Nikkei Smart Cities Forum Final Oct 5

Smarter Energy for a Smarter Planet

© 2011 IBM Corporation

Building Smart Cities A global view

Matt FutchGlobal Policy Lead, IBM Energy & Utilities


Presentation Outline

Major Evolution in Electric Power Sector

Global Smart Grid deployment comparison

Smart City Design and Deployment projects

Universal challenges, unique solutions

Key global partnerships to consider

The top five platform areas of engagement

2IBM Confidential Smart Grid Adoption: Drivers & Challenges - An assessment for UK, Germany, France & Australia

Apr 9, 2023


ConsumerPower FlowPeriodic Information FlowContinuous Information Flow

Coal/Natural Gas

NuclearHydroelectric

UTILITY

TRADITIONAL

The energy and utilities value chain needs to evolve

Solar Energy Storage

Wind

Nuclear

Energy StorageHydroelectric

Solar

UTILITY

Solar

Wind

Plug-in Vehicle

Energy Storage

Wind

THE INTELLIGENT UTILITY NETWORK

Coal/Natural Gas


Our world is becoming

INSTRUMENTED

Our world is becoming

INTERCONNECTED

Virtually all things, processes, and ways of working are becoming

INTELLIGENT

Intelligence is being infused into the way the world works


With new capabilities to redefine the relationship between utilities and end-users enabling new business models

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Participatory Network

A wide variety of grid and network technology evolve to enable shared responsibility, and consumers’ strong interest in specific goals creates new markets (virtual and physical) and new product demands, which balances benefits more equally between the consumers and utilities

CONSUMERS

UTILITIES

Take advantage of variable pricing by purchasing

electricity when it’s cheapest.

Generate their own

electricity and sell it

back to the grid.

Decrease carbon emissions by choosing

clean electricity sources.

Automatically monitor the health of the grid.

Remotely sense damage to grid assets and dispatch repair crews.

Better predict demand and manage supply accordingly.


Globally, countries have different goals and regulatory environments

USA

•No centralized national level mandate. Each state has independent legislations, consequentially some are moving faster than others in smart grid implementation•States have their own renewable energy and energy efficiency targets.

Germany

•No clear national level mandate for smart meter roll out. However smart meters have been made mandatory in new buildings and renovations•Federal government is strongly committed to renewables. The National Renewables Action Plan estimates the share of RES in gross final energy consumption to be 19.6% by 2020.

China

•State Grid Corporation of China (SGCC) has laid out a three phase roadmap for smart grid roll out by 2020.•Government has set a target to achieve 15 percent of energy demand from Renewable Energy Sources (RES) and reducing the carbon intensity of it’s economy by 40 to 45 percent from a 2005 baseline by 2020.

France

•Mandatory by law to roll out smart meters covering 95% of residential and 100% of commercial & industrial customers by 2016 has been set. 35 million smart meters are expected to be installed•EU obligation of generating 23% of its electricity from RES by 2020 up 13% as compared to 2005 level

Australia

•The Council of Australian Governments (COAG) has committed to a mandated roll-out of smart meters where it can be demonstrated that benefits outweigh costs•The states of Victoria (by 2013) and New South Wales (by 2017) have mandated smart meter deployments to customers consuming less than 160Mwh per annum•Other states have been relatively slower in their progress towards smart meter deployment

• UK

• The country has more or less clear mandate for installation of 47 million smart meters, including both electricity & gas, by 2020.

• Aggressive target under EU renewable energy directive to produce 20% of energy from Renewable Energy Sources (RES) by 2020 as against 1.3% in 2005

6IBM Confidential Smart Grid: Country Perspectives - An assesment for USA, China, Australia, Germany, France and UKApr 9, 2023

Sources: MD&I Analysis,


Planning and Piloting Phase Deployment Phase Innovation Phase

China

Is likely to move ahead with wide scale deployment of mature smart grid technologies.

USA

Some states are likely to move ahead of others, however deployment activity on wider scale is not likely over next two years

UK

Over next two years smart grid piloting activity is likely to pick up but wide scale roll out unlikely

France

Nation wide smart meter roll-out imminent, however deployment of other smart grid technologies is expected to be slow

Germany

Wide scale deployment of smart grid technologies is not likely to begin until 2013

China, Australia and USA have made relatively more progress in terms of smart grid planning and piloting

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Australia

Victoria and NSW moving ahead with smart meter rollouts, however other states lagging behind

Relative assessment of smart grid market stage in key countries

NOTE: A country placed higher along the chart indicates that it has made relatively more progress in terms of its smart grid plans and vision, however it shouldn't be interpreted as higher degree of market maturity as the smart grid vision of each of these countries is different

Time


• Energy-conservation • Reducing carbon emission s• Next-generation urban infrastructure • Electric transportation systems

INDIA - Delhi-Mumbai Industrial Corridor

8 City Development AreasFeb 2011

Key spend areas

City gov’t

priority

Remarks

Urban development

eco-cities will follow the Japanese model of using industrial wastes as raw materials for other industries to create a zero emission environment

Infrastructure Smart community projects as a energy-conserving, emitting low-carbon and using next-gen urban transportation systems

Transportation (Freight)

Dedicated freight corridor to transport goods along the most important business centers and the port cities in Gujarat

Goals

• Mega infra-structure project of USD 90 billion with the financial & technical aids from Japan, covering an overall length of 1483 KMs between Delhi and Mumbai.

• This corridor will be equipped with an array of infrastructure facilities such as power facilities, rail connectivity to ports en route etc.

• Approximately 180 million people, 14 percent of the population, will be affected by the corridor’s development.

Influencers Gujarat Infrastructure Devpt.. Board, Ministry of Commerce and Industry, DMIC Apex Steering Authority

Schedule/ spend plan

• An estimated $90 to $100 billion would be required to create the infrastructure in the first phase of the project. Japanese companies are expected to invest over $10 billion in the proposed corridor during the first phase.

• Schedule: 2006-18

Potential partners

Mitsubishi, Nikken Sekkei and IBM Japan have joined hands with 3 state governments to develop eco-friendly infrastructure

HIGH

MED

DELHI-MUMBAI INDUSTRY CORRIDOR DELHI-MUMBAI INDUSTRY CORRIDOR CRTICAL INVESTMENTSCRTICAL INVESTMENTS

PRIMARY FOCUSPRIMARY FOCUS

HighLowKey:


FLORIDA - Babcock Ranch Development Profile

9 City Development AreasFeb 2011

Key spend areas

City gov’t priority

Remarks

Smart Grid Real-time monitoring and remote programming of every outlet in the house or office alows high-load appliances to operate in off-peak hours when rates are lower

Renewable energy

An array of solar panels positioned on 400 acres of sun-drenched land and atop numerous commercial buildings throughout the city.

Communication Kitson & Partners have joined forces with IBM to drive the convergence of physical and digital technologies necessary

Urban Planning Parks, trails, wellness and fitness centers will be integrated into the city’s urban scape

Goals

• South-west Florida’s city of tomorrow which aims to build a sustainable, environmentally sensitive, green community to new heights

• Babcock Ranch is the first city planned to be powered by the sun, with the majority of its electric needs generated from the largest on-site solar photovoltaic energy facility powering any city on earth.

Influencers Kitson & Partners, State govt. of Florida, Lee County

Schedule/ spend plan

Schedule•2005-16

Spend plan:•$310 mn (govt of Florida investment)•$2bn for the solar city project by FPL

Potential partners Babcock Ranch M\gmt LLC, Florida Power and Light (FPL)

LOW HIGH

Babcock Ranch – Development summaryBabcock Ranch – Development summary Critical Investments Critical Investments

PRIMARY FOCUS PRIMARY FOCUS

HighLowKey:

• Smart Grid and Intelligence • Renewable Energy • Efficiency through urban design • Reduced dependence on vehicles


IBM Internal Use Only © 2010 IBM Corporation

Enemalta and Water Services Corporations

Building a smarter energy and water system.Business challengeOn the island nation of Malta, electricity is generated entirely by imported fossil fuel, and electrically powered desalination plants provide over half its water supply. Meanwhile, rising sea levels threaten Malta’s underground freshwater source. This complex series of challenges required immediate attention to ensure that the country delivers affordable, secure energy while protecting the environment. In addition, to meet this challenge, both Enemalta and Water Services Corporations are undergoing an internal transformation process geared towards increased efficiency.

SolutionThe Maltese national power and water utilities are partnering with IBM to help their country become the first in the world to build a nationwide smart grid and a fully integrated electricity and water system. 250,000 interactive meters will monitor electricity usage in real time, set variable rates, and reward customers who consume less energy and water. Furthermore, in assisting in the transformation of both utilities, IBM is entrusted to implement a customer relationship management (CRM) and Billing solution, as well as Enterprise Resource Planning (ERP) core modules, while a new Web portal will be instilled for both utilities to better interact with their end customers.

Benefits Data from the intelligent meters can be analyzed to help lower costs, adopt

efficient and sustainable consumption patterns and cut greenhouse gas emissions By addressing water and power issues as a system citizens can make smarter

decisions about how and when they use power



SPAIN: Red Electrica de Espana

Reduces costs and carbon emissions by optimizing its power supply strategy.

The needEuropean national power system meets fluctuating demand by calculating the lowest-cost energy available at any given time. To comply with mandates of the Kyoto Protocol, utility management agency needed a more robust and flexible application for making these calculations, one that could accommodate the addition of multiple alternative energy sources as well as the increasing number of energy systems coming online.

SolutionIBM provided training and the client built a new tool for optimizing unit commitment—the process of finding and dispatching power sources at the lowest possible cost—which gives the agency the flexibility it needs to address complex variables. With an integrated development environment at its core, the tool allows planners to easily compare power generation scenarios, programs and production costs and then select the optimal demand coverage at any given time.

What makes it smarter Decreases production costs by one to two percent, a savings of between €50,000

and €100,000 per day, by accommodating complex variables in supply Lowers carbon emissions by 2.5 percent, a savings of approximately 100,000 tons

of carbon dioxide annually, by optimizing supply across a network of traditional and alternative energy generators

Encourages use of wind-generated energy by integrating alternative energy sources into the power supply optimization strategy


Infrastructure is expensive so we must show

RETURN ON INVESTMENT

Consumers must support it but need a clear

VALUE PROPOSITION

Utilities/Regulators being pushed but need new

BUSINESS RISK MODEL

To build an intelligent grid there are major challenges and potential solutions


32%

23%

27%

7%

11%

*Note: The annual benefit at Year 10 (steady state) for this illustrative utility is $605 million

$605 Million*

Demonstrate return on investment

Benefits by area for an illustrative utility More than two million customers

T&D O&M CostsReducing T&D O&M costs for maintenance, metering, field operations, restoration and call center activities

Generation CapExT&D CapEx

Reducing Generation and T&D capital investment through better asset management, voltage/VAR optimization, distribution automation and capacity forecasting

Energy CostsReduced energy cost by controlling line losses and identifying theft and other commercial losses

EnvironmentalReducing emissions through automated operations, lower energy consumption and reduced line losses

$605 Million


Bad news = 40% did not know meaning of $kWh Good news = knowledge increases support for Smart Grid


Speed of technology change

RATE CASE REFORM

Revenue erosion from reduced sales

ENERGY SERVICES MODEL

Resource planning focused on supply-side

IRP GRID ASSETS

Regulatory and Business Structures must evolve along with speed of technology, a monumental challenge



Annual Meeting - Campinas


IBM Energy and Utilities Industry

Sao Paolo, Brazil

Queanbeyan, AustraliaNew Delhi, India

San Diego, CAUSA

Houston, TX USA

Raleigh, NC USA

Washington, DC USA

Copenhagen, Denmark

Paris, France

The Global Intelligent Utility Network Coalition: advancing smart grid progress for over 150 million consumers around the world

Dallas, TX USA

Arnhem, The Netherlands

Seoul, South Korea

Tokyo, Japan

Coalition Focus

Knowledge Transfer Joint DevelopmentInfluence the Marketplace

The mission of the coalition is to shape, accelerate, and share in the development of the Intelligent Utility Network (IUN) or smart grid

The Coalition’s purpose is to collaborate on best practices, work together to influence the market, and jointly develop to progress the industry

The Coalition is currently comprised of 13 members from 9 countries, representing over 150 million consumers worldwide

A key benefit of the coalition is it reduces regulatory, financial, market and implementation risk for both coalition members and IBM

The organization is built through IBM’s strategic partnerships with member clients.

About

The GIUNC was formed by IBM in response to client interest in understanding how other utilities were working through the challenge of smart grid transformation



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Societal and Environmental

Technology

Information, engineering, integration of information and operational technology, standards, and business analytics tools

Conservation and green initiatives, sustainability, economics and ability to integrate alternative and distributed energy

People and Technology Domains

Strategy, Management and Regulatory

Organization

Vision, planning, decision making, strategy execution and discipline, regulatory, investment process

.

Communications, culture, structure

Work and Asset Management

Grid Operations

Value Chain Integration

Customer Management and Experience

Optimizing the assets and resources (people and equipment)

Advanced grid observability & advanced grid control, quality and reliability

Enabling demand and supply management, distributed generation, load management, leveraging market opportunities

Retail, customer care, pricing options and control, advanced services and visibility into utilization quality, and performance

Process Domains

1

2

4

7

5

6

8

The Global IUN Coalition developed the Smart Grid Maturity Model to be used as a blueprint for smart infrastructure transformation


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22

The Global Smart Grid Federation was established in April 2010 to bring together Smart Grid initiatives from around the world. Over the past several years, various countries have initiated projects and programs to explore the potential of the new generation of information- and communication-based technologies emerging across the power sector.

The Global Smart Grid Federation was formed to:

Facilitate the collaboration from around the world to conduct and foster research in the application of Smart Grid technologies

Support rapid implementation of Smart Grid technologies by establishing itself as the global center for competency on Smart Grid technologies and policy issues

Foster the international exchange of ideas and best practices on energy issues, including reliability, efficiency, security, and climate change

Create avenues for dialogue and cooperation between the public and private sectors in countries around the world on issues relating to the deployment of Smart Grid technologies.

The Global Smart Grid Federation


The five tiers to building a strong smart grid platform

Develop a Consumer Education Plan Early

Adopt or Establish Interoperability Standards

Create Regulatory & Financial Incentives for Investments

Establish Clear and Robust Data Privacy and Security rules

Create Long Term Roadmap with Articulated Objectives


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ありがとう * شكرا * 謝謝 * Merci * Danke * शु�क्रि�या� * תודה * terima kasih * با تشکر از شما Thank you * gracias * tack * ہآپ کا شکری * σας ευχαριστώ * спасибо * gratias agimus tibi

Matt Futch, Global Policy LeadIBM Energy & [email protected] 303-638-9412

Nikkei Smart Cities Forum Final Oct 5

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