Expert Interview – Smart grids for seamless integration of consumers

Expert Interview – February 21, 2022

Interview with Michael Villa from smartEn about smart grids in Europe

We will not be able to transform the energy system without smart grids. Michael Villa gives an overview on their development in Europe. He is Executive Director of smartEn, a European business association which strives for the integration of consumer-driven solutions in the clean energy transition.

Michael Villa, Executive Director of smartEn Europe

Mr. Villa, can you tell us what smart grids are?

Smart grids help integrate a larger proportion of variable renewable energy into the system and support a cost-effective decarbonization. They require an active system management of their network to increase their resilience and integration of all consumers. Smart grids need system operators to be neutral market facilitators which procure flexible services from decentralized energy resources on the market.

Which steps need to be taken at European level for the implementation of smart grids?

First and foremost, Member States have to implement the EU Electricity Market Design: national regulatory authorities have to provide incentives to system operators to move from a CAPEX to a TOTEX approach and set out indicators, comparable throughout the EU, to measure progress towards an increase in their smartness. Up to now, positive developments already occur at transmission level, while significant progress is expected at distribution grid level.

Which European countries serve as models for the rest of the continent?

How “smart” a grid is can be weighed up and evaluated from numerous different perspectives.

At distribution grid operator level, Great Britain and the Netherlands are the Member States with more advanced local flexibility markets while countries like France, Finland and Ireland have recently set the regulatory framework for their distribution system operators to become smarter by procuring flexibility services.

Compared to distribution grid operators, the framework for the market-based procurement of all decentralized energy resources by transmission grid operators is more advanced, even if it is not ideal. Finland, Italy and Romania have now joined France, Greece, Ireland, Slovenia and Spain in setting clear rules for the market-based procurement of ancillary services.

The transmission grid operators in France, Finland, Germany, Slovenia and the UK have also taken into account the potential use of all decentralized energy resources as an alternative to expanding the grid in their 10-year grid development plans. This is the foundation to create truly smart grids.

The introduction of smart meters is another key element for the development of smart grids and innovative tariffs, for example dynamic electricity price offers. Several Member States have either already introduced smart meters or are in the process of doing so. It is worth highlighting that in Romania strong delays are being experienced, while Germany has put a halt to its roll-out following a decision from the Higher Administrative Court.

It will also be crucial to deploy smart meters fully interoperable with both energy management systems and smart grids to ensure seamless data exchange and energy system integration.

Which challenges still need to be overcome?

Beyond the limitations outlined above, the lack of data transparency is a major obstacle. The lack of visibility into the grid prevents the introduction of new, innovative services and the efficient functioning of markets which are open to demand-side resources. Operators of smart grids should publish real-time information on their congestion, carbon intensity and energy mix.

What can be done to further advance smart grids?

The definition of a Network Code for demand-side flexibility and an Implementing Act on data access are crucial in Europe. They would make it easier for system operators to obtain flexibility from consumers in a harmonized way and turn them into truly smart grids that can solve congestions and accomplish their tasks by relying on the potential of digitalization and energy system integration.

Why is the flexibility of the power grid so important?

Due to an increase of variable renewables in the EU energy mix, from 2020 to 2050 the system flexibility needs will increase by 4 times its present level. Flexibility today comes from thermal and hydro generation, pumped storage plants and insignificantly from demand. The latter should increase: system operators should ensure the seamless integration of demand-side resources to help integrate more weather-dependent renewables and manage a more variable energy system.

How will flexibility being made available on the grid be primarily provided in the future?

That’s crystal clear: from demand side resources. This is also more efficient for the system. Empowering consumers of all types to offer flexibility to the system is more cost-effective than investments in solutions from the past centralized energy model. It is estimated that 16 GW of flexibility could be offered by European energy intensive industries and 200 GW of controllable loads are already installed in our homes. These are resources that should be all activated in a fully smart grid scenario.

A careful quantification of the total capacity and benefit of the activation of the demand-side flexibility potential for the EU has not been done yet. smartEn has engaged in this effort with DNV and we will present the outcomes on 28 September. Stay tuned!

smartEN is a partner of EM-Power Europe which will be held from May 11–13, 2022, in Munich. The EM-Power Europe Conference on May 10 and 11 will host six different sessions on a variety of topics. They will provide a deep dive into the grids of the future, the challenges and potential solutions.

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