The Smart Grid Challenge March

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1 Overview UK and Ireland Energy Market the challenge Smart Grids and Smart Metering a definition Smart Metering and Smart Grids the opportunity An example of Smart Grids technical and commercial end to end

2 Since privatisation there have been several mergers / acquisitions and a restructuring of the regulatory offices leading to the 2013 GB & Ireland energy markets England, Scotland & Wales: Regulator: Ofgem Market: BETTA Northern Ireland: Regulator: NIAUR Market: SEM Transmission - National Grid is TSO for GB market Republic of Ireland: Regulator: CER Market: SEM Energy Supply Companies - operating nationally in a fully competitive market Republic of Ireland: 2

3 The Energy Trilemma Gone Green Slow Progression Source: National Grid July 2013

4 The Traditional Electricity Network Generation Based on a central generation model with oneway power flow from large, often distant generating stations, via transmission and distribution lines to end consumers. Aging infrastructure with some equipment dating back 60 years+ Limited communications at the distribution level enabling grid automation & monitoring capabilities Limited consumer participation Transmission Distribution Distribution Supply Supply 4

5 Energy generation and distribution is evolving toward a Smartgrid Weather and demand forecasting Onshore / Offshore Wind Demand & supply Management Smart Metering New Nuclear Water Energy Management 24/7 Asset Monitoring and control Electric Vehicles Heat Pumps Microgeneration 5

6 Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly 80 billion of funding available over 7 years (2014 to 2020) in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market.

7 Low Carbon Networks Fund The LCN Fund allows up to 500m to support projects sponsored by the Distribution Network Operators (DNOs) to try out new technology, operating and commercial arrangements. The aim of the projects is to help all DNOs understand how they can provide security of supply at value for money as Britain moves to a low carbon economy explore how networks can facilitate the take up of low carbon and energy saving initiatives such as electric vehicles, heat pumps, micro and local generation and demand side management. They also investigate the opportunities that smart meter roll out provide to network companies. As such, the LCN Fund should provide valuable learning for the wider energy industry and other parties.

8 RIIO Energy key facts Put stakeholders at the heart of their decision making process Invest efficiently to ensure continued safe and reliable services Innovate to reduce network costs for current and future consumers Play a full role in delivering a low carbon economy and wider environmental objectives Transmission (RIIO-T1) 2013 to Gas Distribution (RIIO-GD1) 2013 to Electricity Distribution (RIIO-ED1) 2015 to 2023

9 Smart Metering GB : 30 million homes, 50 million meters, 11 bn.

10 The Olympic Peninsula GridWise Project ftp://ftp.software.ibm.com/software/solutions/ pdfs/sac00318-usen-00.pdf Invensys Application / Web Server Dryer Domain #1 PNL Shadow Market LCM GFA LCM MW DR Status Data Collection User Web Interface 125 Residential Homes Invensys Home Gateway Thermostat Meter Energy Market Internet PNL Application Web Server IBM Event Bus & Event-based Programming Model Control / Application Server Manage 300 KW DR DR Resource Bids Data Collection Additional DR Shadow Market - Market Simulation - Feeder Simulation - Shadow Market Operation Management/Admin/UI - Billing - Analytics/Report - Monitoring/Alert - Web Portal Integration Service Persistent Database Load Shedding Application Server Manage DR & DG DR Resource Bids Status Data Collection Heat Storage Water Heater Space Heater 350 KW Power Generator 150 KW Power Generator Domain #2 120 Residential Home 600 HP Water Pump 600 HP Water Pump Domain #3 Port Angeles Water Supply Domain #4 PNL MSL

11 Advances in renewables technologies and the era of smart drive major industry change and how the incumbents run their business Transform the Energy Network Improve Generation Performance Distributed Generation Integration New Renewables Integration Predictive Asset Maintenance Distribution Grid Monitoring Demand-side Response Mobile Workforce Optimisation etc. Data Velocity Data Volumes Data Variety Diverse Forecasting, e.g. Weather Prices Demand & Supply Distribution Load & Scheduling Intelligent Plant Lifecycle Management Unit Commitment & Fleet Optimisation etc. Data Veracity Transform Customer Operations Smart Meter Analytics Dynamic Pricing Customer Analytics & Insight (360 Customer View) Electric Vehicles (Usage Patterns, Charging Control, Billing etc.) etc. Energy companies will need to develop strategic capabilities to excel in new disciplines adjacent to their traditional business: create value from vast amounts of disparate data

12 In summary UK and Ireland Energy Market involves many different market participants Security of Supply, Carbon Objectives, Economic / Social objectives are driving change Smart Metering and Smart Grids are a part of the solution ICT solutions are needed to support the realisation of the benefits

13 Thank You! Jeremy Willsmore IBM Global Energy & Utilities Industry.