Power Sector Reforms: Smart Grid

An Approach Paper
 Table of Contents

1. Background
1.1 Power ministry role
1.2 Responsibilities
1.3 Objectives
1.4 Other Governmental organizations & Programs

2. Introduction- Smart Grid

3. Definition

4. Need for Smart Grid

5. Smart Grid Drivers

6. Challenges for adoption of Smart Grid Technology

7. Case Study

8. Benefits of Smart Grid

8.1 Benefits to utility
8.2 Benefits to Consumers
8.3 Quantitative benefits

9. Conclusion

10. References
 SMART GRID

1. Background

1.1 Power Ministry Role

The Ministry of Power started functioning independently with effect from 2nd July, 1992.
Earlier it was known as the Ministry of Energy comprising the Departments of Power, Coal and
Non-Conventional Energy Sources.

The Ministry of Power is primarily responsible for the development of electrical energy in the
country. The Ministry is concerned with perspective planning, policy formulation, processing of
projects for investment decisions, monitoring of the implementation of power projects,
training, manpower development, administration and enactment of legislation in regard to
thermal, hydro power generation, transmission and distribution.

1.2 Responsibilities
The Ministry of Power is mainly responsible for evolving general policy in the field of energy.
The main items of work dealt with by the Ministry of Power are as given below:

General Policy in the electric power sector and issues related to energy policy and
coordination.
All matters relating to hydro-electric power (except small/mini/micro hydel projects of
and below 25 MW capacity), thermal power, transmission & distribution system
network, research, development and technical assistance relating to hydro-electric and
thermal power, transmission system network and distribution systems in the
States/UTs.
Administration of the Electricity Act, 2003, (36 of 2003), the Energy Conservation Act,
2001 (52 of 2001), the Damodar Valley Corporation Act, 1948 (14 of 1948) and Bhakra
Beas Management Board as provided in the Punjab Reorganisation Act, 1966 (31 of
1966).
All matters relating to Central Electricity Authority, Central Electricity Board and Central
Electricity Regulatory Commission.
Rural Electrification: Power schemes and issues relating to power supply / development
schemes / programmes / decentralized and distributed generation in the States and
Union Territories.
All matters concerning energy conservation and energy efficiency pertaining to Power
sector
Matters relating to the following Undertakings /Organizations:
a) Damodar Valley Corporation;
b) Bhakra Beas Management Board (except matters relating to irrigation);
c) NTPC Limited;
d) National Hydroelectric Power Corporation Limited;
e) Rural Electrification Corporation Limited;
 f) North Eastern Electric Power Corporation Limited;
g) Power Grid Corporation of India Limited;
h) Power Finance Corporation Limited;
i) Tehri Hydro Development Corporation;
j) Satluj Jal Vidyut Nigam Limited;
k) Central Power Research Institute;
l) National Power Training Institute;
m) Bureau of Energy Efficiency;

1.3 Objectives: The Ministry of Powers objective is to provide access, availability and
affordability of power for all.

1.4 Other Governmental Organizations & Programs

Energy is considered a concurrent subject in the Indian constitution with both state and central
sharing the responsibility of generation, transmission and distribution. The central government
is most actively involved in generation and transmission domains whereas the states control
distribution services. The central government provides funds and resources which allows for
upgrades, expansion and re-engineering. One of the main projects associated with this effort is
the rural electrification and modernization project known as Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY).

The portion of the central government that is most directly associated with the development of
energy policy and Smart Grid efforts in India is the Ministry of Power (MoP). Other sub-agencies
and nodal agencies of the MoP that are involved include the Central Power Research Institute
(CPRI), the Central Electricity Authority (CEA), Power Finance Corporation (PFC) etc.

Central government involvement in the Smart Grid has recently expanded beyond the confines
of the Ministry of Power into an inter-departmental task force known as the Smart Grid Task
Force (SGTF). This group includes the above mentioned MoP organizations, the Ministry of New
and Renewable Energy (MNRE), the Ministry of Communications and Information Technology
(MCIT), and the Department of Science and Technology (DST). In addition to this governmental
body, the Ministry of Power has set up the India Smart Grid Forum as a public-private
partnership, bringing in utilities, industry, academia, etc. as well.

The combined work effort of the Smart Grid Task Force and the Smart Grid Forum is divided
into 7 functioning workgroups: WG1-Advanced Transmission, WG2- Advanced Distribution,
WG3- Communications, WG4- Metering, WG5- Consumption and Load Control, WG6- Policy
and Regulation, and finally WG7- Architecture and Design.
Indias Smart Grid vision as expressed by the India Smart Grid Forum includes five fundamental
Objectives :
End of Load Sharing- peak load shifting through a combination of direct control and
differential pricing (demand response/demand side management (DSM))
Reliable Power- Robust systems with Self-healing capabilities through monitoring
Cheaper Power- Dramatic improvement in AT&C losses, real time monitoring of load &
sources
Shifting the Peak away from Costly Power- Better utilization of Assets
More Sustainable Power- Integration of green and renewable resources at a massive
scale, enough to increase energy independence

Other important changes in energy laws including the Electricity Act of 2003 and the important
National Electricity Policy of 2005 has set forth a formative set of national energy objectives
including:
Access to Electricity - Available for all households in next five years
Availability of Power - Demand to be fully met. Energy and peaking shortages to be
overcome and adequate spinning reserve to be available.
Supply of Reliable and Quality Power of specified standards in an efficient manner and
at reasonable rates.
Financial Turnaround and Commercial Viability of Electricity Sector.
Protection of consumers interests

The next most important Smart Grid related national energy policy decision occurred in 2008
with the implementation of the Re-Structured Accelerated Power Development and Reforms
Program (R-APDRP). This program has several parts. The first part is concerned with the
information and communications technology (ICT), enable power systems and investments of
power infrastructure in an effort to first measure and mitigate losses associated with operating
inefficiencies and energy theft. The primary goal of the program is reduction in losses, with
subsequent portions focusing on physical re-engineering of the grid as indicated by the ICT
driven data.

Other major goals of R-APDRP include:

Renovation and modernization (R&M) of power plants
Strengthening and improvement of sub-transmission and distribution networks
Development of adequate spinning reserves
Development of power systems automated controls
2. Introduction Smart Grid

The global climate change and rapidly growing populations over the past decades have
generated increasing demands for abundant, sustainable, and clean electric energy on a global
basis. In India increasing energy demand means an even heavier burden on the already
overstressed and fragile electricity infrastructure. The average age of power-grid transmission
lines is beyond 5060 years. Over the last several years, the electricity demand and
consumption have increased on an average rate of 6% and expected to stay at around 5.2% as
per reports available. The increasing electricity demand, the existing complex and nonlinear
nature of the electric power distribution network, have caused serious network congestion
issues. The network congestion and safety-related factors have become the main causes of
several major blackouts that happened in recent years.

Based on the reports available India's network losses exceeded 32% in 2010 including
nontechnical losses, compared to world average of less than 15%. Both technical and non-
technical factors contribute to these losses, but quantifying their proportions is difficult. But the
Government pegs the national T&D losses at around 24% for the year 2011 & has set a target of
reducing it to 17.1% by 2017 & to 14.1% by 2022.

The issue related to reduction in the CO2 emissions and the need for generation based on
renewable sources become important topics today. However, these renewable resources are
characterized by fluctuations.

To address these challenges, a new concept of next generation electric power system, Smart
Grid has emerged. The smart grid is a modern electric power-grid infrastructure for improved
efficiency, reliability, and safety, with smooth integration of renewable and alternative energy
sources, through automated control and modern communication technologies. The impact of
equipment failures, capacity limitations, and natural accidents and catastrophes, which cause
power disturbances and outages, can be largely avoided by online power system condition
monitoring, diagnostics, and protection. In this respect, the intelligent and low-cost monitoring
and control enabled by online sensing technologies have become essential to maintain safety,
reliability, efficiency, and uptime of the smart grid.

These low power and low cost sensing devices known as the 6LoWPAN (IPv6 over Low power
Wireless Personal Area Network) devices in the network work together to connect the physical
environment to real world applications. And considering the fact that several hundreds of
millions of Smart Meters along with the sensors need to be connected to the network, there is
an acute need for unique IP addresses. But IP addresses in the existing IPv4 (Internet Protocol
version 4) are exhausted. Hence it becomes mandatory to adopt IPv6 platform for the Smart
Grid application, which apart from providing virtually infinite unique addresses also provide
other advantages like auto-device configuration, built in security and multicasting.
The features of IPv6 which are especially relevant to the Smart Grid are detailed below:

Auto-Configuration: Sensor devices need to be configured with several parameters (IP

addresses) to make them ready for communication at the network layer. Manually configuring
these devices becomes extremely difficult especially when several hundreds of sensor devices
need to be configured. In contrast, auto configuration allows hot plug-in of the network
devices, as the devices configure their own IP addresses automatically without any user
involvement.

Security: Security is a major concern in every part of the Internet, covering areas like
encryption, access control, authentication, authorization, integrity protection, intrusion
detection, prevention of denial of service etc. The sensor networks have resource constraint in
terms of processing power and network bandwidth put limitations on security. Therefore, new
lightweight security mechanisms appropriate for sensor networks have to be used which could
be made possible on an IPv6 platform.

Mobility Management: The point of attachment of the sensor devices to the Internet could be
fixed or dynamic. Like in the case of Electric Vehicle (EV) as they can charge at any charging
stations, these EVs need to be identified in the network for charging and monitoring purposes.
When roaming takes place between different communication technologies such as a WLAN
connection to a mobile connection, it becomes difficult to resolve at the link layer and has to be
handled at the IP layer. So in case of an IPv6 enabled sensor devices NEtwork Mobility (NEMO)
provides a solution for mobility management.

Multicast: IP Multicast technologies enable scalable distribution of data, voice, and video
streams efficiently to hundreds, thousands, even millions of users. IPv6 Multicast utilizes a
single data stream, which is replicated by routers at branch points throughout the network. This
mechanism uses bandwidth much more efficiently and greatly decreases load on content
servers, reaching more users at a lower cost per user. IPv6 feature thus resolves the traffic
congestion problems.

3. Definition
Smart Grid is an evolving set of various technologies, especially information and communication
technologies, working together to improve the present grid. Industry has given various
definitions.

However Smart Grid, in nutshell can be defined as a power system capable of two-way
communication between all the entities of the network-generation, transmission, distribution
and the consumers. The aim of smart grid is to provide real-time monitoring and control, and
thus improve the overall efficiency of the entire system apart from inclusion of renewable
energy resources into the system.
4. Need for Smart Metering
Home appliances, consumer products, and manufacturing automation are just a few examples
of how technology has advances, leading to more electricity use than ever before. The
electricity system that supplies the energy to support this demand has not kept the same pace.
The meters that measured how much electricity customers are using have not changed since
1950s. The meters never knew that there is an outage in the system. But the meters proposed
to be used in the Smart Grid can even detect the outage and convey the same to all concerned
due to two way communication. Also there is a self-healing mechanism built into the smart grid
system which can detect the fault, diagnose and itself heal without any manual intervention.
There is also a growing need for electric vehicles to reduce the green house CO2 effect and to
have a green transport system. Also there is a need for the use of renewable energy sources
like solar, wind etc., as there is depletion in the fossil fuel. So for effective utilization of the
conventional energy and the renewable energy, integration of these sources to the grid is
mandatory. All these are possible with the Smart Grid only. So there is a need for investment in
the 21st century Technology which supports innovations like solar power, electric vehicles etc.

5. Smart Grid Drivers

a) Aging infrastructure: Large parts of the existing infrastructure dates back to the 1960s
or even earlier and is reaching the end of its useful life. Equipment is under extreme stress
during peak demand.

b) Integrating multi-energy sources: As the fossil fuel is getting depleted, there is a need to use
the renewable energy sources such as wind and solar. But these sources are intermittent,
hence an intelligent grid is required to interconnect the existing conventionally generated
power with the renewable energy sources for uninterrupted supply power to consumers.

c) Lower energy prices: With the increasing awareness among the consumers, they look
forward for lower tariff. And with the Government pushing privatization policies, it could lead
to more competition and lesser energy prices.

d) Sustainability: Public interest groups are putting pressure on politicians to reduce CO2
emissions through the adoption of alternative energy sources and to have regulations to
increase energy efficiency. This could only be possible by the Smart Grid Technology which
could connect these conventional and renewable energy sources seamlessly.

e) Revenue protection: Losses due to consumer theft or billing deficiencies is said to be around
1015%. So there is a need for better technology that can safeguard these aspects.

f) Operational efficiency: Electricity losses in India during transmission and distribution are said
to be about 24%. This calls for better efficiency in all these fronts as it is well said that Energy
saved is Energy generated.
g) Customer satisfaction: The inability to supply during the peak demands and faults leading to
break down of the grid resulting in black outs are causing lot of concern for the consumers. Also
wrong billing due to faulty meters lead to customer dissatisfaction.

6. Challenges for adoption of Smart Grid Technology

The Smart Grid is broad in its scope, so the potential standards landscape is also very large and
complex. The fundamental issue is organization and prioritization, to achieve an interoperable
and secure Smart Grid. The major challenges are enumerated below:

Lack of awareness: Mature standards and best practices are available and can be readily
applied to facilitate Smart Grid deployment. The main problem with adoption seems to be a
lack of awareness of these standards, best practices and regulatory guidelines by the people.

IPv6 adoption: As IPv6 has so many features like auto configuration, security, mobility
management, multicast etc., which could be effectively used for the seamless, smooth and
successful implementation of Smart Grid, adoption of IPv6 becomes a pre-requisite to Smart
Grid adoption.

Technical challenges: The Smart Grid poses a technical challenge that is beyond the simple
addition of an Information Technology Infrastructure on top of an electrical infrastructure.
Different stakeholders are responsible for different parts of the system. Independently, each
may make different choices about evolution and use. It is now necessary to manage the
integration of new equipment.

Standards and interoperability: The major challenge is due to integration of numerous

equipments from different providers worldwide. There is a huge need for interoperability
standards that will allow utilities to integrate equipment from any vendor that will work
seamlessly with the existing equipment. This means there is a need for standards at the
interface level that enables elements of any vendor to be connected in a plug and play mode.

High Capital Costs: Deployment of AMI requires expenditures on the hardware and software
components like meters, network infrastructure and network management software, along
with cost associated with the installation and maintenance of meters and information
technology systems. This means a huge capital investment in the deployment of smart grid. In
the prevailing situation it could be only achieved by the Government supporting the project or
playing a key role in encouraging Public Private Partnership (PPP).

Security: As we know that communication is the heart of the Smart Grid, at the same time it is
susceptible to all types of cyber threats. So ensuring consumer privacy and security is an issue
that needs to be addressed.
7. Case Study
Smart Grid projects in the European countries started as early as 2001. Way back in 2001, Enel,
Italys most dominant utility started a five-year program to install smart meters across its
customer base of 40 million homes and businesses. It was meant to improve efficiency, create
higher margins, and help customers reduce their energy bills. As of now 85% of Italian homes
are now fitted with smart meters, the highest percentage in the world.

According to ABI Research, the worldwide installed base of smart meters will more than triple
from 2008 to 2014, to 180 million units. The EU, with its population nearing 500 million and
mandatory installation targets for 2020, represents 64% of that figure, or 115 million smart
meters. North America is No. 2 at 45 million units, with Asia Pacific and Latin America third and
fourth, respectively.

In India too with the initiative taken by the Government of India, 14 Smart Grid pilot projects
are planned in the country. The Smart Grid Pilot Project at Puducherry is one of these 14 pilot
projects. This is done jointly by the Power Grid Corporation of India Ltd., and the Puducherry
Electricity Department (PED) in collaboration with around 56 organizations consisting of
equipment manufacturers, academicians, consultants etc.

The main objectives of the pilot project are to test and demonstrate, the effectiveness and
functionality of the Smart Grid Attributes like AMI, DR etc., scalability & reliability, arrive at a
common platform for seamless interoperability, evolving policies, regulation for large scale
implementation.

The Smart Grid Pilot Project is in progress in Puducherry and as of now the Smart Grid Control
Centre is established with around 1400 smart meters along with 8 numbers of Data
Concentrator Units (DCU) & 12 DT meters deployed in the field as part of AMI, which is the
foundation of Smart Grid. At present Smart Grid attributes such as AMI, OMS, PQM, Demand
Response, Net Metering, Smart Home, 3D map of feeder, Electric Vehicle and Street Light
Automation has been implemented. Other initiatives like Renewable Energy Integration, Micro
grid, Energy Storage are also in the process of implementation.

The present status of the various attributes of Smart Grid implementation is enumerated
below:

Advanced Metering Infrastructure (AMI): Smart Meters from 13 different vendors working
with different communication technologies like PLC, RF (2.4GHz), RF (865 MHz) & GPRS are
deployed. They all are integrated with the common Meter Data Management (MDM) to check
for interoperability and Standardization. This pilot test would help in freezing the common
platform on which equipments from different manufacturers would work seamlessly. Two
modes of communication with the control centre are implemented and tested. In first mode,
SIM card is embedded in the Smart Meter and using GPRS it directly communicates with the
Control Centre. In the other mode the Smart Meter communicate with the Data Concentrator
Unit (DCU) on RF. DCU has the embedded SIM card and concentrates the data from a cluster of
around 50 AMIs and in turn communicates with Control Centre using GPRS. With the AMI
implementation it is possible to monitor and control the following:
Reduction in AT & C losses
Reduction in cost of billing
Facilitating DT wise energy Accounting/ Auditing
Facility to connect and disconnect load by command
Better load management
Monitoring power quality information
Monitoring of outage data
Generation of alerts for tampers and sending to control centres

Outage Management System: In this implementation six Distribution Transformer Monitoring

Units (DTMU) as well as six Fault Passage Indicators (FPI) has been installed. DTMUs monitor
various parameters of the Distribution Transformers (DT) like oil level, oil temperature, load
current, voltage, harmonics, palm temperature etc. These data is captured using sensors and
sent to the control centre using GPRS communication at regular intervals. OMS facilitates the
following:
Easy and early detection of faults using Fault Passage Indicator (FPI)
Status of fault in the phase is communicated remotely
Outage Data is made available along with timestamp, feeder details, etc.
Preventive maintenance for transformers
Better Network Management-load redistribution and more efficient use.
Total Harmonic Distortion value to monitor power quality

Demand Response (DR): A demonstration model of demand response has been set up which
facilitates customer energy dashboard to receive utility signals and to respond for load
shedding. Customer energy dashboard is installed at the customer premises and it was
demonstrated live by controlling AC and lighting in SGCC. DR facilitates the following:
Facilitating consumer engagement in the energy management process by regular price
and usage information
Consumer responds to price signals by changing consumption behavior
Utility is able to better manage power supply deficit and surplus situation
Utility can defer need for capital intensive power capacity addition

Street Light Automation: Street Light Automation was also implemented. It was observed that
the energy consumption was reduced by around 20%. With this implementation it is possible to
monitor and control the following:
Street light switch on and off automatically
Dimming and brightening of street lights based on traffic conditions, thus saving energy
when there is very less traffic eg. during late night hours

Power Quality Management: In this implementation LT Automatic Power Factor correction is

possible. Power quality is affected due to various reasons in an electricity distribution set up.
Power Quality Management system is essential to monitor power quality at regular intervals
and automatically ensure better power factor, provide better compensation for reactive power
and weed out harmonics from the system. POWERGRID has installed a capacitor bank that will
manage power quality (voltage support) by automatic switching of capacitor bank.

Net Metering: The net meters can measure not only the electricity drawn from the grid, but
also what is fed into it. This feature was tested which enabled the customer to know how much
energy is fed into the grid from his roof top solar panel and also how much the customer is
drawing from the grid. At present further testing is in process for grid-interactive rooftop
scheme with technical assistance from Auroville Consulting. The idea is to demonstrate
technical and administrative feasibility of grid-interactive rooftop solar PV systems which will
pave way for a solar energy policy for Puducherry.

Electric Vehicles: POWERGRID is working with different vendors to develop Vehicle to Grid
(V2G) wherein electric vehicles along with many charging stations will be developed for supply
to grid when the grid needs it and vice versa. Demo of Solar charging facility for Electric Vehicle
and interconnection with Grid is in progress. Also using sensors, various parts of EV are
remotely monitored at present.

After close to a year of trials and testing of the features of the Smart Grid and the
communication technologies, the Smart Meter Technology has been demonstrated to work and
now Power Grid is in the process of tendering for 87,000 smart energy meters to be installed in
Puducherry homes for the next phase of the pilot.

8. Benefits of Smart Grid:

8.1. Benefits to Utility:

Reduction in AT & C losses
Increased Grid stability
Peak load management
Renewable integration
Self-healing grid
Reduced capital & operational cost
Increased employee safety
Increased revenue
Higher customer satisfaction
Opportunity to leverage its resources and enter new markets
Increased asset utilization

8.2. Benefits to Consumers:

Prosumer (Producer and consumer ) enablement
Improved quality of supply
 User friendly & transparent interface with utilities
Reduction in electricity bills by shifting loads from peak hours to non-peak hours
Opportunity to interact with the electricity markets through home area network
Opportunity to purchase energy from clean resources, further creating demand for
the shift from a carbon based to a Green economy.

8.3. Quantitative Benefits: The Quantitative benefits expected from a Smart Energy
Efficient Home are as given below:

a) Impact of Smart Grid Implementation on one crore households is expected to yield the
following benefits:
For an Urban area of 1 crore household
Peak demand reduction by at least approx. 12000 MW
Energy consumption reduces by approx. 30 Billion Units
26 million tonnes of CO2 reduction per annum
Reduction in infrastructure investment by 1lakh crore

b) Investment per Household and Payback Period

Investment & Payback
Investment per household Rs.35000/-
Payback period 3 Years
The investment per household includes the cost of SMART Meter, and metering infrastructure
required at the customer premises to capture the customer data remotely either through a
wireless/wired means of communication for processing at the Smart Grid Data Acquisition
Centre. But the Investment done by the utility on the Common Smart Grid infrastructure like
Control Centre, Data Transmission, Data Processing, etc may have a payback period of around 5
to 10 years.

c) Average Power Saving through Energy Efficiency per Household

Summer Winter
Peak Demand Reduction (Units) 1217 2485
Reduction in monthly consumption (Units) 266 199

d) Value of Saving per Household

Average tariff 4.00/unit

Monthly saving (based on energy saving from table above) Rs.1063/- Rs796/-
Annual Saving (4 months Winter + 8 months summer) Rs.11688/-
Annual air pollution reduction 2.60 tons of co2

The Value of saving per household Table above is calculated based on the reduction in monthly
consumption units given in Table 7.3 (c ) above and on the assumption that the average tariff is
Rs.4/- per unit. Also it was assumed that there will be 4 months winter and 8 months summer in
a year.

e) Benefit to Cost Ratio

It has been found that the Benefit to Cost ratio varies from 3.85 to 4.2 and with an average of 4
it is said that investment in smart grid would be a profitable investment.

9. Conclusion
The transformative power of the smart grid is enormous. The smart grid has the potential for
revolutionizing the way we produce and consume electricity. The new services enabled by the
smart grid will include different rate designs that encourage curtailment of peak loads and
make more efficient use of energy. Examples include dynamic pricing and inclining block rates.

These innovative rate designs will be enhanced by various automating technologies such as
programmable communicating thermostats (PCTs), whole building energy management
systems (Auto DR), and in-home displays (IHDs).

Smart Grid requires IPv6 platform to reap the full benefit of the Smart Grid infrastructure and
its applications like AMI, DR, EV etc., hence IPv6 adoption in India is a prerequisite for Smart
Grid implementation. So efforts need to be taken by the Government to frame policies and
regulation for the speedy implementation of IPv6. Government should support and provide
incentives to all stake holders like various departments of State & Central Governments,
institutions, PSUs, ISPs/TSPs, application & content providers and manufacturers to enable
them to quickly embrace IPv6, which is undoubtedly the Internet Protocol of the future.

The smart grid is posed to go beyond smart meters and rate design and enable renewable
energy resources to be connected to the grid. This will allow optimal use of intermittent
resources, such as solar, wind, which often reach their peak generating capacity during off-peak
hours. New off-peak loads, such as plug-in hybrid electric vehicles, which reduce overall energy
consumption and improve the carbon footprint, will be energized by the smart grid. Smart Grid
can therefore become a platform for all the innovative services of the future. Hence
Government of India should provide the necessary thrust for its quick deployment so as to reap
the full benefit. Smart Grid can usher India from power dependent country to self-reliant
country in power, apart from the benefits of so many innovative services that could boast the
socio-economic growth of the country and launch India as the next economic super power.
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