Our next guest in the series of IEEE Smart Grid Video Interviews is Tahir Kapetanović, Director Electricity at the Austrian Energy Regulatory Authority E-Control. Tahir provides insight during the IEEE Smart Grid World Forum in Brussels, Belgium on some of the key drivers for Smart Grid globally - from integration of large scale wind power and distributed generation to security of electricity supply.
One thing is unique and different maybe from the States or Japan is that we have, for a large number of countries, a common legal framework with directives, with regulations for smart grids elements. A lot of smart grids in terms of obligations and duties of the incorporators are already very well anchored, which means we have a good starting point and really a possibility to do the evolution of electric power systems in a uniform and well-coordinated and the way which is more beneficial to the customers.
On the other hand, Europe is, as you know, a group of countries, a union of countries. It is not one country. Equally, it is also a union of different networks, different network operators. So smart grids, starting points of smart grids in Europe do differ from country to country, from region to region, and we have to acknowledge that when we talk about smart grid technologies and evolution in the future.
I think we have some key drivers behind smart grids all around the world, very globally. It's probably CO2, emissions reduction, and the need that electricity grids contribute to these goals. In Europe, particularly, we have maybe four new drivers and two, a little bit older ones.
First, it's integration of large scale wind power. We are going to have probably in the next 20 years, maybe 300 gigawatts of installed wind power in Europe. So one-third of installed capacity and maybe one-third of generated energy might be coming from wind. These are some forecasts. We don't know what will turn out, but these are some forecasts from institutions and organizations, which are probably trusted.
Second is the distributed generation. On the contrary to wind, which is large which is away from the customers from consumption, distributed generation is democratization of degree, if I may say so, where customers are going to have micro windmills, micro photovoltaic things on their roofs, and this is going to become a huge amount of power and energy supplied into the grid.
So we see, and this is the third area, the activation of the distribution grids. It has been said today in the session that distribution grids, which were previously built to forget, now are getting more intelligence, more [inaudible 2:39], and more controlling.
The fourth, this is one of those new drivers. In Europe, particularly, the electricity market integration across the national and control area borders where we have a number of developments like integration of balancing and regulating power markets, congestion management, capacity allocation on borders, etc.
Besides those four, I would say new drivers, even though they are not so new by technology, they are new by appearance. We have two old friends, I would say, or old known drivers, which is the operational security, which is the bottom line of everything in the grid. Without operational security, nothing works. Security of supply, which in the electricity market has turned to be something a little bit different, more related to risk management, more related to every actor and participant in the market really doing what she or he is supposed to do according to the market and electricity market framework.
This depends from country to country, from legal regulatory framework and from support, which is provided for distributed generation. I can talk for my country, where there is really a long, long tradition of distributed generation by history, where because of the Alps in Austria, there is a lot of small hydro and so on. There are other countries also in Scandinavia, and maybe somewhere else, where there is a good support for distributed generation, where it is easy to get network access, network connection, and so on.
On the other hand, you are right. There are other examples, maybe, that are not so bright, where it is more difficult to get connection to the grid, to get access to the grid, and when really, the threat, the fear of the incumbents is voiced and they are preventing the connection to the grid of the small distributed generators.
I think that the trend, especially in Europe, is really moving away from that because there is so much now in the electricity directive, environmental directive, in renewables directive, which actually forces all member states to really support distributed generation, joining the system and providing their services and providing their energy.
What remains really a challenging task is to achieve the same degree of effectiveness and efficiency, the effectiveness and efficiency as we had with large generation. We can achieve this by market mechanism. We can achieve it in the market, but for this we need very high transparency, very clear and robust rules, which do not discriminate. We need very good technological support in terms of not reinventing the wheel and doing the same things twice, three, or twenty times.
I think that one of the first implementations and applications of information technology in the industry was in transmission networks. In the industry as a whole, we know in the '60s and '70s, there was a start of using computers, starting with all PDP-11, etc., for controlling the system and doing some things because indeed electric power system is the most complex machine in the world. We know this.
Now, due to this democratization, which I mentioned, more and more small producers, small generators on the distribution level, there is a need to do some, I would say, very important, economically viable enhancement and improvements at the distribution level. Because, this is very important to emphasize, there would be no way that we think smart grids will cost that much more money because nobody would be paying it.
Smart grids is a paradigm. Smart grid, its evolution is intended actually to provide more for less or to have the overall cost of the system reduced while providing the customers higher degree of participation, higher possibility of choice, and by contributing to the environmental cost. It's a very challenging task, but it can be achieved.
There are good examples for that. There are countries, like in Europe, for example, to mention Denmark, which has turned very much away from the centralized to the distributed generation. They are still having problems with integrating and so on, but this seems to be possible. However, I'd like once again to emphasize one thing. The key force behind smart grids is the user of the grid. It's the one who is connected. The grid is a service provider for him. You have to bear this in mind in all of our discussions and in all initiatives about the smart grids. I would not say only in Europe, but I would say also in other places as well.
Yes, I can give you maybe one or two examples from Austria, where we are quite far away I would say. So for example, Austria is a federal country. In the federal state of Upper Austria, we have a very large number of small photovoltaic and even more growing in the future. So there is already now a trend toward active voltage control in the distribution level.
Then, in the state of Voralberg, which is a far western state of Austria, there is an interesting approach to the fault management and alarm surveillance in the medium voltage level and alarm messages. It's based on a quite traditional technology but very interesting because it provides an added value and a benefit to the network operators.
Then there are more, I would say, economically and socially, maybe even politically motivated initiatives like smart cities, where there are a lot of factors and contributors behind, like in the city of Salzburg, which has a number of projects starting from small micro CHPs, virtual power plants, partly involving industrial and small generation, also having electrical mobility as part of it, etc.
Then to say, maybe, a much bigger country than Austria, Germany is probably at the forefront and the leading country concerning real smart grid and smartness in the network. They have, I think, a dozen test areas of pilot projects around the country where they are testing things like real demand response, like virtual power plants, energy efficiency improvements by information to the customers and so on. I think if I am right, I am not sure if I am right, that these initiatives and this work in Germany is already now sponsored by the German government, I think about a 140 million Euro a year, maybe even more, 180 or so. Those are some examples where I would say there is really something going on in the grid.
Besides that, there are also a lot of projects with digital meters, smart metering in most of European countries. As you know, there is a directive in Europe, which requires that by 2020 that all countries do have it provided there is a positive economic analysis about smart metering.
It remains to be seen to which extent smart metering will really smarten the usage and benefit for the customer, because the digital meter itself, does not change anything. You have to have some flesh, some services, some added value for the customer. Not just showing him information, maybe offering him peak load management, and maybe offering him demand response. I would like also to recall what Claude Turmes said at the beginning today, "Indeed, whom to address?"
I think this is maybe households, of course, but maybe small enterprises which have not measured, but would really gain something with energy management if they get some real time information. So, maybe a household spending only 3,000 kilowatt hours a year is not so much interested in planning efficiency. But a barbershop or a bakery, who is spending 25,000 kilowatt hours a year might have quite an interest to reduce their electricity bill for 500 or 1,000 Euro.
Yes, I think this is one of the most critical questions. I think I would say we, although I should probably not say we, meaning we're regulators, because we are not today talking like that, but all of us in this industry, either regulating it or running it or selling there or running the networks and so on, should really think about the customer as a real entity. We should not be talking expert Chinese or expert language trying to explain to the customer, because the customer cares about cheap quality of electricity. We must find a way to explain to the customer what is the benefit if there is better fault management in the distribution grid. What is the benefit of paying maybe a little bit more for a renewable energy, but do it transparently, not to hide it from the customer in terms of climate change, if there is one. Let's first raise this question.
We have to be clear with the customer what might be the benefit if he gets or she gets the information on his or her consumption. Not just trying to brutally confront the customers with something, telling them they will have to pay more, and for this they will get something but they really do not understand. So I think there is a big, big deficit in explaining and investing effort in talking with all people who are paying the bills, and I think it could not be only done by regulators. We are doing our best. We are trying very much to involve customers. We have our customer [? 12:09]. Our commission is doing it as well. But I think it must be clear to the industry, in Europe and worldwide, that we all have to unite and to listen to what the people paying the bill need and then to explain to them. If we are convinced that what we are doing is useful for that, or if it is not, if it's just a nice toy we would like to have, then to quit it, because then it's obviously not needed. And this will be the best way to distinguish what is smart and what's not smart.
We have been trying, working together with European Commission, there is actually on a website of the Commission's Task Force document, which I happen to be responsible for where we have tried to develop a tool for smartening the grid, where we have a number of key network features and a number of benefits, more than 30 or 40 benefits, which must result out of these features. So it's a good litmus, it's a good test for a network operator, for his activities to see if this is something needed or not. But once again, it's is much more about communication. As you said, communicating and explaining and listening. We have to be very ears, less big mouth, big ears when we talk about customers and with customers.