The energy system in 2035 – A DSO perspective

Porträtt på Per Everhill. Foto. Per Everhill 17 feb 2017

För en tid sedan blev jag ombedd av den europeiska branschorganisationen för mindre elnätsföretag GEODE att beskriva min vision av energisystemet år 2035 ut ett elnätsperspektiv. Här är resultatet:

In 2035, the energy system is almost 100 % fossil free. The only fossil energy still used is from resource efficient energy recovery from waste and industry. A minimum of new energy resources are added to the energy system, where most of the energy is either renewable or recovered. Energy efficiency is very high and an integrated part of all enterprises, housing and industrial processes. Excess energy from one part of the energy system can easily be redistributed to other parts with an energy deficit. This is done through a highly efficient international energy transmission system as well as local energy distributors which are connected with each other enabling optimal energy usage on a strategic level.

Although most energy production is maintained by large and highly efficient energy companies, much production is done by prosumers. Their renewable production, storage facilities and demand response functions are integrated in the technical systems of the DSOs as well as smart business models that benefits all markets actors. Price signals are very effective and most customers and producers are able to reacts on them using smart technology designed to optimize their energy usage in real-time without them having to constantly having to actively manage their consumption. The energy business will be more dependent on data management as the energy market becomes more complex. Much of this data will be handled in the cloud and treated as "open data" available for entrepreneurs and others to create new technology and new smart business models. The DSOs will be responsible to provide this data to the market, thereby acting as a market facilitator.

Energy efficiency, as well as capacity efficiency is aimed at creating smart neighborhoods, rather than individual smart homes. Within a European neighborhood in 2035, people both use and produce energy as well as sharing it with others. We will see more smart appliances by 2035, the big question is which ones will be smart and which ones not. The smart appliances will not be controlled manually, but pre-programmed in order to create greatest possible value for the customer and the environment.

The smart meter is still an important part of the energy market, however much different than in the early 21st century.  Many functions of the smart meter will be in the cloud such as realtime billing and pricing, follow up of carbon footprint etc. which will enable new business models and Incentives to act smart for the customer. The smart meters of the future must also enable economy of sharing, allowing the customer to share surplus energy with others through the smart electricity grid.  In 2035, we will also see more business conducted in "the cloud", where the customers energy usage can be billed without the traditional connection to the meter. We will also see a market that is less focused on energy and more on capacity.  

In 2035, we will still have centralized data hubs that guaranties certain market functions and quality. At the same time, we will have decentralized data hubs for specific functions such as local energy management. These will exist in symbiosis with each other. The centralized hubs will be controlled by a public entity and the others by various market actors.

In 2035, most market subsidies are phased out. This is a must on other to create an efficient and well-functioning energy market. Subsidies disrupt the balance in the market by supporting technology that should not be there. If we had given a lot of public support to steam engines in the 1900s, we would probably still have them today. 

Regarding market design in 2035, we will probably have a mix if energy and capacity based markets, where the price components are giving the best possible price signal to the customer in order to optimize the energy system.  Instead of more localized markets, we will have more interconnected European energy markets which makes them very efficient. Prosumers in Sweden will be able to own PV production units in Spain and utilize that production in their cabin in Norway.

All customers will be connected to the grid/DSO in order to enable optimal usage of energy and energy production. Off-grid will be an exception used in special circumstances such as Island, remote cabins etc. The DSO will provide the customer with services connected to their usage of the grid. That does not mean that they have to be billed by the DSO, that can be done by other market actors in cooperation with the DSO. In order to be able to handle more RES in the energy system, we need to put a price on capacity rather than energy. Tariffs has to be more dynamic in order to send the right price signal to the customer.

In 2035, DSOs acts as smart neutral market facilitates providing key functionalities to the market. Security of supply is extremely high in the European electricity grid as well as the capacity to handle cyber threats. DSO operate under a stabile long term regulation that enables them to develop new technology as well as maintaining the grid. Regulation promotes efficiency and rewards innovation. As non-competitors, DSO all over Europe share knowledge and best practice with each other in order to constantly develop their business.