The Smart Grids are going to change the Energy market dramatically, in ways that are not totally foreseen today.
The introduction of Digital Technologies in the Energy sector is first and foremost a technological change. It is understood that it is going to increase opportunities for new entrants in a market in which the role of the regulator is going to become increasingly complex.
However, Digital does not only mean technological. It is a world unto itself with its own rules, its models, its players and its culture.
And Energy is going to enter in this world.
What we see today is just the beginning of the adventure.
Our expertise covers the different major issues of the value chain :
1- Smart Grids: a constraint to integrate renewable energy
Renewable energies are the main drivers fostering the development of Smart Grids. They are critical:
- for local networks in isolated conditions (e.g. Islands),
- for countries that aim to have larger portions of their energy production derived from solar, windpower and other renewable sources.
Because all countries have to face problems of energy balancing (due to renewable energies or the impact of disruptive demands as is the case in big cities with air conditioning devices), energy suppliers have to improve the tuning of their networks at local, regional and global levels. In addition, the Energy grid is by itself a vast storage mechanism that could be optimized to avoid external purchases.
The Smart Grid is at the core of theses complex mechanisms.
It is based on IT and Network layers of communication which at the end, should operate like a total semaphore network (in reference to communication network management standards).
2- Smart Meters : the Magic Box to provide services to customers
On the customer side, Smart Meters appear to be one of the most strategic devices that the customer could have at home in the future.
Today, including the systems in deployment, Smart meters support many new services which are essentially controlled by the energy supplier. That raises some interesting questions among regulators about “Who controls what?” depending of the available interfaces. And behind “Who controls what?”, that could open the door to new business models.
The case of Interruptible Load Management” (ILM) operated by Independent System Operators is one of these new market opportunities which requires a sharp creativity in business models.
At the same time, different companies are preparing the new generation of Smart Meter. And the debates about strategies on these new smart meters are reminiscent of the ones we used to know on other Digital boxes at home. Some of these debates related to the openness of the box and its interfaces. With the new 4G generation of wireless communication, some players are ready to propose Smart Meters that will make it possible to exchange 10 Mo for less then 10c a month, including all communications layers. In these conditions, the Smart Meters market could be dramatically changed even considering their ad-hoc specifications for energy services.
The local authorities will have a major role to play in the future of Smart Grids.
First they have a sharp political awareness of these issues regarding the environmental concerns of their citizens.
Second, the introduction of Smart Meters is often considering to be a local issue. In many countries, the local authorities have a close relationship with energy suppliers and sometimes own the energy companies. This means to say that globally local authorities are going to be more involved in Smart Grids matters,
Third, local authorities are progressively interested in participating in programs that foster the use of Renewable Energy. However, in a traditional grid, the energy locally produced is generally either used by the producer or either sent to the Grid. Not the local one but the global one without any exclusive benefit for the local authority.
The Smart Grid makes it possible to aggregate local energy because it can measure everything at any levels and it can implement “intelligent” agreements between parties.
4- Smart Grids Standards: The switch to Digital Standards
By including Digital technologies, the Energy sector could have to face new methods to define standards.
When Standards in ICT infrastructures are mainly driven by international standards organizations bodies (like ETSI, IEEE), they mainly result of de facto position in upper layer.
European Standardization Organizations (ESOs) ETSI, CEN, CENELEC have been mandated by the European Commission (M/490) relate to Smart Grids. However, the Standardization Policy is going to be reviewed, precisely because the European Commission has proposed a new analysis of the Standards landscape.
At present the IEC has the lead in the standardization of energy.
However, countries or Europe will have their word to say in new technologies where no standards exist. That is the case in the field of Electric Vehicles in which Europe is competing with the US, China and Japan even if industrial partnerships need to be considered in that complex landscape. It is a sector where France and Germany could have a leadership if they can meet technical agreements.
In the future, the paradigm could change with the increasing role of Digital services and the generalization of global API as it is in the ICT sector.
We think that the challenge is there and we have to bet that Europe is going to be prepared in view of this strategic perspective.
A real challenge for ETSI / CEN / CENELEC. They have issued strategic recommendations in March 2001. Not sure that this response is at the level of the challenge. Europe would like the three ESOs to cooperate and anybody know that is a challenge in itself. In most cases they don’t address the same segment and ETSI is non governmental. In these conditions, it is up to each of them to decide the place they want to take in that market and particularly ETSI that gathers a lot of private ICT worldwide players.
5- Privacy and data access
Everyone understands that privacy is a major issue that raises questions about energy suppliers’ strategic plans. This concern has been raised by many governments or independent authorities like the CNIL in France . The California Public Utilities Commission (CPUC) has issued a specific new policy to protect privacy and security of customers.
Beyond these critical points stands the question of :
- data ownership: there is huge gap. Either you consider that the data belongs to services providers or to the customer himself. We could imagine at the end, that there will no longer have difference between data property policy either they are managed by a smart meter, a telecom box or a TV set-top box. That means that the customers would have the control of their data. In this way they could manag them by using any appropriate value added service depending of their won choice.
- control of the openness of the interfaces technically available within the smart meters. If the suppliers are not driven to open their interfaces, we do think that should become a particular field of interest for competitors and by consequences for regulators.
Another issue that has to be taken into account is “Open Data”. many central and loval governments have taken decision if favor of Open Data. If private data are not at all in the scope, aggregated data are going to interest local authorities to qualify the energy needs and trends for the city, a borrough ….
All these points open new problematics for Smart Grids
