Feasibility of AMI and Smart Grid in Brazil - Lessons Learned - botelho chowdhury- final
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“Brazilian Utility - Lessons Learned from Smart Grid Strategy and Business Case”Speakers: Ricardo Botelho – CEO, Energisa SAJohn Chowdhury – Utility Innovation
About the Speaker: Ricardo Botelho
• Chief Executive Officer and Member of Executive Board at Energisa S.A. since April 2008. A utility company with $1.4B USD in revenue with five different distribution companies in four states. He serves as the Vice Chairman of the Board of Directors of Energipe, SAELPA, CELB, Companhia Energetica da Borborema‐CELB and Energisa. – Mr. Botelho served as the Chief Executive Officer of Nova América S.A. – He serves as the Chairman of the Board of Cat‐Leo Cise. – He served as an Engineer at GTE Laboratories, and GTE Communications
Products ‐ Tempe, in Arizona (USA). – He served as the Development Team Chief ... of Micron Technology ‐
Signal Processing Group, Arizona (USA).
About the Speaker: John Chowdhury• Utility Innovation Practice
25‐year consulting career working with electric utility and telecom businesses to increase performance (including several years in Brazil and Latin America)
– Advised US/international energy entities on Smart Grid/AMI/distribution automation; business case development; CRM and telecom/wireless networks
– Architected first Smart Grid solution at Houston‐based CenterPoint Energy and first Smart Grid city in Brazil
– MBA – University of Texas at Dallas; BSBA/MIS – Tulsa University
Professional Background • Author and Frequent Speaker • Director and Vice President ‐ KEMA/DEKRA• Energy and Utilities Leader – North America – IBMGlobal Services
• President and CTO – NetKnowledge Technologies• Senior Manager ‐ Ernst & Young & Price WaterhouseUtility Consulting
Memberships• UTC Smart Networks Board Member• Advisor to Tulsa University Masters ofEnergy Program
• GridWise Architecture Council• IEEE‐Power Engineering Society• Advisor to National Rural ElectricAssociation ‐ TechAdvantage
• Utility Innovation Council – Board Member
Agenda
Energisa – Company BackgroundEnergisa – Company Background
Smart Grid Trends – Around the worldSmart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findingsFeasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s NextConclusion – What’s Next
Grupo Energisa 107 years old public traded investor owned utility
Distrib. PCH’s Eólicas Termelétricas
Total Energy Distributed – 8,708 GWh
Total Consumers : 2,453,410
# Substations/capacity (MVA): 141 / 2,573
HV Lines (69/138kV/230kV) (km): 4,231
MV and LV distribution lines (22/13.8/11. 4/ 0.38/0.22kV) (km): 123,355
Net revenues - US$ Million : 1,366
Yearly Investment US$ million = 165
2011 Distribution – 5 utilities
Operating SHP plants/capacity: (4)/ 35 MW
Under construction SHP (2013): (1)/8MW
Developing SHP plants (2017): (3)/50 MW
Operating Biomass Cogens plants/capacity: (2)/60 MW
Developing Biomass Cogens plants/capacity (2016): (2)/110MW
Wind Park under construction (2013): 150MW
Developing Wind Park (2017): 90 MW
Expected Total Energy production (operating and construction)- 2013: 532 GWh/year
Total Energy production (developing) 2016-2017: 361 GWh/year
Total Investment (2012-2017) : US$ 572 million
Renewable Generation Portfolio
Consol. Net Revenue US$ Milion: 1.448,6
Consolidated EBITDA US$ Million: 331,3
Net Income US$ Million : 126,6
2011 Consolidated Financial Highlights
O&M and Trading Services
Largest Independent O&M Service Operator of Hydroplants: 130 units
Total capacity under contract: 8,704 MW
Specialized eletrical contractor services for Industrial clients and utilities
Construction/Maintenance of Substations and Transmission lines
Net revenues US$ Million –36.4
Wholesale Electricity Traded– 78 MW avg
45 clients among largest industrial/commercial clients
Net Revenues – US$ Million – 63.4
O&
MTr
adin
g
Energisa Growth History in numbers
166 192233 259 279 313
1.9792.067
2.1672.253 2.338
2.453
2006 2007 2008 2009 2010 2011Rural Consumers Total Number Consumers
Total number of Consumers (000)
106.312113.502
121.344
134.357140.557 145.369
2.643 2.693 2.7362.930 3.054 3.181
2006 2007 2.008 2009 2010 2011
Distribution Transformers (Qty and Installed Capacity MVA)
Quantity Capacity Installed MV/LV (MVA)
1.931 2.042 2.187 2.353 2.593 2.765
6.966 7.280 7.629 7.8788.474 8.70996,8 98,0
100,7 104,2
110,5 113,3
2006 2007 2008 2009 2010 2011Residential Consumption (GWh) Total Energy Distributed (GWh)KWh/residential consumer/mo
Total Energy Distributed -Avg Residential Consumption/month
100,0 105,8 109,9 116,1121,6 123,4
57 55 57 57 59 59
20 20 20 19 19 20
2006 2007 2008 2009 2010 2011MV/LV lines (km ́ 000) MWh/Km Consumer/Km
MV/LV Lines Extension and Consumer/power density
Growth rate 4.4% p.a
Growth rate 6.5% p.a
Growth rate: 4.3% p.a
Growth Rate: 4.6% p.a
Growth Rate: 7.4% p.a
Energisa Performance Indicators
9,3% 8,9% 8,2% 8,2% 8,2% 8,3%
5,3% 5,5% 5,2% 4,8% 4,3% 2,8%
14,6% 14,5%13,4% 13,0% 12,5%
11,2%
16,7% 17,0% 17,0%
18,3%17,8%
2006 2007 2008 2009 2010 2011
Total Energy Losses Energisa vs Brazil average
Line Losses Commercial Losses
Brazil Avg
31,0 24,5 26,3
31,7
23,7 22,6
14,0 15,6 15,7 16,513,9 13,8
27,0 27,0 26,2 25,4 23,6
22,2 25,3 24,7 23,9 22,4
19,6 17,2
2006 2007 2008 2009 2010 2011
Energisa Target SAIDI/SAIFI (*) vs Actuals
SAIDI (hours) SAIFI (#) Target SAIDI Target SAIFI
266 284333 338 338 371
422 431478 494
Average 340
A B C D E F G H I ENERGISA
Consumer/Workforce employed vs Comparable IOUs
Companies Peer Group Avg (2010)
76,8 76,8 77,479,9
77,3 76,7
2006 2007 2008 2009 2010 2011
ABRADEE Customer Satisfaction Survey
EPB EBO ESE EMG ENF Brazil Average
Agenda
Energisa – Company BackgroundEnergisa – Company Background
Smart Grid Trends – Around the worldSmart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findingsFeasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s NextConclusion – What’s Next
Smart Grid – Around The world
• Energy Efficiency• Operational Efficiencies• Improve Reliability• Renewable Integration
• Energy Efficiency• Operational Efficiencies• Improve Reliability• Renewable Integration • Energy Efficiency
• Operational Efficiencies• Improve Reliability• Improve Customer Service• Renewable Integration
• Energy Efficiency• Operational Efficiencies• Improve Reliability• Improve Customer Service• Renewable Integration
• Developing Intellectual property• Reducing usage by 10 percent• Lowering the average annual blackout
minutes per household from 15 minutes to nine
• Reduce line loss to 3 percent.• Capture 30 % of renewables• Create 50,000 annual jobs• US$43 billion in avoided energy imports • $3 billion in avoided power generation
costs.
• Developing Intellectual property• Reducing usage by 10 percent• Lowering the average annual blackout
minutes per household from 15 minutes to nine
• Reduce line loss to 3 percent.• Capture 30 % of renewables• Create 50,000 annual jobs• US$43 billion in avoided energy imports • $3 billion in avoided power generation
costs. • Ecological rationale is not a factor• Energy Efficiency• Develop Distributed Generation• Deploy 280 million smart meters by
2016. • Major generators and substations to be
equipped with smart sensors
• Ecological rationale is not a factor• Energy Efficiency• Develop Distributed Generation• Deploy 280 million smart meters by
2016. • Major generators and substations to be
equipped with smart sensors
• Vision 20-20-20• Smart grid efforts are a specific part of
a low carbon agenda • Sweden is the first country in the world
to hit 100-percent penetration for smart meters
• Vision 20-20-20• Smart grid efforts are a specific part of
a low carbon agenda • Sweden is the first country in the world
to hit 100-percent penetration for smart meters
South Korea
Australia
Europe and UK
China
USA
Smart Grid –Investment by Government in 2010
China is the leader in both categories, with $7.3 billion total investment, or $1,400 per $US million of GDP. As China builds out its modern grid to accommodate extraordinarily rapid growth
US Smart Grid Progress - Govt. Stimulus and Using Cost recovery methods
Observations
PGE Duke Con EdMost Often Used
Least Often Used
Comments
Trackers
Good means for focused recovery in lieu of full rate case process;
saves time; limits utility exposure with large unknowns
Balancing Accounts /Rate Base
Links these programs to normal rate case filing process
Customer Surcharge
Marginal Cost approach; Texas, Michigan, e.g. suggested
approach
State FundingCan be a Long Process would
require legislative action
Case Study Trend
Cost Recovery fall into one of the following categories regardless of state jurisdiction:
Cost Recovery fall into one of the following categories regardless of state jurisdiction:
Trackers: A mechanism that follows or “tracks” unpredictable costs that the utility incurs. Typically, trackers are determined at the end of the year and then recovered over a 12-month period.
Balancing Accounts/Rate Base: A balancing account is an accounting procedure developed by a utility commission to track and recover reasonable and prudent costs unrecovered through retail bills due to the application of applicable rate freezes or ceilings.
Customer Surcharge: A mechanism that has no standard statutory definition, but typically is a charge defined by the governing utility commission and imposed on customers to recover utility expenses.
State Funding: It varies state-by-state, but this approach includes funding for projects provided from existing or newly created state accounts.
Agenda
Energisa – Company BackgroundEnergisa – Company Background
Smart Grid Trends – Around the worldSmart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findingsFeasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s NextConclusion – What’s Next
Sustentability Trilemma for the investor owned utilitybusiness in Brazil: Social Economic Sustentability
Taxes and several Tariff
Charges
45%Generationand Grid
Costs
31%
Distribution
24%
Resource allocation of Brazilian utility bill (2011)
19,813 8,7 7,8 7,1 8,5 7,1 5,8 5,5 4,5 4,3 3,7 3,9 2,7 2
35,6
31,9
26,1 25,7 25,1 23,0 22,922,5 21,5 21,518,8 18,018,0 17,8
11,68,9 7,2
5,1 5,0
Dan
em
ark
Ge
rman
y
No
rway
Ital
y
Swe
de
n
Bra
zil
Ch
ile
Ho
lan
d
Port
uga
l
Spai
n
UK
Pola
nd
Turk
ey
Fin
lan
d
USA
Russ
ia
Ch
ina
Arg
en
tina
Ind
ia
Average Residential Electricity Rate (US$c/KWh, 2010)
Taxes and other Rate Charges Total Rate
ENERGISA Retail Electricity Rates - 2011 (1US$ = 1,67 R$ )Segments US$c/KWh R$c/KWh
Residential 29,80 49,91Low Income residential (subsidized) 14,98 25,09
Industrial 19,96 33,44Commercial 27,41 45,91Rural 14,66 24,55Other segments 18,44 30,89Total 22,70 38,02
Year: 2011 Residencial Baixa RendaAverage Residential Monthly Bill (US$) 46,32 11,08Avg. Yearly Resid. Consumption (KWh) 1.359 889
• High growth markets needs to be bankable - i.e generate sufficient margins to meet growing investment needs;
• Pressure from regulator to lower rates to consumers by reducing the utility operators distribution margins are not sustainable in a long term;
• Regulator wants more reliability but doesn´t provided adequate economic signals;
• Utilities are compelled to increase efficiency and asset utilization with better service delivered in order to sustain profitability.
Sustentability Trilemma for the investorowned utility business in Brazil: InvestmentSustentability
1st 2nd Rate Case Cycle 3rd Rate Case Cycle
14.1
12.6
21.7
14.8
2007 2008 2009 2010 2011 2012 2013 2014 2015
Energisa Distribution Utilities ROCE and EBIT margins
ROCE (%) EBIT margin (%)
82.939
115.123
9.133
27.142
2.007
3.412
15.499
25.461
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Projected Installed Capacity by energy source (MW) PDE-2011 (2010-2020) - source:EPE
Hydros Other Renewables Nuclear Fossil Fuel Plants
• Brazil has one of the cleanestenergy supply matrix in theWorld – 82% renewable non-nuclear
• Challenge is to introducereliable renewable sources costeffectively for the long term(SHP, biomass, wind and solar)
Sustentability Trilemma for the investor owned utility business in Brazil: Environmentally Sustentable
Timeline
Smart Utility - Energisa
2008 2009 20112010 2012
AMI Largest Clients
Roadmap Smart Grid Business
Case
RoadmapUtility
Management Systems
ExpansionAutomatedReclosures
Pilot Case: Smart
Substation
Pilot Case: Self
Healing
Substitutionof SCADA
Substitutionof GIS
Pilot Case: Current
FaultIndicators
ReviewSmart GridBusiness
Case
Workforce AutomationSIGOD / LIS
AMR Pilot
Investments (USD Million) 2008 2009 2010 2011 2012 TOTAL
Distribution Investments 174,20 246,98 229,01 147,6 183,8 981,52 Smart Utility Investment 2,13 2,37 2,19 2,92 10,61 20,22 Percentage 1,2% 1,0% 1,0% 2,0% 5,8% 2,1%
Pathways to Smart Utility - Energisa
Our motivations and needs for a Smart Grid deployment and towards a Smart Utility are different than in USA and Europe;
USA/Europe: aging infrastructure, promote energyefficiency and lower CO2 footprint, tech & innovativeindustry drive Brasil : opt-in meter replacement (REN-502/12), continuous pressure to improve reliability and efficiencyand reduce commercial losses within a declining shareof the rates.
Our hurdles: High deployment costs and not perceivable positive NPV yet Low consumption per capita base Cost recovery mechanism that doesn´t burden consumers or investors anddeliveries benefits in short term No Time of Use rates for LV retail customers still not effective Lack of local manufacturing base or trained personnel Reliable telecom network for wireless data not available in rural and smaller t
Pathways to Smart Utility - Energisa
-83%
AMI – Project Cost (full deployment at Energisa ) – from 2009 Business Case:
AMI – Main Benefits evaluated:
Results Investment :
623 Feeders
2,4 Millions
Meters
U$ 565 Million
Negative NPV in:
(U$ 467 Million)
Negative IRR in:
(8,51%)
57.0%
28.0%
10.0% 3.0%INVESTMENTS (%)
Meters
Shielding
Implementation
TI/Telecom
60.6%
22.5%
7.7%9.2%
BENEFITS (%)
Non Technical Losses
Reactive Energy
AMR+remote C&D
Others
Pathways to Smart Utility - Energisa
Reduction of Commercial Losses – sometimes thesolution is simpler than we think!
Commercial Losses higher than US$ 180/residential customer/ year in higher concentrated commercial loss feeders utilize simplified smart meter (AMI)
Commercial losses lower than US$ 180/residential customers/year in dispersed areas utilize low cost alternatives of electronic meters with shielded cables and meter borne – Energisa patented : DLCB Energisa
Chastity Belt (DLCB )
Pathways to Smart Utility - Energisa
Distribution Automation
Projects with NPV positive based on our 2009 business case: More stringent quality requirements and cost constraints Focus is to reduce penalties and improve reliability with add on Opex
Several Pilots currently being tested Smart Substation Current Fault Indicators Self Healing
Our Roadmap of Smart Utility also points to PoC in several other areas:DMS/OMSFault Detection isolation and restoration (FDIR) Volt-VAR optimization Treatment of large amount of Data Power Quality Management
Pathways to Smart Utility - Energisa
Distributed Generation:
Very low penetration of Distributed Generation
In April 2012 federal regulator released rule REN 482/2012 introducing net metering scheme for DG and provided for the first time mechanism to introduce micro-mini generation (<1 MW) with net-metering. Surplus produced beyond consumption can be credited and used in 36 months. Parity to grid in some locations but economics are not favorable for mass deployment without subsidies.
With TOU and other liberalized movements on energy trading, DG could be potential disruptive business model for traditional utilities
Impact of Smart Grid in the Operating Environment
Pro
ject
M
anag
emen
tBu
sine
ss C
hang
eM
anag
emen
tC
ut-o
ver
Man
agem
ent
Syst
ems
Inte
grat
ion
Busi
ness
In
tellig
ence
Dat
a S
ervi
ceIn
tegr
atio
n S
ervi
ces
Tran
sfor
mat
ion
Serv
ices
IS In
frast
ruct
ure
Man
agem
ent
Oth
er S
ervi
ces
Telecom Planning &Operations
CustomerService
Demand Response Management
Customer Relationship Management
Metering and Billing Service Management
Network Planning Network Solutions & Planning
Network Management
Meter Data Management
Work Management
DistributionManagementSCADA Distribution Management Outage Management
InfrastructureSmart Home Infrastructure (Smart Thermostat, Load Control Devices, Gateways.)
AMI Infrastructure(Smart Meter, Data Concentrators, AMI head end)
SMART Grid Infrastructure (Sensors, Grid Control Devices, Grid head end)
Con
sulti
ng
(Roa
dmap
, St
rate
gy)
App
licat
ion
Dev
elop
men
t &
Mai
nten
ance
NetworkCommunications
Home Area Network (HAN) Local Area Network (LAN)
Wide Area Network (WAN) (Wireless, Fiber & Substation)
Customer Portal Management
Credit and Revenue Protection
DataCenter
Management
Data Center Communications / Failover
Cloud Management Storage Management
Secu
rity,
Sta
ndar
ds &
Inte
rope
rabi
lity
Smart Grid Requires Resilient Communications Systems - CTO’s Approach One multi-purpose Communications network to avoid the implementation of multiple single-purpose
networks A Communications network that can grow as functional requirements change and technology evolve Incorporating commercially available, non-proprietary solutions allowing for future-proofing against today’s
investments cycles and technology obsolescence timeliness Leverage industry standards thereby lowering the overall cost to implement and support Create capacity and infrastructure for secure and fault tolerant requirements
• Low Latency Network• QoS at the core layer• Secure and
Fault Tolerant
Utility Network
Innovation
Control & Protection Network
Control & Protection Network
Utility Operations Network- Data Center
- Voice, Video and Data
Utility Operations Network- Data Center
- Voice, Video and Data
Smart Grid Automation
Network
Smart Grid Automation
Network
• Comprehensive Coverage • Multi-protocol• Scalable and Future Proof
• Resilient Data Center Network
• QoS at the core layer• Secure and
Fault Tolerant
* DUKE Energy CTO Speech, 2010‐2011
Telecom Alternatives Considered
24
Wireless Option Application Pro ConRF Mesh: Bit rate up to 1 Mbps,
variable range, variable frequency
Smart meters, distribution
automation
Able to be customized for specific
deployments, self‐organizing, self‐
healing
Proprietary, lack economies of
scale, equipment can be expensive
GPRS: Bit rate at 20‐200 kbps,
frequency 700 MHz to 2.1 GHz
Smart meters (AMI), mobile work
force management
Able to leverage existing networks,
low upfront capital investment,
short time‐to‐market, low module
cost
Recurring cost per megabyte, lack
of direct utility control over
network
PLC and Broadband Over Power
Lines (BPL): Bit rate at 48 kbps to
10 Mbps, variable range, frequency
at 1.6 to 80 MHz electric carrier
Substations, smart meters,
monitoring/ control at customer
premise, distribution automation
Robust capabilities, integrated
communications throughout grid
and home area network
environments, low recurring costs
High capital costs, expensive chips
and equipment, not widely
adopted
WiMAX: Bit rate up to 3 Mbps,
range of 10‐15 miles, frequency
700 MHz to 2.3‐3.5 GHz
Smart meters, mobile work force
management, distribution
automation
Robust capabilities, integrated
communications throughout grid.
High bandwidth capabilities, low
latency
High equipment cost and initial
build out cost.
VSAT: Bit rate 14 Kbps‐1Mbps, Smart meters, mobile work force
management, distribution
automation
Low‐cost equipment, ubiquitous,
low latency
High latency for DA and limited
growth potential
Agenda
Energisa – Company BackgroundEnergisa – Company Background
Smart Grid Trends – Around the worldSmart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findingsFeasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s NextConclusion – What’s Next
What’s Next- EnergisaProjects to be initiated in 2013 - 2015:
Our View of theFuture
1. Conclude upgrading Utility Management Systems as prescribed in our RoadMapPower Quality managementDigitalization: Protection and AutomationOMS / DMS Modelling Dispatch
1. Conclude upgrading Utility Management Systems as prescribed in our RoadMapPower Quality managementDigitalization: Protection and AutomationOMS / DMS Modelling Dispatch
3 . DG pilot case – handling distributed resources andotimizing dispach of DG solar power
3 . DG pilot case – handling distributed resources andotimizing dispach of DG solar power
4 . Evaluate low cost SG meters – REN-502/12 complaint4 . Evaluate low cost SG meters – REN-502/12 complaint
2 . Study on handling massive amount of data – BIG DATA analytics handling, storage and integrity
2 . Study on handling massive amount of data – BIG DATA analytics handling, storage and integrity
Thank you!Ricardo Botelho
rbotelho@energisa.com.br55-21-2122-6904
John ChowdhuryChowdhury.john@gmail.com
+1 214-213-6226
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