Smart Energy International spoke with Laurent Schmitt, Secretary General for ENTSO-E, about the developments within the organisation and the importance of digitalisation for TSOs.

What digital initiatives has ENTSO-E been pursuing this year?

We are currently working on the faster exchange of information at a European level, allowing for the wider participation of distributed energy resources into the balancing market.

We are also seeing significant digital IT investments related to market platforms; for example, XBID, which was launched just before the summer.

On the other side we also have similar investment related to the management of grid congestion, primarily driven by the introduction of renewable energy into the system at a faster pace than the grid can be constructed.

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We are currently in the middle of a large investment which will enable TSOs in the future to operate their systems from the perspective of a pan-European common grid calculation which will be updated several times a day. The idea behind it is to ensure that all security calculations or capacity calculations made in countries and regions are as accurate as possible in order to have a wider view of the integrated energy system.

We are currently undertaking very large deployments of a new platform which will facilitate that.

Lastly, we are working on increasing transparency to market participants, particularly regarding usage of data, driving towards open data around all happenings, events and flows on our systems. We have made major investments on our transparency platform which is progressively becoming one of the key reference points for every trader or user of our system for optimising its own assets and positions.

We have made significant analytics and digital investment in relation to this transparency platform.

We have an active R&D committee in ENTSO-E which pulls together R&D teams from our TSOs and we are working on digital from a mid-term perspective. We are currently focusing on a new TSO/ DSO interface and how to envisage new flexibility market design with coordinated operation of that platform through the TSO and the DSO.

We have just succeeded in a new Horizon 2020 project for prototyping various flavours of that platform and facilitating prosumer flexibility data exchange at a pan-European level. The idea is to increase liquidity into the market and enable easy exchange and the free flow of consumer data from one country to the other. Of course, this assumes that the consumer agrees and has given their consent.

These are some of the examples of our current, very heavy digital agenda. We also have a chapter on cybersecurity.

As the level of digitisation increases, the level of risk increases, and we are currently focusing on developing a new cybersecurity strategy.

What we are seeing on the pan-European platforms that we have built is the challenge of connecting a wide range of stakeholders across Europe as this exposes our system across a number of dimensions. Firstly, it exposes TSOs and some of the data we exchange. Some of that data is classified, so the first layer of our cybersecurity strategy is to create an environment within the TSOs which is extremely secure and here we are considering the construction of physical lines in some cases.

Secondly, it raises questions related to exposure to a potential attack from the outside. For instance, a market participant being exposed and indirectly impacting our system. We are defining our cyber strategy and we would like the strategy to indirectly imply certain requirements to the balancing party, the aggregators or the utility interacting with our system.

We are in the early design phase – obviously, we cannot expose too much information about the strategy because this is of course very sensitive information.

I can say that there is an initiative underway and we take it very seriously.

It has several implications. Although as a TSO, our exposure is a little bit different to that of a DSO in that we manage much less direct consumer data. More of our risks concern hacking of operational data related to our systems, which could indirectly expose our system to significant incidents. In a context where we do see more and more countries wishing to interconnect with our system and wanting to join Europe – recently we completed a study for the interconnection of the Balkan states – each of these new connections brings further exposure. We are living in a complex environment and as our requirements grow, so our solutions develop from that perspective.

Is there a role for blockchain?

We have a few demonstration projects for blockchain, and there are some TSOs (although not directly at ENTSO-E at the moment) that are piloting the use of block chain in relation to the market platform which we implement. In some of the market platforms, such as the balancing market, where there is a settlement component into the platform a distributed architecture like block chain could be foreseen for certain of the use cases. We are investigating blockchain and there is an R&D team analysing how blockchain could be used versus the needs of the digital grid.

We are actually producing a white paper within the next few months which is going to zoom down into the policy matters related to digital investment as well as cataloguing the ‘low hanging fruit use cases’ of digital grid investments.

What about the physical infrastructure?

For the moment the energy transition means we need to design and construct a grid which is able to withstand the extremely large amounts of renewable energy being fed into it. In the context of the clean energy packet our system will be exposed to more than 50% of the energy on the grid being derived from renewable energy. The complexity of managing these renewables in real time, especially as there is the reality that during peak renewable conditions, there may well be more power than the system needs and therefore there is more curtailment and issues related to congestion. This will drive an agenda to construct a physical system that is robust and we are actively mobilising the necessary investments and producing a network development plan at a panEuropean level which identifies critical bottlenecks which we need to address.

But, there is also a software or digital layer which needs to be added on top of that physical infrastructure, which will enable the migration of the operating system of the grid with new functionality and this functionality is related to further coordination of the grids and the operation of real-time markets, offering more flexible grid operation to offset any imbalance or congestion of renewables. Digital will not replace the need for strong infrastructure.

We do, however, need a new operating system on top of that physical grid.

Challenges to work around

The most significant challenge for us at the moment is the issue of capacity allocation or capacity calculation. When the grid is constrained in certain areas, the key question is how to allocate that capacity.

This relates to the operation of the market itself and to the very, very detailed calculation of that capacity and the planning of capacity and potentially linking new sensors, dynamic line rating and being able to make optimum use of that grid capacity particularly into very congested corridors. We need to optimise our capacity within the operation timeframe.

Where does storage come into this scenario?

Storage will enable flexibility and we know that we will need more and more of it. Already we see areas in our systems where the flexibility is already being exhausted. To enable real-time pricing we should naturally see the development in the market of new storage assets which contribute to our system. We are hoping that putting in place new platforms providing more accurate price signals will develop storage assets in the markets.

In some cases, we also see the use for storage in very specific grid services such as inertia or frequency containment reserve. These are areas where potentially storage could be considered as regulated assets. We do see storage as a mainstream technology – and this includes power to gas as an important option in the mid-term.

What changes are occurring around legal and regulatory frameworks?

The first wave of new regulation relates to the deployment of new network codes and we are actively deploying these in every TSO country. This means new balancing markets and new price signals during this first phase of new incentives.

The second phase will be the Clean Energy Package which we think is the right way to move forward, especially when it comes to the balancing of the real-time operation of the system. We are very actively preparing ourselves for the future steps foreseen in the Clean Energy Package.

We think the regulation is a move in the right direction. We are looking forward to its finalisation and to the regulatory framework being in place. Of course, it will take time to deploy – at least five years from the date of decision up to the point when it comes into force – but it will be the right regulatory framework. We can all hope that in about five year’s time we will see storage developing in various areas of our systems.

What are the most important elements of the new grid code?

The new balancing platforms and all that comes with our market codes. It’s not fully completed yet but these represent major progress how the market operates in Europe. It will offer more transparency as to where the constraints and congestion are and it offers new opportunities for traders to operate smartly into our system.

We think it’s going to be a game changer within the next two or three years.

The most important message for European Utility Week attendees?

Digital is an important element of our current energy transformation as a TSO.

What is very important is that we are at the stage of deployment of digital and we need to be as pragmatic as possible, focusing on the right use cases and we need short-term solutions and deployment successes. Digital is no longterm R&D focus – it is something we need now. That is what we are focussing on right now and I’m confident we will succeed in the next few years too, significantly improving the space. SEI