3-4 Challenges and opportunities in urban energy systems

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From the course by École Polytechnique Fédérale de Lausanne

Management of Urban Infrastructures – part 1

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École Polytechnique Fédérale de Lausanne

Management of Urban Infrastructures – part 1

397 ratings

Sustainability, Resilience and Efficiency are fundamental considerations for city managers in managing urban infrastructures. Today, more than 3.9 billion people, making up more than 54% of the global population, live in cities. Urbanization is expected to continue in the coming years, raising the urban population to 6.0 billion by 2045. This dramatic increase in urban populations will inevitably increase the demand for energy, mobility (transportation), water, and other urban services in every city around the world. Without functional governance and management structures that ensure efficient, resilient and sustainable performance in cities, the current urbanization growth might become a catastrophic risk threatening the quality of life of the humanity. Sustainable development in 21st century can only be realized by introducing innovations in both management and operations of urban infrastructures systems. Developing management practices that effectively integrates the processes of urban planning with urban infrastructures planning and management is a challenging goal that many cities are struggling with nowadays, but is a must for transforming cities to sustainable and resilient engines of growth in both developing and developed economies. This course will provide you with the basic principles of urban infrastructure management that are fundamental for building prosperous cities that are sustainable, resilient and efficient. In order to obtain a certificate for this course, the participants have to pass four graded quizzes and complete four mandatory assignments, plus a final exam. In addition to the graded assignments students have the option to write a 7-10 page peer-reviewed case study about management of energy OR transportation system in their city (on your own choice). The best case studies will be also evaluated by our jury at IGLUS and the authors of the 3 best case studies will win a full tuition fee waiver scholarship to enroll in the IGLUS professional training program in Spring 2017. You can also pre-enroll in our upcoming MOOC on Smart Cities now. Find our more here: http://iglus.org/smart-cities-mooc/

From the lesson

Block 3 - Introduction to Urban Energy Management

Welcome to the 3rd block: an Introduction to Urban Energy Management. We now move into the two last blocks, which deal with specific urban infrastructure systems, in this case, the urban electricity system. First we will be introduced to urban energy infrastructures (3-1), we will then move on to understanding urban electricity systems (3-2). We will then learn how to manage urban electricity systems (3-3) and discover what challenges and opportunities must be confronted (3-4). Finally, an interview with Mr. Thierry Clement, from Veolia, will provide us with the perspective of a leading utility firm (3-5). After watching the five videos in this block, visit the discussion forums to solve your doubts or express your thoughts on the lecture content. In the 3rd block reading you will find a summary of the lecture content, and an illustrative case study exploring the transition towards a sustainable urban energy system in Copenhagen. Finally, test your knowledge of the block’s concepts in the quiz “What did I learn in Block 3?”, and answer Short Answer Assignment 3 and discover the urban electricity system in your city.

3-4 Challenges and opportunities in urban energy systems11:24

Meet the Instructors

Matthias Finger
Professor
EPFL, ITPP, MIR, IGLUS Lab

Hello, and welcome back.

In this session we want to talk about the challenges

to managing urban electricity systems,

and these challenges come from three different angles,

from three different perspectives,

and all these challenges affect the management functions

that we have identified:

the grid management,

the grid reinforcement,

the grid development,

the customer relations, and the purchasing.

Each of these challenges affect these functions differently.

The three challenges are basically the market liberalization,

the electricity market liberalization,

environmental challenges, and climate change in particular,

and then the role of the information and communication technologies.

Let's look at each of them separately,

and let's start with electricity market liberalization.

So, in many countries, electricity markets have been liberalized,

or are in the process of being liberalized.

Basically, liberalization means

that the infrastructure and the services are being unbundled.

It means that the producer can now compete for different customers,

the customers can buy electricity from different producers.

They are still obliged to be hooked to the network,

they have no choice on the infrastructures,

but they have a choice on the energy,

the electricity they buy, and from whom they buy it.

This change, this market liberalization,

has substantial challenges

for the urban electricity infrastructure managers.

Let us start with electricity purchasing.

Basically, the challenge here is that the retail prices

become competitive, and the customers can now switch,

so if you are an urban electricity operator

that has a series of customers,

and some of them go away,

that means that you have to professionalize your management

in order to keep these customers,

perhaps to offer them new services, like energy savings,

and things like that, in order to retain these customers.

You may actually even want to buy customers from other cities,

but I think that's a little bit another story.

Now, the second challenge here

is that you have to change the customer relations,

and you have a shrinking customer base,

and especially the lucrative customers are leaving you.

The big industrial customers are leaving you,

and you have to make sure that you can keep these customers

with all kind of services, additional services.

Sometimes even metering and billing is being liberalized.

This means that you can lose even technical activities.

Metering is actually a very lucrative technical activity

and if you lose it to the competitor,

you lose an additional source of revenue.

It means customers must be treated differently,

and managed more proactively.

Non-paying customers now really become a problem,

because you cannot cross-subsidize

from paying customers to non-paying customers,

and actually they must be disconnected,

which creates a challenge with the political authorities

if you disconnect a customer, and social tariffs,

which the political authorities may allow you to do,

or may force you to do,

must now be compensated by the political authorities.

In terms of grid management, what this means

is that there is an increased complexity because of unbundling.

You, as a grid operator,

are no longer necessarily informed

about all the energy activities that are going on on your grid,

and therefore managing the grid, balancing the grid,

becomes a more demanding activity.

The second big challenge is our environmental challenge,

in particular, greenhouse gas emissions,

climate change.

Overall, the consumption of fossil fuels must be reduced,

including the consumption of fossil fuels for electricity production.

And not only that, overall energy and electricity consumption

must be reduced if we want to address

these environmental challenges, in particular climate change.

What does that mean for the manager

of urban infrastructure, electricity infrastructure systems?

It basically means that in terms of operations and managers

you will have more intermittent production because of renewables,

and therefore you will have more balancing needs.

It will be more complicated to balance

the urban electricity system.

In terms of grid development, it means that self-production

will probably force you to add

new grid developments

to the existing grid, and that can be a challenge.

This is mainly a financial challenge,

because you need to find the money for these grid reinforcements.

And there's also, of course, a regulatory issue.

And if there is less electricity consumption

due to energy efficiency measures, for example,

it is easy to understand that the grid costs will actually,

the proportionate grid costs will actually increase.

There is less electricity to bill, less customers,

less electricity to bill the grid costs to,

which will be another financial challenge.

In terms of energy purchasing, you now have to look also

to buy electricity from non-renewables.

And you have to add a mix,

you have to find producers

with certificates that will sell you

renewable electricity produced from renewables.

In terms of customer relations, it means that consumers

are now also becoming producers,

and that's a different relation.

It's not just the consumer you are selling something to,

you are also now a consumer, a buyer,

from the same customers,

and that creates new challenges

in terms of how to manage the relationships with your customers.

And also, here, I think you have to find

new business models for energy savings.

Basically, you want to try--

I mean, if electricity consumption must be reduced,

then that means that you actually need to make money

from energy savings, and that is a new challenge

in terms of business models, and it is--

We do not have any answer yet how to respond to that challenge,

but it will be a challenge, and it already is a challenge

for urban electricity managers.

The third challenge are the information and communication technologies.

We have already seen that the information communication technologies--

we have seen that in the second block--

that they can make the usage of the infrastructure more efficient,

they can involve the users more actively

in the management of the infrastructures,

and actually they can allow for the development

of new infrastructure services,

in this case energy services.

Now let's look at what that actually means

for the managers of urban electricity systems.

In terms of operations and maintenance,

it means that actually,

thanks to the whole smart metering and ICTs,

the balancing energy can actually become commercialized.

There are companies that--

There are customers that can now sell their ability

to balance the system, for example,

by turning off their fridge,

by turning off machines.

So in case there is a need for balancing energy,

the customers can become more actively involved in balancing.

Overall, I think the ICTs will make the electricity system

much more resilient because of the different measuring points

and the coordination that is allowed thanks to the ICTs.

In terms of grid development, it is clear that the ICTs,

as I said before, is a means to increase energy efficiency

and actually will reduce the need for grid development.

In terms of energy purchasing, we have already talked before,

you can now also purchase energy

from your consumers, who become producers,

at least in the case of balancing energy,

as we have seen before.

So it's clearly a new service that the ICTs allow for.

And in terms of customer relations,

this allows for much more flexible pricing,

peak load pricing, all kinds of prices

that are related to the usage of the infrastructure

to the energy price, things like that.

ICTs also offer the opportunity

to develop new services like the energy--

We already saw energy services companies,

the service to operate one's own internal energy system,

not necessarily in the household, but in a supermarket,

in a big industrial area.

Now in this block, in this session,

we have now seen the three main new trends

that will affect the management of urban electricity systems.

In the next session, we will hear from a practitioner

how he looks at all these things.

Stay tuned.

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