Interview: Livio Gallo, COO Enel Infrastructure & Networks‘Shifting consumption in peak hours can have an enormous benefit for the system’
Enel, Italy’s biggest utility, made a big bet on smart grids back in 2001, when it decided to invest 2 billion euros installing digital meters at all its users in Italy. That project has paid dividends not only in reduced costs, thanks to greater automisation, but also because it has given the company a head start in Europe’s development of smart grids. What Enel does in digital meters and smart grids is closely studied by other European countries.
In this interview with EER, Livio Gallo, chief operating officer of Enel’s Infrastructure & Networks Division, explains what impact the utility’s smart meter project has had in Italy and outlines what steps need to be taken next.
Livio Gallo, COO of Enel’s Infrastructure & Networks Division
Italy is the only country in the world to have electronic meters fitted for several years now at all users, whether domestic or not; this is a fundamental step for introducing differentiated tariffs for different times of the day and night. There has been a strong take-up of time-of-day tariffs in recent years, even before the electricity market was liberalised, thanks to Enel’s offer to domestic customers of different tariffs for the day and night, weekends, summer and winter, second homes, etcetera, which have been taken up by 1.5 million clients.
As of today, with a fully liberalised market, Enel Distribuzione supplies all users on the free market – 5 million in 2009, including 2 million domestic users – with meter readings divided into three time periods, allowing all electricity retailers, including Enel Energia (the company’s commercial unit – ed.), to offer their clients two-tier or three-tier tariffs.
In addition, these time-of-day readings are currently provided to all the 6 million small and medium enterprises (non-residential users) that have not yet switched to the free market and they are being gradually extended to all Italian domestic users in the captive market – another 28 million – users who are already receiving from Enel Servizio Elettrico (the unit serving the captive market – ed.) bills based on actual consumption and no longer on estimated readings.
Enel asked the energy authority to make the introduction of time-of-day tariffs more gradual for small and medium enterprises (SMEs). Are you concerned about these tariffs being extended to all residential users next year? Perhaps some households will be unhappy if their electricity bill goes up.
SMEs already get meter readings divided into three time periods; all remaining residential users are being re-programmed for time-of-day meter readings and the plan is proceeding without particular problems. The decision by the energy authority to extend this possibility to all users in the captive market will be of great benefit to the Italian electricity system by shifting part of consumption from peak hours, when it’s more costly, to the evening, when it’s cheaper, bringing major advantages for the environment and the cost of electricity.
Enel estimates that introducing time-of-day tariffs could reduce consumption by 5-10% and shift 1% of demand from peak hours to cheaper time periods. What are the implications in the near to medium term for the Italian electricity system?
Shifting consumption in peak hours, typically during the day and the summer, to the night, can have an enormous benefit for the system as a whole because it means avoiding the use of very expensive sources of energy at peak times and allows an optimal balance in the generation mix, tending to make better use of renewable energy sources, which don’t always produce at times of greatest demand but only when there’s more wind or sun and so on available.
You’ve started exporting the Enel system to Spain. What other plans do you have abroad?
Apart from the implementation started in Spain with 13 million Endesa clients, our electronic meter has already been installed at 700,000 Eon clients in Spain, 200,000 in Holland, 250,000 in Malta and there are pilot projects in Russia, China and Romania. That’s on top of the 4 million meters installed by local Italian utilities with Enel technology, now the standard technology in Italy.
The future for an Italian smart grid can’t be separated from the European system. Are you satisfied with the progress made on the ADDRESS programme? (Editor’s note: ADDRESS stands for Active Distribution networks with full integration of Demand and distributed energy REsourceS www.addressfp7.org. It is a European working group, co-ordinated by Enel, investigating how to get small and commercial power generation units, e.g. a PV installation or a small wind farm to actively participate in the electricity market via smart grids.)
The ADDRESS project on active demand and the participation of clients in the electricity market is only one element in Europe’s development and co-ordination of smart grid implementation. Enel, thanks to its positive experience with smart meters and network automisation, has helped set up this EU group, which includes all major electricity distributors and has proposed to the European Commission an implementation plan for large-scale demonstration projects for smart grids. These are necessary to be able to deploy key technologies for reaching the 20-20-20 targets.
Now that Italy’s moving to a system of remote meter reading and management, what next steps are needed to make the network more intelligent and safeguard the head-start that the country has gained in this field?
The next step is to increase the intelligence distributed around the network by implementing a powerful telecommunications infrastructure. This will enable us to optimise and control the increased generation from renewable sources and allow clients to actively participate thanks to price and consumption signals; it will allow for technologies for efficiency in buildings and public illumination as well as the integration and promotion of electric mobility (cars, scooters, etc.).
What risks are associated with the transition to a smart grid? When do you estimate that there will be sufficient distributed generation installed to make active management of demand and production a necessity?
Risks arise only if we fail to invest enough in the research, development and deployment of network technologies that allow us to manage the new model of energy distribution; an unintelligent network risks becoming a bottleneck, hampering the passage of new technologies linked to the development of renewable energies, energy efficiency and electric mobility.