Energy Transition Technology Roadmap, distinguishing hype from reality
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
.1
Energy Transition Technology Roadmap
ì
Energy Transition Technology Roadmap,
distinguishing hype from reality
2020 Strategic Technological Plan and Business Targets
Daniele Rosati, PhD, Vice President Engineering
Pietro Raboni, PhD, Senior System Engineer
Carlalberto Guglielminotti, MBA, Chief Executive Officer
.2 Energy Transition Technology Roadmap
.3
Energy Transition Technology Roadmap
INDEX OF CONTENTS
SECTION PAGE
SECTION 1 – ENERGY TRANSITION: A DISRUPTIVE MEGATREND ............................................................ 4
1. Global Overview .................................................................................................................................... 4
2. Rationale and Challenges Behind the Transition .................................................................................. 7
3. Microgrids: enabler of Distributed Smart Generation ........................................................................... 8
4. Virtual Power Plants: Distinction Between Hype And Reality ................................................................ 9
5. Off-Grid: Microgrids to Power Cheaply 2.4 Billion People .................................................................. 11
6. Why Italy Should Take Centre Stage in That Revolution ..................................................................... 14
SECTION 2 – STRATEGIC TECHNOLOGICAL PLAN AND 2020 BUSINESS TARGETS ............................ 17
7. All – Technological Challenges – In-One Project: PROPHET ............................................................. 17
7.1 Optimisation Algorithms and Control Predictive functions for next generation microgrids .............. 18
7.2 Distributed Smart Storage for behind-the-meter grid services ......................................................... 19
7.3 Distributed Smart Generation, to transform consumers in prosumers with energy at a lower cost.. 19
7.4 Virtual Power Plants to achieve a radical transformation .................................................................. 20
7.5 Vehicle-to-the-Grid to transform a car into a revenue generating asset ........................................... 20
7.6 EVs fast charging to speed up EVs penetration ............................................................................... 21
7.7 PROPHET methodology .................................................................................................................... 22
8. EPS Route to 2020 .............................................................................................................................. 23
8.1 EPS today .......................................................................................................................................... 23
8.2 Technological challenges already addressed by EPS ..................................................................... 25
8.3 Business targets for 2020 ................................................................................................................. 30
8.4 Forward looking statements .............................................................................................................. 31
REFERENCES................................................................................................................................................. 33
.4
Energy Transition Technology Roadmap
SECTION 1 – Energy Transition: a disruptive megatrend
1. Global Overview
Climate change and global warming in particular may be a controversial scientific theory, particularly in the US,
but its growing impact on business is undeniable. The energy generation landscape, to begin with, is being
disrupted by the growth of renewables; transport is witnessing the affirmation of the electric car, in its pure form
or as a hybrid, and, most pervasive of all, the search for energy efficiency is creating new businesses – think for
example smart metering or behind-the-meter distributed generation – and is modifying existing ones in a variety
of ways.
Our vision of the macrotrends shaping the energy transition is consistent with the narrative of Bloomberg New
Energy Finance's New Energy Outlook, to which we make extensive reference in this overview.
By 2040, consumers and businesses will drive an demand, the world will need to pursue all economic
ongoing evolution in energy needs, shaped by energy sources. By 2040, zero-emission energy
advances in technology and waves of economic sources will make up 60% of installed capacity.
growth. At the same time, both supply and demand Wind and solar will account for 64% of the 8.6 TW of
will be affected by a wide range of government new power generating capacity added worldwide
policies, including ones that seek to expand access over the next 25 years, and for almost 60% of the
to modern energy and those that aim to reduce the $11.4 trillion invested.
risks of global climate change. In this time frame oil,
While already competitive in a number of countries
natural gas and coal are expected to continue to
today without policy support, the cost of onshore
meet a large part of global demand.
wind is expected to drop 41% by 2040, driven
For a century, these sources have been the primarily by improving capacity. The solar (PV)
foundation of the modern energy that has enabled experience curve also marches on, but decline in
current living style and they remain abundant, technology cost is increasingly accompanied by a
reliable and affordable. Still, significant changes are reduction in the cost of development.
coming.
Solar’s precipitous cost decline sees it emerge as
Policies to address GreenHouse Gases (GHG) the least-cost generation technology in most
emissions will increasingly influence the energy countries by 2030. It will account for 3.7 TW, or 43%,
landscape. Global energy-related CO2 emissions of new power generating capacity added in 2016-40
policies will likely peak around 2030. The member and for over $3 trillion of new investment. Small-
nations of the Organisation for Economic Co- scale solar makes up a bit more than a third of this
operation and Development (OECD), where CO2 new capacity. Starting with Europe, Australia and
emissions are declining, are expected to lead this the US but quickly spreading to India and other
shift. With strong gains in energy efficiency and countries, households and businesses will add solar
significant changes in the world’s energy mix – PV on the rooftops to offset retail power bills almost
driven by economics and climate policies –the CO2 everywhere. Overall, solar PV supplies 15% of world
intensity of the global economy should be cut in half electricity by 2040, seeing an average $135 billion
by 2040. invested per year over the next 25 years.
The period to 2040 is expected to reflect a dramatic Over the next 25 years, light duty electric vehicles
expansion of the world’s population and the global (EVs) will provide 2.701 TWh of additional electricity
middle class and global demand for energy is demand, to reach 8% of world consumption. EVs will
expected to rise by 25 percent. To keep pace with make up 25% of the global car fleet by 2040, putting
.5
Energy Transition Technology Roadmap
continuous downward pressure on battery costs net closure of 286GW of coal in OECD economies to
through technology development, economies of 2040. Meanwhile, China’s moratorium on new coal-
scale and manufacturing experience. Cheaper fired power post-2020 as it deals with its air
batteries increasingly bring small-scale (Distributed pollution, coupled with its near-term slowdown in
Smart Storage) and grid-scale storage options into electricity demand growth, means that country sees
66GW less coal installed to 2040 than anticipated
play.
last year. Despite an uptick in the near term, by
As new wind and solar capacity is added 2020 US coal has joined Europe in terminal decline.
worldwide, generation using these technologies However, low coal prices mean more new coal in
rises ninefold to 10,591 TWh by 2040, and to 30% of countries such as India which will see 258GW of
the global total, from 5% in 2015. By 2040, new capacity and a trebling of coal consumption by
Germany, Mexico, the UK and Australia all have 2040.
average wind and solar penetration of more than
Gas’ role as a 'transitional fuel’ appears overstated
50%. With the increase in renewable generation
outside the US as it accounts for just 16% of global
comes a fall in the run-hours of coal and gas plants,
generation in 2040, up just 7% from 2015. Gas
contributing to the retirement of 819 GW of coal and
demand increases about 10% to 2026 as France,
691 GW of gas worldwide over the next 25 years.
the UK and Germany retire nuclear plants and
The fossil plants remaining on-line will increasingly
consumption rises in North America and the Middle
be needed, along with new flexible capacity, to help
East. However from 2027, gas generation begins to
meet peak demand, as well as to ramp up when
fall in Europe, and then in the US and China. India
solar comes offline in the evening. Pricing
once again is the major economy to buck the trend,
mechanism of ancillary services markets will be
becoming Asia’s largest gas power market by 2040,
disrupted as a whole.
with 79 GW of cumulative capacity.
The combination of pollution regulations, carbon
prices and weak electricity demand growth, drives
Figure 1: energy mix forecasts, where “flexible capacity” includes storage, demand response and other potential resources [1]
.6
Energy Transition Technology Roadmap
The Asia-Pacific region will experience colossal grow, helped in the short term by US tax incentives
growth in new power generation capacity over the but in the medium term by out-competing gas and
next 25 years, with installed capacity tripling and coal in many countries. Latin America sees over
electricity generation doubling. Renewable energy $798 billion of investment in new power generation
will make up nearly two-thirds of the 4,890 GW capacity as it continues to diversify away from an
added during this period. Onshore wind will bring in over-reliance on drought-prone hydro.
the largest share of investment at $1.3 trillion, while
In the Middle East & Africa, renewables enjoy an
utility-scale PV sees $897 billion. This mountain of
eightfold increase over the next 25 years to reach
capacity will drive renewable energy penetration to
55% of all power generating capacity by 2040, up
38% by 2040, up from 21% in 2015.
from 16% today.
Europe sees significant decarbonisation to 2040,
The higher renewables penetration means that
with renewables rising to 70% of generation in 2040.
power systems will increasingly need to reward
Solar accounts for almost half of all new capacity.
system services such as demand response, battery
This is driven initially by small-scale PV, before
storage, interconnectors and control systems that
ongoing cost declines makes large-scale solar cost-
work along with traditional firm capacity to help
competitive. Onshore wind sees half of all new
match supply with demand (Flexible Capacity) and
investment in Europe as green-field projects
increasingly give way to repowering. has given rise to new challenges that have seen
storage technology take centre stage.
Different countries in the Americas will follow
different pathways to change. In North America, In parallel, while Flexible Capacity will boost the
total capacity stands to grow by a third to 2040 as matching between supply and demand, further
the region forms a more integrated market in which stabilizing the intermittency coming from renewable
electricity and natural gas flow across borders in generation, seasonality patterns can be managed
unprecedented quantities and renewables take with Power-to-Gas technologies that, with a proper
greater prominence. Natural gas will play a key role cost reduction of electrolyzers driven by volumes,
in electricity generation across North America over would enable a major shift from gas to hydrogen by
the next decade, accounting for 15% of all new up to 20% in energy terms.
build, at the same time renewables continue to
Figure 2: cumulative energy deployment forecasts [1]
.7
Energy Transition Technology Roadmap
In that context, by 2024, total installed energy (Distributed Smart Storage) becomes increasingly
storage capacity will reach 45 GW / 81 GWh. The important throughout the 2016-24 period, and in
market is expected to blow-up also by 2020, with 14 2021 it becomes the larger of the two market
GW installed, of which 5.6 GW just in Europe. segments. In parallel, behind-the-meter solar plus
Utility-scale storage deployments will dominate in storage installations (Distributed Smart
terms of total installed power output (MW) in 2016. Generation) will increasingly play a pivotal role
They make up 84% of total installed capacity. potentially cannibalizing the traditional distribution-
However, behind-the-meter energy storage level ecosystem.
2. Rationale and Challenges Behind the Transition
Thomas Edison opened his first commercial Distributed Smart Generation model, be overcome
centralised power station in 1882 to serve New and a new figure of “prosumer” can play a key role
York’s financial district, and the global spread of in new electrical grids.
electrification, with all the enormous changes that
has brought, has mostly followed his model. Until Microgrids, grid-scale and behind-the-meter storage
now. systems, virtual power plants, power-to-gas and
green mobility solutions are changing the game and
Spurred by falling costs and government incentives, the whole future of energy.
homes and businesses are producing more of their
own power, a trend that threatens the business In the changed context of reference, while the pace
model of centralised generation that has dominated in the installation of conventional power plants has
the industry, worldwide, for 130 years. been slowing down significantly in the last two
decades the relentless diffusion of renewables, most
A paper by the Edison Electric Institute, the US of all at distribution level, has been consolidating.
industry association, has warned that electricity This phenomenon appears disruptive for traditional
utilities were facing “disruptive challenges” power system stakeholders, either utilities and
comparable to the way the fixed-line telephone network operators, since thousands of small
industry was shaken up by mobile. US utilities worry independent power producers stemmed in the
that as more businesses and households use solar, distribution networks. It is worth to be mentioned
wind and other sources to generate their own that this process (in connection with the overall
power, they will lose customers and revenues demand reduction) led to overcapacity, need of
bearing the costs of running the grid. The utilities network infrastructure renovations, more challenging
would then have to charge higher rates, losing more power system operation and control and even
customers, worsening their position further. In the higher power costs, due to an higher ratio between
industry, they call it the “death spiral” [2]. fixed and infrastructure costs over the decreasing
amount of energy flowing through the transmission
Even if it may not be a death spiral, but simply a
lines.
dramatic “change spiral”, reality is that the energy
scenario is evolving rapidly, as well as the role of But does it worth? Absolutely, indeed distributed
utilities and network operators. The structure of the energy resources (DERs) operate at negligible
electricity system is undergoing significant marginal costs, the technology is getting cheaper
paradigm changes with incisive penetration of and it is leading to higher efficiency conversion.
intermittent renewable sources, fragmentation and Moreover the smart control and operation of loads,
distribution of the production points, diffusion of through so called Demand Side Management, could
efficient and innovative technologies, and a shift in add further degree of freedom to the customers. In
the axis of energy production value to the supply of this context, the flexibility offered by thermal loads,
services. As a result, the traditional distinction some household appliances, as dishwashers, and
between power producers and consumers can, in a smart charging and controlled discharging of
.8
Energy Transition Technology Roadmap
electric vehicles (EVs) enabling the provision of In addition, an energy integration between
remunerated grid services to Transmission System photovoltaic (PV) systems and EVs can help to
Operators (TSOs), so called Vehicle-to-Grid (V2G), overcome problems related to the feasibility of a
and further electrochemical storage units appear more sustainable mobility, most of all in urban
very promising for load shifting and participation to context. Academia already assessed the potential
the frequency regulation and all the other grid and the technical benefits of using PV systems as
services generally. As previously mentioned the mix energy supplier for charging EVs [3].
of all these factors are transforming traditional In other terms, disruptive challenges are not looking
customers to active “prosumers” in the energy forward to 2040, but are blowing-up now.
arena.
On its turn, Distributed Smart Storage and
In parallel, EVs are every day more and more Distributed Smart Generation will be the concrete
important and diffuse in all day life. EVs will make up commercial driver of the whole transition in 2018 as
25% of the global car fleet by 2040, and represent a do not require any subsidy nor any regulatory or
new prospective mode of transportation to address policy change. In other terms, Distributed Smart
environment issues. The major drawback of the Generation in particular, it can be a concrete
present EVs are the long charging times and alternative to the traditional electricity system for
mechanical hassles with charging cables. And fast businesses and households as solar plus storage in
charging which does not require any MV system south Europe is today able to provide dispatchable
(which would be unconceivable in a real distributed clean energy at less than 150 $/MWh.
model) as well as contactless battery charging
As it would be better described in the section below,
systems are a challenging but necessary solution to
Virtual Power Plants aggregating DERs such as
overcome these issues (EVs Fast Charging).
loads, renewables, but even more importantly
In that context, big players such like Toyota, behind-the-meter Distributed Smart Storage and
Mitsubishi and Honda are investing supported by Distributed Smart Generation, could heavily
EU policies in hydrogen vehicles (FCEV) that cannibalize distribution-level deployments if
ensure faster charging, long miles-range autonomy providers are able to aggregate it effectively.
and are backed by an industry of cheap hydrogen
refuelling stations enabled by reliable power-to-gas
technologies.
3. Microgrids: enabler of Distributed Smart Generation
A microgrid is a local and well defined network can switch from grid connected to islanded modes
which connects together dispatchable and non- and viceversa without any power interruption. Such
dispatchable DERs, various types of loads and a feature could be exploited for performing
possibly storage systems [4]. An autonomous intentional islanding of microgrids containing
control system regulates power flows within the voltage sensitive loads in case the mains power
microgrid and between the microgrid and the main quality turns poor. Such a functionality should be
grid, where a connection between the two is activated with a mechanism similar to the Low and
present. This way, from the main network point of High Voltage Ride Through DER requirement and
view, the microgrid can be equivalently seen as a will likely pose the need of grid code overhauling.
single node constituted by the aggregation of all its
In addition, the advantages that can be attained by
units, and that can alternatively behave as a load or
adopting this kind of system architecture are
a generator. Microgrids can also operate in islanded
several:
mode, meaning that they can run in off-grid mode,
independently from the main grid. Moreover they • By locally integrating non-dispatchable generators
within a system that offers different ways to cope with
.9
Energy Transition Technology Roadmap
their un-programmable nature (local generation back- the mains power quality gets poor, or if this
up, energy storage, load control), it is possible to functionality is not included or fails, through a black
increase the penetration of non-dispatchable sources start of the distribution feeders when the rest of the
in the energy supply mix, thus allowing for a more distribution system is down. It is worth to be mentioned
extensive use of RES; that these functions pose technological challenges
either in terms of communications and risk
• Where demand-side actions are possible (in the
assessment. On the other hand it is evident that these
presence for example of programmable loads, or if
functionalities can bring a strong driver for microgrid
non-critical load shedding is possible) such decisions
installations in areas periodically hit by such a natural
can be taken contextually with generators operation
disasters.
planning, to further improve the performance of the
overall system; These advantages can be further amplified if the
• When operating in grid-connected mode, the microgrid is designed to cover the supply of more
behaviour of the equivalent single node which than just electric energy. Multi-DERs microgrids
represents how the main grid sees the microgrid can include not only electrical loads, but a broader
be modulated (within the capacities of the microgrid
itself) in order to actively contribute to grid balancing
spectrum of possible energy-related goods
(microgrid can thus behave as Virtual Power Plant, or consumers (e.g. heating, cooling, fresh water, etc.).
controllable aggregated load);
By contextually managing the supply of all goods,
• Adding resiliency to parts of the distribution networks
in case of natural disasters, as typhoons or an optimal operation planning of multi-effect units
earthquakes. It is indeed demonstrated that these (such as CHP engines) can be attained, and it
events hit more severely the distribution system rather becomes possible to exploit synergies between
than the transmission one. The resiliency feature can
production and distribution of different goods.
be achieved either through intentional islanding when
4. Virtual Power Plants: Distinction Between Hype And Reality
Being “distributed” could turn out a drawback since Academia in 2007 split the VPP concept in
independent operation could collide with the overall Commercial VPP (CVPP), which are the VPPs
optimization pursue in terms of market mechanisms currently implemented mainly in USA and Germany,
and optimisation algorithms (Optimisation and Technical VPP (TVPP), respectively for
Algorithms), which is the first priority of any TSO referring the VPP that simply enables to trade
but even more importantly the main challenge of any energy and the ones that can provide technical
system provider of Distributed Smart Generation regulation services to the grid. In the first case the
systems. Hence at the end of last century the term aggregated mix of units participates to the power
“Virtual Power Plant” (VPP) was just coined for market, a fact that if they were alone would not be
referring to the aggregation and automated possible likely due to their limited size or would be
operation of DER and loads, in order to behave as too risky due to the possible unbalances. Technical
conventional power plants. In this way prosumers VPPs allow offering ancillary services, as black start,
gain visibility on the market and they can optimize voltage and frequency regulations directly at
their clustered operation, reducing the risk of distribution level.
imbalances and increasing the overall efficiency. It is worth to remark that while a CVPP could be
For example curtailing the power intake of composed by prosumers sited at nodes in different
renewables for complying with ramp rate areas of the power system, even at thousands of
requirements would not be anymore necessary if kilometres far away, a TVPP can be associated only
other units within the VPP would be capable to to a well defined subset of a distribution system, as
counteract the wind or irradiance variations. a part of a radial system or at a grid connected
Moreover the presence of several generators, microgrid through a single node of interconnection.
frequently located in different sites, would make Follows that while utilities and new energy players
unlikely to have a simultaneous outage, therefore the can easily start a CVPP, a TVPP can be run only
unavailability risk would result reduced. when a CVPP exists and there is a strong
collaboration with a system provider running a TVPP
. 10
Energy Transition Technology Roadmap
and liaising regularly with the local Distribution summarises the required inputs and outputs
System Operator (DSO). that characterise the TVPP activity; information on
DERs in the local network is passed through by the
The rationale behind the distinction is crystal clear:
various CVPPs that represent DERs in the area. In
as mentioned in Section 2, CVPPs, aggregating DER
the local distribution network, DER operating
such as loads, renewables, but even more
positions, parameters and bids and offers collected
importantly behind-the-meter Distributed Smart
from the CVPP can be used to improve DERs
Storage and Distributed Smart Generation (that are
visibility to the DSO and to assist with real-time or
the concrete commercial driver of the whole
close to real-time network management, to provide
transition as do not require any subsidy) could
scheduled ancillary services. To facilitate DERs
cannibalize distribution-level deployments if
activity at the transmission level, DSOs aggregate
providers are able to aggregate it effectively.
the operating positions, parameters and cost data
In that potential death-spiral for utilities and grid from each DERs in the network together with
operators, TVPP are the only technical possibility to detailed network information (topology, constraint
provide visibility of the aggregated DERs to system information and so on), calculating the contribution
operators, enabling them to concretely contribute to of each DERs in the local system and forming the
the system management activities and facilitate use TVPP characteristics. The TVPP is characterised at
of DER capacity, providing system balancing at the its point of connection to the transmission system,
lowest cost. using the same parameters as transmission
connected plant. This TVPP grid aggregation profile
The TVPP aggregates and models the response
and marginal cost calculation (reflecting the
characteristics of a system containing DERs
capabilities of the entire local network) can then be
(controllable loads and networks within a single
evaluated by the TSO, along with other bids and
electric-geographical grid area), essentially a
offers from transmission connected plants, to
description of sub-system operation. A hierarchy of
provide real time system balancing.
VPPs aggregation may be created to characterise
systematically, the operation of DER at low-medium In other terms, with reference to the global debate
and high-voltage regions of a local network, but at about Virtual Power Plants and aggregators, the
distribution-transmission network interfaces, the VPP watershed between hype and reality is essentially
presents a single profile representing the whole represented by the difference between CVPPs and
local network. TVPP.
Figure 3: Inputs and outputs from TVPP activity [5]. 11
Energy Transition Technology Roadmap
5. Off-Grid: Microgrids to Power Cheaply 2.4 Billion People
The growth of the storage market is also starting to More than 95% of these people are either in sub-
affect emerging and frontier markets. Storage Saharan African or developing Asia, and around
companies are now pushing forward some of the 80% are in rural areas.
most ambitious new mini-grids and independent
From the market timing and growth perspective, Off-
energy systems and the same is true for commercial
Grid Power Generation Solutions have to be
and industrial projects. As a result, Off-Grid Power
assessed in the context of (i) the electrification rates
Generation Solutions in emerging markets are rising
that might reduce the market size, (ii) oil prices that
up the strategic priority list for several storage
might impact the business case and (iii) currencies
companies.
stability that might prevent investments in new
According to the Global Off-Grid Lighting energy infrastructures.
Association (GOGLA), as of today, 1.4 billion people
National electrification rates in key markets are either
— roughly 18 percent of the earth’s population — do
improving or stagnating, according to the most recent
not have access to grid electricity. Another 1 billion Climatescope data (see
people are connected to unstable grids and
experience regular power outages, classifying them ). Countries like Peru, Kenya, Nepal,
as “under-electrified”[6]. Together, these people Indonesia and Sri Lanka have all trended upwards,
offer nearly $30 billion of potential business to connecting about 20% of their respective
companies working in the off-grid lighting sector [7]. populations over the past five years. These
In addition, diesel generators ensure electricity countries tend to have active electrification
generation in almost all islands and to all the programs, but in contrast, countries such as
commercial and industrial users based in under- Ethiopia, Senegal or Pakistan have seen their
electrified areas, despite their high generation costs numbers stagnate.
of around €0.25 per kWh or more [8], simply While increasing electrification rates technically
because there is no simple, feasible alternative. This reduce the market’s attractiveness for off-grid
is a sizable market, representing an installed fleet of operators, the statistics often ignore that many newly
600 GW of diesel generation capacity and 29 GW of
1
connected households receive only an irregular
new capacity additions just in 2015. power supply. Anecdotal evidence from Solar Home
System (SHS) and mini-grid operators suggests that
This segment of the population, has an unfulfilled
many of their customers are connected to the power
need that represents a significant market
grid, but prefer to pay premium tariffs for more
opportunity. Sector growth rates are on a trajectory
reliable electricity [10].
similar to the one followed by mobile phones , and 2
therefore an outstanding market growth
performance is expected [9].
_______________________
1
Cumulated market for 1980 to 2010, representing an 2
Mobile phone penetration CAGR from 2000 to 2012
installed capacity of diesel generators with a nominal accounted for 36 percent [17].
power of 500 kW or greater and assuming a 30-year
generator lifetime. See Power Systems Research at
http://www.powersys.com/ referred to in [8].. 12
Energy Transition Technology Roadmap
Figure 4: national electrification rates (% of total population) [11]
Figure 5: Spot FX rates against the USD (indexed, 100=January 2016) [11]. 13
Energy Transition Technology Roadmap
Market fundamentals improved for the Off-Grid mini-grid regulations, which had been expected to
Power Generation Solutions area also because oil be approved by end-2016, aim to encourage
prices recovered somewhat in early 2016 and then decentralised generation. The regulation drafted by
stabilised. The currencies of key markets such as the National Electricity Regulatory Commission
Kenya, Tanzania, Bangladesh or Pakistan have (NERC) and seen by BNEF focuses on:
been quite stable versus the dollar, with the
• Retail tariffs determined by a site-specific cost-plus
exception of Ethiopia and Nigeria, which saw approach (rather than a uniform grid tariff);
devaluations.
• Compatibility standards for distributed networks that
However Nigerian market looks promising since its would allow eventual integration with the national grid;
rural electrification strategy aims to reach 75% of the • An exit option for investors at pre-agreed valuations for
nation by 2020, suggesting that more than 10 million mini-grids that are subsequently absorbed into the
main grid.
households will need to be connected in the coming
The regulation distinguishes three types of mini-
four years, at an estimated cost of $9 billion,
grids as shown in .
according to the government. The strategy and draft
Figure 6: Nigeria’s proposed mini-grid regulation as defined by Nigerian Electricity Regulatory Commission
NERC’s draft addresses two of the main stumbling Nigeria is higher than the grid’s supply. Businesses
blocks that have held back mini-grid development. and residential users often rely on their own power,
First, it allows developers to charge cost-reflective mainly from diesel or petrol generators. These are
retail tariffs instead of nationwide prices. Secondly, it usually expensive, making them targets for
would regulate buy-out values for mini-grids that are displacement by clean energy technologies, in
connected to the main electricity network based on particular solar plus storage solutions. Data shows
a transparent formula. that a record 615,000 generator sets valued at $4.8
billion were sold in emerging markets and island
In any event, microgrids are not just used to bring
states in 2015 only for a total of 29 GW. Capital
power to under-served communities or for rural
expenditure is the small part though, as several
electrification, but also allow industrial sites to
times more is spent on fuel. A basic extrapolation
integrate renewable power generation and boost the
suggests that just the small-scale generators (under
resilience of their sites. There are a variety of
375kVA) that were sold in the last five years may
applications, from the solar plus storage micro-grid
burn more than $40 billion of diesel annually on
at food processing sites that helps reduce diesel
baseload power generation alone (excluding those
consumption and noise on site, to seamless
used for standby generation). The power generated
operations of agricultural facilities or cement
from them is a significant part of those nations’
manufacturing plants during grid outages.
energy systems. South Africa, Nigeria and the
This has to be coupled with the fact that demand for Philippines bought 2-5 times more generator set
electricity in emerging markets such as India, capacity over the past five years than they added to
Democratic Republic of Congo, Pakistan and the grid.. 14
Energy Transition Technology Roadmap
Diesel generators play a significant role in the power more diesel capacity was added in 2015 to run as
systems of many developing economies. Bloomberg baseload power (14.5 GW) than wind and solar
New Energy Finance estimates that about half of the combined (11 GW), even before considering diesel
installed diesel capacity is used for baseload power for back-up purposes.
generation. This means that in emerging economies
Figure 7: power capacity additions in developing countries in 2015
6. Why Italy Should Take Centre Stage in That Revolution
Italy has one of the highest shares of PV penetration market by 2018. This dynamic probably helped to
globally, with 9% of electricity production in 2015. trigger Enel’s expansion into customer offerings
The country added 400 MW of PV annually over the combined with a planned installation of 30 million
past 3 years under the tax credit subsidy which also second-generation smart meters.
applies to storage. As of end 2015 there were 3.6
Italy’s 2020 renewable electricity target is at 26% of
GW of residential systems (. 15
Energy Transition Technology Roadmap
the grid upgrades undertaken by Enel and Terna, From a transmission point of view Terna’s analyses
the grid operator, allowed renewable generators in shows that during peak days, many of Italy’s T&D
formerly congested regions to deliver more of their lines are working at full capacity, struggling at times
output, instead of getting curtailed. to accommodate all renewables output. In order to
integrate renewables, the Italian energy and gas
Despite the positive news for renewables over 2016,
regulator AEEGSI called for reserve capacity
there are clouds on the horizon for 2017. Two key
additions in its latest 10-year strategy plan.
issues need to be addressed if Italy is to keep up
pace with its past. First, and foremost, the Wind projects are causing concern on the high
renewable auction framework, which expired in voltage network, although existing measures saw
2016, needs to be renewed – or no new auctions will curtailment fall to 0.6% in 2015. 90% of PV is
be held. The easy solution would be to extend the connected to medium and low voltage distribution
previous framework, a move that would not require grid. 5% of HV/MV substations across Italy suffered
approval from the EU, thus saving time. The second reverse power flow for more than 5% of the time in
issue, affecting wind specifically, is the lack of a 2015.
framework for repowering old sites. Currently, wind
In order to face this complex new scenario, Terna
farms looking to refurbish are treated like new
launched through its subsidiary Terna Storage an
builds, facing undue bureaucracy and long lead
innovative investment plan in the storage system
times. This hampers such projects’ economic
sector aiming at providing the services needed in
viability and slows down the recycling of existing
order to ensure the safe and cost-effective
wind sites.
management of the National Transmission Grid.
Fossil fuel generation in Italy is in a sombre mood.
Therefore Terna Storage acts as an innovation pole
Power prices have dropped 45% from a 2012 peak
operating in Italy, and is engaged in the
of 78 €/MWh to a 2016 low of 43 €/MWh. Over the
development and implementation of storage system
same period, electricity demand has fallen by 6% to
projects for the transmission grid. The project, which
an estimated 285 TWh in 2016. This double squeeze
involves Italian and foreign universities as well
on prices and volumes led to a 12% shrinking of gas
research centers, will be revolutionary for the current
capacity over 2012-15. The little coal that remains in
management of electricity grids, and will also
Italy is poised for a slow death. Environmental
provide new opportunities to the entire storage
concerns in the country have halted new build and
system industry. This ambitious program consists of
refurbishments of old sites, adding to the costs of
two macro-projects (“energy intensive” and “power
coal and making it an ever less attractive source of
energy. intensive”) and plans the installation of different
types of systems with technological features that
As mentioned above, the Italian regulator intends to
meet the needs of functions and services to be
shift all electricity and gas customers on the
provided.
regulated tariff to the free market by 2018. In
January 2017, the regulator launched a new tariff, Approved by the Ministry of Economic Development
called “tutela simile”, aimed at helping customers (MiSE) in the context of the 2012 Defence Plan, the
with the transition. Enel will strictly monitor the power intensive project of Terna increases the
switch, as 21 million of its Italian customers (78%) security of the electrical systems in the country’s
are on regulated tariffs. As a result, the company major islands by installing 40 MW of energy storage.
has been increasing its consumer offerings. It The first Phase of the project, called “Storage Lab”,
already plans to roll out 30 million second- consists in the installation of two multi-technology
generation smart meters, which it hopes to pass on plants (using various storage technologies and 8
to consumers. But the company is also aiming an different commercial products) that will supply a
expansion into Internet services and electric vehicle total of 16 MW, divided between Sicily and Sardinia.
charging according to Bloomberg New Energy EPS has played a pivotal role in this project with 3
Finance. MW / 4 MWh installations partnering with GE and
Toshiba. Storage Lab will not only support the safe
management of the electric grid, but also host. 16
Energy Transition Technology Roadmap
activities to develop Smart Grid applications. Italian congestions, creation of energy reserve, and real-
and foreign universities and research centers will be time balancing. In this market, Terna acts as a
part of such challenging activities. central counterparty and accepted offers are
remunerated at the price offered (pay-as-bid).
Terna continues to procure energy storage, with two
flow battery projects under construction, a tender for Regulation 300 is the preliminary phase of an
supercapacitors issued, and Phase 2 of the project organic reform of the ancillary services market,
to be tendered later in 2017. which will be defined in accordance with the
European Network Code on Electricity Balancing
Just in Italy, 2.3 GW of behind-the-meter energy
(EB), where EPS is well positioned thanks to the
storage (Distributed Smart Storage) are expected
successful commissioning of the 3 MW / 4 MWh
to be commissioned by 2024. In parallel, by 2024 systems in the context of the Terna Storage Lab
more than 2.5 GW of behind-the-meter solar plus project, the performance of which has also been
storage installations (Distributed Smart made public in a publication of the IEEE (Institute of
Generation) are expected to be deployed in Italy, Electrical and Electronics Engineers), the world's
leading the European energy transition together with largest technical professional organization for the
Germany and UK. advancement of technology [12].
The overall positive outlook for storage deployment The authority said that pilot projects for storage and
is boosted by the newly adopted regulation in Italy renewables will be selected following harmonized
which sealed the opening of the ancillary services procedural criteria by Terna and operators from the
market to pilot renewable energy and storage energy sector.
projects. The Italian energy and gas regulator
AEEGSI has issued the deliberation 300/2017/R/EEL The regulator stressed that it will initially consider
storage units coupled with power generators that
(Regulation 300) with which it authorizes pilot
already participate in this market. The deliberation
renewable energy power generators and storage
also provides the minimum criteria for pilot projects
units to participate to the ancillary services market
to have access to the ancillary services market.
operated by the country’s grid operator Terna.
Selected projects will be submitted to a consultation
The ancillary services market – Mercato Servizi di with the sector’s operators. After the consultation,
Dispacciamento (MSD) – is the venue where Terna these projects will be submitted to the AEEGSI for
procures the power resources it needs for managing approval.
and monitoring the system relief of intra-zonal. 17
Energy Transition Technology Roadmap
SECTION 2 – Strategic Technological Plan and 2020
Business Targets
7. All – Technological Challenges – In-One Project: PROPHET
In this new energy scenario, EPS positioned as a technological leader in distributed generation thanks to its 36
large scale projects, including off-grid hybrid systems serving microgrids powered by renewable and energy
storage for a total installed power of over 35 MW, in addition to more than 18 MW of grid support systems, for a
total capacity output of 47 MWh of systems in 21 countries worldwide, including Africa, Latin America, Asia
Pacific and Europe.
However, the evolving scenario is imposing a strong continuous innovation path. Studying and developing new
innovative microgrid and distributed generation control technologies will be crucial to address the different
market opportunities that will arise from time to time, and pivotal for unlocking the energy transition described in
the previous chapters.
With this goal, EPS identified the major technological challenges for incoming years, which are going to be
described in the next paragraphs:
• Optimisation Algorithms and Control Predictive functions for Next Generation Microgrids;
• Distributed Smart Storage for behind-the-meter grid services;
• Distributed Smart Generation to transform consumers in prosumers with energy at a lower cost;
• Virtual Power Plants to achieve a radical transformation;
• Vehicle-to-the-Grid to transform a car into a revenue generating asset;
• Fast Charging to speed up EVs penetration.
Figure 8: connection chart showing the technological challenges of the Energy Transition. 18
Energy Transition Technology Roadmap
EPS decided to gather all the research and development activities linked to these challenges in the “PROPHET”
(PRedictive OPmitization for Heading to the Energy Transition) project.
Born from the long lasting cooperation between EPS and the Politecnico di Milano, its primary objective is the
improvement of Power Optimization On Line (POOL) control logics and algorithms for islanded and grid-
connected multi-DERs microgrids. Such an optimization platform should be suitable for the rest of the
technological challenges as well, in order to allow EPS deploying a single and flexible technological solution.
Within PROPHET framework EPS will design and build an experimental innovative rig at Politecnico di Milano’s
premises, which includes a multi-DERs microgrid supplying heat and electricity and an EV charging station. This
facility is expected to be used for the validation of the optimization platform and for furtherly develop EPS
solutions and know-how.
7.1 Optimisation Algorithms and Control Predictive functions for next generation
microgrids
EPS already deployed 35 MW of microgrids in areas should take into account the predefined objective
previously powered by diesel fuel only. EPS function and the desired security level;
microgrids already are equipped with real time • Consider the concurrent supply of different services,
exploiting synergies that a joint production optimization
stabilization and optimization features, full virtual
ensures;
inertia like centralized networks thanks to the
• Be oriented towards the next future evolution in
DROOP technology, and intelligent optimization of domestic energy supply, that will follow the increasing
the energy management thanks to the POOL diffusion of EVs mobility and domotic systems.
algorithms that have already demonstrated to
The first point addresses the important problem of
reduce diesel consumption by more than 50%.
conciliating a growing share of non-dispatchable
However, on top of such extraordinary control
renewable energy production with conventional
functions already deployed, more-advanced
generators efficient operation planning. The latter
algorithms can be applied to achieve further
two points are projected towards the integrated
advantages, such as:
managing of multi-asset distributed sub-systems,
• further minimizing fuel consumption; with a particular attention to the role that demand
• optimally planning the maintenance of core
response can play in the future of electricity
components in a predictive way; generation. Specifically, load adaptiveness deriving
• reducing the ageing of the units; from the adoption of intelligent demand-side control
systems (e.g. vehicle-to-grid systems, smart home
• further limiting renewables curtailment; and
systems, etc.) can help attaining instantaneous load
• adding further resiliency to the system.
balance also in presence of renewable generation
To do so they can be designed in order to make use
fluctuation. To do so efficaciously, consumers
of data predictors, such as:
located in different parts of the network must be
• wind, irradiance and load forecasters; and able to interact, and their effort must thus be
programmed by a higher-level aggregator, which
• sensors monitoring the real time status of system
components. can participate on their behalf in the electric grid
Starting from the POOL algorithms fundamental operation.
structure, the new algorithm will:
• Base the medium and long term control decisions on
innovative predictive optimization techniques, which
identify an optimal production mix robust with respect
to forecast errors. In this context the optimization. 19
Energy Transition Technology Roadmap
7.2 Distributed Smart Storage for behind-the-meter grid services
EPS already deployed more than 47 MWh of energy • Spinning reserve: to provide effective spinning
storage between grid support and microgrid reserve, at an adequate level of charge ensuring fast
response to generation or transmission outages.
applications.
• Capacity firming: smoothing the output and
The new technological challenge identified by EPS controlling the ramp rate of wind and solar power
is to bring behind-the-meter the same level of generation to mitigate rapid voltage and power
fluctuations caused by their variable nature.
sophistication and optimization already deployed at
the grid-scale level. • Peak shaving: installed close to loads in order to cut
expensive peak load and lowering tariff times.
As described in the sections above, the potential • Power quality: mitigating short-term voltage sags –
from the market perspective is compelling, and e.g. caused by power system faults or the start-up of a
Distributed Smart Storage, i.e. behind-the-meter large motor.
energy storage systems, can be disruptive for • Uninterruptable power supply: in case of a mains
commercial and industrial users, as a system can at failure or blackout, bridging the gap in supply.
the same time enable different applications and • Load levelling: storing power during low-load periods
related cost savings and revenue pools: and delivers it during periods of high demand in order
to reduce the load on less economical peak-generating
facilities.
• Frequency regulation: to absorb and inject power in
order to keep grid frequency within pre-set limits. • Voltage support: helping maintain the grid voltage,
injecting or absorbing both active and reactive power
7.3 Distributed Smart Generation, to transform consumers in prosumers with energy
at a lower cost
Distributed Smart Generation is, from the technical with good irradiation, today ensures returns higher
perspective, a simple concept: re-shoring in than 7% IRR, even without taking into account
developed countries the microgrids technical ancillary services and remuneration for curtailment
concept already proved by EPS to be able to avoidance and power quality.
reduce by more than 50% the electricity price in
The technological challenges are therefore clear: in
emerging countries. Obviously in developed
this environment of ever-increasing penetration of
countries, where generation is not based on
distributed solar power and behind-the-meter solar
expensive diesel fuel but rather on cheap coal and
plus storage solutions, the new role of the algorithms
gas, the commercial deployment would have been
will be to optimize, also in light of data predictors,
more complex.
the intraday profile of the exchange of energy and
However, the today’s competitiveness of the EPS power with the grid, in order to further minimize the
technology years ahead market expectations, levelized cost of supply for the prosumer, and
coupled with the rapid decrease in the cost of solar further increase the attractiveness of Distributed
power and batteries is already today economically Smart Generation.
enabling the time shift of significant amounts of day-
time solar energy to early morning and evening time
use (and in the medium term even night-time use).
Distributed Smart Generation solutions deployed by
EPS to C&I customers in Southern European areas. 20
Energy Transition Technology Roadmap
In particular, the following set of objectives shall be generation providing Combined Heat and Power or
identified as technological challenges for a concrete capacity to the prosumer (as alternative to grid
connection);
and sustainable deployment of Distributed Smart
• Maximizing the availability of the system for delivery of
Generation:
ancillary services to the system operator (availability is
to be intended in this case as a system state of charge
• Further maximizing the self-consumption of solar
consistent with the specifications for the delivery of the
energy production, and minimizing curtailment, given
respective ancillary services);
the cost advantage vs grid supply;
• Maximizing revenues from the supply of energy,
• Further shaving the peak of absorption from the grid, in
reserve and capacity on the relevant segments of the
order to minimize demand charges;
electricity market.
• Enabling the optimal utilization, in parallel with the grid
or in islanded mode, of any available thermal
7.4 Virtual Power Plants to achieve a radical transformation
While the concept of VPP is known in literature and • Control of the internal units in order to comply with
some CVPP platforms are available nowadays on traditional plant operating modes, as nowadays
prescribed by most common grid codes:
the market their independent operation by the
technical constraints of the power system and by - External reactive power setpoint control at the Point
of Common Coupling, Qref;
the grid operators (either DSOs and TSOs) seems
- Reactive power setpoint at the PCC definition as a
hazardous [13]. Therefore the technical challenges
function of the measured voltage at the same node,
arising under different CVPP penetration scenario Qref(V);
and operating modes shall be investigated by - Power Factor setpoint at the PCC as a function of
means of simulations carried out on benchmark the active power flow at the same node, cosphi(P);
networks. Once this analysis is concluded the - External voltage setpoint at the PCC, Vref;
technological challenges that have to be faced
Further operating modes could be conceived in this
should address the following TVPP aspects:
project taking into account that a VPP includes both
• Characterization and shaping of the VPP capability, generators and loads;
intended as definition of the static active and reactive
power limits of the VPP; • Definition of the least necessary data amount to be
transferred from DSO to VPPs and clarification about
• Characterization and shaping of the VPP transient
the business case consistency for these parties;
response at the Point of Common Coupling for both
symmetrical and asymmetrical faults [14]; Aforementioned objectives should be fulfilled taking
• Control of the internal units in order to comply with into account the CVPP targets and the technical
ramp rates, inertia, primary and secondary frequency constraints of the system (for instance lines, On
control requirements; Load and Off Load Tap Changer Transformers,
shunt capacitors, heating units, load features, etc.).
7.5 Vehicle-to-the-Grid to transform a car into a revenue generating asset
As previously anticipated, the diffusion of EVs is to perform such services EV chargers must be
expected to dramatically change the electric grid bidirectional. This concept is known as Vehicle-to-
scenario in the next few years [15]. The large power the-Grid (V2G) and it has attracted lots of attention
flow absorbed by charging EVs will become a great from not only grid operators, but also vehicle
challenge for DSOs. Contemporarily, having a large manufacturers. The latters indeed start foreseeing
storage capacity connected to the grid can in new business models that bring them a twofold
principle be extremely useful for improving grid advantage:
stability, efficiency and reliability. Obviously, in order. 21
Energy Transition Technology Roadmap
• Reduce the initial price of electric vehicles, one of the • demand charge reduction and peak shaving;
main barriers for this market;
• primary and secondary reserve; and
• Bring them into the power market, through the
• non-spinning reserve and congestion management.
complete or partial participation in the ancillary service
market. In addition, further technological challenges have to
There have been in the market several V2G be addressed to transform the V2G hype to reality:
announcements, but mainly based on a mere
• Investigating whether the algorithms and control
plugging of EVs equipped with on-board bi- architecture already developed for stationary storages
directional inverters to the main grid. However, the control are suitable for the optimal management of an
real technological challenge is to effectively EV fleet;
replicate an adequate level of sophistication in • Paving the way for the harmonization of the signals to
be used for enabling the management of an EV fleet.
terms of grid services effectively useful and directly
This activity should include a survey about already
remunerated by TSOs in the context of the real available standards, as SunSpec [16], and take into
ancillary services market, including: account all the possible fleet and optimizer scenarios.
The proposed list should clearly identify the list of the
• variable charge ramp management to decrease load Inputs and Outputs, runtime reconfigurable parameters
ramps; and predefined settings. Moreover indication about
timings and rate limits should be provided;
• remote trip and remote variation, including ad hoc
signaling (telescatto, teletrip, telemodulazione etc.); • Assessing the possible monetization schemes in order
to steer the market towards the best solution for both
• aggregated frequency regulation; EV manufacturers and DSOs;
7.6 EVs fast charging to speed up EVs penetration
Nowadays EVs fast charging is certainly one of the (2) EV charging station replacing traditional oil stations,
hot topics in the engineering community. According where the EV owners could stop for refilling their
to IEC61851-1 the EV fast charging could be batteries in no more than a tenth of minutes.
achieved through the followings modes: Both cases appear challenging from an electrical
• AC Mode 3: including slow fast and ultra fast charging distribution perspective. Indeed in (1) hundreds of
with a power demand that can vary between 3 and 22 EVs could charge independently, for example at the
kW at the LV socket (either single phase and three arrival at the office of the workers in the early
phase) with a charging duration no shorter than 20-30
min;
morning when PV power production is still modest,
leading to a sudden loading of the distribution
• DC Mode 4: with an ultra fast charging lasting 10-15
min and with a power demand greater than 22 kW network. Differently traditional oil stations in (2) are
through a DC plug. not connected nearby to a MV substation therefore
they would not be capable to bear the power drawn
Follows that EV fast charging is not suitable to most
of the domestic consumers, at least in Southern even by a single car. Evidently both cases well fit
with the coordination with onsite stationary storages
Europe where their maximum contractual power
does not exceed few kilowatts, unless they install a and PV plants, in other terms, again, Distributed
Smart Generation. Such a feature makes natural to
residential storage behind-the.meter with an
extremely high C-rate (an unlikely case). Therefore extend the algorithm already developed in the
context of PROPHET to the mitigation of the effects
the EV fast charging looks promising for the following
scenarios: described for (1) and for making possible (2).
(1) Large parking lots of industrial or commercial facilities,
which are typically close to a strong MV substation;You can also read
