Smart Grid Technology in Emerging Markets

An expert panel of developers and investors from the private sector discuss how to unlock the growing smart grid technology market in the developing world.

Across the globe, energy consumption is increasing, and utilities operating on outdated infrastructure with dwindling resources are struggling to keep up. In many regions, smart grids—the infrastructure that allows real time power delivery monitoring and management from generation to end-use—are emerging as a viable answer to decreasing the burden of projected peak demand. The 2017 Smart Grids Market Report found that smart grids could reduce the projected peak demand by nearly 24 percent across the major regions of the world. But this burgeoning technology still faces barriers to gaining adequate private sector investment.

Private sector engagement is fundamental to USAID’s goal of ending the need for foreign assistance. As one of the most-powerful forces for improving lives, strengthening communities, and accelerating countries towards self-reliance, private-sector engagement—and the market-based approaches it leverages—builds the skills, resources, knowledge, local institutions, and incentives that enable local systems and markets to be self-sustaining long after USAID support has ended.

In order to better apply these principles to developing country energy sectors, USAID and the U.S. Department of Energy’s (DOE’s) National Renewable Energy Laboratory (NREL) have reached out to private sector experts in this webinar series to better understand the barriers to private investment in developing country energy sectors.

The U.S. Agency for International Development (USAID) and the National Renewable Energy Laboratory (NREL) are partnering to support clean, reliable, and affordable power in the developing world. The USAID-NREL Partnership helps countries with policy, planning, and deployment support for advanced energy technologies.

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Video Transcript 
[Matthew] Good morning everyone. I'm Matthew Ogonoswki. I work in USAID's global climate change office on clean energy assistance here in Washington, and I'll be your moderator today. Welcome to the third in the private sector perspectives on clean energy webinar series. Today we'll be looking at smart grid technologies in emerging markets. We'll be discussing with three distinguished panelists and all of our guests on the phone from the field the barriers and potential opportunities for private sector investments in smart grids and how they can be supported. Let me start with just a little bit about my background. As some of you know, I'm the clean energy lead for USAID's CEADIR activity. CEADIR focuses on financial capacity building, so we do work building capacity on clean energy lending with banks, enabling environment support for clean energy with governments and other players, and we recently, in fact, had an event in May in Denver, which specifically brought the private sector together to talk about opportunities and smart grids and renewable energy technologies. I also manage USAID's engagement with the private financing advisory network, known as PFAN, and this is a program which has been around about 10 years, and it links private sector clean energy developers with potential investors to catalyze financing. I'd like to say a few words first about what we're going to focus on in today's webinar. We've seen in recent years across the globe in many emerging markets, energy consumption is increasing rapidly. That's due to economic growth, to expanding energy access in new regions, and rising demands for electricity from new technologies. It's accompanied by a number of new trends. In the more advanced markets we're seeing integration of low-cost distributed solar and wind power, distributed energy resources such as demand response, energy storage and electric vehicles, and even more cutting-edge trends such as digitization of the grid and electrification of new sectors. There's many of these trends going on, but at the same time a lot of emerging markets are dealing with this through utilities that are still using older infrastructure and they really need a more advanced system that can reduce peak demand, that can shift demand between periods, and that can store energy. This all really needs to be done through cutting-edge electronic communication and coordination. So there's a number of challenges, which I'll talk about, associated with the current infrastructure and grid management systems and how to get to the new system where you can effectively manage peak demand and integrate new resources. Along with the challenges, there are a great deal of opportunities and we'll talk about those. In the area of opportunities for reducing demand and improving grid management, the development of smart grids offers a great deal of promise in many emerging markets. The essence of smart grids, which I'm gonna talk about in more detail shortly, but the essence is that there's two-way communication between what you're generating and what you're using. There's a great deal of opportunity and need for private sector investment in these technologies and private sector involvement. Getting that private sector investment in these emerging markets and addressing the barriers to that is what concerns us here today. So let me introduce our guests before I go through my presentation. We're very grateful to have three experts on smart grids here, and all three of them have also worked closely with USAID over the years. I should mention that I had the great pleasure of working with each of them on the CEADIR event from Denver that I mentioned where they shared their very helpful insights on smart grids and clean energy technologies with a number of private sector players. Today we have Douglas Shuster. He's a principal from the Tuatara Group and he will be followed by André du Plessis. He's a manager of business development at Schweitzer Engineering Laboratories. And Steven Hauser who is the CEO of the GridWise Alliance. We're very grateful to having all three of them here and we're looking forward to their insights. Now I will give my presentation, a brief presentation, with an overview of smart grids, and after we'll take some questions from the audience after the presentations. I just want to mention first that we really look forward to having this be the start of useful partnerships that will advance smart grids, advance private sector investment, and advance USAID's clean energy and development objectives. This is the third in a series on private sector perspectives in clean energy investment. The next one will be on September 6, and we'll be looking at Off-Grids, Mini-grids, and Microgrids, and we'll be hearing more about that. This webinar series, the genesis of this effort, was NREL devised a very helpful survey for us for private sector players in the clean energy field. The purpose was to understand what are the barriers and opportunities to investment in emerging markets. We had over 70 private sector respondents to this survey and they were working in smart grids but also in areas including Utility Scale, Wind and Solar, Energy Efficiency, Distributed Generation, and Off-Grid and Microgrids as I referred to earlier. Based on their responses, NREL compiled these results, and this slide shows what areas each of the respondents felt were the key barriers. There isn't much new here. There's the ability of customer to pay was identified as a top one, political instability, permitting processes for generating units, getting grid access and interconnection to the grid, and, of course, access to finance. Those are themes that I'll pick up a little later and that our presenters will be talking about as well and sharing their experiences on. As you see in this slide, the private sector respondents to the survey also shared their thoughts on how actions could be taken to improve their competitiveness and their entry into emerging markets. The top five that came out were supportive and enabling policies for renewable energies and energy efficiency, working with local banks who increase lending and build their capacity, providing access to market and business information on a greater basis, developing power purchase agreements and long-term contracts, and establishing processes to facilitate grid interconnection. In this slide we just provided a short overview of the general feature of smart grids and I took this definition of smart grids from the commerce department ITA Top Markets Report because I think it really captures it well. That is, a smart grid is a modernized electricity transmission and distribution network that includes two-way communications systems and enables the integration of technologies that will modernize the grid to improve its efficiency, reliability, sustainability, and security. I think that captures some of the key aspects, but just to sum up in brief, one of the key features of smart grids is that a smart grid combines a number of heterogeneous components and processes: large and small generators, advanced metering infrastructure, advanced data analysis techniques, cyber security, and others. It is complex, distributed and digitized. It's bi-directional, which is encapsulated there in the commerce department definition, but that's really key that the demand and supply is communicating. The digitizing information technologies structure that enables this is really the backbone, and it ensures that end use in generation and transmission are all well-coordinated. Compared to the traditional grid, there's a larger number of proactive players, and this includes, for example, behind-the-meter systems having a greater role such as residential systems, electrification of areas such as electric vehicles and buildings. Another important component of this market is that advanced IT systems play a fundamental role, and this includes not just regular IT systems but supervisory control and data acquisition, SCADA systems, and also increasingly the Internet of things is being brought into the smart grid, as well. I want to put this graphic up quickly. I really like this because I believe it captures quite well some of the key elements that I just mentioned, such as smart metering, distributed generation, battery storage, transmission, and others. Again, in a single graphic it really shows the complexity and the different types of components that need to be integrated to develop a unified and seamless and effective smart grid. I've summarized some of the main barriers and challenges to developing and investing in and selling technologies for smart grids. Of course many of these you'll already be familiar with because they're also common, some of them, to other clean energy technologies. So I'll go through this fairly quickly, but to begin with smart grids have a high capital costs and long payback times. They don't tend to be cheap, so that's a key barrier. Tied in with that is access to finance is a challenge, in part because of the capital costs and the payback challenges. I also wanted to mention that many countries in emerging markets have limited experience and capacity with smart grid technologies. This is especially true when you get to the more advanced technologies and systems such as advanced IT systems, electric vehicles, and demand response, although energy storage is starting to catch on in some other countries. I referred earlier to the complexity of smart grids, and as a result they require a coordination of components that can be greatly varied and have different interface points. That can be a challenge that also will need to be addressed. Local content requirements are a key barrier that has come up, and depending on their products and their business models, businesses will want to think ahead and consider whether it makes sense to adapt their products and models to meet local content requirements in some regions, or whether it makes sense to have a more central one-size-fits-all business approach. That is a key issue with smart grids. Electricity and prices and volatility, policies and regulations is another area that needs to be navigated to invest in these markets and smart grids. If you want a really interesting example, there was one on Brazil in the Commerce Department's Top Markets Report, and that looked at how the energy regulator had requirements for smart meters but there were regulations that delayed the achievement of those objectives. National standards is another aspect I wanted to mention, and I wanted to give a shout out to Itron, who, Itron made a great presentation at our CEADIR Denver event in May, and they pointed out for example that in Mexico and Central America and in Southern Africa, the countries tend to align with US standards. But in South America and in Northern Africa they tend to align more with standards from the EU, so that's obviously a challenge for US companies both in terms of developing their overall strategies and in terms of selling to the region and targeting their investments. Finally, I mention the financing state of utilities and the need to monitor and maintain smart grids. Maintain smart grids is another potential challenges to effective smart grid implementation and investment. In the next two slides, I want to share some data about recent trends globally in smart grids. These are taken from the IEA's World Energy Investment Report 2018, and they give an overview of investments in smart distribution networks globally in this first slide. Now, these, the data here in this slide is for all countries. If you just pull out the information on investment in smart distribution networks for China, India, and other emerging markets combined and separate those out, you get that for emerging markets total investment was about eight billion in 2017. Equally or perhaps more significantly across emerging markets in the two-year period from to 2017 investment increased about 10 percent, so it's growing at a good pace. In this second slide, we have the cumulative smart meter installations annually, so it's the number of smart meters that were installed in each year from 2013 through 2017. What the graph tells us if you dig down into the data is that the number of smart meters installed in emerging markets outside China increased three times in the five-year period from 2013 to 2017. So there's been pretty much a phenomenal increase in the number, a three-fold increase. And if you look at it again the same countries outside China, in just the last year the total number actually rose by 40 percent, so the growth has been quite impressive. In this next slide, we pulled some information out of the Commerce Top Markets Report and they have a ranking which basically ranked the top 10 countries in overall and in each of three areas: transmission and distribution equipment, smart grid information technologies and energy storage. What they found, not surprisingly, was that markets with high renewable energy deployment targets tend to rank higher overall. They also found that emerging economies of high growth potential they rank higher due to future electricity consumption. So what that amounts to is that in the area of transmission and distribution equipment, you see a great number of emerging markets such as Mexico, Ghana, Vietnam, and India ranking very highly as among the top opportunities in the world. You don't see as much opportunity in the more advanced areas of smart grid ICT and energy storage. The one thing I would call out is that in the area of energy storage, Korea ranks quite high and that's because they've made energy storage a priority and they have a number of enabling policies. What this means, what this slide is telling us is essentially that we're really looking in the area of transmission and distribution equipment in emerging markets where there's going to be the most opportunity for US firms in the near future. To sum up, in the last few slides the bottom-line, I think, we've seen is there's been a significant expansion in investment across emerging markets in smart grids in the last few years. There's been correspondingly a great increase in the deployment of smart meters across emerging markets, and while we've seen a lot of investment in the transmission and distribution sector in emerging markets, there's still a number of other advanced areas where there's room to grow and a lot of opportunities for US firms. With that, I would like to hand this over to our three panelists, and they will give us their first-hand insights and experience at addressing barriers and their thoughts on where things are moving and what the future looks like for the private sector in smart grids. So I will hand it off to Douglas Shuster. Doug, take it away.

[Douglas] Thanks, Matt, and thanks for inviting me to participate in this webinar. Very briefly, I know there's limited time, but Tuatara is a firm that works primarily in emerging markets across a range of infrastructure sectors and we have been focusing on smart grid projects around the world for the last 15 years. We are working in feasibility studies, pre-feasibility studies in Asia, Africa, Latin America. So you can learn more about our partners and our company. We basically have three firms that came together about three years ago, and again focusing mostly on emerging markets infrastructure. The key question I think that we wanted to address was where are the best investments for smart grids opportunities and why? When I think about this, based on our experience and the number of markets, it really comes down to two questions. What is the policy and regulatory framework and what is the institutional framework? For the policy and regulatory framework, the real issue is, does the framework incentivize market investment? I think that the technologies continue to evolve but there's a lot of great technologies and solutions that have been tested and proven. In the beginning of smart grid everything had to be... Everyone had to have a pilot project for everything, but at this point there's enough case studies out there, proven technologies that a lot of these systems are proven to work, the technologies are there. But the question is, are the incentives there? For example, Matt spoke about demand response for peak shaving. We work with a firm that has a great technology for peak shaving for at the distribution utility level, but the question is, is there an incentive? For example, are they paying peak pricing for the generation that is not able to be passed on to the customers and so they have the incentives to put in these types of systems? Some other areas in terms of the incentives, reducing O&M costs and theft, there's a lot of technologies including smart-metering that could be used for this and are well-proven. But in markets like India, for example, theft, electricity theft is only recently enforceable, so is there motivation for capturing that? Can you actually capture revenues where you identify thefts? Renewable energy integration will be critical going forward, but I think a lot of other countries are struggling with what the incentive structure and what the policy framework should look like to incentivize where do you put the energy storage? Who pays for it? Who bears those costs? Then reliability is critical, as maybe some of the largest economic impacts and benefits, but often is one of the hardest to incentivize through the regulatory framework. The second issue is the institutional framework and it's about what have they done with the utilities in that country? We think and are they able to capture and monetize those incentives that are in place, if they are in place? I think the best scenario probably from our perspective looking at emerging markets, is a private utility that has a strong regulatory framework. Those are the places where you see really dramatic improvements and I'll show you a few case studies in a minute. That's compared with state-owned enterprises which in many of the markets, many of the emerging markets, of course, are highly inefficient, loss-making entities. But there are other cases, Matt mentioned China, and there's other countries like Vietnam, we've done work in Costa Rica where state-owned enterprises have been corporatized and even though it's sort of a command-and-control and directive or five-year planning in some countries like Vietnam, the motivation is there and they're able to move forward with a large-scale smart grid investments. I thought I would just give a few examples from the markets we've worked in. India, the institutional framework is very interesting because you have this stark contrast between these very efficient private distribution utilities in some of the large metropolitan areas versus these state-owned electricity utilities which are highly inefficient loss-making entities. The regulatory framework is fairly good for these private utilities and some of them have reduced losses from well over 40 percent, to under 10 percent in just a few years using various best practices and smart grid technologies. While the state-run utilities are at least five years behind, I'd say generally in terms of bringing forward smart grid technologies. There's another system they have for utilities, distribution utilities which is sort of a concession arrangement but they call them franchises, which is interesting because they incentivize the investment in reducing losses by basically your utility is paid through the reduction and losses within the system. Those are being done in urban as well as rural areas. In Jamaica where we've done some work, you have a vertically-integrated privatized utility and a pretty strong regulator, and one of the interesting things they've done there to incentivize smart grid is anything greater than 20 percent total commercial losses within the system has to be absorbed by JPS, the national utility as a penalty. That amounts to over 20 million a year, which has motivated them very immediately to invest in smart grid and AMI, as well as other smart grid technologies. In Nigeria, we've done some work there about four or five years ago and there was a lot of optimism about the privatization of the distribution companies or DISCOs and a lot of plans for smart grid investments there, including pre-paid metering and smart-metering and GIS and other substation automation. I think we haven't worked there recently but my understanding is that the regulatory environment has not really been that conducive to those investments going forward. For example, some of the metering plans have been very slowly deployed because there is estimated metering currently, which is highly inefficient in a way and yet it's highly cost-effective in another way compared to putting in a real metering infrastructure. If you can work that type of system the investments may not actually make sense from a purely financial perspective. Again, it's a pretty good institutional infrastructure but a weak regulatory framework there. In Vietnam you have more of the state-owned enterprise approach and a five-year planning type of approach to the system. It is a corporatized, unbundled state-owned enterprise system, but so you don't have those private sector immediate financial incentives to install metering and other smart grid technologies. But what we've seen and we did some work with the national transmission companies there is that there is a real push for capturing the economic benefits from things like improved reliability. So they sort of they're taking a longer term approach and they're making good investments for the overall economy and they are making those smart grid investments based on some of the directives and some corporatized sort of accounting practices. That's sort of a good example of a state-owned enterprise where it's not necessarily a strong regulatory environment but a strong policy environment for smart grid. So those are a few examples and I thank you for your time.

[Matthew] Doug, thanks very much. It was really helpful to get your experiences. I know that you talked a lot about the number of key areas of interest that we discussed earlier like weak regulatory environments and the importance of loss reduction. It was really good to hear how your company has been able to address these areas in emerging markets and harness these opportunities to improve their grids. Now I would like to turn it over to André from Schweitzer Engineering. Thank you.

[André] I think that that was an excellent kind of like a 1,000 foot-level overview of the... I think of the environment, of the smart grid environment for us. I'm definitely going to jump into, I think, a much more tactic, not necessarily tactical but practical level because obviously we are a supplier, so we look through everything through that lens. Not necessarily looking at the issues raised by, some of the issues raised by Doug, regulation and those kind of things. We have a much more practical approach in terms of projects and the development of opportunities for us, export opportunities. Very briefly, we are headquartered in Washington State. We have manufacturing facilities in Idaho, Illinois, and Washington. Essentially SEL, we are known by our abbreviation, SEL, we develop, engineer, and manufacture protection from the control and automation devices like for the utility sector, for the power sector. Essentially smart grid. Everything that we do is related to that focus area and just a footnote and I will get back later to that discussion, we are not manufacturing what is called primary equipment such as transformers and switches and those kinds of things. We only stick to the secondary equipment equation in terms of the smart systems, basically the smart of smart grid. That's what we focus on. We have 5,600 employees and we are basically a global organization. This slide offers you just a view of where our offices are. We have equipment currently in 161 countries and we have direct office representation in about 24 countries now. We have regional engineering and services, hubs are spread across several continents. Brazil being one, South Africa another one, India another one, and then Saudi Arabia and Australia. Those are our hubs that support the rest of our operations. What I want to do is without going into the technology per se, I just want to highlight two projects that we did with USAID, very successful projects. One is a pilot or demonstration project that we did with the US Energy Association in partnership with USAID. As far as the distribution automation project, which we did in Bosnia, and it was a very, very simple solution to solve a problem that they had in terms of power outages. They had a significant amount of power outages which they wanted to solve, and we installed some recloser control equipment and did some automation for them. As a result of that we had a 51 percent reduction in the number of outages that they had. This is basically over a two-year period. It's been an extremely successful project for them as a test case for technology which they have not yet considered at that point. Just as a proof-of-concept that distribution, that smart grid works, it has immediate return on investment and that project is still ongoing and obviously saving them. The other project that I just wanted to highlight is that project with USAID also that we did. This one was not a part of, this one was competitively-procured and the objective of this project was, again, in the realm of power outages and saving blackouts. We did a country-wide power protection, power systems, special protection system project for the country of Georgia. They had a big problem many years ago with power outages and the capital city went without electricity multiple times a month, literally. We started to work with them and then this project came up, we bid and we won it. The outcomes of this project over this time period, and this information that I'm showing on this slide actually comes from GSE, the utility or the customer in this regard. We prevented 20 blackouts country-wide, blackouts during a 28-month period between 2014 and '16. This is the compilation of the customer. This amount to basically a... 39 million dollars in terms of GDP. The solution itself that we bid for them was two million, so you can obviously make your own deductions in terms of return on investment for the country of Georgia on this project. It was, hands-down, a clear success for us and for USAID and GSE, and as a result of that, given the success of this project that we had, we also bid and won a subsequent project with the same customer for the implementation of 10 substations. That was competitively bid, so we were one of the bidders for that project. But I think because of not think, I think we are sure that as a result of the success of the emergency control system project, that we won the subsequent project. Clearly it opened the way for us there when we proved that smart grid technology has a real and concrete return on investment for them. By the way, at the time of the first project, the emergency control system project, that type of technology was not even available in Europe, so it was mainly deployed in the US. We basically introduced this technology to Europe to a large degree, and we're very proud of that. As a result of that performance in Georgia, that led to other project successes in Europe as well for us. I just wanted to very briefly touch upon where the opportunities for us as a technology supplier are. We see that even the revolution in communication in terms of fiber optics and what we can do with fiber and how fast we can operate our power systems today, that has opened up tremendous opportunities for us in the smart grid. Today we can operate the power system and decisions on the power system with our equipment as fast as six milliseconds. Now just to give you an idea, there are 1,000 milliseconds in a second, so we are moving towards being able to operate in nanoseconds. That is not a dream anymore, that is a potential for us to start considering operating our power systems in nanoseconds. As a result of that, it opened up tremendous opportunities for us. Today we see opportunities obviously in microgrids, renewable energy integration, grid instability. We have to realize when it comes to grid instability as far as power outages and those kinds of things are concerned, the faster you operate a grid the more stable grid you have. That's the principle and the premise on which we develop our technologies. The faster you operate, the more stable your grid is. We see other opportunities in grid upgrades as we go along introducing technologies and then obviously new infrastructure. As a result of communication, the communication revolution in technologies, that opens up a can of worms when it comes to cyber security. All of that goes cyber security as additional opportunities for us in smart grid. When it comes to, my last slide, when it comes to what are the barriers for us as a supplier, as a technology supplier, we see specifically in developing countries the least-cost bidding process and preference in many countries. That is a major issue for us. Number one, because they don't go for performance and reliability, they go for least-cost and we can expand that discussion, maybe a bit later on this if there's a need for that. But that is for us as a technology supplier that focuses largely on reliability and performance, it is a huge issue for us, probably the biggest issue for us as a technology supplier in developing countries. So then obviously the historical linkages, that's also a problem for us. That's a secondary problem for us. Another really big problem for us is repeat consultants that are used by developing finance institutions. Repeat consultants being using, not all do that, but there are folks that use copy-and-paste for designer projects. That is a problem for us because they oftentimes have a preference for not, for your most modern technologies or your most effective, or for reliable technologies. How can we overcome these barriers? We always argue for the leveling of a playing field so that we can compare apples with apples in terms of reliability and performance, which we don't have in developing countries because of the least-cost human system. Now, having said that, we also realize that this is in the process of changing with what the World Bank has introduced in terms of your value-for-money approach. However, it is still very prevalent, and it has been an issue for us. As a result with quality performance and reliability, we can increase, we can overcome those barriers. Then, of course, lastly, US institutional support through our government agencies is for us a tool in our toolbox to overcome these barriers. I will leave it at that, and we can circle back to some of these issues if there are any questions. Thank you.

[Matthew] Thank you, André. That was a very informative presentation. It was helpful to hear your experiences of both of your company, as a technology supplier and how you address practical issues such as outages. It was also interesting to hear about your insights on advancing the grid and operating at faster speeds to increase stability, and your thoughts on the barriers were helpful as well, and your thoughts on the level-playing field, and we appreciate that that's an area that we should look to address in the future. Okay, well, this brings us to our last presentation, after which we'll have some questions from the panel. Our final presenter is Steve Hauser, and he's the CEO of the GridWise Alliance. Thank you, Steve.

[Steven] Yeah, thank you, Matt, and thanks for inviting me to participate today. I appreciate what the speakers have already said, and I'll try to not duplicate that and add a few things that come from a unique perspective that we have. I've put in a few slides about the GridWise Alliance. We've been around for 15 years here in the United States. We bring together companies who have a stake in how the industry is changing and we try to represent those interests across a broad swath of stakeholders, including legislators and governors and mayors and regulators and so on. What's important for us is that we represent all the diversity of interests, so we have utilities as members, we have large multinational companies that, like ABB and GE and IBM that are members. Then we have smaller technology companies. We do focus on the US infrastructure because that's been our core mission, but I want to mention to this audience that we also helped found another nonprofit called the Global Smart Grid Federation that's been around for about eight years. We have 12 different countries that participate in that, including India and Mexico as more of the developing countries. We've already talked about how the industry is changing. In terms of what's changing, particularly the developed grid, its technology innovation, competitive markets clearly, costs are coming down for technologies that are enabling us to employ those in the grid, but overall we still have to be concerned about the safety, productivity of the economy and the health of our citizens and consumers. It's important for us to use these new technologies to do a more decent job of deploying capital. So as opposed to just simply building central generation, transmission, distribution down to the consumer, we look for a lot of variety in technologies that can be deployed to make the system overall more efficient and more effective. Just briefly mentioning that there is a national policy here in the US that was created back in 2007, '08 Title XIII, part of the Energy Policy Act. One of the things that's important as countries look at how to deploy smart grid technologies is really developing a policy around how it can be used. Because it can be used, of course, as is already been talked about, it can used to improve the centralized grid and the distribution system, but it can also be used to provide remote-power microgrids and so on for underserved markets in the world. We do something called the Grid Modernization Index, which looks at how all the 50 states and Washington, DC are doing in their progress towards grid modernization. One of the things that USAID might think about is looking at a grid modernization index, if you will, for poor countries that they serve. It serves as a useful tool to present to policy makers in terms of the good things that are happening but also the opportunities for changing and improving the grid over time. So I'm not gonna spend a lot of time on that. I encourage you to go to our website gridwise.org, All of the information I'm talking about here is downloadable from our website. I did want to mention one project in particular that's a little bit different than what's been talked about already. This happens to be one of our members, which is a co-op in Texas called Bandera Electric, and Bandera has partnered with USAID and NRECA to essentially build a co-op in Liberia, north of Monrovia in the rural unserved or underserved part of the country. So Bandera's already built this micro-grid, it's a 70-kilowatt, 100-kilowatt hour solar battery system with some diesel back up for rainy season when solar's not available. What's pretty interesting is that they're already providing this electricity to these customers, it's largely business customers, but some residential, and the demand has gone up steeply, sharply as you might expect. As electricity becomes available, the demand increases exponentially, you might say. The cost of electricity from this system is actually 33 cents kilowatt-hour, roughly, and that's compared to the grid providing electricity in Monrovia at 50 cents. So it's actually a very cost effective solution for this. They're looking at other parts of Africa for doing similar projects and they're also looking at increasing the size of this current one by an order of magnitude, which is fairly impressive. Here's just a photo of the project as it was deployed and some of the happy customers that now have electricity. I'll end by just a couple of comments which probably you all know about how much of the world is not served by electricity and one of the things we've learned from deploying smart grids is that there's clearly not a one-size-all-fits... One-size-fits-all solution. We talk about that a lot here in the US. What's good for the state of Maine or Massachusetts is not necessarily the same solution that's gonna work in Arkansas, or Texas, or Oregon, or California, right? The deployment of new technologies that have already been talked about earlier give us an opportunity to design very customized systems based on customer needs, based on unique constraints of the particular community it serves. That's especially true in developing worlds where the constraints, the opportunities, the needs can be very different. It offers us a very good opportunity to expand the grids to meet these markets. I'll end by just saying one of the things that I think surprised us a bit over the last five years or so is the opportunity to use smart meters not just to reduce theft and losses, which is extremely important in a number of countries, but also to create an economic, transaction ability for customers in underserved or not-served markets to actually be able to pay incrementally their bills based on what's metered and what they actually use. There's a company called Spark Meter, which has developed a very inexpensive meter that's being used in a number of these markets and it's a very interesting opportunity. Thanks, Matt.

[Matthew] That was very helpful, Steve. Thank you. It's really good to hear the perspectives and views of a diverse group like the GridWise Alliance. They bring a lot of expertise and I was particularly interested in your thoughts on the Grid Modernization Index and how tools like that can address... Can make sure smart grid investments are addressing the diversity of country. We have some questions now that I want to bring up to our presenters. I'll direct one to each presenter in particular, given that some of the presenters address these issues that were raised in their presentation. It would be great to have them expand on that a bit. My first question I'll ask is for Doug. Doug, can you tell us, in brief, what have you seen from your personal experience and perspective looking at technology, services and regions, what are the top opportunities for US firms, in a smart grid investment and sales over the coming five years?

[Douglas] Thanks, Matt. I guess there's a few areas I see as really critical and emerging. I mean, we have a lot of, as you mentioned earlier, there's a huge range of smart grid technologies, but a few areas that are gonna be critical. One is the integration of distributed energy resources and it falls also within the larger theme of utilities, the electric utility sector's sort of evolving to a new model. Looking at what's the role of the utility in that space? I think it's critical of course for them to... For utilities to be able to, and regulators to enforce, and find ways for utilities to integrate renewables to make them most efficient and reduce any potential curtailment of electricity where the grid can take on these variable, as variable generation. But at the same time it's critical for the utility in terms of capturing new markets. We see utilities around the world that are very concerned about diminishing markets for electric power under the traditional model as their customers do move to captive and distributed energy resources. It's similar to that. I see smart grids as a segue to other areas that utilities can get into related to smart cities. I think that the utility electric, power utilities have really led the way, a lot of the big ICT investments and under smart grid. The well positioned utilities, for example, I mentioned we were doing some work in Jamaica, they have integrated the smart meter system with the smart LED street light system and now are looking to leverage that for other smart city opportunities. So they can provide additional services similar to what you do with smart metering and using SCADA and GIS and other smart grid technologies to serve other utilities, for example, water utilities that may be a bit behind in terms of making those investments, or other service areas in other sectors like intelligent transportation. They're looking to do EV charging systems, which of course is a great business model for electric utilities because they're, of course, buying more electricity. You also have other services that you can provide. I guess I see that as those are two areas where smart grid will really play an important part in utilities moving forward.

[Matthew] Thank you, Doug. So my next question was for Steve. Steve, I was wondering if you could elaborate a bit from your, either from your microgrid example or others, what are some of the general barriers you've encountered and how you've addressed them, particularly in some of the markets like the ones you mentioned which clearly have limited capacity with microgrids and similar technology? So knowing how you've addressed the barriers, I think would be helpful to our audience.

[Steven] Sure. If we were to make a list of barriers, it'd probably be a pretty long list and I think this group could probably do a good job of listing barriers. In the interest of time, I'm gonna focus on one that's most near and dear to our hearts and that's the stakeholder education. Not just here in the US but every country has unique challenges and opportunities and barriers, if you will, to keeping regulators, legislators, mayors, governors, whoever the local authorities are the commissions that are making decisions around what these look like, what the future looks like, creating plans for the future, those all have to be done in order for this to work, and oftentimes, just educating those people who don't necessarily have time to get immersed in the details that we all appreciate, they need a top-level message that they can understand and appreciate. Then, of course, companies like ours here today and many others who can come in and act as consultants and advisors to this, but I think that's a huge barrier to this moving forward in a reasonable way, in a way that can be, can generate consistent opportunities and revenue for the companies we're talking about.

[Matthew] Thank you, Steve. That was an informative summary, and I want to note that I think it's really great that you emphasize the importance of stakeholder education. I mean, as you point out, it's important that while we're immersed in the technical details and the financing, we don't forget the basics and the importance of capacity. You noted that private firms and donors can play a key role just in helping stakeholders to have the capacity they need and make sure that smart grid technologies are understood. So thanks for that. For my last question, I want to put this to André. André, since you already mentioned in your presentation about support from USAID, maybe you could just talk a bit more about how you've worked with USAID and donor agencies. What are the most helpful ways that you think going forward donors and governments can partner with the private sector on smart grids?

[André] I'll be very brief, Matt. I think for us it's not a question of having access to USAID specialists Or consultants to put out requirements, favorable requirements and specifications for projects and so forth and so forth. That is not the case, and I think what I want to do is just to dovetail with Steven a little bit. We need, I think from our perspective, the assistance what we need from a private sector point of view is a, call it an industry.. an industry liaison with DFI where we can channel information, where we can channel unique perspectives in terms of how we can improve reliability, how we can raise performance of power systems. We don't have those mechanisms, we don't have those mechanisms where we have an industry body that consults on a fairly regular basis, which, for example, USAID did. Not that I am aware of. I know that there's such a mechanism with the World Bank, for example, what I understood where there is the medical equipment... medical equipment sub-sector that they have apparently something like that going on that is very, very successful, where you have even competitors coming together and advising the World Bank on industry and technology and those kinds of things. As far as I know, we don't have that, we don't participate in anything like at the moment with the advisement that comes to the power sector, and I think something like that would be very useful to also help with capacity building and training because in our discussion with customers, if we want to raise the rate of performance and reliability, it is very closely tied to education, training and capacity-building. So that is extremely important for us. In all our discussions which we had with customers, when we talk about performance, there is a huge element of training and information. In many of our discussions with USAID staff and DFI staff in general, they are not experts, they are not engineers. They needed this information. There needs to be a flow of industry information about cutting-edge technologies and those kinds of things that can be helpful in increasing your return on investment in power systems.

[Matthew] Thank you, André. That was very helpful. We're going to need to wrap up soon, but I did want to ask Doug and Steve whether you had any very quick comments you wanted to add on that same question. Any insights you can share from your experience with USAID?

[Douglas] Yeah, I mean, I think that's... We do a lot of work with US Trade and Development Agency also and USAID. I think it's really critical. I think one of the questions we often get in the emerging markets is maybe more earlier on, but is smart grid, is it really possible here in this country? I think so. Having those studies and those interactions and the training and things to get the utilities and stakeholders up to speed on why smart grid can work even in relatively underdeveloped economies, that the economics can work even if it's advanced technologies you can sort of leap-frog and you can move forward and take advantage of these technologies. I think it's sort of critical for them to stay abreast of the technology and help the stakeholders understand that they can be deployed in these countries.

[Matthew] Thank you very much. Well, that brings us to the end of this smart grids webinar, and I want to close by thanking everyone. First and foremost, many thanks to our distinguished panel for their time and their helpful insights, which I'm sure everyone found very educational and informative. Again, I want to thank ENI, RTI, and NREL and all of you in the field as well for your help and participation. We look forward to future collaboration with the private sector. We appreciate your contribution to USAID's energy and development mission. For those of you in the field, we hope this was a useful and helpful tool that you'll be able to draw on as you move forward with your clean energy programming. We look forward to working with you on this. Many thanks, again, to all of you, and have a good day.

Last updated: April 21, 2020

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