December 31
2013.
American Recovery and Reinvestment Plan - 2009
Page 4 .
Changing Industry Organization Landscape
IEEE-USA National Energy Policy Recommendations
4
Smart Grid
Expanded
Transmission System
Energy Storage
All Can Participate
Electrifying Transportation
Alternative Fuels
Expanding Use of Renewables
Expanding Nuclear Power
Capturing Carbon Emissions
Page 5 .
Changing Consumer Landscape
Efficient
Building
Systems
Utility
Communications
Dynamic
Systems
Control
Data
Management
Distribution
Operations
Distributed
Generation
and Storage
Plug-In Hybrids
Smart
End-Use
Devices
Control
Interface
Advanced
Metering
Consumer Portal
and Building EMS
Internet
Renewables
PV
Page 6 .
Changing Industry Landscape
The smart energy industry accounts for $20 billion in
annual sales.
Its estimated growth is at least 5-10% per year over the
next 5 years.
Collec
tor
Level 1
Level 2
Level 3
MAS Server
Billing, OMS, CIS, Load Research
Level 1
Level 2
Level 3
WAN
RF Mesh allows system
wide or strategic
deployment of AMI
system
Page 7 .
Vision
Use of advanced technologies to improve the performance of electric
utility systems to address the needs of society.
a fully automated power delivery network ensuring a two-way
flow of electricity and information between the power plant and appliance,
and all points in between. Its distributed intelligence, coupled with
broadband communications and automated control systems, enables
real-time transactions and seamless interface among people, buildings,
industrial plants, generation facilities and the electric network. - U.S.
Department of Energy Grid 2030
Its foundation is new distributed data communication, computing, and
control technologies efficient transfer of data and control from/to/among
many field units.
Page 8 .
Keys to Achieving the Smart Grid
Architecture
An integrated approach to deploy technology.
New technology on the system must conform to this architecture.
Should allow for efficient and economic development of new applications.
Communications
Effective, two-way communication with all parts of the Electric Grid are essential
to achieving the Vision.
Handle very large amounts of data points to glean information.
Technology
Utilize technological enhancements in equipment and methodologies that are
cost effective, innovative, interchangeable, and reliable to provide the
performance enhancing capabilities throughout the electric grid.
Page 9 .
SMART GRID
The Smart Grid is enabled by advanced technologies from
several industries
Page 10 .
Technology Overview
The Smart Grid brings together three kinds of
technologies for the electric power system:
Page 11 .
Technology Overview
Page 12 .
Technology Overview
Enterprise Network
Load Management (Demand-
Side Management)
Asset Management
Energy
Management
System
Inventory and Track facilities
and Equipment
Outage and Workforce
Management
Pinpoint problems, locate
equipment, dispatch crews
Graphical Information System
Load
analysis and
forecasting
Intelligent Network Agent
Gather data, makes decision
about local switching an control
functions and communicates with
control centers
Power Systems
Market Operations
Distribution/Substation
Automation
Remotely monitors and control
operations formally done
manually at substations and
feeders. Supply information
about asset utilization for
improved asset management,
dynamic equipment rating, etc.
Power System Monitoring and Control
Monitoring: Up-to-the-second displays of
conditions,
Control: Automate operations to allow
centralized control
Wide-Area Management System
(WAMS)
Dynamic Thermal Circuit Rating
Integrated Enterprise Software
Custom-built applications: accounting,
billing and customer service etc...
Distribution
Management System
Energy efficiency
applications (volt-VAR
optimization, automatic
restoration, switch order
management, decision
support tools, etc.)
Page 13 .
Technology Overview
Advanced
Hardware
Advanced
Software/
Systems
Advanced
Materials
Grid of the Future
Advanced Cables
(composite conductors,
high-temperature
superconductors)
Advanced Energy Storage (Super-
Conducting Magnetic Energy Storage
(SMES), advanced flywheels, flow
batteries charge and discharge fluid
between tanks, liquid molten sulfur
batteries built to utility scale
Page 14 .
Technologies: Hype Cycle
Proactive Outage
Prediction
Advanced Energy Storage
Intelligent Electronic Devices
HTLS Conductors
Source: Gartner (June 2006)
Page 15 .
Smart Grid: Evolving changes
Operate at maximum capacity based on the
actual real-time conditions
Conservative seasonal equipment rating
Many customer choices Few customer choices
Predictive reliability Estimated reliability
Pervasive control system Limited control system contingencies
Monitor equipment remotely Check equipment manually
Automated, "self-healing" Manual restoration
Self-monitoring "Blind"
WAMPAC, Adaptive protection
Local/limited protection, monitoring and control
systems
Accommodates distributed generation Centralized generation
Global/integrated two-way communication One-way and local two-way communication
Digital/Microprocessor Electromechanical, Solid State
Moving Forward Now
Page 16 .
Market Barriers
Some market barriers:
New technology/products must
always be proven :
Extensive field testing is required
before widespread integration into
power grid
Financial constraints:
Many technologies are too expensive,
Difficulties in financing, bonding and
insuring large projects,
Slow-moving customers and utility
industry
Risk-averse mentality, long scale
cycles for equipment, etc
Regulatory:
Spending the appropriated dollars
meaningful in the necessary timeframe
Page 17 .
Standards Supporting the Smart Grid
Apply
ASHRAE
BACnetfor
Building
Automation
Apply ANSI
C12 for
Revenue
Metering
Apply IEC
61850 for
Real-Time
Controls
Apply IEC 61970
and 61968 (CIM,
GID) for
Enterprise Data
Sharing
R&D:
Integrate
and
Harmonize
IEC 61850
IEC 61968
ANSI C12
Standards
Develop and implement consistent systems
management and security policies
Page 18 .
Road Map Overview
Architecture Specification and Development
Infrastructure for
Transmission
Applications
Infrastructure for
Customer
Integration
Substation
Integration
Infrastructure for
Distribution
Applications
Page 19 .
Recommendations to IEEE
Actively lead the development of a Road Map to identify new and
updates of existing standards affecting Smart Grid
Actively work to effectuate a cultural change to modernize and
strengthen the electric grid today
Review and modify, if appropriate, IEEEs functional structure in
light of the need to remake America
Identify industry experts who can lead and respond to technical
concerns affecting Smart Grid
Actively work with federal and state regulators to develop and
promote Smart Grid legislation
Thank You
Thomas J. Gentile PE
Quanta Technology
Phone: 919.334.3051
E-mail: tgentile@quanta-technology.com
Running todays digital society through yesterday's
grid is like running the Internet through an old
telephone switchboard
Energy Future Coalition
IEEE Transactions on Smart Grid

J ou r na l t o b e l au nc h e d by I e e e
The IEEE Transactions on Smart Grid is intended to be a cross
disciplinary and internationally archival journal aimed at
disseminating the results of research on smart grid that relates to
energy generation, transmission, distribution and delivery. The journal will publish
original research on theories, technologies, design, policies, and implementation of smart
grid. The Transactions will welcome manuscripts on design, implementation and evaluation of
energy systems that include smart grid technologies and applications. Surveys of existing work on
smart grid may also be considered for publication when they propose a challenging perspective
on the future of such technologies and systems. The initial topical issues considered by the
Transactions include:
> Smart sensing, communication and control in energy systems
> Wireless communications and advanced metering infrastructure
> Smart grid for energy management in buildings and home automation
> Phasor measurement unit applications for smart grid
> Smart grid for plug-in vehicles and low-carbon transportation alternatives
> Smart grid for cyber and physical security systems
> Smart grid for distributed energy resources
> Smart grid for energy savings and fnancial management
> Smart grid in interdependent energy infrastructures
> Smart grid for intelligent monitoring and outage management
If you are interested in reviewing papers and assisting in the launch of this journal,
please sign up as a reviewer on the Manuscript Central site at:
http://mc.manuscriptcentral.com/pes-ieee.
The Transactions on Smart Grid will be added to the PES portal site by September 2009, and
at that time it can be accessed via the drop-down menu. If you are interested in reviewing
papers for our new Transactions and you are currently a reviewer for PES Transactions, you
can access your account in Manuscript Central and add smart grid to your keywords or areas
of expertise. If you have an account in Manuscript Central and are not currently a reviewer
for PES Transactions and would like to become a reviewer for PES Transactions, access your
account and you will automatically be given a reviewer center, then update your areas
of expertise. If you do not have an account, create a new user account and complete all
the required felds, you will then be given an author center and a reviewer center.
About the Editor-in-Chief: If you are interested in participating in the publication activities,
please contact the Editor-in-Chief, Dr. Mohammad Shahidehpour at: m.shahidehpour@
ieee.org. Prof. Shahidehpour (Fellow 01) has been affliated with IEEE for the last
thirty years. He is currently the Carl Bodine Distinguished Professor of Electrical and
Computer Engineering at Illinois Institute of Technology. Dr. Shahidehpour is an IEEE
Distinguished Lecturer who has lectured in 30 countries on issues related to power system
operation and control. He has served as the Vice President of Publications for the IEEE
Power & Energy Society and an Editor of the IEEE Transactions on Power Systems.
Transactions on Sustainable Energy

J ou r na l t o b e l au nc h e d by I e e e
The IEEE Transactions on Sustainable Energy is intended to be a cross disciplinary and
internationally archival journal aimed at disseminating results of research on sustainable
energy that relates to, arises from, or deliberately infuences energy generation,
transmission, distribution and delivery. The journal will publish original research on
theories and development on principles of sustainable energy technologies and systems.
The Transactions will also welcome manuscripts on design, implementation and evaluation
of power systems that are affected by sustainable energy. Surveys of existing work on
sustainable energy may also be considered for publication when they propose a new
viewpoint on history and a challenging perspective on the future of sustainable energy.

In the beginning we are planning to cover the following areas in the journal which will
expand as the publication matures.
> Wind Energy
> Solar Energy
> Biomass and Hydroelectricity
> Ocean energy (tidal, wave, geothermal, etc.)
> Grid interconnection issues
> Sustainable energy & the environment
If you are interested in reviewing papers and assisting in the launch of this journal, please
sign up as a reviewer on the Manuscript Central site at:
http://mc.manuscriptcentral.com/pes-ieee.
The Transactions on Sustainable Energy will be added to the PES portal site in September
2009, and at that time it can be accessed via the drop-down menu. If you are interested
in reviewing papers for our new Transactions and you are currently a reviewer for PES
Transactions, you can access your account in Manuscript Central and add sustainable
energy to your keywords or areas of expertise. If you have an account in Manuscript
Central and are not currently a reviewer for PES Transactions and would like to become a
reviewer for PES Transactions, access your account and you will automatically be given a
reviewer center, then update your areas of expertise. If you do not have an account, create
a new user account and complete all the required felds, you will then be given an author
center and a reviewer center.t.
About the Editor-in-Chief: If you are interested in serving
as a topic area editor, please contact the Editor-in-Chief,
Prof. Saifur Rahman at s.rahman@ieee.org. Prof. Rahman
(Fellow IEEE) is the director of the Advanced Research
Institute at Virginia Tech where he is the Joseph Loring
Professor of electrical and computer engineering. He also
directs the Center for Energy and the Global Environment
at the University. Professor Rahman served as a program
director in engineering at the US National Science
Foundation between 1996 and 1999. In 2006 he served
as the vice president of the IEEE Publications Board, and a
member of the IEEE Board of Governors.
1
Smart Grid
Improving economic competitiveness through smarter
energy investments
Luke Clemente, GM, Smart Grid
GE Energy, Transmission & Distribution
November 5, 2009
"Results are preliminary and unaudited. This document contains forward-looking statements- that is, statements related to future, not past, events. In this context, forward-looking
statements often address our expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe,
seek, see, or will. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual
results to be materially different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility
in interest and exchange rates, commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national
and global economies; the impact of conditions in the financial and credit markets on the availability and cost of GE Capitals funding and on our ability to reduce GE Capitals asset levels as
planned; the impact of conditions in the housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating
and the impact on our funding costs and competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash
flow and earnings and other conditions which may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major
industries we serve, including, without limitation, air and rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory,
investigative and legal proceedings and legal compliance risks, including the impact of proposed financial services regulation; strategic actions, including acquisitions and dispositions and
our success in integrating acquired businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature.
These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-
looking statements.
This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative
to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP
measures presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.
In this document, GE refers to the Industrial businesses of the Company including GECS on an equity basis. GE (ex. GECS) and/or Industrial refer to GE excluding Financial Services.
2
Information infrastructure
Sources: (1) UtilityPoint, by Ethan Cohen 7/18/0 (2) EPRI Intelligrid
The integration of two infrastructures securely
Electrical infrastructure
A smarter grid
+
Embracing
renewables
Empowering
consumers
Increasing
productivity
Reducing CO
2
emissions
Increasing
efficiency
3
In the news
Biggest award made
in a single day from
stimulus package
4
100% 40% 105%
Amount global
energy demand is
expected to grow by
2030
Amount of
greenhouse gas
emissions for which
electricity
generation accounts
UK residential
electricity cost
increases between
2000-2007
Source: Army Corp of Engineers
Geopolitical drivers
Source: U.S. Conference of Mayors resolution for Congress Source: Energy Information Administration
Coupled with utility industry challenges
Carbon policy driving influx of green
energy sources
Energy demand increasing long term
Rising cost of energy
Aging infrastructure & workforce
Importance of reliability & quality
6
The 4 E drivers
Economic Competitiveness
Energy Independence
Empowerment of the Consumer
Environmental Sustainability &
Efficiency
7
DMS/OMS real-time data to improve reliability
- 69 utilities in 16 countries, including global top 3 utilities
Data management from device to enterprise
- 300,000 Installations
EMS managing transmission networks
- Over 100 utilities, servicing 1.3B consumers
GIS visualization for network design
- More than 1,000 companies, in 40 countries
GE has a great start
8
Were data management experts
Private label
credit cards
Mobile resource
management
Patient records
and care tracking
9
Collaborating with customers
Partnering to develop advanced technologies
Wide range of input and perspective
Best practice sharing across the bigger GE
Expediting deployment of proven solutions
Expediting deployment of proven solutions
10
Working together
to provide
customer solutions
Transmission optimization
Distribution optimization
Demand optimization
Asset optimization
Workforce & engineering optimization
Delivering holistic solutions
11
Floridato lead the nation in
energy efficiency with $578 million
smart grid initiative
The smart grid at work
Hawaii working to bring more
renewables on-line via GE smart
grid technologies
Thank you
2035
2040
2045
2050
Technology Roadmap
Smart Grids
INTERNATIONAL ENERGY AGENCY
The 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 member
countries through collective response to physical disruptions in oil supply, and provide authoritative
research and analysis on ways to ensure reliable, affordable and clean energy for its 28 member
countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among
its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports.
The Agencys 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 protection
in a global context particularly in terms of reducing greenhouse-gas emissions that contribute
to climate change.
n Improve transparency of international markets through collection and analysis of
energy data.
n Support global collaboration on energy technology to secure future energy supplies
and mitigate their environmental impact, including through improved energy
effciency and development and deployment of low-carbon technologies.
n Find solutions to global energy challenges through engagement and
dialogue with non-member countries, industry, international
organisations and other stakeholders.
IEA member countries:
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Korea (Republic of)
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
The European Commission
also participates in
the work of the IEA.
Please note that this publication
is subject to specifc restrictions
that limit its use and distribution.
The terms and conditions are available
online at www.iea.org/about/copyright.asp
OECD/IEA, 2011
International Energy Agency
9 rue de la Fdration
75739 Paris Cedex 15, France
www.iea.org
1 Foreword
Current trends in energy supply and use
are patently unsustainable economically,
environmentally and socially. Without decisive
action, increased fossil fuel demand will heighten
concerns over the security of supplies and energy-
related emissions of carbon dioxide (CO
2
) will more
than double by 2050. We can and must change
our current path, but this will take an energy
revolution and low-carbon energy technologies
will have a crucial role to play. Energy efficiency,
many types of renewable energy, carbon
capture and storage, nuclear power and new
transport technologies will all require widespread
deployment if we are to reach our greenhouse-gas
emission goals. Every major country and sector
of the economy must be involved. The task is also
urgent if we are to make sure that investment
decisions taken now do not saddle us with
sub-optimal technologies in the long term.
There is a growing awareness of the urgent need
to turn political statements and analytical work
into concrete action. To spark this movement, at
the request of the G8, the International Energy
Agency (IEA) is developing a series of roadmaps
for some of the most important technologies.
These roadmaps provide solid analytical footing
that enables the international community to move
forward on specific technologies. Each roadmap
develops a growth path for a particular technology
from today to 2050, and identifies technology,
financing, policy and public engagement
milestones that need to be achieved to realise the
technologys full potential. Roadmaps also include
a special focus on technology development and
diffusion to emerging economies. International
collaboration will be critical to achieve these goals.
To date, much of the of low-carbon technology
analysis in the energy sector has focused on
power generation and end-use technologies.
This roadmap focuses on smart grids the
infrastructure that enables the delivery of power
from generation sources to end-uses to be
monitored and managed in real time. Smart grids
are required to enable the use of a range of low-
carbon technologies, such as variable renewable
resources and electric vehicles, and to address
current concerns with the electricity system
infrastructure, such as meeting peak demand with
an ageing infrastructure. Unlike most other low-
carbon energy technologies, smart grids must
be deployed in both existing systems (which in
some cases are over 40 years old) as well as within
totally new systems. Smart grid technologies
must also be installed with minimum disruption
to the daily operation of the electricity system.
These challenges do not detract, however, from
the opportunity to gain significant benefits from
developing and deploying smart grids.
Nevertheless, significant barriers must be
overcome in order to deploy smart grids at the
scale they are needed. Governments need to
establish clear and consistent policies, regulations
and plans for electricity systems that will allow
innovative investment in smart grids. It will also be
vital to gain greater public engagement, and this
will be helped educating all relevant stakeholders
but especially customers and consumer
advocates about the need for smart grids and
the benefits they offer. Achieving the vision of
smartening the grid between now and 2050
requires governments, research organisations,
industry, the financial sector and international
organisations to work together. This roadmap
sets out specific steps they need to take over the
coming years to achieve milestones that will allow
smart grids to deliver a clean energy future.
Nobuo Tanaka
Executive Director, IEA
Foreword
This roadmap was prepared in April 2011. It was drafted by the International Energy Agencys Energy Technology Policy Division.
This paper reflects the views of the International Energy Agency (IEA) Secretariat, but does not necessarily reflect those of IEA
member countries. For further information, please contact the author at: david.elzinga@iea.org.
ERRATA
Figure 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 is inserted under the heading Smart grid demonstration and deployment efforts following the
second 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) addresses
many of these issues. The project installed 33 million smart meters (including system hardware and software architecture) and automated
100 000 distribution substations, while also improving management of the operating workforce and optimising asset management policies
and network investments. The project has resulted in fewer service interruptions, and its EUR 2.1 billion investment has led to actual cost
savings of more than EUR 500 million per year. ENEL is continually enhancing the system by introducing new features, technologies and
flexibility. The project clearly demonstrates the value of a large-scale, integrated deployment of smart grid technologies to solve existing
problems and plan for future needs.

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2 Technology Roadmaps Smart grids
Foreword 1
Table of Contents 2
Acknowledgements 4
Key Findings 5
Introduction 6
What are smart grids? 6
Rationale for smart grid technology 6
Purpose, process and structure of the roadmap 8
Electricity System Needs for Today and the Future 10
Future demand and supply 10
Electricity system considerations 13
Electricity reliability 14
Smart Grid Deployment 17
Smart grid technologies 17
Smart grid demonstration and deployment efforts 20
Tailoring smart grids to developing countries and emerging economies 22
Status of electricity system markets and regulation 23
Vision for Smart Grid Deployment to 2050 24
Regional analysis and impacts for deployment 24
Quantification of peak demand and the impact of smart grids 24
Regional scenarios for deployment to 2050 26
Smart grid CO
2
emissions reduction estimates to 2050 27
Estimating smart grid investment costs and operating savings 27
Technology Development: Actions and Milestones 30
Development and demonstration 30
Standards 31
Policy and Regulatory Framework: Actions and Milestones 34
Generation, transmission and distribution 34
Smart grid, smart consumer policies 36
Building consensus on smart grid deployment 40
International Collaboration 41
Expand existing international collaboration efforts 41
Create new collaborations with other electricity system technology areas 41
Smart grid collaboration and developing countries 42
Conclusion: Near-term Roadmap Actions for Stakeholders 43
Summary of actions led by stakeholders 43
Glossary 45
References 47
List of Relevant Websites 48
Table of contents

O
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2
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3 Table of contents
List of Figures
1. Smarter electricity systems 6
2. Smart grids can link electricity system stakeholder objectives 8
3. Electricity consumption growth 2007-50 (ETP BLUE Map Scenario) 10
4. Portion of variable generation of electricity by region (ETP BLUE Map Scenario) 11
5. Deployment of electric vehicles and plug-in hybrid electric vehicles 12
6. Example of a 24-hour electricity system demand curve on several dates over the year 14
7. Transmission links between Nordic countries 15
8. Smart grid technology areas 17
9. Example of developing country rural electrification pathway 22
10. Vertically integrated and unbundled electricity markets 23
11. Regional smart grids analysis structure 24
12. OECD North America EV deployment impact on peak demand 25
13. Regional CO
2
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. Modelling scenarios for SG
MIN
and SG
MAX
25
7. Increase in electricity demand over 2010 values for SG
MIN
and SG
MAX
scenarios 26
8. Increase in peak demand over 2010 values for SG
MIN
and SG
MAX
scenarios 26
9. Electricity sector focus for ECG IA's 42
List of Boxes
1. Energy Technology Perspectives scenario descriptions 10
2. Electricity system flexibility 15
3. Smart communities 22

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This publication was prepared by the International
Energy Agencys Energy Technology Policy
Division. Bo Diczfalusy, Director of the Directorate
of Sustainable Energy Policy and Technology, and
Peter Taylor, Head of the Energy Technology Policy
Division, provided important guidance and input.
Tom Kerr, co-ordinator of the Energy Technology
Roadmaps project, provided invaluable leadership
and inspiration throughout the development of
the roadmap. David Elzinga was the lead author
for this roadmap. Steve Heinen also provided
significant input and support. Many other IEA
colleagues have provided important contributions,
in particular Seul-Ki Kim (with the support of the
Korean Ministry of Knowledge and Economy),
Yuichi Ikeda, Grayson Heffner, Hugo Chandler,
Marilyn Smith, Uwe Remme, Lew Fulton, Hiroyuki
Kaneko, Stefanie Held, Mary Harries Magnusson
and Catherine Smith.
The volunteers of the smart grids roadmaps
advisory committee have provided guidance over
the course of its development: Guido Bartels
of IBM; David Mohler of Duke Energy and the
members of the e8 technology group on smart
grids; Joris Knigge of Enexis; Laurent Schmitt of
Alstom Power; Michele de Nigris of Ricerca sul
Sistema Energetico and the Electricity Networks
Analysis and R&D IEA Implementing Agreement;
Hans Nilsson of the Demand Side Management IEA
Implementing Agreement; Henriette Nesheim of
the Norwegian Ministry of Petroleum and Energy;
Eric Lightner of the US Department of Energy;
and Bartosz Wojszczyk of General Electric. David
Beauvais of Natural Resources Canada contributed
to the development of the smart grid technologies
sections and George Arnold of the National Institute
of Standards and Technology (NIST) contributed
to the section on standards. The roadmap was
edited by Andrew Johnston of Language Aid. Muriel
Custodio and Bertrand Sadin of the IEA provided
layout and graphical design support.
This work was guided by the IEA Committee on
Energy Research and Technology. Its members
hosted one of the roadmap workshops and
provided important reviews and comments that
helped to improve the document. A number of IEA
Implementing Agreement members, as part of the
Electricity Co-ordination Group, provided valuable
comments and suggestions. We want to thank
the Norwegian Ministry of Petroleum and Energy
and the Japanese Ministry of Economy, Trade and
Industry for support and guidance to the roadmap.
Finally, this roadmap would not be effective
without all of the comments and support
received from the industry, government and non-
government experts who attended meetings,
reviewed and commented on drafts, and provided
overall guidance and support. The authors wish to
thank all of those who commented who cannot be
named individually.
For more information on this document, contact:
David Elzinga, IEA Secretariat
Tel. +33 1 40 57 66 93
Email: david.elzinga@iea.org
Steve Heinen, IEA Secretariat
Tel. +33 1 40 57 66 82
Email: steve.heinen@iea.org
Acknowledgements

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5 Key findings
The development of smart grids is essential if
the global community is to achieve shared goals
for energy security, economic development
and climate change mitigation. Smart grids
enable increased demand response and
energy efficiency, integration of variable
renewable energy resources and electric vehicle
recharging services, while reducing peak
demand and stabilising the electricity system.
The physical and institutional complexity of
electricity systems makes it unlikely that the
market alone will implement smart grids on the
scale that is needed. Governments, the private
sector, and consumer and environmental
advocacy groups must work together to define
electricity system needs and determine smart
grid solutions.
Rapid expansion of smart grids is hindered
by a tendency on the part of governments
to shy away from taking ownership of
and responsibility for actively evolving or
developing new electricity system regulations,
policy and technology. These trends have led to
a diffusion of roles and responsibilities among
government and industry actors, and have
reduced overall expenditure on technology
development and demonstration, and policy
development. The result has been slow
progress on a number of regional smart grid
pilot 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 urgently
needed to determine solutions that can be
deployed at full scale, integrating the full set of
smart grid technologies with existing electricity
infrastructure.
Large-scale pilot projects are urgently
needed in all world regions to test various
business models and then adapt them to the
local circumstances. Countries and regions
will use smart grids for different purposes;
emerging economies may leapfrog directly to
smart electricity infrastructure, while OECD
countries are already investing in incremental
improvements to existing grids and small-scale
pilot projects.
Current regulatory and market systems can
hinder demonstration and deployment of smart
grids. Regulatory and market models such
as those addressing system investment, prices
and customer participation must evolve
as technologies offer new options over the
course of long-term, incremental smart grid
deployment.
Regulators and consumer advocates need
to engage in system demonstration and
deployment to ensure that customers benefit
from smart grids. Building awareness and
seeking consensus on the value of smart
grids must be a priority, with energy utilities
and regulators having a key role in justifying
investments.
Greater international collaboration is needed
to share experiences with pilot programmes,
to leverage national investments in technology
development, and to develop common smart
grid technology standards that optimise
and accelerate technology development
and deployment while reducing costs for all
stakeholders.
Peak demand will increase between 2010 and
2050 in all regions. Smart grids deployment
could reduce projected peak demand increases
by 13% to 24% over this frame for the four
regions analysed in this roadmap.
Smart grids can provide significant benefits
to developing countries. Capacity building,
targeted analysis and roadmaps created
collaboratively with developed and developing
countries are required to determine specific
needs and solutions in technology and
regulation.
Key findings

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There is a pressing need to accelerate the
development of low-carbon energy technologies
in order to address the global challenges of
energy security, climate change and economic
growth. Smart grids are particularly important
as they enable several other low-carbon energy
technologies, including electric vehicles, variable
renewable energy sources and demand response.
This roadmap provides a consensus view on the
current status of smart grid technologies, and maps
out a global path for expanded use of smart grids,
together with milestones and recommendations for
action for technology and policy development.
What are smart grids?
A smart grid is an electricity network that uses
digital and other advanced technologies to
monitor and manage the transport of electricity
from all generation sources to meet the varying
electricity demands of end-users. Smart grids
co-ordinate the needs and capabilities of all
generators, grid operators, end-users and
electricity market stakeholders to operate all parts
of the system as efficiently as possible, minimising
costs and environmental impacts while maximising
system reliability, resilience and stability.
For the purposes of this roadmap, smart grids
include electricity networks (transmission
and distribution systems) and interfaces with
generation, storage and end-users.
1
While
many regions have already begun to smarten
their electricity system, all regions will require
significant additional investment and planning
to achieve a smarter grid. Smart grids are an
evolving set of technologies that will be deployed
at different rates in a variety of settings around
the world, depending on local commercial
attractiveness, compatibility with existing
technologies, regulatory developments and
investment frameworks. Figure 1 demonstrates the
evolutionary character of smart grids.
Rationale for smart grid
technology
The worlds electricity systems face a number
of challenges, including ageing infrastructure,
continued growth in demand, the integration of
increasing numbers of variable renewable energy
sources and electric vehicles, the need to improve
the security of supply and the need to lower carbon
emissions. Smart grid technologies offer ways not
just to meet these challenges but also to develop a
cleaner energy supply that is more energy efficient,
more affordable and more sustainable.
1 Smart grid concepts can be applied to a range of commodity
infrastructures, including water, gas, electricity and hydrogen.
This roadmap focuses solely on electricity system concepts.
Introduction
Figure 1. Smarter electricity systems
Source: Unless otherwise indicated, all material derives from IEA data and analysis.
System
operator
Distribution
control centre
Distribution
control centre
Energy
service
provider
Electric
vehicles
Industrial
customer
Industrial
customer
Industrial
customer
Commercial
customer
Commercial
customer
Commercial
customer
Substation
Substation Substation
Substation
Substation Substation
Residential
customer
Residential
customer
Residential
customer
Transmission
control centre
Transmission
control centre
Energy
storage
Storage
Communications Electrical infrastructure
High-temperature
superconductor
Past Present Future
KEY POINT: The smartening of the electricity system is an evolutionary process, not a one-time event.

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7 Introduction
These challenges must also be addressed with
regard to each regions unique technical, financial
and commercial regulatory environment. Given the
highly regulated nature of the electricity system,
proponents of smart grids must ensure that they
engage with all stakeholders, including equipment
manufacturers, system operators, consumer
advocates and consumers, to develop tailored
technical, financial and regulatory solutions that
enable the potential of smart grids (Figure 2).
The main characteristics of smart grids are
explained in Table 1.
Table 1. Characteristics of smart grids
Characteristic Description
Enables informed
participation by
customers
Consumers help balance supply and demand, and ensure reliability by modifying
the way they use and purchase electricity. These modifications come as a result of
consumers having choices that motivate different purchasing patterns and behaviour.
These choices involve new technologies, new information about their electricity use, and
new forms of electricity pricing and incentives.
Accommodates all
generation and
storage options
A smart grid accommodates not only large, centralised power plants, but also the
growing array of customer-sited distributed energy resources. Integration of these
resources including renewables, small-scale combined heat and power, and energy
storage will increase rapidly all along the value chain, from suppliers to marketers to
customers.
Enables new
products, services
and markets
Correctly designed and operated markets efficiently create an opportunity for
consumers to choose among competing services. Some of the independent grid
variables that must be explicitly managed are energy, capacity, location, time, rate of
change 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 of
business to suit operating and market conditions.
Provides the power
quality for the range
of needs
Not all commercial enterprises, and certainly not all residential customers, need the
same quality of power. A smart grid supplies varying grades (and prices) of power.
The cost of premium power-quality features can be included in the electrical service
contract. Advanced control methods monitor essential components, enabling rapid
diagnosis and solutions to events that impact power quality, such as lightning,
switching surges, line faults and harmonic sources.
Optimises asset
utilisation and
operating effciency
A smart grid applies the latest technologies to optimise the use of its assets. For
example, optimised capacity can be attainable with dynamic ratings, which allow
assets to be used at greater loads by continuously sensing and rating their capacities.
Maintenance efficiency can be optimised with condition-based maintenance, which
signals the need for equipment maintenance at precisely the right time. System-control
devices can be adjusted to reduce losses and eliminate congestion. Operating efficiency
increases when selecting the least-cost energy-delivery system available through these
types of system-control devices.
Provides resiliency to
disturbances, attacks
and natural disasters
Resiliency refers to the ability of a system to react to unexpected events by isolating
problematic elements while the rest of the system is restored to normal operation. These
self-healing actions result in reduced interruption of service to consumers and help
service providers better manage the delivery infrastructure.
Source: Adapted from DOE, 2009.

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Purpose, process and
structure of the roadmap
To provide guidance to government and industry
stakeholders on the technology pathways needed
to achieve energy security, economic growth and
environmental goals, the IEA is developing a series
of global low-carbon energy roadmaps covering a
range of technologies. The roadmaps are guided
by the IEA Energy Technology Perspectives BLUE Map
Scenario, which aims to achieve a 50% reduction
in energy-related CO
2
emissions by 2050. Each
roadmap represents international consensus on
milestones for technology development, legal and
regulatory needs, investment requirements, public
engagement and outreach, and international
collaboration.
The Smart Grid Roadmap aims to:
Increase understanding among a range of
stakeholders of the nature, function, costs and
benefits of smart grids.
Identify the most important actions required to
develop smart grid technologies and policies that
help to attain global energy and climate goals.
Develop pathways to follow and milestones to
target based on regional conditions.
The roadmap was compiled with the help of
contributions from a wide range of interested
parties, including electricity utilities, regulators,
technology and solution providers, consumer
Financial
Regulatory
and policy
Technology
Societal
Figure 2. Smart grids can link
electricity system stakeholder
objectives
Table 2. Workshop contributions to the Smart Grids Roadmap
Date Location Event Workshop topic
28 April 2010 Paris ENARD/IEA Joint Workshop
Electricity Networks: A Key Enabler of
Sustainable Energy Policy
20-21 May 2010 Paris
Joint GIVAR/Smart Grid
Roadmap Workshop
Defining Smart Grid Technologies and
RD&D needs
8-9 June 2010 Paris CERT Meeting
Role of Government and Private Sector
in Smart Grid RD&D
23-24 September 2010 Washington, DC GridWise Global Forum Smart Grid Smart Customer Policy
28-29 September 2010 Madrid ENARD/IEA Joint Workshop Financing the Smart Grid
8-9 November 2010
Jeju Island,
Korea
Korea Smart Grid Week
Developing Country and Emerging
Economy Smart Grid Perspectives
Notes: ENARD refers to the IEA implementing agreement on Electricity Networks Analysis, R&D, (www.iea-enard.org). The ENARD/IEA
workshops are part of the implementing agreement work plan and, although highly complementary, not directly tied to the smart grid
roadmap initiative.
The IEA Grid Integration of Variable Renewables (GIVAR) project is a multi-year initiative that is assessing and quantifying approaches
to large-scale deployment of variable renewable generation technologies.
CERT refers to the IEA Committee on Energy Research and Technology.
KEY POINT: Smart grids provide
an opportunity to link societal, fnancial,
technology and regulatory and policy objectives.

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9 Introduction
advocates, finance experts and government
institutions. In parallel with its analysis and
modelling, the Smart Grid Roadmap team
has hosted and participated in several expert
workshops (Table 2).
This roadmap does not attempt to cover every
aspect of smart grids and should be regarded as a
work in progress. As global analysis improves, new
data will provide the basis for updated scenarios and
assumptions. More important, as the technology,
market and regulatory environments evolve,
additional tasks will come to light. The broad nature
of smart grids requires significant collaboration
with other technology areas, including transport
electrification, energy storage, generation and
end-use. The roadmap provides links to further
background information and reading.
The roadmap is organised into seven sections.
The first looks at the challenges facing grids today
and the benefits that smart grids offer, including
electricity reliability. The second describes the
current deployment status of smart grids, along
with smart grid costs and savings and market
and regulatory considerations. The third section
outlines a vision for smart grid deployment to
2050 based on the Energy Technology Perspectives
2010 (ETP 2010) BLUE Map Scenario, including an
analysis of regional needs. The fourth and fifth
sections examine smart grid technologies and
policies, and propose actions and milestones for
their development and implementation. The sixth
section discusses current and future international
collaboration, while the seventh section presents
an action plan and identifies the next steps that
need to be taken.

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Over the last few decades, generation and network
technology deployment, market and regulatory
structures, and the volume and use of electricity
have changed significantly. This transformation
has largely been managed successfully, but ageing
infrastructures mean that further changes could
affect system stability, reliability and security.
Smart grid technologies provide a range of
solutions that can be tailored to the specific needs
of each region. The primary global system trends
and the role of smart grids are illustrated in the
following sections using the Energy Technology
Perspectives (ETP) Baseline and BLUE Map Scenarios
developed by the IEA to estimate future technology
deployment and demand (Box 1).
Future demand and supply
Increased consumption
of electricity
Electricity is the fastest-growing component of total
global energy demand, with consumption expected
to increase by over 150% under the ETP 2010
Baseline Scenario and over 115% between 2007
and 2050 under the BLUE Map Scenario (IEA, 2010).
Figure 3. Electricity consumption growth 2007-50 (BLUE Map Scenario)
Source: IEA, 2010.
0%
100%
200%
300%
400%
500%
600%
OECD North
America
OECD
Europe
OECD
Pacific
Transition
economies
China India Other
developing Asia
Africa Global
average
Central and
South America
Middle
East
KEY POINT: Emerging economies will need to use smart grids to effciently meet rapidly growing
electricity demand.
Electricity system needs for today and the future
The ETP BLUE Map Scenario aims to ensure
that global energy-related CO
2
emissions are
reduced to half their current levels by 2050.
This scenario examines ways in which the
introduction of existing and new low-carbon
technologies might achieve this at least
cost, while also bringing energy security
benefits in terms of reduced dependence
on oil and gas, and health benefits as air
pollutant emissions are reduced. The BLUE
Map Scenario is consistent with a long-term
global rise in temperatures of 2
o
C to 3
o
C,
but only if the reduction in energy-related
CO
2
emissions is combined with deep cuts
in other greenhouse-gas emissions. The
Baseline Scenario considers the business-as-
usual case, not reducing emission levels to
any predetermined goal by 2050. The BLUE
Map and Baseline Scenarios are based on
the same macroeconomic assumptions.
Box 1: Energy Technology Perspectives
scenario descriptions

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11 Electricity system needs for today and the future
Growth in demand is expected to vary between
regions as OECD member countries experience
much more modest increases than emerging
economies and developing countries (Figure 3). In
OECD countries, where modest growth rates are
based on high levels of current demand, smart grid
technologies can provide considerable benefits
by reducing transmission and distribution losses,
and optimising the use of existing infrastructure.
In developing regions with high growth, smart
grid technologies can be incorporated in new
infrastructure, offering better market-function
capabilities and more efficient operation. In all
regions, smart grid technologies could increase
the efficiency of the supply system and help
reduce demand by providing consumers with the
information they need to use less energy or use it
more efficiently.
Deployment of variable
generation technology
Efforts to reduce CO
2
emissions related to
electricity generation, and to reduce fuel imports,
have led to a significant increase in the deployment
of variable generation technology.
2
This increase
is expected to accelerate in the future, with all
regions incorporating greater amounts of variable
generation into their electricity systems (Figure
4). As penetration rates of variable generation
increase over levels of 15% to 20%, and depending
on the electricity system in question, it can
become increasingly difficult to ensure the reliable
and stable management of electricity systems
relying solely on conventional grid architectures
and limited flexibility. Smart grids will support
greater deployment of variable generation
technologies by providing operators with real-
time system information that enables them to
manage generation, demand and power quality,
thus increasing system flexibility and maintaining
stability and balance.
There are some good examples of successful
approaches to integrating variable resources.
Irelands transmission system operator, EirGrid, is
deploying smart grid technologies, including high-
temperature, low-sag conductors and dynamic
2 Variable generation technologies produce electricity that is
dependent on climatic or other conditions, meaning there is no
guarantee that it can be dispatched as needed. This includes
electricity generation from wind, photovoltaic, run-of-river
hydro, combined heat and power, and tidal technologies.
Figure 4. Portion of variable generation of electricity
by region (BLUE Map Scenario)
Source: IEA, 2010.
0%
5%
10%
15%
20%
25%
30%
2010
2050
OECD North
America
OECD
Europe
OECD
Pacific
Transition
economies
China India Other
developing Asia
Africa Central and
South America
Middle
East
KEY POINT: All regions will need smart grids to enable the effective integration of signifcantly
higher amounts of variable resources to their electricity grids.

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line rating special protection schemes, to manage
the high proportion of wind energy on its system
and maximise infrastructure effectiveness. The
operation of the system is being improved through
state-of-the-art modelling and decision support
tools that provide real-time system stability analysis,
wind farm dispatch capability and improved wind
forecasting, and contingency analysis. System
flexibility and smart grid approaches are estimated
to facilitate real-time penetrations of wind up to
75% by 2020 (EirGrid, 2010).
In Spain, Red Elctrica has established a Control
Centre of Renewable Energies (CECRE), a
worldwide pioneering initiative to monitor and
control these variable renewable energy resources.
CECRE allows the maximum amount of production
from renewable energy sources, especially wind
energy, to be integrated into the power system
under secure conditions and is an operation
unit integrated into the Power Control Centre.
With CECRE, Spain has become the first country
worldwide to have a control centre for all wind
farms over 10 MW.
Electrification of transport
The BLUE Map Scenario estimates that the
transport sector will make up 10% of overall
electricity consumption by 2050 because of a
significant increase in electric vehicles (EV) and
plug-in hybrid electric vehicles (PHEV) (Figure 5).
If vehicle charging is not managed intelligently,
it could increase peak loading on the electricity
infrastructure, adding to current peak demands
found in the residential and service sectors, and
requiring major infrastructure investment to avoid
supply failure. Smart grid technology can enable
charging to be carried out more strategically,
when demand is low, making use of both low-cost
generation and extra system capacity, or when
the production of electricity from renewable
sources is high. Over the long term, smart grid
technology could also enable electric vehicles to
feed electricity stored in their batteries back into
the system when needed.
3
In the Netherlands, the collaborative Mobile
Smart Grid project lead by the distribution utility
Enexis is establishing a network of electric car
recharging sites and is using smart informartion
and communication technology (ICT) applications
3 The ownership strategy of the vehicle battery will have a
significant impact on whether using vehicle batteries for grid
storage is realistic, as this may reduce the life/reliability of vehicle
batteries for not much financial return for the vehicle owner.
Battery switching technology and leasing models may facilitate
the use of vehicle batteries for grid storage.
Figure 5. Deployment of electric vehicles and plug-in hybrid electric vehicles
Source: IEA, 2009.
0
20
40
60
80
100
120
2010 2015 2020 2025 2030 2035 2040 2045 2050
P
a
s
s
e
n
g
e
r
L
D
V
s
a
l
e
s
(
m
i
l
l
i
o
n
s
p
e
r
y
e
a
r
)
All other
India
China
OECD Europe
OECD Pacific
OECD Pacific
OECD
North America
All other
India
China
OECD Europe
OECD
North America
PHEVs
EVs
0
1
2
3
4
5
6
7
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
P
L
D
V
s
a
l
e
s
(
m
i
l
l
i
o
n
s
p
e
r
y
e
a
r
)
KEY POINT: Major economies with large personal vehicle sales will need smart grids to enable the effective
integration of electric vehicles to their electricity grids.

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to enable the existing power network to deal with
the additional power demand. Working together
with other network operators, energy companies,
software and hardware providers, universities
and other research institutes, the project should
result in simple solutions for charging and paying
automatically (Boots et al., 2010).
4
Electricity system
considerations
Ageing infrastructure
The electrification of developed countries has
occurred over the last 100 years; continued
investment is needed to maintain reliability and
quality of power. As demand grows and changes
(e.g. through deployment of electric vehicles), and
distributed generation becomes more widespread,
ageing distribution and transmission infrastructure
will need to be replaced and updated, and
new technologies will need to be deployed.
Unfortunately, in many regions, the necessary
technology investment is hindered by existing
market and regulatory structures, which often
have long approval processes and do not capture
the benefits of new, innovative technologies.
Smart grid technologies provide an opportunity to
maximise the use of existing infrastructure through
better monitoring and management, while new
infrastructure can be more strategically deployed.
Rapidly growing economies like China have
different smart grid infrastructure needs from
those of OECD countries. Chinas response to
its high growth in demand will give it newer
distribution and transmission infrastructure than
the other three regions examined in detail in this
roadmap (OECD Europe, OECD North America
and OECD Pacific). In the Pacific region, recent
investments in transmission have resulted in
newer infrastructure than that in Europe and
North America. OECD Europe has the highest
proportion of ageing transmission and distribution
lines, but North America has the largest number
of lines and the largest number that are ageing
especially at the transmission level. This is an
important consideration given the changes in
generation and consumption in the IEA scenarios
up to 2050, and the need to deploy smart grids
strategically. In recent years Japan has invested
significantly in its transmission infrastructure,
4 www.mobilesmartgrid.eu
which is operating with very high reliability levels,
and is now focusing on its distribution networks.
One example is in Yokahama City, where a large-
scale energy management project is using both
new and existing houses in urban areas to assess
the effects of energy consumption on distribution
infrastructure.
5
In the United States, as part of a
broad range of smart grid investments, significant
effort is being devoted to deploying phasor
measurement units on the transmission system,
providing increased information for more reliable
operation of ageing infrastructure.
6
Peak demand
Demand for electricity varies throughout the day
and across seasons (Figure 6). Electricity system
infrastructure is designed to meet the highest
level of demand, so during non-peak times the
system is typically underutilised. Building the
system to satisfy occasional peak demand requires
investments in capacity that would not be needed
if the demand curve were flatter. Smart grids can
reduce peak demand by providing information and
incentives to consumers to enable them to shift
consumption away from periods of peak demand.
Demand response in the electricity system the
mechanism by which end-users (at the industrial,
service or residential sector level) alter consumption
in response to price or other signals can both
reduce peak demand, but also provide system
flexibility, enabling the deployment of variable
generation technologies. Reducing peak demand
is likely to be the first priority, because demand at
a system level is relatively predictable and ramps
up and down slowly compared with variable
generation. As demand response technology
develops and human interactions are better
understood, the availability, volume and response
time of the demand-side resource will provide
the flexibility necessary to respond to both peak
demand and variable generation needs.
The management of peak demand can enable
better system planning throughout the entire
electricity system, increasing options for new loads
such as electric vehicles, for storage deployment
and for generation technologies. These benefits are
essential for new systems where demand growth
is very high, and for existing and ageing systems
that need to maintain existing and integrate new
technologies.
5 www.meti.go.jp/english/press/data/20100811_01.html
6 www.naspi.org/

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PowerCentsDC was an advanced meter pilot
7

programme in Washington DC for 850 residential
customers that ran over two summers and one
winter from July 2008 to October 2009. The
programme analysis found that customer response
to three different residential pricing options
contributed to reducing peak demand, ranging
from 4% to 34% in the summer and 2% to 13%
in the winter. These results indicate that different
price structures enabled by smart grids can reduce
peak demand.
8
Electricity reliability
Growing electricity consumption and recent system
failures have focused attention on the role that smart
grids can play in increasing electricity reliability
especially by increasing system flexibility. The North
American Electric Reliability Corporation (NERC)
9

7 www.ieso.ca/imoweb/marketdata/marketSummary.asp
8 www.powercentsdc.org/
9 NERCs mission is to improve the reliability and security of the bulk
power system in the United States, Canada and part of Mexico.
The organisation aims to do that not only by enforcing compliance
with mandatory Reliability Standards, but also by acting as a
force for good a catalyst for positive change whose role
includes shedding light on system weaknesses, helping industry
participants operate and plan to the highest possible level, and
communicating Examples of Excellence throughout the industry.
defines the reliability of the interconnected bulk
power system in terms of two basic and functional
aspects: adequacy and security.
Adequacy is seen by NERC as the ability of the bulk
power system to supply the aggregate electrical
demand and energy requirements of its customers
at all times, taking into account scheduled and
reasonably expected unscheduled outages of
system elements. System operators are expected
to take controlled actions or procedures to
maintain a continual balance between supply and
demand within a balancing area. Actions include:
Public appeals to reduce demand.
Interruptible demand customer demand that,
in accordance with contractual arrangements,
can be interrupted by direct control of the
system operator or by action of the customer at
the direct request of the system operator.
Voltage reductions sometimes as much as 5.
Rotating blackouts.
Security, in NERCs definition, includes all other
system disturbances that result in the unplanned
and/or uncontrolled interruption of customer
demand, regardless of cause. When these
interruptions are contained within a localised area,
they are considered unplanned interruptions or
Figure 6. Example of a 24-hour electricity system demand curve
on several dates over the year
0 4 8 12 16 20 24
M
W
Time of day
0
5 000
10 000
15 000
20 000
25 000
30 000
08 Jul. 10
08 Jan. 10
08 Apr. 10
08 Oct. 10
KEY POINT: The demand for electricity varies throughout the day and across seasons; smart grids can
reduce these peaks and optimise system operation.
Source: Data from Independent Electricity System Operator, Ontario, Canada.
7

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disturbances. When they spread over a wide area
of the grid, they are referred to as cascading
blackouts the uncontrolled successive loss of
system elements triggered by an incident at any
location. Cascading results in widespread electric
service interruption that cannot be prevented
from spreading sequentially beyond an area
predetermined by studies.
10

System adequacy
The considerations for meeting the needs of
electricity consumers are significantly different
from those for other energy commodities. First,
large-scale electricity storage is available only
in a few regions that have significant reservoir
hydro resources. Second, electricity is traded
on a regional rather than on a global basis. It is
in this context that electricity production and
consumption must be continually monitored
and controlled. Smart grid technologies can help
to improve system adequacy by enabling more
efficient system operation and the addition of
regional energy resources to the electricity mix.
The increased amounts of data gathered from a
smart grid can show where operational efficiency
can be improved and increased automation can
improve control of various parts of the system,
enabling fast response to changes in demand.
The introduction of regional energy resources,
including variable generation such as solar, wind,
small-scale hydro, and combined heat and power,
as well as dispatchable generation such as biomass,
reservoir-based hydropower and concentrating
10 www.nerc.com/page.php?cid=1|15|123
solar power systems, will increase the amount of
generation capability on the system. Smart grids
enable improved, lower-cost integration of these
and other variable technologies that may require
different electricity system operation protocols.
Box 2. Electricity system flexibility
Flexibility is the capability of a power system to maintain reliable supply by modifying production
or consumption in the face of rapid and large imbalances, such as unpredictable fluctuations in
demand or in variable generation. It is measured in terms of megawatts (MW) available for ramping
up and down, over time.
The term flexibility is used here to include power system electricity generation, transport,
storage, trading and end-use consumption. Smart grids can optimise the operation of a range of
flexibility mechanisms in three contexts: the power market, system operation and the use of grid
hardware. Resources that contribute to flexibility include dispatchable power plants, demand-side
management and response, energy storage facilities and interconnection with adjacent markets.
Source: IEA,2011.
Figure 7. Transmission links between
Nordic countries
Source: Norwegian Ministry of Petroleum and Energy.
KEY POINT: The Nordic electricity system
successfully integrates large amounts of
variable renewable energy in a regional
grid by making use of interconnections.

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Adequacy concerns introduced by the deployment
of variable generation technology can be
addressed by a number of flexibility mechanisms,
such as direct trading of electricity between
regions. One of the best examples of such
trading is the Nordic electricity system, where
significant interconnection and well functioning
markets between regions allow for high levels of
wind energy deployment (Figure 7). Smart grid
technology can address the complex power flow
problems that result from wide-area wholesale
trading by allowing them to be managed with
increased efficiency and reliability.
System security
Although a number of OECD countries have
recently experienced large-scale blackouts, their
electricity systems are regarded as generally
secure, according to industry-specific indices that
measure the number and duration of outages.
Smart grid technologies can maintain and improve
system security in the face of challenges such as
ageing infrastructure, rising demand, variable
generation and electric vehicle deployment. By
using sensor technology across the electricity
system, smart grids can monitor and anticipate
system faults before they happen and take
corrective action. If outages do occur, smart grids
can reduce the spread of the outages and respond
more quickly through automated equipment.
Cyber security
Smart grids can improve electricity system
reliability and efficiency, but their use of new ICTs
can also introduce vulnerabilities that jeopardise
reliability, including the potential for cyber attacks.
Cyber security is currently being addressed by
several international collaborative organisations.
One recent US study summarised the following
results (GAO, 2011):
Aspects of the electricity system regulatory
environment may make it difficult to ensure
the cyber security of smart grid systems.
Utilities are focusing on regulatory compliance
instead of comprehensive security.
Consumers are not adequately informed about
the benefits, costs and risks associated with
smart grid systems.
Insufficient security features are being built
into certain smart grid systems.
The electricity industry does not have an
effective mechanism for sharing information
on cyber security.
The electricity industry does not have metrics
for evaluating cyber security.
These findings confirm that cyber security must
be considered as part of a larger smart grid
deployment strategy. Lessons can be learned
from other industries that have addressed these
challenges, such as banking, mobile phones
and retail, but in the context of infrastructure-
related systems, dedicated focus is needed.
For example, the Joint Research Council of the
European Commission has initiated the European
network for the Security of Control and Real-Time
Systems (ESCoRTS).
11
ESCoRTS is a joint project
among European Union industries, utilities,
equipment manufacturers and research institutes,
under the lead of the European Committee
for Standardisation (Comit europen de
normalisation, or CEN), to foster progress towards
cyber security of control and communication
equipment in Europe. The adoption of such models
that work to develop solutions for cyber security,
while allowing data to be used for acceptable
purposes, is required for successful deployment of
smart grid technologies.
11 www.escortsproject.eu/

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17
Smart grid technologies
The many smart grid technology areas each
consisting of sets of individual technologies
span the entire grid, from generation through
transmission and distribution to various types of
electricity consumers. Some of the technologies
are actively being deployed and are considered
mature in both their development and application,
while others require further development and
demonstration. A fully optimised electricity system
will deploy all the technology areas in Figure 8.
However, not all technology areas need to be
installed to increase the smartness of the grid.
Wide-area monitoring
and control
Real-time monitoring and display of power-
system components and performance, across
interconnections and over large geographic areas,
help system operators to understand and optimise
power system components, behaviour and
performance. Advanced system operation tools
avoid blackouts and facilitate the integration of
variable renewable energy resources. Monitoring
and control technologies along with advanced
system analytics including wide-area situational
awareness (WASA), wide-area monitoring systems
(WAMS), and wide-area adaptive protection,
control and automation (WAAPCA) generate data
to inform decision making, mitigate wide-area
disturbances, and improve transmission capacity
and reliability.
Information and communications
technology integration
Underlying communications infrastructure,
whether using private utility communication
networks (radio networks, meter mesh networks)
or public carriers and networks (Internet, cellular,
Smart grid deployment
Figure 8. Smart grid technology areas
Source: Technology categories and descriptions adapted from NETL, 2010 and NIST, 2010.
Information and communications technology integration (ICT)
Generation Transmission Distribution Industrial Service Residential
Information and communications technology (ICT) integration
Wide-area monitoring and control
Renewable and distributed generation integration
Advanced metering infrastructure (AMI)
Distribution grid
management
Customer-side systems (CS)
EV charging infrastructure
Transmission
enhancement applications
Transmission lines
Transmission
substation
Distribution
substation
Distribution lines
Padmount
transformer
KEY POINT: Smart grids encompass a variety of technologies that span the electricity system.

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cable or telephone), support data transmission
for deferred and real-time operation, and during
outages. Along with communication devices,
significant computing, system control software
and enterprise resource planning software support
the two-way exchange of information between
stakeholders, and enable more efficient use and
management of the grid.
Renewable and distributed
generation integration
Integration of renewable and distributed
energy resources encompassing large scale
at the transmission level, medium scale at the
distribution level and small scale on commercial
or residential building can present chalenges
for the dispatchability and controllability of these
resources and for operation of the electricity
system. Energy storage systems, both electrically
and for themally based, can alleviate such
problems by decoupling the production and
delivery of energy. Smart grids can help through
automation of control of generation and demand
(in addition to other forms of demand response) to
ensure balancing of supply and demand.
Transmission enhancement
applications
There are a number of technologies and
applications for the transmission system. Flexible
AC transmission systems (FACTS) are used to
enhance the controllability of transmission
networks and maximise power transfer capability.
The deployment of this technology on existing
lines can improve efficiency and defer the need of
additional investment. High voltage DC (HVDC)
technologies are used to connect offshore
wind and solar farms to large power areas, with
decreased system losses and enhanced system
controllability, allowing efficient use of energy
sources remote from load centres. Dynamic line
rating (DLR), which uses sensors to identify the
current carrying capability of a section of network
in real time, can optimise utilisation of existing
transmission assets, without the risk of causing
overloads. High-temperature superconductors
(HTS) can significantly reduce transmission losses
and enable economical fault-current limiting with
higher performance, though there is a debate over
the market readiness of the technology.
Distribution grid management
Distribution and sub-station sensing and
automation can reduce outage and repair
time, maintain voltage level and improve asset
management. Advanced distribution automation
processes real-time information from sensors
and meters for fault location, automatic
reconfiguration of feeders, voltage and reactive
power optimisation, or to control distributed
generation. Sensor technologies can enable
condition- and performance-based maintenance
of network components, optimising equipment
performance and hence effective utilisation
of assets.
Advanced metering infrastructure
Advanced metering infrastructure (AMI) involves
the deployment of a number of technologies in
addition to advanced or smart meters
12
that enable
two-way flow of information, providing customers
and utilities with data on electricity price and
consumption, including the time and amount of
electricity consumed. AMI will provide a wide
range of functionalities:
Remote consumer price signals, which can
provide time-of-use pricing information.
Ability to collect, store and report customer
energy consumption data for any required
time intervals or near real time.
Improved energy diagnostics from more
detailed load profiles.
Ability to identify location and extent of
outages remotely via a metering function that
sends a signal when the meter goes out and
when power is restored.
Remote connection and disconnection.
Losses and theft detection.
Ability for a retail energy service provider to
manage its revenues through more effective
cash collection and debt management.
Electric vehicle charging
infrastructure
Electric vehicle charging infrastructure handles
billing, scheduling and other intelligent features
for smart charging (grid-to-vehicle) during low
energy demand. In the long run, it is envisioned
12 The European Smart Meters Industry Group (ESMIG) defines four
minimum functionalities of a smart meter: remote reading, two-
way communication, support for advanced tariff and payment
systems, and remote disablement and enablement of supply.

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19
that large charging installation will provide power
system ancillary services such as capacity reserve,
peak load shaving and vehicle-to-grid regulation.
This will include interaction with both AMI and
customer-side systems.
Customer-side systems
Customer-side systems, which are used to help
manage electricity consumption at the industrial,
service and residential levels, include energy
management systems, energy storage devices,
smart appliances and distributed generation.
13

Energy efficiency gains and peak demand reduction
can be accelerated with in-home displays/energy
dashboards, smart appliances and local storage.
Demand response includes both manual customer
response and automated, price-responsive
appliances and thermostats that are connected to
an energy management system or controlled with a
signal from the utility or system operator.
13 Residential small-scale generation equipment on customer
premises falls under both categories of consumer-side systems
and renewable and distributed energy systems.
Table 3. Smart grid technologies
Technology area Hardware Systems and software
Wide-area monitoring
and control
Phasor measurement units (PMU)
and other sensor equipment
Supervisory control and data acquisition
(SCADA), wide-area monitoring systems
(WAMS), wide-area adaptive protection,
control and automation (WAAPCA), wide-
area situational awareness (WASA)
Information
and communication
technology integration
Communication equipment (Power
line carrier, WIMAX, LTE, RF mesh
network, cellular), routers, relays,
switches, gateway, computers
(servers)
Enterprise resource planning software
(ERP), customer information system (CIS)
Renewable and distributed
generation integration
Power conditioning equipment
for bulk power and grid support,
communication and control hardware
for generation and enabling storage
technology
Energy management system (EMS),
distribution management system (DMS),
SCADA, geographic Information
system (GIS)
Transmission enhancement Superconductors, FACTS, HVDC Network stability analysis, automatic
recovery systems
Distribution grid
management
Automated re-closers, switches
and capacitors, remote controlled
distributed generation and storage,
transformer sensors, wire and cable
sensors
Geographic information system (GIS),
distribution management system (DMS),
outage management system (OMS),
workforce management system (WMS)
Advanced metering
infrastructure
Smart meter, in-home displays,
servers, relays
Meter data management system (MDMS)
Electric vehicle charging
infrastructure
Charging infrastructure,
batteries, inverters
Energy billing, smart grid-to-vehicle
charging (G2V) and discharging
vehicle-to-grid (V2G) methodologies
Customer-side systems Smart appliances, routers, in-home
display, building automation systems,
thermal accumulators,
smart thermostat
Energy dashboards, energy management
systems, energy applications for smart
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Table 3 highlights a number of hardware and
systems and software associated with each
technology area.
Within the smart grid technology landscape, a
broad range of hardware, software, application
and communication technologies are at various
levels of maturity. Some technologies have proven
themselves over time, but many even if mature
have yet to be demonstrated or deployed on a
large scale. Existing projects give an indication
of the maturity levels and development trends of
smart grid technologies (Table 4).
Smart grid demonstration
and deployment efforts
There has been a marked acceleration in the
deployment of smart grid pilot and demonstration
projects globally, due in part to the recent
government stimulus investment initiatives in
2009 and 2010 (Table 5). Investments around the
world have enabled hundreds of projects entirely
or partly focused on smart grid technologies; the
above table provides only a small sample.
Most current smart grid pilot projects focus
on network enhancement efforts such as local
balancing, demand-side management (through
smart meters) and distributed generation.
Demonstration projects have so far been
undertaken on a restricted scale and have been
hindered by limited customer participation and
a lack of a credible aggregator business model.
Data (and security) challenges are likely to increase
as existing pilots expand to larger-scale projects.
Non-network solutions such as ICTs are being
used in a growing number of smart grid projects,
bringing a greater dependence on IT and data
management systems to enable network operation
(Boots et al., 2010).
The Telegestore project, launched in 2001 by
ENEL Distribuzione S.p.A. (i.e. prior to the current
smart grids stimulus funding) addresses many of
these issues. The project installed 33 million smart
meters (including system hardware and software
architecture) and automated 100 000 distribution
substations, while also improving management
of the operating workforce and optimising asset
management policies and network investments.
The project has resulted in fewer service
interruptions, and its EUR 2.1 billion investment
has led to actual cost savings of more than EUR 500
million per year. ENEL is continually enhancing the
system by introducing new features, technologies
and flexibility. The project clearly demonstrates the
value of a large-scale, integrated deployment of
smart grid technologies to solve existing problems
and plan for future needs.
Although significant effort and financial resources
are already being invested in smart grids, the scale
of demonstration and deployment co-ordination
needs to be increased. Several organisations have
created, are creating or are calling for the creation
of an inventory or database of detailed case studies
to gather the lessons learned from such projects,
particularly in the areas of policy, standards
and regulation, finance and business models,
technology development, consumer engagement
and workforce training.
14

14 These include the international Smart Grid Action Network, Asia-
Pacific Economic co-operation, European Union Set Plan, as well
as a number of national initiatives.
Table 4. Maturity levels and development trends of smart grid technologies
Technology area Maturity level Development trend
Wide-area monitoring and control Developing Fast
Information and communications technology integration Mature Fast
Renewable and distributed generation integration* Developing Fast
Transmission enhancement applications** Mature Moderate
Distribution management Developing Moderate
Advanced metering infrastructure Mature Fast
Electric vehicle charging infrastructure Developing Fast
Customer-side systems Developing Fast
* Battery storage technologies are less mature than other distributed energy technologies.
** High Temperature Superconducting technology is still in the developing stage of maturity.

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Smart grid deployment 21
Table 5. Select national smart grid demonstration and deployment efforts
Country National smart grid initiatives
China The Chinese government has developed a large, long-term stimulus plan to invest in water
systems, rural infrastructures and power grids, including a substantial investment in smart grids.
Smart grids are seen as a way to reduce energy consumption, increase the efficiency of the
electricity network and manage electricity generation from renewable technologies. Chinas
State Grid Corporation outlined plans in 2010 for a pilot smart grid programme that maps out
deployment to 2030. Smart grids investments will reach at least USD 96 billion by 2020.
United States USD 4.5 billion was allocated to grid modernisation under the American Recovery Reinvestment
Act of 2009, including:
USD 3.48 billion for the quick integration of proven technologies into existing electric grid
infrastructure.
USD 435 million for regional smart grid demonstrations.
USD 185 million for energy storage and demonstrations.
Japan The Federation of Electric Power Companies of Japan is developing a smart grid that incorporates
solar power generation by 2020 with government investment of over USD 100 million.
The Japanese government has announced a national smart metering initiative and large utilities
have announced smart grid programmes.
South Korea The Korean government has launched a USD 65 million pilot programme on Jeju Island in
partnership with industry. The pilot consists of a fully integrated smart grid system for 6 000
households, wind farms and four distribution lines. Korea has announced plans to implement
smart grids nationwide by 2030.
Spain In 2008, the government mandated distribution companies to replace existing meters with new
smart meters; this must be done at no additional cost to the customer.
The utility Endesa aims to deploy automated meter management to more than 13 million
customers on the low voltage network from 2010 to 2015, building on past efforts by the Italian
utility ENEL. The communication protocol used will be open.
The utility Iberdrola will replace 10 million meters.
Germany The governments E-Energy funding programme has several projects focusing on ICTs for the
energy system.
Australia The Australian government announced the AUD 100 million Smart Grid, Smart City initiative
in 2009 to deliver a commercial-scale smart grid demonstration project. Additional efforts in the
area of renewable energy deployments are resulting in further study on smart grids.
United Kingdom The energy regulator OFGEM has an initiative called the Registered Power Zone that will
encourage distributors to develop and implement innovative solutions to connect distributed
generators to the network. OFGEM has set up a Low Carbon Networks fund that will allow
up to GPB 500m support to distribution network operator projects that test new technology,
operating and commercial arrangements.
France The electricity distribution operator ERDF is deploying 300 000 smart meters in a pilot project
based on an advanced communication protocol named Linky. If the pilot is deemed a success,
ERDF will replace all of its 35 million meters with Linky smart meters from 2012 to 2016.
Brazil APTEL, a utility association, has been working with the Brazilian government on narrowband
power line carrier trials with a social and educational focus.
Several utilities are also managing smart grid pilots, including Ampla, a power distributor in Rio
de Janeiro State owned by the Spanish utility Endesa, which has been deploying smart meters and
secure networks to reduce losses from illegal connections. AES Eletropaulo, a distributor in So
Paulo State, has developed a smart grid business plan using the existing fibre-optic backbone.
The utility CEMIG has started a smart grid project based on system architecture developed by
the IntelliGrid Consortium, an initiative of the California-based Electric Power Research Institute.
Source: Updated from MEF 2009 using feedback from country experts. Projects are listed in order of largest to smallest amount of investment.

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Tailoring smart grids to
developing countries and
emerging economies
While advanced countries have well-developed
modern grids, many others have grids that do not
operate consistently over a 24-hour period, and
still others have no electricity infrastructure at all.
Developing countries and emerging economies
are often categorised by high growth in electricity
demand, high commercial and technical losses
in a context of rapid economic growth and
development, dense urban populations and
dispersed rural populations. These aspects present
both significant challenges and opportunities.
Smart grids can play an important role in the
deployment of new electricity infrastructure in
developing countries and emerging economies
by enabling more efficient operation and lower
costs. Small remote systems not connected to
a centralised electricity infrastructure and initially
employed as a cost-effective approach to rural
electrification could later be connected easily to
a national or regional infrastructure.
As a means to access to electricity in sparsely
populated areas, smart grids could enable a
transition from simple, one-off approaches to
electrification (e.g. battery- or solar PV-based
household electrification) to community grids that
can then connect to national and regional grids
(Figure 9).
The deployment stages in Figure 9 require
standardisation and interoperability to be scaled
up to the next level with higher amounts of supply
and demand. Each successive step can increase
reliability and the amount of power available if
managed in a way that allows a seamless transition
for the community. Roadmaps and targeted
analysis focusing on developing countries and
emerging economies should assess what lessons
can be learned from smart grid demonstrations
and deployments in developed countries.
Ultimately, the end point of smart grid deployment
is expected to be similar across the world, but the
routes and time it takes to get there could be quite
different (Bazilian, 2011).
Box 3. Smart communities
Several concepts are emerging that extend the reach of the smart grids from electricity systems to
broader energy and societal contexts. One of these is the smart community or smart city. A smart
community integrates several energy supply and use systems within a given region in an attempt
to optimise operation and allow for maximum integration of renewable energy resources from
large-scale wind farm deployments to micro-scale rooftop photovoltaics and residential energy
management 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 of
such integration through the use of ICT include increased sustainability, security and reliability, as
well 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 of
infrastructure systems, which are ultimately expected to evolve in this direction.
Figure 9. Example of developing
country rural electrification
pathway
Battery based and single
household electrification
Micro/mini-grid, stand-alone grid
National grid
Regional interconnections
KEY POINT: Developing and emerging
economies can use smart grids to build from
household electrifcation to community
and regional systems.

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23 Smart grid deployment
Status of electricity system
markets and regulation
Current regulatory and market systems, both at the
retail and wholesale levels, can present obstacles
to demonstration and deployment of smart grids.
It is vital that regulatory and market models such
as those addressing system investment, prices and
customer participation evolve as technologies
offer new options.
Some markets allow vertically integrated utilities,
which own and operate infrastructure assets across
the generation, distribution and transmission
sectors. This ensures that costs and benefits from
the deployment of technology are shared and
managed efficiently across the various sectors.
Vertically integrated structures also allow the most
appropriate and fully integrated investment and
development for the power system as a whole,
rather than just evaluating costs and benefits in
one part of the electricity system. It can be difficult
for competitors to enter such markets and compete
with incumbent players, which could hinder
innovation and increase prices for consumers.
However, the climate for competitiveness depends
largely on whether the market is governed by
appropriate regulatory structures.
Unbundling of the electricity system, which
is intended to allow increased competition,
has required entities that operated across the
entire system to divide into market-based and
regulated units, either functionally by creating
separated operating teams within companies or
legally by selling companies or creating new ones
to separate activities. Market-based activities
typically include the generation sector and the
retail sector (Figure 10). In the generation sector,
markets have developed in which generators
sell electricity within a structure defining prices,
time frames and other rules. In the retail sector,
sometimes the distribution system operator still
retails the electricity to consumers and sometimes
new participants enter the market that sell only
electricity services.
The introduction of market-based activities through
unbundling has brought many benefits to the
electricity sector, primarily a continued downward
pressure on prices, but such objectives can also
be met in vertically integrated markets. Varying
degrees of unbundling exist around the world.
Unbundling also makes it difficult to capture
both costs and benefits of various technology
deployments on a system-wide basis especially
with respect to smart grids. Smart grid investments
are likely to be deployed more rapidly in vertically
integrated utilities where the business case can
more easily be made. In the many areas where this is
not possible, more strategic co-operation between
distribution system operators and transmission
system operators is needed.
Figure 10. Vertically integrated and unbundled electricity markets
Source: Enexis, 2010.
R2 R1 Rn
Generation
Transmission
Distribution
Retail
Regulated activities
Market activities
Vertically integrated
electric utility
G2 G1 Gn Market activities
Unbundled electricity market
Transmission
Distribution
KEY POINT: The unbundling of electricity markets has introduced benefts and complexity
to the electricity sector.

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Smart grids are complex systems that incorporate a
number of technologies, consumer interactions and
decision points. This complexity makes it difficult
to define detailed development and deployment
scenarios. Smart grid technologies are being
developed worldwide, so much of the research,
development and demonstration (RD&D) can be
discussed in a global context. But deployment
needs to be discussed at the regional level, where
important factors such as the age of infrastructure,
demand growth, generation make-up, and
regulatory and market structures vary significantly.
Regional analysis and
impacts for deployment
Motivated by economic, security or environmental
factors, countries will choose their own priorities
when adopting smart grid technologies. Where
possible, the costs and benefits of different
approaches must be quantified to assess the
impacts of potential smart grid deployment. The
following regional characteristics need to be taken
into account in any regional assessment:
Current and planned mix of supply, including
fossil, nuclear and renewable generation.
Current and future demand, and sectoral
make-up of demand, such as manufacturing
industry, residential load prevalence or the
deployment of electric vehicles.
Status of existing and planned new
transmission and distribution networks.
Ability to interconnect with neighbouring
regions.
Regulatory and market structure.
Climatic conditions and resource availability.
Quantification of peak
demand and the impact of
smart grids
15
The incentives, or drivers, behind smart grid
deployment and the interactions between such
drivers need to be understood in the context of
local or regional electrical systems. This roadmap
has expanded upon the ETP 2010 scenarios to
develop a more detailed regional electricity system
15 A detailed description has been developed as an IEA working paper.
entitled: Impact of smart grid technologies on peak load to 2050.
vision for four regions: OECD North America,
OECD Europe, OECD Pacific and China. Data in the
analysis includes:
16

Annual demand.
Electric vehicle (EV) deployment and peak
demand as a function of EV deployment.
Demand response potential.
Future potential electricity use in buildings.
Deployment of advanced metering
infrastructure.
The model focuses on the demand side of the
electricity system; variable renewable deployment
is considered in the discussion but not in the
analysis itself.
17
The scenarios modelled are shown
in Figure 11. In the SG
MAX
scenario, there is strong
regulatory and policy support for the development
and deployment of smart grids, whereas the
SG
MIN
scenario assumes little policy support. The
amount of clean technology installed such as
heat pumps, variable renewable resources (varRE)
and electric vehicles (EVs/PHEVs) follows the
deployment pathways developed by the ETP 2010
analysis in the Baseline and BLUE Map Scenarios.
16 Energy efficiency improvements in end-use sectors are modelled
in the ETP BLUE Map and Baseline Scenarios.
17 Although smart grids will play a role in all parts of system
operation, this roadmap will examine the impact of smart grids
on peak demand. By focusing on the demand portion of the
electricity system, this analysis is complementary and related to the
IEA GIVAR study, which focuses on electricity system flexibility in
terms of variable renewable generation deployment. Both sets of
analysis will be integrated at a later time.
Vision for smart grid deployment to 2050
Figure 11. Regional smart grids
analysis structure
KEY POINT: Two scenarios SG
MAX
and SG
MIN

were conducted to assess smart grids impact
on peaking demand under the ETP Baseline
and BLUE Map Scenarios.

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25 Vision for smart grid deployment to 2050
Since smart grids are already being deployed,
policy support is assumed to be at least at a
minimum level; a scenario without smart grids will
be shown only as reference case to demonstrate
that where EVs/PHEVs are deployed with no
consideration for electricity system operation, they
can have a significant negative impact on peak
demand. The key variables used, in addition to
ETP 2010 analysis values, are the reduction of peak
demand through demand response and electric
vehicle connections: grid-to-vehicle (G2V), or
battery charging, and vehicle-to-grid (V2G), in
which electricity flows from batteries into the grid.
Table 6. Modelling scenarios for
SG
MIN
and SG
MAX
SG
MIN
SG
MAX
Demand response
low (5)
Demand response
high (15)
G2V scheduled G2V scheduled
and V2G deployed
Note: Values for demand response were chosen from Faruqui,
2007; it should be noted that further demand response
technological developments could significantly increase these
amounts.
Impact of electric vehicles on
peak demand
The deployment of EV/PHEV technology can
have a significant positive or negative impact on
peak demand. The demand cycle for EV/PHEV
charging could be similar to the daily demand
cycles of residential and service sector consumers
adding to existing peak demand. If charging is
performed in a controlled fashion, simply through
a scheduling process, or interactively with signals
from utilities, the impact on peak demand could be
significantly minimised. The electricity storage in
EVs/PHEVs could also be used to reduce the impact
of peak demand by providing electricity at or near
end-user demand (V2G). Figure 12 shows both the
positive and negative impact of EVs/PHEVs on peak
demand for OECD North America with no demand
response capability installed. The trend is similar in
all regions.
Figure 12. OECD North America EV deployment impact on peak demand
2020 2030 2040 2050
0
200
400
600
800
1 000
1 200
1 400
G
W
2010
SG BLUE Map
0
SG BLUE Map
MIN
SG BLUE Map
MAX
KEY POINT: Smart grid deployment can reduce the peak electricity demand associated with the charging
of electric vehicles and contribute to reducing overall peak demand by enabling V2G.

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Figure 12 shows the SG
0
case with total peak
demand under the BLUE Map Scenario with no
demand response capability and deployment of
EVs/PHEVs to 2050. In this case, peak demand
increases faster than overall consumption 29%
over the 2010 value by 2050. When some level
of scheduling spreads out the charging of EVs/
PHEVs over the course of the day, the increase in
peak demand is reduced to 19% over the 2010
value. When both scheduled charging and V2G are
deployed, peak demand increases by only 12% by
2050. With the addition of demand response, peak
demand could be held steady at 2010 values.
Regional scenarios for
deployment to 2050
This roadmap compares the impact of smart
grids on system operation among four regions,
combining the ETP BLUE Map Scenario with the
SG
MAX
and SG
MIN
scenarios. In the SG
MIN
BLUE Map
Scenario, deployments of clean energy technology
such as VarRE and EVs/PHEVs are significant, but
policy support for smart grids is modest. In the
SG
MAX
BLUE Map Scenario, deployments of clean
energy technology such as varRE and EVs/PHEVs
are the same as in the SG
MIN
case, but the policy
support for smart grids is strong. Tables 7 and 8
look at the increase in peak demand and overall
electricity demand compared with 2010 values for
the different regions.
Table 7 shows that China will see more growth
in electricity demand than the other regions will
see in 40 years on a net and percentage basis.
The other regions will only see growth in the
range of 22% to 32% from 2010 to 2050, and
no net growth in the near future because of low
economic growth and the deployment of energy
efficiency technologies. Some minor reductions in
transmission and distribution line losses have been
included in the analysis, but they have little impact
on overall demand.
Table 7. Increase in electricity demand
over 2010 values for SG
MIN
and
SG
MAX
scenarios* (%)
2020 2030 2040 2050
China
53 90 122 170
European
Union
0 10 26 27
North
America
-3 1 16 22
Pacific
0 6 17 32
* Electricity generation was modeled using the same parameters for
both the SG
MIN
and SG
MAX
scenarios.
Table 8 shows that in all cases, the SG
MAX
scenario
sees a significant decrease in peak demand,
providing the opportunity to delay investments
in and/or reduce stress on existing infrastructure,
especially in the context of new loads such as EVs/
PHEVs. The most interesting case is North America,
where a 22% increase in overall electricity demand
can be seen, but only a 1% increase in peak
demand by 2050 in the SG
MAX
case. Chinas overall
demand growth has a dramatic effect on the
countrys peak demand over 2010 levels and is the
dominant driver for this increase in the analysis.
In other regions, peak demand is increased by
deployment of EVs/PHEVs and greater use of
electricity in buildings. All regions except China
show that the deployment of smart grids, even to a
minimum level, can decrease the rate of peak load
demand to a level below overall demand growth.
Table 8. Increase in peak demand
over 2010 values for SG
MIN

and SG
MAX
scenarios (%)
2020 2030 2040 2050
China
SG
MIN
SG
MAX
56
55
99
91
140
125
200
176
European
Union
SG
MIN
SG
MAX
1
-4
13
5
30
18
32
17
North
America
SG
MIN
SG
MAX
-4
-10
0
-9
10
0
15
1
Pacific
SG
MIN
SG
MAX
-2
-7
4
-4
12
2
25
11

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Interpreting results and further
analysis
The regional results provide guidance for the types
of pathways that each region might follow as they
develop smart grids. China has the opportunity
to deploy smart grid technologies to better plan
and design the new infrastructure that is being
built, thereby reducing the negative impacts on
peak demand from the deployment of EVs/PHEVs.
OECD Europe and OECD Pacific
18
demonstrate
similar trends with respect to all drivers, but OECD
Europe shows the highest peak demand of the
OECD regions considered. OECD Europe also must
manage deployment within an older infrastructure
base and with higher deployments of variable
generation technology. OECD North America can
benefit significantly from the deployment of smart
grids, given that it is the largest electricity market
in the world and has an ageing infrastructure,
especially at the transmission level. A North
American smart grid pathway might therefore
focus on the benefits of demand response and
transmission system monitoring and management.
This roadmap provides some insights into the
benefits and possible regional pathways for smart
grids deployment, but more analysis is needed,
particularly of the generation side, to provide a
more complete picture of system performance.
Additional regional examination is also needed
to consider specific system attributes. Major
characteristics of developing countries were not
considered in this modelling, and should be added
to provide insights into developing regions.
Smart grid CO
2
emissions
reduction estimates to 2050
Although electricity consumption only represents
17% of final energy use today, it leads to 40% of
global CO
2
emissions, largely because almost 70%
of electricity is produced from fossil fuels (IEA,
2010). In the ETP BLUE Map Scenario, as a result of
decarbonisation, electricity generation contributes
only 21% of global CO
2
emissions, representing
an annual reduction of over 20 Gt of CO
2
by 2050.
Smart grid technologies will be needed to enable
these emissions reductions. Direct reductions will
occur through feedback on energy usage, lower line
18 Although OECD Pacific is modelled as a single region, its
countries are not highly interconnected; further analysis must be
carried out to determine how this will affect the areas of concern
demonstrated in the model.
losses, accelerated deployment of energy efficiency
programmes, continuous commissioning of service
sector load, and energy savings due to peak load
management. Indirect benefits arise from smart
grid support for the wider introduction of electric
vehicles and variable renewable generation.
Taking these direct and indirect emissions
reductions into account, the ETP BLUE Map
Scenario estimates that smart grids offer the
potential to achieve net annual emissions
reductions of 0.7 Gt to 2.1 Gt of CO
2
by 2050
(Figure 13).
19
North America shows the highest
potential for CO
2
emissions reduction in the OECD,
while China has highest potential among non-
OECD member countries.
Estimating smart grid
investment costs and
operating savings
A high-level cost/benefit analysis is vital for the
deployment of smart grids. Work carried out so far
in the roadmap process is providing the foundation
for such an analysis, but more effort is needed as
additional data and modelling become available.
The cost discussion needs to include the three
main electricity stakeholders: utilities, consumers
and society.
Utilities will experience both costs and savings
in the deployment of smart grids, in the areas of
operating and capital expenditure. The deployment
of new generation (such as variable generation)
and end-use technologies (such as electric
vehicles) could increase the need for investment
in infrastructure, therefore raising capital
expenditures; but smart grids have the potential to
reduce peak demand, better manage generation
from both variable and dispatchable sources,
and therefore reduce the potential increases in
conventional infrastructure costs. Operating savings
can come from decreased costs for maintenance,
metering and billing, and fuel savings through
increased efficiencies and other areas.
Electricity production costs fluctuate according
to basic supply and demand conditions in the
market, generation variability (such as unplanned
outages), system congestion and the prices of
19 The methodology for calculating the emissions reduction
benefits requires further refinement but this provides an
indication of the potential reductions.

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commodities such as oil, gas, coal and nuclear
fuel. In markets where consumers are billed using
pricing schemes that do not vary based on real
production costs (flat-rate based pricing), there is
no real- or near real-time link to production costs
and consumption. Smart grids can help consumers
manage energy use by taking advantage of lower
off-peak prices, for example so that even if the
price of electricity is significantly higher during
peak times, their monthly or annual bills would
change little. Technology that can accomplish this
varies in industrial, service and consumer sectors;
some of it is mature and has been deployed for
many years, especially in the industrial sectors.
Further study is required of the costs and benefits
and behavioural aspects of electricity usage in
order to identify solutions that enable consumers
to manage electricity better and minimise costs.
The environmental costs and security benefits
to society of the electricity system are not
completely taken into account in current
regulatory frameworks for production, use and
market arrangements. Companies typically invest
large amounts of capital to build electricity
system assets and receive regulated rates of
return over a long time period especially in
the transmission and distribution sectors. In the
current technologically mature market, this is a
low-risk, low-reward model. Future grid regulation,
however, will need to incorporate factors such as
greenhouse gas emission reductions and system
security into operating costs. For smart grid
deployment to become a reality, all stakeholders
must bear their fair share of benefits, costs and
risks especially end-users, who ultimately pay
for the electricity service. This can only happen
through clever market design and regulation, and
sustained stakeholder engagement that will enable
new technology demonstration or deployment
at an acceptable level of risk, taking into account
the existing status of the system as well as
future needs. If this is accomplished, the costs
and benefits can be rationalised and defended,
ensuring the development of a clean, secure and
economical electricity system.

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Technology development: actions and milestones
This roadmap recommends the following actions: Milestones
Build up commercial-scale demonstrations that operate across system
boundaries of generation, transmission, distribution and end-use and
that incorporate appropriate business models addressing key issues
including cost, security and sustainability.
Concentrated effort from 2011 to 2025
Enable increased levels of demand response for customers from
industrial, service and residential sectors, co-ordinating collaboration
and responsibilities among electricity system stakeholders.
Completed by 2020
Develop and demonstrate consumer-based enabling technologies
including behavioural, policy and technical aspects.
2011 to 2020
Development and
demonstration
The need for commercial-scale
demonstration
The existing smart grid technology landscape is
highly diverse. Some technology areas exhibit high
levels of maturity while others are still developing
and not ready for deployment. Although continued
investments in research and development are
needed, it is even more important to increase
investments in demonstration projects that
capture real-world data, integrated with regulatory
and business model structures, and to work
across segmented system boundaries especially
interacting with end-use customers. While this
is happening currently as a result of stimulus
funding (Table 5), it is vital that it continue to
expand. Only through large-scale demonstrations
allowing for shared learning, reduction of
risks and dissemination of best practices can
the deployment of smart grids be accelerated.
Current levels of political ambition appear to be
sufficient, but high quality analysis and positive
demonstration outcomes must be highlighted to
sustain these levels.
Demand response enabled
by smart grids
Demand response (DR) is one of the key
approaches enabled by smart grids. Changes in
the generation sector will include the increased
deployment of variable generation to levels over
20% of overall demand in many regions, with
some regions significantly surpassing this level.
Increased consumption of electricity from both
existing and new loads will continue to place
stress on the electricity system and increase
peak demand. Variable generation resources
and peak demand can be managed by a range
of mechanisms DR being one where more
potential is ready to be exploited.
Load management, in the form of direct load
control, peak shaving, peak shifting and various
voluntary load-management programmes, has
been implemented since the early 1980s. With
demand response, the system operator will be able
to monitor and manage demand; the electricity
grid will thus move from load-following to load-
shaping strategies in which demand-side resources
are managed to meet the available generation and
the grids power delivery capabilities at any given
time (Ipakchi and Albuyeh, 2009).
Demand response cuts across several technology
areas highlighted earlier, including customer-
side systems, advanced metering infrastructure,
distribution management and automation, and
sometimes stretching from generation to end-use.
Additionally, there are three main customer groups
with different DR profiles: industrial, service and
residential. A relatively few industrial customers
with large electricity demands could have a
significant impact on the electricity system; mature
technologies and market approaches exist for
applications in this end-use sector. A large number
of residential consumers would be needed to have
a similar effect and the technology, behavioural
and market models are much less mature. The
service sector falls somewhere in the middle.
Demand response can significantly reduce peak
demand and in the longer term provide the
flexibility needed, both in volumetric terms and in
speed of response, to support variable generation
technologies. Given current technological and
market design maturity levels, however, system

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31 Technology development : actions and milestones
operators have made it clear that more work is
needed in the near term to understand the key
factors that will enable DR in the residential and
service sectors. In addition to system operators,
generation stakeholders who depend on system
flexibility, such as wind and solar farm operators,
must actively support DR technology development
and demonstration as a way to increase flexibility
and ensure increasing deployment levels into
the grid can be managed effectively. Other DR
stakeholders, including aggregators, technology
developers and industrial, service and residential
customers, must also collaborate to ensure that
technology development meets all parties needs
with due consideration of regulatory and market
mechanisms.
Development of consumer-based
enabling technologies
Pilot projects have shown that certain so-called
enabling technologies enhance the ability of smart
grids consumers to adjust their consumption
and save on their electricity bills. These enabling
technologies also improve the sustainability of end-
user behaviour change over time. Considerable
innovation is under way in this field and numerous
enabling technologies have already been developed
and piloted, including in-premise customer displays
or energy dashboards, programmable and price-
responsive end-use controllers, and home or facility-
wide automation networks.
Some research projects are looking into the
behavioural aspects of presenting feedback
on consumption, as well as opportunities for
automated end-use load control. As with many
emerging fields, the range of approaches is wide
and early results vary considerably.
Key enabling technology development questions
include:
Is there an optimal mix of behavioural
modification and automation technologies?
How much customer education is required and
what are the best approaches?
What policies can governments adopt to
encourage innovation without picking
technology winners?
What is the impact of ICT choices (e.g. private/
dedicated carriers vs. public-based carriers
such as the Internet) on enabling technology
development?
Smart grid equipment and systems are provided
by many industry sectors that historically
have not worked together, such as equipment
manufacturers, ICT providers, the building
industry, consumer products and service suppliers.
Control systems operated by utilities whose
networks interconnect need to be able to exchange
information. Customer-owned smart appliances,
energy management systems and electric vehicles
need to communicate with the smart grid.
Standards, definitions and protocols for transport
of data are essential for this complex system
of systems to operate seamlessly and securely
(Figure 14).
Standards
Governments and industry should evaluate priorities and establish protocols,
definitions and standards for equipment, data transport, interoperability and
cyber security, and create plan for standards development to 2050.
From 2011 to 2013
Expand collaboration in the development of international standards to reduce
costs and accelerate innovation while developing globally accepted standards.
Continue from 2011 to 2050

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Figure 14. Smart grid
product providers
Source: Canmet Energy/Natural Resources Canada
(not previously published)
International perspective on
standards
Variations in equipment and systems to meet
differing national standards add cost; this
eventually gets passed on to consumers.
International standards are needed to promote
supplier competition and expand the range of
options available to utilities, resulting ultimately in
lower costs for consumers. Connection of national
electric grids with those of adjacent countries as
in the Americas and in Europe, for example will
also be facilitated by expanded international
standards. For all these reasons, it is in the interest
of countries developing smart grids to collaborate
on international standards.
Smart grids will eventually require hundreds of
standards to be completely specified. Some of the
highest priority areas include:
20

Advanced metering infrastructure (AMI).
Interfaces between the grid and the customer
domain to support demand response and
energy efficiency applications.
20 Adapted from NIST, 2010.
Phasor measurement units and other sensors
that increase wide-area situational awareness.
Distribution grid automation and integration
of renewable resources.
Interconnection of energy storage.
Communication with electric vehicles to
manage charging.
Data communication in the smart grid.
Cyber security.
Benefits of interoperability
Interoperability refers to the ability of two or
more networks, systems, devices, applications or
components to communicate and operate together
effectively, securely, and without significant user
intervention. The evolution of telecommunication
networks and the Internet over the last 40 years
has demonstrated the benefits of having robust
interoperability standards for large infrastructure
systems. Standards prevent premature
obsolescence, facilitate future upgrades and ensure
systems can be scaled up for larger deployments.
Standards can also provide for backward
compatibility, integrating new investmentswith
existing systems. Standards are needed
to support the development of mass markets for
smart appliances and electric vehicles that can
communicate with the grid regardless of location
or service provider. The introduction of information
technologies in the smart grid introduces new cyber
vulnerabilities that must be protected against by
the rigorous application of cyber security standards.
Standards will also protect privacy while enabling
customers to securely access information on their
own energy consumption.
Highlights of ongoing activities
At the international level, technical standards
underpinning the smart grid are being developed
by several organisations.
21
Since the standards
all need to work together to support an overall
system, co-ordination of efforts by these
organisations is critically important.
In the United States, the National Institute of
Standards and Technology (NIST) has been
leading a major co-ordination programme, which
has developed and published the Release 1.0
21 Including International Electrotechnical Commission (IEC),
International Institute of Electrical and Electronics Engineers
(IEEE), International Organization for Standardization (ISO),
International Telecommunications Union Standardization
Sector (ITU-T), and many other.
Building industry
(HVAC,
energy management
systems)
Electrical equipment
manufacturers
(Production, transformation
and protection equipment)
ICT industry
(Communication equipment,
software and data
management, cyber security)
Consumer products
(Electronics, appliances,
automotive)
Smart grid
products
KEY POINT: A broad range of product and
service providers who have not worked
together in the past will have to collaborate
in smart grids deployment.

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33 Technology development : actions and milestones
Interoperability Framework for smart grids. NIST
has co-operated with many other countries that
are working on smart grids to share work and
facilitate collaboration, and has also established
a new independent organisation, the Smart Grid
Interoperability Panel. Nearly 600 companies
and organisations from around the world are
participating in the panel, which is co-ordinating
the work of over 20 standards development
organisations, including those listed above.
In Europe, a European Joint Working Group for
Standardisation of Smart Grids has recently been
established in which CEN, CENELEC, ETSI
22
and
the European Commission are participating.
Japan has developed an initial standards roadmap
for smart grids and has also formed a Smart
Community Alliance, which has extended the
concept of smart grids beyond the electric system
to encompass energy efficiency and efficient
22 European Committee for Standardization (CEN), European
Committee for Electrotechnical Standardization (CENELEC),
European Telecommunications Standards Institute (ETSI).
management of other resources, such as water,
gas and transportation. The government of Korea
has announced a plan to build a national smart
grid network and is beginning work on a standards
roadmap. In China, the State Grid Corporation has
developed a draft Framework and Roadmap for
Strong and Smart Grid Standards.
The major economies are all contributing to the
development of international standards upon
which national standards can be based. Continued
communication and collaboration will create
excellent prospects for international harmonisation
of many smart grid standards, especially those
dealing with the new information aspects of the
grid, while taking into account the diversity of
infrastructure requirements around the world.

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Collaborating on a policy and regulatory
environment that supports smart grid investment
is perhaps the single most important task for
all stakeholders in the electricity sector.
23
A lack
of collaboration has already led to problems in
demonstration and deployment projects. As with
most policy issues, the key is to find the right
balance in sharing costs, benefits and risks. The
responsibility for achieving this balance lies with
regulators and, in some cases, legislators, but must
include input from all stakeholders. Key policy
questions that regulators must answer include:
How should smart grid investment costs be
recovered? If shortfalls in benefits occur, how
should they be shared between utilities and
consumers?
23 Many other issues associated with smart grid deployments need
to be addressed such as: providing for utility cost recovery;
encouraging volumetric decoupling; providing metering
compatibility; implementing demand response; and moving
towards wholesale market integration. Although not directly
related to smart grid deployment, well-developed policies in these
areas can help accelerate the beneficial impacts of smart grids.
How can additional services (such as
balancing, demand response, energy retailing)
be enabled by new regulations and smart grid
technologies?
Should electricity rate options be compulsory
or voluntary?
Should vulnerable customers be protected
from the possibility of higher bills? If so, how?
Should advanced technology investments
such as smart grids, which carry the extra
risk of technology obsolescence, be treated
differently from other utility investments?
Should some customer groups less able to
participate in dynamic pricing be excused from
bearing the extra costs of smart grids or being
subject to new service conditions? If so, what
can or should be done for these customers?
What is the impact of differing tariff structures
between interconnected regions?
Policy and regulatory framework:
actions and milestones
Generation, transmission and distribution
Cross-sector
Determine approaches to address system-wide and cross-sector barriers to enable
practical sharing of smart grids costs and benefits.
Completed by 2020
Address cyber security issues proactively through both regulation and application of best
practice.
Ongoing to 2050
Generation
Develop an evolutionary approach to regulation for changing the generation landscape
from existing and conventional assets to more variable and distributed approaches
including both large and small electricity generation.
2011 to 2030
Develop regulatory mechanisms that encourage business models and markets to enable
a wider range of flexibility mechanisms in the electricity system to support increased
variable generation penetration.
2011 to 2030
Transmission
Continue to deploy smart grids on the transmission system to increase visibility
of operation parameters and reliability.
Ongoing
Assess the status of regional transmission systems and consequently future requirements
in smart grid technology applications to address existing problems and potentially delay
near- and medium-term investments.
Continued 2011
to 2020
Distribution
Determine policy approaches that can use smart grids to leverage distribution system
investments strategically and optimise benefits.
2011 to 2020
Promote adoption of real-time energy usage information and pricing that will allow
for optimum planning, design and operation of distribution system in co-operation
with customers.
Focused effort
from 2011 to 2020,
ongoing to 2050

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35 Policy and regulatory framework: actions and milestones
Electricity system and market operation can
benefit from the deployment of smart grids, but
regulatory changes are required to ensure that all
stakeholders especially consumers share the
costs and the benefits. Many of these issues have
not yet been examined in detail yet, so as well as
offering solutions to certain issues, this section will
indicate where more work is needed.
Cross-sector considerations
Unbundling and liberalisation of the electricity
system has increased the institutional and market
complexity associated with system planning,
operations and services. Functional unbundling
and new operating entities have complicated
ownership and operations, which are often under
different or dual regulatory jurisdictions, and
have added uncertainty as regards delivering
needed investment. Under these conditions, there
are increased barriers to the demonstration and
deployment of smart grids, and an increased need
to address these across all sectors, rather than only
at the sectoral level. Smart grids costs and benefits
can be more easily shared if they are considered
across all sectors.
As discussed earlier, cyber security is a key issue
as the deployment of increased ITCs introduces
new vulnerabilities to the system. These must be
proactively addressed across all sectors of the
electricity system as opposed to simply meeting
regulatory requirements. This will require
increased effort for regulators, system operators
and technology providers.
Electricity generation sector
The deployment of variable generation is expected
to increase to over 20% of overall supply in many
regions (with some regions significantly surpassing
this level), supported by government policy and
regulation, at state, provincial and regional levels.
Regulatory mechanisms need to be developed
to encourage business models and markets that
enable sufficient flexibility required by variable
generation deployment to ensure reliable system
operation. Markets must be transparent to allow
asset owners and third parties to enter and offer
conventional as well as innovative solutions to
provide such flexibility. More effort is needed
in demonstrating and verifying the interactions
between well-known and established approaches
(such as peaking generation plants) and other
flexible approaches (including expanded
DR applications), along with market design
refinements that enable continued innovation.
A new factor in recent years in the electricity
generation sector is the rise in the number of
electricity consumers who produce small amounts
of electricity at or near the place of consumption
often referred to as prosumers. Management
of this sort of distributed generation can be
better enabled by smart grids, through increased
information, and creation of beneficial market
and regulatory structures. Many policies and
regulations have been established globally to
support this type of generation, such as feed-in
tariffs and accompanying grid interconnection
policy. But this will need continuing evaluation to
ensure the maximum amount of customer-sited
generation at lowest cost can be deployed, with
consideration to all electricity system stakeholders.
The deployment of smart grids may have a
negative impact on some types of generation. As
global electricity demand increases, smart grids
may slow demand growth by enabling more
efficient system operation but are not likely to
significantly decrease the use of existing assets to
meet power needs. On a regional basis, certain
assets may become redundant as smart grids
are deployed, because of decreased electricity
demand, shifting demand profiles and new
approaches to increase system flexibility or provide
ancillary services. As smart grids will enable
increased DR and electricity storage that reduces
the need for peaking generation, identification
of possibly redundant assets should be carried
out at the earliest possible point in smart grid
deployment to allow for appropriate planning
and cost/benefit analysis. Regulatory treatment of
such stranded assets is well developed, however,
and existing regulatory structures can be used to
facilitate loss recovery.
Transmission networks
Investment in the smartening of transmission
networks is occurring around the world. Many
transmission systems already use some smart grid
technologies and are operating robustly, allowing
for adequate competition among generators
and therefore ensuring appropriate electricity
prices. Other transmission systems are plagued by
congestion and concerns over ageing infrastructure.

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Even as transmission systems are being smartened,
new transmission capacity and interconnections
with other electricity systems are also needed.
Deploying new transmission is often complicated by
the unbundled and liberalised nature of electricity
systems and by lengthy approval processes.
Some countries now investing in national-
scale transmission systems (e.g. China), are not
experiencing these issues and have been able to
deploy modern transmission systems very quickly,
defining smart grids as strong and smart grids
and making use of modern HVDC technologies.
Other countries could benefit from greater
regional assessment of the current status and
future requirements of transmission systems, to
identify technology applications and requirements
for additional capacity and interconnection.
Such assessments can lead to new technical and
regulatory solutions that optimise the operation
and planning of existing systems, enabling the
deferment of conventional investments that may
be hindered by long approval processes or local
opposition. To enable efficient operation today as
well as accommodate future changes, government
and regulatory policies must allow timely and
adequate transmission system investment;
inadequate investment brings risks of higher costs
in the future and of system failures.
Distribution networks
The smartening of distribution networks can
bring significant benefits to operators and
customers, but requires considerably more
effort than smartening transmission networks.
Distribution networks have many more nodes to be
instrumented and managed, and ICT requirements
are much higher. Distribution systems connect to
nearly all electricity customers (excluding large
industrial customers connected to the transmission
system), as well as distributed generation, variable/
dispatchable resources and new loads such as
electric vehicles. Smart grid technology must be
strategically deployed in order to manage this
complexity, as well as the associated costs, to the
benefit of all stakeholders.
Market unbundling has changed the ownership
and operating arrangements of distribution
networks and, in many countries, the role of
the distribution system operator (DSO). In
some countries, an electricity retailer or energy
service provider entity is placed between the
customer and the DSO. Smart grids enable
increased interaction between DSO and customer
through the provision of real-time energy usage
information and pricing, which are important
new tools for both DSOs and retailers. Experience
gained through pilots and demonstrations can
be applied to develop new business and market
models for DSO/retailer-customer engagement.
The most important aspect in the development of
needed regulatory, business and market models
is that benefits and risks associated with the
deployment of smart grids must be shared with
other stakeholders upstream with other system
operators and generators as well as downstream
with end-users. Business models without shared
costs and benefits will not be successful. Additional
policy and regulation will be needed for DSOs to
manage and utilise these relationships to meet
system investment needs.
Smart grid, smart
consumer policies
Electricity is consumed by a range of customers,
including industrial, service/commercial and
residential. In industrial and sometimes the
commercial sectors, customer knowledge of
energy management is high and technologies to
enable demand response or energy efficiency are
well known, mature and driven by cost savings.
However, this is not the case at the residential level,
where there is a need to rapidly expand business
models, analysis and communication to enable
much greater residential customer interaction with
the smart grid.
Compared with customers in other industries, such
as telecommunications, travel and retail, electricity
consumers are typically not provided with either
the service options or pricing information needed to
manage their consumption. Providing these options
and information can help costumers become
smarter while delivering significant benefits to grid
operators, including reduced costs. Smart grid
customer policies fall into three groups: consumer
feedback, pricing and customer protection.

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Collect best practice on consumer
feedback and use it to improve
pilot projects
The principle behind consumer feedback policies is
that making energy more visible enables customers
to better understand and modify their behaviour.
Consumer feedback can be provided across a
continuum, from a monthly bill to instantaneous
read-outs of consumption and prices, some of
which are quite costly. A balanced and effective
consumer feedback policy can be developed by
considering: i) What information customers really
need to make rational energy decisions?;
and ii) What is the best form and medium to
present this information?
Current consumer feedback pilot projects have
only been able to motivate and discern short-term
behaviour changes, because participants realise
that the technology and services provided are
temporary. Infrastructure changes, which deliver
large and sustainable efficiency and demand
response results, are obtained only from long-term
or permanent programmes. This is one of many
reasons why consumer feedback pilot project
results vary radically. The design of pilot projects
also makes it difficult to discern adaptive and
infrastructure changes, resulting in overestimates or
underestimates of long-term results. More rigorous
and methodical research and evaluation is needed
to identify the optimal method to deliver feedback
and to understand better the interaction between
consumer feedback and pricing or incentives
(financial or other) and the effect of enabling
technologies (e.g. automation) on results. These
improved approaches can reduce other issues
creating variability in pilot project results, including
the prior history of consumer feedback policies,
variety in customer types and preferences, and the
specifics of the service options being piloted.
Additional research in this area should have three
objectives: i) identify lessons for policy-makers
from social science research on consumer
feedback by collecting and comparing the results
of advanced metering, real-time pricing and
consumer feedback demonstration; ii) outline
technologies proven to mobilise sustainable
changes in energy consumer behaviour; and iii)
establish a community of practice internationally
to develop standard methods and analytic tools
for estimating the consumer behaviour change
benefits of smart grids.
Automated demand response
Many analysts believe that the full potential of
smart grids can only be realised by creating a
seamless and automatic interconnection between
the network and the consumer installation
either by using some end-use devices that are
pre-programmed by the consumer, or by using
automated building management systems.
Feedback with the customer would occur
automatically within consumer-set parameters, in
an extension of the feedback policies discussed
above. There is a significant amount of research
being carried out on processing and automation
technologies that enable homeowners, building
managers and business operators to programme
Collect and codify best practice from smart grid and smart metering pilot projects
and increase study of consumer behaviour, use findings to improve pilot projects.
2011 to 2020
Expand pilots on automated demand response especially in service and
residential sectors.
Continue over 2011 to 2050
Develop electricity usage tools and pricing practices that incentivise consumers
to respond to changes in electricity markets and regulation.
Evolve approaches over time,
largely completed by 2030
Develop new policies and protection mechanisms to control and regulate
privacy, ownership and security issues associated with detailed customer usage
behaviour information.
From 2011 to 2020
Develop social safety nets for vulnerable customers who are less able to benefit
from smart grid pricing structures and are susceptible to remote disconnection
functions made possible by smart grids.
From 2011 to 2015

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end-uses to automatically adjust consumption and
demand according to price or other signals. The
potential for automated end-user demand and
efficiency response are considerable and have been
already proven in some situations. In California,
several energy providers have collaborated with
factories and building owners to configure energy
management systems to curtail discretionary loads
(lighting, elevators, heating, ventilation and air-
conditioning) whenever hourly prices exceed pre-
set levels.
Smart grid and smart metering pilot projects on
automated demand response and energy efficiency
offer best-practice lessons that need to be
collected and incorporated into pilot programmes.
There is significant interest in extending successful
approaches found in the industrial and service
sectors to the residential sector, but many aspects
need to be investigated. Key research questions
include:
Is there an optimal mix of consumer feedback
and automation technologies?
What is the impact of ICT choices on
automated DR?
Which types of automated DR designs are
most useful to different types of customers
(households, businesses, industry)?
Determine best practice
pricing policies
A range of pricing options can reflect actual
generation and delivery costs, from static (non-time
differentiated) to real-time pricing. The capability
to deliver dynamic rather than static pricing is an
important benefit of smart grids, but has raised
fundamental questions about energy prices,
including whether they should reflect real costs
in real time, provide customers with choice and
eliminate cross-subsidies. Dozens of smart customer
pilot projects around the world have shown that
time-differentiated pricing can reduce peak demand
by an average of about 15%; adding technology
on the customer side of the meter can more than
double these impacts (Faruqui, 2010). This research
shows a relationship between information and
consuming behaviour, with more detailed and more
frequent information yielding greater efficiency
improvements and peak demand reductions.
The benefits to be delivered by smart customers
who respond to pricing signals make up a
large part of the business case for smart grid
deployments. For example, the United Kingdoms
national smart meter rollout is expected to reduce
domestic electricity consumption by 3% and peak
demand by another 5%, generating almost half
of the USD 22 billion annual estimated savings
providing benefits to both consumers and utility
stakeholders. Electricity providers in California and
elsewhere estimate that demand response and
energy efficiency benefits made possible by smart
customers will be one-third to one-half of total
benefits from smart grid deployment
24
With flat-rate pricing, common to most retail
markets globally, customers are charged the
same price for electricity through out the day
and the evening. The result is that customers are
overcharged for some electricity (typically at non-
peak times) and undercharged for some electricity
(typically during peak times). Such pricing does not
encourage customers to shift demand to different
times, thereby reducing stress on the infrastructure
when needed, but does provide a simple cost
structure. The other end of the spectrum is real-time
pricing, in which electricity is priced based on actual
costs of generation, transmission and distribution.
There is no overcharging or undercharging for
electricity, but consumers may not be able to reduce
electricity demand during peak times and therefore
risk incurring higher costs. A third option for retail
customers falls between these two extremes. Time-
of-use (TOU) pricing mechanisms take advantage
of the general predictability of electricity costs on a
daily and seasonal basis. TOU pricing also reduces
the risk for customers by providing certainty.
In deciding pricing policies for smart grid
deployments, regulators must consider not only the
pricing programme, but also the approach taken
to communicate and deliver such changes to the
customers. The following questions need to be
considered:
Should dynamic pricing be the default service
or an optional service?
Are there better alternatives to dynamic
pricing that can yield equivalent demand
response benefits, such as peak time rebates
or direct load control, which may be easier to
understand and less controversial?
24 These are estimated benefits usually based on extrapolation
of pilot projects to large-scale rollouts. They include a number
of assumptions on market penetration and capacity/energy
impacts of pricing and service options.

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How much time differentiation in prices is
needed to deliver demand-response benefits?
What transitional policies are needed to help
overcome customer inertia and risk aversion?
Transition strategies and policies are especially
important considering opposition by some
consumer advocates to smart metering
deployments and associated pricing changes
More research is needed to examine how time-
differentiated pricing can best induce behaviour-
changing effects, taking account of such factors
as the rate difference needed and the optimum
number of time zones for consumer communication.
Transition strategies to be studied include consumer
communications schemes, shadow pricing, bill
protection mechanisms and two-part rate designs.
Develop and implement consumer
protection policies
The main consumer protection issues associated
with smart grid deployments include: i) privacy,
ownership and security issues associated with
the availability of detailed customer energy
consumption data; ii) customer acceptance and
social safety net issues associated with new types
of rates, especially dynamic pricing; and iii)
consumer protection issues associated with remote
disconnection functions made possible by smart
grids. These consumer issues should be addressed
within the overall context of smart grid design
and deployment planning; otherwise there is a
very real potential for some customers to react
adversely or even be harmed.
Customer data privacy, ownership and security
issues are a leading concern of consumer and
privacy advocates. Smart grid and smart meter
deployments create large amounts of detailed
customer-specific information, while energy
providers gain a new medium for customer
interaction. Policy questions needing attention
include:
Who owns the customers data, and how is
access to and use of this data regulated?
Who guarantees privacy and security of
customer data (e.g. against risk of surveillance
or criminal activity)?
Will sale or transfer of customer data be
allowed, and under what terms and to whose
benefit?
In jurisdictions with retail choice, are measures
needed to ensure competing electricity
providers have access to customer data on the
same terms as the incumbent utility?
Many regions are beginning to address these
issues, as evidenced by rules relating to
consumer data recently proposed in Ohio
25
and
by the European Commissions expert group on
regulatory recommendations for safety, handling
and protection of data (part of the EUs Task Force
on Smart Grids),
26
among other projects. The
Office of Gas and Electricity Markets (OFGEM) in
Great Britain is proposing to have an independent
organisation (Data Communications Company)
to access and store consumer data, and to
disseminate only the basic required data to the
relevant parties for billing or usage purposes. Best
practices are coming to light in these and other
project, and work in this area must continue.
Customer acceptance and social
safety net issues
Customer acceptance and social safety net issues are
of key concern where consumer advocates warn of
rate increases and adverse consequences, especially
for vulnerable consumers or those who cannot
adjust their usage patterns as a result of pricing.
Additionally, smart grids could allow quicker
disconnection of service and negatively impact
vulnerable consumers such as low-income groups,
pensioners and the handicapped. These groups
may be disadvantaged by dint of their consumption
level or inability to change behaviour, or they
may be subject to new rate burdens that are not
commensurate with their opportunity to benefit.
The development of smart metering and dynamic
pricing technology also introduces new pressures
and opportunities for rate regulation. Charging
customers the same electricity price all hours of
the year when the true cost of electricity changes
constantly may not be good regulatory practice
if it is possible to deploy the technology in a cost-
effective way to reflect these variations.
There is also some evidence that smaller customers,
including low-income households, have been
paying more than their fair share for electricity,
while larger users with big, temperature-sensitive
loads may be driving up electricity costs for
25 www.puco.ohio.gov/PUCO/Consumer/Information.cfm?id=10032
26 http://ec.europa.eu/energy/gas_electricity/smartgrids/doc/
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everyone. From this viewpoint, smart metering
and dynamic pricing provide an opportunity to
remove hidden rate subsidies that until now have
burdened smaller customers. Further, in many pilot
projects, including the PowerCents DC project in
Washington, DC, lower-income customers have
signed up for the programme at higher rates than
others, and have responded to price signals.
Further research is needed to identify the full
range of consumer protection policies and make
recommendations to governments on smart grid-
related consumer protection issues.
Building consensus on
smart grid deployment
Accelerate education and improve understanding of electricity system
customers and stakeholders (including energy utilities, regulators and
consumer advocates) to increase acceptance for smart grid deployments.
From 2011 to 2020
Develop technological solutions in parallel with institutional structures
within the electricity system to optimise overall operations and costs.
From 2011 to 2020 (with
continued evolution to 2050)
As smart grid technologies are deployed, electricity
systems will become more customer-focused, but
customer behaviour is difficult to predict. A long-
term process of customer education and improved
understanding of customer response is needed to
consolidate technology and user interactions across
the electricity system. Energy utilities, regulators
and consumer advocates all have a role in building
awareness. Ultimately all investments are paid
for by customers, so those deploying smart grids
should be able to demonstrate clearly how costs will
be recovered and how investment will benefit the
customer. Customers must be significantly engaged
in the planning and deployment of smart grids, at
demonstration stage and at full-scale rollout. So far,
customers have seldom been at the table during the
smart grid planning process.
A positive example of a good customer
engagement strategy can be found in ENELs
Telegestore project in Italy. During the rollout of
33 million smart meters, ENEL dedicated time to
educating the public through town hall meetings
and discussions with consumer protection groups
that had voiced concerns over the collection
of data about consumer energy habits. While
assuaging peoples doubts, Enel was able to
explain that most customers bills would go
down because of smart meters, helping increase
customer loyalty.
27

27 www.smartgridaustralia.com.au/index.php?mact=News,cntnt01
,detail,0&cntnt01articleid=277&cntnt01returnid=69
The demonstration and deployment of new
technologies involves some level of risk. The
risk must be analysed and addressed jointly
by stakeholders; technology risks can be best
addressed by the technology providers and
system operators, while policy and market risks
must be considered with regulator and customer
involvement. By phasing demonstration and
deployment carefully while considering and
adapting policy, regulation and institutional
structures, risks can be minimised and projects
will be more broadly accepted. It can be argued
that risks associated with smart grid development,
demonstration and deployment will be lower than
the risk of not addressing the coming changes and
needed investment in the electricity system.

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41 International collaboration
International collaboration
Expand smart grid collaboration; particularly related to standards and sharing
demonstration findings in technology, policy, regulation and business model
development.
Targeted effort from 2011
to 2015. Ongoing to 2050
Link with electricity system technology areas that are not exclusively focused on
smart grids.
From 2011
Expand capacity-building efforts in rapidly developing countries by creating smart
grid roadmaps and undertaking targeted analysis tailored to contexts such as rural
electrification, island systems and alternative billing approaches.
Focused initiatives to 2030.
Ongoing to 2050
Expand existing international
collaboration efforts
International collaboration enables the sharing of
risks, rewards and progress, and the co-ordination
of priorities in areas such as technology, policy,
regulation and business models. In order to reach
the goals set out in this roadmap, smart grids
need to be rapidly developed, demonstrated and
deployed based on a range of drivers that vary
across regions globally. Many countries have
made significant efforts to develop smart grids,
but the lessons learned are not being shared
in a co-ordinated fashion. Major international
collaboration is needed to expand RDD&D
investment in all areas of smart grids but
especially in standards, policy, regulation and
business model development. These efforts will
require the strengthening of existing institutions
and activities, as well as the creation of new joint
initiatives.
Standards play a very important role in the
development of technology. By providing common
design protocols for equipment, they can increase
competition, accelerate innovation and reduce
costs. International collaboration on standards is
vital to ensure that the needs of various regions
are included, and to reduce repetition and
overlap in the development of standards. Several
organisations are already working to harmonise
standards; continued and increased efforts are
needed as discussed earlier in the section on
technology development.
There is an urgent need to develop a significant
number of commercial-scale demonstration
projects and share the results among electricity
system stakeholders. Projects are being developed
at a national or regional level, but the reporting
of data, regulatory approaches, financial
mechanisms, public engagement experiences
and other aspects need to be shared globally. The
International Smart Grid Action Network (ISGAN),
which has been created to address this need, will
serve an important role as a platform and forum
for compiling global efforts, performing analysis
and developing tools for stakeholders. The Global
Smart Grid Federation (GSGF), APEC Smart Grid
Initiative, the European Electric Grid Initiative
(EEGI) and European Energy Research Alliance Joint
Programme (EERA JP) on Smart Grids are examples
of global or regional initiatives that need to build
on and strengthen their collaboration as they
monitor the implementation of the actions and
milestones in this roadmap.
28
Create new collaborations
with other electricity system
technology areas
Smart grids include technology areas, such as
renewable energy resources and demand response,
which are not exclusively associated with, but are
related to, smart grids. Some of these technology
areas were being studied long before the term
smart grid was developed, and therefore may
offer solutions to problems that smart grids hope
to address. Collaboration with these electricity
system technology areas has the opportunity to
accelerate the useful deployment of smart grids
and avoid repeating past development work.
An ideal way to collaborate across these electricity
system technology areas is through the IEA
Implementing Agreements (IAs).
29
Of the 43 IAs,
11 focus on electricity system issues (Table 9); these
are co-ordinated under the Electricity Co-ordination
28 Web addresses for these organisations can be found on p. 48.
29 IEA Implementing Agreements are multilateral technology
initiatives through which IEA member and non-member
countries, businesses, industries, international organisations and
non-government organisations share research on breakthrough
technologies, fill existing research gaps, build pilot plants and
carry out deployment or demonstration programmes.

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Group (ECG). These IAs develop and deliver broad
knowledge about the electricity system as a whole
along the entire value chain on an international
level. The ECG enables those working under
related IAs to learn what others are studying and
determine ways to analyse aspects that cut across
several technology areas; this is especially relevant
for smart grids. The need for an implementing
agreement focus on smart grids is currently under
consideration.
Table 9. Electricity sector focus for IEA ECG Implementing Agreements
Smart grids
Generation Transmission Distribution End-user
Demand-Side Management
Efficient Electrical
End-Use Equipment
Electricity Networks Analysis,
Research & Development
Energy Conservation through Energy Storage
IEA GHG R&D Programme
Hybrid and
Electric Vehicles
Hybrid and
Electric Vehicles
High-Temperature Superconductivity
on the Electric Power Sector
Ocean Energy Systems
Photovoltaic Power Systems
Renewable Energy Technology Deployment
Wind Energy Systems
Note: The diagram indicates the primary area of the electricity system where the IA focuses. Most IAs engage with sectors beyond
those indicated. Website addresses can be found on page 48.
Smart grid collaboration
and developing countries
Smart grids can provide significant benefits for
developing countries that are building up electricity
system infrastructure. In some cases, the solutions
applied in developed countries will be appropriate;
in others, targeted approaches will be required.
Collaboration between developing and developed
countries can provide the basis for identifying
problems and solutions.
Some countries have already started to pursue
smart grid activities and some of these efforts
include international collaboration. However,
other countries need to be more actively
engaged, through information-sharing efforts
about the benefits and best practices of smart
grids. Roadmaps tailored to a set of needs
common to many developing countries such
as rural electrification and island-based systems
would provide much value. These roadmaps
could identify the barriers to wider technology
deployment and the means to overcome them,
including regulation, policy, finance, and targeted
technology development and business models.
Additionally, targeted energy system modelling,
standards development, legislation precedents
and capacity building would help identify and
prioritise developing country specific needs
and advance technology deployment (Bazilian,
2011). International platforms such as ISGAN and
GSGF, as well as the United Nations Industrial
Development Organisation and other organisations
focusing on developing country needs, could be
used to help capacity-building efforts and to share
lessons learned and experiences.

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43 Conclusion: near-term roadmap actions for stakeholders
Conclusion: near-term roadmap
actions for stakeholders
Smart grids are a foundational investment that
offer the potential to substitute efficient use of
information for more conventional "steel-in-the-
ground" investments in the electricity system,
at considerable cost savings to consumers, as
demonstrated by early results of pilot projects.
Smart grids will also change how power system
planning is done, and how wholesale and
retail electricity markets are co-ordinated. The
information collected through smart grids will
not only empower customers to manage their
electricity consumption but will enable electricity
system operators to better understand and meet
users needs.
The roles of the government and the private sector
are often misunderstood, at times by themselves
and often by each other. The broadness and
complexity of the electricity system (technologically
and from a regulatory and market perspective),
and its importance to society in general, increase
the necessity to understand who should perform
the actions outlined in this roadmap. Neither the
government alone, nor the private sector alone, can
accomplish the goal of modernising the electricity
system. Collaboration is vital.
Below is a summary of the actions by key electricity
system stakeholders, presented to indicate who
should take the lead in such efforts. In most cases,
a broad range of actors will need to participate in
each action.
Summary of actions led by stakeholders
Lead stakeholder Action
Electricity
generators
Utilise flexibility and enhancements delivered by smart grids to increase use of variable
generation to meet demand growth and decrease emissions.
Transmission
and distribution
system operators
Develop business models along with government and regulators that ensure all
stakeholders share risks, costs and benefits.
Lead education in collaboration with other stakeholders on the value of smart grids,
especially with respect to system reliability and security benefits.
Promote adoption of real-time energy usage information and pricing to allow for
optimum planning, design and operation of distribution and transmission systems in a
co-ordinated fashion.
Demonstrate smart grids technology with business models that share risks, benefits and
costs with customers in order to gain regulatory approval and customer support.
Government and
regulators
Collaborate with public and private sector stakeholders to determine regulatory and
market solutions that can mobilise private sector investment in all electricity system sectors.
Recognise that smart grid deployments should reflect regional needs and conditions
a one-size-fits-all does not apply to the deployment of smart grids.
Plan for evolution in regulation along with technology development new technologies
will both offer and need new regulatory options.
Invest in research, development and demonstration (RD&D) that address system-wide
and broad-range sectoral issues, and that provide insights into behavioural aspects of
electricity use.
Technology
and solution
providers
Deliver full technology solutions to system operators through partnership with others in
the value chain to address concerns with technology system integration, long-term post-
installation support, and security and reliability.
Create a strategy and develop standards in participation with industry and government
stakeholders on an international level to ensure interoperability of system components
and reduce risk of technology obsolescence.

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Lead stakeholder Action
Consumers
and consumer
advocates
Develop understanding of electricity system reliability, quality, security and climate
change benefits of smart grids. Help develop regulatory and market solutions that share
investment risks, costs and benefits with all consumers.
Actively engage in developing system demonstrations and deployments in order to
ensure consumer contribution to and benefit from future electricity systems and markets,
while ensuring consumer protection.
Environmental
groups
Support the development of smart grids necessary for a range of clean energy
technology deployments such as wind, solar and electric vehicles.
International
governmental
organisations
Support the RD&D of smart grid solutions for developing countries through targeted
analysis, roadmapping exercises and capacity building.
Support international collaboration on and dissemination of smart grid RD&D, including
business and regulatory experiences.

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45
Glossary
Glossary
Critical peak pricing (CPP): A tariff structure in
which time-of-use prices are in effect except for
certain peak days, when prices may reflect the
costs of generating and/or purchasing electricity at
the wholesale level.
Cyber security: Effective strategies for protecting
the privacy of smart grid related data and for
securing the computing and communication
networks that will be central to the performance
and availability of the envisioned electric power
infrastructure.
Demand response (DR): Changes in electricity
usage by customers in response to alterations in
the price of electricity, or incentives designed to
induce lower electricity use when system reliability
is jeopardised or to increase consumption when
generation from renewable sources is high. Demand
response can be performed manually by the end-
user or automatically based on predefined settings.
Distribution: The transfer of electricity from the
transmission system to the end-use customer.
Electric utilities: Enterprises engaged in the
production, transmission and/or distribution of
electricity for use by the public, including investor-
owned electric utility companies; cooperatively
owned electric utilities; and government-owned
electric utilities.
Flexibility: The capability of a power system to
maintain reliable supply by modifying production
or consumption in the face of rapid and large
imbalances, such as unpredictable fluctuations in
demand or in variable generation. It is measured in
terms of megawatts (MW) available for ramping up
and down, over time.
Generation: The process of producing electric
energy or the amount of electric energy produced
by transforming other forms of energy, commonly
expressed in kilowatt hours (kWh) or megawatt
hours (MWh).
Real-time pricing (RTP): A tariff structure in
which electricity prices may change as often as
hourly (exceptionally more often). A price signal
is provided to the user on an advanced or forward
basis, reflecting the utilitys cost of generating and/
or purchasing electricity at the wholesale level.
Renewables: Resources that derive energy
natural processes that are replenished constantly.
Renewable energy resources include biomass,
hydro, geothermal, solar, wind, ocean thermal,
wave action and tidal action.
Time-of-use pricing (TOU): A tariff structure in
which electricity prices are set for a specific time
period on an advance or forward basis, typically
not changing more often than twice a year. Prices
paid for energy consumed during these periods
are pre-established and known to consumers in
advance, allowing them to vary their usage in
response to such prices and manage their energy
costs by shifting usage to a lower cost period or
reducing their consumption overall.
Transmission: The transfer of bulk energy
products from where they are produced or
generated to distribution lines that carry the
energy products to consumers.
Variable renewables: Technologies such as
wind, solar PV, run of river hydro and tidal where
production of electricity is based on climatic
conditions and therefore cannot be dispatched
based on a need for additional power alone.
Regional definitions
Africa
Algeria, Angola, Benin, Botswana, Burkina Faso,
Burundi, Cameroon, Cape Verde, Central African
Republic, Chad, Comoros, Congo, Democratic
Republic of Congo,Cte dIvoire, Djibouti, Egypt,
Equatorial Guinea, Eritrea, Ethiopia, Gabon,
Gambia, Ghana, Guinea, Guinea-Bissau, Kenya,
Lesotho, Liberia, Libya, Madagascar, Malawi, Mali,
Mauritania, Mauritius, Morocco, Mozambique,
Namibia, Niger, Nigeria, Runion, Rwanda, So
Tom and Principe, Senegal, Seychelles, Sierra
Leone, Somalia, South Africa, Sudan, Swaziland,
the United Republic of Tanzania, Togo, Tunisia,
Uganda, Zambia and Zimbabwe.
Central and South America (CSA)
Antigua and Barbuda, Argentina, Bahamas,
Barbados, Belize, Bermuda, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Cuba, Dominica, Dominican
Republic, Ecuador, El Salvador, French Guiana,
Grenada, Guadeloupe, Guatemala, Guyana, Haiti,
Honduras, Jamaica, Martinique, the Netherlands
Antilles, Nicaragua, Panama, Paraguay, Peru, St.
Kitts-Nevis-Anguilla, Saint Lucia, St. Vincent-
Grenadines and Suriname, Trinidad and Tobago,
Uruguay and Venezuela.

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China
China refers to the Peoples Republic of China
including Hong Kong.
Middle East (MEA)
Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon,
Oman, Qatar, Saudi Arabia, Syria, the United Arab
Emirates and Yemen. For oil and gas production,
it includes the neutral zone between Saudi Arabia
and Iraq.
Other developing Asia
Afghanistan, Bangladesh, Bhutan, Brunei, Chinese
Taipei, Fiji, French Polynesia, Indonesia, Kiribati,
Democratic Peoples Republic of Korea, Malaysia,
Maldives, Mongolia, Myanmar, Nepal, New
Caledonia, Pakistan, Papua New Guinea, the
Philippines, Samoa, Singapore, Solomon Islands,
Sri Lanka, Thailand, Vietnam and Vanuatu.
Economies in transition
Albania, Armenia, Azerbaijan, Belarus, Bosnia-
Herzegovina, Bulgaria, Croatia, Estonia, the Federal
Republic of Yugoslavia, the former Yugoslav
Republic of Macedonia, Georgia, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Moldova, Romania,
Russia, Slovenia, Tajikistan, Turkmenistan, Ukraine
and Uzbekistan.
OECD Europe
Austria, Belgium, Czech Republic, Denmark,
Finland, France, Germany, Greece, Hungary,
Iceland, Ireland, Italy, Luxembourg, Netherlands,
Norway, Poland, Portugal, Slovak Republic, Spain,
Sweden, Switzerland, Turkey and United Kingdom.
OECD North America
Canada, Mexico and United States.
OECD Pacific
Australia, Japan, Korea and New Zealand.

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47 References
References
Bazilian, M. and Welsch, M. et. al (2011), Smart
and Just Grids: Opportunities for Sub-Saharan Africa,
Imperial College London, London.
Boots, M., Thielens, D., Verheij, F. (2010),
International example developments in Smart Grids
- Possibilities for application in the Netherlands
(confidential report for the Dutch Government),
KEMA Nederland B.V., Arnhem.
Brattle (The Brattle Group) (2010), Pricing Policy
Options for Smart Grid Development, San Francisco.
DOE (U.S. Department of Energy) (2009), Smart
Grid System Report.
EdF (2010), Smart Grid Smart Customer
Distribution System, Paris.
EirGrid (2010), Smart Grids A Transmission
Perspective, Dublin.
Enexis (2010), Smart Grids: Smart Grid Smart
Customer Policy Workshop Presentation,
's-Hertogenbosch.
Faruqui, A., (2010), Demand Response and Energy
Efficiency: The Long View, presentation to Goldman
Sachs Tenth Annual Power and Utility Conference,
The Brattle Group.
Faruqui, A., Hledik, R., Newell, S., and Pfeifenberger
H. (2007), The Power of 5 Percent, Elsevier Inc.,
October 2007, Vol. 20, Issue 8, pp.68-77.
GAO (United States Government Accountability
Office) (2011), Electricity Grid Modernisation: Progress
Being Made on Cybersecurity Guidelines, but Key
Challenges Remain to be Addressed, GAO-11-117.
IEA (International Energy Agency) (2009),
Technology Roadmap: Electric and plug-in hybrid
electric vehicles, OECD/IEA, Paris.
IEA (2010), Energy Technology Perspectives 2010,
OECD/IEA, Paris.
IEA (2011) Harnessing Variable Renewables: a Guide
to the Balancing Challenge, OECD/IEA, Paris.
Ipakchi A., Albuyeh F. (2009), Grid of the Future, IEEE
Power and Energy Mag., 1540-7977/09/, pp. 52-62.
MEF (Major Economies Forum) (2009), Technology
Action Plan: Smart Grids.
www.majoreconomiesforum.org/the-global-
partnership/smart-grids.html
Migden-Ostrander, J (2010), Smart Grid Policy
Challenges: A Residential Consumer Perspective,
Office of the Ohio Consumers Counsel, Ohio.
NETL (National Energy Technology Laboratory)
(2010), Understanding the Benefits of Smart Grids,
Pittsburgh.
NIST (National Institute of Standards and
Technology) (2010), NIST Framework and Roadmap
for Smart Grid Interoperability Standards, Release 1.0,
Office of the National co-ordinator for Smart Grid
Interoperability.

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List of relevant websites
Department of Energy Smart Grid:
www.oe.energy.gov/smartgrid.htm
European network for the Security of Control and
Real-Time Systems (ESCoRTS):
www.escortsproject.eu/
European Technology Platform (ETP) for Europes
Electricity Networks of the Future:
www.smartgrids.eu/
Global Smart Grid Federation:
www.globalsmartgridfederation.org/
IEEE Smart Grid: smartgrid.ieee.org/
International Electricity Infrastructure Assurance:
www.ieiaforum.org
International Smart Grid Action Network (ISGAN):
www.iea-isgan.org
Japan Smart Community Alliance:
www.smart-japan.org/english/tabid/103/Default.aspx
Korean Smart Grid Institute:
www.smartgrid.or.kr/eng.htm
National Institute of Standards and Technology
(NIST) Smart Grid: www.nist.gov/smartgrid/
The NETL Smart Grid Implementation Strategy
(SGIS): www.netl.doe.gov/smartgrid/
Smart Grid Information Clearinghouse:
www.sgiclearinghouse.org/
IEA Electricity based
Implementing Agreements
Demand-Side Management (DSM):
www.ieadsm.org/
Electricity Networks Analysis, Research &
Development (ENARD): www.iea-enard.org/
High-Temperature Superconductivity on the
Electric Power Sector (HTS):
www.superconductivityIEA.org
Energy Conservation through Energy Storage
(ECES): www.energy-storage.org
Hybrid and Electric Vehicles (HEV): www.ieahev.org
Efficient Electrical End-Use Equipment (4Es):
www.iea-4e.org
IEA GHG R&D Programme (GHG R&D):
www.ieaghg.org
Ocean Energy Systems (OES): www.iea-oceans.org/
Photovoltaic Power Systems (PVPS):
www.iea-pvps.org
Wind Energy Systems (Wind): www.ieawind.org
Renewable Energy Technology Deployment (RETD):
www.iea-retd.org

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2020
2025
2030
2010
2015
International Energy Agency IEA
9 rue de la Fdration, 75015 Paris, France
Tel: +33 (0)1 40 57 65 00/01, Fax: +33 (0)1 40 57 65 59
Email: info@iea.org, Web: www.iea.org

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1
GE Energy
Digital Energy
The Smarter Grid:
Concepts, Standards and
Recent Deployments
John McDonald, P.E.
Director, Technical Strategy & Policy Development
February 23, 2011
2
Smart Grid
Concept and
Applications
3
What is Smart Grid?
+
Embracing
renewables
Empowering
consumers
Increasing
productivity
Reducing CO
2
emissions
Increasing
efficiency
4
DATA & COMMUNICATIONS
Power
Generation
Transmission
& Distribution
Residential &
Community
Industrial &
Commercial
Diagnostics & visualization
Substation digitization
Mobile applications
Reliability & demand
forecasting
Smart appliances
Home energy use
monitoring
Backup power mgmt
& control
TOU reporting
Energy management
Generation optimization
Renewables
Microgrids
Protection & control
Advanced metering infrastructure
Distributed generation infrastructure
Asset monitoring & diagnostics
Embracing
renewables
Increasing
Reliability
Empowering
consumers
Increasing
efficiency
5
Growing Complexity In Modern Grids
6
Smart Grid Framework
Transmission
Optimization
Distribution
Optimization
Asset
Optimization
Demand
Optimization
Communications Infrastructure
Engineering & Operational Systems
Utility Enterprise Applications
T&D Infrastructure
Smart Sensors, Controllers and Meters
S
m
a
r
t

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f
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a
s
t
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c
t
u
r
e
Alternative Energy Sources, Storage & PHEVs
E
l
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c
t
r
i
c
a
l

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f
r
a
s
t
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u
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t
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r
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S
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a
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G
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i
d

S
o
l
u
t
i
o
n
s
Energy Consumer Home Area Network
Workforce &
Engineering
Optimization
7
Heavy Metal
Generate & Deliver Power
Control
How Power Flows
Management
Applications
Transmission
Automation
Gen & Trans
Mgt.
Dist.
Mgt.
Sensors
Dist.
Automation
Asset
Optimization
Smart Grid Adds
Old Grid
Old Grid
You call when the power goes out.
Utility pays whatever it takes to meet peak demand.
Difficult to manage high Wind and Solar penetration
Cannot manage distributed generation safely.
~10% power loss in T&D
New Applications enabled by Additional Infrastructure
Adv.Metering
System
Enabled
Consumers
Economic
Dispatch
Smart Grid
Utility knows power is out and usually restores it automatically.
Utility suppresses demand at peak. Lowers cost. Reduces CAPEX.
No problem with higher wind and solar penetration.
Can manage distributed generation safely.
Power Loss reduced by 2+% lowers emissions & customer bills.
Demand
Optimization
Delivery
Optimization
Energy
Optimization
Thermal
Generation
Lines
Sub
Stations
Dist
Equipment
Renewable
Generation
Voltage
Control
A Smarter Grid
Enabled
Utility Managers
8
Demand
Optimization
Distribution
Optimization
Asset
Optimization
Transmission
Optimization
Workforce &
Engineering
Design
Optimization
GE Smart Grid Holistic Solution
Smart Meter
&
Comms
Shared Services & applications
Interoperability Framework
Transitioning from conceptual to executable business
strategy. Products to Holistic Solutions
9
Smart Grid Standards
Development
10
Who Makes Standards, Anyway?
Proprietary Systems - vendor specific
Industry Standards - formalized practice
National Standards (ANSI, NIST, IEEE)
International Standards (ISO, IEC)
Industry Practice - informal practice
11
The NIST Role
In cooperation with the DoE, NEMA, IEEE,
GWAC, and other stakeholders, NIST has
primary responsibility to coordinate
development of a framework that includes
protocols and model standards for
information management to achieve
interoperability of smart grid devices
and systems
Energy Independence and Security Act (EISA) of 2007
Title XIII, Section 1305
Smart Grid Interoperability Framework
11
Customer
LAN
Customer
LAN
Wide Area Network Wide Area Network
What Interoperability Standards are Needed?
Bulk Power
Generation
Operations
Transmission
Operations
Retail Delivery
Operations
Consumers
Back Office
Customer Operations
Wholesale Market
Operations
Distributed
Energy Resources
Electricity Information Data Communication
Metering
Distribution
Operations
Standards are needed for each of the interfaces shown to support many different smart
grid applications. Standards are also needed for data networking and cyber security.
12
13
We Need A Standards Roadmap
Capabilities
Priorities
Architecture
Standards
Release Plan
Responsibilities
Governance
Conformity (including testing and
certification where appropriate)
13
14
NIST Conceptual Model
15
16
NIST Plan was developed after listening
to key industry concerns
Open, participative process 80% of electric
grid is owned and operated by private sector
Utilities recognize need for speed, but want a
systematic, not ad hoc process
Standards should be developed by private
sector standards bodies, with NIST coordination
Standards are necessary but not sufficient
conformity regime (including testing and
certification where appropriate) is essential
16
17
NIST Three Phase Plan
17
PHASE 1
Recognize a set of
initial existing
consensus standards
and develop a roadmap
to fill gaps
PHASE 2
Establish public/private
Standards Panel to provide
ongoing recommendations
for new/revised standards to
be recognized by NIST
PHASE 3
Conformity
Framework
(including Testing and
Certification)
March September
2009 2010
18
NIST- Recognized
Standards Release 1.0
Following the April 28-29
Smart Grid Interoperability
workshop, NIST deemed that
sufficient consensus has been
achieved on 16 initial
standards
On May 8, NIST announced
intention to recognize these
standards following 30 day
comment period
NISTs announcement
recognized that some of these
standards will require further
development and many
additional standards will be
needed.
NIST will recognize additional
standards as consensus is
achieved
18
Standard Application
AMI-SEC System Security
Requirements
Advanced metering infrastructure (AMI) and Smart Grid end-to-end
security
ANSI C12.19/MC1219 Revenue metering information model
BACnet ANSI ASHRAE 135-2008/ISO
16484-5
Building automation
DNP3 Substation and feeder device automation
IEC 60870-6 / TASE.2 Inter-control center communications
IEC 61850 Substation automation and protection
IEC 61968/61970 Application level energy management system interfaces
IEC 62351 Parts 1-8 Information security for power system control operations
IEEE C37.118 Phasor measurement unit (PMU) communications
IEEE 1547 Physical and electrical interconnections between utility and
distributed generation (DG)
IEEE 1686-2007 Security for intelligent electronic devices (IEDs)
NERC CIP 002-009 Cyber security standards for the bulk power system
NIST Special Publication (SP) 800-
53, NIST SP 800-82
Cyber security standards and guidelines for federal information
systems, including those for the bulk power system
Open Automated Demand
Response (Open ADR)
Price responsive and direct load control
OpenHAN Home Area Network device communication, measurement, and
control
ZigBee/HomePlug Smart Energy
Profile
Home Area Network (HAN) Device Communications and Information
Model
19
Driving Smart Grid
Through Policy
20
Recognizing our numerous challenges
Policymakers can lead the way
1 National energy policy
A framework for utility investments
2 Deployment costs
PUCs wary of ratepayer burden
3 Open, interoperable standards
Vendors, utilities need certainty
4 Cybersecurity
Mitigate risks without stifling innovation
5 Consumer privacy + engagement
SG value contingent on consumer participation
6 Market-based price signals
Enables more efficient grid operation
7 Demand response / EE incentives
Place demand-side resources on equal ground
Federal Clean Energy Standard
Peak Load Reduction Standard
Accelerated depreciation
Clean Energy Deployment Administration
NIST Smart Grid program funding
FERC rulemaking for NIST standards
Clarify authority among NERC, FERC, etc.
Endorse technical standards through NIST
FERC National Action Plan on Demand Response
Consumer right to access (HR 4860, S 3487)
Repeal restrictions on variable electricity rates
Utilities offer variable rates on opt-in basis
DR compensation in wholesale markets
Performance-based ratemaking for DR/EE
Federal
State
Challenge Solutions
21
Collaboration is key
Trade associations Academia Customers/Vendors
Refine Strategy Define Landscape New approaches
Technical Stnds
Drive Standards
22
Smart Grid
Recent Deployments
23
Smart Grid at work
Real. Efficient. Solutions.
Project Scope:
Enhanced customer experience
Operational and energy efficiencies
Technology:
Demand Optimization: Smart meters with communication,
home area networks, smart appliances
Distribution Optimization: DMS, OMS, Volt-Var Control
Asset Optimization
Integration of all components
Expected Benefits:
Lowering voltage by as much as 3%; reducing consumer
demand
Power factor approaching .98
Generate less power to meet the same consumer demand
24
Smart Grid at work
Real. Consumer-Empowering. Solutions.
Project Scope:
Test the use of smart appliances to help offset
energy costs when higher prices are implemented
during peak usage times
Technology:
Smart Meters & Smart Appliances
Expected Benefits:
Help LG&E manage its energy better, reducing the
need to construct more power generation facilities --
which is better for LG&E, its customers and the
environment
Lower peak demand by directing high-energy-
consumption activities to off-peak times
Consumers are saving up to 20% on their electric
bill with time-of-use pricing
25
Smart Grid at work
Real. Load-Smoothing. Solutions.
Project Scope:
Demonstrate and validate microgrid control and
energy management technologies to improve
energy efficiency and energy security for DOD
installations, realized though optimal dispatch,
island operation, and demand management and
load optimization
Technology:
Microgrid Controller
Expected Benefits:
Improved energy efficiency and reduced fossil
fuel costs
Increased energy security and power system
reliability
Enable continuous operation
Reduce carbon footprint and CO2 emission
Twentynine Palms
US Marine Corps
26
Smart Grid at work
Real. Reliable. Solutions.
Project Scope:
The utilities need the ability to quickly identify
and respond to wide area system instabilities
Technology:
Phasor Measurement Units
Expected Benefits:
Enables rapid detection, coordination and
emergency reconfiguration of network in
response to system disturbances
West Coast Utilities
27
Project Scope:
Energy Smart Florida - a groundbreaking public/private
alliance of the City of Miami, FPL, GE, Silver Spring
Networks and Cisco - is using federal economic stimulus
funds as part of its $800 million investment in smart grid
technology and renewable energy over the next two years
Technology:
Smart Meters - An estimated 4.5 million smart meters
will be installed on homes and businesses by 2014
Demand Management
Substation Intelligence
Distributed Generation
Enterprise Systems
Expected Benefits:
Potential to slash CO2 emissions
Optimize distributed renewable energy deployments
Reduce power disturbances more than 75% by 2020
Increase energy efficiency through demand optimization
and distribution automation delivering 3+% peak load
reduction.
Create 800-1,000 green collar jobs
Energy Smart Miami
Smart Grid at work
Real. Holistic. Solutions.
28
Maui Smart Grid Project
Develop a Smart Grid controls and communication
architecture capable of coordinating DG, energy storage and
loads to:
Reduce peak load by 15% relative to loading on the distribution
circuit.
Mitigate the impacts of short-timescale wind and solar variability on
the grid
29
Q&A
1
The smart grid at work
Luke Clemente, GM
Smart Grid
GE Energy
"Results are preliminary and unaudited. This document contains forward-looking statements- that is, statements related to future, not past, events. In this context, forward-looking statements
often address our expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan, believe, seek, see, or
will. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially
different than those expressed in our forward-looking statements include: the severity and duration of current economic and financial conditions, including volatility in interest and exchange rates,
commodity and equity prices and the value of financial assets; the impact of U.S. and foreign government programs to restore liquidity and stimulate national and global economies; the impact of
conditions in the financial and credit markets on the availability and cost of GE Capitals funding and on our ability to reduce GE Capitals asset levels as planned; the impact of conditions in the
housing market and unemployment rates on the level of commercial and consumer credit defaults; our ability to maintain our current credit rating and the impact on our funding costs and
competitive position if we do not do so; the soundness of other financial institutions with which GE Capital does business; the adequacy of our cash flow and earnings and other conditions which
may affect our ability to maintain our quarterly dividend at the current level; the level of demand and financial performance of the major industries we serve, including, without limitation, air and
rail transportation, energy generation, network television, real estate and healthcare; the impact of regulation and regulatory, investigative and legal proceedings and legal compliance risks,
including the impact of proposed financial services regulation; strategic actions, including acquisitions and dispositions and our success in integrating acquired businesses; and numerous other
matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties may cause our actual future results to be materially
different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to
investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures
presented in this document, see the accompanying supplemental information posted to the investor relations section of our website at www.ge.com.
In this document, GE refers to the Industrial businesses of the Company including GECS on an equity basis. GE (ex. GECS) and/or Industrial refer to GE excluding Financial Services.
Presented by: Luke Clemente, GM Smart Grid, GE Energy, T&D
2
Drilling/production for
land, offshore, subsea
LNG and pipelines
Refining/petrochemical
Industrial power gen
Complete lifecycle services
Oil & Gas
GE Energy
Energy Services
Power generation
Renewables
Gas Engines
Nuclear
Gasification
Water treatment
Process chemicals
Power & Water
Contractual agreements
Smart Grid
Field services
Parts and repairs
Optimization
technologies
Plant management
08 revenue: $38.6B Employees: 65,000 Operating in 140 countries
3
Energy Services where smart grid fits in
Turbines
Power island
Balance of
plant
Emissions
testing
O&M
Inspection &
repair
Uprates
Life extension
Multi-vendor
services
Emissions
reduction &
control (NOx,
Hg, PM)
Thermal
performance
services
Smart Grid
Grid
decongestion
Metering
solutions
Automation
systems
T&D projects
Asset condition
monitoring
Control solutions
Optimization &
diagnostic
software
Comprehensive
plant services
T&D
Outage
Services Contractual Environmental
Optimization
& Control
08 revenue $10.3 billion
4
integration of two infrastructures
The smart grid is
+
Embracing
renewables
Empowering
consumers
Increasing
productivity
Reducing CO
2
emissions
Increasing
efficiency
5
100% 40% 105%
Amount global
energy demand is
expected to grow by
2030
Amount of
greenhouse gas
emissions for which
electricity
generation accounts
UK residential
electricity cost
increases between
2000-2007
Source: Army Corp of Engineers
Geopolitical drivers
Source: U.S. Conference of Mayors resolution for Congress Source: Energy Information Administration
Coupled with utility industry challenges
Rapid increase in energy consumption and
cost
Aging infrastructure requires increased
investment
Heavy distribution losses
Policy and regulation drive influx of
greener energy resources
7
The 4 E drivers
Economic Competitiveness
Energy Independence
Empowerment of the Consumer
Environmental Sustainability &
Efficiency
8
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2009 2010 2011 2012
Estimated North American Smart Grid Market,
2009-2012 ($Billions)
C
A
G
R
=
2
0
%
$4.9
$6.0
$7.0
$8.3
Smart grid technologies account for 27% of total
utility spend in 2009
Smart meters account for single largest share of
smart grid spend
2009 = 21%
2012 = 33%
Integration & business services excluded from
market analysis ~ tremendous market potential
The smart grid market continues to grow
Sources: GE Energy analysis; BCC Research; Newton-Evans; Frost & Sullivan; Thomas Weisel Partners; Utilities Telecom Council; Greentech Capital Advisors; AMR Research
System Coordination
6% CAGR
Protection & Control
Wide are network
communications
Network management
systems
Dynamic line rating
sensors & technology
Phasor Measurement
Delivery Infrastructure
22% CAGR
Smart Meters 31%
CAGR
AMI Communications
Power Electronics
Monitoring & Diagnostics
Substation Automation
Demand Management
32% CAGR
Load Management
services
In-Home displays and
home management
technologies
Home area networks
Distributed energy
management systems
Information Networks
17% CAGR
Data historians
Cyber-security
Network management
system
communications
Globally 145%
And it keeps getting better
Growth in GE smart grid orders, 2008 versus 2009*
Growth in key markets:
9
Eastern Europe: 36%
North America:
336%
Asia Pacific: 24%
MEA: 70%
India: 483%
GE Proprietary and Confidential. *Estimates for 2009
10
$14.5 billion of
guarantees for T&D
and renewables
$4.5 billion for Smart
Grid, including federal
matching funds
Global stimulus includes smart grid
Support trans-
European
infrastructure
Energy Package, 80%
smart meter coverage
by 2020
EU 20/20/20
Additional funding for
Indias 07-12 power
development program in
order to reduce T&D
energy losses by 15%
Part A-$2B, SW/Auto
Part B-$8B, Hardware
Expand power grid by
26,000 km, incl. new
equipment by 2009
and 2010
$70B $19B $10B $7B
$1B $3B
Ofgem - 500MM, four
(4) Smart Towns
Olympic village
Regulation to reward
grid efficiency and
reliability
$0.5B
Govt $100MM, two (2)
Smart Cities
Victoria required to
achieve full smart
meter coverage by
2013
$0.3B
Jeju island test bed
Development opptys
MKE directing Smart
Meter roll-out
Infrastructure: Smart
Grids, Renewable
integrations
Demonstration
programs, matching
funds
11
DMS/OMS real-time data to improve reliability
- 69 utilities in 16 countries, including global top 3 utilities
Data management from device to enterprise
- 300,000 Installations
EMS managing transmission networks
- Over 100 utilities, servicing 1.3B consumers
GIS visualization for network design
- More than 1,000 companies, in 40 countries
We have a great head start
12
Working together
to provide
customer solutions
Transmission optimization
Distribution optimization
Demand optimization
Asset optimization
Workforce & engineering optimization
Innovating advanced, holistic solutions
for a smarter grid
13
Glimpse at the future. Net Zero Energy Homes
14
Were data management experts
Private label
credit cards
Mobile resource
management
Patient records
and care tracking
15
New service opportunities
Predictive analytics
System balancing services
O&M contracts
Data hosting
Data security mgmt.
Network operations
Charging services
Billing/metering
services
Load management
M&D
Targeted maintenance services
Deep outage analytics
Transformer maintenance
Customer demand
management services
Home area network
installation & management
Net metering optimization
Storage services
Total cost of energy
management
16
Investing for growth
2X increase in new product spend
2X engineering resource expansion
and ~35% increase in commercial
resources globally
17
Floridato lead the
nation in energy efficiency
with $578 million smart
grid initiative
The smart grid at work here
Hawaii bringing
renewables on-line via
GE smart grid
technologies
Ohio leading holistic
smart grid, from consumer
empowerment to
efficiency and security in
$150 million project
18
and globally
UK: Energy Minister Lord Hunt opens first Smart Grid Center in
Europe, demonstrating generation to consumption, at GE Energys
Bracknell headquarters
India: NDPL enjoys benefits of GEs outage management systems and
advanced geospatial information systems
China: Comprehensive and holistic smart grid demonstration in
Yangzhou.
New Zealand: Utilities deploy distribution management systems to
help improve reliability and integrate distributed renewable power
Sweden: Gothenburg Energy in Western Sweden to implement 90K
GE smart meters
Australia: SP AusNet becomes first utility in the world to deploy
WiMax smart grid solution
19
Positioned for success
Strong geopolitical drivers and industry challenges create
demand in market
Stimulus dollars help drive global global smart grid spending
Industry growing at 20% per year
GE well positioned to lead
GE Energy
Session 5 of a 5 Part
Series on the Smart Grid
The Smart Grid Lunch and Learn The Smart Grid Lunch and Learn
Session 5: The Smart Grid
The View From Rural America
1
e e o u a e ca
Smart Grid Learning Series
Session 1: The Smart Grid and its Benefits
Session 2: The Smart Grid The Consumer View
Session 3: The Smart Grid The Distribution View
Session 4: The Smart Grid The Transmission View
Session 5: The Smart Grid The ViewfromRural America Session 5: The Smart Grid The View from Rural America
2
Session 5: The Smart Grid The View From Rural
America
Topics:
Previous Session Review
M k D i Market Drivers
Increasing Costs
Smart Grid Solutions A Recap
The Role of Advanced Metering Infrastructure (AMI)
WiMAX Bringing Broadband and the Smart Grid to Rural America
Green Generation in Rural America
Biomas Generation
Small and Large Wind Generation
A Role for PV?
The Impact Green Generation on the Distribution System
Impact of Policy Discussion
3
Smart Grid - Review
Industry challenges
9 Soaring energy demand
9 Power outages financial impact
9 Green energy takes center stage
9 Electricity prices on the rise
9 Aging infrastructure/workforce
5
Electricity prices on the rise
U.S. sees 6.5%
spike in 09
l t i bill
6.5%
electric bills
%
6
Source: EIA (Energy information Administration)
Electricity Poised to change the world again
We cant solve
problems by using the problems by using the
same kind of thinking we
used when we created
them.
- Albert Einstein
7
The Smart Grid The Smart Grid
Growing complexity in modern grids
9
Grid inefficiency
10
Source: AEP PUC Hearing
Aging assets
100%
Transformer failure rate
80%
60%
20%
40%
0%
20%
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
11
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97
Age in Years
Emerging Capabilities
Wide-Area
Protection &
Automation
Wide-Area
Monitoring
Renewables
Forecasting
Renewables
g
& Control
Smoothing
Delivery
Optimization
Demand
Optimization
Asset
Optimization
12
Smart Grid The
View from Rural
America America
Rural Electric Cooperatives An Overview
864 distribution, 66 generation & transmission cooperatives serving:
40 million people in 47 states
17.5 million businesses, homes, other establishments in 2500 of 3141 (80%) counties in U.S.
12% of U.S. population
Electric cooperatives in the United States:
Own/maintain 2.5 million miles (42%) of nations distribution line, covering 75% of U.S.
landmass
Deliver 10% of total kilowatt hours sold in U.S. each year
G t l t 5% f l t i it d di U S h Generate almost 5% of electricity produced in U.S. each year
Own assets worth $100 billion
Employ nearly 67,000 people
Pay over $1.2 billion state/local taxes
Source: National Rural Electric Cooperative Association
14
American Recovery & Reinvestment Act of
2009
10 8 46 2
2009
7.2
2.7
10.8 46.2
12.7
3.3
Plus $30-60B in
4.5
5.0
$
additional customer
spend
Smart
Grid
BPA
WAPA
Energy
Efficiency
Fossil
Energy
Broad
Band
America
Competes
Bonds/
Guarantees
Energy
Segment
15
~$100 billion energy related spend
What is a Smart Grid?
g y
Electrical
Infrastructure
Information
Infrastructure
16
Sources: EPRIIntelligrid
ARRA Broadband Provisions
ARRA allocates $7.2B for broadband funding
$4 7B to National Telecommunications &InformationAdministration (Commerce) $4.7B to National Telecommunications & Information Administration (Commerce)
$2.5B to Rural Utilities Service (Agriculture)
National Telecommunications & Information Administration funding
(Grants) (Grants)
Provide broadband to people residing in unserved/underserved areas, community
support organizations (schools, libraries, etc.), agencies that facilitate broadband use
by low-income, aged, other vulnerable groups by o co e, aged, ot e u e abe g oups
Stimulate demand for broadband, job growth, economic development
Rural Utilities Service funding (Grants/Loans)
At least 75% of area receiving funds must be in rural area without sufficient access to
high speed broadband service to facilitate rural economic development
Priority given to projects that will give customers choice of more than one provider and
those that will provide service to highest proportion of unserved residents
17
those that will provide service to highest proportion of unserved residents
The Power of 4G for the Smart Grid
Leading, Low-Cost,
Open Standards-Based
500+ Members
$ Millions Invested in
Open Standards Based,
4G Wireless Broadband
Technology
$ Millions Invested in
Proven Technology
Non-line-of-sight (NLOS) service
into customer premise
>Ideal for hard-to-reach locations
Strong, thriving ecosystem
>Intel, Cisco, Microsoft,
Motorola,
Highly flexible bandwidth
delivers cost-effective network
build-out
Siemens, Comcast, Alcatel
>No vendor lock-in
Open standards
Multiple concurrent sessions,
with full security
Operable in both unlicensed and
>WiMAX Forum, IEEE, IETF
Proven telecoms-grade
reliability and scalability
18
p
licensed spectrum
y y
WiMAX Deployments Worldwide
19
GE WiMAX Smart Grid Solution
Partners
4G wireless communications network for ALL utility requirements
Advanced Metering, Demand Response, SCADA, Distribution Automation, Voice, and Mobile
Real-time Outage and Fault Detection, and Real-time Service Restoration improving reliability
Utility & Wireless Carrier collaborative business models (Shared CAPEX / Outsourced OPEX)
Utility capital for WiMAX Network deployment O&M provided by Carrier with guaranteed SLAs
WiMAX SmartMeter by GE innovative, truly open, standards-based, smart meter
GE SmartMeter becomes a valued asset providing a broadband pipe at every home
GE SmartMeter is gateway to the home providing advanced utility and customer energy services
20
WiMAX Smart Grid Network collaboration changing the game for the utility & telecom industries
WiMAX SmartMeter by GE WiMAX SmartMeter by GE
truly open, standards-based Smart Meter / Broadband Router
Advanced Metering Advanced Metering
> Full featured ANSI C12.19 Smart Meter
> Automated and On-Request Reads q
> Meter Events, Alarms, and Reporting
> Secure Remote Disconnect / Reconnect
> Outage / Restoration Detection & Reporting
> Remote Configuration&Firmware Upgrade > Remote Configuration & Firmware Upgrade
> Demand Management / Load Limiting
> On-Board Secure / Dynamic SOAP Server
Standards Standards- -based Strong Security based Strong Security g y g y
> EAP-TLS Authentication; WiMAX PKMv2
> Tamper-proof Crypto EEPROM Key Store
> x.509 Digital Certificate based Identity
> Meter Password Management > Meter Password Management
Broadband Access Router Broadband Access Router
> IPv4 / IPv6 Router; 802.1Q VLAN Switch
> IP DiffServ and 802.1P QoS / CoS Services
21
> DHCP, NTP, Firewall, Encryption
> VPN Services TLS, IPSec
Rural Connectivity - Summary
Enables advanced metering and broadband connectivity using one unit and
one network
Expedited implementation through shared use of existing assets (poles,
right of way)
Helps to accomplish multiple ARRA objectives
Investing in the future
Key benefits for utilities, consumers, smart grid
Utiliti bl t b tt th i t d Utilities are able to better manage their assets and resources
Customers are able to better manage energy use
Less energy used
Two connections
gy
Reduced emissions
Win-win!
Electricity
Internet
Plug-in
vehicle
Solar
S t
22
Smart meter/
Smart modem
Broadband
network
one smart system
Smart
appliance
s
Small Utility Small Utility
Generation Options
23
DG with small renewables
Wind Wind
Small wind <100kW
unit
Economical wind
Solar
Residential, commercial
and utility applications
installation, using
existing infrastructure
AeroDerivative GT
Biogas
Gas engine power
range:
0 25 MW-4 MW
AeroDerivative GT
0.25 MW4 MW
Fuel flexibility: variety
of renewable or
alternative gases
Peaking application: technology
to augment unpredictability in
renewable power generation
24
Electricity Cost by State, J anuary 2009
WA
7.65
MT
ND MN
NH
16.29
VT
14 37
ME
16 03
8.44
ID
7.05
OR
8.41
NE
SD
7.58
6.55
WY
7.76
NV
IA
9.59
WI
12.35
MI
11.17
MA 18.12
RI 17.20
CT 19.49
14.37
16.03
NY
17.46
PA
CA
14.95
NE
6.89
NV
12.23
UT
8.00
CO
9.25
MO
7.02
8.88
KS
8.16
KY
8.10
IN
8.62
IL
10.78
VA
10.01
NC
OH
9.39
10.83
WV
7.40
NJ 15.8
DE 13.25
MD 14.40
DC 12.83
AZ
9.51
TX
12 79
OK
7.67
NM
9.54
MS
9.64
TN
9.44
LA
AR
8.94
9.45
SC
9.80
GA
9.40
AL
10.31
Residential Average
Price (cents per KW)
6.00 7.99
8.00 9.99
12.79
LA
8.92
FL
12.43
HI
25.76
AK
17.25
10.00 11.99
12.00 15.99
16.00 26.00
25
Source: Energy Information Administration
Table 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, January 2009 and 2008
(Cents per kilowatthour)
Biogas Biogas
26
Biomass-to-power
Landfill Gas
Waste Water
Treatment Plants
Animal / Industrial
Bio waste
Biomass
Gasification Treatment Plants Bio waste Gasification
Methane from
Methane from Methane from
Fuel /
Technology
Methane from
anaerobic
digestion
Methane from
anaerobic
digestion
Methane from
anaerobic
digestion
Syngas from
gasification
Total Est.
$1 4 B
$0 54B
$1 0B
$15 6B
Total Est.
Market
$1.4 B
$0.54B
$1.0B
$15.6B
27
Gas engine
Unit size:
t 4 MW/ i up to 4 MW / engine
Key benefits
Fuel flexibility: access to alternative fuel sources Fuel flexibility: access to alternative fuel sources
Access to renewable incentives (if biogas used)
Fast deployment
Flexibility in plant size: installation of multiple units
Portable; skid mounted solution possible
Hi h ffi i High efficiency
28
Source: Nexterra web site
Biogas applications
Biogas sources
Enabling
technologies
Renewable
power generation
technologies
(available)
Forest industry (wood chips)
power generation
with gas engine
Digester
Forest industry (wood chips)
Diary farm (animal waste)
Industrial (industrial waste) Industrial (industrial waste)
Municipal WWTP
Industrial WWTP
Biomass
gasifier
Industrial WWTP
Landfill gas
29
Biomass gasification pilot
30
Source: Nexterra web site
Solar Solar
31
Solar
Key benefits
Continuous reduction in PV module cost Continuous reduction in PV module cost
Fast deployment
Modular installation; flexible size
Low infrastructure requirement on installation
Power generation timing, matching the
demand demand
32
Solar potential in USA
Z A thl
1kW solar system
(per 100ft
2
)
Zone Average monthly
kWh production
range
1 80-90
2 90-100
3 105-115
4 115-125
5 125 135 5 125-135
6 135-145
33
Source: GE data
Solar: PV application examples
C i l R id ti l /
18kW, Santa Maria de Roncesvalles
Pomplona, Spain
129 kW, Shafer Vineyards
CA, USA
10MW, Cceres Project
Spain
Commercial
building
Industrial
Residential /
Rural
34
Preparing for the Future PV grid parity is
coming coming
10%
Prob
40%
Prob
60%
Prob
90%
Prob
Commercial
without incentives
NJ
Commercial
Residential
IL
NJ
R id ti l
Commercial
Residential
GA
IL
Residential
Commercial
Residential
CA
GA
16 18 20 22 24 26 28 30
Residential
10-25% IRRs today in AZ CT HI MA NJ & OR with
35
10-25% IRR s today in AZ, CT, HI, MA, NJ, & OR with
incentives
W l M t L h S l P I iti ti
Big Boxes Adopting PV Solar
Wal-Mart Launches Solar Power Initiative
". . . provide as much as 20 megawatts of electricity, for prices less than it
currently pays local utilities . . . solar power companies pay the upfront costs of y p y p p p y p
installations and retain ownership of the systems, and enter long-term contracts
to sell electricity to their customers."
Long Beach, CA
Source: Fortune, May 07, 2007
Electricity Rate: $.145/kWh
Contract
0 125/kwh 2 5%escalation 20 years 0.125/kwh.. 2.5% escalation .. 20 years
390 KW $ 4.145/watt module cost.
$6.10 install cost
36
Residents will realize future savings
Breakeven Cash Flow Analysis
using Home Financing
Calculations
$/W
(installed)
Breakeven Retail Rate
(cents/kWh)*
8 18.8
Net capital cost ($) $/W * 1000 *4kWp Federal & State tax ITC
Annual payment ($) Monthly payment (assuming interest is
compounded monthly) * 12 +O&M
System output (kWh) 4kWp * 8760 hours * capacity factor
7 16.6
6 14.3
5 12.1
y p ( ) p p y
Breakeven ( /kWh)
Annual payment / system output * 100
Location: Atlanta O&M(annual): $40
Assumptions
4 9.8
Location: Atlanta
System size: 4 kWp
Capacity factor:
15%
Debt terms: 25
years
Cost of debt: 7%
O&M (annual): $40
#hours/year: 8760
Federal ITC: 30%
State ITC: 35%
* Resident achieves cash savings when retail
electricity rate exceeds $/kWh value for 4kW
system
Residential customers who finance PV in Mortgage
Cost of debt: 7%
37
Residential customers who finance PV in Mortgage
can get Positive Cash Flow
Source: GE internal analysis
Complete Solar System Kit
Utility-Scale Solution Thin Film
Example
Complete Solar System Kit
Example
Racking System Thin Film PV Modules GE Inverter Cabling Monitoring & Security
GE offers a 1.5MW solar power plant kit, designed for ease of installation,
optimized for performance, and delivered with excellent GE execution and
t ti
System Specs 1.5MW
Area 10-14 Acres
Effi i
Plug & Play Advantages
GE Reliability & Execution
Grid Friendly & GE Controls
reputation
Efficiency 8.5->12+ %CE
No. of Modules 23,000
Steel Posts 1,500
Production 2 100 MWh/yr
G d e dy &G Co t os
Simplified & Scalable
Cost Competitive
Commercial Discussions Production 2,100 MWh/yr
System Life >20yrs
Commercial Discussions
4Q08
38
Small wind Small wind
39
Small wind
Unit size:
< 100kW /unit
Key statistics
2008 Global small wind
market
Key benefits
Ease of scalability
38.7MW
19,000 units
$156MM (sales)
Federal tax credit (30%)
Further state incentives on renewables
Utilizationof existing infrastructure
53% growth over 2007
Players
Total 219 companies
>74 (US)
Utilization of existing infrastructure
(Tower & grid connection)
Swift installation
>74 (US)
>145 (Others)
Projection
1 7GWin USA by 2013 Source: AWEA Small Wind Turbine Global Market Study
40
1.7GW in USA by 2013
Source: Southwest
Windpower
Source: AWEA Small Wind Turbine Global Market Study
2008
Small wind: Application examples
Residential
li ti
Utility pole
i t ti
Retail car park
applications integration
Retail car park
41
Source: Southwest Windpower
Small wind: State incentives
42
Source: AWEA Small Wind Turbine Global Market Study
2008
AeroDerivative AeroDerivative
Gas Turbines Gas Turbines
43
AeroDerivative Gas Turbines
Unit size:
20 100MW 20 100MW
Key benefits:
Proven reliability and availability
Fast load response
Excellent starting reliability @ max load in <10mins
Short installation time Short installation time
Small footprint; lightweight, compact design
Dual fuel capability
Outstanding low emissions
High efficiency for simple & combined cycle, and cogeneration
applications
44
applications
AeroDerivative GT + Wind
X Traditional manual dispatch when generation is needed
Deregulation/dispatch drives generation investment
Grid system manages wind volatility and takes all it can get
Y Managing real-time wind volatility through a smart Y Managing real-time wind volatility through a smart
controller Wind Intermittency Management System (IMS)
Nodal market calls upon most efficient generation, high ancillary market
Benefits/penalties for not meeting wind forecast Benefits/penalties for not meeting wind forecast
45
Wind needs AeroDerivative GT
Capabilities
M lti l t t/ t l
p
oMultiple start/stop cycles
without maintenance
penalty
9Proven AeroDerivative
design
o10 minutes or less to full
power The higher the
ramp rate the better
9Demonstrated plus
50 MW/min ramp rate
without penalty possible p
oHigh simple cycle efficiency
oHigh part po er efficienc
p y p
9Best in industry is @ 44%
9H t d f oHigh part power efficiency
and low emissions
oRemote operation 9Demonstrated
9Hot day performance
46
Example: 400 wind + LMS100
(One representative week of good wind operation)
500 0
400.0
500.0
200.0
300.0
M
W
Actual Wind
LMS power
0.0
100.0
Forecast Wind
(unbiased)
-200.0
-100.0
1 13 25 37 49 61 73 85 97 109 121 133 145 157
47
Hour
NW Miller 2/7/2007 Energy Consulting
System integration System integration
48
Distributed generation: System integration
Equipment
Small
Solar
Small Wind
CONVERSIO
LOAD
CONVERSIO
N
STORAGE
T&
D
Inverter Batteries
49
Managing the Grid
Planning
Building
Safety
Reliability
50
Summary
Unique opportunity to bring 4G WiMax technology to rural Unique opportunity to bring 4G WiMax technology to rural
America
NRECA and NRTC collaboration next generation networks
Small Green Generation enabled
Smart Grid reliability
P ti l S l ti t F W t I Partial Solution to Farm Waste Issues
51
the
SMART GRID:

an introduction.
Exploring the imperative of revitalizing
Americas electric infrastructure.
How a smarter grid works as an enabling engine
for our economy, our environment and our future.
prepared for the U.S. Department of Energy by Litos Strategic Communication under contract No. DE-AC26-04NT41817, Subtask 560.01.04
the
SMART GRID:

an introduction.
the
SMART GRID:

an introduction.
DISCLAIMER
This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government
nor any agency thereof, nor Litos Strategic Communication, nor any of their employees, make any warranty, express or implied, or assumes any
legal liability or responsibility for the accuracy, completeness, or usefulness of any information apparatus, product, or process disclosed, or
represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade
name, trademark, manufacturer or otherwise does not necessarily constitute or imply its endorsement, recommendation or favoring by the
United States Government or any agency thereof, or Litos Strategic Communication. The views and opinions of authors expressed herein do not
necessarily state or reflect those of the United States Government or any agency thereof.
PRINTED IN THE UNITED STATES OF AMERICA.
From the Department of Energy
The Smart Grid Introduction is intended primarily to
acquaint non-technical yet interested readers about:
theexistenceof,andbeneftsaccruing
from,asmarterelectricalgrid
whattheapplicationofsuchintelligence
means for our country
howDOEisinvolvedinhelpingtoaccelerate
its implementation.
PREFACE
It Is A ColossAl tAsk. But It Is A tAsk
thAt must BE donE.
TheDepartmentofEnergyhasbeenchargedwithorchestratingthewholesale
modernization of our nations electrical grid.
While it is running.
Full-tilt.
HeadingthisefortistheOfceofElectricityDeliveryandEnergyReliability.In
concertwithitscuttingedgeresearchandenergypolicyprograms,theofcesnewly
formed,multi-agencySmartGridTaskForceisresponsibleforcoordinatingstandards
development,guidingresearchanddevelopmentprojects,andreconcilingtheagendas
of a wide range of stakeholders.
Equally critical to the success of this efort is the education of all interested members
ofthepublicastothenature,challengesandopportunitiessurroundingtheSmart
Grid and its implementation.
It is to this mission that The Smart Grid: An Introduction is dedicated.
TOC
KNOWL E DGE B R OUGHT
T O P OWE R
TWO Edison vs. Graham Bell: The Case for Revitalization.
Presenting the argument in a timely fashion requires a trip back to the future
SECTION
Resources and Glossary
Coming to terms with the Smart Grid...
ONE Introduction: We Dont Have Much Time.
Toward an orderly transition to a smarter grid

FOUND ON
SEVEN How Things Work: Creating the Platform for the Smart Grid.
Making it possible for consumers to participate
NINE Edison Unbound: Whats Your Stake in All This?
Benefits for everyone
FIVE Compare and Contrast: A Grid Where Everything is Possible.
For an invigorating vision of our energy future, look forward
SIX First Things First: Teasing Out the Complexities.
How various constituencies i.e., utilities and regulators are working toward
fundamental realignment to make a smarter grid get here faster
FOUR The Smart Grid: What It Is. What It Isnt.
Why its important to know the difference
THREE The Grid as It Stands: Whats at Risk?
The many hazards associated with operating the 20th century grid in the 21st century.
The lights may be on, but consider what were missing
EIGHT Progress Now!: A Look at Current Smart Grid Efforts and How Theyre Succeeding.
From West Virginia to California to Hawaii, a smarter grid is taking shape
TOPICS
TOC
KNOWL E DGE B R OUGHT
T O P OWE R
TWO Edison vs. Graham Bell: The Case for Revitalization.
Presenting the argument in a timely fashion requires a trip back to the future
SECTION
Resources and Glossary
Coming to terms with the Smart Grid...
ONE Introduction: We Dont Have Much Time.
Toward an orderly transition to a smarter grid

FOUND ON
SEVEN How Things Work: Creating the Platform for the Smart Grid.
Making it possible for consumers to participate
NINE Edison Unbound: Whats Your Stake in All This?
Benefits for everyone
FIVE Compare and Contrast: A Grid Where Everything is Possible.
For an invigorating vision of our energy future, look forward
SIX First Things First: Teasing Out the Complexities.
How various constituencies i.e., utilities and regulators are working toward
fundamental realignment to make a smarter grid get here faster
FOUR The Smart Grid: What It Is. What It Isnt.
Why its important to know the difference
THREE The Grid as It Stands: Whats at Risk?
The many hazards associated with operating the 20th century grid in the 21st century.
The lights may be on, but consider what were missing
EIGHT Progress Now!: A Look at Current Smart Grid Efforts and How Theyre Succeeding.
From West Virginia to California to Hawaii, a smarter grid is taking shape
TOPICS
1
2
4
6
10
16
24
28
32
36
40
Our nations electric power infrastructure that has served us so well for so long also known as the grid
is rapidly running up against its limitations. Our lights may be on, but systemically, the risks associated with
relying on an often overtaxed grid grow in size, scale and complexity every day. From national challenges like
power system security to those global in nature such as climate change, our near-term agenda is formidable.
Some might even say history-making.
Fortunately, we have a way forward.
Thereisgrowingagreementamongfederalandstatepolicymakers,business
leaders,andotherkeystakeholders,aroundtheideathataSmartGridisnotonly
needed but well within reach. Think of the Smart Grid as the internet brought to
our electric system.
A tale of two timelines
There are in fact two grids to keep in mind as our future rapidly becomes the present.
The frst well call it a smarter grid ofers valuable technologies that can be deployed within the very near future
or are already deployed today.
The second the Smart Grid of our title represents the longer-term promise of a grid remarkable in its intelligence
andimpressiveinitsscope,althoughitisuniversallyconsideredtobeadecadeormorefromrealization.Yetgivenhow
asinglekillerapplicatione-mailincitedbroad,deepandimmediateacceptanceoftheinternet,whoistosaythat
a similar killer app in this space wont substantially accelerate that timetable?
Intheshortterm,asmartergridwillfunctionmoreefciently,enablingittodeliverthelevelofservicewevecometo
expectmoreafordablyinaneraofrisingcosts,whilealsooferingconsiderablesocietalbeneftssuchaslessimpact
on our environment.
Longerterm,expecttheSmartGridtospurthekindoftransformationthattheinternethasalreadybroughttothe
waywelive,work,playandlearn.
Section one :
IntRoduCtIon
WE dont hAvE muCh tImE.
2
A smarter grid applies technologies, tools and techniques available now to bring knowledge to power
knowledge capable of making the grid work far more efciently...
Ensuringitsreliabilitytodegreesneverbeforepossible.
Maintainingitsafordability.
Reinforcingourglobalcompetitiveness.
Fullyaccommodatingrenewableandtraditionalenergysources.
Potentiallyreducingourcarbonfootprint.
Introducingadvancementsandefcienciesyettobeenvisioned.
Transformingournationsgridhasbeencomparedinsignifcancewithbuildingtheinterstatehighwaysystem
orthedevelopmentoftheinternet.Theseeforts,rightlyregardedasrevolutionary,wereprecededbycountless
evolutionarysteps.Envisionedinthe1950s,theEisenhowerHighwaySystemwasnotcompleteduntiltheearly
1980s.Similarly,theinternetslineagecanbedirectlytracedtotheAdvancedResearchProjectsAgencyNetwork
(ARPANET)oftheU.S.DepartmentofDefenseinthe60sand70s,longbeforeitsappearanceasasociety-changing
technology in the 80s and 90s.
Inmuchthesameway,fullimplementationoftheSmartGridwillevolveovertime.However,countlesspositive
stepsarebeingtakentoday,organizationsenergizedandachievementsrealizedtowardreachingthatgoal.You
will learn about some of them here.
ThepurposeofthisbookistogivereadersinplainlanguageafxonthecurrentpositionoftheSmartGridand
itsadoption.YouwilllearnwhattheSmartGridisandwhatitisnot.Youwillgetafeelfortheissuessurrounding
it,thechallengesahead,thecountlessopportunitiesitpresentsandthebeneftsweallstandtogain.
Rememberlifebeforee-mail?
Witheverypassingday,fewerandfewerpeopledo.
Withtheappropriateapplicationofingeniousideas,advancedtechnology,entrepreneurialenergyandpoliticalwill,
there will also come a time when you wont remember life before the Smart Grid.
3
The story goes like this:
If Alexander Graham Bell were somehow transported
tothe21stcentury,hewouldnotbegintorecognize
thecomponentsofmoderntelephonycellphones,
texting,celltowers,PDAs,etc.whileThomasEdison,
oneofthegridskeyearlyarchitects,wouldbetotally
familiar with the grid.
Section tWo:
ediSon vS.
GRAHAM Bell:
thE CAsE FoR
REvItAlIZAtIon.
There is a popular comparison that
underscores the pace of change or lack
thereof regarding our nations grid.
Menlo Park Workshop Pearl Street Station First Street Lamps Metering Compact Fluorescent Light
4
advancements in electricity
advancements in telecommunications
Operator Switching Stations Rotary Dialing North American
Numbering System
Rotary Dial with Ringer
and Handset
First Telephone
While this thought experiment speaks volumes about
appearances,itisfarfromthewholestory.Edisonwouldbequite
familiar with the grids basic infrastructure and perhaps even an
electromechanicalconnectionortwo,buthewouldbejustas
dazzled as Graham Bell with the technology behind the scenes.
Ourcentury-oldpowergridisthelargestinterconnected
machineonEarth,somassivelycomplexandinextricablylinked
to human involvement and endeavor that it has alternately (and
appropriately)beencalledanecosystem.Itconsistsofmore
than9,200electricgeneratingunitswithmorethan1,000,000
megawatts of generating capacity connected to more than
300,000milesoftransmissionlines.
Incelebratingthebeginningofthe21stcentury,theNational
Academy of Engineering set about identifying the single most
important engineering achievement of the 20th century. The
Academy compiled an estimable list of twenty accomplishments
which have afected virtually everyone in the developed world.
Theinternettookthirteenthplaceonthislist,andhighways
eleventh.Sittingatthetopofthelistwaselectrifcationas
madepossiblebythegrid,themostsignifcantengineering
achievement of the 20th Century.

Given that the growth of the nations global economic leadership
overthepastcenturyhasinmanywaysmirroredthetrajectory
ofthegridsdevelopment,thischoiceisnotsurprising.
Inmanyways,thepresentgridworksexceptionallywellfor
whatitwasdesignedtodoforexample,keepingcostsdown.
Becauseelectricityhastobeusedthemomentitisgenerated,
thegridrepresentstheultimateinjust-in-timeproductdelivery.
Everything must work almost perfectly at all times and does.
Wheneveranoutageoccursin,say,Florida,theremaywellbe
repercussionsuptheAtlanticseaboard;however,duetothe
systemsrobustnessandresultantreliability,veryfewoutside
the industry ever know about it.
Engineered and operated by dedicated professionals over
decades,thegridremainsournationalengine.Itcontinuesto
ofer us among the highest levels of reliability in the world for
electricpower.Itsimportancetooureconomy,ournational
security,andtothelivesofthehundredsofmillionsitserves
cannot be overstated.
But we all of us have taken this marvelous machine for
grantedforfartoolong.Asaresult,ouroverburdenedgrid
has begun to fail us more frequently and presents us with
substantial risks.
POWER SYSTEM FACT
Todays electricity system is 99.97
percent reliable, yet still allows for
power outages and interruptions that cost
Americans at least $150 billion each
year about $500 for every man,
woman and child.
5
Long Distance Calling First Telecom Satellite Touch-Tone Telephones Cellular Communications Phone Over the Internet
tHe GRid AS it
StAndS: WhAts
At RIsk?
Since 1982, growth in peak demand for electricity
driven by population growth, bigger houses, bigger
TVs, more air conditioners and more computers
has exceeded transmission growth by almost
25% every year. Yet spending on research and
development the frst step toward innovation
and renewal is among the lowest of all industries.
Evenasdemandhasskyrocketed,therehasbeen
chronic underinvestment in getting energy where it
needstogothroughtransmissionanddistribution,
furtherlimitinggridefciencyandreliability.While
hundreds of thousands of high-voltage transmission
linescoursethroughouttheUnitedStates,only668
additional miles of interstate transmission have been
builtsince2000.Asaresult,systemconstraints
worsen at a time when outages and power quality
issues are estimated to cost American business more
than $100 billion on average each year.
In short, the grid is struggling to keep up.
Section tHRee:
6
0% 4% 8% 12%
R&D as a % of Revenue
PERCENTAGE of REVENUE
Energy &
Managment
Services
Office Mech
Healthcare
Durable Goods
Aircraft &
Missiles
Retail
Stone,
Clay & Glass
Printing
Agriculture
Electric
Utilities
Less than 2%
Based on 20
TH
century design requirements and having matured
in an era when expanding the grid was the only option and
visibilitywithinthesystemwaslimited,thegridhashistorically
hadasinglemission,i.e.,keepingthelightson.Asforother
modern concerns
Energy efciency? A marginal consideration at best when
energy was as the saying went too cheap to meter.
Environmental impacts? Simply not a primary concern when
the existing grid was designed.
Customer choice? What was that?
Today,theironyisprofound:Inasocietywheretechnology
reignssupreme,Americaisrelyingonacentrallyplannedand
controlled infrastructure created largely before the age of
microprocessors that limits our fexibility and puts us at risk
on several critical fronts:
EFFICIENCY:Ifthegridwerejust5%moreefcient,theenergy
savings would equate to permanently eliminating the fuel and
greenhousegasemissionsfrom53millioncars.Considerthis,
too:IfeveryAmericanhouseholdreplacedjustoneincandescent
bulb(Edisonsprideandjoy)withacompactfuorescentbulb,the
country would conserve enough energy to light 3 million homes
andsavemorethan$600millionannually.Clearly,thereare
terrifcopportunitiesforimprovement.
RELIABILITY:Therehavebeenfvemassiveblackoutsover
thepast40years,threeofwhichhaveoccurredinthepast
nineyears.Moreblackoutsandbrownoutsareoccurring
duetotheslowresponsetimesofmechanicalswitches,a
lackofautomatedanalytics,andpoorvisibilityalackof
situational awareness on the part of grid operators. This issue
of blackouts has far broader implications than simply waiting
forthelightstocomeon.Imagineplantproductionstopped,
perishablefoodspoiling,trafclightsdark,andcreditcard
transactions rendered inoperable. Such are the efects of even
a short regional blackout.
did you know
InmanyareasoftheUnitedStates,the
only way a utility knows theres an outage
is when a customer calls to report it.
7
POWER SYSTEM FACT
41% more outages afected 50,000
or more consumers in the second half of
the 1990s than in the frst half of the decade.
The average outage afected 15 percent
more consumers from 1996 to 2000
than from 1991 to 1995 (409,854
versus 355,204).
NATIONAL ECONOMY: The numbers are staggering and speak
for themselves:
ArollingblackoutacrossSiliconValleytotaled$75
million in losses.
In2000,theone-houroutagethathittheChicago
Board of Trade resulted in $20 trillion in trades delayed.
SunMicrosystemsestimatesthatablackoutcosts
the company $1 million every minute.
TheNortheastblackoutof2003resultedina$6
billion economic loss to the region.
Compounding the problem is an economy relentlessly grown digital. In
the1980s,electricalloadfromsensitiveelectronicequipment,suchas
chips(computerizedsystems,appliancesandequipment)andautomated
manufacturingwaslimited.Inthe1990s,chipsharegrewtoroughly10%.
Today,loadfromchiptechnologiesandautomatedmanufacturinghasrisen
to40%,andtheloadisexpectedtoincreasetomorethan60%by2015.
AFFORDABILITY:Asratecapscomeofinstateafterstate,thecostof
electricityhasdoubledormoreinrealterms.Lessvisiblebutjustasharmful,
thecostsassociatedwithanunderperforminggridarebornebyeverycitizen,
yet these hundreds of billions of dollars are buried in the economy and largely
unreported.Risingfuelcostsmademoreacutebyutilitiesexpiringlong-
term coal contracts are certain to raise their visibility.
Section tHRee : CONTINUED
thE gRId As It stAnds: WhAts At RIsk?
resource recovery
Dollarsthatremaininthe
economy rather than paying the
freightforsysteminefciency
are dollars that society can put
togooduseforjobcreation,
healthcare,andhomelandsecurity.
8
75 80 85 90 95 00
Decrease in Transmission Investment (Dollar Amount In Billions)
YEARS
$1
$2
$3
$4
$5
$6
- 117 million
SECURITY:Whentheblackoutof2003occurredthelargestinUShistory
thosecitizensnotstartledbybeingstuckindarkened,sufocatingelevators
turned their thoughts toward terrorism. And not without cause. The grids
centralizedstructureleavesusopentoattack.Infact,theinterdependencies
of various grid components can bring about a domino efect a cascading series
offailuresthatcouldbringournationsbanking,communications,trafc,and
security systems among others to a complete standstill.
ENVIRONMENT/CLIMATE CHANGE:Fromfoodsafetytopersonalhealth,a
compromisedenvironmentthreatensusall.TheUnitedStatesaccountsforonly
4%oftheworldspopulationandproduces25%ofitsgreenhousegases.Halfof
ourcountryselectricityisstillproducedbyburningcoal,arichdomesticresource
butamajorcontributortoglobalwarming.Ifwearetoreduceourcarbonfootprint
andstakeaclaimtoglobalenvironmentalleadership,clean,renewablesourcesof
energylikesolar,windandgeothermalmustbeintegratedintothenationsgrid.
However,withoutappropriateenablingtechnologieslinkingthemtothegrid,
their potential will not be fully realized.
GLOBAL COMPETITIVENESS: Germany is leading the world in the development
and implementation of photo-voltaic solar power. Japan has similarly moved to
the forefront of distribution automation through its use of advanced battery-
storagetechnology.TheEuropeanUnionhasanevenmoreaggressiveSmart
Gridsagenda,amajorcomponentofwhichhasbuildingsfunctioningaspower
plants.Generally,however,thesecountriesdonthavealegacysystemonthe
order of the grid to consider or grapple with.
How will a smarter grid address these risks and others? Read on.
9
The U.S. accounts for 4% of the
worlds population while contributing
25% of its greenhouse gases.
U.S. Share of World Population
Compared to its Production of
Greenhouse Gases
4%
25%
Centralized System of the mid 1980s More Decentralized System of Today
Large CHP (Combined Heat & Power)
Wind
Small CHP (Combined Heat & Power)
DENMARKs PROGRESS OVER THE PAST TWO DECADES
The electric industry is poised to make the transformation
fromacentralized,producer-controllednetworktoonethat
is less centralized and more consumer-interactive. The move
to a smarter grid promises to change the industrys entire
businessmodelanditsrelationshipwithallstakeholders,
involvingandafectingutilities,regulators,energyservice
providers,technologyandautomationvendorsandall
consumers of electric power.
tHe SMARt GRid:
WhAt It Is.
WhAt It Isnt.
part 1: what it is.
Prepare for an electric system that is
cleaner and more efcient, reliable,
resilient and responsive
a smarter grid.
Section FoUR :
10
A smarter grid makes this transformation possible by bringing
thephilosophies,conceptsandtechnologiesthatenabledthe
internettotheutilityandtheelectricgrid.Moreimportantly,
it enables the industrys best ideas for grid modernization to
achieve their full potential.
Concepts in action.
It may surprise you to know that many of these ideas are already
inoperation.Yetitisonlywhentheyareempoweredbymeansof
the two-way digital communication and plug-and-play capabilities
that exemplify a smarter grid that genuine breakthroughs begin
to multiply.

Advanced Metering Infrastructure (AMI) is an approach to
integrating consumers based upon the development of open
standards. It provides consumers with the ability to use electricity
moreefcientlyandprovidesutilitieswiththeabilitytodetect
problemsontheirsystemsandoperatethemmoreefciently.
AMIenablesconsumer-friendlyefciencyconceptslikePricesto
Devicestoworklikethis:Assumingthatenergyispricedonwhat
it costs in near real-time a Smart Grid imperative price signals
are relayed to smart home controllers or end-consumer devices
likethermostats,washer/dryersandrefrigeratorsthehomes
majorenergy-users.Thedevices,inturn,processtheinformation
based on consumers learned wishes and power accordingly. The
houseorofcerespondstotheoccupants,ratherthanvice-versa.

Becausethisinteractionoccurslargelyinthebackground,with
minimalhumanintervention,theresadramaticsavingsonenergy
that would otherwise be consumed.
Thistypeofprogramhasbeentriedinthepast,butwithoutSmart
Gridtoolssuchasenablingtechnologies,interoperabilitybased
onstandards,andlow-costcommunicationandelectronics,it
possessed none of the potential that it does today.
Visualization technology. Consider grid visualization and the
tools associated with it. Already used for real-time load monitoring
andload-growthplanningattheutilitylevel,suchtoolsgenerally
lack the ability to integrate information from a variety of sources
or display diferent views to diferent users. The result: Limited
situational awareness. This condition will grow even more acute
ascustomer-focusedefciencyanddemand-responseprograms
increase,requiringsignifcantlymoredataaswellastheability
to understand and act on that data.
Next-generationvisualizationisonitsway.Ofparticularnoteis
VERDE,aprojectindevelopmentforDOEattheOakRidgeNational
Laboratory.VERDE(VisualizingEnergyResourcesDynamicallyon
Earth)willprovidewide-areagridawareness,integratingreal-
timesensordata,weatherinformationandgridmodelingwith
geographicalinformation.Potentially,itwillbeabletoexplorethe
state of the grid at the national level and switch within seconds
toexplorespecifcdetailsatthestreetlevel.Itwillproviderapid
information about blackouts and power quality as well as insights
into system operation for utilities. With a platform built on Google
Earth,itcanalsotakeadvantageofcontentgeneratedbyGoogle
Earths user community.
POWER SYSTEM FACT
11
INDUSTRY AMOUNT
Cellular communications $41,000
Telephone ticket sales $72,000
Airline reservation system $90,000
Semiconductor manufacturer $2,000,000
Credit card operation $2,580,000
Brokerage operation $6,480,000
AVERAGE COST FOR 1 HOUR OF
POWER INTERRUPTION
Phasor Measurement Units.
Popularlyreferredtoasthepowersystemshealthmeter,Phasor
MeasurementUnits(PMU)samplevoltageandcurrentmanytimes
asecondatagivenlocation,providinganMRIofthepowersystem
comparedtotheX-RayqualityavailablefromearlierSupervisoryControl
andDataAcquisition(SCADA)technology.Oferingwide-areasituational
awareness,phasorsworktoeasecongestionandbottlenecksandmitigate
or even prevent blackouts.
Typically,measurementsaretakenonceevery2or4secondsoferinga
steady state view into the power system behavior. Equipped with Smart
Gridcommunicationstechnologies,measurementstakenareprecisely
time-synchronizedandtakenmanytimesasecond(i.e.,30samples/second)
ofering dynamic visibility into the power system.
Adoption of the Smart Grid will enhance every facet of the electric delivery
system,includinggeneration,transmission,distributionandconsumption.
It will energize those utility initiatives that encourage consumers to modify
patternsofelectricityusage,includingthetimingandlevelofelectricity
demand.Itwillincreasethepossibilitiesofdistributedgeneration,bringing
generation closer to those it serves (think: solar panels on your roof rather
thansomedistantpowerstation).Theshorterthedistancefromgeneration
toconsumption,themoreefcient,economicalandgreenitmaybe.Itwill
empower consumers to become active participants in their energy choices
to a degree never before possible. And it will ofer a two-way visibility and
control of energy usage.
Section FoUR : CONTINUED
thE smARt gRId: WhAt It Is. WhAt It Isnt.
smart definition: distributed generation
Distributedgenerationistheuseofsmall-scalepowergenerationtechnologies
locatedclosetotheloadbeingserved,capableofloweringcosts,improving
reliability,reducingemissionsandexpandingenergyoptions.
Just whos running the grid?
FormedattherecommendationoftheFederal
EnergyRegulatoryCommission(FERC),an
IndependentSystemOperator(ISO)orRegional
TransmissionOrganization(RTO)isaproft-
neutral organization in charge of reconciling
supplyanddemandasitcoordinates,controls
and monitors the operation of the power
system.TheISOscontrolareacanencompass
one state or several.
Theroleoftheseorganizationsissignifcant
inmakingtheSmartGridreal.ISOsandRTOs
will use the smart distribution system as
another resource for managing a secure and
most economic transmission system. Lessons
learned from their experiences in building
processesandtechnologies,etc.,willbedirectly
applicabletoefortsingridtransformation,
both short-term and long-term.
12
Anautomated,widelydistributedenergydeliverynetwork,the
Smart Grid will be characterized by a two-way flow of electricity
and information and will be capable of monitoring everything from
power plants to customer preferences to individual appliances.
Itincorporatesintothegridthebeneftsofdistributedcomputing
and communications to deliver real-time information and enable
the near-instantaneous balance of supply and demand at the
device level.
The problem with peak.
While supply and demand is a bedrock concept in virtually all
otherindustries,itisonewithwhichthecurrentgridstruggles
mightilybecause,asnoted,electricitymustbeconsumedthe
moment its generated.
Withoutbeingabletoascertaindemandprecisely,atagiventime,
having the right supply available to deal with every contingency
is problematic at best. This is particularly true during episodes of
peakdemand,thosetimesofgreatestneedforelectricityduring
a particular period.
320
240
160
80
0
0 6 12 18 24
Demand Profile
K
I
L
O
W
A
T
T
S
HOURS of the DAY
13
Imagine that it is a blisteringly hot summer afternoon. With countless commercial
andresidentialairconditionerscyclinguptomaximum,demandforelectricityisbeing
drivensubstantiallyhigher,toitspeak.Withoutagreaterabilitytoanticipate,without
knowing preciselywhendemandwillpeakorhowhighitwillgo,gridoperatorsand
utilities must bring generation assets called peaker plants online to ensure reliability and
meetpeakdemand.Sometimesolderandalwaysdifculttosite,peakersareexpensive
tooperaterequiringfuelboughtonthemorevolatilespotmarket.Butoldornot,
additionalpeakersgenerateadditionalgreenhousegases,degradingtheregionsair
quality.Compoundingtheinefciencyofthisscenarioisthefactthatpeakerplantsare
generation assets that typically sit idle for most of the year without generating revenue
but must be paid for nevertheless.
Inmakingreal-timegridresponseareality,asmartergridmakesitpossibletoreducethe
high cost of meeting peak demand. It gives grid operators far greater visibility into the
systematafnergranularity,enablingthemtocontrolloadsinawaythatminimizes
theneedfortraditionalpeakcapacity.Inadditiontodrivingdowncosts,itmayeven
eliminate the need to use existing peaker plants or build new ones to save everyone
money and give our planet a breather.
part 2: what the
smart grid isnt.
PeopleareoftenconfusedbythetermsSmartGridandsmartmeters.Aretheynotthe
samething?Notexactly.Meteringisjustoneofhundredsofpossibleapplicationsthat
constitute the Smart Grid; a smart meter is a good example of an enabling technology
that makes it possible to extract value from two-way communication in support of
distributed technologies and consumer participation.
As much as smart
technologies can enhance this
familiar device, its not the same
thing as the Smart Grid.
Section FoUR : CONTINUED
tHe GRid todAy: WhAt It Is. WhAt It Isnt.
14
Enabling nationwide use of
plug-in hybrid electric vehicles
illustrating the opportunities: the smart grid as enabling engine.
SMART
GRID
Asoneindustryexpertexplainsit,thereisnosilverbulletwhenitcomesto
enablingtechnologiesforasmartergrid;thereisinsteadsilverbuckshot,
an array of technological approaches that will make it work.
Furtherclarifcation:Devicessuchaswindturbines,plug-inhybridelectric
vehiclesandsolararraysarenotpartoftheSmartGrid.Rather,theSmart
Gridencompassesthetechnologythatenablesustointegrate,interface
with and intelligently control these innovations and others.
The ultimate success of the Smart Grid depends on the efectiveness of
these devices in attracting and motivating large numbers of consumers.
Making large-scale energy
storage a reality
Making use of solar energy
24 hours a day
Allowing the seamless integration of
renewable energy sources like wind
Ushering in a new era of
consumer choice
Exploiting the use of green building
standards to help lighten the load...
15
coMpARe And
contRASt:
A gRId WhERE
EvERythIng
Is PossIBlE.
The Smart Grid transforms the current grid
to one that functions more cooperatively,
responsively and organically.
SMART GRID FACT
Made possible by a smarter grid, DOEs
Solar Energy Grid Integration Systems
(SEGIS) is a suite of tools, techniques and
technologies designed to achieve a
high penetration of photovoltaic
(PV) systems into homes
and businesses.
Section Five:
16
Applied across various key constituencies, the benefts of
creating a smarter grid are drawn in even sharper relief.
The Smart Grid as it applies to utilities.
Whethertheyreinvestor-owned,cooperativelyownedor
public,utilitiesarededicatedtoprovidingforthepublicgood
i.e.,takingcareofsocietyselectricityneedsbyoperating,
maintaining and building additional electric infrastructure. The
costs associated with such tasks can run to billions of dollars
annually and the challenges associated with them are enormous.
Forasmartergridtobeneftsociety,itmustreduceutilities
capitaland/oroperatingexpensestodayorreducecostsinthe
future. It is estimated that Smart Grid enhancements will ease
congestionandincreaseutilization(offullcapacity),sending50%
to300%moreelectricitythroughexistingenergycorridors.
The more efcient their systems, the less utilities
need to spend.
Given our nations population growth and the exponential
increase in the number of power-hungry digital components in
ourdigitaleconomy,additionalinfrastructuremustbebuilt
Smartornot.AccordingtoTheBrattleGroup,investmenttotaling
approximately $1.5 trillion will be required between 2010 and
2030 to pay for this infrastructure. The Smart Grid holds the
potential to be the most afordable alternative to building out
bybuildingless,andsavingmoreenergy.Itwillclearlyrequire
investments that are not typical for utilities. But the overall
beneftsofsuchefortswilloutweighthecosts,assomeutilities
are already discovering.
17
Intelligent capable of sensing system overloads and
rerouting power to prevent or minimize a potential outage;
of working autonomously when conditions require resolution
faster than humans can respondand cooperatively in aligning
thegoalsofutilities,consumersandregulators
Efcient capable of meeting increased consumer demand without
adding infrastructure
Accommodating accepting energy from virtually any fuel source including
solar and wind as easily and transparently as coal and natural gas; capable of
integratinganyandallbetterideasandtechnologiesenergystoragetechnologies,
for example as they are market-proven and ready to come online
Motivating enabling real-time communication between the consumer and utility so
consumerscantailortheirenergyconsumptionbasedonindividualpreferences,likeprice
and/orenvironmentalconcerns
Opportunistic creating new opportunities and markets by means of its ability to capitalize on
plug-and-play innovation wherever and whenever appropriate
Quality-focusedcapableofdeliveringthepowerqualitynecessaryfreeofsags,spikes,disturbances
andinterruptionstopowerourincreasinglydigitaleconomyandthedatacenters,computersand
electronics necessary to make it run
Resilient increasingly resistant to attack and natural disasters as it becomes more decentralized and reinforced
with Smart Grid security protocols
Greenslowingtheadvanceofglobalclimatechangeandoferingagenuinepathtowardsignifcant
environmental improvement
In tERms oF
ovERAll vIsIon,
thE smARt gRId Is:
One afternoon in early 2008, the wind stopped blowing in Texas.
Aleaderinthisrenewableenergy,thestateexperiencedasudden,unanticipated
anddramaticdropinwindpower1300Mwinjustthreehours.Anemergency
demand response program was initiated in which large industrial and commercial
usersrestoredmostofthelostgenerationwithintenminutes,actingasabufer
for fuctuations in this intermittent resource. Smart Grid principles in action.
The Smart Grid as it applies to consumers.
Formostconsumers,energyhaslongbeenconsideredapassivepurchase.
Afterall,whatchoicehavetheybeengiven?Thetypicalelectricbillislargely
unintelligible to consumers and delivered days after the consumption actually
occurs giving consumers no visibility into decisions they could be making
regarding their energy consumption.
However,itpaystolookatelectricbillscloselyiffornootherreasonthanthis;
they also typically include a hefty mortgage payment to pay for the infrastructure
needed to generate and deliver power to consumers.
Asurprisinglysubstantialportionofyourelectricbillbetween33%50%is
currentlyassignedtofundingourinfrastructuremortgage,ourcurrentelectric
infrastructure. This item is non-negotiable because that infrastructure power
plants,transmissionlines,andeverythingelsethatconnectsthemmustbe
maintainedtokeepthegridrunningasreliablyasitdoes.Infact,thetransmission
anddistributionchargeontheelectricbillisspecifcallyforinfrastructure.
Withdemandestimatedtodoubleby2050andmorepowerplants,transmission
lines,transformersandsubstationstobebuiltthecostsofthisbigironwillalso
show up on your bill in one way or another. (The only diference this time is that
globaldemandfortheiron,steel,andconcreterequiredtobuildthisinfrastructure
willmakethesecommoditiesfarmorecostly;infact,thecostofmanyrawmaterials
andgridcomponentshasmorethantripledsince2006.)
smart definition: real-time pricing Theseareenergypricesthataresetforaspecifc
time period on an advance or forward basis and which may change according to price changes in the
market.Pricespaidforenergyconsumedduringtheseperiodsaretypicallyestablishedandknownto
consumersadayahead(day-aheadpricing)oranhourahead(hour-aheadpricing)inadvanceofsuch
consumption,allowingthemtovarytheirdemandandusageinresponsetosuchpricesandmanage
theirenergycostsbyshiftingusagetoalowercostperiod,orreducingconsumptionoverall.
POWER SYSTEM FACT
In the United States, the average
generating station was built in the
1960s using even older technology. Today, the
average age of a substation transformer
is 42, two years more than their
expected life span.
Section Five : CONTINUED
coMpARe And contRASt: A gRId WhERE EvERythIng Is PossIBlE
18
Now for the good news. The Smart Grid connects consumers to the grid in a way that
isbenefcialtoboth,becauseitturnsouttheresalotthataverageconsumerscando
to help the grid.
Simply by connecting to consumers by means of the right price signals and
smartappliances,forexampleasmartergridcanreducetheneedforsomeofthat
infrastructurewhilekeepingelectricityreliableandafordable.Asnoted,duringepisodes
ofpeakdemand,stressonthegridthreatensitsreliabilityandraisestheprobabilityof
widespread blackouts.
By enabling consumers to automatically reduce demand for brief periods through
newtechnologiesandmotivatingmechanismslikereal-timepricing,thegridremains
reliable and consumers are compensated for their help.
Enabling consumer participation also provides tangible results for utilities which are
experiencingdifcultyinsitingnewtransmissionlinesandpowerplants.Ultimately,
tapping the collaborative power of millions of consumers to shed load will put
signifcantbrakesontheneedfornewinfrastructureatanycost.Instead,utilities
willhavetimetobuildmorecost-efcienciesintotheirsitingandbuildingplans.
Consumers are more willing to be engaged.
Consumersareadvocatingforchoiceinmarketaftermarket,fromtelecomto
entertainment. Already comfortable with the concept of time-diferentiated service
thankstotime-dependentcellphoneratesandairlinefares,itfollowsthattheyjust
mightwantinsightandvisibilityintotheenergychoicestheyaremaking,too.Enabled
bySmartGridtechnologyanddynamicpricing,consumerswillhavetheopportunityto
see what price they are paying for energy before they buy a powerful motivator toward
managing their energy costs by reducing electric use during peak periods.
Currently,recognitionofthetime-dependentcostofenergyvariesbyregion.Inareas
wherecostsarelowandspecializedratestothispointnon-existent,thereislittle
interest or economic incentive on the part of the consumer to modify usage or even
thinkaboutenergyhavinganhourlycost.InCalifornia,onahotafternoon,consumers
are well aware of the possibility of a blackout driven by peak demand and familiar with
adjustingtheirenergyusageaccordingly.
Efciency is the way.
10%ofallgenerationassetsand
25%ofdistributioninfrastructure
are required less than 400 hours
peryear,roughly5%ofthetime.
While Smart Grid approaches cant
completely displace the need to
buildnewinfrastructure,they
willenablenew,morepersistent
forms of demand response that will
succeed in deferring or avoiding
some of it.
The rewards of getting involved.
Smart Grid consumer mantra: Ask not what the grid
can do for you. Ask what you can do for the grid and
prepare to get paid for it.
19
Given new awareness, understanding, tools and education made possible by a smarter
grid, all consumers will be able to make choices that save money, enhance personal
convenience, improve the environment or all three.
The message from consumers about the Smart Grid: Keep It Simple.
ResearchindicatesthatconsumersarereadytoengagewiththeSmartGridaslong
astheirinterfacewiththeSmartGridissimple,accessibleandinnowayinterferes
with how they live their lives. Consumers are not interested in sitting around for an
hour a day to change how their house uses energy; what they will do is spend two
hoursperyeartosettheircomfort,priceandenvironmentalpreferencesenabling
collaboration with the grid to occur automatically on their behalf and saving money
each time.
Attheresidentiallevel,SmartGridmustbesimple,set-it-and-forget-ittechnology,
enablingconsumerstoeasilyadjusttheirownenergyuse.Equippedwithrich,useful
information,consumerscanhelpmanageloadon-peaktosavemoneyandenergyfor
themselvesand,ultimately,allofus.
The Smart Grid as it applies to our environment.
Whilethenationstransportationsectoremits20%ofallthecarbondioxidewe
produce,thegenerationofelectricityemits40%clearlypresentinganenormous
challenge for the electric power industry in terms of global climate change. Smart
Griddeploymentisakeytoolinaddressingthechallengesofclimatechange,
ultimatelyandsignifcantlyreducinggreenhousegasesandcriteriapollutantssuch
asNOx,SOxandparticulates.
Forthegrowingnumberofenvironmentally-awareconsumers,asmartergridfnally
provides a window for them to assess and react to their personal environmental
impacts.Already,someutilitiesareinformingconsumersabouttheircarbon
footprintalongsidetheirenergycosts.Intime,theSmartGridwillenableconsumers
to react in near real-time to lessen their impacts.
smart definition: criteria pollutants - Criteria pollutants are six common
airpollutantsthatthescientifccommunityhasestablishedasbeingharmfultoourhealth
andwelfarewhenpresentatspecifedlevels.Theyincludenitrogendioxide(NOx),carbon
monoxide,ozone,lead,sulfurdioxide(SOx)andparticulatematter,whichincludesdirt,soot,
carandtruckexhaust,cigarettesmoke,spraypaintdroplets,andtoxicchemicalcompounds.
POWER SYSTEM FACT
From 1988-98, U.S. electricity
demand rose by nearly 30 percent,
while the transmission networks capacity
grew by only 15%. Summer peak demand is
expected to increase by almost 20%
during the next 10 years.
20
For utilities, adoption of the Smart Grid clears the air on several fronts.
Energy efciency:
Ontheloadside,consumerscapableofexercisingusagecontrolaresuddenlyand
simultaneouslyalsoabletoexercisetheirenvironmentalstewardship,resultingin
tremendousconsumer-sideenergyefciencies.
Avoidance of new construction:
Increased asset optimization made possible by a smarter grid means more reliance
uponthemostefcientpowerplantsandlessrelianceupontheleastefcient,more
expensive-to-runpeakerplants.Optimizingpowerplantutilizationcouldalsoallow
utilities to defer new generation investments or reduce dependence upon sometimes
volatileandexpensivewholesalemarkets.Utilitiesstandtobeneftfromlowercosts,
whichincreaseprofts.
The ability to efectively manage load with existing transmission and distribution
infrastructure means that ultimately utilities would no longer have to build or
could at least defer infrastructure to account for rapidly increasing peak demand.
Integration of renewable energy sources:
Giventhesignifcantconcernsregardingclimatechange,theneedfordistributed
solarandwindpoweriscritical.AccordingtotheEuropeanWindEnergyAssociation,
integratingwindorsolarpowerintothegridatscaleatlevelshigherthan20%
will require advanced energy management techniques and approaches at the grid
operator level. The Smart Grids ability to dynamically manage all sources of power
on the grid means that more distributed generation can be integrated within it.
21
Preparation for the future:
A smarter grid is also a necessity for plugging in the next generation of
automotivevehiclesincludingplug-inhybridelectricvehicles(PHEVs)
to provide services supporting grid operation. Such ancillary services hold
the potential for storing power and selling it back to the grid when the
grid requires it.
Enabledbynewtechnologies,plug-inhybridvehiclescurrently
scheduled for showroom foors by 2010 may dramatically reduce our
nationsforeignoilbill.AccordingtothePacifcNorthwestNational
Laboratory,existingU.S.powerplantscouldmeettheelectricityneeds
of73%ofthenationslightvehicles(i.e.,carsandsmalltrucks)ifthe
vehicles were replaced by plug-ins that recharged at night. Such a shift
wouldreduceoilconsumptionby6.2millionbarrelsperday,eliminating
52%ofcurrentimports.
However, there is a lot more to realizing this potential than simply
plugging in.
Without an integrated communications infrastructure and corresponding
pricesignals,handlingtheincreasedloadofplug-inhybridsandelectric
vehicleswouldbeexceedinglydifcultandinefcient.SmartChargers,
however enabled by the Smart Grid will help manage this new
energy device on already constrained grids and avoid any unintended
consequences on the infrastructure.
smart definition : off peak
Aperiodofrelativelylowsystemdemand,oftenoccurringindaily,weekly,and
seasonalpatterns.Off-peakperiodsdifferforeachindividualelectricutility.
To get a greener grid, you need
a Smart Grid.
Solar and wind power are necessary
and desirable components of a cleaner
energy future. To make the grid run
cleaner,itwilltakeagridcapableof
dealing with the variable nature of
these renewable resources.
22
What might the longer-term future look like?
It is a decade from now.
An unusually destructive storm has isolated a community or
region.Tenyearsago,thewaitfortheappearanceofautilitys
trouble trucks would begin. The citizens would remain literally
inthedark,theirfoodspoiling,theirsecuritycompromisedand
their families at risk.
Instead,withfullSmartGriddeployment,thisfuturecommunity
isnotwaiting.Instead,itsableimmediatelytotakeadvantage
of distributed resources and standards that support a Smart
Grid concept known as islanding. Islanding is the ability of
distributed generation to continue to generate power even when
power from a utility is absent. Combining distributed resources
ofeverydescriptionrooftopPV(solar),fuelcells,electric
vehiclesthecommunitycangeneratesufcientelectricityto
keepthegrocerystore,thepolicedepartment,trafclights,the
phone system and the community health center up and running.
Whileitmaytakeaweektorestorethelines,thegeneration
potential resident in the community means that citizens still
havesufcientpowertomeettheiressentialneeds.
thIs Is PoWER
FRom thE PEoPlE.
And it is coming.
With a smarter grid at work, a community
without power is far from powerless.
23
Whenelectricitysregulatorycompactwasfrststruckinthe1930s,
a nation with little appetite for monopolies recognized the provision
ofelectricityasanaturalmonopolyservice,onebestaccomplished
byasingleentity,whetheritwasinvestor-owned,amunicipalutility
or a co-op.
Underthetermsofthecompact,inexchangeforprovidingelectric
servicetoallconsumerswithintheutilitysserviceterritory,utilities
were provided a return on their investments plus a return on those
investments commensurate with risks they take in ensuring service
and reliability. State regulatory commissions were charged with
determining whether the investments made were prudent and what
a reasonable return on those investments should be.
FiRSt tHinGS FiRSt:
tEAsIng out thE
ComPlExItIEs.
Getting from Point A to Point B from our
present grid to the Smart Grid requires
a brief examination of the history and
culture of the industrys primary custodians;
namely, utilities and regulators.
SMART GRID FACT
The American Public Power
Association (APPA) has launched
a task force to develop a framework for
deploying Smart Grid technologies in
a public-power environment.
Section SiX:
24
Overtheensuingdecades,muchhardworkwasdoneonboth
sides of the compact as much of the grid as we know it was built.
Withinutilities,efortstowardthisobjectiveweretypically
segmented or siloed. This division of labor worked well for
utilities,providingefciencieswithintheorganizationforquick
execution and maintenance of system reliability.
Meanwhile,regulatorsfocusontheirrespectivestatesasa
matteroflaw,anunderstandablecircumstancegiventhateach
statemustanswerfrstandforemosttoitscitizensandtheir
uniquesetofneeds,resourcesandagendas.
Untilrelativelyrecently,thisstatutoryarrangementhasresulted
in little regulatory action among the states and little reason to
engageincollectiveactiononanationalbasis,althoughthey
work at common purposes through regional associations.
Similarly,regulatedutilitieshavetraditionallybeenreactive,
with no need or incentive to be proactive on a national level.
Wellalignedforutilityoperations,theyarenotnecessarilywell
positioned for integrated strategic initiatives like the Smart Grid
although they have collectively and forcefully advocated in the
past on issues such as security and climate change.
STATES TAKING ACTION:
25
state amount year rps administrator
Arizona 15% 2025 Arizona Corporation Commission
California 20% 2010 California Energy Commission
Colorado 20% 2020 Colorado Public Utilities Commission
Connecticut 23% 2020 Department of Public Utility Control
District of Columbia 11% 2022 DC Public Service Commission
Delaware 20% 2019 Delaware Energy Ofce
Hawaii 20% 2020 Hawaii Strategic Industries Division
Iowa 105 MW Iowa Utilities Board
Illinois 25% 2025 Illinois Department of Commerce
Massachusetts 4% 2009 Massachusetts Division of Energy Resources
Maryland 9.5% 2022 Maryland Public Service Commission
Maine 10% 2017 Maine Public Utilities Commission
Minnesota 25% 2025 Minnesota Department of Commerce
Missouri* 11% 2020 Missouri Public Service Commission
Montana 15% 2015 Montana Public Service Commission
New Hampshire 16% 2025 New Hampshire Ofce of Energy and Planning
New Jersey 22.5% 2021 New Jersey Board of Public Utilities
New Mexico 20% 2020 New Mexico Public Regulation Commission
Nevada 20% 2015 Public Utilities Commission of Nevada
New York 24% 2013 New York Public Service Commission
North Carolina 12.5% 2021 North Carolina Utilities Commission
Oregon 25% 2025 Oregon Energy Ofce
Pennsylvania 18% 2020 Pennsylvania Public Utility Commission
Rhode Island 15% 2020 Rhode Island Public Utilities Commission
Texas 5,880 MW 2015 Public Utility Commission of Texas
Utah* 20% 2025 Utah Department of Environmental Quality
Vermont* 10% 2013 Vermont Department of Public Service
Virginia* 12% 2022 Virginia Department of Mines, Minerals, and Energy
Washington 15% 2020 Washington Secretary of State
Wisconsin 10% 2015 Public Service Commission of Wisconsin
* Four states, Missouri,
Utah, Vermont, &
Virginia, have set
voluntary goals for
adopting renewable
energy instead of
portfolio standards
with binding targets.
30 states have developed and adopted renewable portfolio standards, which require
a pre-determined amount of a states energy portfolio (up to 20%) to come exclusively
from renewable sources by as early as 2010.
WithgrowingconsensusaroundthecrucialneedforSmartGriddeployment,
the cultures of these entities are now changing dramatically.
Fortheirpart,regulatorsareactivelysharingideasandinformationwithother
states.Actingwithaneyetowardnationalagreement,twenty-ninestates
havealsodevelopedandadoptedrenewableportfoliostandards,whichrequire
apre-determinedamountofastatesenergyportfolio(upto20%)tocome
exclusively from renewable sources by as early as 2010.
Regulatorsonboththestateandfederallevelaresteppinguptheirdialog.
StateregulatorsrepresentedbytheNationalAssociationofRegulatory
UtilityCommissions(NARUC)areexploringoptionsforexpeditingSmart
Gridimplementationwiththeirfederalcounterpart,theFederalEnergy
RegulatoryCommission(FERC).Meanwhile,DOEisprovidingleadershipwith
thepassingintolawoftheEnergyIndependenceandSecurityActof2007
(EISA),whichcodifesaresearch,developmentanddemonstrationprogram
for Smart Grid technologies.
Thankstotheseandothereforts,manyregulatorsaremovingtowardnew
regulations designed to incentivize utility investment in the Smart Grid.
Amongthesearedynamicpricing,sellingenergybacktothegrid,andpolicies
thatguaranteeutilitiescostrecoveryand/orfavorabledepreciationonnew
Smart Grid investments and legacy systems made obsolete by the switch
to smart meters and other Smart Grid investments.
Section SiX : CONTINUED
FiRSt tHinGS FiRSt: tEAsIng out thE ComPlExItIEs
26
Asforutilities,anincreasingnumberofthemaretakingamoreintegrated
viewofasmartergrid,particularlywhenthereareareasofoverlapthatcan
beleveragedforcostreductionorbeneftincrease.Thereareregulatory
implicationshereaswell;ifutilitiesaretoargueforcostrecoveryproject
byprojectratherthanbysingleintegratedplan,somebenefcialaspects
of deployment of a smarter grid could be lost.
Integratedplansarebeingproposedandconsidered.InCalifornia,smart
meters only became economic when the commission considered non-utility
beneftsbeneftstoconsumersfromlowerbills.
Toanindustryhistoricallyregulatedforpriorinvestment,thetransformation
to regulation for value delivery promises to stimulate substantial progress
and alignment around the Smart Grid vision and implementation. Keep in
mind,though,thatregulatorswillcontinuetorequireashowingthatthe
value of the investments to consumers whatever they may be ultimately
exceeds the costs.
27
SMART GRID FACT
To advance the modernization
of our nations electric grid, DOE has
entered into public/private partnerships
with leading champions of the Smart Grid
which include the GridWise Alliance,
EPRI/Intelligrid, and the Galvin
Electricity Initiative.
The industry is not without its role models in this regard.
Consider the ATM. It is available virtually anywhere. Every
unitfeaturesasimilaruserinterface,understandablewhether
ornotyouknowthelocallanguage.Usersdontgiveitasecond
thought.Itsimplyworks.YetthefactthattheATMexistsat
all was made possible only by industry-wide agreement on
amultitudeofcommonstandards,fromcommunicationto
security to business rules.
Fortunately,theagendasofutilities,regulatorsandautomation
vendors are rapidly aligning and movement toward identifying
and adopting Smart Grid standards is gaining velocity.
HoW tHinGS
WoRk: CREAtIng
thE PlAtFoRm FoR
thE smARt gRId.
Open architecture. Internet protocol. Plug
and play. Common technology standards.
Non-proprietary. Interoperability.
Fine concepts all, yet one of the reasons
the electric industry has been slow to take
advantage of common technology standards
which would speed Smart Grid adoption is
a lack of agreement on what those standards
should be and who should issue them.
Section Seven:
28
DOE lists fve fundamental technologies that will drive the Smart Grid:
Integratedcommunications,connectingcomponentstoopenarchitectureforreal-time
informationandcontrol,allowingeverypartofthegridtobothtalkandlisten
Sensingandmeasurementtechnologies,tosupportfasterandmoreaccurateresponse
suchasremotemonitoring,time-of-usepricinganddemand-sidemanagement
Advancedcomponents,toapplythelatestresearchinsuperconductivity,storage,power
electronics and diagnostics
Advancedcontrolmethods,tomonitoressentialcomponents,enablingrapiddiagnosisand
precise solutions appropriate to any event
Improvedinterfacesanddecisionsupport,toamplifyhumandecision-making,transforminggrid
operators and managers quite literally into visionaries when it come to seeing into their systems
killer app
WillthePHEVbetheSmartGridskillerapp,theoutwardexpression
of the Smart Grid that consumers adopt en masse as they did e-mail?
There are plenty of experts who think so.
TheNationalInstituteofStandardsandTechnology(NIST),
anagencyoftheU.S.DepartmentofCommerce,hasbeen
charged under EISA (Energy Independence and Security
Act)withidentifyingandevaluatingexistingstandards,
measurementmethods,technologies,andothersupport
inservicetoSmartGridadoption.Additionally,theywillbe
preparing a report to Congress recommending areas where
standards need to be developed.

The GridWise Architecture Council is an important resource
forNIST.TheCouncil,representingawidearrayofutilityand
technologystakeholdersandunderwrittenbyDOE,hasbeen
workingcloselywithNISTtodevelopcommonprinciplesandan
interoperability framework spanning the entire electricity delivery
chain.Already,theworkoftheGridWiseArchitectureCounciland
otherorganizationssuchasANSI(AmericanNationalStandards
Institute),IEEE(InstituteofElectricalandElectronicsEngineers)
and the ZigBee Alliance have enabled a smarter grid to readily
accept innovation across a wide spectrum of applications.
29
Integration in practice.
OnWashingtonsOlympicPeninsula,aDOEdemonstrationprojectsetin
motion a sophisticated system that responded to simple instructions set
inplacebyaconsumerinhisorherpreferenceprofle.Meanwhile,inthe
background,energywasmanagedontheconsumersbehalftosavemoney
and reduce the impact on the grid.
Consumerssavedapproximately10%ontheirbills.Moresignifcantly,peak
loadwasreducedby15%,bringingtheconstrainedregionalgridanother
3-5yearsofpeakloadgrowthandenablingtheinstallationofcleaner,
moreefcienttechnologiesforsupply.
Acrossthenation,companiesaredevelopingnewSmartGridtechnologies
for utility-scale deployments that are progressively raising the bar on what
is possible and practical.
Section Seven : CONTINUED
HoW tHinGS WoRk: CREAtIng thE PlAtFoRm FoR thE smARt gRId.
30
Steps toward a common language.
Theindependent,non-proftElectric
PowerResearchInstitute(EPRI)is
also conducting research on key
issues facing the electric power
industry and working towards the
development of open standards for
the Smart Grid. The International
ElectroTechnicalCommission(IEC)
recentlypublishedEPRIsIntelliGrid
MethodologyforDeveloping
RequirementsforEnergySystems
asapubliclyavailablespecifcation.
advancements also in development
Zero-net energy commercial buildings:
Whethermeasuredbycost,energy,orcarbonemissions,structuresequippedwithSmart
Grid technologies capable of balancing energy generation and energy conservation.
Superconducting power cables:
Capable of reducing line losses and carrying 3-5 times more power in a smaller
right of way than traditional copper-based cable.
Energy storage:
Whileelectricitycannotbeeconomicallystored,energycanbewiththeapplication
ofSmartGridtechnologies.Thermalstorage,sometimescalledhybridairconditioning,
holds promising potential for positively afecting peak load today. Also of note is the
near-termpotentialoflithium-ionbatteriesforPHEVapplications.
Advanced sensors:
Monitoringandreportinglineconditionsinrealtime,advancedsensorsenablemore
power to fow over existing lines.

Another look at the future: PHEV (Plug-in Hybrid Electric Vehicles)
Assumingcustomeracceptanceregardingprice,performanceandlongevity,these
vehicles ofer consumers the opportunity to shift use of oil and gasoline to electricity
andtopoweracarfortheequivalentof$.90pergallon.(Asinefcientasthegrid
istoday,itiscleaneronbalancethanoilandgasoline.)Consumersgetfarmore
afordabletransportation.Relyingmoreonelectricityfortransportationandless
on fossil fuels increases our energy independence as well as our environmental
prospects.PHEVstakeadvantageoflowercostandof-peakcapacityandcanprovide
grid support during the peak periods.
31
pRoGReSS noW!:
A look At CuRREnt
smARt gRId EFFoRts
And hoW thEyRE
suCCEEdIng.
The Department of Energy is actively
engaged in supporting a wide variety of
Smart Grid projects. The role of DOE is to
act as an objective facilitator, allowing the
best ideas to prove themselves. Smart Grid
eforts are well underway on several key
fronts, from forward-thinking utilities to
the 50
th
state.
SMART GRID FACT
States such as Texas, California,
Ohio, New Jersey, Illinois, New York
and others are already actively exploring
ways to increase the use of tools and
technologies toward the realization
of a smarter grid.
Section eiGHt:
32
Distribution Management System (DMS) Platform by the University of Hawaii
Theintegratedenergymanagementplatformwillbedeveloped,featuringadvancedfunctionsfor
home energy management by consumers and for improved distribution system operations by utilities.
ThisplatformwillintegrateAMIasahomeportalfordemandresponse;homeautomationforenergy
conservation;optimaldispatchofdistributedgeneration,storage,andloadsinthedistribution
system,andcontrolstomakethedistributionsystemadispatchableentitytocollaboratewithother
entities in the bulk grid.
Homeenergymanagementofthistypewillenableconsumerstotakecontrol,automatingenergy
conservation and demand response practices based on their personal preferences.
ThehomeautomationwillbebasedontheSmartMeterandecoDashboardproductsfromGeneral
Electric.TheSmartMeterwithaZigBeenetworkwillcommunicatewithhouseholdappliances,and
thedashboardwillautomatecontrolsoftheiroperations.Inaddition,thisplatformwillprovideancillary
servicestothelocalutilitysuchasspinningreserve,load-followingregulation,andintermittency
managementforwindandsolarenergy.ThisplatformwillbedeployedattheMauiLaniSubstation
inMaui,Hawaii.
Perfect Power by Illinois Institute of Technology (IIT)
APerfectPowersystemisdefnedas:Anelectricsystemthatcannotfailtomeettheelectricneeds
oftheindividualend-user.APerfectPowersystemhasthefexibilitytosupplythepowerrequiredby
various types of end-users and their needs without fail. The functionalities of such a system will be
enabled by the Smart Grid.
ThisprojectwilldesignaPerfectPowerprototypethatleveragesadvancedtechnologytocreate
microgrids responding to grid conditions and providing increased reliability and demand reduction.
This prototype model will be demonstrated at the IIT campus to showcase its operations to the
industry. The model is designed to be replicable in any municipality-sized system where customers
can participate in electric market opportunities.
33
West Virginia Super Circuit by Allegheny Energy
Thesupercircuitprojectisdesignedtodemonstrateanadvanceddistributioncircuit
with improved reliability and security through integration of distributed resources
andadvancedmonitoring,control,andprotectiontechnologies.Thiscircuitwill
integratebiodieselgenerationandenergystoragewiththeAMIandamesh-based
Wi-Ficommunicationsnetworkforrapidfaultanticipationandlocationandrapidfault
restoration with minimized impact to customers.
Currentlyduringacircuitfault,allcustomersonthiscircuitarebeingafectedwith
power loss or with power quality issues. The super circuit will demonstrate an ability
todynamicallyreconfgurethecircuittoallowisolationofthefaultedsegment,
transferuninterruptedservicestounfaultedsegments,andtapsurpluscapacity
fromadjacentfeederstooptimizeconsumerservice.
Beach Cities MicroGrid by San Diego Gas & Electric
Asitsnameimplies,amicrogridresemblesourcurrentgridalthoughonamuch
smallerscale.Itisuniqueinitsabilityduringamajorgriddisturbancetoisolate
from the utility seamlessly with little or no disruption to the loads within it and
seamlessly reconnect later.
TheBeachCitiesMicrogridProjectwillbedemonstratedatanexistingsubstation
identifedasBeachCitySubstation.Itisintendedtooferablueprinttoalldistribution
utilities proving the efectiveness of integrating multiple distributed energy resources
with advanced controls and communications. It seeks to improve reliability and reduce
peak loads on grid components such as distribution feeders and substations.
Bothutility-ownedandcustomer-ownedgeneration,i.e.,photovoltaic(PV)systems
andbiodiesel-fueledgenerators,andenergystoragewillbeintegratedalongwith
advancedmeteringinfrastructure(AMI)intothereal-worldsubstationoperations
withapeakloadofapproximately50MW.
Beach Cities will serve as a guide for improved asset use as well as for operating the
entire distribution network in the future. Successfully building such capabilities
will enable customer participation in reliability- and price-driven load management
practices,bothofwhicharekeytotherealizationofasmartergrid.
Section eiGHt : CONTINUED
pRoGReSS noW! : A look At CuRREnt smARt gRId EFFoRts And hoW thEy RE suCCEEdIng
34
High Penetration of Clean Energy Technologies by The City of Fort Collins
Thecityanditscity-ownedFortCollinsUtilitysupportawidevarietyofcleanenergy
initiatives,includingtheestablishmentofaZeroEnergyDistrictwithinthecity
(knownasFortZED).
Onesuchinitiativeseekstomodernizeandtransformtheelectricaldistribution
system by developing and demonstrating an integrated system of mixed distributed
resources to increase the penetration of renewables such as solar and wind while
deliveringimprovedefciencyandreliability.
These and other distributed resources will be fully integrated into the electrical
distributionsystemtosupportachievementofaZeroEnergyDistrict.Infact,this
DOE-supportedprojectinvolvestheintegrationofamixofnearly30distributed
generation,renewableenergy,anddemandresponseresourcesacross5customer
locationsforanaggregatedcapacityofmorethan3.5Megawatts.
The resources being integrated include:
photovoltaic (PV)
microturbines(smallcombustionturbinesthat
produce between 25 kW and 500 kW of power)
dual-fuelcombinedpowerandheat(CHP)systems
(utilizing the by-product methane generated from
a water treatment plant operation)
reciprocating(orinternalcombustion)engines
backupgenerators
wind
plug-inhybridelectricvehicles(PHEV)inan
ancillary-services role
fuelcells
Thisprojectwillhelpdeterminethemaximumdegreeofpenetrationofdistributed
resources based on system performance and economics.
35
ediSon UnBoUnd:
WhAts youR
stAkE In All thIs?
When Smart Grid implementation
becomes reality, everyone wins
and what were once our risks become
our strengths.
Section nine:
36
LETS REVISIT THAT LIST:
EFFICIENCY: It is estimated that tens of billions of dollars
will be saved thanks to demand-response programs that
providemeasurable,persistentsavingsandrequireno
human intervention or behavior change. The dramatically
reduced need to build more power plants and transmission
lineswillhelp,too.
RELIABILITY: ASmartGridthatanticipates,detectsand
responds to problems rapidly reduces wide-area blackouts to
near zero (and will have a similarly diminishing efect on the
lostproductivity).
AFFORDABILITY:Energypriceswillrise;however,the
trajectoryoffuturecostincreaseswillbefarmoregradual
post-SmartGrid.SmartGridtechnologies,tools,and
techniques will also provide customers with new options for
managing their own electricity consumption and controlling
their own utility bills.

SECURITY: The Smart Grid will be more resistant to attack
andnaturaldisasters.Sofortifed,itwillalsomoveus
towardenergyindependencefromforeignenergysources,
whichthemselvesmaybetargetsforattack,outsideofour
protection and control.
ENVIRONMENT/CLIMATE CHANGE:Clean,renewable
sourcesofenergylikesolar,wind,andgeothermalcaneasily
be integrated into the nations grid. We reduce our carbon
footprint and stake a claim to global environmental leadership.
NATIONAL ECONOMY: Openingthegridtoinnovationwill
enable markets to grow unfettered and innovation to fourish.
Forcomparisonssake,considerthemarket-makingefect
of the opening of the telephone industry in the 1980s. With
revenuesof$33billionatthetime,theensuingproliferation
of consumer-centric products and services transformed it into
a$117billionmarketasof2006.
GLOBAL COMPETITIVENESS:Regainingourearlyleadinsolar
and wind will create an enduring green-collar economy.
37
We are being
presented with unprecedented
opportunity and challenge across
our industry. By coming together
around a shared vision of a smarter grid,
we have an equally unprecedented opportunity
and challenge for shaping our industrys
and our nations future.
stEvEn g hAusER president,
the gridwise alliance
Section nine : CONTINUED
ediSon UnBoUnd: WhAts youR stAkE In All thIs?
38
TODAYs GRID. AND TOMORROWs.
Characteristic Todays Grid Smart Grid
Enables active participation
by consumers
Accommodates all generation
and storage options
Enables new products, services
and markets
Provides power quality for the
digital economy
Optimizes assets & operates
efciently
Anticipates and responds to system
disturbances (self-heals)
Operates resiliently against attack
and natural disaster
Consumers are uninformed and
non-participative with power system
Dominated by central generation- many
obstacles exist for distributed energy
resources interconnection
Limited wholesale markets, not well
integrated - limited opportunities for
consumers
Focus on outages - slow response to power
quality issues
Little integration of operational data with
asset management - business process silos
Responds to prevent further damage- focus
is on protecting assets following fault
Vulnerable to malicious acts of terror and
natural disasters
Informed, involved, and active
consumers - demand response and
distributed energy resources.
Many distributed energy resources
with plug-and-play convenience focus
on renewables
Mature, well-integrated wholesale
markets, growth of new electricity
markets for consumers
Power quality is a priority with a variety
of quality/price options - rapid resolution
of issues
Greatly expanded data acquisition of
grid parameters - focus on prevention,
minimizing impact to consumers
Automatically detects and responds
to problems - focus on prevention,
minimizing impact to consumer
Resilient to attack and natural disasters
with rapid restoration capabilities
TheSmartGridcreatesvalueupanddownthevaluechain,muchlikethe
internethas.Asweveexperiencedwiththeinternet,afordable,rapidand
universalcommunicationcanenablesophisticatedtransactions,create
entirely new business models and sweep across society with surprising speed.
Consider for a moment your iPod, YouTube, internet banking
Priortotheinternetsadoption,marketsdidnthavetheabilitytooperateas
cost-efectivelyandproductivelyastheydotoday.Fewpredictedthatpeople
would engage as seriously with the internet as they have. And no one could
have predicted the revolutionary advancements it has fostered.
Similarly,wehadnoideathattheinternetwouldrevolutionizesomany
aspects of our lives.
The Smart Grid represents the relatively simple extension of this movement
to power consumption.
ThomasEdison,TheWizardofMenloPark,wouldapproveoftheenterprise
and innovation that drive the Smart Grid. He might even ask what took
ussolong.Newtechnologiesandpublicpolicies,economicincentivesand
regulations are aligning to bring the Smart Grid to full implementation. Its
success is imperative to the economic growth and vitality of America far
into the future.
We hope that The Smart Grid: An Introduction has given you a clearer
understanding of the need for immediate and concerted action in the
transformationofournationselectricalgrid.Tolearnmore,pleasevisit
the websites listed on the following page.
If we all did the things we are capable of doing,
we would literally astound ourselves.
thomas a. edison (1847-1931)
39
souRCEs
Sources for this book include the Department of Energy, the GridWise Alliance, the Galvin Electricity Initiative
and EPRI/Intelligrid.
REsouRCEs
2007 INTERGRAPH ROCKET CITY GEOSPATIAL CONFERENCE:
Presentation:http://www.directionsmag.com/images/RCG/Main/Damon%20Dougherty.ppt#257,3,What%20is%20Smart%20Grid
COLUMBIA UNIVERSITY:http://www.ldeo.columbia.edu/res/pi/4d4/testbeds/Smart-Grid-White-Paper.pdf
EEI :
http://www.eei.org/industry_issues/electricity_policy/advanced_metering_infrastructure.htm
http://www.eei.org/magazine/editorial_content/nonav_stories/2007-09-01-Smart.pdf
http://www.eei.org/magazine/editorial_content/nonav_stories/2005-01-01-Smarter.pdf
ENERGY FUTURE COALITION :
Smart Grid Working Group:http://www.energyfuturecoalition.org/preview.cfm?catID=13
Reports:http://www.energyfuturecoalition.org/pubs/app_smart_grid.pdf
http://energyfuturecoalition.org/pubs/PJMsmartgrid.pdf
ELSTER:
http://www.eei.org/meetings/nonav_2008-02-06-ja/Gray_Elster.pdf
http://www.eei.org/industry_issues/electricity_policy/federal_legislation/deciding_on_smart_meters.pdf
GRIDPOINT:http://www.electricitydeliveryforum.org/pdfs/Gridpoint_SmartGrid.pdf
NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION:
Presentation:http://www.nema.org/gov/energy/smartgrid/upload/Presentation-Smart-Grid.pdf
NATIONAL ENERGY TECHNOLOGIES LABORATORY:
Presentation:http://www.energetics.com/supercon07/pdfs/NETL_Synergies_of_the_SmartGrid_and_Superconducitivity_Pullins.pdf
THE PEW CENTER ON GLOBAL CLIMATE CHANGE:
Workshop Proceedings:http://www.pewclimate.org/docUploads/10-50_Anderson_120604_120713.pdf
SAN DIEGO SMART GRID STUDY:http://www.sandiego.edu/epic/publications/documents/061017_SDSmartGridStudyFINAL.pdf
SMART GRID NEWS: http://www.smartgridnews.com/artman/publish/index.html
XCEL ENERGY:
Smart Grid City Web site:http://www.xcelenergy.com/XLWEB/CDA/0,3080,1-1-1_15531_43141_46932-39884-0_0_0-0,00.html
EPRI INTELLIGRID:http://intelligrid.epri.com/
PNNL GRIDWISE: http://gridwise.pnl.gov/
SMART GRID TASK FORCE: http://www.oe.energy.gov/smartgrid_taskforce.htm
SMART GRID: http://www.oe.energy.gov/smartgrid.htm
GRIDWISE ALLIANCE: www.gridwise.org
GRID WEEK: www.gridweek.com
40
glossARy: ComIng to tERms WIth thE smARt gRId
AMI:AdvancedMeteringInfrastructureisatermdenotingelectricitymetersthatmeasureandrecordusagedataataminimum,inhourly
intervals,andprovideusagedatatobothconsumersandenergycompaniesatleastoncedaily.
AMR:AutomatedMeterReadingisatermdenotingelectricitymetersthatcollectdataforbillingpurposesonlyandtransmitthisdataoneway,
usually from the customer to the distribution utility.
ANCILLARY SERVICES: Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such
servicesmayinclude:loadregulation,spinningreserve,non-spinningreserve,replacementreserve,andvoltagesupport.
APPLIANCE:Apieceofequipment,commonlypoweredbyelectricity,usedtoperformaparticularenergy-drivenfunction.Examplesofcommon
appliancesarerefrigerators,clotheswashersanddishwashers,conventionalranges/ovensandmicrowaveovens,humidifersanddehumidifers,
toasters,radios,andtelevisions.Note:Appliancesareordinarilyself-containedwithrespecttotheirfunction.Thus,equipmentsuchascentral
heatingandairconditioningsystemsandwaterheaters,whichareconnectedtodistributionsystemsinherenttotheirpurposes,arenot
considered appliances.
CAPITAL COST:Thecostoffelddevelopmentandplantconstructionandtheequipmentrequiredforindustryoperations.
CARBON DIOXIDE (CO2):Acolorless,odorless,non-poisonousgasthatisanormalpartofEarthsatmosphere.Carbondioxideisaproductof
fossil-fuelcombustionaswellasotherprocesses.Itisconsideredagreenhousegasasittrapsheat(infraredenergy)radiatedbytheEarthinto
theatmosphereandtherebycontributestothepotentialforglobalwarming.Theglobalwarmingpotential(GWP)ofothergreenhousegasesis
measuredinrelationtothatofcarbondioxide,whichbyinternationalscientifcconventionisassignedavalueofone(1).
CLIMATE CHANGE:Atermusedtorefertoallformsofclimaticinconsistency,butespeciallytosignifcantchangefromoneprevailingclimatic
conditiontoanother.Insomecases,climatechangehasbeenusedsynonymouslywiththetermglobalwarming;scientists,however,tendto
usetheterminawidersenseinclusiveofnaturalchangesinclimate,includingclimaticcooling.
CONGESTION:Aconditionthatoccurswheninsufcienttransfercapacityisavailabletoimplementallofthepreferredschedulesforelectricity
transmission simultaneously.
DSM:ThisDemand-SideManagementcategoryrepresentstheamountofconsumerloadreductionatthetimeofsystempeakduetoutility
programs that reduce consumer load during many hours of the year. Examples include utility rebate and shared savings activities for the
installationofenergyefcientappliances,lightingandelectricalmachinery,andweatherizationmaterials.Inaddition,thiscategoryincludesall
otherDemand-SideManagementactivities,suchasthermalstorage,time-of-userates,fuelsubstitution,measurementandevaluation,andany
otherutility-administeredDemand-SideManagementactivitydesignedtoreducedemandand/orelectricityuse.
DISTRIBUTED GENERATOR: Ageneratorthatislocatedclosetotheparticularloadthatitisintendedtoserve.General,butnon-exclusive,
characteristics of these generators include: an operating strategy that supports the served load; and interconnection to a distribution or sub-
transmission system.
DISTRIBUTION: The delivery of energy to retail customers.
DISTRIBUTION SYSTEM: The portion of the transmission and facilities of an electric system that is dedicated to delivering electric energy
to an end-user.
ELECTRIC GENERATION INDUSTRY: Stationary and mobile generating units that are connected to the electric power grid and can generate
electricity.Theelectricgenerationindustryincludestheelectricpowersector(utilitygeneratorsandindependentpowerproducers)and
industrialandcommercialpowergenerators,includingcombined-heat-and-powerproducers,butexcludesunitsatsingle-familydwellings.
ELECTRIC GENERATOR:Afacilitythatproducesonlyelectricity,commonlyexpressedinkilowatthours(kWh)ormegawatthours(MWh).Electric
generators include electric utilities and independent power producers.
ELECTRIC POWER: The rate at which electric energy is transferred. Electric power is measured by capacity and is commonly expressed in
megawatts(MW).
ELECTRIC POWER GRID: A system of synchronized power providers and consumers connected by transmission and distribution lines and operated
byoneormorecontrolcenters.InthecontinentalUnitedStates,theelectricpowergridconsistsofthreesystems:theEasternInterconnect,
theWesternInterconnect,andtheTexasInterconnect.InAlaskaandHawaii,severalsystemsencompassareassmallerthantheState(e.g.,the
interconnectservingAnchorage,Fairbanks,andtheKenaiPeninsula;individualislands).
ELECTRIC SYSTEM RELIABILITY: The degree to which the performance of the elements of the electrical system results in power being delivered
toconsumerswithinacceptedstandardsandintheamountdesired.Reliabilityencompassestwoconcepts,adequacyandsecurity.Adequacy
impliesthattherearesufcientgenerationandtransmissionresourcesinstalledandavailabletomeetprojectedelectricaldemandplusreserves
forcontingencies.Securityimpliesthatthesystemwillremainintactoperationally(i.e.,willhavesufcientavailableoperatingcapacity)even
afteroutagesorotherequipmentfailure.Thedegreeofreliabilitymaybemeasuredbythefrequency,duration,andmagnitudeofadverseefects
on consumer service.
42 41
ELECTRIC UTILITY:Anyentitythatgenerates,transmits,ordistributeselectricityandrecoversthecostofitsgeneration,transmissionor
distributionassetsandoperations,eitherdirectlyorindirectly,throughcost-basedratessetbyaseparateregulatoryauthority(e.g.,StatePublic
ServiceCommission),orisownedbyagovernmentalunitortheconsumersthattheentityserves.Examplesoftheseentitiesinclude:investor-
ownedentities,publicpowerdistricts,publicutilitydistricts,municipalities,ruralelectriccooperatives,andStateandFederalagencies.
ELECTRICITY CONGESTION:Aconditionthatoccurswheninsufcienttransmissioncapacityisavailabletoimplementallofthedesired
transactions simultaneously.
ELECTRICITY DEMAND:Therateatwhichenergyisdeliveredtoloadsandschedulingpointsbygeneration,transmission,anddistribution
facilities.
ENERGY EFFICIENCY, ELECTRICITY:Referstoprogramsthatareaimedatreducingtheenergyusedbyspecifcend-usedevicesandsystems,
typicallywithoutafectingtheservicesprovided.Theseprogramsreduceoverallelectricityconsumption(reportedinmegawatthours),often
without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technologically
moreadvancedequipmenttoproducethesamelevelofend-useservices(e.g.lighting,heating,motordrive)withlesselectricity.Examples
includehigh-efciencyappliances,efcientlightingprograms,high-efciencyheating,ventilatingandairconditioning(HVAC)systemsorcontrol
modifcations,efcientbuildingdesign,advancedelectricmotordrives,andheatrecoverysystems.
ENERGY SAVINGS:Areductionintheamountofelectricityusedbyendusersasaresultofparticipationinenergyefciencyprogramsandload
management programs.
ENERGY SERVICE PROVIDER: An energy entity that provides service to a retail or end-use customer.
FEDERAL ENERGY REGULATORY COMMISSION (FERC):TheFederalagencywithjurisdictionoverinterstateelectricitysales,wholesaleelectric
rates,hydroelectriclicensing,naturalgaspricing,oilpipelinerates,andgaspipelinecertifcation.FERCisanindependentregulatoryagency
withintheDepartmentofEnergyandisthesuccessortotheFederalPowerCommission.
FUEL CELL:Adevicecapableofgeneratinganelectricalcurrentbyconvertingthechemicalenergyofafuel(e.g.,hydrogen)directlyintoelectrical
energy.Fuelcellsdiferfromconventionalelectricalcellsinthattheactivematerialssuchasfuelandoxygenarenotcontainedwithinthecellbut
aresuppliedfromoutside.Itdoesnotcontainanintermediateheatcycle,asdomostotherelectricalgenerationtechniques.
GENERATION: Theprocessofproducingelectricenergybytransformingotherformsofenergy;also,theamountofelectricenergyproduced,
expressed in kilowatthours.
GLOBAL WARMING: An increase in the near surface temperature of the Earth. Global warming has occurred in the distant past as the result
ofnaturalinfuences,butthetermistodaymostoftenusedtorefertothewarmingsomescientistspredictwilloccurasaresultofincreased
anthropogenic emissions of greenhouse gases.
GREENHOUSE GASES: Thosegases,suchaswatervapor,carbondioxide,nitrousoxide,methane,hydrofluorocarbons(HFCs),
perfluorocarbons(PFCs)andsulfurhexafluoride,thataretransparenttosolar(short-wave)radiationbutopaquetolong-wave(infrared)
radiation,thuspreventinglong-waveradiantenergyfromleavingEarthsatmosphere.Theneteffectisatrappingofabsorbedradiation
and a tendency to warm the planets surface.
INTERMITTENT ELECTRIC GENERATOR OR INTERMITTENT RESOURCE: An electric generating plant with output controlled by the natural
variabilityoftheenergyresourceratherthandispatchedbasedonsystemrequirements.Intermittentoutputusuallyresultsfromthedirect,non-
storedconversionofnaturallyoccurringenergyfuxessuchassolarenergy,windenergy,ortheenergyoffree-fowingrivers(thatis,run-of-river
hydroelectricity).
INTERRUPTIBLE LOAD:ThisDemand-SideManagementcategoryrepresentstheconsumerloadthat,inaccordancewithcontractual
arrangements,canbeinterruptedatthetimeofannualpeakloadbytheactionoftheconsumeratthedirectrequestofthesystemoperator.This
typeofcontrolusuallyinvolveslarge-volumecommercialandindustrialconsumers.InterruptibleLoaddoesnotincludeDirectLoadControl.
LINE LOSS:Electricenergylostbecauseofthetransmissionofelectricity.Muchofthelossisthermalinnature.
LOAD (ELECTRIC):Theamountofelectricpowerdeliveredorrequiredatanyspecifcpointorpointsonasystem.Therequirementoriginatesat
the energy-consuming equipment of the consumers.
LOAD CONTROL PROGRAM: A program in which the utility company ofers a lower rate in return for having permission to turn of the air
conditioner or water heater for short periods of time by remote control. This control allows the utility to reduce peak demand.
OFF PEAK:Periodofrelativelylowsystemdemand.Theseperiodsoftenoccurindaily,weekly,andseasonalpatterns;theseof-peakperiodsdifer
for each individual electric utility.
ON PEAK:Periodsofrelativelyhighsystemdemand.Theseperiodsoftenoccurindaily,weekly,andseasonalpatterns;theseon-peakperiods
difer for each individual electric utility.
OUTAGE:Theperiodduringwhichageneratingunit,transmissionline,orotherfacilityisoutofservice.
glossARy (CONT D)
42
43
PEAK DEMAND OR PEAK LOAD:Themaximumloadduringaspecifedperiodoftime.
PEAKER PLANT OR PEAK LOAD PLANT:Aplantusuallyhousingold,low-efciencysteamunits,gasturbines,diesels,orpumped-storage
hydroelectric equipment normally used during the peak-load periods.
PEAKING CAPACITY:Capacityofgeneratingequipmentnormallyreservedforoperationduringthehoursofhighestdaily,weekly,orseasonal
loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-
clock basis.
RATE BASE:Thevalueofpropertyuponwhichautilityispermittedtoearnaspecifedrateofreturnasestablishedbyaregulatoryauthority.The
rate base generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination
ofthefollowingaccountingmethods:fairvalue,prudentinvestment,reproductioncost,ororiginalcost.Dependingonwhichmethodisused,the
ratebaseincludescash,workingcapital,materialsandsupplies,deductionsforaccumulatedprovisionsfordepreciation,contributionsinaidof
construction,customeradvancesforconstruction,accumulateddeferredincometaxes,andaccumulateddeferredinvestmenttaxcredits.
RATE CASE:Aproceeding,usuallybeforearegulatorycommission,involvingtheratestobechargedforapublicutilityservice.
RATE FEATURES:Specialrateschedulesortarifsoferedtocustomersbyelectricand/ornaturalgasutilities.
RATE OF RETURN: The ratio of net operating income earned by a utility is calculated as a percentage of its rate base.
RATE OF RETURN ON RATE BASE:Theratioofnetoperatingincomeearnedbyautility,calculatedasapercentageofitsratebase.
RATE SCHEDULE (ELECTRIC):Astatementofthefnancialtermsandconditionsgoverningaclassorclassesofutilityservicesprovidedtoa
customer. Approval of the schedule is given by the appropriate rate-making authority.
RATEMAKING AUTHORITY: Autilitycommissionslegalauthoritytofx,modify,approve,ordisapproveratesasdeterminedbythepowersgiven
thecommissionbyaStateorFederallegislature.
RATES:Theauthorizedchargesperunitorlevelofconsumptionforaspecifedtimeperiodforanyoftheclassesofutilityservicesprovidedtoa
customer.
RELIABILITY (ELECTRIC SYSTEM): A measure of the ability of the system to continue operation while some lines or generators are out of service.
Reliabilitydealswiththeperformanceofthesystemunderstress.
RENEWABLE ENERGY RESOURCES: Energy resources that are naturally replenishing but fow-limited. They are virtually inexhaustible in duration
butlimitedintheamountofenergythatisavailableperunitoftime.Renewableenergyresourcesinclude:biomass,hydro,geothermal,solar,
wind,oceanthermal,waveaction,andtidalaction.
SOLAR ENERGY:Theradiantenergyofthesun,whichcanbeconvertedintootherformsofenergy,suchasheatorelectricity.
TARIFF: A published volume of rate schedules and general terms and conditions under which a product or service will be supplied.
THERMAL ENERGY STORAGE:Thestorageofheatenergyduringutilityof-peaktimesatnight,foruseduringthenextdaywithoutincurring
daytime peak electric rates.
THERMAL LIMIT:Themaximumamountofpoweratransmissionlinecancarrywithoutsuferingheat-relateddeteriorationoflineequipment,
particularly conductors.
TIME-OF-DAY PRICING: A special electric rate feature under which the price per kilowatthour depends on the time of day.
TIME-OF-DAY RATE: The rate charged by an electric utility for service to various classes of customers. The rate refects the diferent costs of
providing the service at diferent times of the day.
TRANSMISSION AND DISTRIBUTION LOSS:Electricenergylostduetothetransmissionanddistributionofelectricity.Muchofthelossis
thermal in nature.
TRANSMISSION (ELECTRIC) (VERB): The movement or transfer of electric energy over an interconnected group of lines and associated
equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems.
Transmission is considered to end when the energy is transformed for distribution to the consumer.
UTILITY GENERATION: Generation by electric systems engaged in selling electric energy to the public.
UTILITY-SPONSORED CONSERVATION PROGRAM: Anyprogramsponsoredbyanelectricand/ornaturalgasutilitytoreviewequipmentand
constructionfeaturesinbuildingsandadviseonwaystoincreasetheenergyefciencyofbuildings.Alsoincludedareutility-sponsoredprograms
toencouragetheuseofmoreenergy-efcientequipment.Includedareprogramstoimprovetheenergyefciencyinthelightingsystemor
buildingequipmentorthethermalefciencyofthebuildingshell.
WIND ENERGY:Kineticenergypresentinwindmotionthatcanbeconvertedtomechanicalenergyfordrivingpumps,mills,andelectricpower
generators.
www.energy.gov
GE Digital Energy
imagination at work
End-to-end vision, technology and expertise to build a smarter grid. Today.
Building a grid that can do more with less: Thats the power of GE.
GE smart grid solutions are redefining energy realities around
the world. Our proven technology, focused innovation and
unmatched expertise optimize end-to-end grid efficiency,
reliability and flexibility. If theres an opportunity for improve-
ment fromgeneration and transmission to distribution
and consumption chances are GE is already working on
the solution.
The need for a smarter grid is critical. Growing worldwide energy
needs demand viable solutions today with the scalability to be
ready for tomorrow. GEs smart grid initiatives integrate solutions
for utilities, consumers and industrial sites. Our unparalleled
experience and forward-looking invention touches every facet
of the energy value chain.
GE can help overcome your power challenges and re-energize our
planets energy infrastructure to handle the demand of the next
hundred years. Because were building a reimagined grid with:
Real. Weve developed the technology, conducted the trials and
proved the results. GE has smart grid products and services that
can improve your performance today. They are real and running.
Right now.
Smart. Weve added intelligence, understanding and control
improvements ranging fromincidental through monumental.
As a result, utilities, consumers and regulators all have better
ways to manage energy usage and control costs.
Solutions. GE has a holistic smart grid vision. Were leveraging
our unmatched resources and scope to design, build and integrate
complete smart grid solutions. Our customers get a smarter grid,
not merely smarter grid products.
Real. Smart. Solutions. GE is building themtoday.
What makes GEthesmarter choicefor smart gridsolutions? Everything
GE has expertise across everything electrical. Nobody else even comes
close to the breadth and depth of our real-world expertise. GE brings
more than 110 years of experience building successful energy grid
solutions to help you understand your status and plan your future.
Its not just the destination: GE can improve the journey.
GE can help you set your direction for smart grid success.
Our experience and thought leadership make it easy to
followthis simple path.
Set goals. Considering regulations, your current equip-
ment, economic factors and business issues, GE can help
you create your roadmap with clear, measurable goals.
Knowthe available technology. Your GE smart grid team
can help you understand whats real, whats vaporware
and whats on the horizon, to help set your direction and
fashion an overall improvement plan.
Execute to industry standards. GE is helping shape
smart grid standards around the world, so we can help
youchoose solutions that are scalable andflexible.
Create a solid business case. Working to a clear value
proposition with a stringent vetting process, we can
help ensure your smart grid investment improves your
operation in meaningful, important ways.
Your smart grid roadmap may run all the way fromgeneration to
consumption, with rich improvements every step of the way. Or you
may need to focus on updating your distribution control. Or getting
consumers on board to manage peak demand. Whatever shape
your roadmap takes, GEs turbine-to-toaster experience
can help get you where you need to be faster.
1. Understand generation needs
GE can help optimize your current generation capacity and assets,
integrate centralized and distributed renewables, engineer microgrids
and strengthen protection and control. So you can power more with less
and be ready for tomorrows ever-increasing demand.
2. Determine transmission and distribution requirements
GE has proven smart grid breakthroughs to monitor, control and
optimize howyou move power. Our industrial-strength communications
and network management systems can help you understand and
better manage loads. Diagnostics, visualization and control systems
help prevent and minimize the effects of outages.
3. Architect a communications plan
Your grid cant be smart unless it communicates. GE can architect an
end-to-end communications infrastructure, fromgeneration through
transmission and all the way into consumers homes.
4. Monitor, optimize and analyze assets to extend their lives
GEs asset monitoring, diagnostics, energy management and control
systems can maximize efficiency and help control costs across a facility.
Sub metering and Time-of-Use reporting help you better understand
operations and identify opportunities to improve.
5. Realize consumer benefits in individual homes and communities
Smart appliances, demand response control and dynamic pricing will
help consumers optimize their energy spend. Energy portals and home
automation will empower true consumer energy management. And
smart meters will provide the functionality and communications to
make it possible. GE can be your one resource to help do it all.
6. Integrate business systems
GEs systems integration and partner programs can develop intelligent
business systems andprocesses for today, andfor theneeds of tomorrow.
7. Choose the right partners to deliver your Real. Smart. Solutions.
GE has the team, technologies and solution set to make your smart grid
future proof. Our unmatched experience, talent, ongoing research and
commitment to the future of the smart grid make us the right choice for
your long-termsuccess.
GE enables the smart grid
Our advanced, holistic solutions apply the performance gains of new
technologies while extending the capabilities and life cycles of older
investments. That helps you reduce risk and optimize performance
as you build the grid of tomorrow, today.
A clear, compelling roadmap to success begins with GE.
Smart Grid Facts
L
GEs smart grid is an integrated solution set that can combine technologies and expertise fromthought leaders throughout the
world. On a city-wide basis, GEs solutions holistically support a geographys entire infrastructure network fromtransmission
and distribution to consumption and distributed generation. We see solutions in the framework of a complete picture that
includes all utilities, consumers, businesses and the planet. And our commitment to open systems and standards means
GEs solutions canintegrate withvirtuallyanytechnologyonthe grid. We trulyconnect everythingfromthe turbine tothe toaster.
The GE smart grid: Better frombeginning to end.
69 utilities in 16 countries including the top three global
utilities use GE DMS/OMS systems to improve reliability.
Generation-to-consumption tools, integrated to optimize the right solution for you.
Keeping a digital eye on the ball
Intelligent GE Protection and Control devices
protect critical electrical equipment and ensure
safe reliable power up and down the line. They
continuously monitor systemhealth, employing
bothpredictive andearly-detectiontools. Distur-
bances are detected, analyzed,
and handled instantly through
controlled actions, such as fault
isolation, load shedding, power
restoration and alarming.
Generating flexible energy alternatives
DistributedGenerationConnectionandOptimization
tools increase reliabilitythroughsafe interconnections of
wind, solar andother generators. GEs MicrogridControl
Systemuses generator informationtoselect the
most-effective optionavailable, while also con-
trollingandoptimizingthegeneration, storage
anddeliveryof cleanrenewableenergy.
Making renewable doable
Wind, solar andbiomass generationare welcome additions to the smart grid. GEs
Renewable Energy technologies enable easy integration of renewable energy just
about anywhere along the grid. You get clean energy without congestion
or capacity worries. GE renewable technologies can also help forecast
renewable potential and store excess renewable generationflattening
out the inherent ups and downs of generation that relies on nature.
LL
L
GEs energy-savingamorphous technology
is reducingwaste inmillions of transformers
throughout the world.
650,000 of the worlds critical electrical assets
generators, transmissionlines, motors are
protectedby GEs Multilindevices.
Transforming efficiency and reliability
Asmarter grid means more efficient transformers
and a smarter way to track aging assets through-
out your grid. Newamorphous transformers use
GE technology to slash no-load losses and
increase the efficiency throughout your delivery
system. GEs Asset Optimization technologies
monitor the health of older transformers. Using
physical performance characteristics to identify
assets at risk, you can make repairs or
replace transformers before they
cause outages.
L
Knowing whats up
and isolating whats down
Outage Management Systems
(OMS) restore power faster when
unforeseen problems cause out-
ages. Automated solutions, like
Fault Detection, Isolation and
Restoration (FDIR), determine the
location of an outage, isolate it
and then route power to minimize
the number of customers
affected. Smart OMS solutions
can also determine the cause of
the outage and dispatch properly
equipped repair crews more
efficiently to get the power
back on faster.
Substations connecting like never before
GEs digitized substations enable utilities to define
theperformancerequirements for their substations and
create a standardized, proven configuration of power-
control and information technologies to streamline substation
construction, management and maintenance. You get predictable
performance and real-time information exchange with centralized
network systems. And you can build substations faster, more cost-
effectively and with reduced risk.
Trimming delivery losses
Innovative solutions, like GEs Volt/VAR
technology, can reduce energy waste
byadjustingvoltageandreactivepower
on distribution lines in response to
demand fromusers. So you deliver
a more precise level of power with
reducedlosses tomeet real-timeneeds.
Better understanding the true reactive
power status frees up line capacity and
reduces the need to invest in additional
generation and substations.
Stability over the long haul
GEs EMS solutions keep the power flowing efficiently
and reliably through transmission lines. Wide Area
Monitoring Systems (WAMS) synchronize phase angles
to maximize line capacity and maintain stability. With
more accurate condition understanding and manage-
ment, we helpyoustoppotential problems before they
occur and prevent catastrophic cascading outages.
Smarter software uses capacity knowledge to flexibly
integrate clean power fromconcen-
trated solar facilities and large
wind plants.
LLLL
Managing man-hours
Field-force automation solutions help
crews in the field and dispatchers
at the control center maintain,
repair and service the grid more
efficiently fromroutine service
orders to outage restoration
activities.
Thepower tocontrol demand
Demand response solutions combine smart
meters, smart appliances, traditional appliances,
home automation and heating/cooling controls to
dial down demand during peak times. GE demand
response helps keep expensive peaking generation
offline and reduces the need for newgeneration.
Over 100 utilities, servicingover 1.3 billion
consumers, trust GE EMS technologies for
managingtransmissionnetworks.
More than 1,000 companies in 40 countries rely
on GEs geospatial technology and advanced
engineering applications for network design.
Atrue viewfromthe top
Geospatial asset management systems
give network operators a geographic
inventory of assets and a detailed, accu-
rate model of the T&D network. So you
knowthe status of current equipment
and you have a trusted basis for design-
ing extensions to the network and
planning grid upgrades.
L
Acityscape of capabilities and control
GEs smarter Distribution Management System(DMS)
gives grid operators decision-support capabilities
to maximize systemefficiency, identify troubled
assets and improve network performance
and reliability.
L
Power to the people
GEs Wide Area Protection prevents and minimizes
power outages. Our solutions detect outages andauto-
matically reconfigure the systemto restore power.
Secure high-speed communications networks share
real-time information and direct operations to
either intelligently shed load or to identify and
access additional generation. Inthe end, net-
works and people make the right decisions to
keepthe power ontomore people more often.
Our engineers knowhowto communicate
Deliveringthe wireless or wiredprimarycommunications
networks for utilities, GEs high-speed, high-bandwidth
solutions are the enablingtechnologies that make areal-
time, information-rich smart grid possible. Fromsecure,
long-distance wireless networks, including WiMAX
solutions, to multi-service fiber optic
multiplexors and rugged Ethernet
switches, GE customers experience
rich, reliable communications.
LLLL
The power to understand
Energy information and control
can be vital elements in a smart
home automation hub. PCs, home
energy panels and mobile devices can
deliver real-time information to guide
and enable immediate household
energy decisions. Utilities can even
share real-time pricing information so
consumers can understand the true,
minute-to-minute cost of power.
Automation hubs can also interact with
lighting, appliances and heating/cooling
systems to manage a households total
energy usage.
Fromdevice to enterprise, GE has over
300,000 data management installations.
Millions and millions of GE smart meters are
installed and preconfigured to accept new
technology breakthroughs throughout the world.
L
Appliances that knowbetter
Smart appliances receive signals fromsmart meters that
determine howtheyoperate. During peak periods, they can
change modes or put off high-energy-consuming activities
to times when more energy is readily available and costs
are lower. Consumers can maintain their lifestyles with little
or no disruption, while lowering energy costs. Utilities get
lower peak-demand loads and increased consumption
during low-demand periods generating
revenue fromotherwise idle grid assets.
Meters that read customers
Smart meters with Advanced Metering Infrastructure (AMI),
coupled with dynamic pricing, can teach consumers to modify
their energy-use profiles, saving money and shifting high-
energy-consuming activities to lower-demand times. Nowa meter shifts
frombeing a simple reporting device to becoming a powerful influencing
device. GEs meters are communications-neutral,
working with whatever protocol utilities choose.
(PHEVs) Plug in, take off
Plug-in Hybrid Electric Vehicles will
connect with smart-metered homes to make
electric transportation practical and affordable.
Dynamic pricing can encourage charging at
night and give utilities a revenue streamfor
fixed assets that are otherwise lying idle.
LL LL
GE solutions move energy around the globe.
Much of the planets electricity is generated, delivered or consumed
using GE solutions. With 110+ years in the energy industry, were
uniquely positioned to understandhowthechallenges of electrifyingthe
world are different today, and changing for tomorrow. Whether its
transmission lines or smart-home technologies, GEs solutions, leader-
ship and industry collaborations can help modernize your slice of our
planets electrical infrastructure and turn challenges into advantages.
Real powerful solutions come fromapplying technologies, building
synergies and redefining realities to improve the performance,
reliability and efficiency of your electrical system. Its the smarter
way to the smart grid thats working with GE solutions around
the world.
Whether youre powering a city, a country or an industrial plant
Moving power is about more than stringing cable.
What challenges canGEs solutions turnintoadvantages for you?
More energy challenges fromgeneration to consumption.
More energy solutions fromGE.
Challenge: Inefficiency and the need for overcapacity
waste money and resources.
Real. Efficient. Solutions.
The grid is wasting energy at every point during every second of every
day lots of energy. And that costs lots of money. The cost of generating
a kilowatt-hour of electricity is 70 to 170 times the cost of saving a kWh
through efficiency. GEs smart grid technologies help reduce the flow
of lost energy and wasted money. We have solutions that help lower
delivery losses in transmission and distribution, and technologies that
anticipate and monitor demand to help you minimize overcapacity. In
the end, consumers and businesses actually use more of the power
you bring into the system.
Its Working:
AEP(American Electric Power Co., Inc.) is addressing the waste and inefficiency factors designed into our power delivery model. Utilizing GEs
Coordinated Volt/VAR-Control (CVVC) system, AEP is dynamically controlling voltage and power factors on feeders to minimize losses and reduce
customer energy consumption. By maintaining power factors near unity, AEP is reducing reactive power loading. Theyre applying more real
power and lowering reactive power waste all while maintainingcustomer service voltage standards. The bottomline? AEP needs togenerate less
power tomeet the same consumer demand.
1 kWh: generation 70-170 x >saving
Challenge: Power interruptions drag down the economy and disrupt our lives.
Real. Reliable. Solutions.
Power interruptions cost European Union businesses 150 billion each year.
(1)
Outages cost theU.S. economyanaverageof $1.5billioneachweek $80billion,
with a B each year.
(2)
They cost utilities in penalties, repairs, overtime and
customer service. GEs smart gridtechnologies deliver dramatic reliabilitygains.
With smarter networks, focused maintenance, better understanding and
greater load control, you have what it takes to prevent outages. There are
technologies to anticipate and prevent problems before they happen. And
when unplanned outages do occur, smart grid outage management systems
canreroute power tominimize the outage, analyze neededrepairs anddispatch
crews more effectively to get the job done faster and more efficiently.
Its Working:
When Great Britains Office of Gas and Electricity Markets introduced a Quality of Service Interruptions Incentive Scheme, EDFEnergy leveraged
its GE Distribution Management System(DMS) to cash in on the programs incentives and avoid paying penalties. EDF Energy, one of the UKs
largest energy companies, worked with GE to create automatic fault isolation and rerouting schemes that utilized the DMS hardware and software
already in place. As a result, fewer consumers are affected by outages and service is restored faster. The systemresulted in a 20%reduction
in customer interruptions and a 30%reduction in customer minutes lost in the first 18 months of operation. The cash payoff? EDF received a
regulatory performance reward of over 1 million.
(1)
Study conducted by Jonathan Mason for ECI.
(2)
Study conducted by Lawrence Berkeley National Laboratory (Berkeley Lab) for the U.S. Department of Energys Office of
Electric Transmission and Distribution.
99.999999
Challenge: The current formula for powering our planet is also a formula for changing its climate.
Real. Clean. Solutions.
Climate change is goingtoleadtoeconomic change. Because today40%
of the planets CO
2
emissions come frompower generation. By2020, Europe
has committedtocuttingits greenhouse gas emissions by20%, producing
20%of its energyfromrenewable sources andincreasingenergyefficiency
by20%. As carbonlegislationbecomes reality, GE smart gridcustomers will
have anadvantage. Our efficiencytechnologies reduce waste inthe system.
Andwecanhelpoptimizerenewables toaddmorecleanwind, solar and
biomass inthegenerationmixenablingmoredomesticcleanenergysources.
That means less relianceonthevolatilityof importedfuels andgreater energy
independenceandsecurity. Youget aworldof advantages for acarbon-
constrainedworld.
Its Working:
The Hawaiian Islands are aggressively moving fromtheir 80%-fossil-fuel-dependent energy generation to more renewable, carbon-free solutions.
GE is working with the U.S. Department of Energy, Hawaii Natural Energy Institute, Maui Electric Company and Hawaiian Electric Company to
deliver smart grid solutions that will help see 40%of Hawaiis electricity coming fromclean renewable energy sources by 2030. Hawaiis holistic
solution deployment includes the demonstration of increased solar and wind integration features through GEs Distribution Management
System. The deployment is also rolling out technology breakthroughs in energy storage and other renewablesintegration features to maximize
the usable energy fromHawaiis vast renewable resources. At the same time, GE will demonstrate peak load management with Demand
Response systems and Volt/VAR technologies to reduce the need for peaking generation and help manage the integration of wind and solar
power. The project is looking to reduce peak load in a substation by 15%and help enable higher penetrations of renewable energy in Maui.
20/20/20
Challenge: Our energy workforce and infrastructure are both
fast approaching retirement age.
Real. Productive. Solutions.
More than 50%of grid assets are at or approaching the end of their usable
life. In the next 10 years, 50%of the grids skilled workforce will retire with
a critical shortage of replacement workers. GEs smart grid productivity
solutions help on both fronts. Asset monitoring, management, maintenance
and optimization solutions can keep capital-intensive grid assets on the job
beyond their intended lifetimes. Workforce management and field force
automation solutions use advanced analytics, communications and geospatial
technology to apply human resources more efficiently and effectively.
Its Working:
Eneco, one of the Netherlands leading utility companies, is using GE Energys Field Force Automation (FFA) solutions to increase productivity
in its Joulz division including 500 field workers who provide construction, maintenance and operations services on distribution grids. Since the
introduction of GEs FFA solutions, Eneco has reported outstanding results, including significant productivity improvements for office personnel
and field workers. Yearly inspections are nowcompleted by March instead of December and maintenance work previously completed around
year-end is nowcompleted around September. The initiative has delivered an additional benefit not originally anticipated: Significantly increased
revenue frommore accurate billing and invoicing.
Unmatched domain knowledge to assemble needs-based solutions.
GEs approach to the smart grid is simple: Find what works best and do it. We
are continuously developing innovative products, cultivating newpartnerships
and seeking smart entrepreneurs to join the cause.
GEs global research centers employ industry authorities and proven research
rigor in a concerted effort to continuously find better ways to deliver energy.
With a commitment to open systems and enabling standards, GE people are
bringing unparalleled experience, talent, tenacity and technology together to
build complete smart grid solutions.
GE engineers sound, dynamic, worry-free solutions.
Unmatched domain expertise delivers more than superior engineering.
Real. Smar
Challenge: Consumers are in the dark about the
consequences of their energy usage.
Real. Consumer-Empowering. Solutions.
For the first time in the 100+ years of an electrified world, consumers can
finally understand howtheir habits directly affect their energy consump-
tion. And it makes a difference. Anumber of international studies have
shown that real-time smart grid pricing information changed consumer
behavior, helped reduce household electricity costs by up to 10%and
lowered peak-time consumption by 15%. With information portals and
in-home devices, GEs smart grid shows consumers howthey can take
control of their energy usage without sacrificing lifestyle.
Its Working:
Louisville, Kentucky consumers are improving their energy profiles without sacrificing lifestyles. GE smart appliances in homes equipped with GE
smart meters are helping consumers understand their energy use and make decisions that save energy and money every day. Smart appliances
are also lowering peak power demands by moving high-energy-consumption activities, such as freezer defrost cycles, to off-peak times.
10%
reduce household electricity costs
V
l
{
Challenge: Aroller coaster of load demand means huge
investments in capacity thats hardly ever used.
Real. Load-Smoothing. Solutions.
As energy demand continues to grow, so will the need for investment
in peaking resources that are rarely used, yet need to be available. That
contributes to skyrocketing energy costs between 2000 and 2007,
electric rates increased an average of 42%in the U.S. and 105%
in the UK. With worldwide energy demand forecasted to double by
2030, its only going to get worse. GE is smoothing the demand peaks
and valleys with demand response solutions, consumer empowerment
tools and voltage-reducing Volt/VAR technologies to lower peak demand
and better manage loads around the clock.
Its Working:
The worlds largest Marine Corps base uses GEs smart microgrid to handle on-site power generation and energy storage, while simultaneously
interacting with the local electric grid. Advanced network control and communications smooths load requirements by lowering peaking demand
and integrating power fromthe grid and onsite storage as needed. The solution also enhances the bases ability to add renewable resources,
shrinking its carbon footprint and increasing its energy independence.
Challenge: Communications technologies that power the smart grid
cannot be vulnerable.
Real. Secure. Solutions.
Moving information is as important as moving power in the smart grid. GE has made
the securing of private fiber optic, wireless and Ethernet communication networks a
cornerstone strategy to aid in eliminating cyber risks. Wereactivelyinvolvedwiththe
National Institute of Standards and Technology (NIST) initiatives to standardize and
optimize smart grid security. We work with the worlds leading IT security experts to
designsystems that resist outsideinfluences, detect tamperingandfollowstrict protocol
to keep information and energy flowing safely. And GE is employing technology and
protocols to help ensure data transmitted across the smart grid remains private.
Its Working:
CenterPoint
Energy in Houston, Texas, relies on GE's cyber-security-enabled WiMAX wireless radios, engineering services, and technical support
for its Advanced Metering Systemcommunications network that connects meter collection devices to CenterPoint Energys private network.
This rugged, secure, two-way communications solution uses 128-bit encryption to protect data in transit and an array of authentication tools
to secure data at points throughout the network. GE gets the right data to the right destinations without interception, misdirection or tampering.
t. Solutions.
SECURE
Challenge: Before making an effective business change, you need an effective business case.
Real. Financial. Solutions.
Agrid isnt really all that smart if it doesnt make financial sense. GEs smart grid
solutions deliver payback in efficiency, reliability, capital-cost reduction and asset
utilization. We also have the financial resources and financing solutions to help
throughout your smart grid deployment. So you have smarter ways to pay
for the solutions that help you:
Maximize your assets productive life cycles
Lower labor costs
Reduce the need for newequipment
Eventhe peaks indemandfor power, soyoumaximize the use of generation
Solve problems with maintenance instead of repair
Its Working:
Financial benefits of smart grid technology are wide-ranging and significant. Here are a fewof the gains smart grid communities can expect:
Improved maintenance and asset management lengthens asset life and defers capital expenditures
Efficiency gains result in more of the power generated being consumed by paying customers
Load leveling reduces the need for newgeneration while shifting consumption to non-peak times maximizing the profitable capacity
of current assets
Field Force Automation increases worker productivity, speeds repairs and reduces downtime
delivering
financial
Payback
Communities with efficient, reliable energy
resources will be the communities that thrive
in the 21st century. Theyll have the power
to attract business and industry. Theyll have
better jobs for a higher-skilled, higher-paid
workforce. Theyll have more potential to
fund the extras that make a society thrive.
GEs smart grid is an economic engine for
communities and utilities. It helps you do
more with less fromequipment repair and
maintenance to dispatching workers in the
field. And, as the utility workforce reaches
retirement age and replacing workers
becomes more challenging, youll have
systems in place to adjust to changing
realities without jeopardizing performance.
The bottomline?
You get newways to maximize the revenue
fromall your assets.
The smart grid is an economic engine. For everyone.
GE is working to
change the world
The worldwide
community needs
to change the way
it regulates utilities
and power distribu-
tion. GE is working
to help.
Through education and outreach to regulators, governments and
organizations worldwide, GE is advocating a re-examination and
restructuring of howutilities are overseen and regulated. Current
thinking was developed for the current grid neither is up to the job
at hand anymore.
Setting the standard literally
The smart grids newtransmission and distribution technologies need
new, uniform, performance-based standards. GE is taking an active
role on standards committees and governing boards throughout the
world. Were lending our experience to help make standards practical,
attainable, safe and affordable.
As a major standards influencer, GEs smart grid solutions are designed
to be in line with performance and compliance requirements being
created worldwide.
Theres never enough innovation to satisfy us
While everyone at GE is certainly proud of our invention and leader-
ship, were also smart enough to knowthat we dont have a lock on
innovation. And, we dont want one. The best way for the smart grid
to growand thrive is with newideas and better products being
developed all the time.
GE advocates a smart grid built on open systems to encourage
ongoing innovation fromcompanies large and small, everywhere in
the world. Its everybodys smart grid, and we believe open systems
should keep it that way.
Open to collaboration
The name you trust for objective performance across the smart grid
is GE. Were committed to bringing you the right solutions for your
grid performance even if theyre not GE solutions. So, we openly
collaborate with other technology companies to integrate products
and streamline solutions. Because its all about working smarter.
Building the grid for the next 100 years
GE has been in the power grid business since day one. Were proud
of that accomplishment. And, were proud of the advances our tech-
nology has brought to light in parts of three centuries. Today, we stand
ready to build the smart grid foundation for the next century of power
transmission and distribution. Its a commitment that helps complete
the GE smart grid advantage.
The smart grid is here. All you need to get
started is a smart conversation with GE.
Were building it today.
Technologies, People, Commitment, Proven Deployments, Worldwide Resources.
More energy solutions fromGE.
Ready to optimize the reliability, efficiency and performance of your grid?
GE has the real smart solutions you need to do more with less today.
Heres howto find out more:
2010 General Electric Company. All rights reserved. GE and GE monogramare trade-
marks and service marks of General Electric Company. The contents of this document
are the property of General Electric Company. No part of this work may be reproduced
or transmitted in any formor by any means, except as permitted in written license
agreement with General Electric Company. The information contained in this
document is subject to change without notice.
Trademarks of General Electric Company
AEP is a trademark and/or service mark of American Electric Power Company, Inc.
EDF is a trademark and/or service mark of Electricite de France Socit anonyme.
Eneco is a trademark and/or service mark of Eneco, Inc.
CenterPoint Energy is a trademark and/or service mark of CenterPoint Energy, Inc.
WiMAX is a registered trademark/service mark of WiMAX ForumCorporation.
imagination at work
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Atlanta, GA 30339
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www.itsyoursmartgrid.com
ACCELERATING
SMART GRID
INVESTMENTS
World Economic Forum
in partnership with
Accenture
This World Economic Forum report was developed by the
Forums Energy Industry Partnership in collaboration with
Accenture and with the input from an Advisory Board of
experts.
About the World Economic Forum
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state of the world by engaging leaders in partnerships to
shape global, regional and industry agendas. Incorporated
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Switzerland, the World Economic Forum is impartial and
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interests. (www.weforum.org)
About Accenture
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services and outsourcing company. It is committed to
delivering innovation and collaborates with clients aiming
to help them become high performance businesses and
governments. It has deep industry and business process
expertise, broad global resources and a proven track
record. With more than 186,000 people serving clients in
over 120 countries, the company generated net revenues
of US$ 23.39 billion for the fiscal year to the end of
August 2008.
About the Energy Industry Partnership
The Energy Industry Partnership (IP) programme of the
World Economic Forum provides chief executives and
senior executives of the worlds leading companies as well
as select energy ministers with the opportunity to engage
with peers to define and address critical industry issues
throughout the year. Identifying, developing and acting
upon these specific industry issues is fundamental to the
Forums commitment to deliver sustainable social
development founded upon economic progress.
As of 1 June 2009, the Energy Industry Partner and
Industry Associate companies include:
ABB, Applied Materials, BC Hydro, BP, Calik Holding,
Centrica, CERA, Chevron Corporation, Duke Energy, EDF,
EGL, EnBW, ENI, E.ON, Eskom, ExxonMobil, Fluor
Corporation, Fortum, GDF SUEZ, Iberdrola, JCS
Rushydro, Kuwait Petroleum Corporation, Lukoil Oil
company, OC Oerlikon, PEMEX, Petrobras, Petronas,
Reliance Industries, Renova, RWE, Sasol, Saudi Aramco,
Royal Dutch Shell, Siemens, SK Corporation, Socar,
StatoilHydro, Tokyo Electric Power Company, Total,
Vattenfall, Vestas Wind Systems, Xenel Group.
About the Smart Grid Advisory Board
The following Smart Grid Avisory Board experts
contributed to the report:
Juergen Arnold, Research and Development Director,
ESS EMEA Technology Office, Hewlett Packard, Germany
Bart Boesmans, Managing Director Laborelec, Research
& Innovation Direction, GDF SUEZ, France
Peter Corsell, Chief Executive Officer, Gridpoint, USA
John Finney, Global Product Manager, Business Unit
Network Management, Power Systems Division, ABB,
USA
David Mohler, Vice President and Chief Technology
Officer, Duke Energy, USA
Michele Morgan, Senior Vice-President, Smart Metering
and Infrastructure Program, BcHydro, Canada
Andreas Renner, Senior Vice-President, Head of
Representative Offices Berlin and Brussels, EnBW Energie
Baden-Wrttemberg, Germany
Blair Swezey, Senior Director, Solar Markets and Public
Policy, Applied Materials, USA
Dirk Schlesinger, Global Lead, Manufacturing Industries
and Managing Director, Asia Pacific Internet Business
Solutions Group, Cisco Systems, USA
Johan Sderbom, R&D Programme Manager, R&D,
Vattenfall Group Functions Strategies, Sweden
Benito Vera, Director of Strategic Analysis, Iberdrola,
Spain
The views expressed in this publication do not necessarily
reflect those of the World Economic Forum, Accenture,
the Smart Grid Advisory Board members or the Industry
Partner companies.
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Tel.: 41 (0)22 869 1212
Fax: 41 (0)22 786 2744
E-mail: contact@weforum.org
www.weforum.org
2009 World Economic Forum 2009 Accenture
All rights reserved.
No part of this publication may be reproduced or
transmitted in any form or by any means, including
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storage and retrieval system.
REF: 150709
1
From Accenture
Andre Begosso
Senior Manager specializing in economic regulation and
policy frameworks
Michael Donohue
Senior Executive responsible for Accentures engagement
with Xcel Energys SmartGridCity
Simon Giles
Senior Manager within Strategy, leading Accentures
global Smart City Strategy Programme
Jenny Hawes
Senior Consultant within Strategy, with a focus on
cleantech innovation and Smart Technology strategy
Mark Spelman
Global Head of Strategy
Jeffrey Taft
Global Smart Grid Chief Architect, Accenture Resources
Bartosz Wojszczyk
Global Market Director, Intelligent Network Services/Smart
Grid
From the World Economic Forum
Espen Mehlum
Associate Director, Head of Electricity Industry
Emilie Bompard
Team Coordinator, Energy Industries
Johanna Lanitis
Project Associate, Energy Industries
Advisory Board
Juergen Arnold
Research and Development Director, ESS EMEA
Technology Office, Hewlett Packard
Bart Boesmans
Managing Director Laborelec, Research & Innovation
Direction, GDF SUEZ
Peter Corsell
Chief Executive Officer, Gridpoint
John Finney
Global Product Manager, Business Unit Network
Management, Power Systems Division, ABB
David Mohler
Vice President and Chief Technology Officer, Duke Energy
Michele Morgan
Senior Vice-President, Smart Metering and Infrastructure
Program, BcHydro
Andreas Renner, Senior Vice-President, Head of
Representative Offices Berlin and Brussels, EnBW Energie
Baden-Wrttemberg
Blair Swezey
Senior Director, Solar Markets and Public Policy, Applied
Materials
Dirk Schlesinger
Global Lead, Manufacturing Industries and Managing
Director, Asia Pacific Internet Business Solutions Group,
Cisco Systems
Johan Sderbom
R&D Programme Manager, R&D, Vattenfall Group
Functions Strategies
Benito Vera
Director of Strategic Analysis, Iberdrola
Editor
Helena Halldn
Design and Layout
Kamal Kimaoui
Associate Director, Production and Design, World
Economic Forum
Kristina Golubic
Graphic Designer, World Economic Forum
Contributors
2
Contents
Accelerating Smart Grid Investments Executive Summary 3
Smart Grids as an Enabler to the Low-Carbon Economy 6
1. WHAT DEFINES A SMART GRID AND WHY DO WE NEED THEM? 7
1.1 Introduction 7
1.2 How Does the Power Grid Operate Today? 7
1.3 What Is a Smart Grid? 8
1.4 What are the Technical Capabilities that Deliver a Smart Grid? 11
1.5 One Size Does Not Fit All 12
2. BARRIERS TO IMPLEMENTATION 18
2.1 Policy and Regulation 19
2.2 Business Case 19
2.3 Technology Maturity and Delivery Risk 20
2.4 Increasing Awareness 21
2.5 Access to Affordable Capital 21
2.6 Skills and Knowledge 22
2.7 Cybersecurity and Data Integrity 23
3. SOLUTIONS TO THE BARRIERS TO IMPLEMENTATION 24
3.1 Creating Political and Economic Frameworks that Align the Stakeholders 24
3.2 Moving Towards a Societal Value Proposition 26
3.3 The Role of Standards 28
3.4 Increasing Awareness of Smart Grids 28
3.5 Creating a New Pool of Skills and Knowledge 29
3.6 Addressing Cybersecurity Risks and Data Privacy Issues 30
3.7 The Central Role of Cities in Catalysing Investment 30
4. SUMMARY RECOMMENDATIONS 32
4.1 Government and Policy-makers 32
4.2 Regulators 34
4.3 Utilities 34
4.4 Vendors 34
4.5 Customers 34
Endnotes 35
Glossary 36
3
The challenges of climate change and the continued
growth of electricity demand are putting increasing stress
on the worlds electricity network infrastructure. The
prevailing design philosophy for the existing electricity
networks is a legacy from a period when energy was
relatively cheap and plentiful and meeting rising demand
was the dominant driver. The world is now at the point of
transition to a new era where clean energy will be at a
premium, networks will need to be flexible to the
incorporation of new low-carbon technologies and
customers will demand greater insight and control over
their own consumption.
Smart grids are a necessary element to enable this
transition:
They deliver energy more efficiently and reliably
They provide the capacity to integrate more renewable
energy into existing networks
They provide the ability to manage increasing numbers
of electric vehicles
They enable customers to have greater control of their
energy
They have considerable capacity to reduce global
carbon emissions
They stimulate an array of new business models in the
energy sector
In addition to noting the benefits, it is worth recognizing
the potential impact of inaction: without smart energy
infrastructure, the integration of intermittent renewable
energy supply and the charging requirements for electric
vehicles have the potential to put the stability of the
energy system at risk. Even at relatively low penetration
levels, these technologies could cause instability and
increased risk of outages. By acting now, decision-
makers can avoid having the electricity infrastructure
become a bottleneck to delivering a lower-carbon future.
Smart grid technology will bring
together the advancements in
the IT and Telecommunications
sector embedded sensing,
computing and ubiquitous
communications to deliver a
safer, more efficient and more
resilient energy system. Not
dissimilar to the Internet, this
smart grid will act as a
backbone infrastructure,
enabling a suite of new
business models, new energy
management services and new energy tariff structures.
The smart grid will enhance the way that utility companies
manage assets and offer consumer-relevant products and
services, how consumers interact with their energy
supply, and how governments respond to the challenge of
maintaining security of supply and reducing carbon levels
while managing costs of energy delivery. However, a
number of factors are holding back this transition and
may ultimately act as a limiting factor to the broader drive
to reduce greenhouse gas emissions. This paper seeks to
define smart grids and present a recommended design
philosophy, identify the barriers to adoption and, finally,
suggest potential strategies to address the challenges.
One Size Does Not Fit All
The transition towards a
smart grid can be driven by
a number of factors, some or
all of which may apply to
varying degrees. However,
the hierarchy of needs will
vary from country to country,
region to region and even
circuit to circuit, based on
the legacy network that
exists and the ambitions of
local policy-makers. In some
cases, reliability may
dominate the list of
outcomes due to challenges
faced by an ageing
infrastructure; however, in
another area, the drive to
incorporate plug-in hybrid
electric vehicles and
distributed generation and
storage may be dominant. In
these instances, different
physical architectures might evolve that are optimized to
the local need. Over time, needs may change and
therefore the design philosophy will need to embrace the
concepts of flexibility, modularity, scalability and forward
compatibility.
To highlight the issue of variability in vision and design, a
number of smart grid archetypes have been outlined to
highlight how changes in the hierarchy of needs may lead
to smart grids that are optimized to prioritize certain
functionality. These are not intended as a menu of
designs, but simply as a demonstration of their potential
diversity. In each case, policy-makers and regulators will
need to define their hierarchy of needs and then work
with the incumbent utility to define the journey that takes
them from where they currently are to where they want to
be. In each case, the transition will need to be defined to
allow a gradual layering of capabilities that will lower the
impact on the incumbent utility and deliver the best value
for the customer.
Accelerating Smart Grid
Investments Executive Summary
Smart grids are
emerging as the next
strategic challenge
for the energy sector
and as a key catalyst
to achieve the vision
of a low-carbon
economy.
Ignacio S. Galn, Chairman
and Chief Executive Officer,
Iberdrola, Spain
Ultimately, smart grids
empower consumers by
providing unprecedented
visibility and control over
energy usage and will
change the way we all
think about and buy
energy. This new system
will also transform the
relationship between the
utility and consumer
from a one-way
transaction into a
collaborative relationship
that benefits both, as
well as the
environment.
Peter L. Corsell, Chief Executive
Officer, GridPoint
4
Policy and Framework Alignment
There are a number of factors that, in combination, act as
a brake on smart grid investment, most of which are
institutional and relate to the regulatory and policy
frameworks that have evolved to support the existing
power delivery system. The current frameworks often
create reverse incentives or fail to create sufficient positive
incentives for private sector investment. In the future, the
regulatory model will have to adapt to balance a suite of
outcomes in which carbon reduction and security of
supply are rewarded in the same way that productivity
and efficiency gains have been rewarded in the post-
privatization era. As a consequence, difficult trade-offs
may need to be made with the degree of market
competition and cost to the consumer.
If policy-makers and
regulators see long-term
carbon reduction and security
of supply as important
outcomes, they will need to
rebalance the regulatory
incentives to encourage
privately financed utilities to
invest at rates of return that
are commensurate with the
risk that they are taking. The
relative risk profile for smart
grid investments, given the
technology and delivery risks
that come with relatively
immature suite technologies,
will require policy and
regulatory frameworks that
allocate risk to the parties that
can diversify it most
effectively. This may mean
creating frameworks that
allow risk to be shared
between customers (either
through their utility bills or
taxes) and shareholders so
that risks and rewards are
balanced at the lowest total
cost to the customer. As it
stands, there are few
examples of where this is
being done effectively.
Moving from a Utility-centric Business Case to
a Broader Societal Value Proposition
In those cases where more forward-thinking regulators
and policy-makers have either commissioned business
cases or progressive utilities have taken it upon
themselves to push the issue, there have been mixed
results. Typically, the smart grid business case is tackled
as an add-on to the AMI business case and, as a stand-
alone case, it is hard to justify the additional expenditure.
In the majority of cases, there have been negative
business cases driven by two fundamental challenges:
High capital and operating costs Capital and
operating costs include large fixed costs attributable to
the ubiquitous communications network; hardware
costs do not factor in significant improvements in
economies of scale and production innovation, and
software integration assumes significant delivery and
integration risks.
Benefits are constrained by regulatory rules
When assessing the benefits business case, modellers
are restricted in what they can realize as cash benefits
to the shareholder. For example, in many cases, line
losses are considered as a pass-through to the
customer and, therefore, any reduction in losses would
have no net impact on the utility shareholder.
There is a clear link between the business case and many
of the barriers identified in this section. Regulatory and
policy frameworks determine the economics of the
business and therefore drive what can be accounted for
in the benefits case. They determine what benefits can be
monetized and which remain neutral to the utility shareholder
despite being of potentially significant value to the consumer
or society more broadly. Governments and industry need
to jointly assess the value for smart grid investment and
to develop either convincing rate cases that reflect the
value of the positive externalities, or public-private
partnership vehicles to share the investment burden
between the public and private purse. By moving beyond
the traditional utility-centric business case to a broader
view of the societal value, it will make it easier for politicians
and regulators to articulate the value to customers.
In the early years of smart grid investment, the costs will
inevitably reflect the relatively high risk of cost overruns.
By investing in a small number of high profile, large-scale,
integrated pilots and sharing the learnings, the global
smart grid community will be able to reduce the risk
premium on the capital and operating costs to a level that
makes the value case more viable. With US$ 461 million
of total smart grid investment in 2008 and an expected
significant increase in investment requirements over the
coming decade,
1
even small percentage reductions have
a large impact.
Smart grids represent
an evolution of the
electricity network from
generation to
consumption in a way
that is interactive,
flexible and efficient.
The challenges include
integrating renewable
but intermittent power
from large-scale plants,
often located far from
consumers, and from
small-scale installations.
It will take several
decades to apply the
solutions to a mix of
new and existing
equipment. All
stakeholders policy-
makers, regulators,
utilities and vendors
must tackle this
challenge together.
Joe Hogan, Chief Executive
Officer, ABB
5
Cities as Catalysts
During the early stages of the transition towards smart
grids, cities will play a critical role in demonstrating the art
of the possible and consequently reducing the delivery
risk for regional or national roll-outs. Cities such as
Boulder, Colorado, and Austin, Texas, are already leading
the way with large-scale pilots, and this trend can be
expected to continue with a migration to larger and larger
cities. However, not every city is suitable to be at the
vanguard of this change. To identify those cities that are
most likely to lead the change, a number of factors must
be identified that, when they converge, will produce an
environment that is primed for change. Key
considerations include the market structure (i.e. regulated
or liberalized), the degree of political alignment at the city
level and the occurrence of municipal asset ownership.
Conclusion
Despite the clear benefits case for smarter electricity
infrastructure, there are a number of factors, as defined
within this report, which are acting as a brake on
investment.
Two key themes sit at the heart of overcoming such
challenges:
Regulatory refresh There is an urgent need to
refresh the utility regulatory regimes that oversee the
governance and economics of the power industry. No
longer is it the sole purpose of this industry to provide
energy to the masses at cost-competitive prices; there
now exists a set of competing imperatives which
centre on the provision of infrastructure to support a
low-carbon economy while maintaining security of
supply and quality of service to the end consumer. The
regulatory regimes worldwide need to be restructured
to reflect these new imperatives. Governments and
regulators should provide clear profit motives to utilities
to place value on energy efficiency, encouraging utilities
to produce and deliver as efficiently and clean
electricity as possible, without compromising security
of supply. In both vertically integrated and competitive
utility value chains, utilities should be rewarded for
helping achieve this mission.
Public-private partnerships and societal value
propositions The limitations need to be recognized
of either the utility or the city/region acting in isolation.
A wealth of smart grid benefits sit across the boundary
between the utility and society as a whole. It is
unrealistic to expect the utility shareholder to take on
the full risk of investment in this instance. Public-private
partnerships are required for this technology to reach
its full potential. A new era of collaboration is essential.
It is necessary to move away from purely financial
business cases to develop broader societal value
propositions, which are reflective of more than financial
benefits and consider positive effects on citizens and
businesses from clean, reliable energy supply. They
can then be used as a tool with which to appropriately
allocate smart grid cost/benefit.
6
Over the next two decades, assuming a limited
intervention scenario, the International Energy Agency
(IEA) expects to see aggregate global energy demand to
roughly double from current levels as the population
increases, new consumers in the developing world
acquire electronic products and the growth in computing
consumption increases.
2
This growth in demand will
coincide with a global drive towards lower carbon
generation sources in the battle with climate change. It
will also operate within the context of an ageing power
grid transmission and distribution infrastructure which
desperately requires investment.
To successfully transition to a fully fledged low-carbon
economy, the core infrastructure for transmission and
distribution of electricity needs to be addressed. Smart
technologies will be a necessary part of this
transformation, applying telecommunications and
computing technologies developed over the last two
decades to the current and future electricity infrastructure.
Cities will play an important role in managing this
transition. At present, 71% of the worlds carbon
emissions are from urban centres
3
and, as such, cities are
at the front line of the battle for a low-carbon economy.
Cities are at the centre of global commerce, industry and
finance, and are critical to the functioning of the global
economy. If urban environments are to be sustainable in
the long-term, it will be critical to develop scalable, secure
and reliable communications and power grid networks
that will become the backbone for a much broader suite
of advanced and low-carbon technologies. Cities, as
centres of consumption, will become the focus for energy
conservation and efficiency, and smart technologies will
enable new products and services to be offered to help
consumers manage energy needs, whether at home, at
work or in transit.
The US Department of Energy published their Grid 2030
vision in July 2003 in which they stated the intention to
migrate towards smart grids. However, over the six years
since its publication, progress towards the vision has
been hampered by misalignment of incentives among
customers, government, regulators, utilities and product
suppliers. Standard business case methods often fail to
represent the true cost/benefit of smart grid investments;
costs are high, driven partially by a lack of awareness
The development of a fully fledged, low-
carbon economy will require changes to
the core electricity infrastructure. Smart
technologies will be a necessary element
of this transformation.
regarding the opportunities for realizing economies of
scale and scope within infrastructure investments to
deliver multiple outcomes, and do not represent the full
spectrum of hard and soft benefits, many of which cannot
be ascribed a specific monetary value. It is possible to
move beyond this impasse by creating a suite of policy
and economic frameworks that allow the alignment of
incentives across stakeholders and define value cases
that more fully describe the benefits case at a societal
level.
The global and local response to the challenges of climate
change will require an integrated supply- and demand-
side response. On the supply side, there is a drive
towards sustainable, low-carbon electricity generation
(e.g. nuclear, wind power, solar, etc.) and hydrocarbon
substitution (e.g. biofuels, biogas, electric vehicles, etc.).
On the demand side, customers are increasingly seeking
more information and control over their consumption and,
as a consequence, there are new technologies that
enable energy conservation and efficiency (e.g. smart
buildings, smart meters, demand response, etc.). Without
investment in the smart grid infrastructure to support
these technologies, natural limits will be reached as to
what can be achieved. The existing distribution grid
infrastructure is primarily designed for one-way flow of
electricity and limited consumption in the home. With the
growing implementation of large-scale, intermittent
renewable energy generation, distributed generation and
electric vehicles, the operational limits of the network as it
is currently designed will be reached. To avoid stalling
progress towards a sustainable and low-carbon future,
necessary investments must be made in power grid and
urban infrastructures that will effectively (without significant
operational constraints) accommodate these technologies
at large-scale deployment.
Smart Grids as an Enabler to the Low-Carbon Economy
Limited transparency with customers and regulators
Current State Current State
Analogue/electromechanical
Centralized (generators)
Reactive (prone to failures and blackouts)
Manual (field restoration)
One price
No/limited consumer choice
One-way communication (if any)
Few sensors
Manual restoration
Limited control over power flows
Estimated reliability
Current State Current State
Manual restoration
Estimated reliability
Transparency with customers and regulators
Modern Utility Modern Utility
Digital/microprocessor
Decentralized (generation)
Proactive
Semi - automated, automated (self-healing)
Real time pricing
Multiple consumer products
Two-way/integrated communication
Ubiquitous monitors, sensors
Condition - /performance-based maintenance
Pervasive control systems
Predictive reliability
Modern Utility Modern Utility
Proactive
Semi -
Condition -
Figure 1: Transition to a smart grid
1.1 Introduction
In the following section we will describe the power grid,
how it operates today and how a smarter grid will change
the design and operations to lead to more efficient,
effective power delivery in the future. There are several
challenges which are leading decision-makers to consider
this technology as an option and in some cases a
requirement. This section will explore the different
capabilities which sit within the smart grid construct and
how they help respond to those challenges. Once it is
recognized that smart grids are not a simplistic one-size-
fits-all, it is possible to examine the geographic variances
which occur and identify several smart grid archetypes
which correspond to a locations specific starting point
and implementation objectives.
1.2 How Does the Power Grid Operate
Today?
Todays power grid is analogue and
needs a great deal of investment. There
is significant scope for operational
improvements through smart grid
technologies.
Todays power grid is composed of two networks. The
first is an actively managed transmission network which
supplies electricity over longer distances at a higher
voltage; the other, the distribution network, operates at a
lower voltage and takes electricity the last mile to
individual homes and businesses. Combined,
transmission and distribution networks represent a
significant technical legacy, mirrored in its investment
requirements; current estimates are US$ 13 trillion
worldwide through to 2030.
4
Hes been dead more than 75 years, but Thomas Edison
hailed as the father of the light bulb probably could
run the nations modern-day electric grid. It just hasnt
changed that much.
5
Unlike other industries, telecommunications for example,
power utility infrastructure is composed of many
analogue/electromechanical legacy systems that are
prone to failure and blackouts. It is dominated by
centralized generation disseminated via a relatively
passive (limited control), and one-way or limited two-way
communication network between utilities and the end
users. Residential energy consumption is often projected
rather than measured. Grid maintenance is time-based
and often reinforced when system components fail or
reach their expected lifetime. Outage management
practice relies on consumers notifying the utility that a
power outage has occurred. A significant volume of the
electricity which enters the network is lost either through
technical inefficiencies or theft from 4-10% in Europe
6
to
more than 50% in some developing city environments.
7
1. What Defines a Smart Grid and Why
Do We Need Them?
7
8
1.3 What Is a Smart Grid?
A smart grid uses sensing, embedded processing and
digital communications to enable the electricity grid to be:
observable (able to be measured and visualized)
controllable (able to manipulated and optimized)
automated (able to adapt and self-heal)
fully integrated (fully interoperable with existing systems
and with the capacity to incorporate a diverse set of
energy sources).
Smart grids incorporate embedded
computer processing capability and
two-way communications to the current
electricity infrastructure. Smart grids
operate across the utility value chain,
and should not be confused with smart
meters.
A smart grid will create the platform for a wide range of
advanced and low-carbon technologies.
The smart grid, as defined in Figure 2, encapsulates
embedded intelligence and communications integrated at
any stage from power generation to end point
consumption. To date, the majority of the industry debate
has centred on smart meters and advanced metering
infrastructure devices designed to accurately measure
and communicate consumption data in the home or office
environment. Confusion can arise if the term smart
meter is used synonymously with smart grid. One of
the objectives of this paper is to provide some clarity
regarding this misunderstanding. The reality is that, with
the holistic smart grid, the smart meter becomes just one
more node on the network, measuring and relaying flow
and quality data.
Figure 2: Smart grids A holistic definition
Smart
D
substation
Smart
T
substation
Smart
T
substation
Smart
D
substation
Grid-based
renewables
Grid-based
storage
Nuclear
power plant
Coal and gas
plant with CCS
Natural gas
transmission
CO2 transport for
sequestration
Tidal power
Hydrogen, biofuels
and gasoline/
diesel distribution
infrastructure
H2

production
electrolysis
Direct H2

production
Gen IV
H2

production
electrolysis
Direct H2

production
Gen IV
Bio-fuels
production
H2

production
electrolysis
Direct H2

production
Gen IV
High temp
super
conductor
Super grids
HVDC link to
neighbouring
grids
CHP/district
heating
network, DC
micro grid
Embedded
renewables
Embedded
storage
Photo voltaics
Heat pump
Smart
sensors
Automatic
fault isolation
Smart buildings
Smart homes
Fault
location
Sensors,
smart switches
Highly insulated
housing structure
Micro
generation
Photovoltaic
roof tiles
Dynamic control
of refrigeration
and HVAC
In-house
data on
usage and
costs
Demand-side
management
High-efficiency
appliances
Plug-in hybrid
Wind farm
Wind farm
Fault
location
Generation
Transmission and distribution
Retail
Smart
meter
Low
power
radio
network
9
Todays Importance of Smart Grid
A number of factors are converging, driving the energy
industry towards a smart grid (as outlined in Figure 3).
These factors are bringing the agenda to the attention of
politicians and regulators and driving a need for industry
solutions. The requirement to act now is compounded by
the non-insignificant lead time on these technologies. The
opportunity cost of not investing at this stage firstly could
create a rate-limiting step in the renewables and electric
vehicle ramp-up, and secondly could result in mass
investment in dumb infrastructure which later has to be
upgraded at greater total cost to the customer.
A confluence of factors is driving the need
for investment. Smart grids have the
ability to fundamentally change the way
people interact with their electricity
supply.
A smart grid will exhibit seven key characteristics:
Self-healing and resilient: A smart grid will perform
real time self-assessments to detect, analyse and
respond to subnormal grid conditions. Through
integrated automation, it will self-heal, restoring grid
components or entire sections of the network if they
become damaged. It will remain resilient, minimizing
the consequences and speeding up the time to service
restoration. The modernized grid will increase the
reliability, efficiency and security of the power grid and
avoid the inconvenience and expense of interruptions
a growing problem in the context of ageing
infrastructure. In the US alone, interruptions in the
electricity supply cost consumers an estimated US$
150 billion a year.
8
It will reduce vulnerability to the
growing threats of natural disasters (hurricanes, ice
storms) as well as cyber-attacks and terrorism.
Integration of advanced and low-carbon
technologies: A smart grid will exhibit plug and play
scalable and interoperable capabilities. A smart grid will
permit a higher transmission and distribution system
Figure 3: Factors driving smart grid
EU and US
climate change
legislation is
forcing
companies to
implement
smart
technology
United Kingdom
mandate for
residential
national roll-
out of smart
metering by
2020
US$ 4.5 billion
US fiscal
stimulus
allocated to
smart grid
number of states
now planning
pilots
Rapidly
developing EU
policy re. Smart
Grid
Regulatory
Mandate
Massive
investment will be
needed to upgrade
the transmission
and distribution
grid over the next
10 years to meet
new low-carbon
energy
requirements
All new network
upgrades will
include the
introduction of
sensors and
controls to enable
efficiency and
improved
management
The total
estimated annual
cost to the US
economy from
power outages
and power quality
disturbances is
over US$ 100
billion which
can be saved
through smart
technologies
Ageing Grid and
Reliability
Under rising
costs of
energy,
customers are
likely to demand
a more granular
level of
information to
reduce their
bills
Consumer
energy
awareness and
demand for
sustainability
will require an
enhanced ability
to measure and
manage use
The use of more
flexible pricing
mechanisms,
such as Time of
Usage and
Critical Peak
Pricing, will
require
automation
Customer
Needs
The enabling of
energy demand
management to
reduce
consumption
peak shaving
and load
shifting will
require more
control in the
home
Carbon
emissions
reduction will
drive the need
for more
information to
enable energy
efficiency
Government
refunds will
require more
monitoring of
carbon
emission
savings for
auditing
purposes
Environmental
Impact
Increased use of
smart
technology is
increasing data
volumes and
driving the need
for high-speed
analytics
Automated
meter reading is
quickly
becoming
obsolete as
energy
companies move
to advanced
metering
infrastructures
In the face of
new capital
investment,
smart grid
components
are becoming
increasingly
cost
competitive
Technology
Evolution
Deployments of
renewables and
distributed
generation
technologies will
affect the design
and operation of
the distribution
network leading to
increasing need for
automation
Plug-in hybrid
vehicles are likely
to further increase
the stress on the
distribution network
Low-carbon
technologies will
mean the energy
grid will need to be
able to deal with
intermittent
generation and
drive need for
demand
management
Future Gen
Mix
10
penetration of renewable generation (e.g. wind and
photovoltaic solar energy resources), distributed
generation and energy storage (e.g. micro-generation).
Case studies from Belgium demonstrate that as low as
a 7% penetration of distributed wind turbines on the
low voltage network can begin to cause major
problems on the distribution network.
9
To mitigate the
intermittent nature of renewable generation, the
smarter grid can leverage embedded storage to
smooth output levels. Without a smart grid, diurnal
variations in generation output will typically require
renewables to be backed with fast ramp-up fossil fuel
based plants. Smart grids will also provide the
necessary infrastructure for mass adoption of plug-in
hybrid and electric vehicles, ultimately enabling both
scheduled dispatch of recharge cycles and vehicle-to-
grid capability. Such networks will allow society to
optimize the use of low-carbon energy sources,
support the efforts to reduce the carbon intensity of
the transport sector and minimize the collective
environmental footprint.
Enable demand response: By extending the smart
grid within the home (via a home area network),
consumer appliances and devices can be controlled
remotely, allowing for demand response. In the event
of a peak in demand, a central system operator would
potentially be able to control both the amount of power
generation feeding into the system and the amount of
demand drawing from the system. Rather than building
an expensive and inefficient peaking plant to feed the
spikes in demand, the system operator would be able
to issue and demand response orders that would
trigger a temporary interruption or cycling of non-
critical consumption (air conditioners, pool pumps,
refrigerators, etc.).
Asset optimization and operational efficiency: A
smart grid will enable better asset utilization from
generation all the way to the consumer end points. It
will enable condition- and performance-based
maintenance. A smart grid will operate closer to its
operational limits, freeing up additional capacity from
the existing infrastructure; this remains an attractive
proposition when a US study demonstrated that
transmission congestion costs Eastern US consumers
US$ 16.5 billion per year in higher electricity prices
alone.
10
Smart grids will also drive efficiencies through
reductions in technical and non-technical line losses
estimates are that 30% of distribution losses could be
mitigated.
11
Customer inclusion: A smart grid will involve
consumers, engaging them as active participants in the
electricity market. It will help empower utilities to match
evolving consumer expectation and deliver greater
visibility and choice in energy purchasing. It will
generate demand for cost-saving and energy-saving
Figure 4: Opportunities and benefits of a smart grid
A highly effective carbon abatement investment option
Opportunities for GDP uplift and green-collar job creation
Opportunities to rationalize national infrastructure investments
(telecommunications, energy)
Government and
Regulators
Opportunities to develop new products and services to
take to market
Ability to alter consumers interaction with energy

Opportunities to develop improved understanding of
consumer behaviour
Opportunity to transition from commodity provider
to higher-value service provider
Operational and maintenance savings from
improved outage management, etc.
Ability to take steps towards corporate
sustainability and carbon goals
Energy bill and carbon savings
Greater transparency, control and choice over
energy consumption
Increased availability of clean technologies,
such as electric vehicles and micro-generation
Utilities
Consumers Vendors
11
products. In a world where consumer expectations and
requirements are growing, smart grids will help educate
the average consumer, foster innovation in new energy
management services and reduce the costs and
environmental impact of the delivery of electricity.
Power quality: A smart grid will have heightened
power quality and reductions in the occurrence of
distortions of power supply. As the load demands
increase on an exponential path, power quality
degradation will manifest as more of an issue, in turn
requiring distributed monitoring and proactive
mediation. This will confluence with a decrease in
tolerance for power quality variances from modern
industry, particularly the hi-tech sector and the higher
costs of such quality issues as economies grow.
Market empowerment: A smart grid will provide
greater transparency and availability of energy market
information. It will enable more efficient, automated
management of market parameters, such as changes
of capacity, and enable a plethora of new products and
services. New sources of supply and enhanced control
of demand will expand markets and bring together
buyers and sellers and remove inefficiencies. It will shift
the utility from a commodity provider to a service
provider.
1.4 What are the Technical Capabilities
that Deliver a Smart Grid?
Layers of technical capability will be applied to a power
grid to deliver these smart grid characteristics:
Secure and ubiquitous communications: resilient,
two-way digital communication infrastructure exhibiting
appropriate bandwidth and latency and enabling
communications from generation source to consumer
end point
Embedded sensing, automation and control:
monitoring and sensors (voltage, current, etc.),
automated switches and controls and micro-
processing capability to enable the electricity network
to respond to real time conditions
Automated real time optimization: advanced
monitoring, sensing and controls, decision support
algorithms, low latency communications to support
active load balancing and self-correct for interruptions
and power quality issues in real time
Enhanced design and predictive monitoring: asset
data collection, analytics and advanced visualization
techniques integrated in to the utility enterprise
systems to provide the tools to optimize network
planning and predict and respond to anticipated
equipment failure
Figure 5: Smart grids Incremental layers of capability
Reliability
System losses
Constrained boundaries
Network security
Ageing network
Power quality issues
Balancing costs
Increasing loads
Lack of data for effective
planning
Sub-optimal asset
management
Intermittency due to DG
Increased in extreme
weather outages
Reverse power flow
Loads in excess of network
capacity
Secure and Ubiquitous
Communications
Embedded Sensing,
Automation and Control
Automated Real Time
Optimization
Enhanced Design and
Predictive Monitoring
Distributed Generation and
Demand Response
Secure and ubiquitous
communications
Remote sensing and condition
monitoring
Remote control and
automation
Fault analysis and response
Optimize power flow and
quality
Real time preventive action
Improved network design
Predictive monitoring
Perform dispatch and
registration for DG
S
m
a
r
t

G
r
i
d

C
a
p
a
b
i
l
i
t
y

L
e
v
e
l

Short-term network challenges Long-term network challenges
Time
12
Distributed generation and demand response:
simplified interconnection standards, two-way power
flow capabilities and more effective load balancing
techniques to allow distributed generation and energy
storage to be incorporated seamlessly into the
transmission and distribution network; energy
management systems will track the balance of supply
and demand on the network and control consumer
devices to optimize 24-hour energy consumption
1.5 One Size Does Not Fit All
When developing an understanding of smart grids, it is
important to recognize both the common technical
principals (embedded intelligence and ubiquitous
communications) and the geographic variances which
exist, and to move away from a one-size-fits-all definition.
Each smart grid implementation will have an architecture
that will be a function of:
Legacy characteristics of the power grid: the
condition of the existing smart grid infrastructure will be
an important determinant of the smart grid strategy.
The degree of urgency for implementation will vary,
depending on the relative state of repair and the
remaining capacity. The current and future generation
mix will also determine both the need and scope for
the smart grid. In some instances, a smart grid could
be a complete new build infrastructure, for example, to
support greenfield sustainable cities, which will offer
several more degrees of freedom for the strategy and
implementation.
Primary drivers for implementation: the specific
tactical and strategic objectives which the smart grid is
designed to achieve will also vary in each instance,
reflective of the regions challenges and ambitions. The
focus could be on either transmission or the
distribution network, where separate suites of
technologies might be required. The primary drivers
could range from enabling a city environment to
integrate low-carbon technologies to reducing the risk
of outages from extreme weather events. These
implementation drivers will define the to-be vision of
capability for the smart grid implementation.
Implementation of a smart grid will be
step-wise and tailored to fit, rather than
one-size-fits-all. The architecture will be a
product of the legacy infrastructure and
to-be vision for a smarter grid.
With both the legacy and the vision, the delta which the
smart grid implementation is intended to close can be
defined. Relating to the nature of this delta, the smart grid
will be configured differently to prioritize the capabilities
required to deliver specific business outcomes.
It is important to recognize that a smart grid
implementation is unlikely to be a big bang. The
complexity and scale will require an incremental approach
with the marginal capabilities, packages of hardware,
software and communication solution, phased over time.
Staged releases of logical capabilities which gradually
transform the grids functionality would be expected.
One of the first decisions with the smart grid strategy will
be which communications technology to adopt. Utilities
will have to be forward-minded to ensure that the
backbone they deploy has sufficient bandwidth and
latency to support the end game functionality of the smart
grid. Utilities should also be cognisant of the option for
installing smart grid component technologies/solutions
that can be lit up at a later stage as the communications
infrastructure is rolled out and/or the enterprise systems
are successfully integrated.
Below, some representative smart grid archetypes are
identified, and the drivers and capabilities likely to be
prioritized in initial releases are examined. None of the
examples listed has a fully fledged smart grid today, but
many have identified the need for change and have begun
developing strategies for change. The archetypes are not
intended to be exhaustive, but rather provide some
examples and templates for what smart grids will look like
in different regions. The archetypes help crystallize the
differences in drivers; it is recognized that, within one
geography, multiple priorities will be at play and, in this
instance, multiple archetypes will apply. In each case, the
legacy and hierarchy of outcomes will define the
parameters of the journey towards a smart grid, and the
transition will see multiple releases over time that will build
layers of incremental capability that will ultimately deliver
the desired outcomes. This staggered release strategy will
allow the utility to manage the transition at a pace that
does not compromise grid performance.
13
1. Aging Infrastructure
E.g. New York
Key drivers
Preventing energy loss
Reducing costs
Increasing reliability and
resilience to threats
Capabilities
communications
Remote sensing and
condition monitoring
Remote control and
automation
Fault analysis and
response
Optimize power flow
and quality
Real time preventive
action
Improved network
design
2. Island Networks
E.g. Singapore
Key drivers
Incorporating renewables
Enabling substitution
technologies
Optimizing consumption
Capabilities
communications
Remote sensing and
Remote control and
automation
registration for DG
Several major cities around the world are struggling with
outdated energy grids that have outlived their useful life and
failed to evolve with the demands of modern society. In the
US, Canada and many parts of Europe, the grid is now 60+
years old and major infrastructure investment is overdue.
Reducing costs and preventing energy loss are key drivers
of the business case in these cities, as opportunities for
maintenance cost reduction and efficiency gains are significant.
Smart grid implementations in these cities are likely to focus on
replacing distribution and transmission assets, as these are key
drivers of costs. Furthermore, the ability to predict and avoid
power failures through network intelligence will be important.
A good example of this archetype is New York City.
Reliability will be a key factor; the Northeast blackout of
2003 left 45 million people across eight US states
without power, including all of New York City, resulting in huge economic losses and
several fatalities. The US Electricity Advisory Committee estimates that a smart grid
would enable a 90% reduction in the cost of disturbances to business.
New York sources a significant portion of its electricity from Canada, meaning vast
transmission networks are an important source of costs.
Self-contained islands may be ideal
environments for spearheading smart grid
adoption, as small urban areas are conducive
to electric vehicle use and relative simplicity of
regulatory environments enables swift action.
Furthermore, islands are often heavily
dependent on external sources of energy and
highly vulnerable to the effects of global
warming, providing further incentive to diversify
the energy mix towards micro-generation and
renewables.
The key focus in this type of smart grid will be on the distribution grid, through enabling
substitution technologies and distributed generation. Import/export interconnections and
sub-sea transmission interconnections will also play a role.
Seven key smart grid archetypes provide logical groupings for implementation
architectures. They are intended to crystallize the differences in drivers; it is recognized
that, within one geography, multiple priorities will be at play and, in this instance,
multiple archetypes will apply.
Archetype Description
14
Key drivers
Capabilities
communications
Remote sensing and
Remote control and
automation
quality
registration for DG
A good example is Singapore, recently pegged by an international panel of experts
as an ideal place to launch an EV network.
12
Key characteristics:
A contained urban area (the longest east-west stretch is just over 40 km and
north-south stretch about 20 km)
Top-down policy environment which will ensure rapid deployment of a
complicated and ambitious system once there is buy-in from the top
Singapore has one of the most efficient and reliable electrical grids in the world
and a sophisticated IT sector, a good platform for smart grid roll-out
Environmental concerns key vulnerabilities to climate change include coastal
land loss, increased flooding, impact on water resources and spread of disease
Energy security concerns No indigenous oil and gas resources. Hydro,
geothermal and wind power are not available in Singapore, while nuclear energy is
not feasible due to population density and lack of scale. Plugging solar panels into
the grid is a potential solution
Singapore believes the current liberalized market structure should provide a
platform for innovation, while correcting market failures with market-based
instruments or through imposing standards and regulations
13
An ambition to develop leading-edge expertise that can be exported to larger
markets will also drive the smart grid effort and boost the business case. However, a
lack of economies of scale is one challenge that will need to be overcome
Renewable energy sources, such as wind farms,
are more location-dependent than conventional
power sources, contingent on where the natural
resources are most abundant (wind/tides/sun) and
where there is sufficient space and availability of
planning permission.
Typically, these factors lead to geographic
separation between concentrated renewables and centres of demand, often cities.
This increases the need for efficient long-distance transmission networks.
Alternative energy sources also have a high level of variability in electricity output,
causing variability of the power supply. This leads to intermittency issues as
electricity transmission systems require a real time balance in supply and demand to
maintain network stability and security of supply.
Such issues can be met in several ways, some of which involve a smart grid,
including using demand-side management and use of e-vehicles and vehicle-to-grid
storage capacity, and some probably do not, such as greater use of flexible
generation like gas turbines, or incorporation of storage. The benefit of a smart grid
solution is that it helps avoid intermittent renewables being backed-up with fast
ramp-up fossil fuel generation.
The United States Midwest exemplifies this archetype:
To accelerate the creation of a clean energy economy, we will double the
capacity to generate alternative sources of energy like wind, solar and biofuels
over the next three years, said US President Obama in a February radio address.
Well begin to build a new electricity grid that will lay down more than 3,000
miles of transmission lines to convey this new energy from coast to coast.
14
A key question is going to be how to get renewable power from the mountain
states to the West coast, or to the centre of the country.
15
3. Concentrated Intermittent Renewables
E.g. US Midwest
continued from previous page
15
Key drivers
Reducing costs
Capabilities
communications
Remote sensing and
Remote control and
automation
quality
registration for DG
As economic growth continues in
emerging economies, millions of
consumers in countries such China,
Brazil and India are reaching levels of
prosperity that will require substantially
higher energy use. In many of these
developing economies, energy theft is a
growing problem and one of the biggest
challenges that utilities are trying to
address.
Indias Ministry of Power estimates that about half of the electricity in the country is
billed. The financial impact of technical and commercial losses has been estimated at
1.5% of GDP.
Brazil is another country with similar problems; the federal statistics institute, Instituto
Brasileiro de Geografia e Pesquisa (IBGE), says that, by 2020, the number of
residents living in slums could climb to 55 million, equivalent to 25% of the national
population. Access to basic services like electricity in Brazils low-income
communities is limited, and slum residents in the countrys south-east and north-east
regions often resort to illegal power connections to meet basic needs such as
refrigeration and lighting.
16
Accommodating this demand growth and at the same time reducing non-technical
losses will require significant new build of generation, transmission and distribution
capacity. The case for smart will revolve around the grids ability to reduce non-
technical losses, integrate renewables and improve resilience to external threats.
Rio de Janeiro provides a good demonstration of the challenges and potential
solutions and has a small pilot project underway:
One local energy-distribution company, Ampla, was losing revenue from more
than 53% of all the energy it supplied. Through implementing smart grid
technology, it has been able to reduce losses to 1.6% of energy supplied
17
The key components included remote monitoring technology, feeding data to an
operations centre every 15 minutes. Software systems then analyse the data and
generate web reports, pinpointing transformers with higher than acceptable
losses
Furthermore, the ability to remotely disconnect culprits has been especially
important, as it saves the cost of having to send someone to do it manually and
overcomes the previous inability of connecting/reconnecting clients in violent
areas controlled by drug dealers
4. Developing Economy
E.g. Mumbai, Rio de Janeiro
16
Key drivers
Improving power quality
Key drivers
Enabling substitution
technologies
Capabilities
communications
Remote sensing and
Remote control and
automation
registration for DG
In many of the existing hi-tech
manufacturing clusters, a high degree of
power quality and reliability is critical to
complete the day-to-day activities. The
equipment used is typically extremely
sensitive to power fluctuations, and any
voltage surge, sag and momentary
outage on the supply cause several
tools, equipment and even entire
production lines to malfunction, resulting
in significant business losses.
The application smart grids features in the network, such as sensoring, automated
self healing and controlling mechanisms distributed throughout the network, can
monitor power quality and in the majority of the cases trigger automatic responses
ensuring a higher quality power in the network and less downtime.
Silicon Valley is a good example of this model:
Silicon Valley is the leading hi-tech economic centre in the United States. The
economy is highly dependent on the quality of the power supplied to many of the
electronics manufacturers and IT houses spread around the region.
In most parts of the world,
environmental awareness, the rising cost
of energy and the lowering cost of
technology such as solar panels are
driving governments and citizens alike to
increase the number and diversity of
micro-renewable energy sources.
Financial incentives by governments can
cause relatively rapid increases in the
penetration of these technologies (there
are examples of feed-in tariffs which
offer 10-fold the value of the energy). On-site photovoltaic panels and small-scale
wind turbines are present-day examples; emerging resources include geothermal,
micro-combined heat and power boilers, biomass, hydrogen fuel cells, plug-in hybrid
electric vehicles and batteries.
Todays distribution system is designed to deliver energy in a single direction from the
substation to the home. The integration of micro-generation goes against this design
assumption and can risk exposing system and customer equipment to potential
damage, decrease in power quality, decrease in reliability and extended time to
restoration after outage.
18
Such considerations are important in countries such as Belgium:
A Belgian utility is working to adapt fast to the increase in micro-generation.
5. Hi-tech Manufacturing
E.g. Silicon Valley
6. Distributed Generation and Storage
E.g. Flanders, Belgium
17
Key drivers
Improving power quality
Capabilities
communications
Remote sensing and
Remote control and
automation
quality
Feed-in tariffs of 45 cents for electricity placed back on to the grid have meant
that individuals investing in renewables can break even just two years.
19
Combined
with fast turn-around planning permission, an average of 7% of KwH is now
produced from decentralized power sources.
20
As a result, the utility is required to
explore the use of smart technologies to support this new energy infrastructure.
A safer and more resilient network grid is essential to
ensure progress and economic growth. Existing
energy grids are vulnerable to external threats or
attacks, such as natural disaster or cyber-attacks,
putting at risk energy supply and availability.
Implementing a next-generation electrical power grid
is vital to strengthening resilience and promoting
energy efficiency, security and alternative sources of
power. Our nation is at a crossroads as our energy
dependence and vulnerable critical infrastructures
become significant liabilities to our security and
resilience. Our current grid is highly vulnerable to
severe disruption in the case of a catastrophic
event.
21
The implementation of smart grids, using advanced communications and other
electrical capabilities, can create a more dynamic and agile grid that enhances the
resilience of the grid and ensures availability of energy supply.
Some regions have higher propensity to these situations, such as natural disasters,
cyber-attacks or both, making them ideal for smart grid adoption.
Prime examples are New Orleans, with its high propensity for natural disasters, any
major city vulnerable to cyber-threats and attacks, and the Harbin province within
China, which has a susceptibility to outages due to ice storms.
Smart grid adoption would be able to avoid and prevent many of the problems
resulted from these threats. Embedding smart technologies in smart grid
functionalities such as early warning systems, self healing mechanisms and active
temperature control can be on the front line to prevent outages and ensure energy
supply.
7. Enhanced Resilience
E.g. New Orleans, North-east China
18
In the following section, the current challenges that are
holding back investments in smart grids will be examined,
before looking, in Section 3, at potential actions that
could be taken to address them and accelerate the
adoption of smart grid technologies. There are a number
of factors that, in combination, are acting as a brake on
smart grid investment, most of which are institutional and
relate to the regulatory and policy frameworks that have
evolved to support the existing power delivery system.
Seven areas have been identified that will need to be
addressed before smart grids become more widely
adopted:
1. Policy and regulation In many cases, utilities do
not get as far as a business case for the smart grid as
there are regulatory and policy barriers in place that
either create reverse incentives or fail to create
sufficient positive incentives for private sector
investment.
2. Business case Where policy-makers and utility
executives are aware of the role that smart grids can
play, they are often unable to make the business case
for smart grid investments. Within the business case,
two factors operate: first, the capital and operating
costs are too high, as suppliers have not been able to
achieve scale economies in production and delivery
risk is priced in; and second, only those benefits that
are economically tangible are factored in, while other
ancillary and non-financial benefits are not included
(e.g. the carbon benefits) or are aligned to the
appropriate value-chain players.
3. Technology maturity and delivery risk A smart
grid brings together a number of technologies
(communications, power electronics, software, etc.) at
different stages of the technology maturity lifecycle. In
some cases, these technologies have significant
technology risks associated with them because de
facto or agreed standards have not emerged. In
addition, there are only a handful of examples of large-
scale implementation of more than 50,000 premises
and therefore there continues to be significant delivery
risk priced in to the estimates.
Seven barriers are holding back the
implementation of smart grids; none of
which are insurmountable, as described in
the next section. The paramount issue is a
regulatory framework that is out of sync
with todays industry needs and societys
broader environmental objectives.
4. Lack of awareness Consumers and policy-makers
are becoming increasingly aware of the challenges
posed by climate change and the role of greenhouse
gas emissions in creating the problem. In some cases,
they are aware of the role of renewable generation and
energy efficiency in combating climate change. It is
much less common that they are also aware of the
way that power is delivered to the home and the role of
smart grids in enabling a low-carbon future.
5. Access to affordable capital Utility companies are
generally adept at tapping the capital markets;
however, where delivery risks are high and economic
frameworks are variable, the relative cost of capital
may be higher than normal, which acts as a deterrent
to investment. Stable frameworks and optimum
allocation of risk between the customer, the utility and
government will be the key to accessing the cheapest
capital possible. In the case of municipalities and
cooperatives, this challenge may become amplified as
the ability to manage delivery risk is reduced.
6. Skills and knowledge In the longer term, a shortfall
is expected in critical skills that will be required to
architect and build smart grids. As experienced power
system engineers approach retirement, companies will
need to transition the pool of engineering skills to
include power electronics, communications and data
management and mining. System operators will need
to manage networks at different levels of transition and
learn to operate using advanced visualization and
decision support.
7. Cybersecurity and data privacy Digital
communication networks and more granular and
frequent information on consumption patterns raise
concerns in some quarters of cyber-insecurity and
potential for misuse of private data. These issues are
not unique to smart grids but are cause for concern on
what is a critical network infrastructure.
Of the seven barriers outlined above, the first three pose
the most significant hurdles, but, if addressed, will go a
long way towards creating an environment that will
encourage investment in smart grids. None of these
barriers is insurmountable; however, it is important to
understand the root cause of the issues before
developing strategies to break them down. In the
following sections, each area will be looked at in more
detail with examples that highlight the challenge.
2. Barriers to Implementation
19
2.1 Policy and Regulation
The current policy and regulatory frameworks were mostly
designed to deal with standard networks and utility
operating models; in effect, an all-you-can-eat buffet of
electrons. In some cases, this has evolved to encourage
competition in generation and supply of power. With the
move towards smart grids, the existing policy and
regulatory frameworks will need to evolve to encourage
the right behaviours and incentives for investment. The
new frameworks will need to align the interests of
consumers with utilities and suppliers to ensure that the
societal goals are achieved at the lowest cost to the
consumer (either through the utility or tax bill).
In most cases, governments set policy while regulators
monitor the implementation, protect the consumer and
seek to avoid market abuse. Over the last two decades,
the trend towards liberalized markets in many parts of the
world has focused the attention of policy-makers on
enabling competition and consumer choice. In economic
terms, the onus has been on the private sector to make
capital investments and to earn regulated rates of return
on those assets. In a mature market model, this is a
relatively low risk, low reward endeavour. The regulatory
models have evolved to become more and more effective
at avoiding market abuse and regulating rates of return.
Moving forward, the regulatory model will have to adapt to
balance a suite of outcomes in which carbon reduction
and security of supply take a more prominent place in the
defined outcomes. As a consequence, trade-offs may
need to be made with the degree of market competition
and cost to the consumer. If policy-makers and regulators
see long-term carbon reduction and security of supply as
important outcomes, they will need to rebalance the
regulatory incentives to encourage privately financed
utilities to invest at rates of return that are commensurate
to the risk. The relative risk profile for smart grid
investments, given the technology and delivery risks
outlined above, will require policy and regulatory
frameworks that allocate risk to the parties that can
diversify it most effectively. This may mean creating
frameworks that allow risk to be shared between
customers (either through their utility bills or taxes), and
shareholders, so that risks and rewards are balanced at
least aggregate cost to the customer.
Policy and regulatory frameworks need to
adapt; todays frameworks evolved to
encourage competition in generation and
supply of power rather than to promote
clean energy supply.
As it stands, there are few examples of where this is
being done effectively. Section 3 will look at some of the
mechanisms that are being used or suggested in
countries that are wrestling with this challenge.
2.2 Business Case
In those cases where more forward thinking regulators
and policy-makers have commissioned business cases,
or progressive utilities have taken it upon themselves to
push the issue, there has been a mixed set of results The
majority of examples results in negative business cases,
undermined by two fundamental challenges:
High capital and operating costs Capital and
operating costs include large, fixed costs attributable
to the ubiquitous communications network. Hardware
costs do not factor in significant improvements in
economies of scale and production innovation, and
software integration assumes significant delivery and
integration risks.
Benefits are constrained by the regulatory
framework When assessing the benefits, business
case modellers tend to be conservative in what they
can realize as cash benefits to the shareholder. For
example, in many cases, line losses are considered as
a pass-through to the customer and, therefore, any
reduction in losses would have no net impact on the
utility shareholder.
There is a clear link between the business case and many
of the barriers that have been identified in this section.
Regulatory and policy frameworks determine the
economics of the business and therefore drive what can
be accounted for in the benefits case. The regulatory
frameworks and accounting rules will determine what
benefits can be monetized and which remain neutral to
the utility.
As illustrated in Figure 6 (see next page), the smart grid
benefits case may begin as positive but, as misaligned
policy and regulatory incentives are factored in, the
investment becomes less attractive. A broader societal
benefits case which monetizes externalities is required.
By purely quantifying the utilitys financial
benefits which could be realized today,
the smart grid business case fails to
recognize the broader societal value
proposition.
20
The first consideration is the incentive to remove
inefficiencies from the system. Utilities may be fully
compensated for the line losses on their network;
therefore, this common good fails to be monetized by the
utility chief financial officer. Utilities also often recoup a
return on their assets deployed; therefore, capital deferral
(especially within generation) again is discouraged. The
electricity demand destruction realized through
empowered consumers will strip profits from the retail
business, and finally the utility market structure may
create a situation whereby those that are required to
invest realize limited benefit. The end result is that, once
the reverse incentives have been factored in, the utilitys
purely financial smart grid business case provides a mildly
negative view. But this perspective fails to realize the value
of externalities; it discounts the positive effects of
reduction in greenhouse gases and improved network
reliability. Section 3 will look at how the parameters of the
business case can be broadened through changes to the
regulatory accounting guidelines and innovative incentive
structures.
On the cost side of the equation, there is no avoiding the
fact that smart technologies are expensive to implement,
and at the current level of maturity it is right to factor in
the risk associated with delivery. However, there are ways
in which policy-makers and regulators can help mitigate
that risk and lower the fixed cost of communications by
seeking economies of scale and scope with broader
digital communications strategies (high speed wireless
and/or fibre roll-out). Going forward, it can be expected
that there is a move away from utility-specific business
cases to broader societal value propositions that look
across the entire value chain and seek to identify winners
and losers. In this way, a framework is created to
reallocate value accordingly to aligned incentives.
2.3 Technology Maturity and Delivery Risk
Within the smart grid technology landscape, a broad
range of hardware, software and communications
technologies, at various levels of maturity, can be seen. In
some cases, the technology is well established; however,
in many areas the technologies are still at a very early
stage of maturity and have yet to be trialled at significant
scale. At a component level, this means that many of the
core elements of the solution are not being produced at a
significant enough scale to make them economically
viable. With so few large-scale pilots under way, the
industry is still at the earliest stages of understanding how
to manage the explosion of data that comes from the
embedded sensing on the network. As the technologies
mature and standards (imposed or de facto) form, the
delivery risk will decrease but, until that is the case, the
risks will be factored into the business cases, making it
harder to justify.
Smart technologies vary in technological
maturity, with the challenges of data
management and secure, ubiquitous
communications proving to be key
considerations.
Figure 6 Illustrative graph of smart grid benefits case
Societal benefits
case, including
monetization of
intangibles
Carbon
abated
Market
structure
Reliability Capital
deferral
Demand
destruction
Line losses Smart grid
benefits
case
Utility benefits
case post-
regulation
Utility benefits
case pre-
regulation
21
On the hardware side, rapid evolution of designs and
functionality is seen from vendors all over the world. Over
the last three years, this space was being led by new
companies that were innovating rapidly and developing
integrated product sets that operated within their own
ecosystems, using proprietary data protocols and
sometimes even their own communications solution. More
recently, these companies have evolved to become more
agnostic to the communications solutions and more
focused on operating within a suite of hardware and
software solutions. In addition to this trend, there is
increasing interest from the more established hardware
providers as policy-makers, regulators and utilities begin
to make more significant commitments to smart grids.
This trend is expected to continue with increasing
competition from Asian manufacturers and, as a
consequence, standards will naturally form and
equipment costs will drop as economies of scale arise
and competition increases.
On the software and data management side, the critical
challenges to overcome relate to the integration of
multiple products sets and the management of data
proliferation. With multiple software providers come
multiple data formats and the need for complex data
models. In addition, the proliferation of data puts stresses
on the data management architecture that are more akin
to the telecommunications industry than the utilities
industry. Many of these issues are currently being
addressed in pilots such as SmartGridCity and, as a
consequence, the delivery risk will reduce as standard
architectures become established best practice.
(SmartGridCity is a trademark of Xcel Energy.)
At present, communications are presenting a real
challenge as utilities struggle to find a common
architecture that provides the right balance of latency and
bandwidth to satisfy their requirements. There are many
options that exist, from mesh radio solutions through 2G
and 3G to power line carrier (PLC) and broadband over
power line (BPL) and optical fibre. Each option has
different performance characteristics depending on where
and how it is implemented. Given the relatively high fixed
cost of a ubiquitous communications platform, it is
essential that it is designed with future functionality in
mind and with an ability to scale to fit over time as
additional demands materialize. In many cases, there is a
confluence of government digital broadband
communications infrastructure roll-out and smart grid
communications infrastructure roll-out.
2.4 Increasing Awareness
Consumers level of understanding and engagement in
how power is delivered to their premises is often low.
Within the policy-making and regulatory arena, smart
grids have only recently begun to attract interest where
renewable generation has dominated the share of mind
for low-carbon strategies in the past. This is compounded
by the relatively short tenure (3-4 years) of an average
PUC member. Within the utility industry itself, only recently
have smart grids reached the boardroom and, even then,
there remains a lack of consensus over what it is and how
it is best applied. If smart grids are to gain traction, it will
need to be clear to all the stakeholder groups what smart
grids are, how they are different to the status quo and
why they will be a central enabler of a low-carbon future:
Consumers will need to be educated on how their
energy consumption patterns at home, at work and in
transit drive cost and have value
Policy-makers and regulators will need to work across
government departments, to understand how smart
grid technologies will transform the networks and allow
for the integration of future low-carbon technologies
Utility executives will need to take a more holistic view
of smart grid technologies, looking beyond the smart
meter to a broader set of smart grid capabilities that
will fundamentally change the operating model of the
business; barely a process or system will remain
untouched
2.5 Access to Affordable Capital
In an environment of stable, predictable economic
regulation, access to capital is well understood by all
parties in the transaction. As the traditional capital
investment and replacement programmes are
supplemented with smart grid investment programmes,
the pricing of the additional risk will mean that the utility
weighted average cost of capital (WACC) will increase.
Unless this is reflected in higher allowed rates of return for
smart investments, the utility is unlikely to sanction the
expenditure; furthermore, the increased cost of capital will
The profile of smart grids among industry
and the public needs to grow.
Utilities are a relatively risk-adverse,
heavily regulated industry; they will need
to adapt towards investing in less mature
product sets.
22
further degrade the business case. In the long run, it is
expected that the risk profile return to something closer to
the current state as new, stable economic frameworks
come into play, delivery and technology risks unwind, and
risk is equally and optimally shared across the value chain.
If long-run, marginal costs of hardware are to drop, the
current low-volume vendors will need to scale up
production by investing in manufacturing innovation and
mass production facilities. To access the capital required
for this transition at a reasonable cost, they will need to
demonstrate that their risk of technology obsolescence is
low and that their volume projections are stable and
predictable. As it stands, there are many technologies
vying for similar functionality and little in the way or firm
commitments to volume purchases.
2.6 Skills and Knowledge
At this stage in the development of smart grids, there are
such a limited number of large-scale pilots that getting
access to leading industry architects is relatively easy. As
the number of projects proliferates, the demands will grow
for best practice documentation and information transfer
from the original set of communications, data and system
integration architects to the new projects. The existing
population of utility engineers has developed deep skills in
analogue electrical engineering; however, as the utilities
drive towards smart grids, there will be a demand for a
new skill set that bridges the analogue/digital divide and
brings new skills in communications, data management,
decision support and analytics.
Over the last two decades, the ageing workforce trend
has largely gone unchecked and, as such, many utilities in
the developed economies are destined to lose a
generation of power system engineers at a time when
they will be needed most to transition the existing
networks to become smart grids. To address this
challenge, a new cadre of engineers will need to be
trained to manage the transition and to build an expanded
set of skills that will help them design and build physical,
communications and data architectures that will support
the new grid. This transition will take investment of time
and resources from government and the private sector to
support education programmes that will create the
engineers of tomorrow.
Smart technologies will require specialist
skills to develop, implement and maintain
the new energy system. New skills and
knowledge need to be injected into an
ageing industry workforce.
In the future, there will be a need for a broader knowledge
base that can be tapped by entities choosing to transition
towards smart grids. Much of the progress to date has
been made by private companies developing and
patenting new technologies, processes and architectures.
Despite the current drive by the US administration to
foster innovation in clean technologies in the US and the
initiatives by FERC and DoE to drive standards, there is a
risk that these technologies will become universally
available but not royalty free. Those companies that are
investing in intellectual capital will want reasonable returns
on their investment. This issue will be addressed in the
US through the NIST (National Institute of Standards and
Technology) and may pave the way for a broader, global
consensus on smart grid IP.
22
Further to the challenge of developing enough skills and
knowledge to design and build the smart grid, a new
workforce of system operators, asset managers and field
crews will need to be trained to operate, manage, install
and maintain the network. This exercise will require
developing new competencies and skills in areas such as
advanced decision support, visualization and
communications engineering. The scale of this change in
skills and competencies will require utilities to think hard
about how they manage the transition to avoid
overburdening staff with change.
23
2.7 Cybersecurity and Data Integrity
With the transition from an analogue to a digital
electricity infrastructure comes the added
complexity of having to manage the security of the
communications infrastructure and data collected.
Concerns are now being raised about the integrity
and security of what will become a critical national
infrastructure. Articles have been released that
suggest that a digital network is more susceptible to
malicious attacks from software hacks.
23
In addition to these concerns over the vulnerability
of the communications and control system, there
are broader concerns over invasion of privacy and
security of personal consumption data. The data and
information collected on customer consumption (and
potentially generation) could provide significant insight
into customer behaviour and preferences. This
information, while potentially valuable to the customer,
service providers and system operators/planners,
could be abused if the correct protocols and
security measures are not adhered to.
In both of these cases, there are measures that can
be put in place to mitigate these concerns.
However, if not dealt with early in the process and in
a transparent manner, the issue could shift public
perception negatively and prove to be a barrier to
adoption.
With enhanced digitalization and the
greater availability of data comes greater
risk of data mismanagement or intentional
cyber-attack; such risks should be
effectively assessed and managed.
24
Despite the challenges laid out in Section 2, there are a
number of concrete actions that can be taken to
accelerate the adoption of smart grid technologies. At the
root of the solution is a suite of systemic changes that
need to be made to the way that policy-makers and
regulators structure the economic incentives and align risk
and reward across the value chain. By creating the right
economic environment for private sector investment and
thinking more broadly about the way that societal value
cases are created and presented, the two most critical
impediments will have to be overcome. Although national
and transnational changes are required, there is a central
role for cities to play in this process. Progressive and
visionary cities will act as catalysts. By testing these
solutions in increasingly larger environments, the entire
industry will learn what it takes to implement smart grids
successfully, and cities at the vanguard of the smart grid
revolution will reap the rewards of developing an industry
that is set to boom over the coming decade.
3.1 Creating Political and Economic
Frameworks that Align the Stakeholders
As it stands, the regulatory and policy frameworks in
place in most locations are not designed to encourage
the transition towards a smart network infrastructure, and
in some cases the frameworks create negative incentives
for investment. In a few cases, ambitious attempts have
been seen to redress the balance and encourage
investment in smart grid technologies. The final design of
the regulatory framework will differ from location to
location and will need to reflect the legacy environment
(level of market liberalization, age and history of assets,
ownership structures, etc.), desired outcomes and
proposed strategy for transition. In each case, economists
and lawyers will need to assess the frameworks and bring
to bear a suite of potential mechanisms that create the
right incentives across the entire value chain, allocate risks
optimally, protect private investors against stranded asset
risk and deliver the outcomes at the lowest cost to the
consumer (through their bills and/or taxes). This section
will tackle a number of critical policy issues and propose
potential remedies (some of which are already being
trialled). It has been deliberately chosen to stay at the
level of basic principles, given that the details will differ
from instance to instance; however, a number of universal
principles should generally be applicable:
Policy and regulatory frameworks will
need to adapt to enable the low-carbon
economy aligning incentives for smart
grid investment for both integrated and
non-integrated utility value chains.
Decoupling In most cases around the world, utility
revenues are a function of the commodity price and
volume of that commodity sold. In these cases, there is
a negative incentive to reduce consumption. In some
cases, regulators have introduced specific energy
efficiency incentives; however, in the US, some
regulators have gone further and decoupled utility rates
from the volume of the commodity that they are selling.
By guaranteeing a rate of return on the installed asset
base independent of the consumption levels, the
incentive to drive sales is reduced. Decoupling does
not, however, address the issue of gold plating, as
the utility is still remunerated on asset base installed.
However, this is not a new issue and regulators have
developed methods to address this. In some cases,
regulators may also want to create stronger incentives
for volume reduction in the domestic market or
flattening of peak load. However, decoupling is only
intended as a transitionary measure to manage the
transition from a commodity-based business model to
a service-based business model. In the long-run,
regulators, policy-makers and utilities will need to
transition towards a model that rewards efficiency, low-
carbon generation and flexibility for the consumer.
Output-based regulation As regulators and policy-
makers consider the best frameworks for smart grid
investment, it is worth considering a greater level of
output regulation. If it is assumed that similar regulated
return models will be used in the future, it is worth
considering linking bonus/penalty mechanisms to the
rate of return to encourage delivery of the outcomes
defined in the smart grid vision (those outcomes
specified during the design and architecting phase). In
principle, the utilities that are able to deliver the most
efficient network per unit of electricity generated should
get the highest rate of return.
Managing telecoms investments Telecoms
infrastructure will form a significant proportion of the
total investment in smart grids and has potential
overlap with other aspects of the broader economy. In
many developing and developed economies, the
growth of a high-speed data and voice infrastructure
(both wired and wireless) is a fundamental aspect of
their future economic growth plans. The roll-out of
these networks will cover similar footprints and may
present opportunities to drive economies of scale and
scope. Customers should not have to bear the burden
of multiple coincident communications networks unless
it is strictly necessary for reasons of security.
Furthermore, by piggy-backing the existing
communications infrastructure where possible, it will
improve the business case for marginal improvements
in smart grid functionality. In many cases,
telecommunications and energy regulators have
separate remits. Going forward, these regulators will
have to work more closely together to agree on
3. Solutions to the Barriers to Implementation
25
spectrum allocation, standards and cost/risk allocation.
The same is true of policy-makers who will be
responsible to consumers and taxpayers for delivering
telecommunications and energy infrastructure at the
lowest total cost of ownership.
Improved allocation of risk As mentioned in
Section 2, the technological and delivery risk
associated with smart grid implementation is
significant, although it will decrease over time as more
issues arise and are addressed. In the meantime, it is
important that the regulatory frameworks are structured
to allocate risk to the parties that are best able to
manage it and diversify it. Every party in the value
chain should shoulder some of the risk to align
incentives, but some parties are more able than others
to manage the risk. When designing the frameworks
for delivery of the smart grid and awarding contracts, it
should be clear that utility shareholders must hold
some of the risk, but only sufficient risk to make them
act in a way that aligns their interests to those of the
consumer, and to a level that is material but not so
severe that it is a disincentive to engaging in the
project. By balancing bonus/penalty mechanisms at a
material level, there will be improved alignment of
incentives. In addition to creating the right incentives
for the utility, there should be careful consideration of
how much of that risk the utilities can pass on to the
suppliers and contractors. If the risks are simply
passed through to the suppliers and contractors but
the benefits are kept by the utility, the alignment breaks
down. All parties should have positive and negative
incentives in the framework for delivery.
Migrating value across the value chain in a
deregulated market Although the process of
deregulation has delivered significant cost savings for
the consumer in many deregulated markets, it does
tend to make the process of transition to a smart grid
more complex as there are multiple private sector
parties involved with varying potential to win and lose.
In each deregulated market, it is important to look at
the entire length of the value chain and understand
where investments will need to be made and where
benefits will accrue. It will then be down to the
economists to work out how best to migrate the cost
and benefit across the value chain to make sure there
is an equal alignment of incentives and delivery of
benefits to the consumer. As with the private sector, if
consumers are being asked to shoulder significant
elements of the risk, they should also see the greatest
percentage of the reward.
Figure 7 US regulatory model examples
Build with Supplier
Mandatory by
Commission
I will build if you
approve
1 2 3
Xcel Energy and Current
Technologies; TXU and
Current Technologies
PG&E; San Diego Gas &
Electric; Southern
California Edison
Exelon; Duke Energy
Source: Company websites; State PUC; Accenture
Proof of concept at
technology level
Deployment to smart city.
funding is designed as a
shared-risk model with
contributions from multiple
partners. Total investment
US$ 100 million, US$ 15
million from Xcel
If successful, the project will
be put on rate base to be
recovered
Decoupling of rates due to
energy efficiency initiatives
Investments are mandatory
with directives approved by
the public utility commission
Decoupling of rates allow
for utilities to be kept whole
and recoup investment
Energy efficiency
programmes are in place to
avoid new building and rate
base increases
Will only invest in upgrading
the grid if public utility
commission approves
amount of capex prior to
deployment
Energy efficiency
programmes are being
proposed but recovery of
90% of demand destruction
Minimal impact until rolled
into consumer rates
Consumer will bear the full
cost of recovery of these
investments
Benefits are yet to be
proven to offset costs
None at the moment, but
likely to be minimized due
to regulatory environment
Strategy
Consumer Cost Impact
26
Dealing with stranded assets In some cases,
there will be a significant legacy of installed assets that
may become stranded by the transition to a smarter
grid. In deregulated markets, this may mean that some
players in the value chain will lose out significantly from
this technology. While this could be considered to be a
natural risk of doing business, there will be calls for
mechanisms to smooth the transition. If some
stakeholders are set to lose significant sums from the
process of modernization, there will be strong
incentives for them to delay the transition. Whether this
is dealt with through the regulatory mechanism or
allowed to play out without interference will be a
political decision, but it could put significant stress on
the transition. This issue has been faced a number of
times already in other areas, and the same mechanism
would apply but should be considered on a case by
case basis.
Funding of pilots If smart grids are to move forward
at a rate that will help society deliver its ambitions to
reduce greenhouse gas emissions, there will be a need
for many, coordinated smart grid pilots, which then
move quickly via effective dissemination of best
practice to full-scale implementation. These pilots will
need to vary in size and scope to ensure a broad
spectrum of understanding of the risks and mitigations
that need to be addressed to make smart grid value
cases more attractive. At present, pilots such as that at
SmartGridCity in Boulder have been reliant on the
investment of private sector companies and have been
conducted at significant risk. Since the announcement
of the fiscal stimulus packages in the US and
elsewhere, there has been a rapid increase in the level
of interest in smart grids and potential trials. To get
best value for money for the consumer and taxpayer,
these pilots will need to coordinate scope and size.
They will need to be funded or underwritten by either
taxpayers or consumers with incentives placed on the
parties engaged to share outputs and learnings so that
consumers can mutually benefit from investments
made elsewhere. Recently, a number of strategies have
been adopted by utilities to encourage regulators and
policy-makers to agree to pilots. A subset of US
examples are outlined in Figure 7.
3.2 Moving Towards a Societal Value
Proposition
The business case for smart grids today is defined in a
narrow context that prices risk in to the cost and
underplays the potential benefit. The challenge will be to
move from a utility-centric investment decision to a
societal-level investment decision which recognizes the
breadth of players and demonstrates the broader value of
smart grids, which may or may not currently be rewarded
within the confines of todays regulatory regime but remain
valuable to both the consumer and society. Recognizing
this value is the first step to appropriately rewarding it.
The business cases used for evaluating smart grids
should be developed to encompass generation,
transmission and distribution, retailers, customers and
smart grid technology suppliers. Business cases should
attempt to monetize appropriate externalities such as
carbon. They should consider the gross impact at an
economic level of building sustainable communications
and energy infrastructure GDP uplift, etc.
On the cost side of the equation, business cases should
consider that both the price per unit and the assigned
value for risk is expected to come down over the
deployment lifetime of a smart grid programme. They
should also consider whether costs can be shared
through economies of scale and scope with other major
infrastructure investments such as the national
deployment of a broadband infrastructure. On the benefits
case, they should recognize the potential of smart grids
as an infrastructure provider to a low-carbon economy
and attempt to monetize intangible benefits, such as
carbon.
Achieving greater efficiency in energy delivery
Efficiency reduces the need to maintain expensive and
potentially carbon-emitting generation assets and helps
reduce overall energy consumption. Smart grid business
cases should take account of building greater efficiency
A large proportion of the smart grid value
proposition resides in its benefits to the
public sector and to society as a whole. A
more holistic perspective is required to
capture and quantify externalities such as
avoidance of power disturbances and
carbon savings.
27
into the energy network (reduction in losses on the
network, peak load shifting) which today are ultimately
picked up by the consumer. New regulatory frameworks
which reward utilities for minimizing the technical losses
on their network will drive different behaviours. Regulatory
frameworks which are more innovative in how they
provide regulated return on assets and how they
incentivize demand destruction will lead the way to smart
grid deployments. Some strong examples are already
seen today where regulators energy efficiency
programmes compensate generators for 90% of the value
of demand destruction.
Enabling distributed generation and storage
combined with new business opportunities Smart
grids will change where, when and how energy is
produced. Each home and business will be enabled to
become a micro-generator. Onsite photovoltaic panels
and small-scale wind turbines are present-day examples;
emerging resources include geothermal, micro-combined
heat and power boilers, biomass, hydrogen fuel cells, and
plug-in hybrid electric vehicles and batteries. As the cost
of traditional energy sources continues to rise and the
cost of distributed generation technologies falls, the
economic case for this transition will build. Assuming a
10% penetration of distributed generation, technologies
smart, interactive storage capacity for residential and
small commercial applications has been estimated to add
US$ 10 billion per year by 2020 to the US economy.
Facilitating electrification of vehicles The ability to
electrify the transport sector also hinges upon a smarter
grid. Todays network is designed to provide
approximately 1 KwH/home. The advent of electric
vehicles and their charging requirements is likely to
increase this dramatically. Early estimates are that the
current distribution grid is not dimensioned for more than
a 15-20% penetration of electric vehicles. The recent
launches of e-vehicles by several major manufacturers
GE, Toyota, Nissan, etc. represent the bottom of the S-
curve on these technologies. If their uptake is to be
supported, it is imperative to plan ahead to put the
platform infrastructure in place.
Carbon abatement An important element to the
rationale of deploying smart grids is the ability to save
carbon, both directly through more efficient transmission
and distribution of electricity and more indirectly through
the ability to change consumers behaviour and as an
enabler for a raft of low-carbon technologies. Worldwide,
smart grid technologies can prevent about 2,000 MMT
CO
2
of emissions, or about 4% of worldwide emissions in
2020,
24
according to a recent study by The Climate
Group. This, together with other information and
communication technologies (ICT) opportunities (in the
key areas of travel/transport, buildings and industry
systems), suggests a potential reduction of about 15% of
total worldwide emissions in 2020. Moreover, considering
even a relative conservative future price of carbon, for
example US$ 20, would make the financial business case
for smart grids immediately positive.
Some visionary utilities, such as Duke Energy, are
beginning to quantify and assign monetary values to their
smart grid value proposition. Dukes smart grid business
case includes the avoided costs from improved reliability,
the carbon savings from lowered maintenance truck rolls
and the carbon and operational savings associated with
the reduced need for peaking plants. The study
demonstrates that 40% of the total value case for smart
grids is societal.
25
However, societal value propositions for smart grids do
not necessarily need to be limited to purely monetary
benefits. A number of externalities are likely to not be
readily converted into dollar values and, yet, still reflect
changes that are considered valuable to society more
broadly. Rather than trying to convert these benefits to a
monetary figure and having to make significant
assumptions that could undermine their validity, regulators
and policy-makers could take the benefits in their existing
format and build them into the economic framework of
incentives by creating rate of return multipliers (both
positive and negative) to encourage the right behaviour
from utilities.
28
3.3 The Role of Standards
At face value, the rapid migration towards a set of
standards seems the logical and lowest risk solution to
decreasing the implementation cost and risks for smart
grids. However, there are inherent risks in setting de jure
standards too early in the maturity cycle for a technology
that will need to be borne in mind as the industry is driven
headlong towards a set of standards. With most
technologies, a progression of formalization is seen
through coalescence around specifications and
requirements; through the formation of de facto standards
towards de jure national and ultimately international
standards. With smart grid technologies it is possible to
see a rapid acceleration of this process in some markets,
especially in the US, where the American Recovery and
Reinvestment act mandates the creation of national
standards and the process is already under way to create
them. A similar acceleration is seen in the European
market and is expected also in Asia.
There are pros and cons to rapid adoption of de jure
standards. On the positive side, there is likely to be a
more rapid reduction in the hardware and integration
costs for deployment of smart grids as suppliers and
utilities gravitate towards agreed standards. However, on
the negative side, there is a risk that the standards could
act as a barrier to innovation and constrain the ultimate
functionality of the system in an area where the
technology is still relatively immature. One example of
where the haste to develop standards ultimately
hampered functional innovation is in the mobile telephony
industry. In the drive to define the standards in the US, the
industry created solutions that constrained the US
networks ability to deliver value-added services such as
text and multimedia messaging. In Europe, the GSM
standard allowed more flexibility to network operators and
as a result there was a more rapid adoption of text
messaging and the resultant revenue uplift.
Given the complexity of the power industry, the multiplicity
of interfaces, the level of capital investment and the
strategic importance of critical national infrastructure, the
case for rapid adoption of standards is strong. However,
in the absence of de facto standards, the stakeholders in
the process will need to pre-empt the future functional
requirements of utilities and create standards that are flexible
enough to allow for innovation in the products and services
that can be offered on the back of the standard infrastructure.
Debate exists around the relative
importance of standards; the key is
getting the right type of standards at the
appropriate level within the architecture.
3.4 Increasing Awareness of Smart Grids
There is an imminent need to increase the amount and
the quality of available information regarding smart grids
across the board, from senior policy-makers and the C-
suite of the utilities to the electricity consumers. Each
stakeholder group will have a different set of priorities and
motivations for learning about smart grids, and the
content and direction of the education will need to reflect
that need and provide the appropriate details in given
areas.
The first step is to establish a clear, universal definition on
the common principles of a smart grid. Lack of a
consensus clouds the industry today. Smart meters (with
both one-way and two-way communications) are
discussed synonymously with a smart grid which delivers
quite a different set of capabilities. Beyond agreement on
a definition, the topic also needs to be discussed more
holistically as a true enabler to the low-carbon economy,
rather than as an investment decision to be taken purely
within the boardroom of individual utilities. The societal
benefits case for such investments warrants discussion
across the public/private sector boundary to develop
workable industry solutions.
The role of consumer education is not to be
underestimated. To maximize the benefits of smart
technologies, significant behavioural change will be
integral. The participatory nature of the new network and
the advent of energy management tool and services will
fundamentally shift the way people value and interact with
their electricity supply. The creation of user-friendly and
innovative products and services will play an important
role in engaging the public and articulating the answer to
the question, Whats in it for me?
Policy-makers and regulators will require help in quickly
getting up to speed on this relatively novel concept to
ensure that they are setting in place economic regulatory
and market constructs which address the true needs of
the industry. They will also need to ensure that they are
aligned across political parties to deliver consistent
messaging to their citizens. Forums and open discussions
with utilities and technology suppliers will be an important
element of this process.
The dissemination of clear, consumer-
relevant smart grid information to the
public domain will be a key accelerator for
education across the stakeholder groups.
29
Relatively quickly, utilities also need to obtain a base
understanding of the technology, business case and
implementation challenges of smart grids. They need to
leverage the learnings from the handful of smart grid pilots
which are live today. Utility executives need to begin
factoring smart technology into their asset management
planning and anticipating the impacts on both their
business models and operations.
3.5 Creating a New Pool of Skills and
Knowledge
The greying workforce and shortage of engineering
talent are already concerns within the utility sector.
Successful implementation of the smart grid will require a
large number of highly skilled engineers, particularly those
trained to work on transmission and distribution networks.
As such, a dramatically increased commitment to on-the-
job training and workforce development will be required
across the industry. In parallel, there is a need for
investment in the development-relevant undergraduate,
postgraduate and vocational training to ensure the
building of a sufficient pipeline of next generation, smart-
grid-savvy electrical engineers. Mechanisms such as the
Green Jobs Act and Workforce Investment Act in the US
provide initial examples of formalizing this investment.
Smart grid investors should also look beyond their
national borders and recognize the wealth of engineering
talent that is available globally. Today, China is the largest
producer of engineering graduates in the world, with
some 600,000 passing out of its colleges and universities
last year. India is not far behind, producing slightly more
than 500,000 engineering graduates a year.
26
In
comparison, the United States produces only 70,000
engineering graduates every year. All of Europe produces
just 100,000.
27
The ability to sensitively leverage this
abundance of talent will help alleviate short-term
bottlenecks in supply.
The investment should not be limited to the T&D
engineering workforce; research and development skills
and knowledge will also be fundamental to accelerating
this sector. Studies and papers released by the US
National Energy Technology Laboratory and President
Obamas recent pledge of US$ 1.2 billion to the
Advanced Research Projects Agency-Energy marks good
progress in this arena. The literature to date has been
Addressing the skills shortages and
providing the infrastructure to facilitate
cross-industry knowledge exchange is
fundamental to moving the technology
forward.
fairly US-centric, and there is a clear
requirement/opportunity for countries outside the US to
establish a stronger presence in this area.
The final key solution in this area is the efficient and
effective dissemination of knowledge. The role of
organizations such as the Institute of Electrical and
Electronics Engineers will be integral to coordinating
international smart grid efforts and helping share and
establish best practices. The role of innovative
professional networking sites which are dedicated to
linking professionals within the cleantech sector should
also not be underestimated as a forum for discussing and
solving the key challenges facing the industry. Part of the
solution will be effective impetus placed on those
organizations which conduct pilots to contribute
knowledge capital backs to the wider community. Levers
such as fiscal stimulus conditions may be useful in this
regard.
30
3.6 Addressing Cybersecurity Risks and
Data Privacy Issues
With increased computer and communications network
interconnection comes the increased potential for cyber-
attack. Information technology companies have been
tackling similar security issues for more than 20 years, but
the critical asset base in question makes this a
considerable challenge. This is not a challenge limited to
the larger utilities within an integrated system; all players
must adhere to sufficiently high standards to withstand
attack, as they all retain the potential of becoming a
vector of vulnerability to the broader network.
NERC, with the support of NIST and EPRI, has been
making some solid progress in the definition of
cybersecurity standards. First and foremost, they are
supporting utilities to identify critical assets and to apply
risk-based assessments.
28
It is hoped that these
standards will be rolled out industry-wide and provide a
global benchmark. To date, the US has been most
proactive in the creation of smart grid standards; it is
imperative that Europe follow suit via the European Smart
Networks programme to provide a unified international
standard for Europe to serve what will potentially be a
highly interconnected pan-European smart grid.
Standards will also need to be supported through new
legislation; there are two US smart grid cybersecurity bills
in the pipeline.
29
In alignment with this, utility executives
will be expected to progressively establish expectations
for cybersecurity performance and hold employees
accountable. The systems will need to be rigorously
tested on build and undergo continuous risk
management. The challenges are not insurmountable and
have been overcome with other critical systems e.g. the
global banking system when treated with due care and
attention.
There remains a valid concern regarding the way
individuals energy consumption data is used, both by the
utility and by third parties. Such concerns recently held up
a decision to mandate smart metering in the
Netherlands.
30
The solution to such challenges will involve
clear legislation around smart meter and smart grid data
ownership and privacy, similar to how telecoms data is
carefully managed and used today. Utilities, regulators and
governments will need to give consumers confidence that
Concerns over cybersecurity should be
met with appropriate standards and
legislation. Individuals should be satisfied
that their personal data is protected and
handled appropriately.
their usage data is being handled by authorized parties in
an ethical manner. Such assurances will be the key when
developing the public perception of these new technologies.
3.7 The Central Role of Cities in Catalysing
Investment
Why Cities?
When looking at the global variation in smart grid drivers,
it becomes apparent that cities will be integral in
managing the transition to a smarter energy infrastructure
and a functioning low-carbon economy. The city
environment provides a prime location for smart grid
investment. They are centres for electricity demand,
investment and innovation; they are great starting points
from which to pilot technologies in the move towards
larger and larger scale roll-outs. Cities are looking for
solutions; they have requirements to provide services
which work towards national and internationally agreed
targets on efficiency and carbon reduction goals (e.g.
cities within the European Union striving towards a 20%
reduction by 2020). Cities are also competing on a global
stage for inward investment (to attract business and
entrepreneurs), for public expenditure (for public funds to
invest/create jobs, etc.), for residents (affluent, talented
citizens) and for visitors (tourists and business travellers).
Putting in place sustainable communications and
electricity networks will be critical in maintaining a long-
Cities will play a pivotal role as catalysts
for smart grid implementation, with some
of the greatest needs and the greatest
motivation. Several factors have been
identified which highlight those cities
likely to be early adopters.
31
term competitive edge. Rather than a piecemeal
infrastructure upgrade approach, smart grid investments
offer cities an integrated infrastructure upgrade
methodology: optimization of operations (transmission
and distribution networks), a drive for behavioural change
(using less, cleaner energy) and the introduction of new
technologies (smart grids, combined with smart meter
and home/office automation) simultaneously.
On a purely environmental basis, it is imperative that cities
engage in smart grids 71% of emissions are generated
by urban environments. Moreover, people continue to
coalesce in urban environments, driving load growth and
increases in city infrastructure 50% of the worlds population
lives in cities today, and 70% of the global population is
expected to live in urban environments by 2050.
31
Smart grids could reach their greatest potential in urban
environments, providing the backbone for a series of low-
carbon technologies in the city environment, including the
integration of distributed micro-renewables; biomass-
based generation (using anaerobic digestion of organic
waste); dynamic transport solutions; distributed sensing
and control environments; interconnected smart building
environments; electric vehicles charging infrastructure,
etc. The municipality political construct has a privileged
position to act as an integrator to help realize
sustainability across multiple areas, often grid assets
owners, with links to waste management companies, and
building companies, and a role in transportation politics to
bring together the disparate stakeholders and align them
towards common goals such as CO
2
reductions.
Which Cities?
Cities will not be equal in their immediate amenability to a
smart grid deployment or their relative capability to
execute a smart grid strategy, the primary variables being
policy and regulatory constructs, economics and
consumer appetite. To identify the cities that are most
likely to lead the change, a number of factors have been
identified that, when they converge, will produce an
environment that is primed for change. Both national and
local factors will be at play.
National factors
Market structure: The electricity market structure will
be the key. Within a regulated and vertically-integrated
market (e.g. in the US), the relative ease of aligning the
different parts of the value chain to drive a common
outcome will be significantly less complex. The
alternative, a deregulated, liberalized market (e.g.
United Kingdom, Germany), will have an increased
need to motivate multiple, competing parties to drive in
a common direction and to develop economic
regulation which successfully rebalance who invests
and who benefits.
Federalization: Those countries which favour
dissemination of the decision-making power will
empower the local decision-makers (governors,
mayors, etc.) to promote smart grid investment within
their domain and equip them with the autonomy to
strive ahead of the curve.
National ambition: Some countries will target smart
grids as a technology to excel and develop relevant
intellectual property and skills to export globally. One
example is South Korea, whose government drive has
seen over-allocation of fiscal stimulus funds to smart
grids, and the recruitment of over 100 personnel to a
dedicated government department.
Local factors
Visionary leadership: To engage in a task of this
magnitude, the city will require bold and visionary
leadership.
Political alignment: The alignment of the political and
decision-making authorities at the municipality level will
be the key the local government, the mayor,
incumbent utility and the city council will need to step
through the smart grid transition together. This was a
key success factor in Boulder, Colorado, for example.
Municipal asset ownership: It is much easier for
cities to make smart grid decisions if the city owns the
distribution assets.
Consumer appetite: The citys appetite for change
will also be fundamental. Those cities with
environmentally aware citizens, who are open to new
technology, will be able to move at a faster pace.
Specific goals and timelines: An impending event or
set of challenges can act as a catalyst for the decision-
making. This could be a major political or sporting
event or an impending election or contract renewal for
utility concessions.
It is important to recognize that, even if cities operate as
an impetus for smart grid implementation, they cannot act
as single point implementations; this approach will never
allow smart grids to reach a meaningful scale. Rather,
they must sit within an integrated regional/national
approach and commitment to a smart electricity system.
It is also noted that, in some instances, visionary utilities
may lead the way, e.g. as in Palo Alto, California.
32
To achieve the successful acceleration of smart grid
investment, it is necessary to raise awareness and
understanding across all industry stakeholders. In parallel,
it is imperative to support a transition from planning to
implementation, establishing pragmatic policy and
regulatory structures which drive the right behaviours and
long-term outcomes across the industry.
The successful global acceleration of smart grid
investment will be a central tenet of the transition to a
lower-carbon economy. The benefits of smart grids (as
described throughout this paper and crystallized in Figure
4) are persuasive and resonate across the full spectrum of
stakeholders. To access this wealth of value, it will be
necessary to ensure that the systemic industry structure is
correct. Central to the required changes are two themes:
Regulatory refresh adapting utility regulatory
regimes worldwide to provide clear profit motives to
utilities to place value on energy efficiency;
encouraging utilities to produce and deliver as
efficiently and clean electricity as possible, without
compromising security of supply
Public-private partnerships and societal value
propositions a new era of collaboration is required
across the utility industry and among
government/policy-makers, accompanied by a move
away from purely financial business cases to broader
societal value propositions that demonstrate the
benefits of smart grids to the general public
Despite the stated benefits outlined above, some policy-
makers may still be hesitant to make what is undeniably a
significant and definitive investment. However, it should be
stressed that the potential costs of procrastination in making
this transition are equally significant. Failing to have the
appropriate backbone infrastructure is likely to put a brake
on the integration of alternative low-carbon technologies.
Maturing, clean technologies will struggle to shift from
small-scale implementations to mass roll-out, for example
PHEVs, and microgeneration. Without smart grids and the
regulatory structures that support a shift in the utility retail
operating model, it will be more difficult to deliver energy
efficiency measures. The opportunities for industry to
create new products and services, to develop a better
understanding of their customers and to provide more
jobs and economic uplift will be considerably curtailed.
The acceleration of smart grid investment
is pivotal to the creation of a low-carbon
economy. It will require timely and
definitive action across a range of
stakeholders.
The time for this action is now. Recent economic
modelling by the Stern Review estimates that if action is
not taken now, the overall costs and risks of climate
change will be equivalent to losing at least 5% of global
GDP each year, now and forever, rising to 20% of GDP or
more if a wider range of risks and impacts is taken into
account. In contrast, the costs of action now reducing
greenhouse gas emissions to avoid the worst impacts of
climate change can be limited to around 1% of global
GDP each year.
32
To help progress the debate and to move towards this
end goal, the section below provides a handful of key
recommendations for each stakeholder group as a
distillation of this papers findings.
4.1 Government and Policy-makers
Policy-makers and governing bodies have a role to play at
multiple levels to accelerate smart grid investment.
Trans-national
Global policy forums will play a key role in establishing
common smart grid standards and protocols that will
remove industry uncertainty surrounding the risk of
technology obsolescence and accelerate investment. A
coordinated set of pilot projects with shared access to
data and knowledge gained will help reduce delivery
risk and therefore improve the value case for smart
grids.
Global climate change initiatives, such as the UN
Climate Change Initiative (COP15), have an essential
role to play in translating carbon reduction targets to
action. Formalization of GHG reduction targets and
liquid carbon markets will create a stronger platform for
change and will help translate intangible carbon
reduction externalities into financially quantifiable
benefits.
National
National policy-makers will need to rebalance the
potentially competing objectives of climate change,
security of supply, competitive markets and cost to the
consumer. Clarity over these objectives and generation
portfolio mix will help set the parameters for regulators
and utilities to generate smart technology strategies.
National statements of intent on the potential for this
technology to achieve national carbon and security of
supply objectives will help drive industry momentum
and awareness. Statements of intent will allow vendors
to invest in scaling up production which, in turn, will
improve the value case for investment.
4. Summary Recommendations
33
Beyond statements of intent, national governments
could potentially play an important role by developing
regulatory frameworks and co-funding of pilot projects
conducive to bringing down risks to investors.
National governments are encouraged to look across
their departmental portfolios to see the opportunity for
economies of scale and scope regarding the
deployment of smart technologies and national
telecommunications infrastructure.
National policy-makers can play a key role in
encouraging utilities to stretch their thinking beyond
standard smart metering deployments to consider
smart grid and smart homes and offices.
Local
Bold leadership by local government leaders can help
catalyse the implementation of smart grids by drawing
together critical stakeholders from utility companies
and major industrial and commercial consumers.
By setting a bold vision, strategy and roadmap for
achieving energy efficiency and carbon substitution
goals, local government can position cities at the
forefront of the low-carbon economy, attracting high-
value investment and boosting local GDP. The
competition between major cities to house this next
wave of clean technology companies is intense and will
require integrated local strategies.
34
4.2 Regulators
Regulators will be responsible for designing and
implementing relevant and workable regulatory
frameworks and incentive structures that reflect the policy
objectives set by politicians.
Regulators will need to create regulatory frameworks
that align the incentives of each participant in the
energy value chain. In deregulated markets, this will
require new economic frameworks that allocate risk
and reward efficiently, create the right incentives and
deal with asset stranding risk.
In assessing the viability of utility investment plans,
regulators should switch from a purely financial
business case towards a broader set of measures that
reflect the total societal value proposition.
By shifting towards an output-based regulatory
framework, regulators can translate the broader set of
societal values into economic incentives and penalties
that will encourage behaviour that aligns the needs of
shareholders with societal needs.
4.3 Utilities
Utilities will be responsible for the majority of smart grid
implementations and will need to reconcile the needs of
society with shareholder needs.
It is recommended that utilities adopt a more holistic
approach to business case building. By widening this
value proposition to a broader societal value
proposition, they will build their regulatory case and
demonstrate to their consumers the broader benefits
case which will be realized over time.
Utilities can reduce the risk of technology
obsolescence by deploying smart technologies that are
modular in design, forward compatible and
interoperable.
Conversations with government and regulators early in
the process to identify potential for economies of scale
and scope on multiple infrastructure investments
(especially in telecommunications infrastructure) will
deliver the greatest value to consumers.
Utilities are recommended to undertake large-scale,
broad capability pilots, and to measure the benefits as
they are realized, adding concrete numbers and
savings to what is to date a fairly difficult equation to
quantify. They are encouraged to this knowledge to
refine future business case development.
Utilities should consider strategies for transitioning from
commodity service provision to a broader set of
consumer value-added services early in the planning
process. Early definition of this long-term strategy will
help build in smart grid infrastructure that enables this
transition (e.g. Home Area Networks and EV charging
infrastructure).
4.4 Vendors
Technology vendors for all aspects of smart grids should
not underestimate their role and should ensure that they
engage in the smart grid debate.
Vendors are encouraged to bring the wealth of their
experience to the policy table and ensure their
requirements are reflected in new regulatory regimes
and global standards.
Modular design, forward compatibility and
interoperability of smart grid equipment will be a key
driver of how fast utilities and consumers adopt the
technology. Vendors are encouraged to move rapidly
towards de facto standards to help utilities re-risk
investments.
As the industry moves rapidly towards standards for
critical smart grid infrastructure, it is important that
vendors continue to innovate with the end consumer in
mind. The most successful vendors will create blended
product and service offerings that make it easy for
consumers to change their behaviour. For smart grids
to move towards mass adoption, consumers will need
to embrace the technology.
4.5 Customers
Customers have a critical role to play in the development
of smart grids. By demanding and paying for cleaner and
more flexible services (and being willing to switch supplier
where possible to a supplier that offers more innovative,
focused and value-added products), the business model
will change by default. New entrants will come into the
market with more customer-centric offerings and incumbent
utilities will innovate and become more focused on how to
create more flexible, efficient and value-added products
and services. By demanding these services, the utility
companies, politicians and regulators will understand that
there is mileage in pursuing policies and frameworks that
consumers want, and awareness will grow.
35
1
GP Bullhound Ltd. Sector Update, How Real is the
Vision of a Smart Grid? (June 2009)
2
International Energy Agency, World Energy Outlook
2008, Global Energy Trends to 2030 (2008)
3
Global Dashboard, A Tale of Two Cities (January 2009)
http://www.globaldashboard.org/2009/01/30/climate-
cities-2/ (May 2009)
4
International Energy Agency, as cited in Global
Environment Fund, The Electricity Economy (2008)
http://www.globalenvironmentfund.com/data/uploads/
The%20Electricity%20Economy.pdf
5
Denver Business Journal, Smart Grid Bring Lights to
Power, by Cathy Proctor (March 2007)
http://denver.bizjournals.com/denver/stories/2007/04/
02/story6.html
6
Leonardo energy, Reducing electricity network losses
(April 2008)
http://www.leonardo-energy.org/reducing-electricity-
network-losses
7
Energy-distribution company boosts revenue by
reducing energy theft and by introducing peak/off-
peak billing (March 2009)
http://www.specialtypub.com/article.asp?article_id=4635
8
Galvin Reports (June 2009)
www.galvinpower.org/resources/galvin.php?id=26
9
Accenture Analysis (2008)
10
Joint Coordinated System Plan (2008)
http://www.jcspstudy.org
11
Xcel Energy Smart Grid: A White Paper, Minneapolis,
MN: Xcel Energy (2008)
http://smartgridcity.xcelenergy.com/media/pdf/SmartG
ridWhitePaper.pdf
12
Electrifying Singapore: Drivers and Roadblocks (May
2009)
http://greenleapforward.com/2009/01/23/electrifying-
singapore-drivers-and-roadblocks/
13
Energy for Growth, National Energy Policy Report
(June 2009)
http://app.mti.gov.sg/data/pages/2546/doc/NEPR.pdf
14
President Barack Obama, White House address
(2009) http://www.whitehouse.gov/president-obama-
delivers-your-weekly-address/
15
Ibid
16
Promoting Citizenship Through Energy Efficiency (April
2009) http://www.america.gov/st/business-english/
2009/April/20090410131136CMretroP0.8297344.html
17
Bandidos de la Energa (Energy Bandits) (November
2006)
http://www.specialtypub.com/article.asp?article_id=4635
18
Impact on Power Delivery Systems, Working Group on
Distributed Generation Integration, IEEE Transactions
on Power Delivery, Volume 23, No. 3, July 2008
19
20
21
The Reform Institute, The Smart Alternative: Securing
and Strengthening Our Nations Vulnerable Electric
Grid, by Kenneth R. Nahigian (June 2008)
http://www.reforminstitute.org/uploads/publications/S
mart_Grid_Final.pdf
22
Smart Grid News, Standards vs Patents How to
manage the coming collision, by Jeffrey E. Young,
(April 2009)
http://www.smartgridnews.com/artman/publish/comm
entary/Standards_Vs_Patents_How_to_Manage_the_
Coming_Collision-574.html
23
CNN News, Smart Grid May Be Vulnerable to Hackers
(March 2009)
http://edition.cnn.com/2009/TECH/03/20/smartgrid.vu
lnerability/index.html
24
Smart 2020: Enabling the low carbon economy in the
information age, The Climate Group on behalf of the
Global eSustainability Initiative (GeSI) (2008)
http://www.theclimategroup.org/assets/resources/publ
ications/Smart2020Report.pdf.
25
David Mohler, Duke Energy (June 2009)
26
ZD Net News, Western economies warned of
serious skills crisis (March 2008)
http://news.zdnet.co.uk/itmanagement/0,1000000308
,39369893,00.htm
27
Engineering education: Can India overtake China?
(June 2006)
http://inhome.rediff.com/money/2006/jun/09bspec.htm
28
North American Utility Reliability Corporation
Reliability Standards (June 2009)
http://www.nerc.com/page.php?cid=2|20
29
The Smart Grid Security Blog, Dueling Smart Grid
Cyber Bills (June 2009)
http://smartgridsecurity.blogspot.com/
30
Metering.Com, Smart meters not to be compulsory in
Netherlands (April 2009)
http://www.metering.com/Smart/meters/not/compulso
ry/Netherlands
31
United Nations, World Urbanization Prospects (2007)
http://www.un.org/esa/population/publications/
wup2007/2007WUP_Highlights_web.pdf
32
Stern Review: The Economics of Climate Change
(May 2008) http://www.hm-treasury.gov.uk/d/CLOSED
_SHORT_executive_summary.pdf
Endnotes
36
de facto standards A de facto standard is a
standard (formal or informal) that has achieved a
dominant position by legal enforcement.
de jure standards De jure standards are standards
that have been approved by standard bodies,
professional organizations, industry groups, a
government body or other groups.
Decoupling In public utility regulation, decoupling
refers to the disassociation of a utilitys profits from its
sales of the energy commodity. Instead, a rate of return
is aligned with meeting revenue targets, and rates are
trued up or down to meet the target at the end of the
adjustment period. This makes the utility indifferent to
selling less product and improves the ability of energy
efficiency and distributed generation to operate within
the utility environment.
Demand response This term generally refers to
mechanisms used to encourage consumers to reduce
demand, thereby reducing the peak demand for
electricity. Demand response mechanisms enable
consumer appliances to be shut off or cycled in
response to electricity supply conditions, enabling
electricity customers to reduce their consumption at
critical times. Under conditions of tight electricity
supply, demand response can significantly reduce the
peak price and, in general, electricity price volatility.
Since electrical systems are generally sized to
correspond to peak demand (plus margin for error and
unforeseen events), lowering peak demand reduces
overall plant and capital cost requirements.
Distribution network The wiring from substations
to customers is referred to as electricity distribution,
following the historic business model separating the
wholesale electricity transmission business from
distributors who deliver the electricity to the homes.
[1]
Distributed generation generates electricity from
many small energy sources. Currently, industrial
countries generate most of their electricity in large
centralized facilities, such as coal, nuclear, hydropower
or gas powered plants. DG is another approach, using
small-scale power generation technologies (typically in
the range of 3 kW to 10,000 kW) to provide an
alternative to or an enhancement of the traditional
electric power system.
Output-based regulation regulation that rewards or
penalizes specifically defined outcomes, such as
carbon emissions, reliability improvements (in terms of
customer minutes out), etc.
Plug-in hybrid electric vehicles a hybrid vehicle
with batteries that can be recharged by connecting a
plug to an electric power source. It shares the
characteristics of both traditional hybrid electric
vehicles (also called charge-maintaining hybrid electric
vehicles
[1]
), having an electric motor and a internal
combustion engine, and of battery electric vehicles,
also having a plug to connect to the electric grid (a
plug-in vehicle).
Predictive monitoring extracts sensor information
from equipment, control systems and business
systems, and then uses sophisticated analytic models
to predict equipment faults and sub-optimal
performance long before the equipment fails. The
system uses both historical and real-time data to make
predictions about the future.
Stranded assets An asset that is worth less on the
market than it is on a balance sheet due to the fact
that it has become obsolete in advance of complete
depreciation.
Smart grids Sensing, embedded processing and
digital communications to enable the electricity grid to
be observable (able to measure the states of all grid
elements), controllable (able to affect the state of any
grid element), automated (able to adapt and self-heal)
and fully integrated (fully interoperable with existing
systems and have the capacity to incorporate a
diversity of energy sources).
Transmission network the bulk transfer of electrical
power (or more correctly, energy), a process in the
delivery of electricity to consumers. A power
transmission network typically connects power plants
to multiple substations near a populated area.
Vehicle-to-grid a system in which power can be
sold to the electrical power grid by an electric-drive
motor of a hybrid vehicle that is connected to the grid
when it is not in use for transportation.
[1]
Alternatively,
when the car batteries need to be fully charged, the
flow can be reversed and electricity can be drawn from
the electrical power grid to charge the battery. Vehicle-
to-grid can be used with such gridable vehicles that
is, plug-in vehicles (electric vehicles as battery electric
vehicles or plug-in hybrid electric vehicles) with grid
capacity.
Glossary
The World Economic Forum is an independent
international organization committed to improving
the state of the world by engaging leaders in
partnerships to shape global, regional and
industry agendas.
Incorporated as a foundation in 1971, and based
in Geneva, Switzerland, the World Economic
Forum is impartial and not-for-profit; it is tied to
no political, partisan or national interests.
(www.weforum.org)
Smart Grids IEEE P2030
Claudio Lima
Vice Chair of IEEE P2030 Smart Grid Communications Architecture SG1
ETSI Workshop - Standards: An Architecture for the Smart Grid
France, April 5
th
2011
Copyright2011 All rights reserved
Disclaimer
The information contained here does not necessarily
expresses the final opinion of the IEEE P2030 since
this is still an working in progress. But it provides
the basis for ongoing standards development
discussions. discussions.
2
IEEE P2030 Smart Grid Key Highlights
The IEEE P2030 is a Standard Guide for Smart Grid
Interoperability.
It addresses the basic Smart Grid definitions, frameworks,
challenges and three different architectural perspectives
(Power & Energy, Communications and IT) with
interoperability tables and charts.
The architectures adopts a methodic end-to-end and system
engineering approach to address the secure, modular and engineering approach to address the secure, modular and
scalable Smart Grid interfaces and building blocks.
IEEE P2030 has been voted and approved for ballot in the
last General Plenary meeting (New Orleans, Feb 2011).
The IEEE 2030 Series of standards will address more specific
technologies and implementation of Smart Grid system (e.g.
P2030.1 Electric Vehicle, P2030.2 Storage Energy Systems).
All Rights Reserved to the IEEE
Source: IEEE
3
IEEE P2030 Smart Grid Interoperability Timeline IEEE P2030 Smart Grid Interoperability Timeline IEEE P2030 Smart Grid Interoperability Timeline IEEE P2030 Smart Grid Interoperability Timeline
Almost DONE!
All Rights Reserved to the IEEE 4
IEEE P2030 Smart Grid
Generic Framework
Methodological Interoperability
Framework composed of:
Three Interoperability
Architecture Perspectives
(IAP):
Power System (PS) Power System (PS)
Communications
Technology (CT)
Information
Technology (IT)
IAPs Interoperability Tables
Source: IEEE
5
Using the System Engineering Approach Using the System Engineering Approach Using the System Engineering Approach Using the System Engineering Approach
6
Two Two Two Two- -- -Levels SG System Architecture Levels SG System Architecture Levels SG System Architecture Levels SG System Architecture
7
The Smart Grid Foundational Layers The Smart Grid Foundational Layers The Smart Grid Foundational Layers The Smart Grid Foundational Layers
8
Key Attributes
1. Broadest, All Inclusive Architecture (provide
alternative paths).
2. Adopt a System Engineering Approach.
3. Define Key Actors and Critical Interfaces.
4. Methodological and Well Documented Procedure.
5. Top Down Approach (System to Sub-System Level).
6. Secure, Modular, Scalable and Interoperable. 6. Secure, Modular, Scalable and Interoperable.
(define demarcation points between entities/actors).
7. Use Technology Neutral Approach.
8. Dynamic and Evolving Architecture.
9. Covers the Whole Utility Smart Grid Spectrum.
10. Useful to Stakeholders (utilities, vendors, SDOs, etc).
11. Seeks an International Perspective.
Source: IEEE
9
Important Smart Grid Design Principles Important Smart Grid Design Principles Important Smart Grid Design Principles Important Smart Grid Design Principles
Secure
Reliable
Scalable
Open
Standards-Based
Recommended
Smart Grid
Manageable
Modular
Future Proof
Standards-Based
Interoperable
Smart Grid
Characteristics
10
The Smart Grid Building Blocks The Smart Grid Building Blocks The Smart Grid Building Blocks The Smart Grid Building Blocks
Source: IEEE
11
IEEE P2030 Smart Grid Communications IEEE P2030 Smart Grid Communications IEEE P2030 Smart Grid Communications IEEE P2030 Smart Grid Communications
Reference Architecture (SG Reference Architecture (SG Reference Architecture (SG Reference Architecture (SG- -- -CRA) CRA) CRA) CRA)
Source: IEEE P2030
12
SG Architecture Development Methodology
Source: IEEE P2030
13
IEEE P2030 Smart Grid Work: Architectures
14
IEEE P2030 Smart Grid Work: Tables & Charts
15
IEEE P2030
Appendix
Source: IEEE
IEEE P2030 Communications Technology
Interoperability Architecture Perspective (CT-IAP)
Source: IEEE
IEEE P2030 Power System
Interoperability Architecture Perspective (PS-IAP)
Source: IEEE
IEEE P2030 Information Technology
Interoperability Architecture Perspective (IT-IAP)
Source: IEEE
IEEE P2030
Interoperability Tables Interoperability Tables
Source: IEEE
Example of Detailed Communications (CT) Interface Description
Source: IEEE
IT Interfaces/Data Flows Description Table
Source: IEEE
Power System Interfaces Types and Descriptions
Source: IEEE
Sample Smart Grid Interface/ Application Mapping Table
Source: IEEE
Typical Data Characteristics of Sample Applications
Source: IEEE
IEEE P2030 Contact Information
For more information about the IEEE P2030, 2030 Standards Series
(e.g. P2030.1 - Electric Vehicles, P2030.2 - Storage Energy Systems,
P2030.3 - Testing Storage Energy Systems, etc), collaboration and
partnership opportunities please contact:
http://grouper.ieee.org/groups/scc21/2030/2030_index.html
Source: IEEE
Dick DeBlasio IEEE P2030 Chair
Email: dick.deblasio@nrel.gov, Phone: +1 303 275 4333
Thomas Basso IEEE P2030 Secretary
Email: thomas.basso@nrel.gov, Phone: +1 303 275 3753
Bill Ash Strategic Program Manager, IEEE-SA
Email: w.ash@ieee.org, Phone: +1 732 465 5828
Claudio Lima
crlima10@hotmail.com

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Fig.6 Interoperability Framework

Fig 9. Queuing model from Gateway Router to WiFi AP

Self-Defending Network philosophy integrates security throughout

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