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SMART GRIDS and RENEWABLES: a Guide for Effective Deployment TABLE of CONTENTS

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SMART GRIDS and RENEWABLES: a Guide for Effective Deployment TABLE of CONTENTS IRENA International Renewable Energy Agency SMART GRIDS AND RENEWABLES A Guide for Effective Deployment Working Paper Working November 2013 Copyright © IRENA 2013 Unless otherwise indicated, material in this publication may be used freely, shared or reprinted, so long as IRENA is acknowledged as the source. About IRENA The International Renewable Energy Agency (IRENA) is an intergovernmental organisation that supports countries in their transition to a sustainable energy future, and serves as the principal platform for international cooperation, a centre of excel- lence, and a repository of policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy in the pursuit of sustainable development, energy access, energy security and low-carbon eco- nomic growth and prosperity. www.irena.org Acknowledgements The work for the preparation of this paper was led by Paul Komor and Anderson Hoke, University of Colorado, Boulder, Colo- rado, USA. The paper benefitted from very valuable comments from Rainer Bacher (Bacher Energie, Switzerland), Melissa Chan (Navigant Consulting, USA), Kazuyuki Takada (New Energy and Industrial Technology Development Organization, Japan), Matt Wakefield (EPRI, USA). Authors: Ruud Kempener (IRENA), Paul Komor and Anderson Hoke (University of Colorado) For further information or to provide feedback, please contact: Ruud Kempener, IRENA Innovation and Technology Centre. E-mail: [email protected] or [email protected]. Disclaimer The designations employed and the presentation of materials herein do not imply the e xpression of any opinion whatsoever on the part of the International Renewable Energy Agency concerning the legal status of any country, territory, city or area, or concerning their authorities or the delimitation of their frontiers or boundaries. SMART GRIDS AND RENEWABLES A Guide for Effective Deployment November 2013 2 SMART GRIDS AND RENEWABLES: A Guide for Effective Deployment TABLE OF CONTENTS Executive Summary ............................................................................................................................... 5 1. Introduction: Smart Grids and Renewables .......................................................................................... 7 2. Making the Transition to a Smarter Grid ............................................................................................. 10 Start with Pilot and Demonstration Projects .........................................................................................10 Specific Technology Recommendations ..............................................................................................10 Costs and Benefits: Making the Business Case for Smart Grid Technologies ........................................... 12 Recognise and Respond to Technological Conservatism ...................................................................... 12 Leverage the Need for Private Sector Investment .................................................................................. 13 Recognise the Continual Nature of Technological Change ..................................................................... 13 Regulation ......................................................................................................................................14 3. How Smart Grids Enable Renewables ................................................................................................15 Smart Grids and Variability ............................................................................................................... 15 Smart Grids and Distributed Generation ..............................................................................................16 Smart Grids and Capital Intensity .......................................................................................................16 Improved Consumer Information, Control, and Choice .........................................................................16 Improved Transmission and Distribution System Monitoring and Control ................................................16 Integration of New Resources ............................................................................................................ 17 4. Nontechnical Barriers to Smart Grids ..................................................................................................18 Data Ownership and Privacy ............................................................................................................. 18 Grid Security ...................................................................................................................................19 Control of Distributed Resources ........................................................................................................19 The Role of New Private Sector Grid Players ........................................................................................19 The Need for Standards ................................................................................................................... 20 5. Smart Grid Technologies...................................................................................................................21 Advanced Metering Infrastructure ...................................................................................................... 23 Advanced Electricity Pricing ............................................................................................................. 24 Demand Response ......................................................................................................................... 26 Distribution Automation ................................................................................................................... 27 Renewable Resource Forecasting ..................................................................................................... 28 Smart Inverters ............................................................................................................................... 30 Distributed Storage .......................................................................................................................... 31 Microgrids and Virtual Power Plants ................................................................................................. 33 Bulk Power Technologies................................................................................................................. 34 List of Abbreviations ............................................................................................................................ 39 References ..........................................................................................................................................41 SMART GRIDS AND RENEWABLES: A Guide for Effective Deployment 3 Executive Summary Electricity generation from renewable sources will need ● the need to recognise and respond to inertia to increase signifi cantly to achieve the Sustainable En- within the electricity sector; and ergy for All (SE4ALL) objective of doubling the share ● the importance of regulation associated with of renewable energy (RE) in the global energy mix by data ownership, grid security issues, standards, 2030. Fortunately, there is growing evidence in many and the role of new private sector grid players. countries that high levels of renewable energy penetra- tion in the grid are technically and economically feasible, The report also provides a detailed review of smart grid particularly as solar and wind technologies increasingly technologies for renewables, including their costs, tech- reach grid parity in economic terms. nical status, applicability and market maturity for vari- However, continuous and expanded growth of the share ous uses. Smart grid technologies are divided roughly of renewables in centralised and decentralised grids into three groups: requires an eff ective new approach to grid manage- ment, making full use of “smart grids” and “smart grid ● Well-established: Some smart grid components, technologies”. Existing grid systems already incorporate notably distribution automation and demand elements of smart functionality, but this is mostly used response, are well-established technologies that to balance supply and demand. Smart grids incorpo- directly enable renewables and are usually cost- rate information and communications technology into eff ective, even without taking into consideration every aspect of electricity generation, delivery and con- the undeniable benefi ts of sustainability related sumption in order to minimise environmental impact, to renewable energy integration. enhance markets, improve reliability and service, and ● Advanced: Smart inverters and renewable fore- reduce costs and improve effi ciency (EPRI 2013). casting technologies are already used to increase the effi ciency and productivity of renewable These technologies can be implemented at every level, power generation, yet tend to entail additional from generation technologies to consumer appliances. costs. These devices start to help noticeably As a result, smart grids can play a crucial role in the when capacity penetration for renewables reach- transition to a sustainable energy future in several ways: es 15% or more (on any section of the grid) and facilitating smooth integration of high
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