European power industry seeks regulatory support

Last Updated (Tuesday, 30 November 1999 00:00)
Written by Administrator
Tuesday, 19 May 2009 00:00

On May 19, the European electricity industry asked regulators on the continent to greater incentivise the development of smart grid technology.  The industry wants regulators to guarantee “an appropriate return” for the significant investments that are required to make smart grid technology a reality.

Research & development costs, along with costs associated with installation and deployment of a smart grid are significant, said Eurelectric, the industry group.  Eurelectric pointed out that most electricity networks in Europe are regulated so incentives to develop technology will be crucial in order to meet the EU’s carbon reduction goals.

At the end of 2008, the EU announced commitment to the 20-20-20 goals where overall carbon emissions must be 20 percent below the carbon emissions produced in 1990 by the year 2020.  Also that year, the share of renewable energy present in the aggregate energy supply must equal 20 percent.

Smart grid technology integrates information technology within electricity distribution.  Networking technology allows energy to flow bi-directionally which gives power grid operators a greatly enhanced ability to include renewable energy projects both large and small.  A true smart grid would allow homeowners to generate their own power – and sell the excess not used back to the energy supplier.

Eurelectric said that the EU’s 20-20-20 goals are a significant challenge for the power grid as it is currently designed.  The grid in place can’t handle the intermittent and distributed supply of renewable power.  Adding rechargeable hybrid vehicles to the mix complicates the matter even further.

“It will not be feasible to add all the renewable energy and other distributed energy generation power to the grid, as it was not built for this purpose,” said Peter Birkner, chair of Eurelectric’s networks committee.

The industry believes the answer lies in the construction of a smart grid but is concerned that it will have to foot the bill of a massive installation project while figuring out how to commercialise the technology at the same time.

Manuel Sanchez Jimenez, an official at the EU’s information society department, agrees that initial capital investment has prevented commercial development of smart grid technology.  He added that it could be possible to introduce a smart grid within the next decade but the uncertainty involved concerning expected returns on investment presents a problem.  The lack of standardisation further complicates matters.

“I think the owner operators are the ones that will make the vast investment,” said Sanchez Jimenez.  He agreed with Eurelectric that regulators need to step in and offer help.
The EU’s energy liberalisation package that was agreed to in March of this year requires that Member States introduce smart meters capable of monitoring energy usage in real time.  The legislation requires that at least four-fifths of consumers have a smart meter by 2020.

Sanchez Jimenez added that the new Energy Saving Action Plan, currently under discussion by the Commission, may include language requiring the development and installation of smart grid technology.