The next wave of digital innovation – and disruption – in the electricity sector will rely on artificial intelligence and Blockchain technology, according to the new boss of the European power grid operators association, ENTSO-E, who is drafting an IT roadmap for publication later this year.
Just two weeks after taking on his new role, Laurent Schmitt, the new secretary general of the European Network of Transmission System Operators (ENTSO-E), is already buzzing with new ideas and projects.
“We are at the beginning of the digital transformation,” the Frenchman told reporters on Wednesday (18 January), admitting “nobody knows” yet exactly where the digital revolution will take the electricity industry.
And he believes Europe is in a good position to take a leading role in the development of digital grids, which are expected to transform the way people consume and, sometimes, also produce and store electricity.
“I think Europe is very advanced in the amount of renewables already connected to the system” and has more experience than any other region in the world when it comes to managing variable flows of electricity using digital technology, he said.
“The industrial base in Europe is strong and relevant,” said Schmitt who was global smart grid strategy leader at GE before joining ENTSO-E, citing industry frontrunners such as Sweden’s ABB, Germany’s Siemens and France’s Schneider Electric.
However, “the US is three or five years ahead of Europe” when it comes to developing new business models based on demand response technology, added Schmitt, who worked on gas turbine control systems for North American markets at Alstom before the French company was acquired by GE.
Some of these digital applications will work better if shared across EU countries in the internal energy market, Schmitt stressed, saying he was “positively surprised” by the appetite for cooperation among European grid operators on IT matters.
“We would like to jointly develop things,” he said, revealing that ENTSO-E was currently working on an IT strategy and roadmap for publication in the second half of 2017, probably as early as July. “This IT roadmap and strategy is built around that notion: How can we together be more efficient in building this IT infrastructure.”
“This will be a very important document,” Schmitt insisted, saying ENTSO-E’s role was to assist in areas like harmonisation and sharing industry resources on some IT developments.
Artificial intelligence and Blockchain
Traditionally, the digital dimension of electricity has been associated with smart meters, which allow households to control their energy bill by prioritising consumption when power is cheapest, usually at night.
But Schmitt emphasised that digital grids “go beyond smart meters” by adding a layer of communication infrastructure on top of the sensors embedded in people’s homes.
“In the new digital world comes artificial intelligence, big data and all these new technologies. And I think there is at least as much hope to gain efficiency with those technologies than with a smart meter,” Schmitt said.
Artificial intelligence can bring huge benefits in terms of the accuracy of energy demand forecasts Schmitt explained, saying it can bring big energy savings on a system-wide level.
“We’re not against smart meters but they are not the end of the story,” he stressed, explaining that the smart grid is “the brain” behind smart meters – “the calculation, the analytics that is behind efficient decisions”.
“I’m a true believer in data, and what data can bring for smart grid operation.”
Artificial intelligence, he said, will also help manage data privacy, ensuring only information approved by individual consumers is passed on to grid operators or other parties in the electricity value chain.
Asked by euractiv.com about the potential of Blockchain, Schmitt cited a pilot project in Southern France called NiceGrid which pioneered peer-to-peer energy exchanges between solar PV installations and storage suppliers, allowing to maximise the integration of intermittent renewable energy into the distribution grid.
“By 2020, more than 50 billion of grid devices integrated through Prosumers and Prosumer Virtual Power Plants are expected be connected to each other worldwide, requiring electricity grids to progressively become the foundation of new Digital Systems of System architectures, composed of ‘Constellations of Prosumer Microgrids’,” Schmitt wrote in a blog post on the Peer2Peer energy revolution.
Regional cooperation is key
But for his IT roadmap to succeed, Schmitt will have to overcome more down-to-earth political realities, including fragmentation across national and regional borders.
ENTSO-E represents 42 electricity transmission system operators (TSOs) from 35 countries across Europe, with members including the likes of France’s RTE, Britain’s National Grid and Belgium’s Elia. In a country like Germany, there are four grid operators represented, reflecting the regional boundaries of the federal state.
This complexity is aggravated by the interface between TSOs, which are in charge of big power transmission lines, and the distribution system operators (DSOs) who own the local grids that reach out to the end consumer.
And this is where politics can get in the way.
“This question of alignment between European and national regulation is very complex to manage. And simply because there is no alignment on all political aspects across Europe,” Schmitt remarked.
And while it isn’t ENTSO-E’s job to deal with political questions, he said it can help “reach consensus” on rules, standards and harmonisation across borders.
A lot is already underway on cooperation between regional grid operators, said Fabien Roques, an associate professor at the University of Paris-Dauphine who co-authored a report on the issue for FTI-Compass Lexecon Energy in December 2016.
This includes regional security coordinators (RSCs) who carry out sensitive tasks such as security analysis on behalf of the TSOs, who are both their clients and owners.
However, infrastructure projects “are often slowed down by local opposition which generates delays and additional costs, or even sometimes the cancellation of projects,” the report found, saying governance between RSCs should be improved to ensure greater transparency.
Schmitt believes however that a collaborative approach will come naturally. Cooperation among TSOs started with electricity blackouts in 2003 and 2006, which highlighted the need to import electricity from abroad in case of emergency.
“TSOs have regional cooperation in their DNA, it’s a must. You need to cooperate, there is no border for electrons,” said Susanne Nies, Corporate Affairs Manager at ENTSO-E.
All ENTSO-E members are now obliged to join a regional cooperation centre, all of which need to have five common services implemented by end 2018.
But this is still considered insufficient by the European Commission. In November, the EU executive proposed a new electricity market design, foreseeing more cooperation between grid operators in regional operations centres by the end of 2021, under the leadership of ENSTO-E, to develop common rules on cross-border electricity flows.
“We’re now saying, let’s align even more services and have a roadmap to build, say, a further ten,” Schmitt said.
A European Commission proposal for a new EU electricity market design was unveiled on 30 November as part of a Winter Package of Energy Union legislation that promises to put consumers in the driving seat.
The European Commission promised a “new deal for consumers” saying the new market design would do away with all forms of price regulation. Consumers will be exposed to price fluctuations, but also empowered to react to them, for example by moderating consumption during peak times and buying kilowatt-hours when demand, and prices, are low.
The goal is to create a market fit for a growing share of power from intermittent renewable sources, chiefly wind and solar.
One area that looks set for rapid growth on the back of these changes is battery storage, which could enable consumers to buy electricity when it is going cheap, and use it later when peak demand pushes prices up. Storage capacity may also come in the guise of electric vehicles connected to the grid.