Faced with rising world demand for electricity, the need to control consumption, the depletion of fossil energy sources, and the growing call for renewable energy, power grids will have to adapt. Olivier Monié, Managing Director of Omexom, part of VINCI Energies, discusses the environmentally-friendly opportunities offered by smart grids to consumers and agile companies, with Radek Lucky, Managing Director of E.ON Czech Republic.
Power grids have to adapt. One way to upgrade them is to make them smarter. How do you think this could be done?
RADEK LUCKỲ. Efficient network operation is essential for well-functioning energy markets. Distribution System Operators (DSO) have an important role to play, as a neutral market facilitator, to ensure that system operation is secure. For example, they should make sure that all energy retailers can sell energy to consumers with no discrimination. In the coming years, there will be new opportunities for DSOs to deliver benefits to energy consumers and the energy sector in general. New technology allows the consumer to interact with the market, amongst others, which means that the role and culture of DSOs might change. DSOs will be more and more responsible for keeping balance in the grid, especially at a local level.
OLIVIER MONIÉ. A major challenge will be to move beyond historical schemes and to elaborate understandable and fair value sharing rules for all parties. As it is already the case, rules will depend on the country and on the historical players that are in place. This is strongly related to the energy policy in the country and to the way this country manages access to electricity for everyone. Even within Europe, we can see different situations. When you compare French and German regulation systems, they are significantly different, leading to large price gaps, also the ways to make grids smarter are quite different in both countries. Moreover, technological choices and situations can be different. Consequently, DSOs’ answers will be specific to each country, despite similar constraints regarding neutrality and quality.
RADEK LUCKỲ. As you state, each market and each country is different and the approach of the regulatory body varies a lot, mainly for historical reasons. We have identified four overriding principles which should apply to all DSOs: they must run their businesses in a way which reflects reasonable expectations of network users and other stakeholders, including new entrants and new business models; they must act as neutral market facilitators in undertaking core functions; they must do all of this in the interest of the public, taking account of the costs and benefits of different activities; and they must ensure that consumers own their data. DSOs need to be more and more innovative and explore smart solutions when managing networks.
It is thought that progress in photovoltaics and energy storage will accelerate the trend towards self-consumption, and microgrids. This could reduce grid operators’ revenues and impact their business model. How can they offset the loss of revenues and turn this challenge into an opportunity?
RADEK LUCKỲ. I think that it is self-understanding, that everyone connected to the grid should participate fairly to the costs of the grid. The discussion about the tariffs and fair payments could be open in the near future. But this is only one side. The other side is – as you mentioned – our entrepreneurial approach to a changing environment. And there – E.ON is very active in this area. We are currently running pilots with both small and big batteries for various commercial purposes. We expect a dramatic decrease of battery prices that will speed up their implementation, which is already supported with subsidies.
OLIVIER MONIÉ. Usually, people think that the main distribution networks and local microgrids are antagonist solutions, but they are not. In the future, they will have to co-exist and solutions to share the value between them be set up. Complementarities must be explained and enhanced. If I refer to the situation observed in some markets, like Germany, microgrids and sharing local energy within small communities are frequent. More than 1000 communities exchange the electricity they produce locally. In France, this way of consuming local electricity production is also well expected by many local authorities. Local stakeholders and local authorities would appreciate the development of such solutions and of course, as they are our clients, we aim to bring them customised answers to their expectations. Technological and economical improvements will make these solutions more and more efficient and acceptable by people. For us, microgrids can provide services to the main grids, such as investment deferral and voltage control.
New technology allows the consumer to interact with the market, among others, which means that the role and culture of distribution system operators might change
What changes will smart grids bring about to industrial and residential consumers?
RADEK LUCKỲ. Distribution System Operators have a role to play in keeping future balance in the grids, especially at a local level. Specifically, a smart grid must be capable of providing power from multiple and widely distributed sources, for instance wind turbines, concentrated solar power systems, photovoltaic panels and, perhaps, plug-in hybrid electric vehicles. Moreover, since all renewable energy sources invented so far are intermittent, a smart grid must be able to flexibly store electric power for later use, for example in batteries, flywheels, super-capacitors, or even in plug-in hybrid electric vehicles. Last, but not least, in order to improve power reliability, a smart grid must make use of new and highly sophisticated adaptive generation and distribution control algorithms.
OLIVIER MONIÉ. Electricity produced by local means such as solar panels, windfarms, or biogas technology is obviously a good solution for the environment. Some consumers want to produce, by themselves, a share of the electricity they consume. Distribution networks were not designed to accept these energies and need to be adapted. Making grids smarter is not only to implement technology; it also includes solutions for interaction between networks and consumers. Typically, Demand-Response is one of these solutions. More and more frequently used for transmission networks balancing, this solution will progressively penetrate power distribution networks. At the end the consumer, be they industrial or individual, will see their electricity bill decrease.
RADEK LUCKỲ. Consumers are aware about the possibilities of smart grids and smart meters, but the question is still the added value compared to cost. But in the end the question about the implementation of smart technologies is not “yes or no” but rather “when”.
People think that the main distribution networks and local microgrids are antagonist solutions, but they are not.
Cities currently cover less than 2% of the earth’s surface but contain 50% of the world population, consume 75% of the energy produced, and account for 80% of global CO2 emissions. What are cities doing to achieve greater energy efficiency?
RADEK LUCKỲ. In accordance with E.ON know-how, the aim of our “Smart City” project is to support cities in reducing emissions through energy efficiency. It means implementation of energy-saving measures. In order to achieve this, cities replace old public lighting for new effective LED technology and push clean mobility by adapting their transport fleets. Compressed natural gas and electric vehicles are playing a stronger role. Buildings are also built according to stricter energy standards, as well as old buildings, which are being renovated to achieve required norms in The Czech Republic. It’s important to do this. With the planned EU targets of eMobility deployment in cities, a grid has to be adapted definitively, because charging infrastructure requires additional power capacity that system operators will have to deliver in following years.
OLIVIER MONIÉ. Through its brand Citeos, the group has been offering committing solutions to cities for thirty years to save electricity for street lighting while improving quality of service. At first, it was using technology and high-level operation management. Now, we are introducing smart technologies to deliver the right quantity of light, depending on time and affluence. In some cities, we combine street lighting with power generation via PV panels and hydro on the local river. Electricity storage with batteries is now a solution we can use to optimise this generation and consumption set, including e-mobility, in a virtual grid. We aim to dramatically decrease cities’ electricity consumption.
What about smart cities’ development in the Czech Republic?
RADEK LUCKỲ. In the Czech Republic, this topic is very important. We have scaled up projects for smart cities and corporations in more than 20 cities of between 10,000 and 50,000 citizens. Smart cities’ projects are critical for their development, which has been based on historical developments: in some cities, power generators are in the middle of the city; in other urban areas, they are out of town. The Smart City concept is still in its first stage in The Czech Republic. The most advanced cities where we are participating are Pisek, Kyjov, Trebic, and Brno.
OLIVIER MONIÉ. We’ve worked together in Pisek. We have developed solutions for street lighting, for eMobility, and for energy storage. We also know perfectly how to manage traffic, car parking, thus contributing to better living in the city. We offer all these experiments to our clients, provide customised offers, and mobilise our teams and partners (universities, startups, associations etc.) to build solutions for the cities of tomorrow. Right now, we have about 20 ongoing projects in France alone and these reflect the diversity of issues we address by our transversal approach to smart cities: sustainable mobility, energy autonomy, citizen participation, new business models and more.
RADEK LUCKỲ. Based on successful cooperation in Pisek, we’ve worked with you and other partners or universities to create what we called the “Czech Smart City Cluster”. The basic goal is marketing the smart city concept across The Czech Republic and cooperation with state administration, which is sometimes difficult for cities. This cluster was set-up to improve citizens’ quality of life, energy savings, renewables, energy support, and the environment.
One of the main features of the smart city is the large volume of data exchanged among various stakeholders. This data will have to be interpreted at an ever-faster pace and will also have to be secure. Do you see your role shifting to that of data supplier, and if so, for what services?
RADEK LUCKỲ. Smart metering will be the door opener. There is an opportunity for system operators to utilise their existing passive infrastructure and participate in the data market. Current data grids in cities do not fulfil the requirements of the Internet of Things, which has just started to be deployed, and therefore data grids have to be strengthened. This is basically a chance for the system operators to be much more effective in each city in the future.
OLIVIER MONIÉ. Consumers are becoming prosumers, and need data to balance their own electric system. A major stake is to combine data and to deliver an interface adapted for each specific usage. If people have to think about how they consume electricity, it will not work, but if it becomes natural, they will be smart consumers as they will interact with the grid. Cities are becoming active prosumers that we can jointly help to become smart cities. New technologies such as blockchains will probably penetrate cities and create conditions for more interaction between inhabitants and their cities. We have to open our minds to different worlds such as startup companies, universities, and clusters, in order to set up customised solutions. We have some examples of what we do with all this data, like the digitisation of control systems in substations, or by using information we haven’t used before, such as weather conditions.
E.ON and we have a lot to share to help cities to become smarter!