U.S. Smart Grid Market –A Customer Perspective on Demand Side Management
 

U.S. Smart Grid Market –A Customer Perspective on Demand Side Management

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Frost & Sullivan analyzes the U.S. smart grid market.

Frost & Sullivan analyzes the U.S. smart grid market.

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    U.S. Smart Grid Market –A Customer Perspective on Demand Side Management U.S. Smart Grid Market –A Customer Perspective on Demand Side Management Presentation Transcript

    • U.S. Smart Grid Market –A Customer Perspective on Demand Side Management June, 2010
    • Focus Point
      • Understanding Objectives for Utilities
      • Market Definition for Demand Response
      • A Customer Perspective on Smart Grid
    • Primary Objectives for Utilities
      • Increase Power Availability
      • -by minimizing interruptions in power delivery
      • Improve Energy Efficiency
      • -by reducing waste in power delivery and energy losses
      • Accommodate Renewable Power
      • -Prevent congestion on the power lines and interruptions
      • Preparing for Growing Power Load
    • State Level Regulatory Acts Renewable Portfolio Standards Market Adoption
      • Renewable Portfolio Standards (RPS) requires electric utilities to have a certain amount of their electricity come from a renewable source:
        • Wind
        • Solar
        • Biomass
        • Geothermal sources
      • Utilities need to meet this goal as soon as 2015.
      • Overall close to 29 states have a renewable manadate, while an additional six states have renewable goals without a financial penalty.
      • Goals by 2015
        • Michigan: 10%
        • Montana: 15%
        • Nevada: 20%
        • New York: 24%
    • State Level Regulatory Acts Energy Efficiency Resource Standards Market Adoption
      • Energy efficiency resource standard (EERS) in place is designed to reduce or flatten electric load growth through energy efficiency measures.
      • In some instances, states have expanded their renewable portfolio standard to include energy efficiency.
      • Maryland requires statewide peak demand and electricity reduction of 15 percent by 2015. This includes peak demand reduction of 5 GW and electricity savings of 10.5 GWh.
      • Texas electricity-restructuring laws require electric utilities to offset 10 percent of their demand growth through end-user energy efficiency.
      • In Pennsylvania, the Act 129 of 2008 requires 3 percent electric consumption and 4.5 percent peak demand reduction by 2013.
    • Smart Grid Components
      • The Smart Grid consist of a web of technologies aimed at automating, improving efficiency, and increasing availability of the electric grid ranging from generation, transmission, and distribution levels.
      • Automation also includes tools to conduct predictive, preventative and supply analysis based on data collection that is conducted at the transmission and distribution level.
      Power Transmission & Distribution Energy Storage & Distributed Generation HAN Appliances Consulting & Systems Integration Demand & Response Software Network & Connectivity Meter Manufacturers Smart Grid Smart Grid Web
    • Core Technologies Advanced Meter Infrastructure Market Adoption
      • AMI supports bi-directional information flow from the smart meter at the customer site back to the utility business system.
      • Through AMI, utilities will be able to record electricity usage on a time differentiated basis.
      • AMI enables information exchange between the electricity supplier and the customer.
      • AMI is also expected to aid the adoption of renewable power.
      • There are approximately 2.7 billion meters worldwide and only 8 percent of these meters are automated.
      • In North America the meter market is expected to generate $950 million by 2010.
      • Europe were early adopters of smart meters with Italy and Sweden taking the lead.
      • In Asia growth is expected to be driven by AMI rollout in South Korea, Australia, New Zealand, and Japan.
      • Australia is expected to replace roughly 10 million meters between 2011 and 2012.
    • Core Technologies Demand Side Management (Demand Response) Market Adoption
      • Peak load power management program.
      • Programs are differentiated by the tools and incentive plans offered for reducing peak power periods.
      • With the advent of smart meters, utilities will be able to offer dynamic pricing programs to residential customers to offset peak power usage.
      • There is evidence that rolling out smart meters without power management programs may result in negative return on utility investment in the programs.
      • AMI and power management programs must be integrated in a utility’s smart grid strategy in order to meet some of the expectations placed on it.
    • Demand Side Management “ Demand Response is a temporary change in electricity consumption by Demand Resources in response to market or reliability concerns” –National Institute of Standards and Technology Demand Response Market Categories (United States), 2009 Source: Frost & Sullivan Provides the advance notice that the price rate for electricity will be lower during certain periods of the day, and subsequent manual adjust of power usage Could involve a smart thermostat, or a programmable switch that is connected to major home appliances such as air conditioner, heater, etc., that is programmed to automatically lessen power use based on information received directly from the utility company detailing peak and off-peak power prices. Incl. capacity and demand bidding The ability, or more importantly, the permission for a utility company to cycle on and off appliances (air conditioners, dryers, etc.) for brief periods during peak usage times in return for lower utility bills. Interruptible tariffs Other DR Programs Direct load control Dynamic pricing with enabling technology Dynamic pricing without enabling technology Demand Response
    • Demand Response Market Participants
      • Typical DR Model:
      • Shared Savings Model
      • Power dispatchers typically monitor electricity usage and alert their customers to reduce their power usage during peak periods to avoid escalation of brownouts or blackouts.
      • In return, grid operators or utilities pay power dispatchers a stream of recurring revenues for managing this demand response capacity, such as on a monthly basis.
      • Power dispatchers make payments to commercial, institutional, and industrial end users of electricity for both contracting to reduce electricity and actually doing so when called upon.
      Source: Frost & Sullivan Demand Response Market Participants (United States), 2009
    • Customer Groups All figures are rounded; the base year is 2009. Source: Frost & Sullivan Demand Response Market: Percent by Customer Group (United States), 2009-2016 Residential Sector Early commercialization stage. In majority of the places demand response is being pilot tested and is in the evaluation phase C&I Sector Is an established market with set protocols. Majority of C&I consist of medium and large industrial customers. However, more recently hospitals, school districts, high schools, government buildings have been signing on.
    • Customer Participation Direct load control (also called demand-response -- appliances that can be cycled on and off by the electricity supplier during times of peak load) is a possible aspect of Smart Grid technology. If your electric utility offered to either cycle central air conditioners off and on for brief periods during peak usage times in return for lower utility bills, would you sign up for such a program? Dynamic pricing with enabling technology (Smart Appliances, Smart Thermostats) is a possible aspect of Smart Grid technology. If you were equipped with a smart thermostat or a programmable switch that is connected to your major home appliances such as air conditioner, heater, etc., would you program it to automatically lessen power use based on information received directly from the utility company detailing peak and off-peak power prices (off-peak prices are lower than peak prices)? Dynamic pricing without enabling technology is a possible aspect of Smart Grid technology. If you were given a day advance notice that the price rate for electricity will be lower during certain periods of the day, would you manually adjust your power usage (i.e., such as running appliances during off-peak hours, turning off air conditioning or adjusting the temperature, etc.)? Source: Frost & Sullivan Most respondents are willing to participate in the varying demand-response programs. However, the price points at which respondents would participate vary considerably. Dynamic Pricing With or Without Enabling Technologies are most popular.
    • Customer Participation Direct load control (also called demand-response -- appliances that can be cycled on and off by the electricity supplier during times of peak load) is a possible aspect of Smart Grid technology. If your electric utility offered to either cycle central air conditioners off and on for brief periods during peak usage times in return for lower utility bills, would you sign up for such a program? Dynamic pricing with enabling technology (Smart Appliances, Smart Thermostats) is a possible aspect of Smart Grid technology. If you were equipped with a smart thermostat or a programmable switch that is connected to your major home appliances such as air conditioner, heater, etc., would you program it to automatically lessen power use based on information received directly from the utility company detailing peak and off-peak power prices (off-peak prices are lower than peak prices)? Dynamic pricing without enabling technology is a possible aspect of Smart Grid technology. If you were given a day advance notice that the price rate for electricity will be lower during certain periods of the day, would you manually adjust your power usage (i.e., such as running appliances during off-peak hours, turning off air conditioning or adjusting the temperature, etc.)? Slight price point variations exist. Yet, Direct Load Control is the least popular option, with 22 percent having no interest. Source: Frost & Sullivan
    • Motivators and Challenges for Residential Customers Reasons for Not Participating in a Smart Grid Technologies (N=600) Perceived Benefits Smart Grid Technologies (N=600) Upgrades electric grid 14% Reduces Dependence On foreign oil 16% Increases reliability of electricity supply 18% Increases efficiency of electric grid 21% More information On energy consumption 23% Get more Control of electric bill 38% Reduce electric bill 54% Motivators Too complex 7% Don’t want to change energy habits 10% Don’t see benefit 13% Don’t Understand Smart Grid 30% Not Offered In my community 34% “ Big Brother” concerns 36% Think cost too high 44%% Challenges
    • Conclusions
      • Frost & Sullivan projects that sales for the smart grid market will flourish in the coming years.
      • The market is still in very early stages of implementing a true smart grid.
      • Support from the stimulus funding and the drive for utilities to
        • enhance its customer service operations
        • improve energy efficiency
        • increase automation
        • save the environment
      • - has and will create growth opportunities for energy as well as non-energy industries.