Smart grids in Europe need smart regulation


Brussels, Belgium — (METERING.COM) — June 2, 2009 – A predictable and transparent regulatory framework for the European electricity market and incentives to distributors for the development and deployment of new technologies supporting smart grids are among the requirements for the development of smart grids in Europe, according to a recent report from the region’s union of the electricity industry, Eurelectric.

The report also recommends a harmonizing of regulatory rules across Europe as far as possible.

Eurelectric says it is pleased to see that the European Commission has recognized the role of smart grids in reaching the 2020 goals of reducing CO2 emissions by 20 percent, sourcing 20 percent of total energy from renewable sources and improving energy efficiency by 20 percent. However, these add new items to the mission of the transmission and distribution system operators (TSOs, DSOs), which has traditionally been to secure network reliability and quality and, more recently, to act as market facilitators.

Eurelectric says it views an appropriate return as a basic prerequisite for investment, and calls on governments and regulatory authorities to work together towards an optimized business model for all parts of the value chain, from generators to consumers, so as to minimize total costs. In particular regulators need to take appropriate measures to support the development of smart grids, allowing a fair rate of return when DSOs contribute to meeting efficiency and renewable targets.

“The current economic crisis provides extra motivation to accelerate the process, because electric grid infrastructure is the ‘backbone of the economy’ and as such, one of the best places from which to kick-start the recovery,” says the report, adding that these measures should lead to generally lower energy bills for customers.

Eurelectric also wishes to underline that regulators need to provide incentives to the DSOs for their involvement in R&D work and for the development and deployment of new technologies supporting smart grids. These incentives should be further increased.

The report adds that it covers the role of the DSOs. However, a smart grid will require an integrated approach between the DSOs and TSOs. From the operations perspective the DSOs and TSOs will have to work together closely in the areas of outages, dispatch, voltage control and power flow control.

The EU’s 2020 goals “represent a considerable challenge for the energy sector,” comments Eurelectric Networks Committee chairman Peter Birkner. “Smart grids will function bi-directionally, thus enabling the integration of small and large scale renewable energy and distributed generation. However, with the current infrastructure it will not be feasible to add all the renewables and other distributed generation power to the grid, as it was not built for this purpose.”