Download - Executive Summary - Smart Grid
1
Smart Grids The Power Grid of Tomorrow
An Extract
Smart Grids. The Power Grid of Tomorrow – An Extract
2
Thanks to its early installation of more than 32 million automated smart meters, Italy finds
itself in a particularly favourable position to take advantage of the development of intelligent
electricity networks. This evolution in the overall electricity network is a necessary step in
order for the nation to be able to equip itself with an infrastructure capable of managing the
new challenges the energy system faces, such as a greater production of energy from
renewable sources, an increase in energy efficiency and the reduction of emissions of climate-
altering gases.
The entire electricity system is in fact on the point of being invested by what might well be
described as a “storm of innovation”.
This innovation is not only going to affect electricity systems, i.e. distribution and transmission
networks, but will also have a significant impact on the development of renewable energies. In
fact, the generation of electricity, traditionally carried out in large, centralised sites connected
to transmission networks, is engaging to an ever-greater extent small- to medium-sized plants
in the vicinity of users, who – once the plants have been connected up to distribution
networks - then become “prosumers”: producers and consumers at one and the same time.
Moreover, the distribution networks of the future will make it possible for small consumers to
participate more actively in the market, providing them with instantaneous, detailed
information on consumption levels as well as access to channels of communication with a
multiplicity of subjects (energy suppliers, service aggregators, network managers). The new
uses that will be made of electricity – such as electric cars and heat pumps for heating – will
in their turn have a significant impact on the distribution network, obligating it to assume a
greater degree of dynamism and flexibility.
And nor is this “innovation storm” limited to smart grids. Rather, it is heading directly towards
the heart of the electricity system as a whole. In fact, it would be much more accurate to
speak of a revolutionary shift towards a new “smart power system”.
Put in other words - and as is in fact made explicit in the preface to the book - “The future
that awaits us is a future with more electricity and less primary energy”.
Smart Grids. The Power Grid of Tomorrow – An Extract
3
This booklet offers a summary of the themes that are dealt with in the book Smart Grid. Le
reti elettriche di domani. Dalle rinnovabili ai veicoli elettrici il futuro passa per le reti intelligenti
(Smart Grids. The power grid of tomorrow. From renewables to electric vehicles the future
passes through intelligent networks) published in May 2011 and presented in Palazzo Marini in
Rome (the Italian lower house of parliament).
The idea of extracting a brief summary from the longer document arose out of a desire to
make available to a wider public an insight into the extensive and detailed investigation that
the Milan-based foundation Fondazione EnergyLab has been carrying out in relation to the
theme of smart grids in Italy. In particular, the booklet reproduces the preface and
introduction of the original text.
The work is the product of the combined efforts of a group of experts that gravitate around
the Laboratorio Smart Grid (Smart Grids Laboratory), a project conceived of, developed and
promoted by Fondazione EnergyLab. The contents of the booklet fully express the multi-
disciplinary approach characteristic of the work of the laboratory. The research in question
lasted for over a year and the final result is the fruit of a highly articulated and carefully
orchestrated effort that engaged a range of figures from various areas of the academic,
government and business worlds.
In particular, the protagonists included professors from Milan’s five universities and various
research centres – members of the foundation – as well as a range of people from the
government and business worlds.
Editors
Maurizio Delfanti Politecnico di Milano
Andrea Silvestri Politecnico di Milano
Authors Giuseppe Buglione IEFE – Università Commerciale “L. Bocconi”
Massimo Bogarelli Politecnico di Milano
Antonio Capone Politecnico di Milano
Michele De Nigris Ricerca sul Sistema Energetico – RSE
Davide Falabretti Politecnico di Milano
Massimo Gallanti Ricerca sul Sistema Energetico – RSE
Luca Lo Schiavo Autorità per l’Energia Elettrica e il Gas
Marco Merlo Politecnico di Milano
Valeria Olivieri Politecnico di Milano
Clara Poletti IEFE – Università Commerciale “L. Bocconi”
Mauro Pozzi Politecnico di Milano
Smart Grids. The Power Grid of Tomorrow – An Extract
4
The EnergyLab Foundation was founded in
Milan in 2007 with the goal of creating a
network of actors in the energy field
including universities, the business world
and regional and local government. It is a
non-profit organization whose members
include Milan’s 5 major universities. The
foundation promotes research and
innovation in all areas of the energy sector,
operating by way of 6 laboratories focusing
on different themes: Renewable
Energies, Smart Grids, Nuclear
Security, Electric Mobility, Energy
Efficiency and Access to Energy in
Developing Countries.
The foundation’s legal status as a
participatory foundation makes it possible
for it to undertake non-profit activities,
furnishing support to its members and
present and future partners.
The Scientific Members
Università Commerciale “L. Bocconi”
Università degli Studi di Milano Bicocca
Università Cattolica del Sacro Cuore
Politecnico di Milano
Università degli Studi di Milano
RSE – Ricerca sul Sistema Energetico
To Contact Us:
The EnergyLab Foundation
Piazza Trento, 13
20135 Milan (Italy)
Phone +39 02 7720.5265
Fax +39 02 7720.5060
www.energylabfoundation.org
Smart Grids. The Power Grid of Tomorrow – An Extract
5
Preface An “innovation storm” for the entire
electricity system
by Luca Lo Schiavo1
The European targets of producing a
greater quantity of electricity from
renewable sources, increasing energy
efficiency and reducing emissions of
climate-altering gases (the so-called “20-
20-20 by 2020” package) entail – in order
for these goals to be actually achieved - a
very substantial change both for
European electricity networks in general
and Italian networks in particular.
And nor is that all. In addition to the
modifications in network design and
management necessary to allow for a
1 The Executive Office of the Autorità per l’Energia Elettrica e il Gas (Regulatory Authority for Electricity and Gas). The opinions expressed in this preface are the personal opinions of the author. They do not represent the official positions of the Electricity and Gas Authority and do not commit it to any course of action in the future.
development of distributed generation
sufficient to meet the objectives laid
down in the European directive on
climate change), it is also necessary to
take into account the implications of the
objectives fixed by the directive for the
internal market for electricity - an integral
component of the so-called “third energy
package”, which points all European
countries in the direction of smart
metering as a necessary path to pursue -
once an appropriate costs/benefits
analysis has been conducted – in order to
extend the benefits of liberalisation to all
users.
And even that is not the end of the story.
In the not too distant future the
commercial distribution networks of the
world’s biggest automobile manufacturers
are going to introduce into the market
plug-in electric vehicles that will result in
new loads for the electricity network. At
the moment, from the point of view of
the amount of power that will be
absorbed, these loads remain extremely
difficult to predict, even though in all
probability they will be fairly limited vis-à-
vis the total demand for energy and in
any case very efficient in terms of the
overall quantity of primary energy used
for individual mobility compared with
traditional vehicles with internal
combustion engines.
What is involved, then, has three facets:
the development of distributed generation
and its consequential integration -
notwithstanding its traditional reputation
for being made up of sources that are not
amenable to programming - not only into
distribution networks but also into the
electricity market thanks to the
development of advanced forecasting
Smart Grids. The Power Grid of Tomorrow – An Extract
6
technologies and models; the widespread
adoption at the European level of smart
metering (an area in which Italy is a
global frontrunner) and the opportunities
this offers to end-users as well as new
market subjects such as demand
aggregators capable of commercialising
demand-response services; and, lastly, in
a by-now imminent future, electric
vehicles driven by “mobile electricity
consumers”, not just furnished with the
freedom to chose their own supplier, just
like the more traditional “fixed electricity
consumer”, but also protagonists bearing
a new need: access to recharging
facilities not only in private locations like
the garages of family homes and
company premises but also in public
places or at least in places open to the
public. Thus, the challenges for the
electricity networks of the future are truly
immense, so much so that a recent study
in Britain (the LENS project - Long-term
Electricity Network Scenarios) conducted
on behalf of the Office of the Gas and
Electricity Markets (OFGEM, the British
regulatory authority) has defined as
“unprecedented” the degree of innovation
that electricity systems will either have to
face up to in the very near future or that
they are in fact already in part
experiencing. In this phase of massive
and in part unpredictable innovation the
role of regulatory authorities will be
crucial not only in order to furnish the
correct stimuli for investment in smart
grids but also – as is correctly suggested
in this book in the chapter dedicated to
regulation – in order to adjust all those
regulatory frameworks that have anything
to do with this out-and-out “storm of
innovation” that is very shortly going to
invest the entire electricity system. From
this point of view, one could even argue
that smart grids run the risk of being a
misleading brand, given that what is
required are not (just) intelligent
networks but (also, and above all)
network users capable of exploiting the
opportunities that the technological
innovation makes available, appropriately
adapting their own production and
consumption plants. In short, this
impending “innovation storm” does not
stop at smart grids but rather goes right
to the very heart of the electricity system.
Indeed, it would be much more accurate
to speak of a “smart power system”.
There is no doubt that the role of the
enabling technology for this new smart
power system will be played by
information and communications
technology (ICT) but equally clear is the
fact that the developments in technical
regulation will be just as important not
just in the traditional sector of
electrotechnics (handled at the European
level by European Committee for
Electrotechnical Standardisation
(CENELEC)) but also, and to a more
decisive extent for the success of the
changes taking place, in the
communications applications to be put in
place (to be based on standard protocols
and hence of an open and non-
proprietary type) to guide the definition
of technological solutions in such a way
as to leave the market as free as possible
and to minimise the costs and
technological complexities that users of
the intelligent network will have to
confront.
Smart Grids. The Power Grid of Tomorrow – An Extract
7
In view of these considerations it is
important to make clear that the
transition towards a smart power system
goes well beyond the phase of
automating the networks, a phase that
has already been set in motion in Italy
over the last decade by distribution
companies as a consequence of the
encouragement provided by a regulatory
framework incentivating service quality.
In certain respects this phase has already
involved the adoption of very advanced
solutions, ranging from the widespread
use of HV-MV transformer automated
control to the automatic search and
identification of malfunctions. In fact, if
the problem consisted only in the
automation of the network, non-
proprietary communications protocols
(like those used up to now by the major
distribution companies) would not
constitute a problem, given that such
applications do not require any
interaction with active and passive
network users.
But the real benefits of incorporating an
ICT layer into an electricity system can be
obtained only if the end-users too, both
those that immit power and those that
extract it, are connected up with this
layer and are able to modify their own
behaviour in accordance with the
electronic information made available - be
it economic (related to the market) or
technical (related to the efficient working
of the distribution network and, more
generally, to a better management of the
overall electricity system). The need to
involve network users so as to exploit to
the maximum the potentialities deriving
from making the system “smart” is
therefore the obvious reason why it is no
longer possible to use non-proprietary
protocols, as in the case of the mere
automation of networks. Instead, it is
essential to use open protocols that
network users are able to adopt on their
own interface devices in correspondence
with the distributor offering the lowest
price.
It is also the responsibility of the energy
regulator to ensure that, on the one
hand, there are no practices or
requirements on the part of network
managers that result in complications or
costs for network users that are not
strictly necessary and that, on the other
hand, the users of the network respect
the technical stipulations necessary for
the correct working of the network. In
this regard it is worth noting the work
that the Electricity and Gas Authority has
carried out over the past few years to
Smart Grids. The Power Grid of Tomorrow – An Extract
8
eliminate the great variety of technical
stipulations used by the various
distributors – particularly well-known
were the norms of the “DK” series
implemented by Enel distribuzione (ENEL
Distribution) – and to replace them with a
single set of technical connection rules
defined by the authority on the basis of
the technical work carried out by the
Comitato Elettrotecnico Italiano (the
Italian Electrotechnics Committee, the
national organ for standardisation) in
collaboration with the offices of the
regulatory authority itself together with
various independent technicians (the so-
called Norma CEI 0-16). This project has
already been completed for high and
medium voltage distribution networks,
whereas it is still underway – but should
be completed very shortly, certainly
before the end of 2011 – for low voltage
networks. In fact, the work that the
authority has requested the CEI to
conduct on these latter networks is by
now more or less complete (the new
norms for low voltage networks should go
under the name CEI 0-21).
Apropos of the need for open protocols in
smart grids and in particular the need to
avoid generating unnecessary costs for
network users, it should to be underlined
that among the requirements necessary
to have access to the incentives provided
for by the Electricity and Gas Authority’s
Resolution ARG/elt 39/10 in respect of
pilot projects in the field of smart grids is
that of the use of public domain
communications protocols. Even though
the concrete results that the authority’s
decision has had in Italy to stimulate
experimental smart grid projects are
extensively described in this book, it is
nonetheless well worth mentioning some
of the reasons that have led the authority
to move in this direction.
In the first place, it is necessary to recall
that starting out from 2004, i.e.
immediately after the major blackout that
struck the Italian electricity system in
September 2003, the Electricity and Gas
Authority progressively introduced a
series of feed-in-tariffs to promote
“strategic” investments in electricity
networks (subsequently these were
extended to gas networks as well). In a
second phase of regulating electricity
networks, the so-called 2nd Regulatory
Period (2004 – 2007), these incentives –
which take the form of an increase in the
weighted average cost of capital (WACC)
- were initially limited to investments
provided for by the Piano di sviluppo della
rete di trasmissione nazionale (RTN)
(Development Plan for the National
Transmission Network) but by the 3rd
Regulatory Period (2008 – 2011) they
were also extended to a certain number
of special investments in distribution
networks, including experimental projects
in the area of “active networks”. The
underlying idea has been that some
investments are not adequately promoted
by output-based incentives relating to
service quality parameters (SAIDI and
SAIFI+MAIFI) but that these nonetheless
warrant attention in that their failure to
materialise could act as an obstacle to
innovation or damage consumers.
In the second place, it is by now a well-
established principle that electricity
systems need to evolve in the direction of
a management of an active type. This
evolution is necessary in order to achieve
a number of important objectives,
Smart Grids. The Power Grid of Tomorrow – An Extract
9
including the following (in order of the
urgency of the need):
an increased possibility of connecting up
units of distributed generation,
guaranteeing a better contribution (today
absent or negative) on the part of such
units to the security of the overall
electricity system;
the introduction of techniques of load
control on the part of the system;
the introduction of greater opportunities
for end-users (in the future also mobile
end-users) to participate in the electricity
market by way of making use of
electronically conveyed information in
relation to prices.
All these objectives can be realised only
by way of introducing suitable
communications systems that will bring to
completion existing electricity networks.
In a very simplistic manner it is possible
to describe this evolution by saying that
distribution networks must to some
extent resemble transmission networks.
In Italy for many years now the latter
have been completely automated and
subject to control as well as furnished
with communications systems capable of
exchanging appropriate electronic signals
with network users.
The necessary gradualness of the action
to be taken has led operators to focus
attention (since as early as 2007, in the
form of the Electricity and Gas Authority’s
Resolution 348/07) on “medium voltage
active networks”. This concern later
found expression in the determination,
formalised in the authority’s Resolution
ARG/elt 39/10, to limit the pilot projects
eligible for incentives to MV distribution
networks in which there occurs for at
least 1% of a given year/a given year-
long period/an annual period an inversion
of the flow of power from medium to high
voltage in consequence of the surplus
power/an excessive amount of power
introduced by distributed generation in
respect of/compared with the load in that
fraction of time. This focus on problems
deriving from flow inversion in the
context of the existing system of
protections finds its roots in its turn in the
studies commissioned by the authority
from the Politecnico di Milano between
2006 and 2008, the results of which were
published as Appendix B of Resolution
ARG/elt 25/09 (in Chapter 3 of this book
a detailed explanation is provided of
these research results and their partial
extension to LV, as illustrated in this case
in the Appendix to Resolution ARG/elt
223/10). Basically, the idea was to
confront the major problems already in
part evident by selecting pilot projects for
the “smartisation” of medium voltage
distribution networks in contexts where
the penetration of distributed generation
had already reached levels such as to
require new technologies and new
techniques for the “active” management
of the networks and to do this with an
adequate degree of involvement on the
part of the users of the networks (all the
while, as has already been explained,
limiting as much as possible the costs of
modifying the plants of active and passive
users by way of using standard and non-
proprietary communications protocols).
It is important to underline that these
experimental projects, although of limited
dimensions, are moving in the same
direction that is being pursued by the
European Commission with its recent
industrial initiative the European
Smart Grids. The Power Grid of Tomorrow – An Extract
10
Electricity Grid Initiative (EEGI) put in
place by the Directorate-General for
Research as part of the Strategic Energy
Technology Plan (SET): to pass from a
phase, by now fairly well-established, of
carrying out research projects in the
laboratory (i.e. in test facility plants) to a
new phase - without doubt more critical –
of conducting experiments in the field
with “real clients, real plants and real
voltages”. This approach has also been
proposed in the position paper of the
European Regulatory Group for Electricity
and Gas (ERGEG), published in July 2010
and frequently referred to in this book.
This publication also discusses the reason
why the Electricity and Gas Authority
introduced the reference to medium
voltage (MV: 1-35 kV) as an essential
requirement for the pilot smart grid
projects to be selected for admission to
the special fedd-in-tariff programme
consisting in an increase in the WACC of
2% for a period of 12 years. In fact,
three quarters of the renewable energy
produced in Italy is generated on MV
networks. The problem of integrating
massive quantities of power generated by
renewable sources – a process likely to
be characterised by “intermittent
immission”, which may provoke excessive
variations in voltage along transmission
lines – arises prevalently in relation to
medium voltage networks. By contrast, so
far as high voltage networks are
concerned (at least at the national level),
technologies for the remote control of
production plants are already available.
The problems present in high voltage
networks in some parts of Italy need to
be related back more than anything else
to the size of the network as opposed to
its smartisation.
From a more long-term point of view, it
will eventually be necessary to extend the
process of smartisation to LV networks, to
which much larger numbers of users are
connected. So far as these networks are
concerned, the fundamental challenge in
Italy is to take as much advantage as
possible from the investments that have
already been made in smart metering. To
this end the Electricity and Gas Authority
has made it obligatory to use bihourly
energy prices in respect of all users. This
requirement has been in place for
domestic users since 1st July 2010 and
will by fully phased-in by the end of 2011.
What is involved is probably the biggest
experiment in the world of differentiated
prices on the basis of the time of use.
The authority intends to monitor the
effect of this experiment very carefully,
taking advantage amongst other things of
the financial assistance furnished by
Ricerca di sistema. The aim of the
initiative is to introduce electricity prices
that reflect costs (cost-reflectivity) in such
a way as to furnish users – and,
indirectly, the makers of electrical
appliances – with information as to the
economic value of the consumer choices
that are made. The Italian smart
Smart Grids. The Power Grid of Tomorrow – An Extract
11
metering system constitutes the only
system in the world catering for 30
million users. In fact, this unique
opportunity to operate in the field on
such a vast scale has made us the envy
of the rest of the world. Great interest
has been provoked, for example, by the
decisions the authority has taken in
relation to the passage to the regime of
an obligatory bi-hourly price for clients (a
service offering a greater degree of
protection) or in relation to the use of the
capabilities of electronic meters to furnish
a minimal, indispensable service even in
the event of a failure on the part of
domestic electricity consumers to meet
payment requirements (the management
of failure to pay/late payment). The
authority has chosen to follow the
strategy of extracting the highest possible
value from the investment in electronic
meters. This investment is being
recuperated by way of an increase in the
component of tariffs corresponding to
capital investment. By the same token,
however, the initial investment has
already made it possible to render more
exacting the efficiency factor (the X
factor) which governs the reduction of
the operating costs of distribution
companies according to the logic of a
price cap, introduced in Italy by the law
establishing the Electricity and Gas
Authority (Law No. 481/95).
There is little doubt that, if someone were
to design a smart metering system today,
they might well make choices different to
those that were made some 10 or more
years ago in Italy. The configuration of
the system of remote control that is
currently in place does not provide for a
real real-time control of the end-point
objects, something which, for that
matter, is not even necessary for the
objectives that guided the decision to
develop remote control meters towards
the end of what we might now refer to as
“last century”. The principal objectives at
the time were: to read data on
consumption at a distance - be it
periodically or on request - for one-off
operations, for example, in the event of a
user switching from one supplier to
another; and to remotely control
operations like connecting and
disconnecting the power supply or setting
the maximum amount of power available.
Turning our attention towards the future,
a connection between an electronic meter
and Internet, for example, would make it
possible to offer real-time services that
are not yet available. It is quite
legitimate, then, to laud the
foresightedness of the people who
gambled on the introduction of remote
control meters. It is no less legitimate,
however, to begin to work on the second
generation of meters (the Electricity and
Gas Authority has fixed a useful technical-
economic life of 15 years for the current
electronic meters, and we are by now
well into the second half of this period),
identifying new services that might
benefit users and deriving from these the
technical characteristics that the new
meters will require (in line with a model
that makes use of the Quality Function
Deployment Methodology).
The vigorous encouragement that the
European Commission has given to the
spread of smart metering systems in EU
member countries both by way of the
norms contained in the so-called “3rd
Energy Package” and by way of the
Smart Grids. The Power Grid of Tomorrow – An Extract
12
emission of mandate M/441 to the
European standardisation organisms
(CEN, CENELEC and ETSI) has recently
provoked an important change in the
direction of the opening of
communications protocols: the
establishment of the consortium Meters
and More, which has made possible the
disclosure of the communications protocol
used in the major European initiatives in
the area of the remote control
management of low voltage meters (in
Italy, with Enel distribuzione, and in
Spain, with Endesa). The availability of
this protocol in a non-proprietary form
will constitute an important step towards
the possibility of home and building
automation, which, as has been
demonstrated by the most successful
initiatives up to date especially in the
United States, lie at the basis of energy
saving in the domestic use of electricity.
Distributed generation and smart
metering, then, are two key factors in the
evolution of electricity networks towards
smart grids. This evolution, however, is
going to intersect with other crucial
developments such as energy efficiency
in respect of end uses and most
importantly the electrification of individual
transport. Since these themes are the
object of other parallel initiatives
currently being undertaken by Fondazione
EnergyLab, they are dealt with only
partially in this book.
The future that awaits us is a future with
more electricity and less primary energy.
The electrification of individual transport
in particular (i.e. road-bound vehicles)
will bring with it over the next few
decades a change in the logic of energy
consumption which will in all probability
assume the contours of an out-and-out
change of paradigm. The current studies
in nanotechnology could well lead to the
development of industrial applications in
systems for the accumulation of energy
such as to provoke a total change in the
composition of the stock of road-bound
vehicles in the course of just a few
decades. The increase, on the one hand,
of the capacity of on-board vehicle
batteries – all the time maintaining their
high performance and limited size - and
the reduction, on the other, of recharging
times to times that are compatible with a
brief stay at an electric car power station
(without, then, having to effect a long
stop-over to recharge the battery but
only a brief stop) are the two factors
which will determine the speed of the
electric mobility revolution.
The perspective within which to correctly
frame the “innovation storm” that is
about to hit the electricity sector, then, is
more general. It does not relate just to
electricity networks in the strict sense but
rather invests the entire system, including
the end uses of energy, not least those
that as of today are not yet practised
other than in a extremely limited manner,
such as electric mobility (individual and
commercial).
It is to be hoped (and realising this hope
is the job of the regulator) that the whole
evolution of this process, destined to
unfold over a very extended period of
time, unerringly attributes a central role
to the end-user of the system. The need
for a user-centric approach was, for that
matter, the principal methodological
recommendation advanced by the
European Association of Energy
Regulators (ERGEG) in its consultation
Smart Grids. The Power Grid of Tomorrow – An Extract
13
document on smart grids published at the
end of 2009. This approach must remain
the cornerstone not only of the action of
the independent energy regulation
authorities of the various EU member
states but also of the network operators
that are planning investments and the
various market actors who – thanks to a
network that is more open, more efficient
in furnishing services and better equipped
with “intelligent” technology – will be able
to obtain economic and environmental
benefits superior to the admittedly
substantial costs that are necessary in
order to confront the upcoming “storm of
innovation” with the right combination of
vision towards the future and
responsibility in relation to the existing
service.
Introduction
by Maurizio Delfanti and Andrea Silvestri
After the revolution that led from vertically
integrated utilities to a management on the
basis of market models, electricity systems
in the majority of both European and non-
European countries are currently passing
through a new phase of transition. A
rethinking is taking place of the best way to
manage networks, especially distribution
networks, which need to pass from a
“passive” to an “active” mode. This
evolution (with technical implications of
unprecedented complexity) is referred to at
the international level by way of the
expression “smart grid”. This term alludes
to highly innovative structures and
operating modalities which, as well as
guaranteeing a high level of security and
reliability in the overall system, are also
able to deal with the many problems tied to
the management of distributed generation,
to the possibility of controlling loads, to the
promotion of energy efficiency and to a
greater involvement of active and passive
end-users, not least in respect of the
electricity market.
This transformation, which involves the
entire electricity system, does not seem to
have either a definite form or precise
confines. Today it is no longer enough just
to satisfy the growing demand for
electricity (which up to now has always
been the principal, if not only, objective of
electricity networks); it is also necessary to
respond to new needs not confined – and
above all not amenable to satisfaction –
exclusively within the “electricity world”, a
world which, as a consequence, will have to
interact with other worlds such as, and
above all, the “world of information and
communications technology (ICT)”.
The challenge, then, is immense and by
now very much present. Ideas on the
subject, however, are still rather confused
– and not just in relation to the more
technical or detailed matters. In fact,
although smart grids have been at the
centre of debate on electricity systems for a
number of years, it is still difficult at the
present time even to identify a single and
generally accepted definition. Instead, it
seems easier from one moment to the next
and depending on the context to place the
emphasis on some specific point, with the
risk, however – and this is the real danger -
of generating still more confusion.
The result has been the spread of an
excessively trusting approach: thanks to
smart grids, a valid solution for every
national context (from the most advanced
Smart Grids. The Power Grid of Tomorrow – An Extract
14
countries like those of Europe to developing
countries) and to be implemented in its
entirety (from transmission networks to low
voltage networks), it will be possible to
solve every problem in the electricity
sector, from the limited efficiency of the
markets to the improvement of service
quality for end-users, obviously entrusting
a determining role in the exercise to a
vaguely defined research activity.
This book by The EnergyLab Foundation
has been conceived with the aim of
providing a more concrete and technical
vision of the evolution underway and of its
real underlying causes. Obviously, it runs
the risk – a risk that we have taken on
quite deliberately – of providing only a
partial vision of the problem. In order to
achieve our aim it has been necessary to
narrow the focus down from the
international context to a European one
and ultimately to the case of Italy and that
of a specific Italian region. But it has also
been necessary to examine the various sets
of problems involved in terms of successive
future time frames, without, however,
directing attention too far ahead (is it really
a purposeful exercise, for example, for
people who are dealing with electricity
systems today to try to imagine - at times
with extraordinarily passionate involvement
- what is going to happen in 2050?).
Initially, then, this study concentrates
attention on the European scene. So far as
this broad context is concerned, it is
beyond doubt that the principal causes at
the basis of the revolution underway are to
be found in the development of distributed
generation. There is an urgent need to
connect up the rapidly growing number of
distributed generation units, guaranteeing a
real contribution on their part to the
security of the overall electricity system
(today, in fact, non-existent or negative)
and to its management and control.
Distributed generation is in fact the only
way possible to reach the goals of an
increase in the production of electricity
from renewable sources and a reduction in
the emission of climate-altering gases, key
components of the so-called “20-20-20 by
2020” package. This reading is born out
further by an important initiative promoted
by the European Commission, the NER300
Call for Proposals, which defines among
other things the criteria and the parameters
for the funding of three pilot projects for
the management of decentralised
renewable energies (smart grids).
According to this call for proposals, the
increase and development of renewable
energy sources (RESs) connected to the
network represents the principal benefit to
be expected from smart grids. In other
words, smart grids are indispensable in
order to enable the inclusion or better the
real integration of renewable energy
sources into the electricity sector.
At a national level too recent regulatory
provisions (both on the part of the
Electricity and Gas Authority and the
relevant government departments) have
confirmed this link: smart grids in Italy are
destined to develop in close connection
with distributed generation.
Smart Grids. The Power Grid of Tomorrow – An Extract
15
But the European goals for 2020 also
necessitate the active involvement of the
end-users of energy networks. Over the
long-term, then, it will be necessary to
introduce greater opportunities for such
end-users (in the future quite probably
“mobile” as well, in the form of owners of
electric vehicles) to have access to and
make use of electronic conveyed
information in regard to price/the market
(demand response), for example, by way of
implementing intelligent meters (smart
meters, which not by chance are
extensively discussed in this book).
The focus of the book then narrows down
to concentrate on the Italian context. This,
however, does not by any means constitute
a reductive choice, for it so happens that
Italy is at the very forefront of
developments in the field. This position of
pre-eminence has come about thanks to
the initiatives that were taken some time
ago by the relevant operators. A number of
examples might be cited: the project
Telegestore, for example, boldly conceived
of by ENEL and to date the only initiative of
its kind on such a vast scale in the entire
world; or the overall conception and
development of the transmission network,
today unified under the ownership of
Terna; or, finally, (and most importantly
from a long-term point of view) the
courageous regulatory policies set in place
by the policy-makers of the time. Smart
metering distributed on a mass scale and a
modern transmission network (which might
already be classed as “smart”) are in our
view the major distinguishing features of
the Italian case in the European context.
On the basis of these considerations, it is
reasonable to claim that in Italy the
principal driver in the direction of active
networks is constituted today by the
massive presence of distributed generation
on distribution networks.
But what are the major problem areas for
Italy and what are the priorities and time
scales that have been fixed up to now to
confront them? Still in terms of the specific
guidelines cited above, the authors of the
book have succeeded in drawing out from
the pathway traced out by the Regulatory
Authority for Electricity and Gas a range of
highly illuminating perspectives. As Luca Lo
Schiavo has clearly pointed out in his
preface to the book, attention has first
been focused on the problems deriving
from the massive presence of distributed
generation on distribution networks,
especially in the medium voltage (MV)
sector. Distributed generation on medium
(and low) voltage networks brings with it a
number of significant problems, principally
tied to the inversion of flow and to the
performance of the systems of protection
that cater for active users. The Electricity
and Gas Authority’s Resolution ARG/elt
39/10 has traced out a possible evolution in
distribution networks - in particular in those
that are characterised by a significant
amount of distributed generation (inversion
of flow in 1% of annual working hours) -
towards an active mode.
By pursuing this logical path - limiting
attention to Italy (an extremely significant
case at an international level) and
establishing a temporal horizon of just a
few years - it has been possible to
delineate in this study (fruit of the
collaboration of a wide range of highly
qualified experts in the field) a highly
plausible future evolutionary trajectory for
smart grids.
This, then, is the principle objective of this
book: to investigate and to trace out in a
concrete and clearly defined manner the
future prospects for the evolution of smart
Smart Grids. The Power Grid of Tomorrow – An Extract
16
grids in a strictly Italian context and to do
so not only at the level of research,
identifying problems and possible solutions
both of a technical and regulatory nature,
but also at a more practical level,
describing the pilot projects currently
underway and the benefits that are
expected to derive from them.
In keeping with what has just been said,
the sequence of the six chapters of which
the book is made up (and the structure
with which they are dealt with) can be seen
from two points of view:
• in relation to the geographical context
(from international/European to
national, even up to the specific case of
an experiment currently taking place in
Milan in the Region of Lombardy);
• in relation to future time horizons (from
long-term evolutions to the time span
on the national level of the next few
years, even down to that of initiatives in
the field that have already got
underway).
Underpinned by this interpretative
framework, Chapter 1, an introduction to
the entire study, illustrates the fundamental
features of smart grids. After listing a series
of factors that are leading to their
increasingly extensive implementation in
the electricity systems of various European
and non-European countries, the authors
offer a definition of smart grids capable of
effectively establishing their peculiarities
and objectives even over the very long
term. These objectives are then explicated
in terms of the functions that smart grids
make available. A description is provided
not just of the services, solutions and
support infrastructures that smart grids
offer but also of the principle actors
involved in the revolution underway, from
the suppliers of the services to the subjects
who are expected to benefit from them. In
order for the newly implemented
technologies (in particular in the field of
ICT) to make it possible to overcome the
current limitations of smart grids and make
provision for their concrete and full
development - all the while maintaining at
a high level the security and reliability of
the overall system - it is necessary for there
to take place a parallel evolution in both
the regulatory framework (with implications
essentially at the national level) and the
normative framework (of a technical
nature, with not just national but also
international implications).
So far as the modification of the regulatory
framework is concerned, Chapter 2
investigates the national and international
scene with a view to identifying and
distinguishing between those areas not
covered by any regulatory provisions at all
and those covered by regulations, norms
and requirements that could prove to be no
longer valid in the context of a distribution
network (especially a MV network) that is
evolving into a smart grid. In fact, it is
vitally important to analyse all the system
conditions that it is necessary to put in
place in order that investment in smart
technologies can effectively give play to its
full potential. In this chapter the authors
discuss the conditions under which it is
possible to manage in a “smart” way first
the supply and then the demand for
electricity at the level of the market, the
purchase/sale of energy and power delivery
services, referring in particular to the role
that distribution companies will have to
assume in the future and paying special
attention to the national context, i.e.
offering a specific treatment of the
regulatory framework in Italy in relation to
distributed generation and the incentives
Smart Grids. The Power Grid of Tomorrow – An Extract
17
provided for to support pilot projects on
active networks.
Still in relation to the Italian context but
with particular reference to the modification
of the technical-regulatory framework,
Chapter 3 describes in a detailed manner
the impact of distributed generation on the
overall electricity system and in particular
on Italian distribution networks. In fact,
although the incentives and the policies in
support of RESs will make it possible –
albeit in a manner that falls short of an
ideal solution – to reach the “20-20-20 by
2020” objectives a few years ahead of
schedule, there is a need for the networks
to be able to cope with this increasing
quantity of energy. Through an analysis of
hosting capacity, effected on a very
extensive sample of MV networks, the
authors of this chapter have been able to
determine that the most severe limits to
the amount of power that can be installed
depend on a set of phenomena (voltage
regulation, problems tied to interface
protections, thermal limits on lines) that are
all related to the question of power flow
inversion. This factor, in fact, constitutes
the principle indicator of “activity” on
networks. Because of this it will be
necessary in the near future to develop
technologies and solutions that make it
possible to implement smart grid
prototypes based of the use of
communications technology.
As of today these technologies, often
referred to by way of the acronym ICT and
extensively discussed in Chapter 4,
represent the only approach capable of
resolving the new problems associated with
energy networks. In fact, it is only by way
of an intelligent use of communications
systems that it will be possible to overcome
the current limitations of distributed
generation and make provision for a real
and substantial increase in its contribution
to the electricity system, all the while
maintaining at a high level the degree of
security and reliability of the system as a
whole as well as the quality of service
offered to users. In the course of this
chapter, then, the authors offer a
description of all the communications
technologies that can immediately be
applied to monitor, control and co-ordinate
electricity networks. In addition, an
illustration is provided of some possible
future forms of interaction between the two
systems, with particular attention to smart
metering, a key element - over the long
term - of the new architecture, capable of
actively involving the end-user in the
management of the smart grid.
In order to achieve real progress in the
direction of the networks of the future, all
possible solutions need to be tested on real
networks with both end-users and active
users (loads and generators). Today there
is a growing number of projects on smart
grids that deal with a wide range of
problems in a diversified and detailed
manner. These go from activities to
promote the comprehensive development
of the network in the direction of more
advanced standards by way of co-operation
and the sharing of research resources and
extend to experimental projects aimed at
implementing and integrating into the
Smart Grids. The Power Grid of Tomorrow – An Extract
18
electricity system particular types of RES
plants, to programmes to promote the
spread of smart metering and energy
efficiency. The scale of these initiatives
varies widely. Some involve industry
subjects, operators and research
institutions at a global as well as national
level (extensively dealt with in Chapter 5);
others, instead, are more limited in their
scope but very significant numerically even
though they relate just to the Italian
context. In fact, it is for this reason that it
was decided to offer an account of a
specific initiative underway in Milan in the
Region of Lombardy (Chapter 6).
Thus, in the course of Chapter 5 the
authors describe a number of the major
initiatives in the field of smart grids,
following a logical order that gradually
shifts towards focusing on the Italian
context.
Attention is first directed towards initiatives
of a broader international character, with
an analysis of the principal projects
underway outside Europe, and then, the
perspective being narrowed down to the
continental scene, an account is given of
the various initiatives promoted or financed
by the European Commission, be it either
those in the ambit of research institutes or
those that involve the direct participation of
European distribution system operators
(DSOs) and transmission system operators
(TSOs). Finally, a description is given of the
Italian scene, which is without doubt at the
very forefront of the energy revolution.
Following this path, we arrive finally at the
last chapter. In this the authors offer a
detailed description of a specific project,
endeavouring to illustrate the ideas and
principles in question in terms of real and
concrete actions and solutions.
Focusing its attention on a specific
geographical context (Italy, and in
particular the Region of Lombardy) and on
an immediate temporal horizon (the years
between now and 2015), the protagonists
of the project Milano Wi-Power, developed
in collaboration with A2A, are implementing
directly in the field solutions to the most
urgent problems provoked by the
penetration of distributed generation in
Italian distribution networks. The evolution
proposed consists in a new network
automation system furnished with a
suitable channel of communication between
the the DSO Primary Cabin protections and
the units of distributed generation that
pertain to it with a view to resolving a
series of problems relating to flow inversion
and in particular to the current interface
protection systems of active users and
thereby allowing for an immediate increase
in distributed generation in view of the
future development of smart grids. But
here too we trust that in capturing the
detail we have not lost sight of the overall
picture. In fact, the in-principle solutions
demonstrated with reference to this
particular case (the project focusing on
Milan) are in the process of being
incorporated into many of the smart grid
initiatives that the Electricity and Gas
Authority has recently (February 2011)
recognised as being eligible for inclusion
under the incentivation measures provided
for by the above-mentioned Resolution
39/10.
Let us conclude this introduction with a
caveat. We have endeavoured to provide in
a simple and direct manner a certain
number of instruments that might prove
helpful to understand the new frontier of
smart grids. What is involved, however, is a
frontier beyond which it is already possible
to see an infinite number of possibilities still
waiting to be explored. Even more, at the
very moment in which this book is being
Smart Grids. The Power Grid of Tomorrow – An Extract
19
printed a number of important initiatives,
especially on the regulatory front, are in
the process of being perfected. In
particular, an examination is being carried
out of a set of legislative initiatives which
have the potential to influence in a decisive
manner the development of active
networks in Italy. These very recent
initiatives as well as others (quite possibly
of a technological character) presently
underway suggest that we would be well-
advised to consider this book simply as an
expression of the current “state of the art”
of a science that (to our good fortune)
continues to evolve with great ferment and
rapidity.
Smart Grids. The Power Grid of Tomorrow – An Extract
20
www.energylabfoundation.org