Executive Summary - Smart Grid

Smart Grids
The Power Grid of Tomorrow
An Extract

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Smart Grids. The Power Grid of Tomorrow – An Extract

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”.

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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

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The EnergyLab Foundation was founded in The Scientific Members
Milan in 2007 with the goal of creating a
network of actors in the energy field Università Commerciale “L. Bocconi”
including universities, the business world Università degli Studi di Milano Bicocca
and regional and local government. It is a Università Cattolica del Sacro Cuore
non-profit organization whose members Politecnico di Milano
Università degli Studi di Milano
include Milan’s 5 major universities. The
RSE – Ricerca sul Sistema Energetico
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.

To Contact Us:

The EnergyLab Foundation
Piazza Trento, 13
20135 Milan (Italy)
Phone +39 02 7720.5265
Fax +39 02 7720.5060
info@energylabfoundation.org
www.energylabfoundation.org

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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
Preface commercial distribution networks of the
An “innovation storm” for the entire world’s biggest automobile manufacturers
electricity system are going to introduce into the market
by Luca Lo Schiavo1 plug-in electric vehicles that will result in
new loads for the electricity network. At
The European targets of producing a the moment, from the point of view of
greater quantity of electricity from the amount of power that will be
renewable sources, increasing energy absorbed, these loads remain extremely
efficiency and reducing emissions of difficult to predict, even though in all
climate-altering gases (the so-called “20- probability they will be fairly limited vis-à-
20-20 by 2020” package) entail – in order vis the total demand for energy and in
for these goals to be actually achieved - a any case very efficient in terms of the
very substantial change both for overall quantity of primary energy used
European electricity networks in general for individual mobility compared with
and Italian networks in particular. traditional vehicles with internal
And nor is that all. In addition to the combustion engines.
modifications in network design and What is involved, then, has three facets:
management necessary to allow for a the development of distributed generation
and its consequential integration -
notwithstanding its traditional reputation
1
The Executive Office of the Autorità per l’Energia
for being made up of sources that are not
Elettrica e il Gas (Regulatory Authority for
Electricity and Gas). The opinions expressed in amenable to programming - not only into
this preface are the personal opinions of the distribution networks but also into the
author. They do not represent the official
positions of the Electricity and Gas Authority and electricity market thanks to the
do not commit it to any course of action in the development of advanced forecasting
future.
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technologies and models; the widespread invest the entire electricity system. From
adoption at the European level of smart this point of view, one could even argue
metering (an area in which Italy is a that smart grids run the risk of being a
global frontrunner) and the opportunities misleading brand, given that what is
this offers to end-users as well as new required are not (just) intelligent
market subjects such as demand networks but (also, and above all)
aggregators capable of commercialising network users capable of exploiting the
demand-response services; and, lastly, in opportunities that the technological
a by-now imminent future, electric innovation makes available, appropriately
vehicles driven by “mobile electricity adapting their own production and
consumers”, not just furnished with the consumption plants. In short, this
freedom to chose their own supplier, just impending “innovation storm” does not
like the more traditional “fixed electricity stop at smart grids but rather goes right
consumer”, but also protagonists bearing to the very heart of the electricity system.
a new need: access to recharging Indeed, it would be much more accurate
facilities not only in private locations like to speak of a “smart power system”.
the garages of family homes and There is no doubt that the role of the
company premises but also in public enabling technology for this new smart
places or at least in places open to the power system will be played by
public. Thus, the challenges for the information and communications
electricity networks of the future are truly technology (ICT) but equally clear is the
immense, so much so that a recent study fact that the developments in technical
in Britain (the LENS project - Long-term regulation will be just as important not
Electricity Network Scenarios) conducted just in the traditional sector of
on behalf of the Office of the Gas and electrotechnics (handled at the European
Electricity Markets (OFGEM, the British level by European Committee for
regulatory authority) has defined as Electrotechnical Standardisation
“unprecedented” the degree of innovation (CENELEC)) but also, and to a more
that electricity systems will either have to decisive extent for the success of the
face up to in the very near future or that changes taking place, in the
they are in fact already in part communications applications to be put in
experiencing. In this phase of massive place (to be based on standard protocols
and in part unpredictable innovation the and hence of an open and non-
role of regulatory authorities will be proprietary type) to guide the definition
crucial not only in order to furnish the of technological solutions in such a way
correct stimuli for investment in smart as to leave the market as free as possible
grids but also – as is correctly suggested and to minimise the costs and
in this book in the chapter dedicated to technological complexities that users of
regulation – in order to adjust all those the intelligent network will have to
regulatory frameworks that have anything confront.
to do with this out-and-out “storm of
innovation” that is very shortly going to

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In view of these considerations it is constitute a problem, given that such
important to make clear that the applications do not require any
transition towards a smart power system interaction with active and passive
goes well beyond the phase of network users.
automating the networks, a phase that But the real benefits of incorporating an
has already been set in motion in Italy ICT layer into an electricity system can be
over the last decade by distribution obtained only if the end-users too, both
companies as a consequence of the those that immit power and those that
encouragement provided by a regulatory extract it, are connected up with this
framework incentivating service quality. 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
In certain respects this phase has already hand, there are no practices or
involved the adoption of very advanced requirements on the part of network
solutions, ranging from the widespread managers that result in complications or
use of HV-MV transformer automated costs for network users that are not
control to the automatic search and strictly necessary and that, on the other
identification of malfunctions. In fact, if hand, the users of the network respect
the problem consisted only in the the technical stipulations necessary for
automation of the network, non- the correct working of the network. In
proprietary communications protocols this regard it is worth noting the work
(like those used up to now by the major that the Electricity and Gas Authority has
distribution companies) would not carried out over the past few years to

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eliminate the great variety of technical nonetheless well worth mentioning some
stipulations used by the various of the reasons that have led the authority
distributors – particularly well-known to move in this direction.
were the norms of the “DK” series In the first place, it is necessary to recall
implemented by Enel distribuzione (ENEL that starting out from 2004, i.e.
Distribution) – and to replace them with a immediately after the major blackout that
single set of technical connection rules struck the Italian electricity system in
defined by the authority on the basis of September 2003, the Electricity and Gas
the technical work carried out by the Authority progressively introduced a
Comitato Elettrotecnico Italiano (the series of feed-in-tariffs to promote
Italian Electrotechnics Committee, the “strategic” investments in electricity
national organ for standardisation) in networks (subsequently these were
collaboration with the offices of the extended to gas networks as well). In a
regulatory authority itself together with second phase of regulating electricity
various independent technicians (the so- networks, the so-called 2nd Regulatory
called Norma CEI 0-16). This project has Period (2004 – 2007), these incentives –
already been completed for high and which take the form of an increase in the
medium voltage distribution networks, weighted average cost of capital (WACC)
whereas it is still underway – but should - were initially limited to investments
be completed very shortly, certainly provided for by the Piano di sviluppo della
before the end of 2011 – for low voltage rete di trasmissione nazionale (RTN)
networks. In fact, the work that the (Development Plan for the National
authority has requested the CEI to Transmission Network) but by the 3rd
conduct on these latter networks is by Regulatory Period (2008 – 2011) they
now more or less complete (the new were also extended to a certain number
norms for low voltage networks should go of special investments in distribution
under the name CEI 0-21). networks, including experimental projects
Apropos of the need for open protocols in in the area of “active networks”. The
smart grids and in particular the need to underlying idea has been that some
avoid generating unnecessary costs for investments are not adequately promoted
network users, it should to be underlined by output-based incentives relating to
that among the requirements necessary service quality parameters (SAIDI and
to have access to the incentives provided SAIFI+MAIFI) but that these nonetheless
for by the Electricity and Gas Authority’s warrant attention in that their failure to
Resolution ARG/elt 39/10 in respect of materialise could act as an obstacle to
pilot projects in the field of smart grids is innovation or damage consumers.
that of the use of public domain In the second place, it is by now a well-
communications protocols. Even though established principle that electricity
the concrete results that the authority’s systems need to evolve in the direction of
decision has had in Italy to stimulate a management of an active type. This
experimental smart grid projects are evolution is necessary in order to achieve
extensively described in this book, it is a number of important objectives,

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including the following (in order of the long period/an annual period an inversion
urgency of the need): of the flow of power from medium to high
an increased possibility of connecting up voltage in consequence of the surplus
units of distributed generation, power/an excessive amount of power
guaranteeing a better contribution (today introduced by distributed generation in
absent or negative) on the part of such respect of/compared with the load in that
units to the security of the overall fraction of time. This focus on problems
electricity system; deriving from flow inversion in the
the introduction of techniques of load context of the existing system of
control on the part of the system; protections finds its roots in its turn in the
the introduction of greater opportunities studies commissioned by the authority
for end-users (in the future also mobile from the Politecnico di Milano between
end-users) to participate in the electricity 2006 and 2008, the results of which were
market by way of making use of published as Appendix B of Resolution
electronically conveyed information in ARG/elt 25/09 (in Chapter 3 of this book
relation to prices. a detailed explanation is provided of
All these objectives can be realised only these research results and their partial
by way of introducing suitable extension to LV, as illustrated in this case
communications systems that will bring to in the Appendix to Resolution ARG/elt
completion existing electricity networks. 223/10). Basically, the idea was to
In a very simplistic manner it is possible confront the major problems already in
to describe this evolution by saying that part evident by selecting pilot projects for
distribution networks must to some the “smartisation” of medium voltage
extent resemble transmission networks. distribution networks in contexts where
In Italy for many years now the latter the penetration of distributed generation
have been completely automated and had already reached levels such as to
subject to control as well as furnished require new technologies and new
with communications systems capable of techniques for the “active” management
exchanging appropriate electronic signals of the networks and to do this with an
with network users. adequate degree of involvement on the
The necessary gradualness of the action part of the users of the networks (all the
to be taken has led operators to focus while, as has already been explained,
attention (since as early as 2007, in the limiting as much as possible the costs of
form of the Electricity and Gas Authority’s modifying the plants of active and passive
Resolution 348/07) on “medium voltage users by way of using standard and non-
active networks”. This concern later proprietary communications protocols).
found expression in the determination, It is important to underline that these
formalised in the authority’s Resolution experimental projects, although of limited
ARG/elt 39/10, to limit the pilot projects dimensions, are moving in the same
eligible for incentives to MV distribution direction that is being pursued by the
networks in which there occurs for at European Commission with its recent
least 1% of a given year/a given year- industrial initiative the European

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Electricity Grid Initiative (EEGI) put in to the size of the network as opposed to
place by the Directorate-General for its smartisation.
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 From a more long-term point of view, it
and Gas (ERGEG), published in July 2010 will eventually be necessary to extend the
and frequently referred to in this book. process of smartisation to LV networks, to
This publication also discusses the reason which much larger numbers of users are
why the Electricity and Gas Authority connected. So far as these networks are
introduced the reference to medium concerned, the fundamental challenge in
voltage (MV: 1-35 kV) as an essential Italy is to take as much advantage as
requirement for the pilot smart grid possible from the investments that have
projects to be selected for admission to already been made in smart metering. To
the special fedd-in-tariff programme this end the Electricity and Gas Authority
consisting in an increase in the WACC of has made it obligatory to use bihourly
2% for a period of 12 years. In fact, energy prices in respect of all users. This
three quarters of the renewable energy requirement has been in place for
produced in Italy is generated on MV domestic users since 1st July 2010 and
networks. The problem of integrating will by fully phased-in by the end of 2011.
massive quantities of power generated by What is involved is probably the biggest
renewable sources – a process likely to experiment in the world of differentiated
be characterised by “intermittent prices on the basis of the time of use.
immission”, which may provoke excessive The authority intends to monitor the
variations in voltage along transmission effect of this experiment very carefully,
lines – arises prevalently in relation to taking advantage amongst other things of
medium voltage networks. By contrast, so the financial assistance furnished by
far as high voltage networks are Ricerca di sistema. The aim of the
concerned (at least at the national level), initiative is to introduce electricity prices
technologies for the remote control of that reflect costs (cost-reflectivity) in such
production plants are already available. a way as to furnish users – and,
The problems present in high voltage indirectly, the makers of electrical
networks in some parts of Italy need to appliances – with information as to the
be related back more than anything else economic value of the consumer choices
that are made. The Italian smart
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metering system constitutes the only objects, something which, for that
system in the world catering for 30 matter, is not even necessary for the
million users. In fact, this unique objectives that guided the decision to
opportunity to operate in the field on develop remote control meters towards
such a vast scale has made us the envy the end of what we might now refer to as
of the rest of the world. Great interest “last century”. The principal objectives at
has been provoked, for example, by the the time were: to read data on
decisions the authority has taken in consumption at a distance - be it
relation to the passage to the regime of periodically or on request - for one-off
an obligatory bi-hourly price for clients (a operations, for example, in the event of a
service offering a greater degree of user switching from one supplier to
protection) or in relation to the use of the another; and to remotely control
capabilities of electronic meters to furnish operations like connecting and
a minimal, indispensable service even in disconnecting the power supply or setting
the event of a failure on the part of the maximum amount of power available.
domestic electricity consumers to meet Turning our attention towards the future,
payment requirements (the management a connection between an electronic meter
of failure to pay/late payment). The and Internet, for example, would make it
authority has chosen to follow the possible to offer real-time services that
strategy of extracting the highest possible are not yet available. It is quite
value from the investment in electronic legitimate, then, to laud the
meters. This investment is being foresightedness of the people who
recuperated by way of an increase in the gambled on the introduction of remote
component of tariffs corresponding to control meters. It is no less legitimate,
capital investment. By the same token, however, to begin to work on the second
however, the initial investment has generation of meters (the Electricity and
already made it possible to render more Gas Authority has fixed a useful technical-
exacting the efficiency factor (the X economic life of 15 years for the current
factor) which governs the reduction of electronic meters, and we are by now
the operating costs of distribution well into the second half of this period),
companies according to the logic of a identifying new services that might
price cap, introduced in Italy by the law benefit users and deriving from these the
establishing the Electricity and Gas technical characteristics that the new
Authority (Law No. 481/95). meters will require (in line with a model
There is little doubt that, if someone were that makes use of the Quality Function
to design a smart metering system today, Deployment Methodology).
they might well make choices different to The vigorous encouragement that the
those that were made some 10 or more European Commission has given to the
years ago in Italy. The configuration of spread of smart metering systems in EU
the system of remote control that is member countries both by way of the
currently in place does not provide for a norms contained in the so-called “3rd
real real-time control of the end-point Energy Package” and by way of the

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emission of mandate M/441 to the assume the contours of an out-and-out
European standardisation organisms change of paradigm. The current studies
(CEN, CENELEC and ETSI) has recently in nanotechnology could well lead to the
provoked an important change in the development of industrial applications in
direction of the opening of systems for the accumulation of energy
communications protocols: the such as to provoke a total change in the
establishment of the consortium Meters composition of the stock of road-bound
and More, which has made possible the vehicles in the course of just a few
disclosure of the communications protocol decades. The increase, on the one hand,
used in the major European initiatives in of the capacity of on-board vehicle
the area of the remote control batteries – all the time maintaining their
management of low voltage meters (in high performance and limited size - and
Italy, with Enel distribuzione, and in the reduction, on the other, of recharging
Spain, with Endesa). The availability of times to times that are compatible with a
this protocol in a non-proprietary form brief stay at an electric car power station
will constitute an important step towards (without, then, having to effect a long
the possibility of home and building stop-over to recharge the battery but
automation, which, as has been only a brief stop) are the two factors
demonstrated by the most successful which will determine the speed of the
initiatives up to date especially in the electric mobility revolution.
United States, lie at the basis of energy The perspective within which to correctly
saving in the domestic use of electricity. frame the “innovation storm” that is
Distributed generation and smart about to hit the electricity sector, then, is
metering, then, are two key factors in the more general. It does not relate just to
evolution of electricity networks towards electricity networks in the strict sense but
smart grids. This evolution, however, is rather invests the entire system, including
going to intersect with other crucial the end uses of energy, not least those
developments such as energy efficiency that as of today are not yet practised
in respect of end uses and most other than in a extremely limited manner,
importantly the electrification of individual such as electric mobility (individual and
transport. Since these themes are the commercial).
object of other parallel initiatives It is to be hoped (and realising this hope
currently being undertaken by Fondazione is the job of the regulator) that the whole
EnergyLab, they are dealt with only evolution of this process, destined to
partially in this book. unfold over a very extended period of
The future that awaits us is a future with time, unerringly attributes a central role
more electricity and less primary energy. to the end-user of the system. The need
The electrification of individual transport for a user-centric approach was, for that
in particular (i.e. road-bound vehicles) matter, the principal methodological
will bring with it over the next few recommendation advanced by the
decades a change in the logic of energy European Association of Energy
consumption which will in all probability Regulators (ERGEG) in its consultation

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document on smart grids published at the guaranteeing a high level of security and
end of 2009. This approach must remain reliability in the overall system, are also
the cornerstone not only of the action of able to deal with the many problems tied to
the independent energy regulation the management of distributed generation,
authorities of the various EU member to the possibility of controlling loads, to the
states but also of the network operators promotion of energy efficiency and to a
that are planning investments and the greater involvement of active and passive
various market actors who – thanks to a end-users, not least in respect of the
electricity market.
network that is more open, more efficient
This transformation, which involves the
in furnishing services and better equipped
entire electricity system, does not seem to
with “intelligent” technology – will be able
have either a definite form or precise
to obtain economic and environmental
confines. Today it is no longer enough just
benefits superior to the admittedly
to satisfy the growing demand for
substantial costs that are necessary in
electricity (which up to now has always
order to confront the upcoming “storm of been the principal, if not only, objective of
innovation” with the right combination of electricity networks); it is also necessary to
vision towards the future and respond to new needs not confined – and
responsibility in relation to the existing above all not amenable to satisfaction –
service. 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)”.
Introduction The challenge, then, is immense and by
by Maurizio Delfanti and Andrea Silvestri now very much present. Ideas on the
subject, however, are still rather confused
– and not just in relation to the more
After the revolution that led from vertically
technical or detailed matters. In fact,
integrated utilities to a management on the
although smart grids have been at the
basis of market models, electricity systems
centre of debate on electricity systems for a
in the majority of both European and non-
number of years, it is still difficult at the
European countries are currently passing
present time even to identify a single and
through a new phase of transition. A
generally accepted definition. Instead, it
rethinking is taking place of the best way to
seems easier from one moment to the next
manage networks, especially distribution
and depending on the context to place the
networks, which need to pass from a
emphasis on some specific point, with the
“passive” to an “active” mode. This
risk, however – and this is the real danger -
evolution (with technical implications of
of generating still more confusion.
unprecedented complexity) is referred to at
the international level by way of the
The result has been the spread of an
expression “smart grid”. This term alludes
excessively trusting approach: thanks to
to highly innovative structures and
smart grids, a valid solution for every
operating modalities which, as well as
national context (from the most advanced
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countries like those of Europe to developing and to its management and control.
countries) and to be implemented in its Distributed generation is in fact the only
entirety (from transmission networks to low way possible to reach the goals of an
voltage networks), it will be possible to increase in the production of electricity
solve every problem in the electricity from renewable sources and a reduction in
sector, from the limited efficiency of the the emission of climate-altering gases, key
markets to the improvement of service components of the so-called “20-20-20 by
quality for end-users, obviously entrusting 2020” package. This reading is born out
a determining role in the exercise to a further by an important initiative promoted
vaguely defined research activity. by the European Commission, the NER300
This book by The EnergyLab Foundation Call for Proposals, which defines among
has been conceived with the aim of other things the criteria and the parameters
providing a more concrete and technical for the funding of three pilot projects for
vision of the evolution underway and of its the management of decentralised
real underlying causes. Obviously, it runs renewable energies (smart grids).
the risk – a risk that we have taken on According to this call for proposals, the
quite deliberately – of providing only a increase and development of renewable
partial vision of the problem. In order to energy sources (RESs) connected to the
achieve our aim it has been necessary to network represents the principal benefit to
narrow the focus down from the be expected from smart grids. In other
international context to a European one words, smart grids are indispensable in
and ultimately to the case of Italy and that order to enable the inclusion or better the
of a specific Italian region. But it has also real integration of renewable energy
been necessary to examine the various sets sources into the electricity sector.
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 At a national level too recent regulatory
be found in the development of distributed provisions (both on the part of the
generation. There is an urgent need to Electricity and Gas Authority and the
connect up the rapidly growing number of relevant government departments) have
distributed generation units, guaranteeing a confirmed this link: smart grids in Italy are
real contribution on their part to the destined to develop in close connection
security of the overall electricity system with distributed generation.
(today, in fact, non-existent or negative)
14


But the European goals for 2020 also massive presence of distributed generation
necessitate the active involvement of the on distribution networks.
end-users of energy networks. Over the But what are the major problem areas for
long-term, then, it will be necessary to Italy and what are the priorities and time
introduce greater opportunities for such scales that have been fixed up to now to
end-users (in the future quite probably confront them? Still in terms of the specific
“mobile” as well, in the form of owners of guidelines cited above, the authors of the
electric vehicles) to have access to and book have succeeded in drawing out from
make use of electronic conveyed the pathway traced out by the Regulatory
information in regard to price/the market Authority for Electricity and Gas a range of
(demand response), for example, by way of highly illuminating perspectives. As Luca Lo
implementing intelligent meters (smart Schiavo has clearly pointed out in his
meters, which not by chance are preface to the book, attention has first
extensively discussed in this book). been focused on the problems deriving
from the massive presence of distributed
The focus of the book then narrows down generation on distribution networks,
to concentrate on the Italian context. This, especially in the medium voltage (MV)
however, does not by any means constitute sector. Distributed generation on medium
a reductive choice, for it so happens that (and low) voltage networks brings with it a
Italy is at the very forefront of number of significant problems, principally
developments in the field. This position of tied to the inversion of flow and to the
pre-eminence has come about thanks to performance of the systems of protection
the initiatives that were taken some time that cater for active users. The Electricity
ago by the relevant operators. A number of and Gas Authority’s Resolution ARG/elt
examples might be cited: the project 39/10 has traced out a possible evolution in
Telegestore, for example, boldly conceived distribution networks - in particular in those
of by ENEL and to date the only initiative of that are characterised by a significant
its kind on such a vast scale in the entire amount of distributed generation (inversion
world; or the overall conception and of flow in 1% of annual working hours) -
development of the transmission network, towards an active mode.
today unified under the ownership of By pursuing this logical path - limiting
Terna; or, finally, (and most importantly attention to Italy (an extremely significant
from a long-term point of view) the case at an international level) and
courageous regulatory policies set in place establishing a temporal horizon of just a
by the policy-makers of the time. Smart few years - it has been possible to
metering distributed on a mass scale and a delineate in this study (fruit of the
modern transmission network (which might collaboration of a wide range of highly
already be classed as “smart”) are in our qualified experts in the field) a highly
view the major distinguishing features of plausible future evolutionary trajectory for
the Italian case in the European context. smart grids.
On the basis of these considerations, it is This, then, is the principle objective of this
reasonable to claim that in Italy the book: to investigate and to trace out in a
principal driver in the direction of active concrete and clearly defined manner the
networks is constituted today by the future prospects for the evolution of smart
15


grids in a strictly Italian context and to do order for the newly implemented
so not only at the level of research, technologies (in particular in the field of
identifying problems and possible solutions ICT) to make it possible to overcome the
both of a technical and regulatory nature, current limitations of smart grids and make
but also at a more practical level, provision for their concrete and full
describing the pilot projects currently development - all the while maintaining at
underway and the benefits that are a high level the security and reliability of
expected to derive from them. the overall system - it is necessary for there
In keeping with what has just been said, to take place a parallel evolution in both
the sequence of the six chapters of which the regulatory framework (with implications
the book is made up (and the structure essentially at the national level) and the
with which they are dealt with) can be seen normative framework (of a technical
from two points of view: nature, with not just national but also
• in relation to the geographical context international implications).
(from international/European to
national, even up to the specific case of So far as the modification of the regulatory
an experiment currently taking place in framework is concerned, Chapter 2
Milan in the Region of Lombardy); investigates the national and international
• in relation to future time horizons (from scene with a view to identifying and
long-term evolutions to the time span distinguishing between those areas not
on the national level of the next few covered by any regulatory provisions at all
years, even down to that of initiatives in and those covered by regulations, norms
the field that have already got and requirements that could prove to be no
underway). longer valid in the context of a distribution
Underpinned by this interpretative network (especially a MV network) that is
framework, Chapter 1, an introduction to evolving into a smart grid. In fact, it is
the entire study, illustrates the fundamental vitally important to analyse all the system
features of smart grids. After listing a series conditions that it is necessary to put in
of factors that are leading to their place in order that investment in smart
increasingly extensive implementation in technologies can effectively give play to its
the electricity systems of various European full potential. In this chapter the authors
and non-European countries, the authors discuss the conditions under which it is
offer a definition of smart grids capable of possible to manage in a “smart” way first
effectively establishing their peculiarities the supply and then the demand for
and objectives even over the very long electricity at the level of the market, the
term. These objectives are then explicated purchase/sale of energy and power delivery
in terms of the functions that smart grids services, referring in particular to the role
make available. A description is provided that distribution companies will have to
not just of the services, solutions and assume in the future and paying special
support infrastructures that smart grids attention to the national context, i.e.
offer but also of the principle actors offering a specific treatment of the
involved in the revolution underway, from regulatory framework in Italy in relation to
the suppliers of the services to the subjects distributed generation and the incentives
who are expected to benefit from them. In
16


provided for to support pilot projects on
active networks. As of today these technologies, often
Still in relation to the Italian context but referred to by way of the acronym ICT and
with particular reference to the modification extensively discussed in Chapter 4,
of the technical-regulatory framework, represent the only approach capable of
Chapter 3 describes in a detailed manner resolving the new problems associated with
the impact of distributed generation on the energy networks. In fact, it is only by way
overall electricity system and in particular of an intelligent use of communications
on Italian distribution networks. In fact, systems that it will be possible to overcome
although the incentives and the policies in the current limitations of distributed
support of RESs will make it possible – generation and make provision for a real
albeit in a manner that falls short of an and substantial increase in its contribution
ideal solution – to reach the “20-20-20 by to the electricity system, all the while
2020” objectives a few years ahead of maintaining at a high level the degree of
schedule, there is a need for the networks security and reliability of the system as a
to be able to cope with this increasing whole as well as the quality of service
quantity of energy. Through an analysis of offered to users. In the course of this
hosting capacity, effected on a very chapter, then, the authors offer a
extensive sample of MV networks, the description of all the communications
authors of this chapter have been able to technologies that can immediately be
determine that the most severe limits to applied to monitor, control and co-ordinate
the amount of power that can be installed electricity networks. In addition, an
depend on a set of phenomena (voltage illustration is provided of some possible
regulation, problems tied to interface future forms of interaction between the two
protections, thermal limits on lines) that are systems, with particular attention to smart
all related to the question of power flow metering, a key element - over the long
inversion. This factor, in fact, constitutes term - of the new architecture, capable of
the principle indicator of “activity” on actively involving the end-user in the
networks. Because of this it will be management of the smart grid.
necessary in the near future to develop In order to achieve real progress in the
technologies and solutions that make it direction of the networks of the future, all
possible to implement smart grid possible solutions need to be tested on real
prototypes based of the use of networks with both end-users and active
communications technology. 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
17


electricity system particular types of RES particular the Region of Lombardy) and on
plants, to programmes to promote the an immediate temporal horizon (the years
spread of smart metering and energy between now and 2015), the protagonists
efficiency. The scale of these initiatives of the project Milano Wi-Power, developed
varies widely. Some involve industry in collaboration with A2A, are implementing
subjects, operators and research directly in the field solutions to the most
institutions at a global as well as national urgent problems provoked by the
level (extensively dealt with in Chapter 5); penetration of distributed generation in
others, instead, are more limited in their Italian distribution networks. The evolution
scope but very significant numerically even proposed consists in a new network
though they relate just to the Italian automation system furnished with a
context. In fact, it is for this reason that it suitable channel of communication between
was decided to offer an account of a the the DSO Primary Cabin protections and
specific initiative underway in Milan in the the units of distributed generation that
Region of Lombardy (Chapter 6). pertain to it with a view to resolving a
Thus, in the course of Chapter 5 the series of problems relating to flow inversion
authors describe a number of the major and in particular to the current interface
initiatives in the field of smart grids, protection systems of active users and
following a logical order that gradually thereby allowing for an immediate increase
shifts towards focusing on the Italian in distributed generation in view of the
context. future development of smart grids. But
Attention is first directed towards initiatives here too we trust that in capturing the
of a broader international character, with detail we have not lost sight of the overall
an analysis of the principal projects picture. In fact, the in-principle solutions
underway outside Europe, and then, the demonstrated with reference to this
perspective being narrowed down to the particular case (the project focusing on
continental scene, an account is given of Milan) are in the process of being
the various initiatives promoted or financed incorporated into many of the smart grid
by the European Commission, be it either initiatives that the Electricity and Gas
those in the ambit of research institutes or Authority has recently (February 2011)
those that involve the direct participation of recognised as being eligible for inclusion
European distribution system operators under the incentivation measures provided
(DSOs) and transmission system operators for by the above-mentioned Resolution
(TSOs). Finally, a description is given of the 39/10.
Italian scene, which is without doubt at the Let us conclude this introduction with a
very forefront of the energy revolution. caveat. We have endeavoured to provide in
Following this path, we arrive finally at the a simple and direct manner a certain
last chapter. In this the authors offer a number of instruments that might prove
detailed description of a specific project, helpful to understand the new frontier of
endeavouring to illustrate the ideas and smart grids. What is involved, however, is a
principles in question in terms of real and frontier beyond which it is already possible
concrete actions and solutions. to see an infinite number of possibilities still
Focusing its attention on a specific waiting to be explored. Even more, at the
geographical context (Italy, and in very moment in which this book is being
18


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.

19


info@energylabfoundation.org

www.energylabfoundation.org

20

Executive Summary - Smart Grid

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