BuddeBlog

At the Smart Grid Roundtable we were provided with an excellent introduction – one that set the scene for the day.

Shayleen Thompson, A/g First Assistant Secretary of the Strategies and Coordination Division Department of Environment and the Department of Climate Change, outlined the fundamental shift in environmental policies that has taken place since the new government took over.

The conclusion I drew from Shayleen’s introduction was that the policies that were developed prior to the election now need to be considered in relation to the new climate change and environmental realities – and for the ICT and energy industries this will involve checking government initiatives such as smart meters and the NBN against the new directions.

The two presentations that followed enabled the Roundtable to discuss these initiatives and, indeed, to touch them against the information provided by Shayleen. These presentations were given by:

• Mishael J Assistant Manager Demand Response Energy and Environment Division - Department of Resources, Energy and Tourism.
• Brian Kelleher, Manager NBN Taskforce - Department of Broadband, Communications and the Digital Economy.

Smart grids require regulatory changes
Mishael J provided an overview of the Federal Government’s proposal in relation to the smart meter project. While significant progress has been made in defining the functionalities of smart meters the delegates remained seriously concerned that the project is not properly addressing the issue of smart grids – in particular with a renewed focus on the climate change situation. For example, the need for the facilitation of more distributed energy in the network requires nothing less than a fully-fledged intelligent network (smart grid).

We also asked the representatives of the Department of Climate Change to use their influence in making sure that this unique opportunity and significant investment ($2 billion government funding in Victoria alone) incorporates the smart grid network requirements needed to facilitate the management of distributed generation requirements.

There is serious concern that, by maintaining a narrow focus on smart meters, the massive new project about to be launched in Victoria could, within a few short years, end up a massive stranded asset.

Since the project was initiated in Victoria in 2004 most utilities are now in agreement that under the right regulatory regime they would prefer to embark on the broader vision of smart grids, rather than having a narrow focus on smart meters. However it is the current very short-sighted and out-of-date regulatory regime that is preventing the development of smart grids.

With the stroke of a pen the regulatory regime could be changed so as to facilitate the development of smart grids. The utilities are ready and the technology is available;  it would be catastrophic if at this stage Australia were to miss the opportunity and embark on a dumb solution.

NBN requires regulatory changes
While the outcomes of the NBN are far from decided the Roundtable believes that the scope of the NBN is so broad that it will have implications for the electricity industry as it moves towards Smart Grids. Changes to the availability of existing telecommunications infrastructure and services will either enhance or retard the development of M2M, Machine to Machine communications required for Smart Grids an other applications in e-health, e-learning and e-government.

All of these essential applications require very low cost access to this infrastructure for telemetry type IP applications which are needed for interactive energy meters (Smart Meters), interactive diagnostic equipment to the network and so on.

The Smart Grid Roundtable concluded that the NBN RFP was seeking input in the “Regulatory Submissions” round which would provide the opportunity for Smart Grid Australia put forward its value and need, to be assessed as part of the solution required from the NBN along with the envisaged traditional Telco services such as Broadband Internet Access, Voice and Video.

International benchmarks
The presentations by Dr Jürgen Bender and Professor Robin Eckermann both supplied an international perspective on where these developments are heading. In Europe, in particular, a watershed in European policies is forcing governments to be far more proactive in the field of climate change, and these policies are stimulating the development of smart grids.

Also, there is now overwhelming evidence that, taking the wider climate change issues on board, the economic benefits of smart grids far outweigh the costs involved.

For us to now, at this historical juncture, ignore these wider benefits would be one of the dumbest decisions we could make.

The Smart Grid Australia alliance has formed two working groups. One will provide a submission for the Department of Energy on the regulatory changes required to make possible the introduction of smart grids, and the other will prepare a proposal to the Department of Broadband in relation to the regulatory requirements needed to facilitate telemetry IP applications for developments such as smart grids.

As always, your ideas and suggestions are very welcome and I will gladly pass them on to these workgroups.

If you are interested in joining the Smart Grid Australia alliance, see Australia - Smart Grid Australia.

If you missed the Roundtable these issues will also be addressed at the Breakfast meeting on May 6th . For more info see: BuddeComm Breakfast Meeting.

Paul Budde

See also:

• Australia - Smart Grid Australia
• Australia - Energy Utilities Markets
• Australia - Utilities - Major Players and Projects
• Australia - Utilities Broadband - Smart Grids
• Australia - Utilities Broadband - Smart Grids Moving into 2008
• Australia - Utilities Broadband - The Market in 2007
• Australia - Government’s National Broadband Plan
• Australia - FttH Special Interest Group
• Australia - FttH and FttN Market and Industry Analyses
• Australia - Digital Media - E-health
• Australia - Digital Media - E-education
• Australia - Digital Media - E-Government

The debate around smart grids took a very interesting turn in Australia at an industry meeting with the Minister on 6 March.

At this meeting The Hon Stephen Conroy, Australian Minister for Broadband, Communications and the Digital Economy, urged the industry, several times, to put maximum effort into smart grids.

While many of our leaders fully understand their benefits, to date it has not been possible to use the concept of smart grids as an ICT tool to address problems such as climate change, energy saving, carbon emissions, etc. Smart grids are an essential element for the management of distributed generation and customer demand response. However, a vision for the future is required since the rollout of smart grids is a new paradigm for utilities – one that will require new skills and management of significant technical complexity

The Minister strongly urged the industry to strive to lift the profile of smart grids, beyond the telecoms and utilities industries. A more widespread debate would hopefully also encourage the electricity utilities to act with more speed and less reluctance.

The Minister has also instigated inter-departmental discussions on the matter, and he has offered to facilitate meetings between our industry group and other ministerial advisors, and people within government circles he believes we should meet.

GridWise is an alliance that promotes a new way to think about how energy is generated, distributed and used, using advanced communications and up-to-date information technology.

It envisions a transformed electricity system that will improve coordination between supply and demand, and enable a smarter, more efficient, secure and reliable electric power system. Considering the accepted fact that about 40% of the world’s CO2 emissions come from electricity power generation GridWise emphasises in its education, advocacy and lobbying work that the smart grid is an absolute prerequisite for any serious action in effectively addressing global warming.

We are now looking at broadening the UtiliTel initiative to the wider ICT industry, following the precedent set in the USA. Following discussion with the USA Gridwise team, there are clear benefits in combining the know-how of the technology industry and utilities to form a similar body to Gridwise in Australia. Electricity distributors are primarily represented through the ENA as their industry body; however ENA is the domain only of these companies, whereas smart grids will require a cooperative approach from technology companies, utilities and government. It is important that any Australian GridWise initiative includes the ENA and obtains credibility at high levels within electricity distributors.

The aim, as advocated by the Minister, is to act quickly. During March/April we intend to develop the parameters for the launch in Australia of an Alliance similar to Gridwise. The official launch will take place at an industry dinner on 23 April, on the eve of the 2008 Smart Grid Summit in Sydney.

Representatives of the Federal Departments of Climate Change, Energy and Broadband will be present at the Roundtable. I am in the process of inviting one of the Ministers to launch the initiative and I am also looking at a keynote guest for the dinner.

Click the link for more details on the Roundtable and industry dinner

The benefits of Smart Grids are slowly becoming accepted. One of the catalysts for change has been that more and more utilities around the world are recognising the mounting problems presented by energy and environmental concerns. These concerns include:

• inevitable limitations on energy generation, while usage is skyrocketing;
• the decades-old networks are under greater stress;
• the utility workforces are aging and there is a resource squeeze;
• increased use of alternative energy sources in their networks;
• wastage of energy and the resulting high penalties; and
• the inevitability of carbon trading.

At present the infrastructure of the utilities is unable to deal with all of these concerns, so the usual “do-nothing” approach, or more of the same narrow(band) thinking, is no longer an option.

The utilities which are anticipating these developments are embracing the concept of an end-to-end solution in the total energy chain - from energy generation to network operation, distribution and retail services at the customer level. Those companies also understand that the consumer is part of the solution and will need to play a key role in the process.

However, the fragmentation of the industry (generation, distribution, retail) enables companies to pass the buck on to the next segment in the market. Some segments actually have no incentive whatsoever to implement energy saving solutions because they are making huge profits from energy wasting and stresses in peak demand.

It therefore doesn’t make sense for one part of the chain to move forward while another part is holding back.

Leadership is all that is needed
We are certainly not saying that smart grids are the silver bullet. We think there is now a widespread understanding that we need to address many elements of various environmental issues:

• old generators need to be upgraded and modernised;
• new alternative energy sources need to be implemented;
• energy efficiency standards for appliances and building construction need to be improved,
• education to enhance awareness about energy savings; and indeed
• smart grids.

In order to address the issues of the energy crisis, global warming and energy saving, an end-to-end business solution is required. Fiddling with one aspect only is not going to do the job.

All the technology which is needed for a smart grid is in place, so technology is not the issue.

What is needed is industry leadership, and even more importantly, government leadership.

We also believe that most of the finance required to implement smart grids will become available. Over the next decade billions will be allocated to energy networks so, with regulatory vision and leadership, smart grids can, to a large extent, be financed by existing investments.

Utilities need to be modernised
Unfortunately many electrical engineers working in the utilities have little understanding of IT and what new end-to-end business solutions can do for their network and energy management. It has been stated that the ICT industry, technologically, at least, is 10 years ahead of the utilities industry.

However, the industry is also heavily regulated and the government determines what the utilities can or can’t build. So in the absence of any encouragement or promotion from the regulator, it is understandable that many utilities are not going to build a smart grid within such a regulated environment.

This will necessitate regulators taking a different perspective on purely economic return models. The triple bottom line, which includes the social impact of not acting now as well the harsh economic analysis of recent government reports, needs to be considered by regulators to support business innovation to solve these problems. If we don’t act now, the economic and social impact will be much more severe in 20 years.

At the same time, major breakdowns in the old energy networks which involve massive outages and disasters at substations are causing the engineers to look at modern telecoms and IT technologies to help solve some of these problems.  “Doing nothing” has been a great strategy for the last decade, but it is not going to work in the future.

Tightened environmental and energy legislation will inevitably result in higher penalties, and so this is another reason for utilities to start looking at smart grid solutions.

Further information is available from separate reports:

Global - Utilities Broadband - Smart Grids;

Australia - Utilities Broadband - Smart Grids.