A COMPARATIVE STUDY OF SMART GRID

DEVELOPMENT IN DEVELOPED AND

DEVELOPING COUNTRIES

CMI Conference 2014: Mobile communications in developing

countries

Wireless@kth Óscar Álvarez, Amirhossein Ghanbari, Jan Markendahl

2

Outline

• Context of the study• Research questions• Study

• Technology development• Public initiatives• Regulator policies• Economic situation/Business perspective of the country

• Conclusions

Context of the study

• Forecasts fast growth in M2M connections• Internet of Things vision• Ericsson vision: more than 50 billion connected devices by 2020• Everything that will be benefit from being connected will be connected

Source: 2014 Cisco report

Context of the study

• Within M2M, Smart Grid offers business opportunities for classical telecom actors: MNO´s and Telco vendors

• Main barrier: Lack of regulation and business models

• The need of research seeking to define suitable business models and regulations appear naturally

Goal of the techno-economic study: Providing insights on Smart Grid development from developed and developing countries

Country selection: Australia, Sweden, Brazil, China

Research questions

• What are the commonalities for Smart Grid communications development in developing countries? And in developed countries?

• What is driving Smart Grid communications development in developed countries? And in developing countries?

• How can the different Smart Grid communications development affect business strategies for utilities in different countries?

Description of the study

Four different aspects are considered on this study:

• Technology development. Smart Grid state of the art in the country.

• Public initiatives. Existence or not of Smart Grid public plans and drivers and motivations behind them

• Regulator policies. Regulation status in the country, level of liberalization

• Economic situation/Business perspective of the country. Macroeconomic analysis of the country and its energy sector

Technology development

• Smart meter penetration. Percentage of smart meters installed.

• Relevant pilot projects divided in five categories:

Pilot project on Smart Metering.

Pilot projects on Integrated Systems. Focuses on the integration of different Smart Grid technologies and applications, for example projects including smart metering and substation automation.

Pilot projects on Home Application. Includes projects which address new applications at home or directly involved users.

Pilot projects on Transmission and Distribution automation. Refer to projects dealing with automation upgrades of the electricity grid, at the transmission and distribution level.

Pilot projects on Others. Smart cities, Renewable energy or Electric vehicle projectsClassification framework from Virginia Tech Clearing House and EUUS council and used by the JRC-EU.Relevant pilot projects from Smart Grid Global Report 2013.

Technology development

*Siemens ** Brazillian roadmap ***Ericsson **** IEEEClassification framework from Virginia Tech Clearing House and EUUS council and used by the JRC-EU.Relevant pilot projects from Smart Grid Global Report 2013.

8

Technology development Australia Sweden Brazil China

Smart meters installed 23 % 100% 7,5 % (2014 prediction)

27%

Nª of pilot projects 12 5 12 11

Pilots projects on Smart Meters 2 0 6 3

Pilots projects on Integrated Systems

2 4 6 2

Pilots projects on Home Application 1 0 0 0

Pilots projects on Transmission and Distribution Automation

0 0 0 4

Pilots projects in Others 7 1 0 2

Public initiatives

To understand what are the motivations and drivers for Smart Energy in every country, which will be different and have implications when analyzing Smart Grid development and defining business strategies.

Existence of Smart Grid public programs or roadmaps Identification of the main drivers

9

10

Public initiatives

Public initiativesAustralia

 Sweden Brazil China

Smart Grid Public programs

Yes Yes Yes Yes

Main motivation (s)Renewable energy

and Energy efficiency

Renewable energy, improved services and

energy efficiency.

Development of the power grid, energy

efficiency and avoiding fraud.

Renewable energy, development of the

power grid state and energy efficiency

Regulator policies

Energy is a highly regulated sector:

Public vs Private market shares (Generation and Distribution) HHI Herfindahl index. (Generation and Distribution) Description of retail market

Herfindahl index: measure of the size of companies in relation to the industry and an indicator of the amount of competition among them.

• Possible range of values: 0 = Perfect competition

10000 = Monopoly

11

12

Regulator policies

Regulator policies Australia Sweden Brazil China

Market Power shares (public vs private)

Generation: 90-10Distribution: N/A

Generation: 66-34Distribution:

N/A

Generation: 90-10Distribution: 36-64

Generation: 96-4Distribution: 100-0

HHI Index HerfindahlGeneration: 3147

Distribution:N/A

Generation: 2569Distribution:

621

Generation: 1085Distribution:

655

Generation: 306Distribution:

6400

Retail Full competitionFull competition

marketFree-trade

environmentNo competition

market

Economic situation/Business perspective

Gathering of different relevant macro-economic aspects in order to analyze and understand the economic situation and the business perspective in these four countries.

• GDP: Evolution, forecasts and per capita• Energy consumption: Overall, industrial and per capita

13

14

Economic situation/Business perspective

Sources: World Bank database, International Energy Agency

Economic situation/Business perspective

Australia Sweden Brazil China

GDP (billion dollars) 1,505 557 2,242 9,181

GDP per capita (dollars) 64,863 57,909 11,310 6,747

Average GDP annual growth predictions 2015-2020 (%)

2,83 2,64 1,5 6,16

Average GDP Annual growth 2003-2012 (%)

3,004 2,14 3,75 10,21

Overall Energy consumption (gWh) 1,117,222 90,160 400,000 5,256,064

Industrial Energy consumption (gWh) 432,777 38,228 150,000 (2009) 3,900,000

Industrial Energy consumption (%) 38,7 42,4 37,5 74,2

Energy consumption per capita 2009-2013 (MWh/capita)

10,55 14,03 2,44 3,3

Energy consumption world rank 17 26 10 1

15

Main conclusions on country analysis:• Mainly driven by public policies and roadmaps (in some cases

private players are also key actors).• Development starts with Smart Metering and finishes with

Integrated Systems and Transmission and Distribution automation.• Different development stages should be considered when

defining business and regulation strategies.• Different motivations in different countries.

• Different drivers define the development and its focus

Conclusions

• Commonly highly regulated in the generation and distribution side, liberalized retail sector

• High state control and big energy companies with slow technology adoption. Collaboration and flexibility for new actors (MNO´s and Telco vendors) is a key aspect

16

Conclusions

Thank you!

17