Kathleen Davis, senior editor of PEi’s sister title 'POWERGRID International' magazine, reports from the Eurelectric policy workshop ‘How will smart grids change the face of Europe’s electricity distribution and consumption?’ held in Brussels in April.

 

Kathleen Davis, senior editor, POWERGRID International magazine

The Eurelectric policy workshop was held at the Renaissance Hotel in Brussels, located in the EU corner of town on picturesque Rue de Parnasse, not far from the Palais Royal de Bruxelles

“If you’re going to Brussels, you must go to the Grand’Place,” a friend told me. So, when traveling to Eurelectric’s recent policy workshop ‘How will smart grids change the face of Europe’s electricity distribution and consumption?,” which happened to be in Brussels, I did just that. I visited.

For a ‘grand’ place, it was very, very small – about the size of my workplace’s parking lot back home in Oklahoma, but more delightfully surrounded by gorgeous old mercantile guild buildings constructed in the late 17th Century rather than home’s less attractive chainlink fence constructed about 15 years ago. So, surprisingly small but surprisingly delightful, that Grand’Place.

The same can be said for Eurelectric’s smart grids policy workshop on 13-14 April in Brussels. Tucked into a large ballroom at the Renaissance Hotel in the European Union part of the city, the workshop packed a lot of delightful information into a small, compact two-day format.

 

What is Eurelectric, and What do They Know about Grids?

 

Eurelectric is the union of the electricity industry, the sector association representing the common interests of power at pan-European levels. The group’s mission is to contribute to the development and competitiveness of the industry and to promote the role of electricity in the advancement of society. According to Eurelectric, the third internal energy market legislative package passed by the European Commission sparked their interest in smart meters and smart grids as a whole. The third package pushed the concept of smart power into “the public debate, attracting the attention of policymakers and, increasingly, of European citizens themselves”. This specific smart grids workshop focused on smart meters in the short term and smart grids in the long term.

Per Hallberg, chairman of the Eurelectric working group on smart grids, opened the forum with a discussion on how important power and the power industry are to Europe and the world. “Europe has put its electricity sector on the move,” Hallberg noted, reminding the audience that a decade before the continent had decided to start opening up electricity markets. “Step-by-step we are building the European market.”

Opening that market fully requires a line between the competitive and the social sides of power, Hallberg added. That means communication among consumers, regulators, industry insiders and other players, especially the distribution system operators (DSOs).

“Europe’s DSOs have a key role to play in integrating the low-carbon power sources that are essential to reach [Europe’s climate change policy] targets and in facilitating well-functioning electricity retail markets in Europe,” said Hallberg. “Smart grids can help us deliver on that. DSOs, however, need to be able to implement them now.”

Hallberg was followed by John Dalli, the European commissioner for health and consumer policy, who focused on one specific group of smart grid participants, the consumer.

“We need to demonstrate that [smart grids] will yield positive results for consumers,” he told an audience of about 100 on the first day of the workshop, adding that he wanted the smart grid to be simple, prompt and affordable for power users. He noted that smart meters and the smart grid have great potential but pose a challenge to societies used to the traditional form of power production.

“I look forward to the future of electricity being much more consumer-focused,” Dalli noted, stressing three consumer points on his agenda: meters designed so that non-experts can use them, meters that have relevant information, and guarantees on personal data protection.

 

The Smart Consumer

 

Following the opening statements by Hallberg and Dalli, the first session of the workshop focused entirely on consumers. The executive panel discussion labeled ‘From smart meters to energy saving benefits for the customer: a long way to go’ featured seven speakers across the industry and regulatory bodies, including: Per Hallberg; Jorge Vasconcelos, chairman of New Energy Solutions; Tomas Wall, VP of R&D at Fortum; Paul Rübig, a member of the European Parliament; Jessica Stromback, senior partner with VaasaETT’s global energy think tank; Milan Spatenka, head of grids development for CEZ; and João Torres, CEO of EDP Distribução.

The first day of Eurelectric’s smart grid policy workshop saw quite a bit of furious notetaking

Developing the grid’s retail and consumer side of things is becoming a very important part of the smart grid equation, according to panelists. Hallberg noted that, as a society: “We need to consume less and consume smart.” But that issue of less consumption will take all sides of the issue to overcome the large challenge of non-traditional power roles and new technology, including that wily consumer, according to Torres. And the consumer is the all-important part of the equation to Rübig, who requested “knowledge distribution” across the board. Wall noted that, while the consumer does need to be part of the discussion, there is still a valid argument about whether the consumer really cares about the smart grid in general or specifically. For the type of smart grid envisioned, a very active customer must be involved, and there was no consensus among the panelists on whether such a consumer exists.

But, such a consumer’s existence is possible, even if the industry itself hasn’t been so good at ferreting it out. “We have to admit, in our industry, that we haven’t been very good at [informing the consumer],” noted Wall.

“But, we shouldn’t underestimate the customer’s willingness to react,” Torres added. Reactions and responses aren’t predictable at this point, though, although Stromback noted that her company’s think tank had noticed considerably more interest in smart metering/smart grid pilot programmes in Europe as opposed to the USA. In a comparison of response rates, the USA came in at between 4 and 20 per cent of customers interested in smart pilot programmes. Europe came in between 20 and 40 per cent.

 

Where are Those Smart Meters?

 

Whether or not the consumers sign on for participation in masses, smart metering pilots and programs continue to come to fruition, as noted in the workshop’s second session, ‘Why is the roll-out of smart meters a regulatory challenge?’ However, the consumer hadn’t totally left the building. Footprints still tracked through presentations in this session as well, such as when Patricia de Suzzoni, chairwoman of the European Regulators Group for Electricity and Gas (ERGEG) customer working group, looked at the challenges of implementing the third package of legislation’s objectives.

“European energy regulators approach smart meters and smart grids from a technology neutral approach,” said Suzzoni. “The smart grid, in other words, should be the means to the end, not the end itself.” Suzzoni also discussed the benefits of the smart grid in terms of finances. As the advisor to the president of French regulator CRE, she’s had direct experience with figuring out the monetary value of smart grid pilots. She noted that, if one looks at only the DSO perspective, a five-year plan for smart meter roll-outs puts the DSO in the red. However, if the entire value chain is taken into the equation from generation to distribution to supply, the numbers reverse and the project goes from being in the red to being in the black.

A long look at the electricity value chain was also stressed by Jacques Horvilleur, managing director of ERDF, who put forward Eurelectric’s view on smart meters.

“Smart meters present a lot of huge challenges – financial, industrial and social,” he said, revealing six recommendations that Eurelectric has for a successful smart metering roll-out.

 

  • Optimize: Look at geographical-based roll-outs, incorporate only essential functions in the meter and then offer more services later for interested customers
  • Tariff it: Regulators should indicate that smart meter roll-outs be tariff-financed
  • Get down to brass tacks: Smart meters should provide “frequent and precise information,” according to Horvilleur
  • Go off-site: Smart meters need to incorporate the ability to upgrade things remotely or technology change-outs could really run up a roll-out’s final bill.
  • Play nice: All players need to have a hand in the game to enable customers to reduce consumption and hit those climate goals
  • Say it is so: The European Commission needs to issue another mandate, according to Eurelectric. This one needs to cover compatible data exchange protocols.

     

     

    Enter the European Commission

     

    Whether discussing the customer or investments, the smart grid continues to be closely tied to what will or won’t be in the regulations. The second day of the Eurelectric policy workshop in Brussels was opened by Philip Lowe, the director general for energy at the European Commission. He admitted that he’d been in office a scant 35 days.

    However, relying on information from previous directors and the current working group, Lowe noted that the key themes of a smart grid retail market include new roles for regulators and consumer protection measures. Those new protection measures should include a definition of vulnerable consumers, the prohibition of disconnection at critical times and interaction with other social policy measures, Lowes said.

    However, the smart grid remains of utmost importance, Lowe admitted: “I don’t think any of us are unaware of the inadequacy of our existing [grid] infrastructure… There is growing awareness of the cost of not investing in this area.”

    Lowe told the workshop audience that building a grid requires “attention to detail”, which seemed to be his way of telling the industry that while Europe as a whole could do small bits and pieces, the real work needed to be done inside smaller geographical areas.

    “Beyond the overall concept,” he said, “we need to push support down to regional and city levels, in designing a part of the final network that we’d like to achieve.”

    Jessica Stromback, senior partner with VaasaETT’s global energy think tank participates in a panel discussion

    Lowe advocated making investments in smart grid technology and pilot programmes more stable, allowing people to “invest with certainty… [right now] banks, rightly, say, ‘Are you going to implement this, or is it fiction?’” With a cost in “trillions“, Lowe reiterated that change begins at the regional level, looking at what the industry can currently do that is affordable.

    Lowe’s position was supported by Manuel Sanchez Jimenez, policy officer with DG Energy within the European Commission, who noted many challenges still exist with implementing a smart grid, including the large regulatory nature of the beast and a general lack of demonstration projects that prevents, of course, a list of lessons actually learned to work from.

    Lowe added that the practical work on smart grids will be pushed out over the next five to ten years, requiring support of the third legislative package, agreement on grid codes in the form of standardization, and paying attention to consumers, both industrial and residential.

     

    The Return of the Smart Consumer

     

    Most of Eurelectric’s smart grid workshop centered around an active consumer on both days. Lowe noted, in fact, “active consumers are the heart of an active retail market that incorporates smart grids.”

    “Optimization of the electricity system is a public interest,” added Patrick Van Hove, research programme officer for DG Research within the European Commission. Van Hove noted that such optimization to benefit the consumer and all of society requires cash and responsibility, adding that a €3 billion annual amount spent on smart grids and related technologies and programmes needs to raise to €8 billion annually in the next few years, with an additional €50 billion investment over the next decade.

    Along with forking over a lot of funds, though, industry players need to also invest in their roles in the process. “Optimization is the responsibility of many,” Van Hove added.

    One portion of the responsibility is, of course, regulatory as Lowe noted before him. And Van Hove laid out a list of how the European Union can accept its part in the smart grid evolution, including:

    • Facilitating planning
    • Promoting resource pooling
    • Providing some financing
    • Providing a regulation framework
    • Promoting internal co-operation efforts, and
    • Providing regular sharing of data and information.

     

    Van Hove’s points were supported by Tahir Kapetanovic, director of electricity at E-Control, the Austrian power regulator. He added the regulators have two very important roles in the process: helping investment and giving guidance. Guidance is difficult, however, if you don’t believe in the product.

    “We don’t know if we really need smart grids,” stated Andy Phelps, director of policy and regularion at the Energy Networks Association in the UK in the final session of the Eurelectric workshop. “And, if we do need them, we don’t know where or when we will need them – and neither do the regulators,” he added. This makes it difficult, of course, to predict what regulations and incentives are needed to promote the smart grid, although Phelps brought the consumer back to the table.

    “Can customers and society be convinced of the need for all of this?” Phelps asked. “We have to keep the people – the customers – on board,” added Peter Birkner, chairman of Eurelectric’s networks committee. According to the experts at Eurelectric’s smart grid policy workshop, the one person that still needs to be convinced about the smart grid may be the person at the end of the light switch.

    In the end, the grand scale of the smart grid will depend, it seems, on small, individual consumer choices.

    SMART GRIDS WILL:

    • Increase sustainability
    • Provide adequate capacity
    • Create uniform grid connections
    • Provide higher security and quality of supply
    • Enhance efficiency
    • Support trans-national markets
    • Co-ordinate future developments

     

    —Tahir Kapetanovic, director of electricity at E-Control GmbH speaking at Eurelectric’s smart grids policy workshop

     

    FOR A SMART GRID, CONSUMERS WILL HAVE TO:

    • Pay 25-30 per cent more for power by 2025
    • Decrease energy consumption
    • Agree to have power interrupted when necessary
    • Buy expensive smart appliances
    • Buy cars that aren’t as desirable as the current ones

     

    — Andy Phelps, director of the Electricity Networks Association UK speaking at Eurelectric’s smart grids policy workshop

     

    WHY HAS LARGE-SCALE DEPLOYMENT OF SMART GRIDS NOT STARTED?

    • Limited pilot experiences
    • Limited statistical proof of benefits
    • Existing uncertainties with investment

     

    —- Manuel Sanchez Jimenez, policy officer for the DG Energy portion of the European Commission speaking at Eurelectric’s smart grid policy workshop.

     

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