New energy challenges for municipalities aired at POWER-GEN Europe

A round table discussion on how modern European municipalities can adapt to the clean energy transition took place at POWER-GEN Europe in Cologne on Wednesday, with some scepticism being expressed at the likely impact of digitization and renewables among panellists.

Moderator and journalist Eric Marx framed the discussion on how municipality leaders were approaching the new energy landscape and what technologies they saw as being particularly relevant to their businesses, however there was some resistance evident to the merits of digitization in particular.
Rather than discuss potential new energy innovations Bernhard Michels, Managing Director Kraftwerk Mehrum GmbH, drew focus on the negatives associated with the transformational change.

“There will be a transformation time that is much longer than politicians expect ” within the next 30 year that problem will be worked at.”

“Digitization is only a word but what does it really mean? It means we connect customer via internet to enable them change providers, they can pay via internet, connect our systems with booking and tax systems and ensure security and that is a big challenge for us. It also means less employees in the future than we have today and that is the most challenging item.”

Michels went on to clarify the difficulties facing power generators in a world of minimum, if any, returns.

“I am a fossil in the new world but change is the most continuous reality around the world and in business. I have a lot of ideas to improve power station but I cannot see if there will be a return on the money so instead we stick with less efficiency. And we are losing vital technical knowledge (as a result of new energy policy). When I was last involved with a nuclear power station development it took 60 months to complete. Now the time span is closer to 50 years. The connections, knowledge, safety expertise ” that disappears and it’s a big problem in the discussion, everyone is talking about CO2 production and no one is talking about security of supply. We will also need fossil generation in the future.”

It’s left his own company, the Mehrum coal-fired power plant, which powers the local municipality, facing a stark choice.

“We have for our coal station two opportunities. We have to sell the coal power station and if we can’t sell it next year, we don’t have the money to pay our fixed costs. That’s the reality but, despite that, we need in Germany a backup system, no matter how much renewable capacity- we install.”

Fellow panellist, and former E.ON executive, now consultant and lecturer Dr. Dariush Hourfar expressed similar sentiments, noting German stadtwerke ability to innovate and adapt within regulatory frameworks over many decades, up until now.

“Investment is currently a waste without payback time,” he said. “Without that no one will invest. Return on investment is not on the agenda based on the tariffs.”

Marx attempted to re-introduce the brighter possibilities of digitization to the debate, pointing out E.ON’s recent strategy of cultivating start-up firms innovating in the electricity space, and the possibility of the likes of Google coming in to take over if Stadtwerke failed to act, but to no avail.

“Digitisation is an idea but not a proven business case,” Hourfar responded.

On the subject of unproven business models, Michaels also pointed out the limitations of storage technology at the present time.

“One stadtwerke installed a battery last year together with Mercedes for the smart electro car, à‚ which provides 10 MW hours which means nothing at the end of the day.”

“There are other utilities who have installed more than 100 MW hours of capacity but the problem is it’s very expensive and there is no business model yet. But if you want to be a player in the future it would be good to invest in the development of storage especially if you have a heat transfer system.”

“In the city you can build heat storage which is common but expensive. I’m not sure yet if you can get the money back out of it and that’s the problem with our generation business. We need a solution together with the government and we don’t need ideology. The solution is that we work altogether and I have the feeling we are working against each other and that is not good.”

Fabiola Mascardi, chair of the Board of Directors at Italy’s IREN Ambiente SpA, and former European Commission adviser, was more well disposed towards the possibilities new energy presented for her company. She replied to Michaels that successful heat storage was both possible and profitable, as was evident in her company’s district heating network in Turin, but also emphasised the need for a mutually beneficial partnership with customers.

“For instance with lighting. We now distribute to clients LED bulbs to install in their houses or in the plants of industrial clients. Could say we do it against our interest, due to less lighting and less energy? Initially it will not be in our interest but as a better educated client who you have a good relationship with ” they will stay loyal to and you can count on that client and build the relationship on new services for all.”

She went on to describe a progressive approach to smart metering in the regions her company works in and the possibility of facilitating electric vehicle storage, a matter that is currently on the agenda for IREN.

Michaels concluded his remarks by continuing a sceptical note towards digitization as the eureka technology that will trump all issues.

“I think there will come digitization but remember people don’t all want to be controlled. They want to be free in their decisions and sometimes I think if you install this equipment they will think they are being controlled. We have to create a future and there are lot of opportunities but we also have to handle the present.”

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