REGULATION IN SMART GRIDS

 

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REGULATION IN SMART GRIDS

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REGULATION IN SMART GRIDS BRAZIL - EUROPEAN UNION 2016

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION INSTITUIÇÕES RESPONSÁVEIS MINISTÉRIO DA CIÊNCIA, TECNOLOGIA, INOVAÇÕES E COMUNICAÇÕES (MCTIC) Ministro Gilberto Kassab Secretário de Desenvolvimento Tecnológico e Inovação Alvaro Toubes Prata Coordenador-Geral de Tecnologias Setoriais Eduardo Soriano Lousada Coordenador Técnico do Documento Dante Hollanda Autor Perito Sênior Externo Nouredine Hadjsaid CENTRO COMUM DE INVESTIGAÇÃO DA COMISSÃO EUROPEIA (JRC) Diretor da Unidade de Segurança, Sistemas e Mercado Energéticos Marcelo Masera COORDENAÇÃO DELEGAÇÃO DA UNIÃO EUROPEIA NO BRASIL Embaixador Chefe João Gomes Cravinho Ministro Conselheiro - Chefe de Cooperação Thierry Dudermel Adido de Cooperação - Coordenador do Projeto Apoio aos Diálogos Setoriais UE-Brasil Asier Santillan Luzuriaga Consórcio executor CESO Development Consultants/FIIAPP/INA/CEPS MINISTÉRIO DO PLANEJAMENTO, DESENVOLVIMENTO E GESTÃO Ministro Dyogo Oliveira Secretário de Gestão Gleisson Cardoso Rubin Diretor Nacional do Projeto Marcelo Mendes Barbosa CONTATOS MINISTÉRIO DA CIÊNCIA, TECNOLOGIA, INOVAÇÕES E COMUNICAÇÕES (MCTIC) Secretaria de Desenvolvimento Tecnológico e Inovação +55 61 2033-7800 setec@mcti.gov.br DIREÇÃO NACIONAL DO PROJETO DIÁLOGOS SETORIAIS UNIÃO EUROPEIA-BRASIL Secretaria de Gestão Pública Ministério do Planejamento, Desenvolvimento e Gestão + 55 61 2020. 4645/4168/4785 dialogos.setoriais@planejamento.gov.br www.dialogossetoriais.org 3

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION RESPONSIBLE INSTITUTIONS MINISTRY OF SCIENCE, TECHNOLOGY, INNOVATIONS AND COMMUNICATIONS (MCTIC) Minister Gilberto Kassab Secretary of Technological Development and Innovation Alvaro Toubes Prata General-Coordinator of Sectoral Technologies Eduardo Soriano Lousada Technical Coordinator of the Document Dante Hollanda AUTHOR Senior External Expert Nouredine Hadjsaid JOINT RESEARCH CENTRE (JRC) Head of Unit Energy Security, Systems and Market Marcelo Masera COORDINATION EUROPEAN UNION DELEGATION TO BRAZIL Head of the European Union Delegation João Gomes Cravinho Minister Counsellor - Head of Development and Cooperation Section Thierry Dudermel Cooperation Attaché – EU-Brazil Sector Dialogues Support Facility Coordinator Asier Santillan Luzuriaga Implementing consortium CESO Development Consultants/FIIAPP/INA/CEPS MINISTRY OF PLANNING, DEVELOPMENT AND MANAGEMENT Minister Dyogo Oliveira Secretary of Management Gleisson Cardoso Rubin Project National Director Marcelo Mendes Barbosa CONTACTS MINISTRY OF SCIENCE, TECHNOLOGY, INNOVATIONS AND COMMUNICATIONS (MCTIC) Secretariat of Technological Development and Innovation +55 61 2033-7800 setec@mcti.gov.br PROJECT COORDINATION UNIT EUROPEAN UNION-BRAZIL SECTOR DIALOGUES SUPPORT FACILITY Secretariat of Public Management Minister of Planning, Development and Management + 55 61 2020.4645/4168/4785 dialogos.setoriais@planejamento.gov.br www.dialogossetoriais.org The content of this publication does not reflect the official opinion of the European Union and the Brazilian Government. Responsibility for the information and views expressed therein lies entirely with the author. 5

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION INTRODUCTORY NOTE The present document, written by Prof. Nouredine Hadjsaid, was an international challenge in the 8th Call for the Sector Dialogues Project. After several hours of work, the document built in three parts reveals a better understanding of the Regulation in Smart Grids in Europe and stimulates Brazilian actors to develop their activities in the theme. Part I (Smart Grid oriented regulatory policies: a review in five EU leading countries) investigates five countries (UK, Italy, France, Germany and Denmark) on Smart Grids–oriented regulatory policies, since 2006, and respective information related to: i) distributed generation; ii) electric vehicles; iii) distribution automation; iv) smart metering systems; v) storage systems. Part II (Smart Grid projects supported by Energy Regulators – Lessons learned and recommendations for future projects) identifies and describes the main projects supported by the regulatory energy regulators. The projects mapped cover the same topics mentioned in Part I: i) implementation obstacles and difficulties faced during the execution of the project; ii) identification of financial, social and political variables; iii) lessons learned during the execution of these projects and; iv) recommendations for the Brazilian Smart Grid Regulation. Part III (Issues for the development of Smart Grid projects in European countries – From promotion to evaluation of projects) identifies and analyses specific issues for the Smart Grids, such as: i) managing and monitoring implementation plans; ii) incentives for demonstration projects; iii) costbenefit analysis; iv) grid related performance indicators and; v) incentive schemes. With this document, it is hoped the movement of others Brazilian governmental players, as well as entrepreneurial and academic actors. The publication stands as one of the pillars for accelerating public policies in Smart Grids. 7

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INDEX PART 1 1. INTRODUCTION............................................................................................................................................................ 21 2. METHODOLOGY............................................................................................................................................................ 22 2.1. Main and specific characteristics of the selected EU countries:................................................................................. 22 3. SMART GRID-ORIENTED REGULATORY POLICIES AT EU LEVEL..................................................................................... 25 3.1. Definition of “Smart Grid”....................................................................................................................................... 25 3.2. EU policy drivers for Smart Grids............................................................................................................................ 25 3.2.1. European Union’s Third Energy Package........................................................................................................ 25 3.2.2. Other regulations related to Smart Grid.......................................................................................................... 26 3.2.3. Related legislation........................................................................................................................................ 27 3.3. EU initiatives for Smart Grids.................................................................................................................................. 27 3.3.1. Funding for R&D........................................................................................................................................... 27 3.3.2. System innovation........................................................................................................................................ 27 3.3.3. Policy and regulatory frameworks.................................................................................................................. 28 4. DEVELOPMENT OF SMART GRID IN EU COUNTRIES: A COMPARISON........................................................................... 28 4.1. Stakeholder involvement........................................................................................................................................ 28 4.2. Instruments to facilitate Smart Grids development................................................................................................... 29 4.2.1. Regulatory instruments................................................................................................................................. 29 4.2.2. Incentives.................................................................................................................................................... 29 4.3. Obstacles to Smart Grid deployment....................................................................................................................... 29 4.3.1. The use and access of smart meters data for Smart Grids.............................................................................. 29 4.3.2. Unbundling rules.......................................................................................................................................... 30 4.3.3. Regulatory and commercial barriers.............................................................................................................. 30 4.4. Plans for the Implementation of Smart Grids........................................................................................................... 30 4.4.1. Timeframe of the implementation plan........................................................................................................... 30 4.4.2. Monitoring of implementation plans and projects............................................................................................ 31 4.5. Evaluation of plans implementation: performance indicators..................................................................................... 31 4.5.1. Hosting capacity for distributed energy resources in distribution grids.............................................................. 34 4.5.2. Allowable maximum injection of power without congestion risks in transmission networks................................ 34 4.5.3. Energy not withdrawn from renewable sources due to congestion and/or security risks.................................... 34 4.5.4. Measured satisfaction of grid users for the grid services they receive.............................................................. 35 4.5.5. Level of losses in transmission and distribution networks................................................................................ 35 4.5.6. Actual availability of network capacity with respect to its standard value.......................................................... 36 8

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION 4.5.7. Ratio between interconnection capacity of one country/region and its electricity demand.................................. 36 4.5.8. Exploitation of interconnection capacity.......................................................................................................... 36 4.6. Smart meters roll-out in EU countries..................................................................................................................... 37 4.6.1. Progress of smart metering deployment......................................................................................................... 37 4.6.2. Functionality of smart meters & promotion of time of use tariffs...................................................................... 37 5. SMART GRID-ORIENTED REGULATORY POLICIES IN UK................................................................................................ 38 5.1. Distributed generation........................................................................................................................................... 38 5.1.1. Renewables Obligations Certificates.............................................................................................................. 38 5.1.2. Feed in tariffs............................................................................................................................................... 38 5.1.3. Renewable Heat Incentive............................................................................................................................. 38 5.1.4. Carbon Price Support................................................................................................................................... 39 5.1.5. Results of the policies................................................................................................................................... 39 5.2. Distribution automation.......................................................................................................................................... 39 5.2.1. RIIO: Revenue = Incentives + Innovation + Outputs........................................................................................ 40 5.2.2. Capacity market........................................................................................................................................... 40 5.2.3. Funds for Research and Development............................................................................................................ 40 5.3. Electric vehicles.................................................................................................................................................... 40 5.4. Storage systems................................................................................................................................................... 41 5.5. Smart meters roll-out............................................................................................................................................ 42 5.6. Remarks on the UK............................................................................................................................................... 43 6. SMART GRID-ORIENTED REGULATORY POLICIES IN ITALY............................................................................................ 44 6.1. Distributed generation........................................................................................................................................... 44 6.1.1. Renewable Energy Certificate System (RECS)................................................................................................. 45 6.1.2. Energy Efficiency Certificate System (white certificates).................................................................................. 45 6.2. Distribution automation.......................................................................................................................................... 46 6.3. Electric vehicles.................................................................................................................................................... 46 6.3.1. Regulation & Financial Initiatives................................................................................................................... 47 6.3.2. On the road................................................................................................................................................. 47 6.3.3. Industry....................................................................................................................................................... 47 6.4. Storage systems................................................................................................................................................... 47 6.5. Smart meters roll-out............................................................................................................................................ 48 6.6. Remarks on Italy................................................................................................................................................... 48 7. SMART GRID-ORIENTED REGULATORY POLICIES IN FRANCE....................................................................................... 49 9

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7.1. Distributed generation........................................................................................................................................... 50 7.2. Distribution automation.......................................................................................................................................... 54 7.3. Electric vehicles.................................................................................................................................................... 55 7.3.1. Government plan.......................................................................................................................................... 57 7.4. Storage systems................................................................................................................................................... 58 7.5. Smart meters roll-out............................................................................................................................................ 60 7.6. Remarks on France............................................................................................................................................... 64 8. SMART GRID-ORIENTED REGULATORY POLICIES IN GERMANY.................................................................................... 64 8.1. Distributed generation........................................................................................................................................... 64 8.2. Distribution automation.......................................................................................................................................... 65 8.3. Electric vehicles.................................................................................................................................................... 65 8.3.1. On the road................................................................................................................................................. 66 8.3.2. Research..................................................................................................................................................... 66 8.3.3. Industry....................................................................................................................................................... 66 8.3.4. Charging infrastructure................................................................................................................................. 66 8.4. Storage systems................................................................................................................................................... 67 8.5. Smart meters roll-out............................................................................................................................................ 68 8.6. Remarks on Germany............................................................................................................................................ 68 9. SMART GRID-ORIENTED REGULATORY POLICIES IN DENMARK.................................................................................... 69 9.1. Distributed generation........................................................................................................................................... 69 9.2. Distribution automation.......................................................................................................................................... 70 9.3. Electric vehicles.................................................................................................................................................... 70 9.3.1. Policies........................................................................................................................................................ 70 9.3.2. On the road................................................................................................................................................. 71 9.3.3. Research..................................................................................................................................................... 71 9.4. Storage systems................................................................................................................................................... 71 9.5. Smart meters roll-out............................................................................................................................................ 72 9.6. Remarks on Denmark............................................................................................................................................ 73 10. CONCLUSIONS OF PART I........................................................................................................................................... 73 PART II 11. INTRODUCTION OF PART II......................................................................................................................................... 78 12. SUPPORTS FROM EU ENERGY REGULATORS IN SMART GRID PROJECTS................................................................... 78 12.1. Funds from EU Energy Regulators for Smart Grid projects...................................................................................... 79 12.2. The role of UK Energy Regulator........................................................................................................................... 81 12.2.1. The 2015 Competition................................................................................................................................ 82 12.2.2. Analyzed projects....................................................................................................................................... 83 10

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION 13. PROJECT #1: LOW CARBON LONDON......................................................................................................................... 83 13.1. Background........................................................................................................................................................ 83 13.2. General description............................................................................................................................................. 84 13.3. Partners ............................................................................................................................................................. 84 13.4. Lessons learned for future innovation projects....................................................................................................... 84 13.4.1. Trial participants......................................................................................................................................... 84 13.4.2. Central project management and control by the DNO.................................................................................... 85 13.4.3. Optimum partner size and mix.................................................................................................................... 85 13.4.4. Solution design and development................................................................................................................ 85 13.4.5. Project replication and Smart Grid technologies............................................................................................ 86 13.4.6. Regulatory Barriers..................................................................................................................................... 86 1.1.1. Learning dissemination....................................................................................................................................... 86 14. PROJECT #2: DEMONSTRATING THE BENEFITS OF SHORT-TERM DISCHARGE ENERGY STORAGE ON AN 11KV DISTRIBUTION NETWORK................................................................................................................................................. 86 14.1. Background........................................................................................................................................................ 86 14.2. General description............................................................................................................................................. 87 14.3. Partners ............................................................................................................................................................. 89 14.4. Lessons learned for future innovation projects....................................................................................................... 89 14.4.1. System reliability and pilot site selection...................................................................................................... 89 14.4.2. Secure suitable cost effective energy contracts for small scale ESS installations............................................. 89 14.4.3. Implementations needed for the transition to the business case.................................................................... 90 14.4.4. Other recommendations for future projects.................................................................................................. 90 14.4.5. Learning dissemination............................................................................................................................... 90 15. PROJECT #3: CAPACITY TO CUSTOMERS.................................................................................................................... 91 15.1. Background........................................................................................................................................................ 91 15.2. General description............................................................................................................................................. 91 15.3. Partners ............................................................................................................................................................. 93 15.4. Lessons learned for future innovation projects....................................................................................................... 93 15.4.1. Customer engagement and feedback.......................................................................................................... 92 15.4.2. Other faced issues..................................................................................................................................... 93 15.4.3. Project replication...................................................................................................................................... 94 15.4.4. Learning dissemination............................................................................................................................... 94 16. PROJECT #4: 33KV SUPER CONDUCTING FAULT CURRENT LIMITER.......................................................................... 94 16.1. Background........................................................................................................................................................ 94 16.2. General description............................................................................................................................................. 94 16.3. Partners ............................................................................................................................................................. 95 16.4. Lessons learned for future innovation projects....................................................................................................... 95 11

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16.4.1. Success criteria not met............................................................................................................................. 95 16.4.2. Standard commercial and technical boundary definitions.............................................................................. 96 16.4.3. Further Implementation of Fault Current Limiters.......................................................................................... 97 17. PROJECT #5: CUSTOMER-LED NETWORK REVOLUTION............................................................................................. 97 17.1. Background........................................................................................................................................................ 97 17.2. General description............................................................................................................................................. 98 17.3. Partners ............................................................................................................................................................. 99 17.4. Lessons learned for future innovation projects....................................................................................................... 99 17.4.1. Issues related to the installation of smart appliances and monitoring equipment............................................. 99 17.4.2. Industrial & Commercial (I&C).................................................................................................................... 100 17.4.3. Safety problems....................................................................................................................................... 100 17.4.4. Transition to BAU: policies and procedures................................................................................................. 100 17.4.5. Systems reliability.................................................................................................................................... 100 17.4.6. Learning dissemination............................................................................................................................. 101 18. OTHER ER FUNDED SMART GRID PROJECTS........................................................................................................... 101 18.1. Italian regulator overview................................................................................................................................... 101 18.2. Danish regulator overview.................................................................................................................................. 102 19. SUMMARY OF BARRIERS AND OBSTACLES.............................................................................................................. 104 20. SOME RECOMMENDATIONS..................................................................................................................................... 106 21. CONCLUSIONS OF PART II........................................................................................................................................ 107 PART III 22. METHODOLOGY OF PART III...................................................................................................................................... 111 23. INTRODUCTION OF PART III...................................................................................................................................... 111 24. INSTRUMENTS TO FACILITATE SMART GRID DEVELOPMENT.................................................................................... 112 24.1. Typologies of Incentives..................................................................................................................................... 113 24.2. Sources of Funding for Smart Grid projects......................................................................................................... 113 24.2.1. The role of UK Energy Regulator................................................................................................................ 115 24.2.2. The role of Italian Energy Regulator........................................................................................................... 115 24.2.3. The role of Danish Energy Regulator.......................................................................................................... 116 24.2.4. The role of French Energy Agency............................................................................................................. 116 24.2.5. The role of German Ministry of Economics and Technology.......................................................................... 116 24.2.6. The role of the other EU Energy Regulators................................................................................................ 117 25. OBSTACLES TO SMART GRID DEPLOYMENT............................................................................................................. 117 25.1. The use and access of smart meters data for Smart Grid..................................................................................... 117 25.2. Unbundling rules............................................................................................................................................... 117 25.3. Regulatory, technical and commercial barriers.................................................................................................... 118 12

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION 26. PLANS FOR THE IMPLEMENTATION OF SMART GRID............................................................................................... 118 26.1. Timeframe of the implementation plan................................................................................................................ 118 26.2. Monitoring of implementation plans and projects................................................................................................. 119 26.3. Knowledge and results dissemination................................................................................................................. 120 26.3.1. Results dissemination in U.K..................................................................................................................... 120 26.3.2. Results dissemination in Germany............................................................................................................. 121 26.3.3. Results dissemination in France................................................................................................................ 121 26.3.4. Results dissemination in Italy.................................................................................................................... 121 27. COST-BENEFIT ANALYSIS FOR THE DEMONSTRATION SMART GRID PROJECTS....................................................... 121 27.1. Status of Cost-Benefit Analysis on Smart Grid EU countries.................................................................................. 121 27.1.1. Cost-Benefit Analysis levels in EU countries............................................................................................... 123 27.1.2. Benefits of Smart Grid compared to BAU.................................................................................................... 124 27.1.3. Responsibility for conducting the CBA........................................................................................................ 124 27.2. EU Guidelines for Cost-Benefit Analysis............................................................................................................... 124 27.2.1. Review and description of the project........................................................................................................ 124 27.2.2. Map of functionalities............................................................................................................................... 125 27.2.3. Map of functionalities on the benefits........................................................................................................ 125 27.2.4. Establishment of the baseline.................................................................................................................... 125 27.2.5. Monetization of benefits and identification of beneficiaries.......................................................................... 126 27.2.6. Identification and quantification of costs.................................................................................................... 126 27.2.7. Comparison of benefits and costs.............................................................................................................. 126 27.2.8. Sensitivity analysis................................................................................................................................... 126 27.3. Application of EU Guidelines for a CBA: Project Grid4EU....................................................................................... 127 27.3.1. CBA analysis and projects results.............................................................................................................. 128 27.4. Application of EU Guidelines for a CBA: Project GREEN-ME.................................................................................. 129 27.4.1. Projects economic performance................................................................................................................ 130 28. EVALUATION OF IMPLEMENTATION PLANS: PERFORMANCE INDICATORS................................................................ 131 28.1. Interconnection country capacity and electricity demand ratio.............................................................................. 132 28.2. Time for authorization of a new transmission infrastructure.................................................................................. 132 29. CONCLUSIONS OF PART III....................................................................................................................................... 133 30. REFERENCES........................................................................................................................................................... 134 13

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LIST OF FIGURES Figure 1: Distribution of budget per funding source and country for the development of SG projects in EU countries........... 21 Figure 2: Distribution of total budget per stage for the development of SG projects in EU countries................................ 22 Figure 3: Investment in SG projects across Europe divided to the electricity consumption............................................ 24 Figure 4: Investment in SG projects across Europe per capita............................................................................. 24 Figure 5: Major policy instruments to stimulate development of SG in UK............................................................... 43 Figure 6: Evolution of wind generation in France since 2005........................................................................ 51 Figure 7: Evolution of PV generation connected to ERDF grid in France since 2006.......................................... 52 Figure 8: Diagram of the different interactions between the different stakeholders of the PV........................................ 53 Figure 9: CO2 emission by kWh produced by country...................................................................................... 56 Figure 10: 1MW storage demo project in Reunion Island under Millener project (Batterie NaS sur le site de Saint André)..... 59 Figure 11: SG scheme........................................................................................................................... 61 Figure 12: Distribution of cumulated funding source for EU SG projects................................................................. 79 Figure 13: Source of funds for SG projects in Europe – year 2014....................................................................... 80 Figure 14: Single line diagram showing main components of ESS and the ESS installation as built................................ 88 Figure 15: Current Institutional arrangements in Denmark................................................................................. 103 Figure 16: Distribution of cumulated funding source for EU SG projects................................................................. 113 Figure 17: Source of funds for SG projects in Europe....................................................................................... 114 Figure 18: Timeframe for implementation of SG projects in Europe, by number of countries and percentage.................... 119 Figure 19: Results of CEER questionnaire on CBAs diffusion in EU (on SG projects)................................................... 123 Figure 20: Six European energy distributors involved in Grid4EU project and related demonstrations.............................. 128 Figure 21: GREEN-ME system architecture................................................................................................... 129 14

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REGULATION IN SMART GRIDS - BRAZIL - EUROPEAN UNION LIST OF TABLES Table 1: Performance indicators for SG analysis in the selected EU countries.................................................... 32 Table 2: Functionality of smart meters in UE countries............................................................................... 37 Table 3: TSO and DSO responsibilities.................................................................................................. 96 Table 4: Results of CEER questionnaire on CBA levels related to SG............................................................... 123 Table 5: Results of CEER questionnaire on CBAs related to SG..................................................................... 124 15

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