Smart grids - World Trade Institute

« Smart Grids » : the backbone
of a future decarbonised power
system ?
Dr. Joëlle de Sépibus
Visiting Professor College of Europe
• 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)
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
• 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
– 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
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,
• 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
automatically optimizes the operation
of its interconnected elements
• The Smart Grid sits at the intersection
of Energy, IT and Telecommunication
Smart Grid – „when power meets
• .
Distribution and
Communication between
system components
Interdisciplinary technologies:
Data collection, processing and recombination
Grid Operation
Principal goals of the
„Smart Grid“
• to integrate national networks into a marketbased, 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
– 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
Roadmap for a competitive lowcarbon 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
• 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) (
– European Energy Infrastructure Package, 2010 and
– SET- Plan – European Electricity Grid
Initiative (launched 2010
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, costeffective, efficient and fair implementation of Smart Grids
– 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
Dr. Joëlle de Sépibus
[email protected]

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