Kathleen Davis, Senior Editor
Eurelectric’s policy workshop “How Will Smart Grids Change the Face of Europe’s Electricity Distribution and Consumption?” occurred April 13 & 14, 2010 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 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 contributes to the development and competitiveness of the industry and promotes electricity’s role in the advancement of society.
|Palais Royal de Bruxelles|
The Third Internal Energy Market Package passed by the EU sparked their interest in smart meters and smart grids as a whole, according to association material. 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 grid 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 how important power and the power industry are to Europe and the world.
“Europe has put its electricity sector on the move,” Hallberg said. “Step-by-step, we are building the European market.”
He said that a decade before, the continent had decided to start opening up electricity markets. The idea to open that market fully requires a line between the competitive and social sides of power, Hallberg said. That means communication among consumers, regulators, industry insiders and other players, especially 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,” he said. “Smart grids can help us deliver on that. DSOs, however, need to be able to implement them now.”
Hallberg was followed by John Dalli, European commissioner for health and consumer policy. He focused on one group of smart grid participants: consumers.
“We need to demonstrate that (smart grids) will yield positive results for consumers,” Dalli said.
He wants the smart grid to be simple, prompt and affordable for power users. Dalli said that smart meters and the smart grid have great potential but pose a challenge to societies used to traditional power production.
|The first day of Eurelectric’s smart grid policy workshop included furious note taking.|
“I look forward to the future of electricity being much more consumer-focused,” Dalli said.
He stressed three consumer points on his agenda: meters designed so nonexperts can use them, meters that have relevant information, and guarantees on personal data protection.
The first workshop session focused entirely on consumers. The executive panel discussion “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: Hallberg; Jorge Vasconcelos, chairman of New Energy Solutions; Tomas Wall, vice president of research and development at Fortum; Paul Ràƒ¼big, 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 Joàƒ£o Torres, CEO of EDP Distribuàƒ§àƒ£o.
Developing the grid’s retail and consumer side of things is becoming important in the smart grid equation, panelists said.
“We need to consume less and consume smart,” Hallberg said.
But less consumption will take all sides of the issue to overcome the challenge of nontraditional power roles and new technology, including consumers, Torres said.
Consumers are the all-important part of the equation, Rubig said. He requested “knowledge distribution” across the board.
Wall said that consumers don’t need to be part of the discussion, but there is still a valid argument about whether consumers really care about the smart grid in general or specifically. To achieve the type of smart grid envisioned, active customers must be involved. There was no consensus among panelists whether such consumers exist.
But such a consumer’s existence is possible, even if the industry hasn’t uncovered him yet. The industry hasn’t been good at informing consumers, Wall said.
|The European commissioner for health and consumer policy opened the Eurelectric policy workshop.|
The industry, Torres said, shouldn’t underestimate customers’ willingness to react.
Reactions and responses aren’t predictable at this point, although Stromback said her company’s think tank had noticed considerably more interest in smart metering and smart grid pilot programs in Europe as opposed to the U.S. (In a comparison of response rates, the U.S. came in at 4-20 percent of customers interested in smart pilot programs. Europe came in between 20 and 40 percent.)
Where are Those Smart Meters?
Whether or not consumers participate in masses, smart metering pilots and programs continue to come to fruition, as noted in the workshop’s second session, “Why is the Rollout of Smart Meters a Regulatory Challenge?”
Consumers hadn’t totally left the building, however. Footprints still tracked through presentations in this session, including Patricia de Suzzoni’s session on implementing the third package’s electricity objectives.
“European energy regulators approach smart meters and smart grids from a technology-neutral approach,” said Suzzoni, chairwoman of the ERGEG customer working group.
“The smart grid, in other words, should be the means to the end, not the end itself.”
|Jessica Stromback, senior partner with VaasaETT’s global energy think tank, participates in the first session’s panel discussion.|
Suzzoni discussed the benefits of the smart grid in finances. As the advisor to the CRE president, she knows the monetary value of smart grid pilots. If one looks at only the DSO perspective, she said, a five-year plan for smart meter rollouts puts the DSO in the red. If the entire value chain is taken into the equation from generation to distribution to supply, however, 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. He gave Eurelectric’s view on smart meters.
“Smart meters present a lot of huge challenges: financial, industrial and social,” he said.
Horvilleur revealed six Eurelectric recommendations for a successful smart metering rollout:
- 1. Optimize: Look at geographical-based rollouts. Incorporate only essential functions in the meter. Then, offer more services later for interested customers.
- 2. Tariff it: Regulators should indicate that smart meter rollouts be tariff-financed.
- 3. Get down to brass tacks: Smart meters should provide “frequent and precise information,” Horvilleur said.
- 4. Go off-site: Smart meters need to incorporate the ability to upgrade things remotely, or tech change outs could run up a rollout’s final bill.
- 5. Play nice: All players must have a hand in the game to enable customers to reduce consumption and hit climate goals.
- 6. Say it is so: The commission must issue another mandate, according to Eurelectric. This one needs to cover compatible data exchange protocols.
Enter the European Commission
Whether discussing customers or investments, the smart grid continues to be closely tied to what will be/what won’t be/what is in regulations.
Philip Lowe, director general for energy at the European Commission, opened the second day of the Eurelectric policy workshop. He said that he’d been in office 35 days.
|Manuel Sanchez Jimenez, policy officer with DG Energy within the European Commission, makes a point about the commission’s view on smart grids.|
Relying on information from previous directors and the current working group, Lowe said 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, Lowe said.
The smart grid remains of utmost importance, he said.
“I don’t think any of us are unaware of the inadequacy of our existing [grid] infrastructure,” Lowe said. “There is growing awareness of the cost of not investing in this area.”
Building a grid requires attention to detail, Lowe said. While Europe as a whole could do bits and pieces, the real work needs to be done inside smaller bits of geography.
“Beyond the overall concept,” Lowe 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.”
In addition, Lowe advocated investing in making smart grid technology and pilot programs more stable, allowing people to “invest with certainty.”
|Patrick Van Hove discusses financing innovation.|
Change begins at the regional level, looking at what the industry can do right now, with what is affordable and within budgets, he said.
Lowe’s position was supported by Manuel Sanchez Jimenez, policy officer with DG Energy within the European Commission. 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 a list of lessons actually learned to work from, he said.
Lowe said that the practical work on smart grids will be pushed out over the next five to 10 years, requiring support of the third package, agreement on grid codes in the form of standardization, and paying attention to industrial and residential consumers.
The Return of Smart Consumers
Most of Eurelectric’s smart grid workshop focused on active consumers.
“Active consumers are the heart of an active retail market that incorporates smart grids,” Lowe said.
Patrick Van Hove, research program officer for DG Research within the European Commission, said that such optimization to benefit consumers and all of society requires cash and responsibility.
“Optimization of the electricity system is a public interest,” Van Hove said.
Three billion euros are spent annually on smart grids and related technologies, and programs needs to rise to 8 billion euros annually in the next few years, with an additional 50 billion euros investment over the next decade, he said.
Industry players must invest in their roles in the process, as well.
“Optimization is the responsibility of many,” Van Hove said.
One portion of the responsibility is regulatory, as Lowe noted. 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 cooperation efforts, and
- Providing regular sharing of data and information.
Van Hove’s points were supported by Tahir Kapetanovic, director of electricity at E-Control GmbH, the Austrian power regulator. He stated that regulators have two important roles: helping investment and giving guidance.
Guidance is difficult, however, if you don’t believe in the product.
Andy Phelps, director of the Electricity Networks Association UK, introduced doubt in the final session of the Eurelectric workshop.
“We don’t know if we really need smart grid,” Phelps said. “And, if we do need them, we don’t know where or when we will need them, and neither do the regulators.”
|The Eurelectric policy workshop was at the Renaissance Hotel in Brussels in the EU corner of town on Rue de Parnasse.|
That makes it difficult to predict what regulations and incentives are needed to promote the smart grid.
“Incentives should influence desired behavior and deliver the outcomes consumers want,” Phelps said.
Nevertheless, customers might not be sold easily on the idea, given the issues that can arise (see sidebar, previous page).
All of the Eurelectric speakers agreed that customers should be in the grid equation, but all seemed equally in agreement that the the people who still need to be convinced about the smart grid are the ones at the end of the light switches, those very customers of which they spoke.
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
- Coordinate 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 percent more for power by 2025
- Decrease energy consumption
- Agree to power interruption when necessary
- Buy expensive smart appliances
- Buy cars less desirable than 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