DiPP - Smart Energy for Smart Living

We all live in the midst of an energy transition that seems to hold exciting promises. Not surprisingly, the European Commission was keen to address the many challenges associated with this development.

It took the form of the ‘Clean Energy for all Europeans’ package released in November 2016 and aimed to make the most of the main three trends behind this transition, i.e. electrification, decentralization and digitization.

The share of renewables is likely to reach 50% of installed electricity capacity across Europe by 2030 vs 25% at present. This is no less than a paradigm shift: some prerequisites should be met in order to make the most of it. ICT is bound to play a pivotal part: time has come to leverage its matchless enabling merits.

Three mega-trends

Electrification of large sectors such as transport and heating is another key driver of change, due to decarbonisation agenda and new forms of mobility.

Decentralization via consumer-centric energy systems is the new name of the game. It is spurred by the sharp decrease in costs of distributed energy resources. Active energy nodes are expected to deliver power locally as well as to wide-ranging grids. ICT turns buildings into energy conversion hubs. On the 30 November 2016 the Commission proposed an update to the Energy Performance of Buildings Directive to help promote the use of smart technology in buildings and to streamline the existing rules. This opens the way to continuing optimization likely to keep users satisfied while improving energy efficiency. Indeed, heating and cooling accounts for half of the EU’s energy consumption.

Digitization is happening all the way, both within the grid (smart metering, smart sensors, automation) and beyond the meter (IoT, power-hungry devices). Sustainable energy simply cannot happen without ICT.

Panelists highlighted the importance of ensuring that digitalization is applied not only in the power grid but also to the heating and cooling sector, an often overlooked part of the energy system which accounts for roughly half of all energy consumption in the EU. Both district energy and electrification, two key pillars of the EU’s strategy to decarbonize heating and cooling, are a natural fit for the uptake of more digital solutions.

To accommodate the rise of demand-response, power grids should be seen as platforms serving new value chains, no longer as the prerogative of suppliers of a commodity. Indeed, customers want and must be part of the business model. This cultural shift will take time to sink in.

Policy makers are in a position to provide a framework. For instance, they can take measures aimed to make buildings smart by encouraging the use of ICT and modern technologies, including building automation and charging infrastructure for electric vehicles, to ensure that buildings operate efficiently. They can support building renovation by strengthening the links between achieving higher renovation rates, funding and energy performance certificates as well as by reinforcing provisions on national long-term building renovation strategies, with a view to decarbonising the building stock by mid-century.

The tool-box at hand

Infrastructures: of the 24.5GW of new capacity built across the EU in 2016, 21.1GW — or 86% — was from renewables, thus eclipsing the previous high-water mark of 79% in 2014. It is worth emphasizing that we should build on existing networks as much as possible lest undue complexity will set in. On the ICT side, 5G is all the rage; it should provide a boost to smooth distribution.

Algorithms: they are already there, we only need them to talk to each other. End-to-end automation works better: once they’ve set the boundaries, humans should be kept out of the way as the weakest link may very well spoil the party. Automation turns data into information, in turn morphed into knowledge by inspired engineers. End-users have no idea of the power of algorithms, engineers fare only slightly better: technology must indeed feel like services, otherwise people won’t buy it.

Optimization: it’s the way to go whether for electricity use or for market access from the demand side as opposed to utilities. Examples abound of successful flexibility: Sainsbury’s, Vivaqua, Arcelor Mittal etc. Dynamic pricing and aggregators help understand the value of this innovative approach. The challenge is to get the whole chain adjusted at once, not piecemeal. Acceptance needs to take up fast if Europeans are to take advantage of technologies that are already available. In this respect, a robust framework provided by public institutions is likely to boost trust. This is precisely what the Commission has done with its package on ‘Clean Energy for all Europeans’.

On merging the benefits of decentralized production and digitized grids, cybersecurity becomes an obvious concern. Luckily, there is no dearth of appropriate framework or practical tools like early warning sensors or helpful methodology such as cybersecurity by design. The same holds true for the challenges of data privacy, now under control arguably.

The future of smart living looks as bright as the one of smart energy. Though it is commonplace to underestimate what we can do in ten years and to overestimate what we can do in two years, the reason to be optimistic is simply that both the trains of decentralization and digitization have left the station: there is no turning back with respect to using energy more effectively or to making the most of digital empowerment.