World Bank Discussion Global Progress Towards Smarter Grid Cities and Their Enablement of Energy Efficiency

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1 World Bank Discussion Global Progress Towards Smarter Grid Cities and Their Enablement of Energy Efficiency January 27, 2010 Discussion Topics Demand Side Management/Energy Efficiency Findings Accenture Point-of-View and Conclusions 2

2 DRAKE V 1.2 June 24, 2004 SE&G Primary System Accenture is a Leading Global Consulting Firm Over $21 Billion in Revenue in FY09 177,000+ Professionals in 49 Countries Our clients: 96 of the Fortune Global 100 Two-thirds of the Fortune Global 500 Alliances and BPO Businesses Management Consulting The world s top companies benefit from our insights and solutions: - Strategy - Customer Relationship Management - Finance & Performance Management - Talent & Organizational Performance - Supply Chain Management Technology Our experienced professionals bring the latest technology to enable and generate new business opportunities: - IT Strategy & Transformation - Information Management Services - Global Delivery - Infrastructure Consulting Outsourcing Creating value by delivering lifecycle solutions and bottom-line results, helping clients focus on their core business: - Business Process Outsourcing - Application Outsourcing - Infrastructure Outsourcing 3 Accenture Smart Grid Services (ASGS) Overview ASGS is a dedicated practice within Accenture focused on smart grid and infrastructure modernization for utilities 500+ people working on smart metering/smart grid utility projects Accenture has led roughly 40 Smart Grid/AMI projects over the past three years ranging from strategy development to implementation We are the advisor to the World Economic Forum on smart grid UK s Department of Energy and Climate Change selected Accenture to provide strategic consulting on the planning and implementation of smart grids in the U.K. Accenture Smart Grid Services Customer Facing SG Services SG Program Services SG Operational Services Customer Care Transformation AMI, CIS as a result DSM/Efficiency Implementation of AMI/DSM/EE Implementation initiatives Program Management & Metrics Achievement Security & Access Management Grid Analytics & Renewable Integration Work Management Field Force Automation 4 Asset Management 4

3 A number of macro forces are compelling utilities to modify their existing operating models 5 Smart Grid Outcomes and Value Outcomes and Value Support regulatory /societal mandates Optimize Cost to Serve Improve reliability Increase customer satisfaction Increase revenue/new business Supports building renewable generation (wind, distributed energy) Facilitates wholesale market efficiency Enables demand response Key component of carbon reduction agenda Reduce field and call center labor Reduce credit/collection cost Increase billing accuracy Reduce line losses Defer capital investment Decrease outage duration with self-healing grid and predictive outage restoration Decrease outage frequency with better system planning, proactive maintenance and asset management decision-making Enables customers to reduce energy bill and encourage conservation Provides more accurate information on outages, billing Improve service order response Enables environmental choice Ability to improve customer side operations Decrease lost revenue/theft Energy-related products/services (e.g., DSM, CPP, TOU) Advanced home services Infrastructure growth 6

4 Smart Grid Definition A Smart Grid is a power grid that uses sensing, embedded processing, digital communications, and software to manage network-derived information, thus making itself: Observable measure the states of all grid elements Controllable affect the state of any grid element Automated adapt and self-heal Integrated connected to utility processes and systems These capabilities support the three major business functions of the T&D utility: power delivery, asset management, and consumer experience enablement. 7 Smart Grids Represent Utility Model of the Future Utility Model of the Future Generation Grid-based renewables Wind Farm Nuclear Power Plant Natural Gas Transmission CO2 Transport for Sequestration H2 production electrolysis Hydrogen, biofuels and gasoline/ diesel distribution infrastructure Grid-based storage Coal & Gas Plant with CCS Direct H2 production Gen IV Bio-fuels Production Transmission & Distribution Super Grids Smart T Substation High Temp Super Conductor Retail HVDC link to neighboring grids CHP/District heating network, DC Micro Grid Fault Location Embedded renewables Smart D Substation Embedded storage Photo Voltaics Smart T Substation Smart Buildings Heat pump Automatic Fault Isolation Sensors, Smart Switches Smart Sensors Smart Homes Plug-in hybrid Fault Location Smart D Substation Highly insulated housing structure In-house data on usage and costs Tidal Power Micro generation Photovoltaic roof tiles Demand side management High efficiency appliances Wind Farm Dynamic control of refrigeration and HVAC 8

5 Accenture Smart Grid Projects - North America So Cal Edison: MDMS strategy, AMI business case assessment; regulatory filing support Sempra Energy: AMI integration to CIS PSE: Meter-to-cash/smart meter assessment PG&E: AMI integration, smart grid and HAN strategy Power Stream: Hosted MDMS operations Newmarket-Tay Hydro: Hosted MDMS operations Thunder Bay Hydro: Hosted MDMS operations Xcel Energy: Smart Grid City Enbridge: MDMS implementation ComEd: AMI, MDM and ESB implementatio n e.on: Smart grid strategy Duke: Smart grid strategy and MDMS integration National Grid: Smart meter strategy & business case CL&P: Demand response / AMI pilot PSEG: Smart meter strategy & business case PPL: Program Management support, Change Management, and SI PECO: AMI assessment, fitgap analysis BGE: Overall program management, Systems Integration for AMI and DR programs Dominion: Smart meter strategy and business case 9 Accenture Smart Grid Projects Global Scottish & Southern: Hosted and implemented a MDM for a 10K meter deployment Scottish Power: Smart Buildings / white label services ESB: Designed smart metering structure, processes, and AMI requirements National Grid: Smart Grid Strategy and business case United Utilities: Strategy and MDMS evaluation EDF: Managed a 300K meter pilot BT: Communications strategy State Grid of China: Smart Grid Strategy CLP: Smart Grid Strategy Enel: Operate and maintain MDM solution for 30+M AMI implementation ERDF: AMI strategy and program management City of Amsterdam: Smart Grid City Implementation Alliander: Smart metering transformation Delta: Delivered head-end implementation for 200K households Rhein Energie: Smart metering strategy Light S.A.: MDM implementatio n and integration to SAP IS/U Eskom: PM and SI for smart metering and load control 10implementation SP AusNet: SAP ISU with an interface to emeter s Energy IP for >1M smart meters Jemena: Copyright SI for 2009 a 1.1M Accenture meter All deployment Rights Reserved.

6 % Change in Peak Demand % Demand Response Impact High Low Mean Discussion Topics Demand Side Management/Energy Efficiency Findings Accenture Point-of-View and Conclusions Open Discussion 11 AMI (DSM Efficiency) Initiatives and Results DR Reductions Requires Integration of Rate and Tech. Design The typical reductions seen in traditional DSM programs are not enough to achieve a number of the demand reduction requirements that are emerging. Pricing changes of 10x current prices on peak are required to get 15+% reductions. 0.0% Critical Peak Price Responsiveness Technology impact on Demand Response 50% -5.0% 40% CPP -10.0% Technology impact 16% 30% -15.0% TOU -20.0% 20% Technology impact 21% -25.0% 10% Baseline TOU PTR CPP TOU w/ Tech CPP w/ Tech -30.0% $0.13 $0.23 $0.33 $0.43 $0.53 $0.63 $0.73 $0.83 $0.93 $1.03 $1.13 $1.23 $1.33 $1.43 $1.53 Average Customer 0.0% -3.8% -6.2% -7.9% -9.3% -10.4% -11.4% -12.3% -13.0% -13.7% -14.3% -14.9% -15.4% -15.8% -16.3% Cust w/ CAC 0.0% -6.3% -10.2% -13.1% -15.4% -17.3% -18.9% -20.2% -21.5% -22.5% -23.5% -24.4% -25.2% -26.0% -26.7% Cust w/o CAC 0.0% -2.3% -3.7% -4.7% -5.5% -6.2% -6.7% -7.2% -7.7% -8.0% -8.4% -8.7% -9.0% -9.3% -9.5% Series1 0% 8% 18% 29% 30% 46% Series2 0% 3% 8% 16% 21% 32% 0% Series3 0% 5% 13% 23% 26% 39% Average Customer Cust w/ CAC Cust w/o CAC Source: Accenture analysis and Piloting the Smart Grid, Ahmad Faruqui, Bryan Hledik and Sanem Sergici 12

7 AMI (DSM Efficiency) Initiatives and Results Number of DR* Trials Completed Across the Globe Demand response trials completed across the globe have demonstrated demand response benefits in the range of 5 50% reductions in peak & non-peak loads. U.S: CA: City of Anaheim CA: Automated Demand Response Pilot System (ADRS) CA: State-Wide Pricing Pilot CO: Xcel Energy TOU Pilot FL: Golf Power Select Program ID: Power Company Energy Watch Program IL: Energy Smart Pricing Plan MS: Ameren Critical Peak Pricing Pilot NJ: GPU Pilot Canada: Ontario: Hydro Ottawa WA (Seattle): Puget Sound (PSE) TOU Program WA: The Olympic Peninsula Project Europe: Norway France: Electricite de France (EDF) Tempo Program Australia: Country Energy Energy Australia Energy Australia s Network Tariff Reform Source: Brattle Group s Unlocking the 53 Billion Savings from Smart Meters in the EU Oct 2009 * DR = Demand Response 13 AMI (DSM Efficiency) Initiatives and Results Demand Response Pilot Savings Rate Design Projects included above: Average Reductions in Usage During Peak Times Number of Observations Mean 95% Lower Bound 95% Upper Bound Min Max TOU 5 4% 3% 6% 2% 6% TOU w/technology 4 26% 21% 30% 21% 32% CPP 8 17% 13% 20% 12% 25% CPP w/technology 8 36% 27% 44% 16% 51% AmerenUE Residential TOU Pilot Study Anaheim Critical Peak Pricing Experiment BGE Smart Energy Pricing Pilot California Automated Demand Response System Pilot (ADRS) California Statewide Pricing Pilot (SPP) Electricite de France (EDF) TempoProgram Energy Australia s Network Tariff Reform GPU Pilot Idaho Residential Pilot Program Olympic Peninsula Project Ontario Energy Board Smart Price Pilot Public Service Electric and Gas (PSE&G) Residential Pilot Program Puget Sound Energy (PSE) s TOU Program The Community Energy Cooperative's Energy-Smart Pricing Plan (ESPP) The Gulf Power Select Program Xcel Experimental Residential Price Response Pilot Program * Assumes no ARRA or any other type of government funding or subsidy; Capital costs include Program Management for deployment ** Does not include any incremental operational expenses, including maintenance, associated with deployment of Smart Technologies Note: Assumes base tariff of per kwh; Annual consumption of 10,000kWh; Load Shape from Southeastern Utility Source: Accenture Analysis 14

8 % Reduction in Load Conservation Impact (%) The best results (17-35% reduction on peak) are achieved when customers are provided information through value based interactions that are enabled by both price and technology. Consumers conserve when their usage is displayed 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Newfoundland Power 40% 35% 30% 25% 20% 15% 10% 5% 0% Hydro One TOU 1 IHD-Only Impacts Hydro One RTM BC Hydro Woodstock Hydro IHD and Prepayment Impacts PSE&G (TOU) PSE&G (CPP) CA SPP (CPP) AmerenUE-2004 (CPP) Pilot Program SRP IHD and Time-Varying Rates Impacts Country Energy Hydro One TOU 2 and respond dramatically to dynamic price signal and enabling technology 2-18% range Role of Technology on Pilot Program Impacts 12-17% price No Technology 17-35% w/tech Technology AmerenUE-2005 (CPP) Pilots widely varying results on conservation and demand shift owe to their specialized design objectives: Display centric pilots have not been tested with smart rates, and rarely with enabling technology (e.g., smart stat, controls) Dynamic pricing have been tested with enabling techs but not with display impact Limited sample size make extrapolation across customer segments and end use/geographic situations difficult SGC Boulder will be first pilot at scale to testing all 4 major components of customer value proposition: Display (Prius effect) = awareness Smart Rates (inclining block) = price incentive Enabling Premise Techs = facilitate response DSM/EE Programs = lock in/amplify usage cut Large customer benefits in bus case predicated on accelerated penetration - > requiring campaign-style rollout of tailored value props to priority segments Increased scrutiny/mandates for customer outcomes likely including incentive/penalty structure establishing fair baseline expectations imperative and dependent on robust pilot design to increase confidence level 15 Source: Brattle Group AMI (DSM Efficiency) Initiatives and Results Number of Lessons Learned from DR Pilots Lessons Learned There is conclusive evidence that households (residential customers) respond to higher prices by lowering usage The magnitude of price response depends on The magnitude of the price increase The presence of central air conditioning The availability of enabling technologies such as twoway programmable communicating thermostats Implications Time-of-use rates induce a drop in peak demand that ranges between 3-6% Critical-peak pricing tariffs induce a drop in peak demand between 13-20% When accompanied with enabling technologies, the CPP tariffs lead to a drop in peak demand in the 27-44% range Consumers who actively use an IHD reduce their consumption of electricity on average by 7% and 14% when prepayment of electricity is and is not involved, respectively 16

9 Discussion Topics Smart Cities Initiatives and Results 2 case studies Demand Side Management/Energy Efficiency Findings Accenture Point-of-View and Conclusions Open Discussion 17 Accenture Point-of-View and Conclusions Smart Grids Represent Fundamental Paradigm Shift Smart Grids Lessons Learned Potential of smart grids to drive energy efficiency is limitless Operationalizing & fully realizing benefits requires paradigm shift Most utilities do not possess requisite capabilities in-house Consortiums, partnerships, and alliances key to smart grids Deployment of end-to-end smart grids capabilities is evolutionary True value lies in beyond-the-meter applications (customer value) Customer privacy issues will continue to be an issue to manage Do not underestimate power/influence of regulators & authorities * CSF s = Critical Success Factors 18 Smart Grids CSF s* Engage state and local regulators and authorities early Proactively work to align various stakeholder interests Get and stay ahead of state and local regulatory filing deadlines Assure consortium partners bring right capabilities to table Secure stable and requisite funding sources up-front Be clear on aspirations, vision, and benefits hypotheses Undertake pilot approach to minimize deployment risks Track smart grids results early & often Expect the unexpected!!!

10 Accenture Point-of-View and Conclusions As a result of the Smart Grid Technologies, the following Stakeholder Groups are most impacted 19 Accenture Point-of-View and Conclusions Customer Adoption Journey to Energy Consumerism Obstacles Budget billing programs that disconnect energy costs from consumption Bill frequency and complexity Pricing / billing complexity Customer affordability Customer Awareness Lack of Trust Misinformation Technological Complexity Define the key messages & entry points Design Customer- Centric Experience & Interaction Points Develop customerempowered products, services and tools Energy Consumerism Use analytics to drive evolution of programs and products Embrace both traditional and new channels Open dialogue with customers Employ soft-sell and personal touch approach Study your customers by segments Alignment and development of visible product and pricing signals. 20

11 Accenture Point-of-View and Conclusions Operational Journey to Energy Consumerism Obstacles Budget billing programs that disconnect energy costs from consumption Bill frequency and complexity Treatment of financially disadvantaged customers Pricing / billing complexity Reflection of true costs in pricing Data ownership and security Customer adoption and awareness Customer affordability Employee engagement and change management Imp CIS, MDMS, CRM 2.0. Including, pilot roll-out and programs Contact Center Transformatn Change Mgmt & Employee Programs Customer Segmentati on Revenue Cycle Transformatin Pricing & Program Developmt Partnership and Alliance Development Energy Consumerism Demand Response Programs Marketing & Adoption Programs Security Solutions Multi-channel Implementatn Alignment and development of visible product and pricing signals. 21