Whilst the negotiations on the Clean Energy Package are in full swing in Brussels, the European electricity sector faces a revolution which reshuffles the cards for the energy transition. Smart grids boom, combined with the development of new digital and storage technologies, will address the growing need for flexibility in energy markets thus fostering integration of intermittent energy and further consumers involvement in the system. More surprisingly, these revolutions break existing silos between various sectors (transport, building) paving the way for new synergies on the whole value chain.
Eurelectric’s annual convention held on 19-20 June in Estoril goes back on the huge potential of electrification in the digital age, but also the key conditions of a European success.
Electrification, prosumers and smarter market design: the winning trio
“Electrification, strengthening the consumer role through innovative solutions and a smart market design are fundamental ingredients for a sustainable transition,” underlined Antonio Mexia, ex-president of Eurelectric and CEO of EDP, introducing the annual convention of the European sector.
Indeed, the landscape described by Lazlo Varro, Chief Economic Officer in the IEA, displays an unequivocal future: the electric sector will unmistakably be more variable, more connected and deeply embedded by still-emerging technologies such as storage or electric vehicles. “Low-carbon” electricity will be the cornerstone for promoting electrification in key sectors such as transport, which could be 100% decarbonised by 2050 according to Elias Pöyri, CBO of the Finnish company Vierta, specialised in “smart charging” services of electric vehicles. French companies are already embracing the change: Jean-Bernard Lévy, CEO of EDF, mentioned the company’s rising investments in electric mobility, as France ranks second among the less CO2 emitting European countries. The building sector is also becoming a full part of the electricity system: innovations such as “home automation”, self-consumption, home storage, prove the revolution to be under way.
This promising future will not be paved with rose petals. Indeed, nearly €1.8 trillion need to be invested in the European electricity sector by the end of 2050 so as to endeavour modernisation in the sector and reach the objectives set on decarbonisation. This “investment gap” can be closed only if key reforms are implemented.
« Change mindset,embrace the future and transform the present”
Fransesco Starace, CEO of Enel and newly elected Eurelectric president, outlined its conditions for a successful transition that must be pragmatic instead of ideological. By 2040, electricity could become the prevailing energy across the world, but it would require to build a new vision overcoming sectorial barriers and based on innovation. As an example, smart grids and digital technologies will enable conventional power plant to keep creating value for the decades to come in the future power system.
But the regulatory framework at the national and European levels must also provide appropriate incentives. For M. Starace, “the new market design need not only to promote energy, but also flexibility and security of supply”. This acknowledgement is shared by the CEO of EDF Jean-Bernard Levy, who calls for a “modern regulation” so as to bring back together consumers and climate change issues.
Finally, the speakers outlined the importance of a transparent pricing process, and the need for a new pricing architecture notably to better reflect the current role of network operators in the energy transition. Networks – more connected but also more vulnerable – are at the heart of the future power system. If new technologies will undoubtedly have a key role to play in the sectorial transformations, networks will remain ultimately responsible for guaranteeing that the electricity will, indeed, be delivered.