Sustainable Prosperity for Europe


Making smart grids the building block for a greener economy - Roundtable discussion

21 June 2012

Upgrading the European electricity networks is essential if Europe is to increase renewable energy generation, achieve greater security in the networks, and enjoy the opportunities related to energy savings and energy efficiency. It is generally accepted that the transition will require development of a smart pan-European grid, which would allow for a digital communication between suppliers and consumers, intelligent metering and monitoring systems. Information technology provides the means for optimising the grid and using data to support decision-making and empower consumers.

At this Roundtable discussion, which was supported by Oracle, Peter Johnston, Senior Advisor to the European Policy Centre, Mark van Stiphout, Assistant to Philip Lowe, Director-General at DG Energy fromEuropean Commission, Romano Napolitano, Vice Chairman and Member of the Board of the European Utilities Telecom Council, Bastian Fischer, Vice President of Industry Strategy EMEA at Oracle UtilitiesandClaude Turmes, Member of the European Parliament discussed the importance of smart grids and the challenges that have to be tackled if Europe is to make smart grids the building block for a greener economy.

It is clear that much remains to be done. A coherent approach to smart grids is still missing. There are delays in standardisation. Effective storage systems need to be developed. National distribution system operators (DSOs) differ in their approach to smart grids and their roll-out varies greatly across the EU.

Financing the transition to a smart grid is an additional challenge. As utilities will be important investors in smart grids, regulatory framework and incentives should allow them to recover their investment. New business models should promote fair distribution of costs between all stakeholders that potentially benefit from these investments.

The EU's Third Energy Package requires member states to prepare a timetable for the introduction of intelligent metering systems, with an aim to equip 80% of European consumers with them by 2020. However, the debate is still on about role they play in upgrading the electricity networks and what the benefits are for consumers.

Much work remains to be done in analysing and communicating the benefits of smart meters and their added value to consumers. It was debated whether the smart meters only create additional costs for consumers without real life benefits and whether they as such can really help to change consumer behaviour. It was also noted that instead of targeting everyone it would make sense to start with consumers such as small and medium enterprises whose consumption patterns can make a real difference to the overall electricity demand. Also there is still limited trust among consumers in the technology and in those who provide it. Although the system can never be fully secure, consumers’ worries about security and privacy of their information need to be addressed – and perhaps one day the system will become similar to the telecom networks, which consumers have learned to trust. Consumers must be recognised as key actors in the development of smart grids. Every choice they make to reduce consumption must be recorded, rewarded and incentivized.

Alternatives to utility owned and managed smart-meters could bring needed competition to the market. Consumers could benefit enormously, for example, of web-services, which would give them real-time data not only on energy prices but also on emissions.

The potential is great. Providing consumers with real-time data on energy prices and carbon emissions and ensuring they can use it for their benefit and schedule major energy-use to times of lowest price and carbon-intensity would help to change people’s behaviours and reduce peak demand. The technology exists for combining the information with automatic turning on/off electronic appliances, and this should be further encouraged. Consumers should have the right to know when energy is the cheapest, so that they can base their actions on this knowledge.

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