The intention of this blog is to discuss the institutional framework of smart grids, digitalization and energy transition. As a general entry to this topic we can take a look at a presentation that Marius held on 1st March at the China Global Centre @Jacobs University. In his presentation Marius introduced a project that he conducted in China together with colleagues from BTC, EWE, OFFIS and University of Dortmund. The goal of the project was not a simple one:
It was to define a roadmap for the institutional framework of smart grids in China. If you are interested in the whole roadmap, you can access the full study for free here and a summary here.
We identified 6 areas/aspects in the institutional framework of the electricity sector that need special attention when we want to support the development of smart grids.
Figure 1 gives an overview about these six areas.
For each of these six areas we defined recommendations on how to shape the institutional environment to allow the application of smart grids. While these recommendations were specifically targeted at China, they can be applied to other markets as well, at least on a general level.
The market structure, together with the market design, is an important part of the institutional environment of smart grids. Figure 2 gives an overview about the status quo of the market design in the electricity sector in Germany.
The focus of this blog
The ICT layer (dark grey) in figure 2 represents the processes and applications that are summarized under the headline of digitalization in the electricity sector. Here is where this blog focuses on: The institutional implications of the digitalization of the electricity sector.
Data Management in Smart Grids
More specifically, we will discuss topics evolving around data exchange in smart girds, especially from smart metering. The key task is to define a framework that secures the non-discriminatory and neutral facilitation of data exchange between all relevant and eligible parties. Data exchange is at the heart of smart grids and gains relevance with an increasing digitalization of the energy sector. Especially if we want to exploit the potential for innovation from startups as well as other third parties from different sectors, we need to get data exchange right. Therefore, this topic will be of prime interest here on enerquire.
Data can be retrieved from smart meters, smart network infrastructure and markets. Today, most data management models discuss how we can handle data from smart metering and/or from the grid infrastructure. While the discussion about smart meter data concentrates mainly on accessibility and privacy of the consumers’ data, the discussions about network data focus on the data exchange between the transmission and distribution grid operators. The exchange of market data is a big one as well, which currently has a strong focus on the granularity of data: do we need regional price signals or even regional markets for flexibility?
Digitalization & Startups
Data management is just one (very important) aspect of the digitalization of the energy sector. Within the next weeks it will be here that we pick up several topics relevant for the digitalization process in the electricity sector. For example, we will discuss how the German government and industry try to start the digitalization process, based on new innovation processes as well as a smart meter rollout. Furthermore, we will discuss the potential application of the blockchain in the electricity sector and the institutional implications of this.
In the context of digitalization we will analyse the current institutional environment for energy (clean tech) startups in Germany, discussing to which extent we can expect Germany to become a market for energy and clean tech startups.
Regulation of smart grids
Besides the institutional environment of data exchange in smart grids and digitalization, this blog will focus on the regulation of network operators as well. More specifically, we will take up issues evolving around the challenge to provide incentives to the grid operators to deploy smart grid technologies in an efficient way. Furthermore, we will consider that the regulation schemes of the network operators have significant effects on the application of regional products for flexibility. At least for markets like Germany, where RES already today results in network congestion, the network operator is one of the key customers for flexibility providers. So we will ask: How do we secure that network operators make use of the flexibility provided by the market to reduce the costs of RES integration? Under which circumstances do we want the DSO to invest for example in battery storage? And: how do we avoid market failure in such situations?
The following topics will be covered within the next weeks:
- Overview of the digitalization process in the German energy sector
- The changing environment for energy startups in the US, Europe and Germany
- The institutional implications of the blockchain technology for the energy sector
- How Multi-use applications of battery storages will drive the battery market
What are the key challenges for smart grids from your perspective? Which topics would you like us to elaborate here on enerquire?