Reducing the European Union’s dependence on external energy sources is at the top of the European agenda, and the discussion in Brussels is shifting from generation to demand and a point of leverage.
A recent report by Greenpeace said that if the EU adopted a 40 per cent energy efficiency target for 2030, as called for by the European Parliament, it could reduce the need for energy imports by more than 45 per cent above current plans. By empowering people to better understanding how and when energy is used, Europe can master the most cost-effective, low-carbon and secure energy resource available – energy efficiency.
The need to achieve energy security via increased efficiency is driving major structural changes in European utilities. The need for greater renewable energy capacity is another key driver.
In Germany, for example, the influx of renewable energy capacity has caused the wholesale energy market price to fall by 60 per cent in six years. With cost-effective storage solutions still on the technology horizon, German utilities (and other markets where renewables are prevalent) want to understand in real-time how “wrong time” energy supply can be dynamically absorbed within the grid.
Utilities across Europe are adapting their businesses and organisational models to invest in smart infrastructure – technology that enhances resource efficiency by capturing and analysing usage patterns in order to take customers off peak and increase use of intermittent renewable energy sources for baseload requirements.
This is also creating new opportunities for the traditional utility. For the first time, the move to smart technology is enabling utilities to assume a multi-dimensional role. For example, Bloomberg New Energy Finance has suggested that utilities can become capacity providers rather than just electricity providers.
Aside from new business opportunities brought on from regulatory interventions and emerging markets, there are two core areas that utilities need to focus on. First, maintaining stable and reliable distribution, and second, unleashing the value of the new breed of customer: energy producers and consumers, or “prosumers”.
The first involves enabling more renewable energy to be absorbed into the grid, while information and communications technology helps balance and stabilise local distribution grids. The second relies on smart infrastructure to allow peak demand to be shaved or shifted to hours with lower load.
With increasing amounts of intermittent renewable generation coming on-stream, there is a need for more precise monitoring and control to maintain frequency and voltage levels across Europe’s grid. While that has been primarily the task of transmission and distribution system operators to date, retail energy providers will play an increasingly vital role in creating “virtual power plants” by aggregating groups of distributed renewable generation or demand response resources to contribute to grid stability.
To make renewables work, utilities need to be able to quickly backfill capacity shortages when the sun goes behind a cloud or the wind stops blowing. To achieve this, everything from consumer engagement to energy storage and demand response is needed. But, as the first step, accurate energy measurement, including voltage monitoring, load forecasting tied to weather data, and a near real-time link to customers and grid assets is essential in making renewables work for the grid as well as for the utilities and prosumers.
European energy grids are getting smarter. As utilities adopt smart energy management technologies and the ability to leverage data and control technologies to deliver resource efficiency, so the role is greater for information and communications technology to manage distribution networks, and the value of data generated at the household level is greater.
With the data analytics provided by smart technologies, utilities can now send and receive information electronically about energy consumption and also provide real-time information to consumers. This significantly increases the accuracy of billing, allowing energy users to see how much energy is used on a day-to-day or hour-by-hour basis, giving them more control over energy use and costs.
By acting as an aggregator, utilities have a major opportunity to turn big data into meaningful insight. This feeds into strategies to bolster customer service and decrease investment risk. Smart energy management technologies help utilities and distributors forecast and manage loads, while improving service quality and customer satisfaction.
By recognising and pinpointing patterns of domestic energy use, utilities can engage with customers about where they can save money. Using the analytics drawn from big data, utilities can provide incentives to move energy users off peak and flatten the demand curve by gaining a better understanding of how and when energy is produced and used.
This means applying technology to engage consumers and more closely aligning energy demand with capacity and availability.
In order for utilities in Europe to make their energy systems smart from end to end, the key principle required is flexibility.
Utilities require flexible, standards-based architectures, allowing them to optimise communications based on their individual business priorities. According to Gartner, within seven years, 25 billion smart devices will be in communication with each other without human involvement.
Meeting the challenges and opportunities of the internet of things requires a flexible architecture that will support the plug and play addition of new devices on the grid. This approach will help ensure that the internet of things can support multiple devices, applications and value streams that go beyond just smart metering.
For example, Austrian utility Salzburg AG, an energy supplier for 260,000 customers in the Austrian province of Salzburg, is conducting a smart grid pilot project using a network architecture based on IP (internet protocol) standards to test smart grid use cases, including remote service switch capabilities, on-demand meter reading and network resiliency. In addition, the project helps Salzburg AG take an important initial step in meeting European and national mandates requiring 95 per cent of meters be “smart” in Austria by 2019.
Certainly there are myriad opportunities for utilities to transform their business models using smart technologies to improve the reliability, efficiency and flexibility of the grid. According to the Itron Resourcefulness Index, 94 per cent of global utility executives say the industry needs transformation and nearly 75 per cent believe investing in big data tools is critical to modernising infrastructure.
As utilities make these investments, it is vital to safeguard the reliability, resilience and certainty of supply. And, as they face up to the challenge of bringing new technologies on stream, utilities need to put in place infrastructure that supports those vital requirements while also creating new opportunities for the future.
Pieter Coetzee, senior director, Smart Grid Solutions, Itron