“Brazilian Utility - Lessons Learned fromSmart Grid Strategy and Business Case”Speakers:Ricardo Botelho – CEO, Energisa SA...
About the Speaker: Ricardo Botelho• Chief Executive Officer and Member of Executive Board at   Energisa S.A. since April 2...
About the Speaker: John Chowdhury•    Utility Innovation Practice     25‐year consulting career  working with electric uti...
AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsC...
Grupo Energisa107 years old public traded investor owned utility                                                          ...
Energisa Growth History in numbers                                                                                        ...
Energisa Performance Indicators                                                                                           ...
AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsC...
Smart Grid – Around The world                     South Korea                                Europe and UK         •    De...
Smart Grid –Investment by Government in2010China is theleader in bothcategories, with$7.3 billion totalinvestment, or$1,40...
US Smart Grid Progress - Govt. Stimulus andUsing Cost recovery methodsCost Recovery fall into one of thefollowing categori...
AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsC...
Sustentability Trilemma for the investor owned utilitybusiness in Brazil: Social Economic Sustentability                  ...
Sustentability Trilemma for the investorowned utility business in Brazil: InvestmentSustentability                        ...
Sustentability Trilemma for the investor owned utility businessin Brazil: Environmentally Sustentable                     ...
Smart Utility - EnergisaTimeline                                           Substitution                                   ...
Pathways to Smart Utility - EnergisaOur motivations and needs for a Smart Grid deployment and towards a SmartUtility are d...
Pathways to Smart Utility - EnergisaAMI – Project Cost (full deployment at Energisa ) – from 2009 Business Case:          ...
Pathways to Smart Utility - EnergisaReduction of Commercial Losses – sometimes thesolution is simpler than we think!    C...
Pathways to Smart Utility - EnergisaDistribution Automation Projects with NPV positive based on our 2009 business case:  ...
Pathways to Smart Utility - EnergisaDistributed Generation: Very low penetration of Distributed Generation In April 2012...
Impact of Smart Grid in the OperatingEnvironment                                                                         A...
Smart Grid Requires Resilient Communications Systems - CTO’s Approach    One multi-purpose Communications network to avoi...
Telecom Alternatives Considered    Wireless Option                            Application                               Pr...
AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsC...
What’s Next- EnergisaProjects to be initiated in 2013 - 2015:                          1.   Conclude upgrading Utility Man...
Thank you!     Ricardo Botelhorbotelho@energisa.com.br     55-21-2122-6904    John ChowdhuryChowdhury.john@gmail.com     +...
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Feasibility of AMI and Smart Grid in Brazil - Lessons Learned - botelho chowdhury- final

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Is Smart Grid and AMI Feasible for the Brazilian Utilities? Lessons learned from completing a two year project in Brazil with 5 different Distribution Companies in 4 different states.

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Feasibility of AMI and Smart Grid in Brazil - Lessons Learned - botelho chowdhury- final

  1. 1. “Brazilian Utility - Lessons Learned fromSmart Grid Strategy and Business Case”Speakers:Ricardo Botelho – CEO, Energisa SAJohn Chowdhury – Utility Innovation
  2. 2. About the Speaker: Ricardo Botelho• Chief Executive Officer and Member of Executive Board at  Energisa S.A. since April 2008.  A utility company with $1.4B  USD in revenue with five different distribution companies in  four states.  He serves as the Vice Chairman of the Board of  Directors of Energipe, SAELPA, CELB, Companhia Energetica da  Borborema‐CELB and Energisa.  – Mr. Botelho served as the Chief Executive Officer of Nova América S.A.  – He serves as the Chairman of the Board of Cat‐Leo Cise.  – He served as an Engineer at GTE Laboratories, and GTE Communications  Products ‐ Tempe, in Arizona (USA).  – He served as the Development Team Chief ... of Micron Technology ‐ Signal Processing Group, Arizona (USA). 
  3. 3. About the Speaker: John Chowdhury• Utility Innovation Practice 25‐year consulting career  working with electric utility  and telecom businesses to increase performance (including  several years in Brazil and Latin America) – Advised US/international energy entities on  Smart Grid/AMI/distribution automation; business case  development; CRM and telecom/wireless networks – Architected first Smart Grid solution at Houston‐based  CenterPoint Energy and first Smart Grid city in Brazil  – MBA – University of Texas at Dallas; BSBA/MIS – Tulsa University Professional Background  Memberships • Author and Frequent Speaker   • UTC Smart Networks Board Member • Director and Vice President ‐ KEMA/DEKRA • Advisor to Tulsa University Masters of • Energy and Utilities Leader – North America – IBM Energy Program Global Services    • GridWise Architecture Council • President and CTO – NetKnowledge Technologies • IEEE‐Power Engineering Society • Senior Manager  ‐ Ernst & Young & Price Waterhouse • Advisor to National Rural Electric Utility Consulting Association ‐ TechAdvantage • Utility Innovation Council – Board Member
  4. 4. AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsConclusion – What’s Next
  5. 5. Grupo Energisa107 years old public traded investor owned utility 2011 Distribution – 5 utilities 2011 Consolidated Financial Highlights  Total Energy Distributed – 8,708 GWh Total Consumers : 2,453,410  Consol. Net Revenue US$ Milion: 1.448,6  # Substations/capacity (MVA): 141 / 2,573  Consolidated EBITDA US$ Million: 331,3  HV Lines (69/138kV/230kV) (km): 4,231  Net Income US$ Million : 126,6  MV and LV distribution lines (22/13.8/11. 4/ 0.38/0.22kV) (km): 123,355  Net revenues - US$ Million : 1,366  Yearly Investment US$ million = 165 Renewable Generation Portfolio Operating SHP plants/capacity: (4)/ 35 MW O&M and Trading Services Under construction SHP (2013): (1)/8MW  Largest Independent O&M Service Developing SHP plants (2017): (3)/50 MW Operator of Hydroplants: 130 units Operating Biomass Cogens plants/capacity:  Total capacity under contract: 8,704 MW O&M (2)/60 MW  Specialized eletrical contractor services Developing Biomass Cogens plants/capacity for Industrial clients and utilities (2016): (2)/110MW  Construction/Maintenance of Substations Wind Park under construction (2013): 150MW and Transmission linesDistrib. PCH’s Eólicas Termelétricas  Net revenues US$ Million –36.4 Developing Wind Park (2017): 90 MW Expected Total Energy production (operating and construction)- 2013: 532 GWh/year  Wholesale Electricity Traded– 78 MW avg Trading Total Energy production (developing) 2016-  45 clients among largest 2017: 361 GWh/year industrial/commercial clients Total Investment (2012-2017) : US$ 572 million  Net Revenues – US$ Million – 63.4
  6. 6. Energisa Growth History in numbers Distribution Transformers Total number of Consumers (000) (Qty and Installed Capacity MVA) 2.453 2.253 2.338 3.181 3.054 2.167 2.930 2.067 2.643 2.693 2.736 1.979 145.369 140.557 134.357 Growth rate 4.4% p.a 121.344 113.502 106.312 Growth rate 6.5% p.a 166 192 233 259 279 313 2006 2007 2008 2009 2010 2011 2006 2007 2.008 2009 2010 2011 Rural Consumers Total Number Consumers Quantity Capacity Installed MV/LV (MVA) MV/LV Lines Extension and Consumer/power density Total Energy Distributed -Avg Residential Consumption/month 113,3 110,5 Growth rate: 4.3% p.a 121,6 123,4 104,2 116,1 100,7 109,9 98,0 100,0 105,8 96,8 8.709 57 59 59 8.474 55 57 7.629 7.878 57 6.966 7.280 Growth Rate: 4.6% p.a 20 20 20 19 19 20 Growth Rate: 7.4% p.a 1.931 2.042 2.187 2.353 2.593 2.765 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Residential Consumption (GWh) Total Energy Distributed (GWh) MV/LV lines (km ´000) MWh/Km Consumer/Km KWh/residential consumer/mo
  7. 7. Energisa Performance Indicators (*) Total Energy Losses Energisa vs Brazil average Energisa Target SAIDI/SAIFI vs Actuals 18,3% 17,8% 27,0 27,0 26,2 16,7% 17,0% 17,0% Brazil Avg 25,4 23,6 25,3 24,7 22,2 23,9 14,6% 14,5% 22,4 13,4% 13,0% 19,6 12,5% 31,0 31,7 17,2 11,2% 5,3% 5,5% 24,5 26,3 5,2% 4,8% 23,7 22,6 4,3% 2,8% 15,6 15,7 16,5 14,0 13,9 13,8 9,3% 8,9% 8,2% 8,2% 8,2% 8,3% 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Line Losses Commercial Losses SAIDI (hours) SAIFI (#) Target SAIDI Target SAIFI Consumer/Workforce employed vs Comparable IOUs ABRADEE Customer Satisfaction Survey Average 340 79,9 76,8 77,4 77,3 76,7 76,8 478 494 422 431 338 338 371 333 266 284 A B C D E F G H I ENERGISA 2006 2007 2008 2009 2010 2011 Companies Peer Group Avg (2010) EPB EBO ESE EMG ENF Brazil Average
  8. 8. AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsConclusion – What’s Next
  9. 9. Smart Grid – Around The world South Korea Europe and UK • Developing Intellectual property • Vision 20-20-20 • Reducing usage by 10 percent • Smart grid efforts are a specific part of • Lowering the average annual blackout a low carbon agenda minutes per household from 15 minutes • Sweden is the first country in the world to nine to hit 100-percent penetration for smart • Reduce line loss to 3 percent. meters • Capture 30 % of renewables • Create 50,000 annual jobs • • US$43 billion in avoided energy imports $3 billion in avoided power generation China costs. • Ecological rationale is not a factor • Energy Efficiency Australia • • Develop Distributed Generation Deploy 280 million smart meters by• Energy Efficiency 2016. Major generators and substations to be•• Operational Efficiencies Improve Reliability USA • equipped with smart sensors• Renewable Integration • Energy Efficiency • Operational Efficiencies • Improve Reliability • Improve Customer Service • Renewable Integration
  10. 10. Smart Grid –Investment by Government in2010China is theleader in bothcategories, with$7.3 billion totalinvestment, or$1,400 per $USmillion of GDP. AsChina builds outits modern grid toaccommodateextraordinarilyrapid growth
  11. 11. US Smart Grid Progress - Govt. Stimulus andUsing Cost recovery methodsCost Recovery fall into one of thefollowing categories regardless of state Case Study Trend Observationsjurisdiction: Most Least PGE Duke Con Ed Often Often Comments Used UsedTrackers: A mechanism that follows or “tracks” Good means for focused recoveryunpredictable costs that the utility incurs. Typically, in lieu of full rate case process;trackers are determined at the end of the year and Trackers saves time; limits utility exposurethen recovered over a 12-month period. with large unknowns Balancing Accounts Links these programs to normal /Rate Base rate case filing processBalancing Accounts/Rate Base: A balancing account isan accounting procedure developed by a utilitycommission to track and recover reasonable and Marginal Cost approach; Texas, Customerprudent costs unrecovered through retail bills due to Surcharge Michigan, e.g. suggestedthe application of applicable rate freezes or ceilings. approach Can be a Long Process wouldCustomer Surcharge: A mechanism that has no State Funding require legislative actionstandard statutory definition, but typically is a chargedefined by the governing utility commission andimposed on customers to recover utility expenses.State Funding: It varies state-by-state, but thisapproach includes funding for projects providedfrom existing or newly created state accounts.
  12. 12. AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsConclusion – What’s Next
  13. 13. Sustentability Trilemma for the investor owned utilitybusiness in Brazil: Social Economic Sustentability ENERGISA Retail Electricity Rates - 2011 (1US$ = 1,67 R$ ) Segments US$c/KWh R$c/KWh Residential 29,80 49,91 Low Income residential (subsidized) 14,98 25,09 Industrial 19,96 33,44 Commercial 27,41 45,91 Rural 14,66 24,55 Other segments 18,44 30,89 Total 22,70 38,02 Year: 2011 Residencial Baixa Renda Average Residential Monthly Bill (US$) 46,32 11,08 Avg. Yearly Resid. Consumption (KWh) 1.359 889Resource allocation of Brazilian utility bill (2011) Average Residential Electricity Rate (US$c/KWh, 2010) 35,6 Taxes and other Rate Charges Total Rate 31,9 Distribution Taxes and 26,1 25,7 24% 25,1 23,0 several 22,9 22,5 Tariff 21,5 21,5 Charges 18,8 18,0 18,0 17,8 Generation 45% 11,6 and Grid 8,9 19,8 7,2 Costs 5,1 5,0 13 8,7 7,8 7,1 8,5 7,1 5,8 5,5 31% 4,5 4,3 3,7 3,9 2,7 2 Germany Sweden Argentina Danemark China Portugal Turkey Russia India Poland Brazil Norway Finland Holand Spain UK Italy Chile USA
  14. 14. Sustentability Trilemma for the investorowned utility business in Brazil: InvestmentSustentability • High growth markets needs to be bankable - i.e generate Energisa Distribution Utilities ROCE and EBIT margins sufficient margins to meet ROCE (%) EBIT margin (%) growing investment needs; 21.7 • Pressure from regulator to lower rates to consumers by reducing the utility operators distribution margins are not sustainable in a long term; 14.8 14.1 • Regulator wants more reliability 12.6 but doesn´t provided adequate economic signals; • Utilities are compelled to 2007 2008 2009 2010 2011 2012 2013 2014 2015 increase efficiency and asset utilization with better service 1st 2nd Rate Case Cycle 3rd Rate Case Cycle delivered in order to sustain profitability.
  15. 15. Sustentability Trilemma for the investor owned utility businessin Brazil: Environmentally Sustentable Projected Installed Capacity by energy source (MW) PDE-2011 (2010-2020) - source:EPE• Brazil has one of the cleanestenergy supply matrix in theWorld – 82% renewable non- 25.461nuclear 3.412 27.142• Challenge is to introducereliable renewable sources cost 15.499 115.123effectively for the long term 2.007 9.133(SHP, biomass, wind and solar) 82.939 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Hydros Other Renewables Nuclear Fossil Fuel Plants
  16. 16. Smart Utility - EnergisaTimeline Substitution Substitution of SCADA of GIS Pilot Case: Roadmap Review Smart Utility Smart Grid Substation Management Business Systems Case Roadmap Smart Grid Pilot Case: Business Self Expansion Case Healing Automated Workforce Reclosures AMI Largest Automation Pilot Case: Clients SIGOD / LIS Current Fault Indicators AMR Pilot 2008 2009 2010 2011 2012 Investments (USD Million) 2008 2009 2010 2011 2012 TOTAL Distribution Investments 174,20  246,98  229,01  147,6 183,8 981,52  Smart Utility Investment 2,13  2,37  2,19  2,92  10,61  20,22  Percentage 1,2% 1,0% 1,0% 2,0% 5,8% 2,1%
  17. 17. Pathways to Smart Utility - EnergisaOur motivations and needs for a Smart Grid deployment and towards a SmartUtility are different than in USA and Europe;  USA/Europe: aging infrastructure, promote energy efficiency and lower CO2 footprint, tech & innovative industry drive  Brasil : opt-in meter replacement (REN-502/12), continuous pressure to improve reliability and efficiency and reduce commercial losses within a declining share of the rates.Our hurdles: High deployment costs and not perceivable positive NPV yet Low consumption per capita base Cost recovery mechanism that doesn´t burden consumers or investors anddeliveries benefits in short term No Time of Use rates for LV retail customers still not effective Lack of local manufacturing base or trained personnel Reliable telecom network for wireless data not available in rural and smaller t
  18. 18. Pathways to Smart Utility - EnergisaAMI – Project Cost (full deployment at Energisa ) – from 2009 Business Case: INVESTMENTS (%) Results 10.0% 3.0% Meters28.0% Shielding  Investment : 57.0% Implementation  623 Feeders TI/Telecom  2,4 Millions -83% MetersAMI – Main Benefits evaluated:  U$ 565 Million BENEFITS (%)  Negative NPV in: 9.2% 7.7% (U$ 467 Million)22.5% Non Technical Losses  Negative IRR in: Reactive Energy AMR+remote C&D (8,51%) 60.6% Others
  19. 19. Pathways to Smart Utility - EnergisaReduction of Commercial Losses – sometimes thesolution is simpler than we think!  Commercial Losses higher than US$ 180/residential customer/ year in higher concentrated commercial loss feeders  utilize simplified smart meter (AMI) Commercial losses lower than US$ 180/residential customers/year in dispersed areas  utilize low cost alternatives of electronic meters with shielded cables and meter borne – Energisa patented : DLCB Energisa Chastity Belt (DLCB )
  20. 20. Pathways to Smart Utility - EnergisaDistribution Automation Projects with NPV positive based on our 2009 business case:  More stringent quality requirements and cost constraints  Focus is to reduce penalties and improve reliability with add on Opex Several Pilots currently being tested  Smart Substation  Current Fault Indicators  Self Healing Our Roadmap of Smart Utility also points to PoC in several other areas: DMS/OMS Fault Detection isolation and restoration (FDIR) Volt-VAR optimization  Treatment of large amount of Data  Power Quality Management
  21. 21. Pathways to Smart Utility - EnergisaDistributed Generation: Very low penetration of Distributed Generation In April 2012 federal regulator released rule REN 482/2012 introducing netmetering scheme for DG and provided for the first time mechanism to introducemicro-mini generation (<1 MW) with net-metering. Surplus produced beyondconsumption can be credited and used in 36 months. Parity to grid in some locations but economics are not favorable for massdeployment without subsidies. With TOU and other liberalized movements on energy trading, DG could bepotential disruptive business model for traditional utilities
  22. 22. Impact of Smart Grid in the OperatingEnvironment AMI Infrastructure Integration Services Smart Home Infrastructure SMART Grid Infrastructure (Smart Meter, Data (Smart Thermostat, Load (Sensors, Grid Control Infrastructure Concentrators, AMI Transformation Control Devices, Gateways.) Devices, Grid head end) Other Services head end) Services Wide Area Network (WAN) Local Area Network Network Home Area Network (HAN) (Wireless, Fiber & (LAN) Communications Substation) Development & Meter Data Management Demand Response Customer Relationship Data Service Management Maintenance Management Management Application Customer Cut-over Service Customer Portal Credit and Revenue Metering and Billing Management Protection Service ManagementSecurity, Standards & Interoperability Business Change Management Distribution SCADA Distribution Management Outage Management Intelligence (Roadmap, Consulting Management Business Strategy) Telecom Network Solutions Network Network Planning Work Management Planning & & Planning Management Operations IS Infrastructure Management Management Integration Data Center Data Systems Project Communications / Cloud Management Storage Management Center Failover Management
  23. 23. Smart Grid Requires Resilient Communications Systems - CTO’s Approach One multi-purpose Communications network to avoid the implementation of multiple single-purpose networks A Communications network that can grow as functional requirements change and technology evolve Incorporating commercially available, non-proprietary solutions allowing for future-proofing against today’s investments cycles and technology obsolescence timeliness Leverage industry standards thereby lowering the overall cost to implement and support Create capacity and infrastructure for secure and fault tolerant requirements Smart Grid • Comprehensive Coverage Automation • Multi-protocol Network • Scalable and Future Proof• Low Latency Network• QoS at the core layer Control & Utility• Secure and Protection Network Fault Tolerant Network Innovation • Resilient Data Center Utility Operations Network Network - Data Center • QoS at the core layer - Voice, Video and Data • Secure and Fault Tolerant * DUKE Energy CTO Speech, 2010‐2011 
  24. 24. Telecom Alternatives Considered Wireless Option Application Pro ConRF Mesh: Bit rate up to 1 Mbps,  Smart meters, distribution  Able to be customized for specific  Proprietary, lack economies of variable range, variable frequency automation deployments, self‐organizing, self‐ scale, equipment can be expensive healingGPRS: Bit rate at 20‐200 kbps,  Smart meters (AMI), mobile work  Able to leverage existing networks,  Recurring cost per megabyte, lack frequency 700 MHz to 2.1 GHz force management low upfront capital investment,  of direct utility control over  short time‐to‐market, low module  network costPLC and Broadband Over Power  Substations, smart meters,  Robust capabilities, integrated  High capital costs, expensive chips Lines (BPL): Bit rate at 48 kbps to  monitoring/ control at customer  communications throughout grid  and equipment, not widely 10 Mbps, variable range, frequency  premise, distribution automation and home area network  adoptedat 1.6 to 80 MHz electric carrier environments, low recurring costsWiMAX: Bit rate up to 3 Mbps,  Smart meters, mobile work force  Robust capabilities, integrated  High equipment cost and initial range of 10‐15 miles, frequency  management, distribution  communications throughout grid.  build out cost.700 MHz to 2.3‐3.5 GHz automation High bandwidth capabilities, low  latencyVSAT: Bit rate  14 Kbps‐1Mbps,  Smart meters, mobile work force  Low‐cost equipment, ubiquitous,  High latency for DA and limited  management, distribution  low latency growth potential automation 24
  25. 25. AgendaEnergisa – Company BackgroundSmart Grid Trends – Around the worldFeasibility of Smart Grid in Brasil – Our findingsConclusion – What’s Next
  26. 26. What’s Next- EnergisaProjects to be initiated in 2013 - 2015: 1. Conclude upgrading Utility Management Systems as prescribed in our RoadMap Power Quality management Digitalization: Protection and Automation OMS / DMS  Modelling Dispatch 2 . Study on handling massive amount of data – BIG DATA  analytics  handling, storage and integrity Our View of the Future 3. DG pilot case – handling distributed resources and otimizing dispach of DG solar power 4 . Evaluate low cost SG meters – REN-502/12 complaint
  27. 27. Thank you! Ricardo Botelhorbotelho@energisa.com.br 55-21-2122-6904 John ChowdhuryChowdhury.john@gmail.com +1 214-213-6226

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