Presentation to the annual UCLA Smart Grid research collaborative discussing the operational considerations of an increasing hybrid electric system involving millions of customers participating.

1. Evolution of Distributed Power Systems
Paul De Martini
March 22, 2013
© 2012, Newport Consulting Group

2. EEI Future Scenarios
Base Case: The transformation takes place, but the pace is
slower, since utilities have neither policy incentives nor strong
market demand.
Economic
Growth
Base Case
Rapid
Deployment
Policy
Influence
Policy Driven
Market
Driven
Market Driven: Progress is limited to areas the market can pull
forward without incentives, mandates or subsidies. Conditions are
chaotic, with policies, regulations and standards varying widely by
region.
Policy Driven: Federal and state legislation and regulation creates
powerful incentives and mandates. Utilities find themselves
pinched as policymakers push changes without providing the
money to pay for them.
Rapid Development: Most disruptive and unpredictable scenario.
The confusion of an Internet-style frenzy is counterbalanced
somewhat by standards and guidelines from policymakers and
regulators. Utilities have the most opportunities in this
scenario…but also the most risks.
Source: EEI Smart Technology Scenario Workshops

3. 5 Forces Driving Transformation
Signposts point to different experiences and pace of change across US
Rapid
Deployment
Policy Driven
Market
Driven
Base Case

4. Policy is Spurring DER Adoption
Combined with accelerating improvements in DER technology price &
performance are creating opportunities for electric system efficiencies
2011 US State Renewable Policy
Source: EIA
2010 US State EE Policy
Source: ACEEE
Over 80% of US population under the equivalent of EU’s 20/20/20 Plan
4

5. Policy is Spurring DG Adoption
43 states with net metering tariffs + 17 states with distributed generation
mandates + White House goal of 122 GWs of CHP by 2020
2012 US State Net Metering Policy
Source: DoE EERE
Sources: SEPA, DoE, USCHP, McKinsey
322 GWs Solar + CHP
100,000 Distribution circuits
(20% of US total)
= 3.2 MWs/circuit

6. DG is not just for Asia, Europe & California
Solar PV is already more concentrated in Northeast and will expand into Texas and
across the sunbelt over this decade as costs decline and retail rates rise
More than 1.2 million solar PV panels installed by the top 20 corporate solar users in US
Source: SEPA

7. Energy Storage Adoption
“The future U.S. grid energy storage market
value is forecasted to reach between two and
four gigawatts in size by 2016.” KEMA 2012
Storage Application Development Outlook
Source: Southern California Edison
5 Year Adoption Forecast (MWs)
Source: CDA - KEMA
Source: CDA - KEMA

8. Customer Evolution
Linking Smart Grid with Web 2.0 Enables Customer Partnerships
Customer
In Control
Customer
In Context
Customer
Collaboration
Customer
Co-creation
Zero Net Energy
8

9. Transactive Energy

10. Evolving Energy Ecosystem
Convergence of Four Key Networks

11. Conceptual View of Customer Energy Related
Transactions Occurring Today

12. Multiple DER Constituents
Transactive systems & platforms must be able to reconcile multi-party
objectives & constraints related to the same distributed resource
Objectives & Goals
Decision Criteria
& Processes
Constraints
Bulk Power
System
Energy
Financial
Services
Distribution
Operations
Customer
Energy
Provider
Energy
Devices
Energy
Related
Services
Value Perception
Economic Utility
Willingness & Ability

13. Transactive Energy
Refers to techniques for managing the generation,
consumption or flow of electric power within an electric
power system through the use of economic or market based
constructs while considering grid reliability constraints.
The term “transactive” comes from considering that decisions
are made based on a value. These decisions may be
analogous to or literally economic transactions.
Transactive Energy Workshop Proceedings 2012, prepared by the GridWise® Architecture Council,
March 2012, PNNL-SA-90082 (http://www.gridwiseac.org/historical/tew2012/tew2012.aspx)

14. Value Creation thru Differentiated Services
22 Services that DER can provide with proper structuring and pricing
Optimize energy & carbon costs
Source: SCE

15. Unlocking Latent DER – Pricing Structure Matters
Value Realization Requires Satisfying Multi-Party Requirements


Traditional “best efforts” programs are not
effective for most grid operations – need new
approach
Adapt Quality of Service Concept:
 Availability (On/Off or Will be)
 Guarantees (Firmness)
 Auditability (Measurement & Verification)



Use of forward pricing structures to balance
customer needs for comfort and convenience
while providing firm resources for grid operations
Differentiated services may be bundled to keep
pricing simple – “good enough” is fine
Forward pricing structures also enable customer
side investments in enabling technology

16. Engineering-Economic Based Grid Controls
 Transactive Energy framework is focused on
the convergence of multi-party business and
operational objectives and constraints
 Not just markets, but also a broader
integrated cyber-physical control system to
ensure reliable electric services
 Not simply “Prices to Devices”, but
coordinated and federated engineeringeconomic signals aligned to differentiated
services across a broad time range
Transactive Energy
Markets
T&D Grid
Operations
Customer

17. Distributed Energy Resources Platform

18. Central to Distributed Transition
Variable & Distributed Energy Resources Require New Operational Systems
Distributed Gen
Energy Storage
Electric Network + Central Gen
Responsive Demand

19. Customer-Grid Evolution
Net Zero Energy
Source: P. De Martini

20. Virtual Power Plant: 2002-2020
Advanced Automation: Multi-direction and variability of DER power flows drive
circuit design changes, new grid components and control systems

21. Utility Scale Micro-grid:1978-2001
Operational Evolution: 2017-2025+
Transactive Distribution: Creation of local balancing & markets
variable
connectivity

22. Multiple DER Constituents
Transactive schemes must be able in reconcile multi-party
Texas is beginning to face these issues to their market designs and
objectives & constraints related to the same distributed resource
system development for integrating demand response

23. Spatial & Temporal Changes
Operational systems are challenged by increased span of control and decreasing
timing of information and decision and control responses

24. Operational System Evolution
Situational Controls
Situational Intelligence
Situational Awareness

25. Grid 3.0 Operating System
EPRI’s Grid 3.0 Operating System concept reflects current investments
Source: Newport
Architecture and Interoperability
Source: Cisco
Sensing & Communications
Distributed Controls
Source: EPRI
Model Based Management
Graphics adapted from EPRI

26. Asset & Workforce Productivity
Asset Management
Integrating OMS and
GIS with AMI
Enabling the
field workforce
Combination of these systems are being used by utilities
to address outage prevention and restoration

27. Cyber Security Risk Scale & Scope
Threat surface is expanding in two dimensions:
• Scale & reach of grid systems’ topology
• Scope & complexity of the “Systems of Systems”
Robust risk management processes become essential in planning, operations and governance

28. Grid 3.0 Operational Platform
Integrated & Highly Scalable Platforms Are Necessary Today and Future
Grid
Controls
GIS
Distributed
Energy
Resources
CIS
Sensors
/Smart
Meter
Situational
Intelligence
DERMS
IRP
WFM
Asset
Mgmt
Adapted from Alstom

29. Evolution of Distribution Operations
Analog to Digital Transformation
Rich information needs to be transitioned to dynamic decision support systems
and operational controls
Images: A. von Meier
29

30. Investment Challenges & Strategies

31. Resilience & Reliability
$675 billion in distribution investment thru 2030 provides opportunity for grid
modernization to improve reliability and resiliency – challenge is rate impact
Utilities reported average duration
and average frequency of power
interruptions has been increasing
over the past 10 years at a rate of
approximately 2% annually.
LBNL 2012
U.S. Distribution Equipment Age
30%
Beyond Expected Life
49%
Near Expected Life
Within Expected Life
21%
Source: Black & Veatch 2008 Electric Utility Survey
We conclude that it is likely that
greenhouse warming will cause
hurricanes in the coming century
to be more intense globally and have
higher rainfall rates than present-day
hurricanes
Nov 28, 2012

32. Increased Capital + Potential Stranded Asset Risk
New distribution design standards w/advanced technology may create an
additional 15% increase in capital costs
Delays in changing distribution design, standards and advanced distribution
platforms creates potential stranded asset exposure
$775B +15%
BAU Dist. Investment: $675B1
(Billions)
Dist Asset Base
DER Driven Investment: +$100B2
Potential Stranded Assets
from BAU Investment
t5
t10
t15
Sources:
1. Brattle-EEI Forecast 2010-2030
2. Caltech Resnick Estimate
32

33. Advanced Tech Deferral Consequences
Deferring advanced distribution investment to address DER policy targets compounds both
capital costs as well as the time to course correct - creating significant network performance
gaps, unmet policy targets & customer expectation problems
Investment Options & Decision Points
Modern Grid
BAU
DER Adoption
Years
t5
t10
t15
t20
t25
t30
33

34. Uncertainty Factors
Distribution infrastructure investment today is a 20+ year bet on the future
Load:
Power Flow
Growth
+
+
Volatility Increasing +
Time Scales Decreasing
+
Technology:
+
Learning Curves
Investment:
Tech Adoption
Risk
Multi-Directional
Power
Globalization
Uses + R&D
+
Adjacencies
+
Market Adoption
$€¥
Capital Markets
+ Venture Capital
+ RD&D Funding
34

35. Balancing Objectives: Opportunities & Challenges
Distribution capital expenditures forecasted to outpace transmission by more than 2:1
US Cumulative
Source: Brattle Group
$675B
Challenge is how & who will pay for it!

36. www.newportcg.com