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« Smart Grids » : the backbone of a future decarbonised power
system ?
Dr. Joëlle de Sépibus
Visiting Professor College of Europe
Outline
• From monopoly to competition in the European electricity markets:
• The climate challenge: – The decarbonisation of power production
• The deployment of « Smart Grids »: the backbone of a future decarbonised power system ?
The ‘traditional’ monopoly structure of the electricity industry
• Alternative current is at the root of the current structure of the power industry: – A system which generates electricity in large power
stations at remote sites and carries it over long networks to distant users
• Management by a vertically integrated company: – Power generation – Transmission (high voltage networks)– Distribution– Supply of electricity (billing, metering)
Progressive Liberalisation of the European Electricity Market
• Shortcomings of the monopoly system:– Large scale investment and lack of competition– Those who planned, managed, and operated the
system did not carry any of the risk and did not suffer if they erred
– Difficult introduction of small-scale electricity production
• Response of the European Union: – Progressive introduction of competition for generation
and supply of electricity under the influence of the neo-liberal ideology
The Legislative Electricity Framework of the EU
• The first legislative initiative– The ‘first’ Electricity Directive (1996)
• The second legislative package– The ‘second’ Electricity Directive (2003)– The Cross-Border Regulation (2003)– The Security of Supply Directive (2005)
• The third legislative package – The ‘third’ Electricity Directive (2009)– The Second Cross-Border Regulation (2009)– The Regulation establishing an Agency for the
Cooperation of Energy Regulators (ACER) (2009)
Liberalising the European Electricity Markets
• Main principles: – Competition in the generation and supply of electricity
and freedom of choice for customers– The networks remain a monopoly– Non-discriminatory third party access (TPA) to
networks– Unbundling’ rules for vertically integrated companies
(accounting, legal, ownership unbundling)– Designation of national energy regulators – Creation of an Agency for the Cooperation of
Energy Regulators
The EU „climate and energy package“ - 2007
• New commitments by the EU for 2020: – Pledge to reduce the EU GHG by 20% (1990)– Increase the share of renewable energy (20%) – Increase of energy efficiency by 20%
• Legislative framework: – Package of measures (2009)
• Amendment of the Emission Trading Scheme (2013-2020) • New Directive for Renewable Energies• The Directive on Carbon Capture and Storage (CCS)• Strategic Energy Technology Plan (the ‘SET-Plan’)
Climate related challenges for the liberalised electricity markets
• Reduction of CO2 emissions – Low carbon generation of electricity (switch
from coal to gas, equipment of fossil fuel power stations with CCS)
– Increase of renewable energy sources (RES) • Small-scale production (solar, onshore wind,
geothermal, biomass) – „distributed generation“ • Large offshore wind production
– Increase of energy efficiency
The effects of liberalisation for a decarbonised power sector
• For a thorough appraisal see, in particular:
Joëlle de Sépibus,
The Liberalisation of the Power Industry in the European Union and its Impact on Climate
Change
A Legal Analysis of the Internal Market in Electricity, WTI Working Paper No 2008/10
Network-related barriers for RES
• ‘Traditional’ networks: – Largely « passive » management of networks (coal, nuclear,
gas)
• Principal barriers for the introduction of small-scale RES– Despite « unbundling » and regulated TPA still bias againt small
distributed generation (highly concentrated market)– ‘Unfair’ network tariffs (high connection charges)– Insufficient « intelligence » of aging networks
• Principal barriers for the introduction of large-scale RES, especially wind offshore– Insufficient transmission capacities and interconnection capacity
between Member States
The Response of the EU….the Deployment of « Smart Grids »
Smart Grids:
“upgraded electricity networks to which two-way digital communication between supplier and consumer, intelligent metering and monitoring systems have
been added“
What is a Smart Grid? Like blinded men with an elephant
Smart Grid
• Modernised electricity delivery system which monitors, protects and automatically optimizes the operation of its interconnected elements
• The Smart Grid sits at the intersection of Energy, IT and Telecommunication Technologies
Smart Grid – „when power meets intelligence“
• .
Communication between
system components
Interdisciplinary technologies:Data collection, processing and recombination
Market Grid Operation
SmartGeneration
SmartDistribution and Transmission
SmartConsumption
SmartStorage
Principal goals of the „Smart Grid“
• to integrate national networks into a market-based, truly pan-European network
• to guarantee a high-quality of electricity supply to all customers and to engage them as active participants in energy efficiency
• to anticipate new developments such as the electrification of transport
• to substantially reduce capital and operational expenditure for the operation of the networks, while maintaining the security of the system
Principal goals of the „Smart Grid“
• Backbone of the future decarbonised power system: – to transmit and distribute up to 35% of electricity from
renewable sources by 2020 and a completely decarbonized electricity production by 2050, in particular through the integration of vast amounts of both on-shore and off-shore renewable energy
– Strong incentives for efficient energy use, combined in particular with time-dependent electricity prices („peak-shaving“)
Roadmap for a competitive low-carbon economy in 2050
• Communication from the Commission (2011) 112: – “Smart Grids are a key enabler for a future
low-carbon electricity system, facilitating demand-side efficiency, increasing the shares of renewables and distributed generation, and enabling electrification of transport”
EU legal framework for „Smart Grids“
• Electricity Directive (2009/72/EC): – Obliges Member States to define an implementaiton
plan for the roll-out of intelligent metering systems• Energy End-Use Efficiency and Energy Services
Directive (2006/32/EC):– Regulatory incentives should encourage that a
network operator to earn revenues that are not linked to additional sales, but based on efficiency gains
• European Council (2011): – Invitation of MS to liaise with European
standardisation bodies ‘to accelerate work with a view to adopting technical standards for electric vehicle charging systems and for smart grids and meters‘
EU support for the deployment of „Smart grids“
• Technology push
– RTD&D projects since 2003, more than €300 Million EU support
– European Smartgrid Technology Platform (launched 2006) (www.smartgrids.eu)
– European Energy Infrastructure Package, 2010 and 2011: http://ec.europa.eu/energy/infrastructure/index_en.htm
– SET- Plan – European Electricity Grid Initiative (launched 2010 (https://www.entsoe.eu/rd/eegi/)
EU support for the deployment of „Smart grids“
• Coordination activities: – Task Force for Smart Grids, launched in 2009
• Invitation by the Commission of all relevant institutional actors and market stakeholders „to make regulatiory recommendations to ensure EU-wide consistent, cost-effective, efficient and fair implementation of Smart Grids http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm
– Communication of the European Commission on Smart Grids, COM(2011)202 - 12 April 2011
Communication of the European Commission on Smart Grids
• Identified challenges: – Consumer engagement at all levels – Protection, handling and security of data– Standardisation and interoperability– Regulatory framework and incentives for
infrastructure investments and roll out
Communication of the European Commission on Smart Grids
• Standardisation and interoperability: – Diverse mandates for standardisation given to
CEN, CENELEC and ESO by the Commission in 2010
• Regulatory framework and incentives – If evaluation of the Energy Services Directive
shows that progress is insufficient, the Commission will consider the establishment of a Network Code on Tariffs
The road to a Smart Grid is still long and its success
uncertain…..
Dr. Joëlle de Sépibus
