Des

ign,

layo

ut a

nd p

rint

prod

uctio

n: E

rik T

anch

e N

ilsse

n A

S, 0

6/20

11Pr

inte

d on

env

ironm

enta

lly f

riend

ly p

aper

.

The Smart Grid – What it is and what it is not

Research and Innovation, Position Paper 09 - 2011

Contact details:Tore Langeland – tore.langeland@dnv.com

Christopher Greiner – christopher.greiner@dnv.com

Research and Innovation in

DNV

This isDNV

The objective of strategic research is through new knowledge and services to enable long term innovation and business growth in support of the overall strategy of DNV. Such research is carried out in selected areas that are believed to be of particular signifi cance for DNV in the future. A Position Paper from DNV Research and Innovation is intended to highlight fi ndings from our research programmes.

DNV is a global provider of services for managing risk. Established in 1864, DNV is an independent foundation with the purpose of safeguarding life, property, and the environment. DNV comprises 300 offi ces in 100 countries with 9,000 employees. Our vision is to create a global impact towards ensuring a safe and sustainable future.

SummaryElectric power is a fundamental utility in modern society. Power systems today are based on technology that was mainly developed for one-way power flows from large power plants to generally passive customers at the receiving end of the network. Making grids “smarter” will help to alleviate many of the challenges that power systems are currently facing and that will occur with increasing frequency in the future, such as variable-output renewables, distributed generation, electric vehicles, under-investment in grid infrastructure, and more. Interest in Smart Grids has skyrocketed in recent years, and during the last few years the Smart Grid concept has been used and misused in a wide range of reports, studies, and news releases. Many people in the power sector/electricity business also lack a clear understanding of the Smart Grid concept.

The Smart Grid is not a new grid infrastructure. It is an integration of four essential building blocks into the existing power system. The building blocks consist of sensor systems, communication infrastructure, control units, and centralised management systems, where the centralised management systems represent the brains of the Smart Grid.

The Smart Grid refers to both the transmission grid and the distribution grid. The Smart Grid will require a combination of interoperable hardware and software components. Some of these components already exist, but there are enormous challenges to developing hardware, not to mention software, to incorporate the new Smart Grid elements with the existing grid infrastructure and control.

4

electricity networks are currently mainly based on technology that was developed for one-way energy flows from large, centralised, fully controllable power plants to more or less passive customers at the receiving end of the network (Figure 1). Electric power is a fundamental utility in modern society. The rise in variable and distributed generation, under-investment in transmission infrastructure, the increase in electric load, more power outages, and the demand for increased reliability and power quality are all fundamental drivers for the Smart Grid.

Figure 1: Structure of today’s typical power system

“Smarter” grids have the potential to assist with the integration of variable-output renewables and distributed power sources, provide high power quality to all customers, facilitate active participation of users in electricity markets, increase overall energy efficiency, facilitate mass electrification of transport, and optimize investment in grid infrastructure.

The term “Smart Grid” refers to both transmission and distribution grids, despite the different technologies that will be utilized in future “smart” transmission and distribution. Common for the two, is that there will be no fundamental change to the traditional “copper and iron” infrastructure used to transport electricity. Rather, the Smart Grid will materialize through strategic implants of monitoring, control, and communication systems, within and alongside the existing electricity grid.

The Smart Grid term is widely used and misused. Because the term encompasses a wide range of issues, providing a concise, precise definition is not simple. Indeed, the utilities themselves find it challenging to understand what the Smart Grid is all about (Berst, 2009).

DNV Research and Innovation have decided to publish this position paper in order to explain our understanding of the Smart Grid concept: what it is and what it is not. In addition, important technologies are described and also some of the risk and challenges associated with Smart Grid implementation.

Introduction

5

the DnV Definition of “Smart Grid” is inspired by the International Electrotechnical Commission (IEC) and the European Technology Platform on Smart Grids:

A Smart Grid is an electric power network that utilizes two-way communication and control-technologies to cost efficiently integrate the behaviour and actions of all users connected to it – in order to ensure an economically efficient and sustainable power system with low losses and high levels of quality, security of supply and safety.

The four essential building blocks of any “smart” tech-nology or system described by Santacana et al (2010) are shown in Figure 2. All four building blocks are necessary, but it is the control system that makes the system “smart”. A Smart Grid encompasses the existing grid infrastructure (the “copper and iron”) with the four elements presented in Figure 2 added into it.

1. A sensor system to measure the system state.2. Communication infrastructure to transmit data/

information back and forth.3. Control algorithms that analyse information and

generate control signals to alter the system state.4. Actuators that effect the desired changes.

Figure 2: The four essential building blocks of any smart technology. Based on Santacana et al (2010).

What the smart grid is

6

Figure 3 describes how the Smart Grid is actually an addition of both “hardware” and “software” technology into the existing grid infrastructure and management systems. It also shows examples of units that are aided by Smart Grid technology. As Figure 3 shows, Smart Grids represent an addition of different sensor systems, communication infrastructure, control units, and centralised management systems into the existing grid infrastructure.

The Smart Grid will require a combination of standard-based, interoperable hardware and software components. Many of the technologies already exist, but enormous challenges must be overcome in developing hardware, not to mention software, in order to integrate the Smart Grid with the existing grid infrastructure.

two-way communication control-technologies cost efficiency integration minimal losses quality security of supply safety

The Smart Grid term is often misused, mainly because its content is insufficiently understood. For rational development of the Smart Grid, it is essential that electricity sector stakeholders understand what the Smart Grid actually is - and what it is not.

Some of the confusions around the Smart Grid are listed below, based on DOE (2008) and The European Technology Platform on Smart Grids:

• The Smart Grid relates to the electricity network only (not gas) – it concerns both distribution and transmission levels.

• Smart Grids are not new “super grids”. They will not look significantly different from today’s “conventional” electricity grids, transporting and distributing power via “copper and iron” lines or cables.

• The Smart Grid will not be a revolution, but rather an evolution or a process within which electricity grids are continuously improved to meet the needs of current and future customers.

• There will not (and cannot) be any “roll-out” of Smart Grids, since such a “roll-out” will encompass a vast range of technologies and systems that must be integrated with the existing power grid, without interruption in the power supply to customers.

• Smart metering alone is not Smart Grids, but it is an integral part of realising Smart distribution grids

• Wind turbines, plug-in hybrid electric vehicles, and solar arrays are not part of the Smart Grid. Rather, the Smart Grid encompasses the technologies that enable their integration, interfacing with, and intelligently controlling, these and other devices.

7

Figure 3: Turning the existing power grid into a Smart Grid

8

A sMArt Meter is a combination of a sensor (that can measure and communicate electricity consumption in real-time), logic (that enables communication with the operator), and an actuator (that enables active control of consumer appliances). Real-time pricing of electricity consumption will provide customers with the incentive to load shift from peak to off-peak periods (demand response) and to promote energy efficiency measures.

Advanced Meter Reading (AMR) identifies in detail, and often in real-time, the electricity consumption of a house, building, or entire company.

Advanced Meter Management (AMM) is the ability to receive control signals from the operator and to switch off local electric appliances. Within 2020, direct control will predominantly be used in emergency situations to avoid blackouts. Smart meters will automatically detect and report faults, which will enable distribution grid operators to perform necessary remedial actions more quickly.

Figure 4: Difference between a “dumb” meter and a “smart” meter

Sensor systems

9

Smart Electric Vehicle Chargers will become a necessity when the quantity of electric vehicles (EVs) reaches a critical mass, due to the significant stress that charging can place on the power systems. Fast charging, in which high power is drawn in a relatively short time period, will be essential for mass commercialisation of EVs. Managing this additional load on the system will necessitate smart devices that can determine which cars should be charged, by how much, and at what time, as based on the charging state of the car battery, user inputs, and the current system load state.

The storage capacities of car batteries make them an attractive backup for the power system. Vehicle-to-grid (V2G) describes a system in which EVs communicate with the grid, either by delivering electricity back to the grid or by throttling their charging rate. Most EVs are parked for 95 % of the time and their batteries could let electricity flow from the car to the grid and back, which could be of significant value to the utility companies. However, increased charging and recharging can reduce the battery lifetime.

Phasor Measurement Units (PMU) or synchro-phasors1 measure the voltage amplitude and phase angle (the voltage “phasor”) at network buses and current phasors in transmission lines and transformers. The state of the power system is defined as a collection of positive sequence voltage phasors at all network buses (Horowitz et al, 2010). The measurements are taken many times per second and have a precise time “stamp” to within a microsecond. Measurements from multiple geographical

1 A “phasor” or phase vector is a mathematical representation of a sine wave (the form that AC voltages and currents have in AC power systems), including its amplitude and phase angle.

locations are synchronized to a common time reference using a Global Positioning Satellite (GPS) receiving clock.

Many PMU’s also provide other measurements, such as individual phase voltages and currents, harmonics, local frequency, and rate of change of frequency (Horowitz et al, 2010). Table 1 compares the performance of Supervisory Control and Data Acquisition (SCADA), which is used extensively in present power systems, with PMU systems.

Data scADA PMU

Refresh rate 2-5 seconds 0.02-0.10 seconds

Latency and skew Yes & Yes Very low & No

Compatibility “Older”

communication technology

Modern communication

technology

Behaviour Static Dynamic

Table 1: PMU versus SCADA measurements, Giri et al, (2009)

10

coMMUnicAtion technoloGy (ct) will link together all the units and control logics of the Smart Grid. One aspect is two-way connection of consumers and distribution operators, while the supply of rapid, secure, wide-area communication (in the range of ms) for transmission operators is another. Fibre optic communication transmits information by light passage through an optical fibre. Fibre optics ensures reliable, high speed communication and is important for dedicated high-speed broadband in the power industry. Wide Area Measurement Protection and Control Systems (WAMPACS) rely on fast communication, and is probably best achieved using fibre optics. Fibre optics is also increasingly installed in households and, in the future, will be used for communication between smart meters and the utilities.

Broadband over power lines (BPL) uses the existing power lines to transmit communication signals, such as broadband internet. It can also be used to network appliances within a building using in-house electricity wires.

BPL is only suited to medium and low voltage power lines, and communication using BPL requires combination with another communication technology at higher voltage levels. BPL signals cannot pass transformers without a bridge, due to the electric design of the transformers.

BPL is a good option in rural areas. However with the rate of fibre optic roll-out increasing, BPL will probably be most suitable for in-house use, networking appliances within a building and enabling measurement and switching commands from smart meters.

GSM (Global System for Mobile Communications) is a well-known and widespread technology that can also be used as a communication channel for the power grid. In Italy, GSM is used to secure communications between operation centres and substations, enabling communication with the vast number of smart meters installed. However, since GSM is a public network, security issues could be more critical. The advantages are low price and its widespread use globally.

Figure 5: Using two-way communication and control to integrate all users connected to the power grid. Visualisation by EPRI.

Communication infrastructure

11

enerGy MAnAGeMent systeMs (eMs) are systems of computer-aided tools used by power system operators to monitor, control, and optimize the performance of the power system, including generation, transmission & distribution (T&D), and consumption. Thus, the EMS represents the “brains” of the power grid (Giri et al, 2009).

Transmission Systems today employ SCADA systems as integral parts of EMS. SCADA performs the monitoring and control functions in EMS. SCADA systems are highly distributed. A SCADA control centre performs centralised monitoring and control, based on information received from remote stations. Automated or operator-driven supervisory control commands can then be sent to remote station control devices that can control local operations (Stouffer et al, 2006). Problems with SCADA include slow refresh rate, latency, and skew (see Table 1), resulting in lower accuracy and “visibility” of the power system state.

Traditional EMS applications are model-based, and thus the results are only as good as the accuracy of the model. Measurement-based applications do not suffer from this (Giri et al, 2009). The introduction of synchronized WAMPACS has already begun in several countries, including U.S., central-western Europe and the Nordic countries, China, and Russia (Chakrabarti et al, 2009). WAMPACS analyse the data transmitted from PMU’s deployed over a large portion of the power system substations and transmission lines. Data from multiple locations are synchronized to a common time reference using GPS.

Important uses of WAMPACS include state estimation and advanced real-time visualisation of power systems, real-time congestion management, stability enhancement, improved damping of inter-area oscillations, the design of advanced warning systems and adaptive protection systems, validation of system models, and analyses of the causes of blackouts (Chakrabarti et al, 2009).

Wide AreaMeasurement

Protection AndControl Systems

Information on the voltage magnitude and phase angle makes it possible to generate a single state estimate for interconnected systems, where each subsystem is under a different control centre and therefore has its own state estimator. Synchronized measurement technology can achieve significant improvements in real-time visualisation of power systems.

Control Systems

12

Figure 6 shows an example of such a display. The map colours identify the magnitude and sign of the positive sequence voltage phase angle, with respect to a centre of angle reference. Such visualisations can instantly show the quality of the prevailing system state and its distance from a normal state.

Figure 6: Example of voltage phasor contour map for the entire U.S. power system, revealing information about the power fl ows and loading conditions (Horowitz et al, 2010, © IEEE)

DISTRIBUTIOn SYSTEM MAnAGEMEnT started as simple extensions of SCADA, from the transmission system down to the distribution system. A large proportion of dispatch and system operations depend on manual and paper-based systems with little real-time network and customer data. The experience of operators is the key to safe system operation (Fan & Borlase, 2009).

Distribution grids of the future will rely heavily on advanced distribution management systems (ADM) (See Figure 7). Monitoring, control, and data acquisition will happen all the way down to the low voltage end at individual customers. Customer participation, demand response, and/or distributed generation will require more complex assessment of diurnal and annual load profi les. Fault detection and isolation will be enhanced, as will the restoration of power supply after an outage. The operator will have to perform power fl ow simulation, contingency analyses, short-circuit analyses, analysis of switching operations, and relay protection coordination more frequently and at a more detailed level. More advanced energy management systems will require the development of integration interfaces, standards, and open systems. Management of distributed real-time databases, high speed data exchange, and data security will all be essential (Fan & Borlase, 2009).

Figure 7: Visualisation of distribution management using two-way communication

13

A nUMBer of ActUAtors in the existing grid will also be part of the Smart Grid concept, including, among others, switches and circuit breakers. Here, focus will be on the new elements, including smart meters, new Flexible AC Transmission System (FACTS) devices, and energy storage units. Smart meters and Smart EV chargers act as both sensor and control equipment, and have been described earlier in this paper.

The power flow in power systems follows the laws of physics. Previously, power flow control was mainly based on mechanical devices, such as transformer tap changers and turbine governors, which have limited flexibility and speed of control. FACTS devices are high power-electronic devices that can perform control at a very high speed. Some are connected in shunt to the grid to provide reactive power and voltage control, while others are connected in series to provide control of power flow. FACTS devices provide the system operator with a measure of freedom in operating the system. FACTS devices have already been installed in many parts of the world. A Smart Grid will improve control and increase the benefits from using existing and new FACTS devices (Schavemaker & Sluis, 2008).

There are many different FACTS devices, of which the five most common are listed below. All these are based on controllable semiconductors (e.g. thyristors). • Static Var Compensator (SVC)• Static synchronous compensator (STATCOM)• Thyristor-Controlled Series Capacitor (TCSC)• Static Synchronous Series Compensator (SSSC)• Unified Power-Flow Controller (UPFC)

Distributed Energy Storage will play a vital role in future power systems. Strategically located energy storage plants could serve various purposes, including:

• Defer upgrades of lines and substation/ distribution transformers through peak load shaving.

• Balance consumption and production of electricity.• Provide islanding capabilities during grid faults by

supplying power to important loads.

Batteries have been installed at many distribution substations, particularly in Japan, but also in U.S. Most of these installations are sodium-sulphur (NaS) and lead-acid batteries. Typical power capacity is in the range of a few MW, with several hours of discharge capacity. Very recently, lithium-ion technology has also been considered and is currently being installed at several locations, including a distribution substation in Norfolk, UK and a power plant in Southern California, U.S. Several of the battery facilities interface with the power system through voltage source converters (VSCs). This enables simultaneous voltage control and control of active power balance in the grid, which is an additional advantage to current FACTS technology that primarily focuses on stabilising grid voltage.

Smaller battery facilities can be installed at low voltage level closer to the customers. An important driver is the expected drop in costs of small battery systems due to development progress and mass-production of electric car batteries. Such community level systems are currently being considered in U.S. (Nourai & Okafor, 2009).

Actuators

14

sMArt GriD Visions vary from country to country, depending on the existing grid infrastructure and the nature of future challenges and opportunities. With different visions for the Smart Grid it is natural that there are also different concepts which can be summarised as follows:

• Centralised electricity generation technologies include all large power plants connected to the transmission grid. The Smart Grid will improve the usage of ancillary services such as frequency and voltage regulation.

• Transmission issues are the responsibility of transmission system operators. Smart transmission grids will be more reliable and can be operated with much greater flexibility.

• Distribution issues concerning distribution system operators only, include development of monitoring and control as well as self restoration after faults.

• Distribution issues concerning several parties include distributed generation and storage, smart electric vehicle charging, management of energy efficiency and active consumer participation or demand response.

Deployment of Smart Grids around the world is presently limited to small projects and roll-out of smart meters in some countries. Currently no grid exists that operates as a “true” Smart Grid. Most projects receive government stimulus. Figure 8 shows the Smart Grid federal stimulus investments by country in 2010, with China at the top, closely followed by U.S. (Zpryme, 2010).

Concepts and visions

Figure 8: Top 10 Smart Grid field trials and government stimuli by 2010 (Mill. US$)

15

ThE ITALIAn-based energy company, Enel, launched the “Telegestore” project (Italian for automated meter-management solution) in 1999, following successful field trials of automatic meters using BPL. The project was completed by end of 2006, with 30 million smart meters installed. The project budget was €2.1 billion, and has resulted in Enel saving €500 million annually (SmartGridToday, 2010). According to Enel, voluntary actions by customers have led to effective peak shaving, and subsequent “valley filling”, of the aggregated system load curve (see Figure 9).

Figure 9: Impact on average load with introduction of real-time pricing in Italy.

In U.S., the Electric Power Research Institute (EPRI) has launched a 5-year collaborative initiative on Smart Grids. Several demonstrations are being conducted by EPRI together with 19 electricity utilities, with the aim of demonstrating the integration of distributed generation, energy storage, and demand response into “virtual power systems” (EPRI, 2009).

In ChInA transmission system efficiency and reliability have been in focus since the first Wide Area Measurement Protection and Control Systems (WAMPACS) were installed in 1995. By the end of 2006, more than 300 PMU had been installed at transmission substations and larger power plants at voltages between 330 and 500 kV. Data is fed to 7 regional and 6 provincial WAMPACS.

SOUTh KOREA has one of the most ambitious Smart Grid plans and aims for full deployment of Smart Grid technology by 2030. The main motivations are to increase efficiency, to reduce energy imports, and to cut greenhouse gas emissions. In December 2009, Korea Electric Power Corporation together with car manufacturers, telecommunications companies, and home appliance producers, initiated a Smart Grid pilot project on the island of Jeju. It will be up and running by mid-2011 and tested for two years (KSGI).

16

lArGe-scAle introDUction of Smart Grids will intro-duce new risks at all levels in power systems. In order to gain an understanding of relevant risks and how they can be addressed, it is valuable to know the basics of risk analysis. Generally a risk analysis consists of 5 steps addressing the following questions (See Figure 10):

1. What may go wrong? 2. How often might the critical event occur

and what consequences will result? 3. How could we improve conditions and

reduce the risk? 4. How large an investment must be made in

order to improve conditions and how large are the benefits that will result?

5. Which actions should be activated?

Implementation of Smart Grids is expected to bring along large investments in the power system sector. The key risk is that the costs of implementing the Smart Grid will outweigh the benefits. Many of the technologies that will be part of the Smart Grid are presently immature and need to climb significant learning curves. There is therefore a risk of stranded costs, due to high cost investments being made in an immature technology at a too early stage. The lack of protocols and standards for the new “smart” components means that there is a risk that investments may be made in equipment that is unable to interact with other critical components. Secure and safe IT communication and advanced software is essential for the current power system and will be significantly more important in the future Smart Grid.

Smart Grids will generate an enormous amount of real-time data that must be processed, interpreted and addressed by a number of parties spread over the power grid. Even new “unprofessional” actors (consumers) will be a part of this process. If an incorrect decision is made, or a decision is reached based on incorrect information, there is the potential risk of power outages. A cyber attack is a critical event, potentially giving unauthorized personnel access to vital power systems’ control. Each communication path used for monitoring and control is a potential attack path.

Power systems today have relatively closed communication systems, so entry points for attacks are limited. However, the number of potential entry points for cyber attacks will increase by several orders of magnitude when large-scale deployment of smart meters and other smart devices begins. Using public networks for data transfer will lower investment costs, but will also significantly increase the vulnerability of power grids to cyber attacks. The public risk picture is also important and highly uncertain. Some consumers are concerned about relinquishing control of their electricity consumption. This consumer insecurity introduces a risk for stakeholders investing in Smart Grid technology, as if the share of participants is lower than expected, the basis of the investment is undermined.

Significant challenges lie ahead before any power system can be called a true “Smart Grid”. The challenges are spread across the electricity supply chain and solving these will require a great deal of new thinking. In order to encourage the power sector to transform, work should also be directed towards changing the regulatory environment that presently does not reward utilities for adapting and promoting new technology.

Risks and Challenges

17

Figure 10: Conceptual flow in a risk analysis

18

Berst, J. Why the smart grid industry can’t talk the talk. Smart Grid News, March 5, 2009.

Chakrabarti, S. et al (2009). Measurements Get Together. IEEE Power & Energy M

EEGI (2010). The European Electricity Grid Initiative (EEGI) Roadmap 2010-18 and Detailed Implementation Plan 2010-12. Prepared by; the European Network of Transmission System Operators for Electricity (ENTSO-E), the European Distribution System Operator Association for Smart Grids (EDSO-SG), the European Commission (EC), the European Regulators’ Group for Electricity and Gas (ERGEG) and more, May 25 2010. Available: http://www.smartgrids.eu/

Enel. Digital metering – Automatic Meter Management System. Enel presentation [online]. Available: http://www.europeanenergyforum.eu/ EPRI (2009). AEP Smart Grid Demonstration Project “Virtual Power Plant Simulator (VPPS)”. Electric Power Research Institute (EPRI) Smart Grid Host-Site Project, November 2009. Available: http://smartgrid.epri.com/

Fan, J., Borlase, S. (2009). The Evolution of Distribution. IEEE Power & Energy Magazine, March/April 2009.

Giri, J., Sun, D. and Avila-Rosales, R. (2009). Wanted: A More Intelligent Grid. IEEE Power & Energy magazine, March/April agazine, January/February 2009.

Horowitz, S.H., Phadke, A.G. and Renz, B.A. (2010). The Future of Power Transmission. IEEE Power & Energy magazine, March/April 2010, pp. 34-40.

KSGI. Jeju Test-bed e-brochure. Korea Smart Grid Institute. http://www.smartgrid.or.kr/

Nourai, A., Okafor, C. (2009). A Review of 2009 Energy Storage Projects in American Electric Power. In Proceedings of the Electric Energy Storage Applications and Technologies Conference (EESAT), Seattle, Washington, USA, 4-7 October 2009.

Santacana et al (2010). Getting Smart. IEEE Power & Energy Magazine, March/April 2010.

Schavemaker, P. and Sluis, L. v. d. (2008). Electrical power system essentials. John Wiley & Sons Ltd., Chichester, West Sussex PO19 8SQ, England, 2008.Smart Grid Resource Center. Electric Power Research Institute (EPRI), U.S. Website: http://smartgrid.epri.com/

SmartGridToday (2010). Enel shares details from one of planet’s earliest smart meter projects. Online news, 23 February, 2010. Available: http://www.smartgridtoday.com/

Stouffer, K., Falco, J. and Kent, K. (2006). Guide to Supervisory Control and Data Acquisition (SCADA) and Industrial Control Systems Security. National Institute of Standards and Technology (NIST), Gaithersburg, MD, USA, September 2006.

Zpryme (2010). Smart Grid Zpryme Insights. Zpryme Research & Consulting, LLC, Austin, Texas, USA. Available: http://zpryme.com/news-room/

References

19

Det Norske VeritasNO-1322 Høvik, NorwayTel: +47 67 57 99 00

www.dnv.comD

esig

n, la

yout

and

prin

t pr

oduc

tion:

Erik

Tan

che

Nils

sen

AS,

06/

2011

Prin

ted

on e

nviro

nmen

tally

frie

ndly

pap

er.