How can Smart Distribution Grids Power Europe’s Green Transition?
We have asked 4 decision makers to share their perspectives on the role of smart distribution grids and how they can power Europe's green transition. Read their insights here.
Distribution networks are rarely the centre of heated public debates. However, their crucial role in facilitating a transition towards cleaner and more distributed energy sources is widely recognised among both market players and policy makers. Distribution System Operators (DSOs) will need - even more than today – to be the flexible backbone of the electricity system, dealing with both fluctuating production and flexible consumption at the same time.
This is because more and more power is now produced locally, and this gives European DSOs an ever greater role in developing an intelligent and efficient energy system. Traditionally, electricity flows have gone downstream from the transmission grid to the distribution grid, but today as much as 50% of the electricity produced in Denmark flows directly into the distribution grid to find the consumers without ever reaching the transmission grid. And these volumes are increasing year on year.
Image: Share of electricity production connected at distribution level.
At the same time, there has been a transition from centralised fossil-fuelled power plants to a more dispersed generation from wind turbines and solar power. The transition has impacts on the entire energy system and not least on the electricity distribution grid, which is being tested and challenged by the new energy flows. The grid in Denmark – and many other places in Europe – is about to be turned upside down thanks to this decentralisation, and with more and more electric vehicles and heat pumps coming on line, it provides whole new load profiles on the local grid.
Image: Over half of Danish electricity production is now delivered into the distribution grids from
wind turbines, CHP plants and solar cells. The volumes are increasing year on year.
But how do we make the most of the new possibilities and create the highest possible value for both consumers and the energy system as a whole? How do we ensure that necessary and efficient investments are made? And what role should the DSOs play in order to enable and ensure a smooth transition to a renewable energy system and, at the same time, act as neutral market facilitators?
We have asked 4 decision makers to share their perspectives on these topics:
Andrees Gentzsch, Member of the Executive Board, German Association of Energy and Water Industries (BDEW)
1. From my point of view, smart energy systems are important for Europe's green transition because the affordable integration of renewables and of electric vehicles relies on smart solutions. Smart solutions also allow for a higher degree of participation of distributed actors in an increasingly complex energy system.
2. The biggest challenges of transitioning Europe's energy system are decarbonisation, decentralisation and digitalisation. This demands the re-thinking of the roles and tasks for the grid operators.
3. A smarter energy system will affect the daily lives of the European citizens by organising decentral production, the usage of flexibility, energy storage and electric mobility.
4. Before 2020 Danish and German DSOs must encourage the green transition by finding the most cost-effective solutions and creating the regulatory framework to implement them.
Anders Stouge, Deputy Director General, Danish Energy Association
1. From my point of view, smart energy systems are important for Europe’s green transition because it will integrate intermitted renewables more smoothly into the European energy system in a cost-efficient way, without compromising the security of supply.
2. The biggest challenges of transitioning Europe’s energy system are a lack of a regulatory framework supporting a breakdown of barriers between the traditional siloes of the energy system; a lack of a policy balancing the prevailing short term focus on cost savings against the need for investments in innovation and demonstration of new promising technologies and lastly a lack of a coherent policy promoting electrification of the heat and transport sectors to assure a proper balance between consumption and the increasing green production of electricity.
3. A smarter energy system will affect the daily lives of the European citizens as the energy system will become customer driven by putting the consumer in the driving seat
4. Before 2020 Danish and German DSO’s must encourage the green transition by smoothly integrating more renewables into the grid and in a neutral manner facilitate the development and operation of markets for flexibility.
Klaus-Dieter Borchardt, Director DG Energy, European Commission
1. From my point of view, smart energy systems are important for Europe’s green transition because they help to ensure secure the functioning of the electricity system and are the key enablers of both the internal energy market and integration of vast amounts of renewable.
2. The biggest challenges of transitioning Europe’s energy system are the ability for end-users to play an active role in the supply chain, followed by the ability of utilities for adjusting to this change and advocating for more flexible systems and opening new win-win possibilities for the electricity market.
3. A smarter energy system will affect the daily lives of the European citizens by enabling consumers to control appliances at their homes to save energy, facilitate domestic generation, reduce cost and increase reliability and transparency of the energy system.
4. Before 2020 Danish and German DSO’s must encourage the green transition by upgrading and smartening their electricity systems in terms of decarbonising their economies and providing real added value for consumers implementing the single electricity market, while increasing consumer and social welfare and creating new "green jobs".
Knud Pedersen, Chairman, Radius
1. From my point of view, smart energy systems are important for Europe’s green transition because electrification of more sectors like transport and heating is needed to reduce CO2 emissions to an acceptable long term level. Electrification, abandonment of coal and increased volatility from wind and solar will require a more intelligent interplay between electricity, district heating and gas systems and with market players and costumers. Utilisation of IT and communication technologies in smart energy systems allows us to adapt our needs for energy services to the availability of energy in a much more flexible way.
2. The biggest challenge of transitioning Europe’s energy system is to design appropriate competitive markets and regulatory framework to attract capital and labour for the investments needed. Competition is necessary to foster innovation and bring down costs. Legislation and regulation is needed to set the direction towards long term targets and to ensure correct interplay between monopoly grid companies and competing players in the market. The political system must ensure continuity regarding long term targets for the energy system and for cross border competition and market rules. The drastic reduction in costs from off shore wind and solar electricity generation is a clear evidence that a combined use of market forces, regulation and subsidies can deliver the technological progress needed in the transition.
3. A smarter energy system will affect the daily lives of the European citizens in many ways. Utilisation of information technologies will increase the awareness of the individual costumer about his or her own needs and how these needs require access to energy services. Most significantly we will see changes in the way our needs for transportation and heat will be satisfied. Many more customers will move from being passive energy consumers but more actively interact with the markets including investing in decentralised production of energy. Market players will be able to combine different services to offer a package of services that is adapted to the individual costumer need. This development is already taking place although the systemic backbone regarding data communication and remote metering in the grid companies is not yet fully in place. In my company, Radius, which is the largest Danish DSO, our 1 mill. costumers will be affected by installment of remotely read meters in the coming 2-3 years.
4. Before 2020 Danish and German DSO’s must encourage the green transition by further development of time differentiated tariffs and pricing of our grid services to new types of costumers. We must be costumer centric in our approach and develop our services to foster value creation for consumers and companies. The DSO’s play an essential role in the green transition and we need cooperation between DSO’s and between DSO’s and TSO’s. The DSO and the TSO are both neutral facilitators for more competitive energy markets. We should cooperate to find the right level of harmonization of terms and conditions for market access. The green transition will benefit from well-functioning competitive retail and wholesale markets. We should invest in innovative utilization of new technologies to bring down long run costs of DSO services, and the regulatory framework should encourage us to do so.
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State of Green
Anne Vestergaard Andersen
Phone: +45 20 35 04 47