Sara Stefanini provides a written summary of our panel discussion held on Thursday June 30th 2022. It’s a full summary of the 90 minute discussion (including audience questions), but it begins conveniently with a summary of the highlights. Investment in and the modernisation of the electricity distribution grid is one the biggest challenges the EU has to overcome in the next decade. It’s a €400bn investment challenge by 2050 says Eurelectric, an increase of up to 70% compared to today. Our panel of experts discuss how to develop and utilise the wide range of innovative solutions that can bring flexibility to the grid: smart-everything, digitalisation, automation, EVs, market design, and much more. By improving flexibility – rather than just generating more power and laying more cables – modernisation costs can be cut drastically. Enabling access to EU funds will also be key, along with the right incentives. So, a huge scale-up in the share of renewable energy in the bloc’s power grids, transport, buildings and other industries is coming. Done right, noting that wind and solar costs keep dropping, the price of electricity to the consumer won’t have to rise that much. Taking part in the discussion are Pablo Riesgo Abeledo, Policy Officer, Unit B5, DG ENER; Piotr Ordyna, Management Board Advisor for Regulation, Tauron Distribution Poland; Louise Rullaud, Head of Distribution & Market Facilitation, Eurelectric; Arina Anisie, Analyst, Renewable Energy Innovation, IRENA. The event was sponsored by PKEE. You can watch the original video here.
Pablo Riesgo Abeledo – Policy Officer, Unit B5, DG ENER
Piotr Ordyna – Management Board Advisor for Regulation, Tauron Distribution Poland
Louise Rullaud – Head of Distribution & Market Facilitation, Eurelectric
Arina Anisie – Analyst, Renewable Energy Innovation, IRENA
Matthew James – Managing Director, Energy Post (moderator)
Challenges and investment needs
- Investment in the distribution grid is one the biggest challenges the EU has to overcome in the next decade.
- Eurelectric says we face a €400 billion investment challenge by 2050, across the EU and UK. It’s a ramp-up of 50-70% compared to today.
- Decarbonisation will push up demand for electricity over the next decade, averaging an increase of 1.8% per year.
- With more demand we need more power lines and more robust power lines.
- The European grid needs to be modernised. Over half of all low-voltage lines could be over 40 years old by 2030.
- The three main drivers of investment are the modernisation of the network, the integration of renewables, and the electrification of buildings and industry. They account for around 65% of all investment needs.
- The impact on the electricity costs is marginal, estimated at an average 1.5% of the electricity cost, plus inflation.
- The cost of DSO investments should be reflected in customer bills, but the price increase cannot be too radical or they will escalate energy poverty.
New technologies and innovation
- IRENA identifies six technological avenues and says 90% of the decarbonisation involves renewable energy and energy efficiency.
- Of IRENA’s technological avenues, renewables directly provide 25% of the decarbonisation, and contribute to the electrification of new sectors, and hydrogen. Energy efficiency contributes 25% of the decarbonisation.
- The cost of solar photovoltaic has decreased by 85% over the past 10 years, it’s almost cheaper than the fossil fuel cost range, and the same is true for onshore wind which decreased in cost by 56%.
- 40-50 million heat pumps and 50-70 million electric cars are expected to be added to the grid over the next decade. There will also be extra loads from power-to-x.
- The European Commission is convinced that common smart grid indicators could promote more innovative digital solutions for the power grid.
- By defining common smart grid indicators, regulators can look at what makes an efficient investment and provide the relevant incentive to system operators.
Integration of renewables and electrification
- Today wind and solar provide 10% of power; by 2050, to be aligned with the Paris Agreement, it needs to reach 61%. The policies in place now would get us to 36%. So we need much more renewable energy integrated into the system.
- Storage, electric vehicles, digital technologies and hydrogen can all help improve flexibility.
- Industry should increase its electrification by 2% between today and 2030 (i.e. from 26% to 28%), buildings from 32% to 56% and transport from 1% to 9%. This means we need more large heat pumps for industry and small heat pumps in buildings, and more EVs.
- Grids have traditionally been used to transport electricity from the large power plants to the end consumer. With renewables, consumers will start producing electricity on their own, so the role of the grid will change.
- Innovation must go beyond technology.
- Innovation in business models is key, to create revenue streams for new technologies. It’s also key in market design, because it’s important to incentivise flexible behaviour in assets connected to the grid, and in how the system is operated as it transforms from centralised to decentralised.
- The power system is becoming more electrified, decentralised and digitalised.
- The electrification of the end-use sector is an emerging solution.
- We need digital technologies to deal with the complexity of electrification and decentralisation, to connect devices, collect data, monitor and control the grid’s assets, and enable a faster response and better management of the assets to increase their flexibility.
- The Internet Of Things is turning assets smart. It generates vast amounts of granular data, captured with a network of smart devices that have sensors and can act.
- Artificial intelligence can help decision-making and automate decision-making, with data gathered by the Internet Of Things and Big Data.
- Blockchain has a lot of applications in the energy sector, especially with smart contracts and decreasing transaction costs.
- The DSO role changes with digitalisation, centralisation and electrification. They need to become more active operators of the system.
Regulation and support
- We need to facilitate DSOs’ access to EU funds and prioritise investments in DSO grids, especially in post-COVID recovery plans.
- DSOs often complain about the complexity of getting information about EU funding opportunities.
- REPowerEU foresees an additional €29 billion of investments in the electricity grid, on top of the existing €500 billion.
- We need to support EU TSOs and DSOs in the creation of a Digital Twin of the EU electricity grid that makes the electricity grid more efficient and smarter.
- We need to support ACER and national regulators in defining common smart grid indicators to monitor smart and digital investments in the electricity grid.
- One of the main issues is the regulation of DSOs, because they are traditionally only incentivised to invest in reinforcing the grid and are paid back later from consumers.
- DSOs don’t have incentives to innovate, for example trying to find other flexibility solutions that could replace the costly reinforcements of the grid.
The EU’s goals to cut emissions by at least 55% by 2030 requires a huge scale-up in the share of renewable energy in the bloc’s power grids, transport, buildings and other industries.
This transformation poses challenges for distribution system operators, who have traditionally distributed electricity from large, centralised power stations. A power system dominated by renewables requires more flexibility, to manage intermittent supplies, and needs to make room for smaller-scale suppliers – such as rooftop solar panels and electric vehicles – and more active consumers, or prosumers.
Many of the necessary technologies exist already – digitalisation, artificial intelligence, batteries, smart meters, automation of appliances, etc. The key is to ensure access to funding support, especially in countries starting from a lower baseline, and to incentivise DSOs to innovate in new technologies as well as wider systems of doing business.
The European Commission’s REPowerEU policy proposals, aimed at weaning the EU off Russian fossil fuel imports, foresees an additional €29 billion of investments in the electricity grid, on top of the existing €500 billion. Eurelectric estimates that €400 billion of investment will be needed by 2050, across the EU and UK. That’s up by 50-70% from today, but the average electricity price is only expected to rise by around 1.5% per year, plus inflation.
This is a summary, not a verbatim transcript, of the key points made during the online panel event.
Management Board Advisor for Regulation
Tauron Distribution Poland
Tauron Distribution Poland is one of the largest distribution system operators in Poland, and leads Poland in the number of distribution customers and volume of electricity delivered.
Tauron’s grids cover close to 20% of Poland’s territory and 240,000 kilometres of low, medium and high voltage. We deliver about 52 terawatt hours of electricity to close to 6 million customers. We have a lot of renewables connected to our grid, for example around 350,000 small PV renewables of less than 50 kW, and have installed around 850,000 smart metres and are rolling out more.
Our key challenges for energy distribution are: enhancing grid stability, increasing resilience as natural disasters and extreme weather events increase; modernising existing ageing network infrastructure; the smart meters rollout; connecting new and growing demand; integrating massive amounts of new renewables, distributed energy resources and flexibility; enhancing data management; improving cybersecurity; enhancing digitalisation and automation; and generally changing our grid for a smart grid.
Analyst, Renewable Energy Innovation
Our main challenge today is that we have to remove 36.9 gigatonnes of CO2 emissions from the atmosphere by 2050. The good news is that we have solutions.
IRENA identifies six technological avenues to achieving this, and 90% of these avenues involve renewable energy and energy efficiency. Renewables directly provide 25%, and contribute to the electrification of new sectors, and hydrogen. Energy efficiency contributes 25%.
The challenge is huge, but the great news is that the new renewables-based electricity is already the cheapest option in most regions.
This graph shows the tremendous reduction in electricity costs resulting from more renewable technologies. Solar photovoltaic has decreased by 85% over the past 10 years, it’s almost cheaper than the fossil fuel cost range, and the same is true for onshore wind which decreased by 56%.
Now, the challenge is to integrate the high shares of this variable renewable electricity in the system globally. Today, wind and solar provide 10% of power; by 2050, to be aligned with the Paris Agreement, it needs to reach 61%. All the policies in place now would get us to 36%. So we need much more renewable energy integrated into the system.
IRENA is looking at innovation projects that are already in the pilot, demonstration or commercialisation phase and can help integrate higher shares of solar and wind power and increase the flexibility of power systems.
Many emerging technologies could help increase flexibility, such as storage, electric vehicles, digital technologies and hydrogen. But innovation should and must go beyond technology. Innovation in business models is key, to create revenue streams for new technologies. It’s also key in market design, because it’s important to incentivise flexible behaviour in assets connected to the grid, and in how the system is operated as it transforms from centralised to decentralised.
We have identified 30 key innovations for wind and solar PV integration in power systems.
We have identified three innovation trends: the power system is becoming more electrified, decentralised and digitalised. The electrification of the end-use sector is an emerging solution to decarbonising end-use using cheap available renewable electricity, and to maintain value and avoid the curtailment of variable renewable electricity.
Decentralisation comes from the deployment of distributed energy resources, turning the consumer into an active participant, fostering demand-side management.
And we need digital technologies to deal with the complexity of electrification and decentralisation, to connect devices, collect data, monitor and control the grid’s assets, and enable a faster response and better management of the assets to increase their flexibility.
The new consumers are not only consuming, they are also producing energy with solar PV. We’re seeing a lot of PV panels installed, as well as increasing behind-the-metre batteries, peer-to-peer trading, and management of own loads with smart meters.
We have identified three main digital technologies that are key in this transition.
The Internet Of Things is turning assets smart. It generates vast amounts of granular data, captured with a network of smart devices that have sensors and can act.
Artificial intelligence can help decision-making, and automate decision-making, with data gathered by the Internet Of Things and Big Data.
Blockchain has a lot of applications in the energy sector, especially with smart contracts and decreasing transaction costs.
Smart grids and smarter homes are solutions for more connected devices, better monitoring of the consumer’s entire demand, and everything happening across the smart grid.
Electrification is an important trend. Cheap renewable electricity is becoming the main carrier of future energy systems. Today renewables have a 21% share of direct electricity in final energy consumption, but by 2050 we should reach 50% to be in line with the Paris Agreement.
Industry should increase its electrification by 2% between today and 2030 (i.e. from 26% to 28%), but much more needs to happen in buildings (from 32% to 56%) and in transport (from 1% to 9%). This means we need more large heat pumps for industry and small heat pumps in buildings, to electrify the heating and cooling sector in buildings, and more electric vehicles.
Mobility needs to be electrified in a smart way, to ensure that charging offers flexibility rather than overloading the system. Our study shows that a lot of storage capacity would come from electric vehicles, and flexibility when they’re plugged in.
A DSO in Hamburg, for example, says the cost of operating and reinforcing the grid to accommodate a 9% share of electric vehicles on the city’s streets is €20 million, versus €2 million just to increase digitalisation and the ability of charging points to manage the load from the electric vehicles. So 1:10 is the power system cost of smart charging versus non-smart charging as much.
The DSO role changes with all this digitalisation, centralisation and electrification. They need to become more active operators of the system.
In the past they have focused on the planning, maintenance and management of networks. Now new roles are coming including peak load management, network congestion management, possibly to procure voltage support, provide reactive support to the TSO and so on. Coordination between DSOs and TSOs should increase, to integrate distributed energy resources in the system and gain maximum flexibility.
Traditionally all flexibility in the system came from generation, but now we see much more flexibility is needed to integrate variable renewables.
More flexibility can be harnessed on the generation side, but a lot of flexibility should be and is being unlocked on the consumer side, or the prosumer side.
The power system is the backbone of the energy system, and a renewable-based system would ensure decarbonisation of the end-user sector as well. But flexibility is key to integrating more renewables.
We have to think holistically. We have to think about systemic innovation, not only in technology, but also in business models, market design, and systems operation.
Head of Distribution & Market Facilitation
Investment in the distribution grid is one the biggest challenges the EU has to overcome in the next decade.
We released a study last year with Deloitte and 10 partners in different countries to assess what Europe needs in terms of investment in grids for the next decade.
It’s a €400 billion investment challenge by 2050. That’s a lot of money, but it’s across 27 plus one country. It’s a ramp-up of 50-70% compared to today, but there is good news. It comes with significant societal benefits that outweigh the economic impact on the distribution tariff. It will not translate into a massive spike in the unit cost of electricity.
But it won’t happen if we don’t set up a proper regulatory framework to execute those investments.
Decarbonisation and integration are two sides of the same coin. Decarbonisation will push up demand for electricity over the next decade, averaging an increase of 1.8% per year. With more demand we need more power lines and more robust power lines.
There’s also a fundamental systemic transformation of our sector. Over the next decade we expect to add some 40-50 million heat pumps and 50-70 million electric cars to the grid, directly charged at the distribution level. There will also be extra loads from power-to-x, and changes to the generation mix. Assuming a goal of 45% renewables by 2030, more than 70% will be connected to the distribution grids.
We also need this investment because the grid is ageing. Over half of all low-voltage lines could be over 40 years old by 2030. The European network will face imminent and very technical challenges if we do not modernise in the coming years.
The three main drivers of investment are the modernisation of the network, the integration of renewables, and the electrification of buildings and industry. Together, they account for around 65% of the investment needs. Surprisingly, the needed investments for integration of the EVs is quite marginal compared, for instance, to the integration of renewables.
The impact on the electricity costs is marginal. We calculated an average increase of 1.5% of the electricity cost, plus inflation. This increase might even be tempered by the fact that global investments in distribution grids will bring some short and long-term benefits which will lead to another reduction of the electricity costs.
The integration of renewables will result in 50% to 65% lower costs compared to fossil fuel generation. Electrification will also increase efficiency, resulting in lower electricity bills. And flexibility will increase the system’s cost-effectiveness.
One of the biggest challenges for the near future is to update our framework to allow these investments to happen at the European and national levels. We need to facilitate DSOs’ access to EU funds and prioritise investments in DSO grids, especially in post-COVID recovery plans.
We can draw two conclusions. There are plenty of EU funding options for DSOs, but the size of the funds is quite striking. The funds for innovation, for example, is only about 0.7% of the total that will go into DSO projects.
We should, first of all, give much more consideration to the needs of DSOs and support projects such as smart grids. We should make sure national measures fully recognise EU funds as tools for investments and should not deduct the funds from DSOs or impose artificial caps.
Finally, we should make sure the processes are more tailor-made, especially the eligibility criteria, improve the evaluation process and, crucially, ensure better access to information. DSO members often complain about the complexity of getting information about EU funding opportunities.
Pablo Riesgo Abeledo
Policy Officer, Unit B5
The Fit for 55 package is a series of interconnected proposals to reduce emissions by at least 55% by 2030.
Our plan for REPowerEU is to end our dependence on Russian fossil fuel imports. This has three main areas: diversifying energy sources, accelerating the clean energy transition, and reducing demand – all supported by smart investments.
We’ve added a REPowerEU chapter to the Recovery and Resilience Fund to channel investments to REPowerEU priorities across member states. We’re also fostering investments in an integrated and adapted gas and electricity infrastructure network.
REPowerEU foresees an additional €29 billion of investments in the electricity grid, on top of the existing €500 billion.
Meeting the objectives of REPowerEU cost-efficiently requires a smarter and more interactive energy system. Digitalisation will play an instrumental role in achieving an efficient transition. The European Commission will publish an action plan for the digitalisation of energy.
This action plan lies at the intersection of two political priorities for the European Commission: the European Green Deal and the Europe Fit for the Digital Age plan. The action plan highlights how these transitions need to go hand in hand.
The Digitalisation of Energy Action Plan is expected to be published in the autumn of 2022. We currently foresee five areas of action. First, data exchange and how to effectively enhance it. Second, the crucial role of consumers and how to bring benefits to consumers such as literacy skills and digital tools. Third, promoting investments. Fourth and fifth are about cyber security and the importance of the ICT sector in achieving carbon neutrality.
Decentralisation and electrification will require investments in the grid, in cables and copper, and in smartness. Investing in digital solutions for the grid will allow us to integrate renewables faster and ensure a cost-efficient and easy transition.
To achieve this objective, we need to support EU TSOs and DSOs in the creation of a Digital Twin of the EU electricity grid. This virtual model of the grid would make the electricity grid more efficient and smarter. It would be achieved through, and also promote, coordinated investments in key areas.
We also need to support ACER and national regulators in defining common smart grid indicators to monitor smart and digital investments in the electricity grid. This would help national regulators define efficient investments in digitalisation and provide relevant incentives to system operators.
MD, Energy Post (moderator)
Piotr – You’ve heard some good and challenging news from speakers. The development of smarter distribution networks brings efficiencies and an opportunity to integrate higher levels of renewables. That’s in the interest of your customers and their environment. If there are costs to be met, can you pass them on to the customers?
Power grids are critical to enabling the energy transition because they’re key to the integration of renewable energy. As Eurelectric found, around 70% of the capacity of new renewable sources in the EU and UK will be connected to the distribution grid.
This means distribution system operators face enormous challenges from the integration of renewables. Distribution grids will play a crucial role in ensuring the integration of renewable energy and developing innovative solutions for sectors such as transport and buildings.
For example, in 2021 Tauron connected more than 127,000 micro installations to the grid. They’re generally rooftop PV panels with 250 kW, for a total capacity close to 1 gigawatt. It’s an almost fivefold increase compared to 2019, when about 30,000 micro installations with a total capacity of about 200 megawatts were connected.
Power distribution grid investments provide benefits in sustainability, competitiveness, economy, jobs and progress towards customer-centricity and new services for customers.
The cost of DSO investments according to the law should be reflected in customer bills, but the price increase cannot be too radical or they will escalate energy poverty. So the pace of transition must be reasonable, especially in countries with a difficult starting point like Poland.
Pablo – the cost to the incumbents is going to be different in different parts of Europe. If customers are happy or not to pay the increased cost is one question, but will the impact be the same throughout Europe? Is that understood in the policies?
Pablo Riesgo Abeledo
There will be national differences, and actions must ensure that national specificities are taken into account, for example when we define common smart grid indicators to direct investments in the best way possible.
REPowerEU also aims at providing support to the main actors. Important to provide information about the existing opportunities and how we can help actors in the transition.
Louise – can you respond?
We welcome the fact that the European Commission is thinking of increasing access to information.
In an internal survey of members last year, we found that even the largest companies have a service dedicated to just understanding where they can find support. The processes are extremely long and sometimes not fit for smart grids to be funded. Receiving public funds can help secure extra private funds.
Piotr – companies in Poland and other countries are facing the same cost challenges. So what’s the problem? Everyone is in the same boat.
To help achieve climate goals and reduce greenhouse gas emissions, Poland, which still produces more than 70% of the electricity from coal, must replace its coal power plants with lower-emitting sources. This is a big difference compared to other EU countries.
This process must also be coupled with distribution grid adaptation, resulting in significant costs. There is also a need for an extensive modernisation of eight network assets. According to the Eurelectric report, the distribution grid investment costs in Poland are estimated to be around €25 billion by 2030. It’s big because of the need to modernise existing infrastructure.
They also need to adapt the system for increased electrification to connect new demand and renewables and develop IT and OT systems to foster the monitoring of distribution network operations and massively develop smart metres.
The solar revolution is already taking place in Poland, we have around 10 GW of capacity from photovoltaics installed, up from 20 MW four years ago. Mainly they’re very small installations. In a short period of time, prosumer PV installations have become an important energy source for the whole system.
Louise – you have said that market design is key to solving this. Why?
We will always need to reinforce the grid, but at the same time we need to bring flexibility solutions. For this, I don’t think we have an appropriate market design yet.
Member states are still implementing the rules for the procurement of legal services, for congestion management. We need to set up rules that provide greater incentives and more solutions.
One way to mitigate these very high costs is to go for flexibility solutions, so we need good market rules. The EU is looking at setting up some new rules for demand-response, with a consultation led by ACER for framework guidelines.
So in the long run the benefits will be felt, but in the short term the incentives are missing and need to be put in place. The market is not set up correctly.
Correct. At both the national and EU level we need to push for more incentives. We need to push the regulators to cover more of the costs.
So this goes beyond the funding mechanism, it’s the functioning of the market. Arina, can you comment on this?
I agree. One of the main issues is the regulation of DSOs, because DSOs and networks are natural monopolies and are traditionally incentivised to invest in reinforcing the grid and they will be paid back later from consumers. But they don’t have incentives to innovate, for example trying to find other flexibility solutions that could replace the costly reinforcements of the grid.
Pablo – what has been most challenging for the Commission to ensure it does work for all countries?
Pablo Riesgo Abeledo
The Just Transition is a political priority.
On flexibility solutions, we are convinced that common smart grid indicators could promote more innovative digital solutions for the power grid. By defining common smart grid indicators, regulators can look at what makes an efficient investment and provide the relevant incentive to system operators.
Piotr – what is the role of smart grids in the transition? What are the challenges, are smart grid investments necessary?
The smart grid transformation is crucial for the energy transition. It’s the base for further electrification, the connecting point for renewables, the enabler for flexibility and demand management and a key element in enabling customer participation in the energy transition.
Initially smart grid initiatives were R&D projects, we conducted a number of such projects on smart meters, the use of energy storage, the integration of renewables, the automation of network operations, the use of flexibility, etc. We’ve already made several important investments in this field, including the digitalisation and automation of grid infrastructure.
When we talk about grids we shouldn’t only focus on the energy sector – also buildings, agriculture and the whole economy. Investments by DSOs are crucial for the development of the whole economy. EU financial frameworks should ensure equal access to funding, for example regardless of the size of investors.
Louise – can you elaborate on the need for equal access to funding regardless of the size of the investor?
We need to make sure of this, irrespective of the size of the country, and considering the different starting points. When we start the process of providing EU funds, we need to take into account the fact that some countries will need more support than others and ensure not all funds go to the same companies.
Arina – this goes across the whole of society, and the economy. Can you comment?
It’s not only about the electrification of the energy sector. This is the most cost-effective decarbonisation solution we have for sectors such as transport and heating, and some industrial sectors through indirect electrification.
A lot of investments are needed in the end-use sector – more electric vehicles, more heat pumps, etc., – and this increases demand on the grid.
So investment in the grid is needed. But we should also change the paradigm. Grids have traditionally been used to transport electricity from the large power plants to the end consumer. This may need to change, because, for example in Poland, there are now a lot of small PV solar plants, mostly installed very close to the consumer. So consumers will start producing electricity on their own, possibly adding electric vehicles that they can charge, and batteries in the EV or behind the meter for demand-side management.
The grid is still needed, but will serve more of a purpose of reliability. So we need to be careful not to over-invest in the grid based on old systems.
Question: Jan Ossenbrink (Global Founders Capital) asks…
What we need in the power sector is a coordination mechanism, on both the regulatory and DSO levels. Customers have an incentive to bypass costs by investing in distributed generation. That’s not very efficient, we’re free-riding on the legacy system we have.
Which is your favourite coordination mechanism? Smarter pricing? Dispatch signals? Smart devices looking into the power grid and voltage and frequency and making autonomous decisions?
Smarter prices. The technology is there, it’s more about incentives.
Pablo Riesgo Abeledo
It’s more about the diagnostics. It’s true that DSO-TSO coordination is a key aspect in the transformation. I can’t pinpoint how this will happen.
Smart regulation is the challenge for regulators. We have smart grids, meters, everything is smart.
Smart tariffs are the basis for engaging consumers, because they need price incentives. But not all consumers are interested in following price signals. So automation is very important for digitalisation and smart applications. Appliances in the house can make the decision on their own based on the price.
We also need to think about consumer acceptance, because at the end consumers will pay the price of all these investments in their electricity bill. We need to work on explaining the societal benefits.
Understanding is high, yet are you saying consumer willingness to pay is not?
There’s a huge gap between what the consumer believes and the fact that they have to pay their bill. Automation and digitalisation are complex issues and we need to explain the reasons behind increases in electricity bills.
Question: Alexandra Tudoroui-Lakavice (Cogen Europe) asks…
We often speak of the challenges and opportunities of EVs, but those cars will be used throughout the year. You can teach people to charge their cars according to prices. But when it comes to heating homes in winter, electrifying maybe 50% of heat will create significant seasonal peaks.
How do we optimise our energy system, investment in grids and generation capacity? It could easily be done with significant investments to size the electricity system for winter peaks, but it’s probably not the most efficient and cost-effective way to decarbonise heating.
Tariffs are the solution, for example time-of-use tariffs. I don’t see other good incentives for deciding whether to heat with electricity. Stable tariff systems are key.
Piotr – with so much energy consumption moving to electricity, how would that look in Poland? How does it look for Tauron’s consumer base?
The biggest challenge now is to connect so many PV installations to our network. We don’t have great challenges in heating, it’s fairly stable.
IRENA is carrying out a study on innovations that can help smart electrification in end-use sectors, including power-to-heat. We’ve identified a lot of innovations. One way is increased efficiency in buildings, so you could heat the building during the day and the building can keep it in the evening. There are heat storage technologies that could offer storage capacity up to several months, either in houses or community-owned.
Piotr said we have many more solar panels to connect. There’s a challenge in getting much more power directly into the grid, but there’s also a challenge related to connection. We need to connect before 2030 and then go from digitalisation to automation. So investment is about connection, not just flexibility.
Pablo Riesgo Abeledo
Indeed, the smart digital building is also key. It’s not just about the power grid, it’s about ensuring smart solutions across all sectors and it will be addressed in the Digitalisation of Energy Action Plan.
Question: Leonardo Nibbi (University of Florence) asks…
We have a lot of inertia-based resources going into the grid. Since this is a big challenge for transmission system operators, how is it seen for DSOs? Is it also a big challenge for them, or just TSOs.
The key is TSO-DSO cooperation, they need to exchange information and data so they can get to a more integrated approach in the way they deal with issues in the grid. We need extra market rules on what kind of information you should share, when and how.
The TSO is the one that manages inertia in the whole system, not the DSO.
Closing remarks. One final point from each of you?
Always try to think holistically, leverage synergies and innovate in a smart way.
Keep in mind that investing now will cost much less than remedial costs at the last minute if you don’t take into consideration changes that could be done on the grid.
Pablo Riesgo Abeledo
Coordination and cooperation are important across the sector and across the continent, and we need to foster this culture of innovation and of implementation of digital and new solutions.
Power grids are critical to enabling the energy transition, and it poses a lot of challenges for us DSOs. We need more dedicated investments to meet these challenges. In Poland, customers aren’t able to pay all the costs of that transition. We need dedicated funds to support us.
Summary compiled by Sara Stefanini
Produced by Energy Post