Key challenges to transforming electricity systems in Europe


Mats Nilsson,
A conversation with Mats Nilsson, Economist, Vattenfall

In this exclusive interview Mats Nilsson, Economist at Vattenfall, discusses the challenges of transitioning to more intelligent and efficient energy systems.

On the development of electricity markets
Intelligent grids have an important role in development of the internal electricity market, and as a tool for fulfilment of the EU’s ambitious 20-20- 20 targets. The key issue is how to get the national transmission operators (TSOs) to broaden their scope for better international cooperation, without which the market remains fragmented and interstate trades too complex. For this to happen, we need to incentivize the TSOs to better work with integrated planning and operations.

Capacity and new usage patterns
Capacity in transmission and distribution needs to match the changes in demand and supply. These changes relate to size of consumption, but also to new patterns of energy production and usage. For example, more wind power in the system may require more capacity in certain areas and decentralized generation asks for more sophisticated load management.

Consumer involvement will be a major marker of change and with greater access to hourly measurements and differentiated pricing, they should change their behavior to better match price profiles. This will particularly present opportunities for large customers, but also many private households with smart meters could engage in various energy efficiency programs.

Large scale infrastructure investments
From the socio-economic perspective it is difficult to move towards a cost efficient climate problem solving power system without substantial investments in infrastructure. The current plans to increase transmission capacity are large but the permitting processes are increasingly complex and slow moving as they concern many entities, large geographical areas and political willpower. Transparent cost-benefit analyses can bring more clarity to the debate and speed up investment and permitting processes.

But at present we need less discussion on further plans and more building and realizing of the plans that are already presented, e.g. in the Ten Year Network Development Plan 2012 our findings show that including a regional perspective, as well as environmental and political benefits, can lead to a more accurate valuation and faster provision of investments.