How to achieve system efficiency across the EU energy market

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What is system efficiency, how can it be achieved and what is its significance in helping Europe to achieve climate action and energy decarbonisation targets defined in the Fit for 55 and Green Deal packages?

A session hosted by the European Commission during the EU Sustainable Energy Week provided answers to the above questions. Speakers from various organisations within the energy landscape discussed the role regulation, technology and consumers play to achieve system efficiency.

Jochen Kreusel, deputy president at T&D Europe, said: “System efficiency is enabling the grid system to deliver expected energy output by using as little as possible non-renewable energy. That means an increase in the use of renewables as far as possible.”

Leveraging smart grid indicators to achieve system efficiency

Kreusel said grid networks can be a direct contributor to system efficiency for instance through utilities making use of energy-efficient components such as transformers. Ensuring that less electricity is lost or consumed during transmission and distribution is also vital for an efficient energy system to be achieved, said Kreusel. This allows load balancing and minimises losses. Less energy wastage means that more capacity is available for secure and reliable supply, added Kreusel.

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He added that grid networks indirectly contribute to system efficiency by facilitating communication between the load demand and generation divisions. The ability of grid network operators to monitor changes in generation and demand reduces imbalances and enables higher renewable energy capacity to be integrated, according to Kreusel.

Kreusel said: “We need to make sure demand response is well communicated and as such, this is where network operators come into play. In addition, the infrastructure needs to be ready to facilitate demand response mechanisms.”

The role of demand response and DERs

Michael Villa, executive director at Smarten, added that Europe will achieve system efficiency in a cost-effective and more efficient manner by leveraging demand-side flexibility.

Villa said although factors such as a continued decrease in the cost of renewables, increased funding and the enactment of supporting policies have created a perfect scenario for the increased rollout of clean energy infrastructure, there are some issues hindering utilities from fully unlocking the benefits of distributed resources (DERs) for system efficiency.

These issues include renewables curtailment and fluctuations, as well as changes in weather which can affect generation capacity.

He added that “volatility is here to stay, it is the new business model” and as such grid operators need to use technology to optimise the control of DERs and unlock flexible energy from consumers to achieve system efficiency.

Villa explained five key things that utilities need to do to achieve system efficiency using demand-side flexibility and they include:

  1. Communicate the daily benefits of empowered consumers. He said utilities should communicate the benefits consumers are witnessing from deploying decentralized energy systems such as on-site solar generators and storage systems. This will improve consumer awareness and help increase interest.
  2. Develop effective markets. Villa said utilities need to make sure flexible energy markets are open for all end users and DERs and that consumers are rewarded for their participation in the markets.
  3. Make sure buildings, electric vehicles and other DERs are not just optimising their site efficiency consumption but are also flexible assets that are able to contribute to the grid. Villa said grid operators should leverage technologies such as smart buildings and vehicle to grid.
  4. Incentivise the activation of demand side flexibility through various schemes including white certificates and guarantees of origins to stimulate renewables usage.
  5. Enhance digital ecosystem to ensure interoperability of data and the communication of all parties involved to achieve efficiency and climate neutrality. For instance, smart buildings should be able to communicate with electric vehicle chargers and various behind the meter apps and infrastructure.

Zsuzsanna Pato, a senior advisor at the Regulatory Assistance Project, added that “consumers are a key resource to keep the costs of the energy transition down.”

She said, however, regulation needs to play an important role to ensure consumers are well protected from price volatility. Pato reiterated that regulation needs to ensure the adoption of smart tariffs and better rate designs that do not burden end-users.

Find out more about the session.

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