Roadmap Guidelines

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Roadmap for innovative smart metering services

Guidelines by Professor Tadeusz Skoczkowski, Warsaw University of Technology

List of Acronyms

AMI Advanced Metering Infrastructure

AMR Automated Meter Reading

DER Distributed Energy Resources

DGM Distribution Grid Management

DMS Distribution Management System

DP Dynamic Pricing

EMS Energy Management System

EV Electric Vehicle

ICT Information and Communication Technologies

IEA International Energy Agency

IT Information Technology

PEV Plug-in Electric Vehicles

PHEV

RESC Retail energy supply company

SCADA Supervisory Control and Data Acquisition

WAN Wide Area Network

The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.

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Definitions

AMI: The communications hardware and software and associated system and data management software that creates a network between advanced meters and utility business systems and which allows collection and distribution of information to customers and other parties such as competitive retail providers, in addition to providing it to the utility itself.

AMR: Automated Meter Reading is a term denoting electricity meters that collect data for billing purposes only and transmit this data one way, usually from the customer to the distribution utility.

Cyber Infrastructure: Includes electronic information and communications systems and services and the information contained in these systems and services. Information and communications systems and services are composed of all hardware and software that process, store, and communicate information, or any combination of all of these elements. Processing includes the creation, access, modification, and destruction of information. Storage includes paper, magnetic, electronic, and all other media types. Communications include sharing and distribution of information. For example: computer systems; control systems (e.g. SCADA); networks, such as the Internet; and cyber services (e.g., managed security services) are part of cyber infrastructure.

Cyber Security: The protection required to ensure confidentiality, integrity and availability of the electronic information communication systems1.

Demand-side management (DSM): Demand-side management is consumer load reduction at the time of system peak due to utility programs that reduce consumer load during many hours of the year. Examples include utility rebate and shared savings activities for the installation of energy-efficient appliances, lighting and electrical machinery, and weatherization materials. In addition, this category includes all other demand-side management activities, such as thermal storage, time-of-use rates, fuel substitution, measurement and evaluation, and any other utility-administered demand-side management activity designed to reduce demand and/or electricity use.

Implementation: The process of putting a roadmap into action, by carrying out projects and initiatives that address roadmap tasks and priorities, and by monitoring progress using a tracking system.

Interoperability: The capability of two or more networks, systems, devices, applications, or components to exchange and readily use informationsecurely, effectively, and with little or no inconvenience to the user.

Roadmap: A specialised type of strategic plan that outlines activities an organisation can undertake over specified time frames to achieve stated goals and outcomes.

Roadmapping: The evolving process by which a roadmap is created, implemented, monitored and updated as necessary.

Setting a vision: The process of analysing future scenarios and identifying objectives.

Smart grid: 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 supplies2.

Smart metering: Smart metering is designed to provide utility customers information on a real time basis about their domestic energy consumption. This information includes data on how much gas and electricity they are consuming, how much it is costing them and what impact their consumption is having on greenhouse gas emissions.

1

NIST Draft Publication: NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft), U.S. Department of Commerce, September 2009. 2 The European Technology Platform SmartGrids.

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Stakeholders: Relevant individuals who have an interest in seeing the roadmap developed and implemented, such as representatives from industry, government, academia and non-governmental organisations.

Standard: A technical specification, usually produced by a Standards Development Organization (SDO).

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Introduction The term roadmap is being extensively used in many areas, recently especially in politics. A definition of a roadmap can be found anywhere. For example in the Oxford Advanced Learners Dictionary it is described as3:

1. a map that shows the roads of an area, especially one that is designed for a person who is driving a car,

2. a set of instructions or suggestions about how to do something or find out about something.

This report is based on a much useful definition of what constitutes a roadmap in the energy

context, and the specific elements it should comprise provided by the IEA4. Accordingly the IEA has

defined its global technology roadmap as:

a dynamic set of technical, policy, legal, financial, market and organisational requirements identified by the stakeholders involved in its development. The effort shall lead to improved and enhanced sharing and collaboration of all related technology-specific research, design, development and deployment (RDD&D) information among participants. The goal is to accelerate the overall RDD&D process in order to deliver an earlier uptake of the specific technology into the marketplace.

Roadmapping, used for decades in technology-intensive industries, is a useful tool to help address complicated issues strategically at the national, regional and global levels. To help turn political statements and analytical work into concrete action, the IEA is developing a series of global

roadmaps devoted to low-carbon energy technologies5. The IEA has begun work on other roadmaps for other low-carbon energy technologies, including Smart Grids.

There are many kinds of roadmaps. Those of the IEA provided road maps are technology specific roadmaps, which are intended to support the development of a specific type of technology It is to be mentioned that this road map is not a technological one. It falls rather into the category of purely implementation road maps understood as a strategic plan that describes the steps an organisation needs to take to achieve stated outcomes and goals. This roadmap identifies the short term and long term plans for smart metering roll-out.

It clearly outlines links among tasks and priorities for action in the near and long term. As an effective roadmap it also includes metrics and milestones to allow regular tracking of progress towards the roadmaps ultimate goals.

Today there is not a final roadmap to show utilities how to develop a Smart Grid that is truly in that utilitys unique own best interests. Rather, we believe that each utility must analyze and plan for its Smart Grid foundation and future based on its various stakeholders interests, and the financial and human resource limitations imposed in the current economy.

3 Oxford Advanced Learners Dictionary, Oxford University Press 2010

4 IEA, Technology Roadmaps, http://www.iea.org/subjectqueries/keyresult.asp?KEYWORD_ID=4156

5 Energy Technology Roadmaps a guide to development and implementation, IEA, Paris, 2010.

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Road map general rules

Key elements of a successful roadmap6

A successful roadmap contains a clear statement of the desired outcome followed by a specific pathway for reaching it. This pathway should include the following components:

1. Goals: A clear and concise set of targets that, if achieved, will result in the desired outcome; quantified goals.

2. Milestones: The interim performance targets for achieving the goals, pegged to specific dates.

3. Gaps and barriers: A list of any potential gaps in knowledge, technology limitations, market structural barriers, regulatory limitations, public acceptance or other barriers to achieving the goals and milestones.

4. Action items: Actions that can be taken to overcome any gaps or barriers that stand in the way of achieving the goals; typical actions include technology development and deployment, development of regulations and standards, policy formulation, creation of financing mechanisms and public engagement.

5. Priorities and timelines: A list of the most important actions that need to be taken in order to achieve the goals and the time frames, taking into account interconnections among those actions and stakeholder roles and relationships.

6 Energy Technology Roadmaps a guide to development and implementation, IEA, Paris, 2010.

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The logic of a roadmap is depicted in fig. 1.

Figure 1: The logic of a roadmap.

If designed correctly, a successful roadmap should provide the ability to link any project or activity back through this logical structure to understand how the project or activity ultimately contributes to the achievement of the roadmap goals. Simply writing a roadmap is not enough the true measure of success is whether or not the roadmap is implemented and achieves the organisations desired outcome.

The most effective roadmapping initiatives rely upon sound data and analysis in combination with expert workshops to build consensus, thereby gathering the information needed for the roadmap while also building awareness and support throughout the process.

The whole roadmap process outline is presented in fig. 2. In this report only aspects of road map preparation are covered i.e. planning and preparation, visioning and roadmap development.

GOALS

MILESTONES

GAPS AND BARRIERS

ACTION ITEMS

ACTION ITEMS

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Figure 2: Roadmap process outline.

As seen from fig.2 roadmaping is a long term process, usually involving many stakeholders being represented by designated experts. A constant feedback in the form of workshops is an essential element to obtain a consensus which in practice is a prerequisite of a successful roadmap implementation. Also revisions of a roadmap in the implementation phase are not to be avoided.

Purpose of creation of this roadmap

Developing a successful framework for Smart Metering starts with a roadmap which establishes an effective, cost-efficient approach toward Smart Metering implementation having in view far more further reaching goal of Smart Grid building.

Physical and institutional complexity of the electricity system makes it unlikely that the market alone will deliver smart grids. Government, private sector and customer and environmental advocacy groups must work together to define electricity system needs and determine smart grid solutions.7

This roadmap aims to identify the primary tasks that must be addressed in order to reach its vision for smart metering roll-out. It constitutes an attempt to identify needs, barriers to smart metering deployment and then provides a guidance of what, by whom and how should be done

It is of paramount importance to remember throughout the whole process of smart metering roadmapping that smart metering is a part of much broader term of smart grid. Building smart metering systems in a country without placing it in the whole future smart grid process is a mistake already made in many countries. Therefore a broader, view on smart metering from the point of view of smart grids is considered vital and indispensible and is also discussed here.

The roadmap does not attempt to cover every aspect of smart metering and its deployment. For example, more detailed technical issues are not addressed. Neither does the roadmap serve as a beginners guide to smart metering. However the road map is based on a wide literature research

7 Smart Grid Roadmap, IEA.

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and used references and resources are cited where appropriate and can be used as useful source of additional self study.

The roadmap should be regarded as a work in progress as it describes a fairly dynamic process of SM development. More importantly, as the technology, market, power sector and regulatory environment continue to evolve, additional tasks will come to light.

Finally, the objective of this roadmap is to identify actions to accelerate SM deployment across EU. In some MS, certain actions will already have been achieved, or will be underway; but many countries, particularly those in new MS , are only just beginning to develop SM infrastructure. Accordingly, milestone dates should be considered as indicative of urgency, rather than as absolutes.

This roadmap outlines a set of quantitative measures and qualitative actions that define national pathway for SM to 2010...2015..2020.

Roadmap content and structure

This report on how to prepare a roadmap for smart metering and additional services is organised into seven sections.

In the first section some initial remarks on the essence of road maps are given.

Section two provides a short description on the way in which roadmaps should be written. The objective of this presentation is to familiar the reader with international ways (standards) of preparation of roadmaps. The methodology proposed by International the Energy Agency has been chosen for this purpose.

The next two sections, Smart grid and Smart metering namely, are a review of most essential issues concerning the two topics. It has been underlined that when designing smart metering systems they shall be a part of a smart grid. Concept of AMI has been introduced to contrast it with simple AMR. For the sake of brevity, only explanatory text that is essential is included. The section can no way be regarded as clear and comprehensive material on the two extremely wide subjects. Stress has been put to provide the sources used so that a keen reader may use them to deepen his or her knowledge when necessary.

These two chapters can be omitted by those readers who posses substantial knowledge on smart grids and do not need this lengthy introduction.

Section 6. discusses steps and categorises the actions and milestones to be undertaken by stakeholders (policy makers, industry and power system actors, end-users) in the process of preparation the roadmap. The aim of this is to help guide them in their efforts to successfully implement the roadmap activities and achieve the global wind deployment targets. This section contains also a proposal how to organise the process of preparation and implementation of a roadmap for smart metering.

Last section, Recommendation, provides some general rules to be considered when one prepares such a roadmap.

Finally, a list of most important bibliography is presented.

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Smart grid

Smart grid definitions

Smart Metering is also a key element of the Smart Grid, providing a two way link between the grid operators at one end and customers and suitably equipped home appliances at the other. For instance, it is possible for grid operators to remotely adjust thermostats in customers' homes to reduce loads on the system. In turn the utility would have to offer their customers an acceptable tariff to accept this arrangement. This also links smart metering into home automation technology8.

In general Smart Grids are power grids, with a coordinated management, based on bi-directional communication, between

grid components,

generators,

energy storages.

consumers,

to enable an energy-efficient and cost-effective system operation that is ready for future challenges of the energy system9.

Smart Grid can be defined as electricity networks that can intelligently integrate the actions of all users connected to it generators, consumers and those that do both in order to efficiently deliver sustainable, economic and secure electricity supplies10.

In the USA the term Smart Grid refers to a modernization of the electricity delivery system so it monitors, protects and automatically optimizes the operation of its interconnected elements from the central and distributed generator through the high-voltage network and distribution system, to industrial users and building automation systems, to energy storage installations and to end-use consumers and their thermostats, electric vehicles, appliances and other household devices11.

FERC identified four Smart Grid functional priorities that include12: 1. Wide-area situational awareness: Monitoring and display of power-system components and

performance across interconnections and wide geographic areas in near real-time. Goals of situational awareness are to enable understanding and, ultimately, optimize management of power-network components, behaviour, and performance, as well as to anticipate, prevent, or respond to problems before disruptions can arise.

2. Demand response: Mechanisms and incentives for utilities, business and residential customers to cut energy use during times of peak demand or when power reliability is at risk. Demand response is necessary for optimizing the balance of power supply and demand.

3. Electric storage: Means of storing electric power, directly or indirectly. The significant bulk electric energy storage technology available today is pumped storage hydroelectric technology. New storage capabilitiesespecially for distributed storagewould benefit the entire grid, from generation to end use.

4. Electric transportation: Refers, primarily, to enabling large-scale integration of plug-in electric vehicles (PEVs). Electric transportation could significantly reduce U.S. dependence on foreign

8European Smart Metering Alliance (ESMA), http://www.esma-home.eu/

9 National Technology Platform Smart Grids Austria.

10 The definition referred to above was adopted by the European Technology Platform for the Electricity

Networks of the Future, see Smart Grids and smart regulation help implement climate change objectives,

ERGEG FS 10-01, January 2010, 2; see also www.smartgrids.eu/?q=node/163. 11

The Energy Independence and Security Act of 2007. 12

Report to NIST on the Smart Grid Interoperability Standards Roadmap, June 17, 2009.

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oil, increase use of renewable sources of energy, and dramatically reduce the nations carbon footprint.

Besides the FERC priority applications, two cross-cutting prioritiescyber security and network communicationswere included, and two other priority applicationsadvanced metering infrastructure and distribution grid managementwere added because they represent major areas of near-term investment by utilities:

1. Cyber security: Measures to ensure the confidentiality, integrity and availability of the

electronic information communication systems, necessary for the management and protection of the Smart Grids energy, information technology, and telecommunications these infrastructures.

2. Network communications: Encompassing public and non-public networks, the Smart Grid will require implementation and maintenance of appropriate security and access controls tailored to the networking and communication requirements of different applications, actors and domains.

3. Advanced metering infrastructure (AMI): Primary means for utilities to interact with meters at customer sites. In addition to basic meter reading, AMI systems provide two-way communications that can be used by many functions and, as authorized, by third parties to exchange information with customer devices and systems. AMI enables customer awareness of electricity pricing on a real-time (or near real-time) basis, and it can help utilities achieve necessary load reductions.

4. Distribution grid management: Maximizing performance of feeders, transformers, and other components of networked distribution systems and integrating with transmission systems and customer operations.

The latest document from the European Regulators Group for Electricity and Gas (ERGEG) defines smart grid in a slightly different way as: an electricity network that cost-efficiently can integrate the behaviour and actions of all users connected to it generators, consumers and those that do both in order to ensure a sustainable power system with low losses and high levels of quality, security of supply and safety13. At the same time according to the ERGEG the term intelligent grid should be distinguished from intelligent (smart) metering.

As the backbone of the power industry, the electricity grid is now the focus of assorted technological innovations. Utilities across the world are taking solid steps towards incorporating new technologies in many aspects of their operations and infrastructure. At the core of this transformation is the need to make more efficient use of current assets. Figure 3 shows a typical utility pyramid in which asset management is at the base of smart grid development. It is on this base that utilities build a foundation for the smart grid through a careful overhaul of their IT, communication, and circuit infrastructure.

13

ERGEG Conclusions Paper on Smart Grids, Ref: E10-EQS-38-05, 1819, 10 June 2010, http://www.energy-regulators.eu/portal/page/portal/EER_HOME/EER_CONSULT/ CLOSED%20PUBLIC%20CONSULTATIONS/ELECTRICITY/Smart%20Grids/CD/ E10-EQS-38-05_SmartGrids_Conclusions_10-Jun-2010.pdf.

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Fig. 3 Smart grid pyramid

14.

As fig. 4 shows, the metering side of the distribution system has been the focus of most recent infrastructure investments. The earlier projects in this sector saw the introduction of automated meter reading (AMR) systems in the distribution network. AMR lets utilities read the consumption records, alarms, and status from customers premises remotely.

Fig. 4 The evolution of the smart grid15.

14

Farhangi H.: The Path of the Smart Grid, IEEE Power & Energy Magazine, January/February 2010. 15

Farhangi H.: The Path of the Smart Grid, IEEE Power & Energy Magazine, January/February 2010.

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Figure 5 suggests, although AMR technology proved to be initially attractive, utility companies have realized that AMR does not address the major issue they need to solve: demand-side management. Due to its one-way communication system, AMRs capability is restricted to reading meter data. It does not let utilities take corrective action based on the information received from the meters. In other words, AMR systems do not allow the transition to the smart grid, where pervasive control at all levels is a basic premise. Consequently, AMR technology was short-lived. Rather than investing in AMR, utilities across the world moved towards advanced metering infrastructure (AMI). AMI provides utilities with a two-way communication system to the meter, as well as the ability to modify customers service-level parameters. Through AMI, utilities can meet their basic targets for load management and revenue protection. They not only can get instantaneous information about individual and aggregated demand, but they can also impose certain caps on consumption, as well as enact various revenue models to control their costs.

The emergence of AMI heralded a concerted move by stakeholders to further refine the ever-changing concepts around the smart grid. In fact, one of the major measurements that the utility companies apply in choosing among AMI technologies is whether or not they will be forward compatible with their yet-to-be-realized smart grids topologies and technologies.

Fig. 5 Smart grid return on investments (ROI)16.

The current "rush" can result in a lack of structure around strategy and planning for smart grid improvements. As utilities embrace smart grid technologies, many are tempted to develop a vision and strategies in a hurried, reactionary fashion rather than taking a rigorous, structured approach to determine what technologies will deliver the most value to the utility and its customer base17. It is therefore so important to start any activities in smart grid or smart metering from preparation of a reliable roadmap receiving support, at least on consensus basis, from all main stakeholders.

Smart grid benefits

Smart Grid benefits can be categorized into five types18:

16

Farhangi H.: The Path of the Smart Grid, IEEE Power & Energy Magazine, January/February 2010. 17

Lieber B., Welch M.: A Smart Strategy for a Smart Grid, http://mthink.com/utilities/utilities/smart-strategy-for-smart-grid 18

Report to NIST on the Smart Grid Interoperability Standards Roadmap June 17, 2009.

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1. Power reliability and power quality. The Smart Grid provides a reliable power supply with fewer and briefer outages, cleaner power, and self-healing power systems, through the use of digital information, automated control, and autonomous systems.

2. Safety and cyber security benefits. The Smart Grid continuously monitors itself to detect unsafe or insecure situations that could detract from its high reliability and safe operation. Higher cyber security is built in to all systems and operations including physical plant monitoring, cyber security, and privacy protection of all users and customers.

3. Energy efficiency benefits. The Smart Grid is more efficient, providing reduced total energy use, reduced peak demand, reduced energy losses, and the ability to induce end-user use reduction instead of new generation in power system operations.

4. Environmental and conservation benefits. The Smart Grid is green. It helps reduce greenhouse gases (GHG) and other pollutants by reducing generation from inefficient energy sources, supports renewable energy sources, and enables the replacement of gasoline-powered vehicles with plug-in electric vehicles.

5. Direct financial benefits. The Smart Grid offers direct economic benefits. Operations costs are reduced or avoided. Customers have pricing choices and access to energy information. Entrepreneurs accelerate technology introduction into the generation, distribution, storage, and coordination of energy.

In the USA the Energy Independence and Security Act (EISA) of 2007 states that support for creation of a Smart Grid is the national policy. Distinguishing characteristics of the Smart Grid cited in the act include19:

Increased use of digital information and controls technology to improve reliability, security, and efficiency of the electric grid;

Dynamic optimization of grid operations and resources, with full cyber security;

Deployment and integration of distributed resources and generation, including renewable resources;

Development and incorporation of demand response, demand-side resources, and energy-efficiency resources;

Deployment of smart technologies for metering, communications concerning grid operations and status, and distribution automation;

Integration of smart appliances and consumer devices;

Deployment and integration of advanced electricity storage and peak-shaving technologies, including plug-in electric and hybrid electric vehicles, and thermal-storage air conditioning;

Provision to consumers of timely information and control options; and

Development of standards for communication and interoperability of appliances and equipment connected to the electric grid, including the infrastructure serving the grid.

Anticipated Smart Grid benefits are as follows20:

Improves power reliability and quality.

Optimizes facility utilization and averts construction of back-up (peak load) power plants.

Enhances capacity and efficiency of existing electric power networks.

Improves resilience to disruption.

Enables predictive maintenance and self-healing responses to system disturbances.

Facilitates expanded deployment of renewable energy sources.

Accommodates distributed power sources.

Automates maintenance and operation.

19

Energy Independence and Security Act of 2007 [Public Law No: 110-140] Title XIII, Sec. 1301. 20

NIST Draft Publication: NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft), U.S. Department of Commerce, September 2009.

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Reduces greenhouse gas emissions by enabling electric vehicles and new power sources.

Reduces oil consumption by reducing the need for inefficient generation during peak usage periods.

Improves cyber security.

Enables transition to plug-in electric vehicles and new energy storage options.

Increases consumer choice.

The benefits from the Smart Grid can also be categorized by the three primary stakeholder groups21:

1. Consumers. Consumers can balance their energy consumption with the real time supply of energy. Variable pricing will provide consumer incentives to install their own infrastructure that supports the Smart Grid. Smart grid information infrastructure will support additional services not available today.

2. Utilities. Utilities can provide more reliable energy, particularly during challenging emergency conditions, while managing their costs more effectively through efficiency and information.

3. Society. Society benefits from more reliable power for governmental services, businesses, and consumers sensitive to power outage. Renewable energy, increased efficiencies, and PHEV support will reduce environmental costs, including carbon footprint.

Driving forces for smart grid

There are many aspects to successful Smart Grid development, some of which involve administrative as well as operational components of an electric power utility, and must include a variety of components:

IT involvement as well as operations, engineering and administrative management of customer information systems (CIS) and geographic information systems (GIS) as well as control center and dispatching operation outage management systems (OMS) and document management systems (DMS).

Electrical substation automation as well as true power grid automation.

Third party services as well as in-house commitment of individual end-users.

Smart metering at all levels.

The major driving forces to alter the current power grid can be divided into four, general categories: 1. Increase reliability, efficiency and safety of the power grid while increasing the use of

renewable energy sources (prevent outages; lower CO2; reduce energy bills). 2. Enable decentralized power generation so homes can be both energy client and supplier

(provide consumers with interactive tools to manage energy usage). 3. Include flexibility for clients to choose power generation suppliers (this enables distributed

generation, solar, wind, biomass). 4. Create new, clean energy jobs related to renewables, plug-in electric vehicles, etc.

It is considered that the roadmap to a smarter grid has four waypoints:

1. Advanced metering and monitoring. 2. Transmission system that can efficiently move power from one location to another. 3. Power grid that incorporates large- and small-scale distributed generation with energy

storage that is manageable by power providers. 4. Secure and reliable communications infrastructure that operates in tandem with the future

electrical power grid.

21

Report to NIST on the Smart Grid Interoperability Standards Roadmap, June 17, 2009.

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These waypoints are not laid out in a straight line such that we have to go from one to the other along our path to the smart grid. In fact, different organizations and industries engage to manage the complexity involved in designing this second-generation power grid (Gen2PG). Thus, not every city, town or province or state will achieve a smart grid at the same time. Rather, the revolutionary result of the smart grid will be achieved through evolutionary means. In order to maintain our standard of living and the quality of service we have come to expect, this architectural change of the power grid must evolve. At the present time, we are approaching the first waypoint above in the next two to three years. Achievement of the full smart grid grand challenge is a decade away, as long as the courses are maintained and funded. Four priority applications were recommended by FERC in its policy statement22:

Wide-area situational awareness: Monitoring and display of power-system components and performance across interconnections and wide geographic areas in near real-time. Goals of situational awareness are to enable understanding and, ultimately, optimize management of power-network components, behaviour, and performance, as well as to anticipate, prevent, or respond to problems before disruptions can arise.

Demand response: Mechanisms and incentives for utilities, business and residential customers to cut energy use during times of peak demand or when power reliability is at risk. Demand response is necessary for optimizing the balance of power supply and demand.

Electric storage: Means of storing electric power, directly or indirectly. The significant bulk electric energy storage technology available today is pumped storage hydroelectric technology. New storage capabilitiesespecially for distributed storagewould benefit the entire grid, from generation to end use.

Electric transportation: Refers, primarily, to enabling large-scale integration of plug-in electric vehicles (PEVs). Electric transportation could significantly reduce U.S. dependence on foreign oil, increase use of renewable sources of energy, and dramatically reduce the nations carbon footprint.

Besides the FERC priority applications, two cross-cutting prioritiescyber security and network communicationswere included, and two other priority applicationsadvanced metering infrastructure and distribution grid managementwere added because they represent major areas of near-term investment by utilities:

Cyber security: Measures to ensure the confidentiality, integrity and availability of the electronic information communication systems, necessary for the management and protection of the Smart Grids energy, information technology, and telecommunications these infrastructures.

Network communications: Encompassing public and non-public networks, the Smart Grid will require implementation and maintenance of appropriate security and access controls tailored to the networking and communication requirements of different applications, actors and domains.

Advanced metering infrastructure (AMI): Primary means for utilities to interact with meters at customer sites. In addition to basic meter reading, AMI systems provide two-way communications that can be used by many functions and, as authorized, by third parties to exchange information with customer devices and systems. AMI enables customer awareness of electricity pricing on a real-time (or near real-time) basis, and it can help utilities achieve necessary load reductions.

Distribution grid management: Maximizing performance of feeders, transformers, and other components of networked distribution systems and integrating with transmission systems and customer operations.

22

Federal Energy Regulatory Commission, Smart Grid Policy, 128 FERC 61,060 [Docket No. PL09-4-000] July 16, 2009

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The Smart Grid Conceptual Model23

The Smart Grid Conceptual Model is a set of views (diagrams) and descriptions that are the basis for discussing the characteristics, uses, behaviour, interfaces, requirements and standards of the Smart Grid. This does not represent the final architecture of the Smart Grid; rather it is a tool for describing, discussing, and developing that architecture. The conceptual model provides a context for analysis of interoperation and standards, both for the rest of this document, and for the development of the architectures of the Smart Grid. The top level of the conceptual model, in fact a whole, very general model of smart grid, can be schematically depicted as presented in fig. 6.

Fig.6 Smart Grid Conceptual Model Top Level24.

The domains of the Smart Grid are listed briefly in tab. 1.

23

Report to NIST on the Smart Grid Interoperability Standards Roadmap, June 17, 2009. 24


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Table 1 Domains in the Smart Grid Conceptual Model

A good look into the model and relations among its domains gives us fig.7 which shows the so called Wide Area Situational Awareness (WASA) representing the monitoring of the power system across wide geographic areas.

Fig. 7 Wide-Area Situational Awareness (WASA) Use Cases: Actors and Logical Interfaces25.

25


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As seen AMI is only a part of the whole concept of the smart grid. However from the point of interest of smart metering AMI is the most essential part and therefore deserves a thorough reconsideration.

Advanced Metering Infrastructure26

Advanced Metering Infrastructure (AMI) is defined as the communications hardware and software and associated system and data management software that creates a network between advanced meters and utility business systems and which allows collection and distribution of information to customers and other parties such as competitive retail providers, in addition to providing it to the utility itself27. For the sake of being more illustrative one can describe AMI as:

1. The hardware and software residing in, on, or closest to the customer premise for which the utility or its legal proxies are primarily responsible for proper operation.

2. The hardware and software owned and operated by the utility or its legal proxies which has as its primary purpose the facilitation of Advanced Metering.

AMI systems are the primary means for utilities to interact with their meters at customer sites. However, in addition to basic meter reading, AMI systems provide two-way communications that can be used by many functions and, as authorized, by third parties to exchange information with customer devices and systems.

AMI systems consist of the hardware, software and associated system and data management applications that create a communications network between end systems at customer premises (including meters, gateways, and other equipment) and diverse business and operational systems of utilities and third parties. AMI systems provide the technology to allow the exchange of information between customer end systems and those other utility and third party systems.

Purpose / Value Proposition28

Advanced Metering Infrastructure systems promise to provide advanced energy monitoring and recording, sophisticated tariff/rate program data collection, and load management command and control capabilities.

Additionally, these powerful mechanisms will enable consumers to better manage their energy usage, allowing the grid to be run more efficiently from both cost and energy delivery perspectives. These advanced capabilities will also allow utilities to provision and configure advanced meters in the field, offering new rate programs, as well as energy monitoring and control.29

Advanced Metering Infrastructure systems offer a tremendous amount of potential, yet they introduce the requirements for industry proven, strong, robust, scalable, and open standards-based Cyber Security solutions.30

26

Report to NIST on the Smart Grid Interoperability Standards Roadmap, June 17, 2009. 27

The AMI-SEC Task Force references the definition of Advanced Metering Infrastructure which is in alignment with the United States Federal Energy Regulatory Commission. From the FERC Survey on Demand Response, Time-Base Rate Programs/Tariffs and Advanced Metering Infrastructure Glossary. 28

AMI-SEC Task Force Roadmap 29

Source: Advanced Metering Security Threat Model, available at: http://www.ucaiug.org/UtilityAMI/AMISEC/Shared%20Documents/Forms/AllItems.aspx?RootFolder=%2fUtilityAMI%2fAMISEC%2fShared%20Documents%2fWorking%20Documents%2f2008%20Deliverables%2f1%20-%20System%20Security%20Requirements%20(Risk%20Assessment)%2fThreat%20Identification&FolderCTID=&View={2CDA7930-CA93-44F3-AC4D-9F98E89AEC38} 30

Source: See reference No. 4 (above)

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Functionalities of AMI

External clients use AMI system to interact with devices at customer site

A third party vendor wants to identify what customer equipment (e.g. air conditioning, pool pumps, compressors, etc) is running and how much power each piece of equipment is drawing during a particular time of day. The vendor may also want to control or program specific equipment (e.g. turn on/off, adjust thermostat). The third party vendor makes an on-demand status and/or control request of the customer equipment. The monitoring or status request is received by the Customer EMS, the requestor and destination is authenticated and then the request is transmitted to the specific customer site. The customer equipment receives the request and provides a response back to the Customer EMS and the Customer EMS transmits the information back to the third party. If the on-demand request is a control request, the customer equipment will adjust operations as requested and provide an acknowledgement of receipt and processing through the Customer EMS back to the third party.

The third-party monitoring and control capabilities described in this use case may provide customers with increased options for programs and services that might not normally be provided by the utility and also may offset some of the AMI costs. These proposed services will enable customers to more easily participate in utility and non-utility demand reduction programs, by allowing third parties to help them monitor and control their equipment.

Demand Response Management system manages demand through direct load control

A major benefit of the Advanced Metering Infrastructure (AMI) is that it supports customer awareness of their instantaneous kWhr electricity pricing and it can support the utilities in the achievement of its load reduction needs. As we see increased electricity demand on the grid, it may result in energy shortages, therefore triggering the need for utilities to reduce energy consumption in support of grid stability. The AMI will help facilitate load reduction at the customers site by communicating instantaneous kWhr pricing and voluntary load reduction program events to the customer and to various enabling devices at the customers site. Voluntary load reduction events may be scheduled with a large amount of advanced notice (24 hrs) or near real-time. For the utility to receive the desired customer response, we must provide them timely pricing, event and usage information.

Related to this scenario is the measurement of the response to financial incentives, energy price adjustments and other voluntary demand response programs. The customer responses will be used to determine how and/or if they have responded to a pricing event, if the utility needs to launch other demand response events to achieve the needed demand reduction and help the utility determine how to structure future voluntary load reduction programs, to ensure the utility receives the best customer response.

Building automation software/system optimization using electric storage

Energy storage, distributed generation, renewables, and demand response are used as mechanisms to optimize building loads in response to both dynamic pricing (DP) signals and system operational needs. The DP system provides the DP schedule through mechanisms such as email, pager, bulletin board, or direct transfer. The DP operator for the customer must enter the schedule into the building automation software (BAS) and perform the necessary optimization activities to implement the DP goals. The building operator may choose to adjust how their equipment responds to pricing and operational signals. Note that EMS or Energy Management System is often used interchangeably with BAS.

For example, a large industrial customer that can curtail large loads during peak hours will get a different rate than a small commercial customer with less ability to modify its load. The ESP and/or

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Grid operator sends signals (e.g. price / reliability) to the customers it serves, using the AMI system and receives information from the customer

The customers Building Automation System (BAS) optimizes its loads and distributed energy resources (DER), based on the pricing and reliability signals it receives, the load requirements and constraints, and any DER requirements, capabilities, and constraints. The BAS understands the nature and opportunity for altering consumption based on economic and comfort drivers, and, the physical dynamics of the specific customer premises. The BAS then issues (or updates existing) schedules and other control mechanisms for loads and for DER generation. These control actions may be automatically implemented or may be reviewed and changed by the customer.

The BAS system uses the site-optimized algorithms to forecast its load and DER generation. It also determines what additional ancillary services it could offer, such as increased DER generation or emergency load reduction, and calculates what bid prices to offer these ancillary services at. The BAS then submits these energy schedules and ancillary services bids to the ESP (or Scheduling Coordinator, depending upon market structure), as input to the RTO/ISO market operations.

Outage detection and restoration using AMI

The AMI system should provide capabilities to detect and map outages to the customer portion of the power grid. It should provide interfaces to interact with the DA system to enable automated, remote restoration [or to confirm restoration occurred].

AMI System has to have access to a model of the connectivity of the system (or to provide it to an external system) to be able to detect and map outages:

Power outage occurs, due to single customer problem, back hoe fade small number of customers, transformer outage, phase outage, feeder outage, substation outage, transmission outage, cross-system outage.

Detection begins via last gasp messages, DA (distribution automation) monitoring, customer report, polling (status system), triggered polling, control monitoring. There can be different durations and situations, including: momentary, short term outages, outages > 1 hour, false positives, critical customer, customer with backup power

Mapping of extent occurs through Hole detection who isnt responding to AMI? Power levels feeder line drops from 5 to 1 MW, root cause analysis where did it start?.

Responsibility determined, although the outage may be large enough that AMI provides no immediately useful [too much] data for restoration. May bring it back in at end as part of restoration verification.

Restoration begins with different situations, including prioritization, sub-outage restoration, and verification of restoration

Actors

Table 2 provides a summary of the key actors and which domains they participate in.

The Advanced Metering Infrastructure (AMI) is characterized by interactions between the actors that must traverse between the Customer Domain and the Operations Domain, although these same Actors may interact over other infrastructures. Information is exchanged between devices of varied complexity, ownership, and access rights.

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Table 2. Actors in AMI systems31.

31


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Communications Diagram

The complexity of AMI System communication is shown in fig. 8.

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Fig. 8 AMI System application summary communication diagram32.

The principle gap in this area is the substantial overlap without uniformity between metering models in use33. Current protocols support primarily unidirectional relationships between the AMI head end and the meter. Other applications both within and external to customer premises seek to interact with the meter in near real-time on an as needed basis.

The primary goal of standards activities, should therefore, be the coercion of at least a subset of these models into cleanly nested complexity levels with common semantics for each shared subset.

The next highest priority is determining how to infuse a common set of cross-cutting requirements into these standards to facilitate exchange of confidential and authentic information across standards. Currently each AMI standard has its own distinct set of cyber security protocols and capabilities making sharing of information exceedingly complex and limited by the least common denominator.

Coordination and future-proofing AMI Systems

Since AMI systems are going to become widespread, they will inevitably want to be used for more than meter reading or other purely metering functions. They could be used for monitoring DER at the customer site, for DA monitoring and possibly control, for access by third parties to gateways into the customer HAN, etc.

Need to ensure AMI communications systems use open standards capable of interfacing to DER and distribution automation equipment.

32

Report to NIST on the Smart Grid Interoperability Standards Roadmap June 17, 2009. 33

For example ANSI C12.19, IEC 61850, IEC 61968, SEP 1, SEP2, COSEM/DLMS.

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Risks in AMI34

The worst AMI system attack scenario is where an attacker maliciously, and quite easily, uses a cyber attack (i.e., injects a computer worm into the network) to programmatically turn off power to every meter in the grid simultaneously. The result of which would melt down the transmission and distribution grid networks, take years and billions of dollars to repair and create catastrophic impacts on business and society. In addition to this doomsday scenario, attackers can cause mistrust at all levels of the AMI system, including the distribution utility back office35, systems, meter, home area networks and even our corporate information technology systems. This is, simply put, not acceptable and the probability of this happening can be *reduced | lessened+ through strong security systems engineering practices.36

34

AMI-SEC Task Force Roadmap 35

See also head-end systems and/or office a somewhat emerging term describing the major ingress/egress point for AMI telemetry into a utilitys *central+ operations facilities. 36

Source: See reference No. 4 (above)

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Smart metering

Smart Metering definitions

There is no single definition of smart metering, however all smart-meter systems comprise an electronic box and a communications link. At its most basic, a smart meter measures electronically how much energy is used, and can communicate this information to another device which, in turn, allows the customer to view how much energy they are using and how much it is costing them.

In terms of guiding principles, any smart metering system introduced should be based on37:

improvement of customer service and retail market functioning for all customers, and not just for a limited number;

offering the right balance between functionalities and cost;

being as open as possible to downstream innovation in the home beyond the meter.

Smart or advanced electricity metering, using a fixed network communications path, has been with us since pioneering installations in the US Midwest in the mid-1980s38.

Definition proposed by the European Smart Metering Alliance (ESMA) runs as follows39:

Smart metering is designed to provide utility customers information on a real time basis about their domestic energy consumption. This information includes data on how much gas and electricity they are consuming, how much it is costing them and what impact their consumption is having on greenhouse gas emissions.

This definition focuses on objectives of Smart Metering not referencing to technology.

It is common that many refer to Wikipedia to find the definition there40:

A smart meter generally refers to a type of advanced meter (usually an electrical meter) that identifies consumption in more detail than a conventional meter; and optionally, but generally, communicates that information via some network back to the local utility for monitoring and billing purposes (telemetering).

This definitions underlines technological aspects of smart metering.

Some use also the term Automated Metering Reading (AMR). It refers to technologies to optimize the process of entering meter index values at some time into the database of a utility41.

Where the saving in the manual reading process compensate the cost of the infrastructure required for AMR is questionable. It is agreed that this infrastructure should be used to run more services than just automated meter reading. Some use the following expression to illustrate the relationship between AMI and SM:

AMI = Smart Meter + Smart Customer + Smart Utility

AMI refers to the set of services enabled by smart meters (SM is one of these services). These services are used either by the utility or by the customer.

Smart metering refers to a whole range of new functionalities which have been made available by the introduction of electronic utility meters, low cost communications and enterprise software.

37

Building a European Smart Metering Framework suitable for all Retail Electricity Customers, EURELECTRICs Position Paper, 2008,. 38

http://mthink.com/utilities/utilities/utilities-tags/ami/amr 39

European Smart Metering Alliance (ESMA) 40

http://en.wikipedia.org/wiki/Smart_meter 41

http://www.smart-energy.info/smart-metering/

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Smart metering allows utilities to remotely read and manage meters, communicate with final customers and provide final customers with accurate and detailed energy usage information. Smart metering is often synonymous with electricity metering but this does not need to be so and is

not the case in the ESD42, which covers all energy streams. In fact smart metering embraces the

following :

Electric energy metering.

Heat and cooling smart metering.

Gas smart metering.

Water smart metering.

Multi-utility smart metering.

Smart Metering and the Smart Grid

Progress in ICT as well as reductions of communication costs allow for new ways to modernize the operation of the power grid. Furthermore, in the upcoming decade, huge investments are needed in the power sector. This is due to the increasing energy demand, ageing of generation facilities and transmission and distribution infrastructure, and the increasing share of renewable energy sources (RES) and distributed generation (DG). In response to these developments, the electricity distribution grids are developing into so-called smart grids. Smart metering is a key feature of these smart grids. It is therefore important to understand the philosophy of these smart grids and then to learn how these relate to smart metering services.

To support the development and deployment of a Smart Grid, many electric utilities are looking to make their Advanced Metering Infrastructure (AMI) and Smart Meter investments now as a precursor or enabler to additional Smart Grid, energy management, and consumer participation initiatives43.

One of the critical issues facing these electric utilities and their regulators is the need to ensure that technologies or solutions that are selected by utilities will be interoperable and comply with the yet-to-be-established national standards. Further, many utilities want to ensure that the system they select will allow for evolution and growth as Smart Grid standards evolve. To manage change in a dynamically growing Smart Grid, it is essential to be able to upgrade firmware, such as meters, in the field without replacing the equipment or rolling a truck to manually upgrade the meter firmware. Remote image download capability, common practice today in many embedded computing devices, will permit certain characteristics of the meter to be substantially altered on an as needed basis.

Transmission and distribution power system information models used currently must be modified as needed to meet these requirements of smart grids. Smart metering system is shown in fig. 9.

42

Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services and repealing Council Directive 93/76/EEC 2006/32/EC. 43

NIST Draft Publication: NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft), U.S. Department of Commerce, September 2009.

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Fig. 9 Smart metering system44.

Benefits of smart metering

The vision of the Smart Metering includes dramatic increases in energy efficiency and cost savings to both utilities and consumers, with the resultant environmental benefits that come from smart energy use.

The most common benefits listed in literature are:

The end of estimated bills. The benefit of more frequent bills based on real consumption and without waiting for a meter reader, will certainly appeal to most consumers imagination. It will also tackle some of the serious debts which arise when estimated bills grossly underestimate actual consumption. On the other hand, accurate bills mean that energy costs can also rise strongly in certain periods of the year, which could be hard to bear for the most disadvantaged in society.

The provision of historical data on bills to show how energy consumption compares with the same billing period of the previous year. Involve consumer in energy management by promoting energy efficiency and conservation, participation in Demand Response projects.

Enables new functions e.g. increase accuracy of measurements, reduce time usage and billing, reduce bill complaints, better detection of fraud, simplified meter disconnection.

The possibility to become more aware of household energy consumption and the ability to better manage energy consumption, resulting in savings on energy bills.

The ability to switch the supply contract between debit and credit without requiring manual intervention or the installation of prepayment meters.

The ability to switch more easily between energy suppliers.

44 ESMA European Smart Metering Alliance, August 2009, http://esma-home.eu

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The ability to adapt energy consumption patterns to take advantage of time of use tariffs and hence lower costs.

Defers investment in generation and infrastructure.

The ability to install micro generation measures without new metering arrangements.

New energy companies functions e.g. Asset management, Load Profile & Forecasting, CRM (variable pricing), Utility Company Reasons for MDM, Mergers and Acquisitions unifying layer for multiple metering systems, Implement Demand Response Competitive Service, Unifying Platform for Market Participants.

Requirements e.g. higher resolution data, reduced latency of meter data, better methods to disseminate consumption information, shortened data acquisition sampling intervals.

The possibility for prepaid or post paid schemes and easier credit, either by phone or internet for pay as you go meters45.

Smart metering functionalities

Meter reading services provide the basic meter reading capabilities for generating customer bills. Different types of metering services are usually provided, depending upon the type of customer (residential, smaller commercial, larger commercial, smaller industrial, larger industrial) and upon the applicable customer tariff. One can distinguish46:

Periodic Meter Reading.

On-demand Meter Reading.

Net metering for DER and PEV.

Feed-In Tariff Metering for DER and PEV.

Bill - Paycheck Matching.

In terms of functionality, in a residential or small business context a basic smart metering system is one which allows for47:

1. The measurement of electricity consumption and supply characteristics (over representative periods to legal metrology requirements);

2. The storage of measured data for multiple time periods;

3. Ready access to this data for consumers and authorized third parties, according to the market model (independent of time and place see 4 & 5 below), regular remote transfer of consumption and other metering data to DSO, the supplier and/or his agent from the meter for the purposes of accurate billing (also in case of changing supplier or moving in/out) without requiring access to the premises;

4. Accommodation of additional user functionality within the customers premises beyond the meter (i.e. Local communication capability);

5. Allow for remote control of connections without entering the building (temporary limitation, interruption and restoration of power);

6. It measures, and records information as to the continuity and quality of the supply and provides this and other data to the DSO for purposes of system operation, planning, and loss assessment.

45

Smart Metering Guide Energy Saving and the Customer. 46 NIST Draft Publication: NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft), U.S. Department of Commerce, September 2009. 47

Building a European Smart Metering Framework suitable for all Retail Electricity Customers, EURELECTRICs Position Paper, 2008,

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7. It permits remote control of the available capacity (e.g. Temporary limitation, interruption and restoration) for purposes of contract management or of specific consumer circuits or equipment for the purposes of agreed load management.

8. In cases where micro-generation is installed in domestic homes, the meter design takes into account the implications this may have on the system and on the market.

Ideally, functions 1 to 5 should be provided in any smart metering package. Functions 6 to 8, although desirable, may be viewed as non-essential add-ons.

Features of Smart Metering can be provided as48:

Automatic processing, transfer, management and utilisation of metering data.

Automatic management of meters.

Two-way data communication with meters.

Provides meaningful and timely consumption information to the relevant parties and their systems, including the energy consumer.

Supports services that improve the energy efficiency of the energy consumption and the energy system (generation, transmission, distribution and especially end-use).

In addition, there are several goals that should be central to any effort to develop the Smart Grid information infrastructure, including smart metering. These goals include:

Functional requirements are met.

Low cost of implementation.

Low cost of maintenance.

Adaptable.

Interoperable.

Protocol independent.

Scalable.

Broad industry support.

There are a number of design issues which need to be considered before embarking on any smart metering rollout. These design issues, in EURELECTRICs view, have the potential to significantly affect the success of smart metering for customers, suppliers and distributors49. These are as follows:

1. Interoperability (if and how the meter can openly communicate with other devices);

2. Standardisation (what should or could be standardised and what should be left to innovation);

3. Future Proofing (how can smart metering systems be designed so that there is in-built flexibility for possible future changes in technology or application);

4. Certification (what measures can be taken to reduce intellectual property costs and increase device warranties and other guarantees thereby ultimately reducing costs for customers)?

Two of the terms require special clarification, namely the future proofing and certification.

The term future proofing addresses the issue of technological development and imposes that a smart metering system has to be built in a way which allows for future supply and demand-side applications without the need for large new investments in the metering systems themselves.

48

ESMA 49

Building a European Smart Metering Framework suitable for all Retail Electricity Customers, EURELECTRICs Position Paper, 2008.

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Certification refers to further way of reducing risk for customers and meter owners is for meter manufacturers to provide certification of smart meters and related equipment. Although cost-benefit analyses currently being conducted in Member States typically use an average lifespan of 10 to 15 years, this has not in many cases been certified by in metrological requirements or by metering manufacturers. Other legal issues relating to metrological requirements concern respect for ownership of consumption data as well as provision against tampering.

Driving forces for smart metering

The development of smart metering systems would not be possible without the changes seen in electronic communications over the last 5 years50. However, technological advancement is just the catalyst; the four main drivers for the introduction of smart metering have been

1. the need for efficient and reliable processes and systems resulting from the liberalisation of retail electricity markets,

2. the opportunity to improve operation of the distribution network,

3. the recent political drive toward greater energy efficiency51,

4. the facilitation of the introduction of dynamic grid operation, i.e. smart grids. A final, albeit indirect, driver concerns

5. the ability of smart metering to allow for lower-cost multi-utility meter reading.

Identification of barriers

The Smart Grid has many of the following attributes, some of which constitute barriers to smart metering development:

Takes a long time to complete.

Involves iterative process.

Includes deploying one component after another.

Requires planning on a system-wide basis.

Lacks quick solutions.

Needs a systematic approach from the onset.

Demands flexibility and adaptability to changing technology over time.

EUROELECTRIC recognizes the following three barriers52: 1. The first barrier concerns the fact that DSOs and/or meter owners will face considerable

financial and technical risks in any large scale roll-out of this new technology. On the financial side, there is a disjuncture as the market operators that invest in the metering infrastructure (i.e. in most cases DSOs) do not reap all or most of the benefits. In order for a DSO to invest in smart metering, it must be able to recover the net costs from the beneficiary (ies). Such a

50

Building a European Smart Metering Framework suitable for all Retail Electricity Customers, EURELECTRICs Position Paper, 2008,. 51

In recent years, the energy efficiency driver has been the main driver in Sweden (increased meter readings to promote energy awareness), in Victoria state in Australia (i.e. to reduce summer peaking plant use) and in Ontario state in Canada (as part of a larger energy conservation programme). At European level, guidance on the employment of metering for energy efficiency purposes is provided in Article 13 of the Directive on energy end-use efficiency and energy services. 52

Building a European Smart Metering Framework suitable for all Retail Electricity Customers, EURELECTRICs Position Paper, 2008.

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situation would require distribution or meter charge rebalancing. In addition to the net cost of the systems and meters, risks relating to technological changes must be outlined upfront.

2. The second barrier concerns those countries where there is no business case for smart metering i.e. costs outweigh benefits. In Member states where electricity consumption is low (i.e. meter cost as a proportion of electricity expenditure) and where the population is dispersed (i.e. high per meter costs of communication), the business case for smart metering may not exist. In addition, a high net cost would be less acceptable again for member states with lower-than-average income levels.

3. The third issue relates to how smart metering is deployed by DSOs. A geographical rollout of smart metering is often preferable to an ad-hoc approach as many of the benefits of smart metering are network-related. For instance, if meters are replaced on a customer-by-customer basis, then the meter owner faces higher per unit procurement and installation costs. In addition, some of the system benefits of a geographical roll-out would be lost. Therefore, smart meters should be rolled-out at least on a clustered basis rather than on demand.

The principle gap in the area of standardisation is the substantial overlap without uniformity

between metering models in use53

. Current protocols support primarily unidirectional relationships between the AMI head end and the meter. Other applications both within and external to customer premises seek to interact with the meter in near real-time on an as needed basis. Improving energy efficiency has been listed as one of principal drives for smart metering. However, implementation of smart metering systems that reduce energy consumption is not simple for a number of reasons. The main reasons are:

Although trials seeking to establish the energy saving benefits of smart metering have yielded promising results, the trials have been carried out in different ways so that firm conclusions cannot be drawn. It is also clear that final customer reaction depends on the way that the information is presented to them and the proposition they are offered by the Energy Retailer. Smart metering has given best results in combination with other methods and not alone.

Smart metering systems provide a number of benefits beyond customer information and different parties receive these benefits. This creates the need to share the costs of implementing smart metering in proportion to the benefits received. This becomes more of a challenge as energy markets are broken up and more parties are involved.

Article 13 of the ESD54 offers a wide range of interpretations, where some of the key parameters (especially estimated potential savings ) needed to make these judgements are not available or accepted by all parties. This lack of certainty leads to a cautious interpretation of the Directive that may fail to deliver the full energy saving benefits of smart metering.

Smart metering is a recent development and there is only limited experience with it. Consequently, there is a high degree of perceived risk in its implementation.55

Costs, energy savings and data security as controversies: The introduction of smart metering rarely happens without controversies. The most controversial issues are related to the costs of the investment, followed by concerns about actual energy savings and questions related to data security and privacy. A major obstacle for the introduction of smart metering in the MS is the financing of the investments and the question of allocation of the costs between those actors that benefit from the introduction of smart meters.

53

For example the following standards are used: ANSI C12.19, IEC 61850, IEC 61968, SEP 1, SEP2, COSEM/DLMS. 54


Smart Metering Guide Energy Saving and the Customer.

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Identification of stake holders and their role A rough division of stake holders of smart metering is presented in table 3. Table 3. Actors in the domains in the Smart Grid Conceptual Model56

Domain Actors in the domain

Customers The end users of electricity. May also generate, store, and manage the use of energy. Traditionally, three customer types are discussed, each with its own domain: home, commercial/building, and industrial.

Markets The operators and participants in electricity markets

Service Providers The organizations providing services to electrical customers and utilities

Operations The managers of the movement of electricity

Bulk Generation The generators of electricity in bulk quantities. May also store energy for later distribution.

Transmission The carriers of bulk electricity over long distances. May also store and generate electricity.

Distribution The distributors of electricity to and from customers. May also store and generate electricity.

List of Stakeholders of SmartGrids ETP57

The structure of the SmartGrids ETP Forum is an executive group of 12 individuals representing the various groups of stakeholders: TSO, electrical systems manufacturers, DSO, ICT service providers, regulation metering manufacturers, centralized generation, customer interaction and metering, renewable generation, industrial R&D, End-users, academic and governmental R&D58.

56

NIST Draft Publication: NIST Framework and Roadmap for Smart Grid Interoperability Standards Release 1.0 (Draft), U.S. Department of Commerce, September 2009. 57

SmartGrids ETP, http://www.smartgrids.eu/ 58

Chairman: Ronnie Belmans K.U.LEUVEN-ELIA 1. TSO's will be represented by the new ENTSO-E and in particular by its secretary -general, Konstantin Staschus. 2. DSO: will be represented by the new group of DSO's being formed and by its leader, Livio Gallo, ENEL-Distribuzione. 3. Regulators: will be represented in a first instance by CEER/ERGEG, later by ACER. Tahir Kapetanovic. 4. Generation: will be represented by Eurelectric, and in particular by Hans Ten Berge. Gunnar Lorenz will act as Sherpa. 5. Renewables: will be represented by the EUREC organization , and Mr.Greg Arrowsmith. 6. Users: IFIEC. Peter Claes, secretary general has agreed 7. Electrotechnology equipment manufacturers: will be represented by T&D Europe Chair Bertrand Hugoo, and his sherpa Mikel Zaldunbide, ORMAZABAL 8. Customer Demand and Metering will link to the ETP WG3 and to the "ICT for Energy Efficiency" groups through their chair, Maher Chebbo, SAP. 9. Telecommunications will be represented by European Utilities Telecom Council and its chair, Miguel Angel Sanchez Fornie, IBERDROLA. 10. Metering manufacturers and systems will be represented by the recently created European Smart Metering Interest Group and its chair, Andreas Umbach and , John Harris acting as his sherpa. 11. Research and development within the electricity companies: will be represented by Yves Bamberger, Executive Vice-President, Head of Corporate EDF R&D. 12. Research institutes, governmental organizations, university institutes, education: Duncan Botting, Executive Chairman and Interim CEO at Scottish European Green Energy Centre.

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Main stakeholders in smart grid activities as identified by SmartGrids ETP are presented in fig. 10.

Fig. 10 Main stakeholders in smart grid activities59.

Policy Issues

In considering appropriate policy recommendations for full deployment of smart grid technology, it is important to first set the context within which recommendations are being made. The first context is the historical one, namely analyzing the lessons that have been learned for restructuring to date, in order to ensure that we do not repeat the mistakes made in the past decade or two while reconfiguring the nations power sector. The second context is dealing with the reality that the electricity industry structure in a country today, while diverse, is fundamentally bipolar, divided between jurisdictions and regions that have moved toward competitive markets and those that still retain the vertically integrated monopoly model. Given that divide, it is difficult to offer a single set of broad policy recommendations with universal applicability. This section examines smart grid policy in both the monopoly and competitive supplier contexts, including the upsides and downsides to each model. For reasons that will be clear in the discussion that follows, the policy recommendations are largely made in the context of long-range objectives, while recognizing that they may play out differently from one jurisdiction to another60.

Deriving from the first experiences in implementing the ESD61, it is recommended that policy-makers and regulators define some guidelines about feedback for customers. Besides minimum harmonised technical standards that are currently being developed, there is a need to identify which feedback should be sent in which frequency and which level of detail to the final customer. From everything

59

SmartGrids ETP, http://www.smartgrids.eu/ 60

Brown A., Salter R.: Smart grids issues in state law and regulation, 2010. 61

Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services and repealing Council Directive 93/76/EEC 2006/32/EC.

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that is known from recent research, final customers can only benefit from intelligent metering systems when they receive adequate feedback about their consumer behaviour62.

We must understand the affect of policy and regulatory choices on technology choices.

For example, a regulatory decision that merely permits resale of electricity can enable a new (or extended) business for charging Plug-in Electric Vehicles that follows the model for gasoline sale with customers paying cash or using credit/debit cards to pay for charging, while using Automated Demand Response and grid safety signals to ensure the continued reliability of the electricity distribution infrastructure.

A further set of regulations and policy changes would be needed to support identity-based charge-back for energy use and supply to the home utility, but requires augmentation of the users expectations and a great deal of additional complexity to allow identification, billing, clearing, and related issues.

Policy makers and regulators should carefully consider the complexity and costs of the induced technology changes, and whether changes are critical to Smart Grid evolution. For example, a generative approach might take the minimal changes and allow the development of unregulated business models, while a more complex chargeback scheme may require deep and rigid technologiesjust because we can execute a technological solution does not necessarily mean that we should.

1. Development of Architecture Governance and Policy Integration Processes. This task should

also include consistent approaches to energy industry business models where they are critical to the development of Smart Grid components and equipment such as revenue meters, and consumer owned equipment.

2. Consideration of changes in regulation to enable new business models and complex technologies. Minor differences in regulation may require major investment in technology to satisfy requirements. The standard cost-benefit analyses made by regulators need to address broader economic and stakeholder issues.

Ownership of meters: In general the energy supplier or distributor is the owner of the electricity meters in the MS. With the exception of Germany where the Ministry of Economic Affairs aims to (re-)structure and liberalise the meter market for small energy users, there are no plans to change the structure of ownership in the future in any MS.

Legal surroundings around smart metering

In Art.13 (1) the ESD63 stipulates that individual meters shall always be provided when an existing meter is replaced (unless this is technically impossible or not cost-effective)64. Art. 13 ESD does not make an explicit link to smart meters.

Moreover in Art.13 (2) the ESD says that billing shall be based on actual energy consumption and be performed frequently enough to enable customers to regulate their own energy consumption.

Art. 13 ESD does not directly refer to smart metering. In most MS the transposition of Art. 13 did at least trigger some discussions about the introduction of new metering technologies; these discussions have been reinforced by the explicit provisions in the third legislative package. As can be seen from the following tables, smart metering policies are at least under discussion in almost all MS.

62

CA ESD, Executive Summary Report, 2010, http://www.esd-ca.eu/Reports/Executive-Summary-Reports. 63


CA ESD, WG 4.2 Report: Metering & Billing, confidential.

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Article 13 ESD is open to different interpretations regarding feedback to the final customer. A strong interpretation demands smart meters and monthly bills; a loose interpretation requires only individual meters and periodic bills (without specific details on how frequent billing shall be provided). A common understanding about interpretation of Article 13 should be coordinated with the implementation of the recently adopted Directive on the internal electricity market (2009/72/EC), the work currently being done by the Smart Metering Coordination Group of different standardisation bodies (CEN, CENELEC, ETSI) and in the course of the revision of other Directives (e.g. 2004/22/EC on measuring instruments)65.

Article 13 ESD has only limited causal influence on changes in metering & billing policies: In general, both the transposition of Article 13 and the discussion about smart metering policies is well under way in the MS. As of September 2009, 8 MS have not transposed Article 13 and in 6 MS smart metering policies are not included in the transposition of Article 13 into national legislation. Most of the participants in the CA ESD meetings argued that changes in metering and billing in their MS were due to factors other than the ESD. That is to say that the causal influence of Article 13 ESD to the practice of metering and billing in the MS is weak66.

Smart metering is also addresses in Annex A of the recently amended Directive on common rules for the internal electricity market (Member States shall ensure the implementation of intelligent metering systems (...). Where roll-out of smart meters is assessed positively, at least 80% of consumers shall be equipped with intelligent metering systems by 2020).

The measures on consumer protection in Directive 2009/72/EC and 2009/73/EC (Art. 3 and Annex 1(1) lit i) are to ensure that consumers are properly informed of actual electricity/gas consumption and costs frequently enough to enable them to regulate their own electricity/gas consumption without additional costs to the consumer for that service.

In the related interpretative notes on retail markets the Commission services note that receiving information on a monthly basis would be sufficient to allow a consumer to regulate his consumption and that the introduction of appropriate smart meters would greatly assist the fulfilment of this obligation67. . Additionally, the Commission argues that Member States should have regard to appropriate pilot programmes and existing empirical results.

Regulatory issues68

Intelligent metering systems and intelligent networks in the third package

The next stage in the implementation of intelligent grids, or intelligent metering systems, in Member States is defined by the provisions of the third liberalisation package, which consists of directives and regulations pertaining to the European market in electricity and natural gas. The directives set forth similar, though not identical, obligations to introduce such systems in both sectors. With this reservation, subsequent discussion is based on the provisions of the new Electricity Directive with reference to equivalent provisions in the new Gas Directive. Apart from direct reference to intelligent metering systems and intelligent grids, one should also notice the natural correlation between the development of such systems and the unbundling of distribution and transmission system operators. According to the ERGEG, unbundling should encourage network operators to respond actively to the climate change challenge and pursue the deployment of smart grids.

65



European Commission (2010). Retail Markets - Interpretative Note on Directive 2009/72/EC Concerning

Common Rules for the Internal Market in Electricity and Directive 2009/73/EC Concerning Common Rules for the

Internal Market in Natural Gas, Commission Staff Working Paper, Brussels.

68 Swora M.: Intelligent Grid: Unfinished Regulation in the Third EU Energy Package.

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Unbundling may also affect future EU legislation, which may stipulate the establishment of separate types of grid operator activity that will consist of the management of mete