Digitalization of electricity sector… An introduction
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The document discusses the digitalization of the electricity sector and its interplay with decentralization, highlighting two significant waves of changes in the industry. It introduces the shift from centralized utilities to multiple decentralized players and emphasizes the coordination among these entities through emerging technologies, including smart grids and aggregators. Key challenges for regulators and industry stakeholders include new coordination tasks, incentive regulations, and protections against digital power abuses and extreme natural events.
Digitalization of electricity sector… An introduction
- 1. 1 Digitalization of electricity sector… An introduction Jean-Michel Glachant, Director FSR GIZ & CRE 13 November 2018
- 2. 2 I was born analogic, not digital
- 3. Analogic world / Digital world… • -- -- -- -- Analogic (roughly) -- -- -- -- • Each type of data and device: a particular coding, storing, access, etc • Only men are universal go-between: via specialization of tasks & labour • -- -- -- -- Digital (as roughly) -- -- -- -- • All data in a similar code permitting: storing, transmitting, aggregating, disaggregating, checking, injecting into programs for analysis & decision • Instructions for devices too: Thanks A. Turing, computers & smart devices have storable & replaceable programs expressed in codes similar to data • Universal compatibility & universal access are doable: Data, devices, humans can be deeply intertwined 3
- 4. 1st wave of electricity digitalisation… Opening wholesale markets, 30 years ago • Before elec.: Markets for stocks, bonds, currency; Markets for commodities – much more convenient & more informative New-York, Chicago got mainframes, private lines & terminals, stopped being cooperatives of traders: Traceability guarantees • 1st Step: UK Electricity Pool (1 April 1990) took “Plants Merit Order Program” of integrated utility, made it “Open Merit Order” fed by each plant bids 1996, NordPool; 1997, PJM, California wholesale markets • 2nd Step: Transmission equips with new ITC to manage the system & implement market decisions Joint Wave (Wholesale Markets) <:> (Smart Grids 1.0) 4
- 5. • 2 Big Bangs (Decentralization) + (Digitalization) 1- Decentralizing “Big Bang”. Generation new technology : Wind mills by MW - PV Panels by KW Pushed by decarbonisation: EU, Maryland, California. Or not: State of Texas. New wave in Chile, Mexico. Etc. “Utility scale Wind & Solar” can be very cheap, can beat coal: India; or gas: US (And more to come: V. Sivaram -2018- Taming the Sun. Innovations to Harness Solar Energy & Power the Planet) Storage revolution (on the top) growing, challenging system operation 2- Digitalization is parallel “Big Bang”. 1st wave digitalization (“mainframes”, smart grids 1.0) supported wholesale market 2nd wave digitalization (+ new smart grids 2.0) supports new decentralization shift (S. Vadari -2018- Smart Grid Redefined. Transformation of the Electric Utility) Consumer technology shift: Aggregation. Multiple small consumption units are gathered, & become new offer entering wholesale market as “virtual units” 5 2nd wave of digitalization too is a twinning…
- 6. 6 Why are Decentralization & Digitalization so twins? 1/ Decentralization changes size & scope of assets; then their operation, & the decision making New Ownership structure for assets <:> New Operation rules for assets <:> New Governance structure for industry 2/ Digitalization changes information, control, decision making; then operation of assets, services they deliver > new decision making: New Technology frame <:Information, Control, & Decision Making:> New Operation Rules & New Services <:> New Governance structure
- 7. 7 1/ Decentralization has two children *End of single centralized Utilities; substituting multiple players **End of single centralized System Operation; substituting multiple levels of control & optimization (micro-grids; distribution grids; transmission grids) 2/ Digitalization too has two children *Arrangements outside traditional Electricity Sector regulation (as Aggregators playing with consumption, hence “Behind the Meter”) **Coordination of new ‘digitalized’ tasks within Electricity Delivery Loop >Remember 1st wave: Coordinating Transmission & Wholesale >2nd wave > Amazon “Delivery Loop” = coordinating “Distribution Grid Platform” with new actions prosumers + prosumagers + all other Behind the Meter entering the El.system
- 8. Interactions between twins: Decentralization - Digitalization
- 9. 9 Decentralization opens two streams of changes 1*Distributed Generation expands with new “Utility Scale Renewables”, + distributed Prosumers (PV or Wind PPAs) + Prosumagers (Storage) + other “Behind the Meter” (electric Cars; smart buildings) 2**While Aggregators & Platforms (2-sided markets) offer new ways of coordinating decentralized units Down to “Sharing Economy” Platforms = Peer2Peer
- 10. 10 Digitalization favors two streams of changes 1/ Playing from outside Traditional Sector: Fleets of “Behind the Meter devices” can be gathered & controlled to be managed as system smart assets >think electric car fleets; or “zero net consumption” buildings 2/ New ways of coordinating all decentralized units: thanks to Agregators & Platforms P2P; down to Blockchain networks >Blockchain network is P2P with NO intermediary, NO UBER between Peer- 2-Peer 3/ BUT WITHIN “Amazon Delivery Loop” constraint It is the needed / desired “Distribution Grid Platform” >Ignacio Perez-Arriaga “Utility of the Future” when perfectly set up (MIT Report 2016) >>New York “Distribution Platform” project (Sioshansi Fereidoon 2017; 2019)
- 11. 11 Decentralization & Digitalization can only strongly interact 1/ Because they have similar wings of change > “Behind the Meter” targets of “smart assets” >> Aggregators & Platforms P2P offering entry to the “El. Amazon Loop” delivery constraint 2/ Because both 2Ds (Decentralization & Digitalization) touch upon tasks, assets, operation, apps, integrators, platforms > Up to Governance with new types of players, as *Communities of Peers **Clubs of Partners ***Smart Local Authorities
- 12. Conclusions: key challenges for industry, consumers & prosumers, and regulators 1> New Coordination Tasks: Beyond “Utilility”+ “Behind the Meter” activities + interactions Transmission/Distribution 2> New Incentive Regulation: to favour structural business innovations & new business models <through> incentive Regulatory Frames 3> New Protections needed: a) protect individual privacy - from abuse of digital power (typical: EU new regulation; but) b) protect all industry chain - from piracy & organized crime c) protect system bones, assets & all hardware - from extreme natural events, as forest fire, flood, tornado…
- 13. 13 Muchas Gracias! Email : jean-michel.glachant@eui.eu Twitter: @JMGlachant >44 000 tweets Web site: http://fsr.eui.eu/