 My name is Cheryl Eidt and as already has been told I'm a PhD student in the final month right now at the University of Technology and I wrote together with the co-authors this part for the upcoming book and it's called Global Trends in the Political Economy of Smart Grids and as I knew that the audience might be very from a very broad background I would first want to start with what is a smart grid. So it has to do with electricity supply but and the grid refers here to the electricity grid but a smart grid can be defined as electricity networks that enable two-way communication and power exchange between consumers and producers utilizing IT to respond and manage with the want and ensure safe and secure electricity distribution. So the electricity network normally the network itself can be defined between the transmission and the distribution grid and normally the transmission grid already has IT systems in place which ensure that in real time there's a constant balance between electricity supply and demand. However smart grids are actually inviting towards this innovation on the distribution side so that electricity consumers producers local PV panels EV units would all be interacting in real time with the supply and and demand of electricity available. However from a policy perspective this term has actually taken a whole wide usage so it it can be seen as a necessity to go towards smart grid because it can then a grid can then integrate much more renewables because it will be in real time reacting to the availability of sun or wind. It could make sure that there's an efficient use of the sources in the grid so efficient use of the electricity supply but also of the network capacity and it would ensure reliable supply. I will this this actually these parts are for me the major issue that I want to discuss is how is this from a policy side used differently the terminology of smart grid because as I said it can be seen as this interaction of a local grid between different resources and the three main elements in the smart grid are a smart meter which is a meter which is actually in real life monitoring the consumption of a household and it can send this information towards a retailer for example to see how much electricity is consumed then resources and then there is the real-time management of these devices. An important term here is the term demand response which you might hear a lot because the demand response is actually this interaction that takes place in a smart grid. So when I send a price signal to you of a high price and you're responding to that that's demand response because you're then responding to the the scarcity of electricity available in the grid. However not only electricity consumers but also storage units and local production units could respond and therefore I normally use the term flexibility the flexibility of electricity electricity electricity flexibility instead of demand response because it's a wider term but it is just a term which is used more in policy. So coming back to this issue so smart grids are used in many ways because it's such a broad term it's a it's a technology advancement which can be defined in many ways that you could almost say like wherever there's a crisis we just put a smart grid and it will solve the problem but I would like to question that right now. So I go through the structure that is just like that I would shortly talk about the history of the use of this term and then define how in the US and Europe and in China these developments have been taking place in the smart grid domain and how this can be a learning a lesson for other places but also in the developing world how can the smart grid be applied and then I will end with some recommendations. So the history of this term is actually the functionality of a smart grid is actually really old already in 1981 the professor Shrepa and co-authors wrote about the functionality which is actually exactly the same as we know it today an electric grid that can support interactions between supply and demand with local markets efficient use of electricity networks and supply that was already described in 1981. However only from 2005 this term smart grid came up and it was because of a researcher who wrote towards a smart grid power delivery for the 21st century and in this in his document he described how we can relate an electric network to an F-15 aircraft with self-healing possibilities so this this this integration of IT in the electricity supply and in 2007 this word and the naming of smart grid is has been used in the US energy independence and security act in 2007. In Europe it was in 2006 they defined the smart grid in a report where they actually gave a vision for energy of the future but in 2012 in the energy efficiency directive actually there has been a statement of fixing a number 80 percent of smart meter investments for 2020 so it says has been proposed that the country should have 80 percent smart meters invested in 2020 and in China in 2011 the five-year plan for national economic and social development has discussed this term smart grids as well so you see there is it's a nice term it's a nice we rather go for smart grids than dumb grids so but what does it mean and how can we use it and how does the industry structure which is so important here define how a smart grid is applied because you can have a general electricity supply chain is always production transmission system operation that means keeping electricity supply and demand always in balance and then distribution and retail so in a system where everything is owned by just one utility that's called a vertical integrated model that means there is no competition and there can be issues of course there with efficiency because this one monopoly can define any price and the consumer just has to pay because they're dependent so the another model is the single buyer model and that means that there are multiple producers of electricity but there's one public utility for example local utility which buys electricity from different suppliers so there's already a little bit more competition in this model because we make sure that the producers are paid which are giving the lowest price in every moment in time so that is already an improvement this model is right now in China existed and used then in the United States this model is applied in many places it's the wholesale competition model meaning that there can be multiple buyers and multiple sellers trading electricity and then forwarding it to a public utility which can be local in an area in place and municipality utility or it could have another name and in Europe it's even further we have the retail competition model in electricity meaning that ever even the consumers are able to choose a retailer so and also in some places in the United States the last model is applied but in Europe this is by regulation necessary so why do I discuss these models is because they are actually defining the rules of the game for smart with investments so I would like to go into that so in an integrated utility as I said most present in US also in China demand response so when there is electricity there are signals given to for consumers to respond this can be directly used for their internal business model so for reducing network constraints reducing costs for their supply however when there is a distribution service operator and these are these distribution service operators are just focused on their part of the network they don't care about retail prices how high the prices of electricity they would use the demand response just for reducing the network investment needs and so electricity retailers which are only focused on markets and on reducing their risk in markets would use these flexibility of consumers for risk reduction and differently aggregated which are a new kind of actor in the electricity supply chain these actors are actually giving signals to a group of consumers in order to trade their flexibility in central markets so these are actually new actors that come up because they see this business model that's coming up and consumers can be more engaged they can see real time what they're consuming they can have more insight in what price changes that happen and therefore if you see a smart with there can be different type of investments and design from a technical and institutional perspective and these different actors that can be involved and it depends all on the industry structure so as I said the way the industry is designed the roles that they're they're given two different actors the regulatory model and how energy policy has also been discussed by suro how energy policy is stringent or not so if I go over this this three countries so you as a what we can see there is that the the smart with investment started there just the talk about it because of great reliability problems in 1984 to 2006 that the rate the regulatory model applied there is cost of service for many utilities or rate of return that means that the utilities get paid what they are meant to invest in there is not really too much focus on becoming more efficient and in 2009 the smart with investments actually mostly smart metering investments jump started because of a 4.5 billion made available for metering for smart with investments however most utilities just invested in metering and it's for me questionable whether that actually is a smart with because you just have a meter but you don't give a signal for the user to become more efficient with the system and what right now is a problem is how to deal with many distributed energy resources so local PV and CHP or EV units that are being connected to the grid these cause a lot of tension in the local networks and this seems to be a bigger problem than oh we want to do a smart with so that's right now more of an issue in the US than moving towards a holistic use of a smart with vision in Europe the the push towards smart with was mostly to move towards sustainability I think also towards independence and affordability but the regulatory model for many utilities is incentive-based regulation that means that for example the DSOs are incentivized to every year reduce their expenses and to show that they're really efficient in their operations however this means that sometimes no not sometimes many times smart with investments are not of their interest because it would increase their expenses and smart with investments are both of capital expenditure and operational expenditure nature so man it's a big question what would be the role of a DSO in such a smart grid environment differently in China there the this talk about smart with jump started because of this extreme growth of electricity demand and the pollution issues so they thought we have to really move towards renewables but the grid cannot handle that if we are just going on in the same way if we do and also there there's a rate of return regulation and there has been some quite impressive developments but mostly on the high voltage transmission grid so there's been and the funny thing is they use the term smart grid they're actually referring mostly to the central grid expansion but there is also a EV car fleet development which has to do with this pollution issues that they wanted to reduce and this EVs yeah they have no pollution so these are therefore an interesting option however smart metering is not really of an interest in in China so if I just give you an overview this is just what I just a little bit discussed about that we can actually see that smart with investments and interests are very different depending on industry structure depending on the regulation and for example in Europe it's it's very difficult to define what would be the role of the distribution service operator because with a smart grid this this this distribution server operator might become a monopoly actor having access to electricity consumption data and that we yeah create maybe problems with what will be their role towards retailers and how will they have then they have a beneficial position towards retailers so this is an important aspect for Europe but I would like to move towards a little point on India so in the developing world as has been discussed we don't have really this big stranded investment costs that we in Europe or other places have so small investments smaller units like PV units might actually already be very interesting for those for developing electricity in on electrified rural areas so in India is actually a nice place to already observe how they move towards smart grids because they they approved in 2013 a national smart grid mission and they're right now 10 I think even 12 smart grid pilot projects running from the national grid and where they really wanted to want to use interactions with IT and electricity supply with renewable sources however what is important to keep in mind is really a sustainable long-term business models for those smart grids because if you just put down a grid put down some panels but don't support the investment with some pricing mechanism and billing mechanism it will not last it will just fade away nobody will maintain it furthermore once there is a smart grid or a local grid built and the central grid is connect to the local grid because it expands incrementally then the question remains how is the interaction going to take place how are we going to build the local production and versus the central production so these are some important points to take in mind for developing world so just as a recommendation so developments in smart grids are really depending on industry structure regulatory models and the energy policies and we believe smart grid investments should be incentivized so if even utility is not incentivized to invest in some extra part then they will not do so because it will just reduce their incomes then strict CAPEX regulation would just support a smart meter investments what I'm what we mean to say is that if you just give one big bunch of money for one term investments they will just use it a utility will just use it for that one meter that will be applied and to justify the investment however that doesn't mean efficient operation of the system because if you just put in a smart meter it does not mean that the user is going to interact with the grid you need to do efficient pricing time-based pricing direct control aggregators so there these are actors and systems that ensure that there comes an interaction in place so that's a very important point which is many times forgotten people think it's just an investment and then it works no it's also operational expenses which are have to be paid so this is also with the with utilities with an incentive regulation it's not just CAPEX but also OPAC expenses which should be covered so however even we can not just give a big bunch of money to utilities I believe we need to also regulate in another way so because smart grids mean a lot of data that is available to the utilities so you need to make sure that the data is handled really in a private manner and furthermore that because the month response can sometimes not be competitively set it should be fair that the price that is paid for example if you would reduce your production or increase your production that it's a fair price that you're getting for for this behavior that you're doing not just a small price that the utility really benefits a lot from your adjustment to the system so therefore a new regulatory system is needed for these for these new technologies and lastly as we said in the last part in new area developing world and even islands which are disconnected new technologies are really interesting also from an investment perspective however there's real need for also long-term business models so smart to me means not just technically smart it means economically business perspective and institutionally smart thank you so much for listening