EE 379 KEE 394 V Smart Grids Smart

Introduction n Smart Grid projects and technologies are complex and involve many different stakeholders

Reference This Course is an application of Ron Adner’s Innovation Ecosystem model to Smart

Smart Grid Ecosystem The smart grid ecosystem is a complex network of interconnected elements.

Traditional Initiative Execution Strategy Initiative Execution Outcome Scope Copyright © 2017 5

Innovation Strategy The vision of what new value is going to be created, whom

Initiative Risk The challenges you face in bringing about your new product or service,

Interdependence With Complementary Innovations The extent to which the successful commercialization of your innovation

Integration with Value Chain Partners The extent to which value chain partners will need

Innovation Ecosystem Interdependence Risk Innovation Strategy Initiative Risk Informed Expectations Integration Risk Copyright ©

Probability of Success Interdependence Risk 85% Innovation Strategy Initiative Risk 85% Informed Expectations Integration

Probability of Success 45% Interdependence Risk 85% Innovation Strategy 23% Informed Expectations Initiative Risk

Innovation Strategy We are going to create an energy device for homeowners that stores

Tesla Power Wall According to Bloomberg, in 2016 only one week after the initial

Tesla Power Wall One 13. 5 k. Wh Powerwall battery $7, 250 Installation and

Smart Grid Elements Techno logy Mainte nance Regula tory Operati ons Trans mission Installa

Smart Grid Elements Interdependence Initiative Integration Techno logy Mainte nance Regula tory Operati ons

Tesla’s Initiative Distribution Sys. Interconnection Integration Energy Supply/ Purchase Initiative Design PW Interdependence Manufacture

Tesla’s Initiative Distribution Sys. Interconnection Integration Energy Supply/ Purchase -$8, 750 Initiative Design PW

Let’s Add Solar • Add 7 k. W AC System (8 k. W DC)

Tesla’s Initiative Distribution Sys. Interconnection Integration -$30, 750 +$6, 600* -$24, 150 Energy Supply/

Residential Load and Solar Copyright © 2017 26

Residential Load and Solar • Utility agrees to $0 cost interconnection and dual flow

Delivered and Received Energy with Solar 95. 1 k. Wh Total Demand 42. 4

Delivered and Received Energy with Solar and Battery 95. 1 k. Wh Total Demand

Daily Result Summary • Baseline Charge: $10. 58 • W/Solar Charge: $5. 32 •

Annual Charge with Monthly True-Up Copyright © 2017 33

Annual Charge with Monthly True-Up • Baseline Charge: $2, 537. 75 • W/Solar Charge:

Summary Distribution Sys. Interconnection Interdependence Energy Supply/ Purchase $7, 250 Initiative Design PW Manufacture

Summary Decreasing Portion of Interdependence Tot. Value Distribution Sys. Interconnection Energy Supply/ Purchase $7,

What have we not considered? n n n n n Material Suppliers – Lithium,

Summary 45% Interdependence Risk 85% Innovation Strategy 23% Informed Expectations Initiative Risk 60% Integration

Itron Smart Grid Eco. System Copyright © 2017 40

Itron Smart Grid Eco. System Partners Copyright © 2017 41

Homework Exercise: Due Thursday, March 7. n n n Utility decides that it can

Time of Use (TOU) Rate Copyright © 2017 43

Home Work Cont. 1 For the month of July only, answer the following. A.

Slides: 44

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Introduction n Smart Grid projects and technologies are complex and involve many different stakeholders across multiple organizations. Many utilities have aggressively sought to implement the benefits of Smart Grid technologies only to discover they started too early or did not fully understand the risks involved. Ecosystem analysis can help utilities and vendors understand how their initiative will fit within the industry and how to manage their project through the complex environment. Copyright © 2017 2

Reference This Course is an application of Ron Adner’s Innovation Ecosystem model to Smart Grid applications as presented by Matching Your Innovation Strategy to Your Innovation Ecosystem By Ron Adner Harvard Business Review April 2006 Copyright © 2017 3

Interdependence With Complementary Innovations The extent to which the successful commercialization of your innovation depends on the successful commercialization of other innovations. Copyright © 2017 8

Innovation Strategy We are going to create an energy device for homeowners that stores energy when prices are low or when energy is not needed and produce energy when prices are high or energy is needed to save the homeowner money. Copyright © 2017 13

Smart Grid Elements Techno logy Mainte nance Regula tory Operati ons Trans mission Installa tion Distrib ution Manufa cturing Genera tion Smart Grid Rates and Billing Control System s Codes and Standa rds Consu mers Reliabil ity Safety Comm unicati ons Copyright © 2017 Utilities 16

Smart Grid Elements Interdependence Initiative Integration Techno logy Mainte nance Regula tory Operati ons Trans mission Installa tion Distrib ution Manufa cturing Genera tion Smart Grid Rates and Billing Control System s Codes and Standa rds Consu mers Reliabil ity Safety Comm unicati ons Copyright © 2017 Utilities 17

Tesla’s Initiative Distribution Sys. Interconnection Integration Energy Supply/ Purchase Initiative Design PW Interdependence Manufacture PW Distribute and Sell Consumer Uses PW Electricians Install & Maintain Copyright © 2017 21

Tesla’s Initiative Distribution Sys. Interconnection Integration Energy Supply/ Purchase -$8, 750 Initiative Design PW Manufacture PW Distribute and Sell Consumer Uses PW $7, 250 Interdependence Electricians Install & Maintain $1, 500 Copyright © 2017 $3, 300 22

Hourly Residential Load Profile • EIA Nov. 2016 Texas Res. Average Rate: 11. 11 ₵/k. Wh • 95 k. Wh/Day • 2, 945 k. Wh/Mo. • Monthly Charge: $327/Mo. • Flat Rate… no chance for price arbitrage • No Solar to store excess energy… Copyright © 2017 23

Let’s Add Solar • Add 7 k. W AC System (8 k. W DC) • 18% Capacity Factor • Annual Production: 11, 044 k. Wh • Cost: $2. 75/W DC • Total Cost: $22, 000 • Less Tax Credit: $6, 600 • Adj. Total Cost: $15, 400 Copyright © 2017 24

Tesla’s Initiative Distribution Sys. Interconnection Integration -$30, 750 +$6, 600* -$24, 150 Energy Supply/ Purchase Initiative Design PW Interdependence Manufacture PW Distribute and Sell Electricians Install & Maintain $7, 250 $1, 500 Solar Installation Copyright © 2017 Consumer Uses PW $22, 000 *30% Tax Credit 25

Residential Load and Solar • Utility agrees to $0 cost interconnection and dual flow between residence and grid • Utility agrees to Net Metering with Monthly True-up • Utility agrees to purchase excess generation at 5. 0 ₵/k. Wh Copyright © 2017 27

Delivered and Received Energy with Solar and Battery 95. 1 k. Wh Total Demand 53. 3 k. Wh Total Solar 10. 9 k. Wh Excess Solar 10. 9 k. Wh Battery Storage 10. 9 k. Wh Battery Discharge Copyright © 2017 29

Daily Result Summary • Baseline Charge: $10. 58 • W/Solar Charge: $5. 32 • Solar Benefit: $5. 26 • Eff. Solar Rate: 9. 85 ₵/k. Wh • W/Solar and Battery Charge: $4. 65 • Solar Battery Benefit: $5. 93 • Eff. Solar and Battery Rate: 11. 11 ₵/k. Wh Copyright © 2017 31

Annual Charge with Monthly True-Up • Baseline Charge: $2, 537. 75 • W/Solar Charge: $883. 30 • Solar Benefit: $1, 654. 45 • Eff. Solar Rate: 11. 11 ₵/k. Wh • Battery provides no extra value to consumer • Utility may benefit through load factor Copyright © 2017 34

Summary Distribution Sys. Interconnection Interdependence Energy Supply/ Purchase $7, 250 Initiative Design PW Manufacture PW Distribute and Sell $40, 000 Design Tesla Manufacture Tesla Solar Roof $12, 000 Integration -$70, 750 +$6, 600* -$64, 150 Consumer Uses PW Distribute and Sell Solar Installation $10, 000 Electricians Install & Maintain $1, 500 Copyright © 2017 *30% Tax Credit 36

Summary Decreasing Portion of Interdependence Tot. Value Distribution Sys. Interconnection Energy Supply/ Purchase $7, 250 Initiative Design PW Design Tesla Manufacture PW Increasing Portion of Manufacture Tot. Value Tesla Solar Roof $12, 000 Integration Distribute and Sell $40, 000 -$70, 750 +$6, 600* -$64, 150 Consumer Uses PW Distribute and Sell Solar Installation $10, 000 Electricians Install & Maintain $1, 500 Copyright © 2017 *30% Tax Credit 37

What have we not considered? n n n n n Material Suppliers – Lithium, Cobalt, Tariffs Generators Metering Controls and Operations Independent System Operator (ISO) Transmission Automakers Oil Companies Municipal and Electrical Codes Electric Vehicle Charging Infrastructure Copyright © 2017 38

Homework Exercise: Due Thursday, March 7. n n n Utility decides that it can no longer recover the cost of owning and maintaining the distribution infrastructure with so many potential solar installations. The utility decides to do away with Net Metering with Monthly True Up and instead offer Hourly True-Up. As a compromise the utility offers a Time of Use (TOU) rate for the power and energy portion of the charge and a fixed charge to support the distribution and fixed costs. For the summer months the fixed connection charge is $134/Mo. The power and energy time of use (TOU) rate is as follows. Copyright © 2017 42

Home Work Cont. 1 For the month of July only, answer the following. A. What is the impact to the solar only consumer due to the rate switch? B. What is the impact to the solar and battery consumer due to the rate switch? C. Will the time of use rate and switch away from net metering with monthly true up justify the addition of a battery with the solar? D. What is the value benefit of the battery only (no solar) with the TOU rate? Do you think this justifies the $7, 000 investment? E. Solar, Battery, and EV are a major investment that depends heavily on the utility rate structure that can change frequently. What can Tesla do to provide more assurance to its customers that their investment benefit will be realized? F. What actions could the utility take to benefit from Tesla’s addition to the utility ecosystem? Copyright © 2017 44