Concept of Interactive Customer Gateway

Research report 30.10.2010 Concept of Interactive Customer Gateway Tero Kaipia, Jarmo Partanen Lappeenranta University of Technology Pertti Järventausta Tampere University of Technology Lappeenranta 2010 www.lut.fi/lutenergy P.O.Box 20 Skinnarilankatu 34 Tel. +358 5 621 11 53851 Lappeenranta, FINLAND 53850 Lappeenranta, FINLAND Fax. +358 5 621 6799

1 CONTENTS 1 Introduction... 2 2 Overall concept... 3 2.1 Background... 4 2.2 Objectives of development... 5 3 Functional and physical architecture... 6 3.1 Functional objectives... 7 3.2 Technical requirements... 9 3.3 Operational functions... 11 3.4 Structural design... 14 3.5 Control algorithms... 17 4 Technical enablers and drivers... 18 4.1 Smart metering... 20 4.2 ICT... 21 4.3 Distributed generation, electric vehicles and energy storages... 23 4.4 Power electronics and DC distribution... 26 5 Conclusions... 28 6 References... 30

2 1 Introduction This report presents the overall concept of interactive customer gateway (INCA). Background of the development the INCA, its aimed functional preferences, technical architecture and impacts on power system and electricity markets are also discussed. The main focus is the introduction of the functionalities and both the opportunities and the requirements related to the realisation of these functionalities. The basic concept of interactive customer gateway was introduced to public already years ago (Järventausta 2008a). The basic concept provided a starting point for further studies aiming on proving the feasibility of such interactive grid interface. The overall target of the research of the INCA has been to develop concepts, methods, algorithms and simulation tools for analysis, simulation and verification of the technology and the functionality of an interactive customer gateway and associated business activities to be applied in Smart Grid environment. The INCA is a logical interface integrated with supplying distribution system. it composes of active load appliances, building automation, active network components (utility and customer networks), widespread communications network, local control system, and information systems of external service providers (i.e. DSO, TSO, Energy Sales, Aggregator, etc.). The gateway can contain controls for a single customer (e.g. residential household) or for a group of customers (e.g. apartment building, industrial complex). The main functionalities of the INCA have been developed to meet the functional needs of the transmission system operator (TSO), the distribution system operators (DSO), the electricity sales and the users connected to the grid (consumers and producers) in Smart Grid environment. As a part of active power distribution, the INCA is one of the most important actuator entities and goes far beyond the smart metering. Background of the development of the INCA lays in the European definition of the Smart Grids, presented in (EC 2006). The driving forces have been the development of distribution system management, transmission system operation and functionality of the electricity markets. From these perspectives, an essential objective is to make the endcustomers, or at least customer connection points, an active party of the system. As the consequence of converting nowadays passive end-use to active resources, the INCA aims on facilitating interconnection of distributed generation (DG) ans energy storages (ES), efficient use of energy, market-based demand response, improvement of supply

3 quality, increase of regulating power reserves of transmission system, and active management of distribution networks. (Järventausta 2008a) 2 Overall concept The interactive customer interface combines the functional objectives of the distribution system operator, the transmission system operator and the stakeholders of electricity energy markets. It is based on exploitation of smart metering, power electronic converters, small- and micro-scale distributed generators, energy storages and controllable loads. The main principle of interactive customer interface is presented in Figure 2.1. DSO TSO Energy supplier Service provider Figure 2.1 AC or DC distribution network Quality database Energy database Communication On-line voltage billing data measurements interruptions load models control signals Control of Power voltage quality interruptions electronics Embedded intelligence INCA Building automation Smart metering Actions by markets frequency Direct ctrl. by DSO TSO energy sales service prov. CUSTOMER Cost and energy efficient use of load appliances Un-interruptible use of electricity Distributed generation Energy storages (EVs) Active market participation Overall concept of the interactive customer gateway. Adapted from (Järventausta 2008b). The original concept of the INCA has gone through only virtually small principled evolution since its first introduction. However, the increased level of both technical and commercial knowledge of the research team has made it possible to define it in more details and hence the technical definitions have evolved quite much. The INCA constitute a common information exchange point for all the parties of electricity markets and power system (hereafter market players). Its functionalities participate in the management of both local (internal) and system level (external) functionalities. The INCA convert the traditionally static customer grid connection into an active multifunctional gateway for all market players. The active customer gateway include management of controllable and mobile loads (electrical vehicles, EV), energy storages and small-scale energy production, as presented in Figure 2.2. Thereby, the gateway turns electricity end-use and local distributed generation into active resources.

4 Market players TSO, DSO, retailer, wholesaler, aggregator Information systems Direct control signals Energy storages batteries, capacitors, electromechanical, hydraulic, etc. Demand profiles Elasticity profiles Price signals Storage management Power intake/output management Grid Loads Demand management Power quality monitoring Supply security management Interactive Customer Gateway Direct load control Power quality mgnt. Power balance mgnt. Safety management controllable, non-controllable, customer-oriented priorisation Generation management Generation PV, wind, biogas, fuel cell, etc. PHEV Figure 2.2 mobile storages EV mobile storages and generation Principle of the interactive customer gateway including controllable loads, energy storages and small-scale production. The INCA enable efficient risk management at electricity markets and increase of power regulation capacity at system level. On distribution network level the INCA functionalities enable, for instance, efficient use of the infrastructure, offer solutions for safe integration of DG and facilitate network management. The end users obtain high supply security and opportunity to optimise the costs of electric energy. 2.1 Background The existing electric power systems are mainly designed for directional energy flows from large centralized fully controllable power plants to the customers at the other end of the network. The used technology is in most cases based on decades old solutions and the need for new innovations has been limited. Recent developments in society have created drivers for change. These drivers are both internal and external to the electricity networks. The main internal drivers are the need to replace aging infrastructure and tightening demands for power quality. The most visible external driver is the need to fight the climate change. One of the main external drivers is the EU Energy and Climate Package. (Entsoe 2010) An important driver, that is, both internal and external, is that economical benefits have to follow the innovations in order to have efficient incentives for required changes. Together, the internal and the external drivers have led to introduction of the concept of Smart Grids. As modern society is dependent from energy in different forms, the improvement of the energy efficiency is the most effective mean for reducing the climate impacts of our lifestyle. According to 2008 edition of IEA Energy Technology Perspectives

5 Scenarios and Strategies to 2050, meeting the challenges of climate change and rapidly increasing energy use of developing world calls for a revolution in energy technologies. (IEA 2008) In achieving these goals the use of electric energy produced with renewable energy sources is in major role. This development emphasizes also the reliability and economy of electric power systems. Some of the key technologies related with exploitation of clean electric energy are wind and solar power generation, CCS, electric vehicles and other electric drive systems, improved insulation and air exchange systems in buildings, increase of overall efficiency of household appliances, and demand response (Eurelectric 2007). In the European Technology Platform for the Electricity Networks of the Future, the term Smart Grid is defined as follows: electricity networks that can intelligently integrate the behaviour and actions of all users connected to it - generators, consumers and those that do both in order to efficiently deliver sustainable, economic and secure electricity supplies. Furthermore it is said that a smart grid employs innovative products and services together with intelligent monitoring, control, communication, and self-healing technologies. (SGAC 2010) The main objective is clear To make better use of the technical solutions of the electric power system in order to meet the expectations of the future society. The power system of future has to be able to accommodate mobile electricity use as the proportion of electric and plug-in hybrid vehicles (EVs and PHEVs) increases and interconnection of renewable energy sources. Efficiently operating electricity retail and wholesale markets are required. The networks of future have to be more flexible, secure and tolerant than today. Specifically, the recognised targets related directly to the electricity networks are to: Facilitate the connection and operation of generators of all sizes and technologies; Allow consumers to play a part in optimising the operation of the system; Provide consumers with greater information and options for choice of supply; Significantly reduce the environmental impact of the whole electricity supply system; Deliver enhanced levels of reliability, quality and security of supply; All aspects from technology, markets and business models to standardisation, environmental and societal impacts have to be considered. The ICT solutions and related active functionalities are in key role to enable such changes. 2.2 Objectives of development In the Smart Energy Network concept of the European Commission 7 th EC Framework Programme, the main aims are a) to increase the efficiency, flexibility, safety, reliability and quality of European electricity systems and b) to fully exploit the potential

6 advantages of renewable energies, distributed generation, energy storages and demand respond techniques. The future active network will efficiently link small- and mediumscale power sources with customer demands, enabling efficient decisions on how to best operate in real time. (EC 2007). Hence, the interactive customer interface is expected to enable or participate in enabling following properties: On-line market and network based demand response Market access for small and micro scale generators Interconnection of mobile and immobile energy storages and generators Full exploitation of the capacity of the networks Active local power quality management Establishing local microgrids (network of microgrids) Distributed control of power balance (source of regulating power) Incentives and services for improving end-use energy efficiency The hypothesis behind the development of the INCA is that intelligent management of the customer gateways enable radical changes; 1) in the overall management of the power balance in the electricity market; 2) in the acceptability of high penetration rates of DG, local and mobile energy storages; 3) in the management, safety and operation of distribution networks; and 4) in the business models of electricity markets and distribution. On the other hand, based on expand of automation systems, improving ICT systems, innovative primary technical solutions, high penetration of DG and energy storages (especially EVs), there is also opportunity to realise the needed functionalities and related business models. Based on the hypothesis, the main objective in the conceptual development of the interactive customer gateway has been to convert distribution network level DG, local and mobile energy storages together with controllable loads to supporting resources for electricity networks and markets without forgetting the needs of an individual customer. 3 Functional and physical architecture The Interactive customer gateway includes several operational functions that can be used to assist management, protection and operation of both distribution and transmission networks. The INCA can convert small-scale distributed generation to system supporting resources. Similar functions can also be used to optimise, for instance, charging of the batteries of EVs based on the costs of charging and capacity of the network (Makkonen 2010). In the case that the EV technology enables discharging of the batteries back to grid, the energy stored in batteries can also be used to support the power system or to optimise the costs of electricity end-use. Especially from the

7 end-customer perspective, bidirectional use of customer owned energy storages (i.e. EVs) offer great opportunity to efficiently harvest local energy resources and use electricity during network service interruptions. 3.1 Functional objectives The operational functions of the gateway depend from the functional objectives of the market players. They rise from the need to correspond to the challenges of the changing operational environment of the electric power system. Legislation and operation principles related with power systems and electricity markets set requirements on the operation and technology of the customer gateway (Valtonen 2010b). In addition, the expectations of electricity end-users need to be considered. An approach for defining the functionalities of the gateway is presented in Figure 3.1. Market players Responsibilities Business Regulation Environment Costs Gateway Measurements and supervision Functional objectives Operational functions Operations models Controls Figure 3.1 Determination of the functionalities of the interactive customer gateway. The legal responsibilities, the business models and the economical profitability guide the functional objectives of most of the market players. The importance of ecological solutions is also high and increasing constantly especially among the end-customers. For the distribution companies the regulation of the network business is a significant driver towards effective network operation and asset management. Several expected functional objectives for the gateway can be defined without considering deeply the exact business models. A market player specific list of such functional objectives is presented in Table 2.1. However, business models are needed to apply the functionalities provided by the INCA effectively into real life.

8 Table 3.1 Functional objectives of the market players related with the customer gateway. End-customer / Consumer TSO Safe use of electricity Power balance management Continuous use of electricity Power reserve management Minimisation of energy costs System security management Connection of own generators Load profile management Connection and free use of energy storages Elasticity (* profile management Electricity sales DSO Billing information management Billing information management Trade optimisation Network capacity management Power demand management Power demand management Load profile management Load profile management Elasticity (* profile management Elasticity profile management Forecasting of distributed generation Supply security management Voltage quality management Electrical safety *) How elastic is the power demand of a customer or a group of customers seen from the utility grid side of the customer interface. Without functional business models the changes based on the operation of the customer gateway will be valueless. The business models have to be developed in parallel with the technical and functional properties. From the customer perspective, the central functional objectives are the use of electric energy without interruptions and the minimisation of the total energy costs. Other functional objectives like the connection of DG and the use of local and mobile energy storages follow from the two main requirements especially in the case that customer has also interests towards ecological solutions. The requirement of the safe use of electricity derives from the basic need of safe living environment. The participation of the customer loads and generation facilities into the power balance and the reserve power management of the power system are the two main functional objectives from the TSO perspective. The management of load and elasticity profiles aims directly to facilitate the management of the power balance and the reserves. The elasticity profile describe how much of the loads can be sifted or directly reduced within a timeframe. The functionalities of the INCA can also be used to manage and prevent disturbance situations in the system, and thus, to improve the security of operating the power system. One of the backbones of the functioning electricity markets is that the network forms an unrestricting market place. In practise, also the network companies are important market players as realisation of a network without technical limitations is impossible and because the income of a network company depends from the efficiency of the use of its infrastructure. For electric energy retailer it is important to know the magnitude and the elasticity of the power demand of the customers, i.e. what is the controllability of the demand to be used to balance the market actions. Substantial economical benefits can follow the ability to optimise the trading at the electricity exchange markets. Thus, the

9 main functional objective of the electricity sales is to optimise the trading at power exchange markets. The DSOs are interested in smoothing the load profiles to ensure efficient exploitation of the capacity of their networks. For that reason the DSOs are interested from the same functional properties as the electricity traders; management of load and elasticity profiles and opportunity to control the loading of the grid. In addition, the DSOs share functional objectives with TSO. One of these objectives is the management of supply security. In the future, parts of the distribution networks may be operated as micro grids requiring local power balance management. 3.2 Technical requirements The operational functionalities dictate the requirements for the technology of the gateway. The solutions for measurement and ICT technology are in central role. Based on the functional objectives, requirements can be set for the band width of communication, for the resolution of the measurements and for the processing power of the customer gateway. Similarly, the details of the functional objectives set requirements for the technical solutions of the power line, i.e. how much power electronics is applied and for which functions, and what is the overall construction of the power line. According to the data transfer and measurement requirements, presented in (Valtonen 2010b) and (Partanen 2010), broadband communication networks are needed. For instance, in order to use the active resources of the end-customers as commodity at electricity exchange markets at least hour level power demand measurements are needed. Furthermore, participation into the regulating power markets requires three minute time resolution. Similarly all the direct control signals have to get through in short time periods to have real-time response. The management of power system disturbance situations, i.e. power shortage situation, requires local frequency measurements and loads that can be controlled frequency dependently. Solutions for such operation have been presented, for instance, in (Rautiainen 2009). The communications and information systems are needed to keep track on the amount of the currently available frequency dependent loads in the network. The need to monitor the power quality at the end-user requires high resolution measurement of the voltages and currents. In the case that the power quality is controlled locally at the customer site, the measurements are processed constantly in the

10 gateway. Alarms can be sent to DSO if the limits of acceptable power quality are violated. Another option is that the DSO takes the necessary corrective measures based on the alarm signals and no automatic control of power quality is done in the gateway. In this option the measured power quality data is read from the gateway when needed in analysis of possible power quality problems and the decision making for corrective measures is done by the DSO. The latter option can be realised without power electronic converters based on smart meters with quality watches. In both options the gateway can store measurement data over a time period in its local memory for latter use. Further specification of the technical requirements, mainly for measurements and data storing are presented in the following list: Voltage quality parameters (according to EN 50160) o P lt flicker index over a year and P st flicker index over a week o 10 minute mean values of RMS phase voltages over a year o 10 minute mean values of harmonic RMS phase voltages up to 40 th harmonic over a month o Excess of 8 % THD U level calculated up to 40 th harmonic over a year; time of excess and maximum THD value during excess. o 10 minute mean values of harmonic RMS phase currents up to 40 th harmonic over a month Interruption statistics and disturbance recordings o Last 15 s of U and I waveforms readable from buffer when needed (accuracy up to 40 th harmonic) o Number and duration of all interruptions over a year o Number, timestamp and depth of voltage sags over a year o Alarm information of RMS over voltages over a year Power demand and production information o Instantaneous active and reactive powers of loading, generation and storage at minimum with 1 s time resolution. Values of last 15 s in buffer. o Power demand and injection measured from utility grid side with 3 min (over previous week) and with 1 h time resolution (over a year with standard deviations calculated based on earlier years) o Cumulative energy values for grid intake, load and generation Availability of active resources o Regulation capacity, i.e. elasticity of load demand and available storages capacity with 3 min and with 1 h time resolution, data available over the same periods than grid side power demands o Instantaneous state of charge of energy storages

11 Surrounding conditions recorded over a year with 1 h time resolution o Outside temperature (1 h average) o Inside temperature (1 h average) o Inner air quality (worst value of each hour) o level of lightness (1 h average) Not all the measurement data is necessarily stored in the gateway. Part of the data can be stored in external databases, for instance, to quality database of a service provider or distribution company. Selection has to be made based on the way of operating the customer gateway. The technical requirements for the time resolutions of the measurements are based either on standardisation, regulations and decrees, or on demands set by the market players (Valtonen 2010b). For the measurement resolution the 16 bit A/D conversion is in most cases enough. The highest demand for the measurement resolution is set by the demand to follow harmonics up to 40 th order. 3.3 Operational functions The above described functional goals and requirements set basis for the operational functionalities of the interactive customer gateway. Interactive customer gateway can also house several functions to assist management, protection and operation of the distribution networks. An example of this kind of construction is presented in chapter 3.4. Similar functions can also be used to optimise, for instance, charging of EV batteries based on the costs of charging and capacity of the network (Makkonen 2010). In the case that the EV technology enables discharging of the batteries back to grid, the energy stored in batteries can also be used to support the power system or to optimise the costs of electricity end-use. Especially from the end-customer perspective, bidirectional use of customer owned energy storages (i.e. EVs) offer great opportunity to harvest low cost and emission free energy at the most efficient way and use electric energy also during network service interruptions. The main operational functions enabled by an active customer gateway are presented in table 3.2.

12 Table 3.2 Basic functionality based on an active customer gateway Main functions Information to and from customer gateway Task for the customer gateway TSO; Management of power balance and reserve power DSO, supplier, aggregator; optimisation of system loads (determination of optimal grid powers) Customer; Minimisation of total energy costs Input: System frequency measured in the gateway Output: Estimate of available elasticity Input: Hourly grid powers determined by the market player Input/output: Estimate of available elasticity Output: Estimate of grid powers within minimum and maximum limits Input: Estimate of market price Input: Distribution tariff information (in case of dynamic tariffs) Reduce loads/supply power to the grid based on the droop determined for the gateway Keep the objectives for hourly grid powers Optimise control for loads, energy storage and generation Time scale s min 1 168 h 1 24 h The main functions of an active customer gateway can be divided into three main categories: The first is participation in the power balance and reserve power management. In the case of power unbalance (e.g. loss of a large power plant), it is possible to reduce the controllable loads of the customer or to increase the output of an energy storage and controllable generation. This kind of functionality reduces the need for power reserves and improves the security of the power system (Rautiainen, 2009). When the loads of the system participate to the power balancing the need to build more and more power regulation reserves along the increase of un-controllable distributed generation reduces. Furthermore, during the system disturbances the controllable loads can be used as fast reserves that have their own pre-set frequency droop for power control. The second is optimisation of system loads seen by different market players. Optimisation of system loads means, for instance, that the supplier of energy wants to determine certain values for the gateway power during the coming day. This facilitates in keeping the whole economic power balance of the supplier within planned values. Determination of realistic fixed customer gateway powers for each customer is a complicated optimisation problem. The load forecast of the customer has to be made separately for controllable and non-controllable loads. A similar process will be required to estimate non-controllable generation (wind, solar). Next, optimal actions for controllable loads, generation and energy storages have to be solved taking into account all technical limits. The DSOs special interest is in smoothing the load profiles (shift of loads and reduction of peak powers) in their low- and medium-voltage networks, as presented in Figure 3.2. And finally, by correct pricing and direct control it is possible

13 to increase the peak operating times of network structures leading to better rate of return of network investments. For the customer and energy supplier/aggregator the aim is to cut loads during expensive prices, as presented in Figure 3.3. However, this action can be in contradiction with the objectives of the DSO, as can be seen from the Figure 3.3. Change from constant distribution tariffs towards dynamic electric bandwidth pricing is a possible solution for the contradiction. 1,4 1,2 Figure 3.2 Figure 3.3 Peak power of the feeder [MW] 1,0 0,8 0,6 0,4 0,2 Saturday Cooking, sauna Electric heating (heat recovery) Sunday 0,0 0 4 8 12 16 20 0 4 8 12 16 20 Shift of loads and reduction of peak power from DSO perspective. Power demand [MW] 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 E Time Power demand on feeder Spot price of electricity 1800 1600 1400 1200 1000 800 600 400 200 Shift of loads and reduction of peak power from electricity sales perspective. 0 Price [ /MWh] The third is relevant in the case when customer like to optimise the total energy costs independently on market players. In that case, an price signal based optimisation function is required to balance the power intake from utility grid, customer loads and storage capacity with instantaneous production of customers own generators on the way that minimise the costs of using energy to the customer. Typically minimising the energy costs mean minimising the grid intake. However, in future there might be situations in which the customer get paid from use of power during some time periods, for instance, to balance the power system or market situation. The optimisation has to take into account customers living standards, and need of mobility (EV batteries can not be run empty for secondary purposes) as boundary conditions. Otherwise, required price signals are the price of electric energy (e.g. hourly price) and price of network services. Both are needed for power intake and injection to the system. The main load control features are load shedding, load sifting, load alternation and other energy saving solutions like motion detector based power supply of consumer electronics.

14 From the TSO and DSO perspective the direct connection to the customer interfaces opens opportunity to save in infrastructure costs. From the electricity sales viewpoint the market based demand response, realized with the control of the customer s loads and power storages in the boundaries of service quality and local generation, offer an opportunity to manage the risks of electricity markets or develop new products based on virtual power plant concept. From the viewpoint of the customers, the efficient exploitation of the opportunities given by the INCA prods to increase the application of local small-scale generators and power storages. 3.4 Structural design Technology of the INCA is based on the exploitation of modern power electronics, embedded intelligence, ICT systems and smart metering technology. The role of the ICT systems in realisation of the gateway is central. The technical architecture can be divided into two main interfaces; power interface and communication interface. Both of these interfaces are controlled by the local ICT-system based on external information and internal measurement data. Power electronic converters, smart metering and building automation provide the core infrastructure inside the customer premises for realising the control and supervision functions of the INCA. Constant information exchange, both internally and externally of the customer premises, is needed. Real time local optimisation is needed to control both the use of energy sources (grid/dg/es) and the use of load appliances on maximum benefit basis. The objective of such optimisation is to balance the needs of customer with expectations of other market player within constantly changing boundary conditions. Figure 4.1 presents the principled architecture of the interactive customer gateway and its main power line and communications network connections inside the customer premises.

15 Figure 3.4 Principled architecture of the interactive customer gateway presenting the internal power and control circuits at customer premises. The customers can follow their use of electricity and manage the operation of the building automation system through the same user interface (UI). The UI can be realised, for instance, as a website. The UI can be used to present external information, e.g. price signals, and to make changes to the internal settings. Definition of the priorities of ones loads is an important presetting task for the customer. The main controller unit of the local control system receives the external information signals and processes them together with the internal measurement data. Based on this information the controller performs the actions based on the operations models programmed to it. The local main controller holds all the operations models necessary to realise operational functionalities expected by the customer and external actors. Each actor can only make changes to its own operations models. The external control signals are based on the combination of the data from multiple measurements points in the distribution network (incl. all INCAs) with other sources describing the market situation and the state of the power system respectively. The external control signals are formed as a result of analyses performed in the information systems of external market players. The power interface contains a smart meter for power and energy measurements and supervision of both internal and utility grids, mains protection and power electronic grid connections for generators and storage units. In some cases, a voltage quality controlling converter unit can also be included in the gateway equipment. The power interface can either compose of multiple devices or all the functionalities of above mentioned equipments can be integrated into one device.

16 All the devices of the power interface are under the control of the local main controller. The communication both internally and externally is based on standardised protocols and interfaces, for instance, as defined in the IEC 61850 standard. All appliances supporting standardised communications interface can be connected to the main controller. The load appliances in the customer network can be controlled either load group by load group with the switching devices located in the main distribution cabinet or with appliance specific control signals by exploiting their internal control functions or with external controller devices installed in the power sockets. The gateway can take use of all the available control properties of load appliances, such as, motion detectors (ligths, TV-sets), sensitivity to grid frequency and total loading (heating systems, air exchange), possibility to relay market signals directly to devices (washing machines, electric vehicles). The customer needs and living standards are taken into account when performing load shedding or sifting actions. The main controller is responsible for maintaining real-time information of the controllability of loads, storages and generation units. The controllability varies, for instance, based on surrounding conditions. Therefore, to have even a rough short-term forecast it is important to monitor the surrounding conditions, as presented earlier in chapter 3.2. As a part of the distribution network, the measurements and supervision functions located in the customer gateway offer a powerful tool for network management and especially for fault situation management. Several functionalities, already proven useful for DSOs, are available in modern AMR meters (Järventausta 2007). An example of the low voltage network management based on the local supervision by the interactive customer gateways is presented in Figure 4.2. In the presented case the communications system is used in two ways. First, a direct link is founded between each gateway and a secondary substation automation device for local network management and protection purposes. Second, the main data connection to the DSO s information system is used for transferring local measurement and alarm signals to the operating centre. The secondary substation automation device combines the data received from the customer gateways to its own measurement signals. It also continues the link all the way to feeding substation. Thereby, communication based protection methods and fault locating system for both medium and low voltage networks can be applied, within the properties of the data transfer links. The data communication based protection systems are a step towards safe island operation.

17 Figure 3.5 Interactive customer gateways as a part of operational management of the distribution network. 3.5 Control algorithms There are three main levels in the control system of the interactive customer gateway. The first and the highest level control is formed by the algorithms in the information systems of the DSO, TSO and the energy suppliers. The second level of control is the main control of the customer gateway. The third control level is formed by the individual control algorithms of the active devices in the customer s network, like building automation, generator interface converters, AMR meter, sensitive heating system control, active voltage controller, etc. The two upper level controls are the most important for achieving coordinated interoperation of the interactive customer gateway. The execution of the control signals given by the two upper levels are, however, dependent form the operation of the third control level. Examples of devices with internal third level control are frequency (Rautiainen 2009) and total power demand (Kaukora 2003) sensitive space heating systems. These kind of independent controls are, however, mainly power system oriented controls, and thus, by suppressing them under the upper level control algorithms enables the combined market, system and customer oriented control. In addition, the centralised control of the gateway can also be used to take control of some otherwise passive loads. Figure 4.2 presents the principle of the control system.

18 Figure 3.6 Feedback Relevant measurements Customer behaviour Distribution system Power system Electricity markets External control systems Local measurements Simplified control system layout. Market information Direct control signals System information Customer s priorities Internal gateway control Direct control signals Internal device specific control The control algorithms are based on operations models that define the basic actions to in each situation. The operations models act on the basis of optimisation algorithms that aim on finding the best solution for each case and market player within prevailing boundaries. The feedback enables constant adaptation of the control. The main tasks of the first (external) and second (internal) level control algorithms are: Recognition of active resources and creation of patterns for customer behaviour (internal) Classification of the resources according to their elasticity, applicability and random variation (internal and external) Creation of customer specific load and elasticity profiles (internal) Short-term estimation of loads and local generation (internal) Short-term estimation of market behaviour (external) Optimisation of system loads for different market players based on measurement data, short-term forecasts, and load and elasticity profiles (external) Optimisation of load profiles of individual customers based on given market information, direct control signals, customer behaviour and short-term forecasts (internal) Recognition and finding solutions for power quality problems (external and internal) The main target of the third control level is to take care of the execution of the upper level control signals in boundaries of momentary state of the system locally. The third and second level controls have to work seamlessly together so that when the local situation changes, i.e. customer behaves unexpectedly or an disturbance occur somewhere in the system, the first operations are to stabilise the situation and to inform external actors of the situation and of the actions by the gateway due to it, so that the harm caused either to external market players and/or to the customer are minimised. 4 Technical enablers and drivers There are several technical and societal trends affecting on the electricity networks and markets of the future, such as (Järventausta 2008b):

19 The penetration of DG will continue, because the amount of RES will increase due to environmental and political reasons, and the small-scale combined heat and power due to efficiency reasons. Efficient use of energy at customer level and intelligent demand response have become an essential issue. Power quality (voltage quality and reliability) requirements will tighten due to public and regulatory actions at the same time when failure rates will increase due to climate change. Many components of existing networks are becoming into end of their lifetime. They need replacement or continuation of their lifetime in safe and controlled way. Regulation of network companies will tighten up while companies want to ensure profitability of their business. This will mean rationalization of network management both in short- and in long-term perspective. The risk of major disturbances is increasing, both the probability and consequences. The reason for increased probability is the complexity of power network and the increased failure rate due to climate change. The consequences are increasing due to society s higher dependency on the power supply. Traditionally power generation, distribution network management and loads have been considered as quite independent processes. Along with increasing amount of distributed generation the traditional approach is being gradually changing. Considerable amount of renewable energy resources represents distributed generation, but also energy resources like storages and plug-in electro-hybrid vehicles, which can serve both as consumers and sources, will be increased. One of the main barriers for the penetration of DG at distribution network level is the complexity of the interconnection process of DG into network. From network management point of view the increasing amount of DG is often seen as negative development, which brings the complexity of transmission network to distribution network level. So far the loads and customers have also been passive from network point of view. By making the customer connection point more flexible and interactive the demand response functions (e.g. by realtime pricing, elastic load control) are more achievable and the efficient use of existing network and energy resources by market mechanisms can be improved. (Järventausta 2008b) There are some technology trends which make it possible to achieve the functionalities required from the interactive customer interface, (Järventausta 2008b) such as: Large scale AMR implementations going on almost globally Communication technology and computer systems and their integration are under rapid development. Decreasing prices of power electronic converters suggest that majority of new DG units will connect to network through flexibly controllable interface converters

20 Application of power electronics directly in distribution networks, either in DC systems or as active voltage controllers, has proven to have high techno-economical potential Urge to develop electric vehicles has led to fast improvement of electric energy storage technology Developing the interactive gateway will not only solve some of the most difficult challenges related to the structural change of the energy system, but gives opportunity to convert solving the challenges profitable for all market players. 4.1 Smart metering The primary role of AMR (Automatic Meter Reading) systems has been to provide energy consumption data to the utility, but the cost of retrofitting the existing energy metering system may not be justified without added value functions. At the moment, the AMR systems installed can already be considered to be smart metering going beyond the plain remote metered energy reading. Electricity distribution companies in many countries are installing or have already installed smart metering systems as a response to the electricity market reforms and new regulations. Smart metering systems enable real time information exchange between customer interface and information systems of network operators and energy suppliers. This provides new opportunities to develop methods that can benefit all the stakeholders in the power markets. (Valtonen 2010a) The possibilities of using smart metering include, for example, real-time power and energy information, gathering of accurate interruption statistics, voltage quality monitoring, indication of line cuts both in medium and low voltage networks, disconnection and reconnection of customer s electricity supply, demand side management through direct load control (e.g. heating loads). (Järventausta 2007) The measurement data is useful for determination of load profiles, secondary transformer condition monitoring and overall supervision of low voltage distribution networks. Combined with measurement and fault indication devices of the medium voltage network, the metering infrastructure can also be used for fault locating. The measured data offer valuable information for network and electricity sales planning as well as for overall asset management, in addition to the traditional use in billing and balance settlement. (Järventausta 2009) As the Figure 4.1 presents, the AMR or smart metering system can be utilised in many functions of distribution company, e.g. to support network operation.

21 Asset management Control center network data customer data DMS SCADA QMS Customer service Measurement data base AMR system Billing Balance settlement Substation automation DMS = Distribution Management System QMS = Quality Monitoring System Figure 4.1 Role of AMR systems in network management (DMS = distribution management system, QMS = quality management system) (Järventausta 2009) The present AMR meters offer the framework (i.e the infrastructure and communication) for developing the upper-level functionalities of the INCA. The implemented smart metering systems have already changed the function of basic energy meter towards a multifunctional customer gateway. The functions of the AMR meters are nowadays realised mainly as software solutions which means e.g. flexible way of extensions of new functions and facilitate integration with the intelligent devices located in the customer-end. 4.2 ICT ICT system can be divided into communications network and information systems. The technical development of electricity networks and power system call for changes in the ICT systems, used in the system management. The march forward of the AMR and smart metering technology and related data management systems has already laid foundations for the next generation ICT solutions for electricity distribution. The main characteristics of the communications system are bandwidth, latency, reliability and costs. Several options with their own pros and cons exist on the markets, some of them better for urban areas and some for sparsely-populated areas. Comparison of few nowadays used technologies is presented in Table 4.1.

22 Table 4.1 Comparison of communications techniques. Adapted from (Valtonen 2010b), (Partanen 2010) Technique Range Bandwidth PLC (Power line communication) GENELEC A-D HomePlug 1.0 300-500 m 1 30 kbit/s 5 14 Mbit/s (1 GPRS Covering everywhere 20 50 kbit/s 3G Covering at urban areas 150 kbit/s 1 Mbit/s DSL 5 km 10 24 Mbit/s Optical fibre 100 km 10 Mbit/s 10 Tbit/s (2 WLAN 50-100 m 10 50 Mbit/s RF network Local network 50-100 m, 1 300 kbit/s link up to 50 km 1) (Lee 2003) 2) Nippon Telegraph and Telephone Corporation, press release, September 29, 2006 Most of the wireless techniques are suitable for narrow range local networks. However, techniques based on wide ranging telecommunication networks (GPRS, 3G) are useful also in long distance data transfer. The down sides of using GPRS and 3G networks are the operational costs and unknown latency. The telecommunications networks are operated and owned by private service providers that charge from each action in the network. The capacity of the network also has to be shared with other users that lead to varying data transfer speeds. RF and microwave links can also be used in longer distance communication. Microwave links offer high bandwidth, up to some tens of megabits per second, but require line-on-sight transmission links. Therefore the investment costs of microwave links become high. Radio frequency communication links have been used in the management and supervision of electricity distribution networks for decades. However, even though the techniques have evolved since the first applications, the bandwidths still remain quite low. Optical fibre networks offer supreme capacity compared to other options. The latency and reliability of data transfer is also high. The investment costs of installing the optical cable and terminal devices have narrowed the use of the technique. However, the installation of an optical cable or a pipeline for an optical cable during renovation of the electricity network infrastructure is quite small increment to the total investment costs. Due to wide applicability of optical fibre communication in network protection, supervision and in data transfer for electricity markets it can be seen as one of the most recommended techniques. High capacity leaves room also for novel solutions in future or application of the same infrastructure also for commercial solutions outside power distribution. The selection of the suitable communication technique for each case depends from the data transfer needs. The data transfer needs from the electricity markets perspective are thoroughly discussed in (Valtonen 2009) and (Valtonen 2010b). In addition to the