Australian Government $100M Smart Grid Project

The Department of the Environment, Water, Heritage and the Arts is offering up to $100M for a Smart Grid, Smart City demonstration project. There is a Media Release, set of Guidelines and a Pre-deployment report. This is for networked sensors in an energy grid allowing finer control of the system. This can be used to send price signals to optimise energy use, particularly from renewable sources. It is usually claimed to reduce costs to the consumer, but is more likely be used to force the consumer to change their energy use habits.

A smart grid can be for any energy distribution system, but this project appears to be limited to an electricity distribution network. It would be useful to include two different energy sources, such as electricity and gas, in the project to look for synergies.

It is claimed that data and results will be made available publicly over the course of this project. However, smart grids provide data in real time and so there would seem to be no reason why data from the project should not be provided daily from the start date of the system. The proposed lengthy delays in providing data have no technical justification and appear to be the government planning to suppress any bad news about the project, even before it starts.

The government appear to be using a similar process to the NBN Taskforce, where an independent panel of experts is used to assess proposals, rather than a conventional public service tender board. Victorian electricity distributor SP AusNet appears to have a head start having announced it will install 680,000 WiMax connected smart meters by 2013, with about 40,000 installed by mid 2010. Applications close 28 January 2010 and the date for the successful bidder to be announced is a somewhat vague some time in 2010.

It should be noted that smart grids do not require a high speed fibre optic broadband network. Only low data rates are needed and wireless networks can be used as in the Victorian system. Smart grids may not need to use the NBN.

I teach about smart grids in my Green ICT course and perhaps some of the graduates will be involved in the project.

Grant Guidelines

1. Smart Grid, Smart City Grant Guidelines (PDF-347KB)
2. Application Supporting Material
   
3. Presentation on the Release of Draft Guidelines
4. Presentation on the Draft Application Supporting Material
5. Smart Grid, Smart City: A new direction for a new energy era (PDF - 4000KB)
6. Consultation Workshops - Smart Grid, Smart City, National Energy Efficiency Initiative (NEEI)
7. Summary of Stakeholder Workshops - July 2009

While there is extensive documentation provided about the project is is very large PDF and word documents. For a project which is supposed to be about smart use of information technology this shows a lack of smart information design and distribution. Here is an excerpt in plan text from the pre-deployment report:

Smart Grid, Smart City: A new direction for a new energy era

Contents

Minister’s foreword 4
Executive summary 6

1. Background, objectives and approach 11
2. Smart grid business case: Expected benefits in Australia 30
3. Program design for Smart Grid, Smart City 40
4. Recommended approach to industry and next steps 89
5. Role of government and regulatory bodies for broader smart grid adoption in Australia 102

APPENDIX A: Glossary of smart grid terminology 106
APPENDIX B: Smart grid trials in Australia 110
APPENDIX C: Pilot summary 111
...

EXECUTIVE SUMMARY
PURPOSE
The Australian Government announced in the 2009 Federal Budget the availability of up to $100 million for the implementation of a fully integrated smart grid at commercial scale, through the National Energy Efficiency Initiative (NEEI). The government’s investment in Smart Grid, Smart City was subject to a pre-deployment study designed to provide further information to the government on the potential economic and environmental benefits of smart grid technologies and the best way to maximise the benefits of the government’s investment including the best governance framework and business model for the initiative, and how best to bridge any gaps in knowledge about the benefits. The results of the pre-deployment study undertaken in July and August 2009 are presented in this report.

It is the intent that the program design of Smart Grid, Smart City builds off and leverages the programs and lessons from other government and industry initiatives, including but not limited to the Smart Meter program (led by the Ministerial Council on Energy), Solar Cities, Solar Flagships and the National Broadband Network (NBN).

SMART GRID OPPORTUNITIES IN AUSTRALIA
Near-universal access to cheap electric power has helped Australia achieve a high standard of living and a leading position in the global economy. Indeed, low-cost power has helped drive the country’s economic growth for decades. Today, the national power industry is large and complex, with $11 billion1 in revenue, over 45,000 kilometres of transmission lines and 700,000 kilometres of distribution network, and over nine million customers2, including many in remote areas.

An abundance of coal has helped keep the cost of electricity relatively low. But coal imposes environmental costs in the form of greenhouse gases, including 200 million tons of carbon dioxide equivalent (CO2-e) released in 20083, more than a third of Australia’s total CO2-e emissions.


Global and national trends are beginning to affect the entire value chain of the electric power
sector:

• Expert scientific evidence confirms that human activities, power plant emissions in particular, alter the climate and affect the environment. The Australian Government is investing in measures to reduce reliance on fossil fuels
• Rising and more volatile fuel prices and globalisation of fuel markets
• Ageing electric infrastructure that will require costly upgrades to meet the demands of an expanding modern economy.

The nation will need to manage power more efficiently and effectively, lower the ratio of electricity consumption per economic output, reduce overall greenhouse gas emissions with demand management and encourage energy efficiency, improve reliability, and reduce recurring costs while making prudent investments.

The global call to action has initiated a wave of innovation in distributed power generation, electric transport, energy efficiency and smart grid capabilities. Power utilities and solution providers across Australia and around the world are starting to experiment and deploy a wide range of these innovations.

To bring this vision to reality, Australia will need to integrate information processing and communications into power systems to create a unified smart grid that includes generation, transmission, distribution, retail and end-use. This smart grid vision encompasses a suite of applications which are currently at different stages of technical and economic maturity.

They can be categorised into grid-side applications, which reduce line loss and improve fault detection and restoration, for example, and customer-side applications, which help people understand and manage their power usage.

Preliminary analysis carried out in the course of this study indicates that implementing smart grid technologies across Australia could deliver at least $5 billion of gross annual benefit to Australian society. This includes improvements in the operation of the power industry and an estimate of the monetised benefits of reduced greenhouse gases and improved power grid reliability. The significance of the potential benefits and sizable range indicates that many applications are worthy of further investigation and refinement as part of the Smart Grid, Smart City demonstration.

These potential benefits have attracted enormous interest in smart grid technologies and their implementation and governments around the world are making power grid upgrades a priority.

The United States (US), for example, has announced USD $4.5 billion in smart grid funding, while Europe has mandated smart meters as a critical component of a broader smart grid.

Although smart grids offer significant potential, the benefits are largely unproven at commercial-scale and like other countries, Australia faces barriers to a broader adoption, including:

• Australian and international authorities have yet to agree on standards for many applications
• Power industry leaders do not currently share a common understanding about the costs and benefits of different smart grid applications
• Regulatory frameworks that may not reflect the full potential benefits of smart grid
• applications or provide industry with critical guidance on cost recovery or risk
• Utilities have no comprehensive national or global reference cases to guide them toward best practices or help them avoid mistakes.

There are no regulatory barriers for the successful implementation of Smart Grid, Smart City
but a regulatory reference group is recommended to identify potential barriers that could impact
a broader smart grid adoption in Australia.

The absence of standards for smart grid technology and applications are a significant investment risk for the wider adoption of smart grids and, to a lesser extent, the Smart Grid, Smart City demonstration project. It is anticipated, however, that this risk will be mitigated by a
flexible approach to the deployment of the smart grid communications platform. This approach will see a variety of communications solutions adapted to suit different and varying network requirements, which will help spread the risk. A standards working group is recommended to identify standards needed to minimise technology investment risk for a broader smart grid
adoption in Australia.

RECOMMENDATIONS
This report contains the following recommendations:

• Smart grid implementation in Australia should aim to optimise the overall value for society, including financial and non-financial benefits (see sections 2.1 and 2.2).
• Since some underlying technologies are too immature and their business cases too unproven to allow for accurate up-front cost estimates, analysis suggests that gross annual benefits, rather than a net present value, will best prioritise the allocation of funds across potential applications. The Smart Grid, Smart City demonstration should gather data to allow more accurate calculations of the net present value of each major application (see sections 2.1 and 2.2).
• The available funding should be directed at reducing or eliminating as many of the barriers to widespread deployment as possible—including business case uncertainty, technological immaturity, standards development and regulatory uncertainty—enablinga rapid and prudent market-led adoption of smart grid technologies and capabilities that could build on other relevant government initiatives such as the National Broadband Network (NBN), subject to commercial decisions. Funding disbursements should be split between project milestone outcomes and a final performance payment upon completion of project requirements. Consortium applicants should provide significant co-investment for the program to align interests and generate ‘ownership’ and to drive lessons for Smart Grid, Smart City. Finally, the Smart Grid, Smart City program design can be adjusted or scaled in terms of the breadth of the applications deployed pending the total available funding (see section 3.6.4).
• To achieve this objective, Smart Grid, Smart City should provide a competitively solicited grant to a distributor-led consortium to fund a unified deployment of smart grid technologies within a single distributor’s region that rigorously assesses and analyses applications at a relevant commercial scale. This is consistent with the government’s recommendation for the initiative to be in one Australian town, city or region. Finally, distinct modules should address regulatory barriers and standards that could impact a broader smart grid adoption in Australia (see section 3.2).
• Consumer-side applications deployed at commercial scale should aim to understand what drives customer behaviour and therefore should test several different packages across different consumer demographics. The packages should include various tariff programs (e.g. Time of Use and Critical Peak Pricing), the provision of more detailed information for consumers (e.g. real-time energy usage and environmental information via in-home displays or portals) and controls that maximise potential behaviour change (e.g. programmable controllable thermostats and home energy controllers; see sections 3.1 and 3.2). Smart metering will be a critical enabler of customer-side applications.
• Grid-side applications to be deployed at commercial scale should include (see section 2.3):
• Fault detection, isolation and restoration
• Integrated Volt-VAR control, including conservation voltage reduction
• Distributed storage.
• Secondary applications that should be piloted (although not necessarily at commercial scale) include: electric vehicles; substation and feeder monitoring and diagnostics; wide-area measurement; and distributed generation support.
• In order to effectively demonstrate a wide variety of customer-side applications, a minimum of 9,000 – 10,000 participating households is suggested (implying a total minimum population of some 200,000 people), depending upon the number and design of each trial, and the anticipated take-up rate of those trials within the population.
• To ensure a broader adoption of the applications shown to have a positive net benefit, the successful consortium should provide detailed commentary on how it will ensure:
  • Close ongoing engagement with the regulatory reference group established for Smart Grid, Smart City to identify most pressing regulatory challenges and help create recommendations to government and regulatory bodies (see section 3.3)
  • Active dialogue and engagement with the standards working group established for Smart Grid, Smart City to identify standards required to minimise investment in new technologies and ensure broader industry participation (see section 3.4)
  • Mechanisms to involve other industry players and disseminate lessons, e.g. peer evaluation panels and secondments from other distributors/industry players (see section 3.5).
• Government will require the consortium to ensure continuity of supply by using robust security procedures that include plans for handling breach or discovery of weakness (see section 2.3) ...

From: Smart Grid, Smart City: A new direction for a new energy era