IEA ISGAN Annex 3: Benefit/Cost Analyses and Tools of Smart Grids

The European Union has set itself ambitious energy policy targets to curb climate change, strengthen the competitiveness of the European Union and reduce energy import dependency. To achieve these objectives, it is necessary to create an energy infrastructure with a high potential for flexibility and controllability: smart grids. It is essential to assess the costs and benefits of technologies and services used in smart grids with a view to their contribution to increasing the overall efficiency of the energy system.

On behalf of the Federal Ministry of Transport, Innovation and Technology, the Energy Institute at JKU Linz has been participating in the working group Annex 3: Benefit & Cost analysis and Toolkits of the International Smart Grid Action Network (ISGAN) since mid-2013. Together with experts from 11 countries, it has analysed cost-benefit models and developed proposals for their adaptation and further development. In the course of the work, the EI-JKU dealt in particular with two questions: how such an evaluation model can be adapted to Austrian conditions and which socio-economic factors influence the question of whether an end consumer emerges as a winner or loser from Smart Grid-based functionalities.

As a result of these elaborations, a proposal for clustering the main functions of a Smart Grid is now available, which should be considered in a cost-benefit analysis (CBA): (1) involvement of end-users; (2) interconnection; (3) increased quality and stability of supply through two-way communication and comprehensive control and monitoring functions; (4) and increased efficiency. In addition, guidelines on key parameters and conditions for the application of a CBA for Austrian projects were developed. The practicability of these guidelines was tested using data from the research project "Flexible AC Distribution Systems" (FACDS, FFG No. 853555), which tests battery storage in combination with an inverter in the testbed of Aspern Smart City Research. The results show that the benefit of using these technologies from a private investor's point of view depends on the respective business model or storage operation, while the benefit from a societal point of view is consistently positive.

In addition to this topic, the EI-JKU also dealt with the question of whether social imbalances are triggered by shifting the burden of financing the network to lower income classes. The focus was to show how the own, decentralized power generation changes price and tariff models and which socio-economic factors should be considered in the development of new cost and benefit models for the analysis and evaluation of investments in smart grid technologies and regulations.

This topic was further deepened during the project and discussed in another working paper. In this state, the question was how future grid tariff structures could look like and what effect they would have on different household groups. The result shows that, depending on the scenarios used, alternative grid tariff systems (in extreme cases) reduce household expenditure by 50% or increase it by 500% (compared to the status quo).

Italy, Austria, France, India, Korea, Mexico, Russia, South Africa, Sweden, Switzerland, USA

Dr. Andrea Kollmann
Altenberger Straße 69
A-4040 Linz

Tel.: +43-732-2468-5660
Email: kollmann@energieinstitut-linz.at