EURELECTRIC Annual Convention, E-lectricity: the power sector goes digital in June 2016

EURELECTRIC Annual Convention and Conference named E-lectricity: the Power Sector goes Digital, held on the 6-7 June in the Lithuanian capital, Vilnius, addressed the challenges, complexities and implications of digitisation and technological innovation on all aspects of the industry value chain.

2016-06-28 13:00:25

High profile speakers, including government representatives, regulators and company officials explored the implications of this revolutionary trend and looked at how the business is fundamentally evolving to keep up with a modern, digital world.

Hosted by NLEA, the Lithuanian energy association, the EURELECTRIC conference officially kicked off with opening speeches by Antonio Mexia, EURELECTRIC President and CEO of EDP and Dalius Misiunas, President of NLEA and CEO of Lietuvos Energija. Algirdas Butkevicius, Prime Minister of the Republic of Lithuania welcomed delegates to his country and provided a detailed overview of strategic energy developments in Lithuania.

Session I of the Conference focused on the EU decarbonisation agenda in an increasingly interconnected and digital world. Michael Liebreich, Chairman of the Advisory Board, Bloomberg New Energy Finance blamed the current energy policy for stalled renewables investment in Europe at a time when their costs have hit a low. "The cheap energy that is out there is not being reflected in the final customer's electricity bill," he stated, adding that "there is a lot of pain all over the system." Referring to the "energy retail battlefield"-new start-ups, new services, electricity-telco bundles, etc - he underlined the importance of getting as close as possible to the customer as it's the customer who ultimately decides on the value of the product. Carlos Haertel, CEO of General Electric Germany and Head of GE's Global Research Center also stressed this point stating that "Digitisation is not about selling customers another box or a software application, it is about providing them with an outcome which has value for them." Mr Haertel further elaborated on the potential that technology and innovation have to help decarbonisation: according to GE's estimate, this potential could reach above 20o billion Euro by 2020 for the industrial internet, of which €90bn would concern the utility sector alone.

The panel debate, moderated by Hans ten Berge, EURELECTRIC Secretary General, focused on energy policy and climate challenges against the background of the COP21 Paris Agreement. Jean-Bernard Levy, EURELECTRIC Vice-President and CEO of EDF, expressed concern that the EU ETS is still not providing, after more than ten years, a relevant price signal for the decarbonisation of the power sector in Europe. "We cannot wait another six to eight years before it might work," he said. Pekka Lundmark, CEO of Fortum, regretted the proliferation of national measures which considerably undermine the integrity of the EU ETS while Marta Gajecka, Vice-President at PGE, called for adequate recognition of the different starting points of countries.

Session II focused on how the push for increased sustainability offers opportunities for utilities to redefine relations with customers, with interesting debates on a single digital market for utilities; customers' shifting preferences; and the implications of technology developments. Wytse Kaastra, Managing Director- Utilities Netherlands & Accenture Energy Consumer Services EALA, focused on the new benchmark for customer expectations set by companies like Uber, Airbnb, Alibaba or Facebook. Like them, energy companies need to start thinking in terms of end customers, he stressed. New products and services aimed at facilitating customers' everyday lives were then showcased in live demos by utility companies Lyse, Energía Endesa, Verbund Solutions and E.ON. Dirk Vansintjan, President of REScoop.eu then explained how citizens can invest in energy companies and participate in the energy transition. He argued that as a retail customer of a utility, people pay the price of the energy transition in their bill and cooperatives can represent an alternative.

Erwin van Laethem, CEO of Positron, and moderator of Session II, introduced a number of video interviews of household customers showing different customer profiles and the limited awareness of what energy companies can offer as well as giving an understanding of what the "simple" customer wants. Carolina Gouveia, Legal Adviser of Portuguese consumer association DECO, emphasised the need to include consumers in the digital revolution, stating that with deployment of new technologies there could be risk of consumer exclusion. Ad van Wijk, Professor of Future Energy Systems at Delft University of Technology, warned that customers may not stay with traditional suppliers if they do not provide them with the kind of services they require.

On the second conference day, Session III, on innovative, digital and smarter grids, kicked off with two keynote speeches: Markus Merkel, Senior Advisor to the EWE Board of Management, explained how to best exploit system flexibility provided by distributed demand and supply in a minigrid context. "To ensure the smart transition, we need to enhance the DSO toolbox", he said, giving Germany as an example. Andy Burgess, Ofgem UK and CEER DSO Working Group Chair, talked about how to incentivise innovation from a regulator's perspective, stressing that innovation is not just about technology but also about finding new ways of doing things and bringing benefits to customers. He added that in the area of smart grids, TSOs and DSOs need to cooperate and exchange information regarding the challenges they face, including improved coordinated planning.

A lively debate chaired by Pat O'Doherty, CEO of ESB rounded off the session. Panellists concluded that DSOs should facilitate a market where the system should be accessible in real time. This would additionally help with the increasing storage and smartness of grids, which were two recurrent topics in the debate.

Session IV on smarter power markets in the digital age commenced with a keynote from Hando Sutter, CEO of Eesti Energia, who stated the benefits of digital electricity markets and emphasised the importance of smart metering for a more efficient use of distribution networks and active customer involvement. "As long as the customer agrees, the collected data should be available to anyone willing to provide innovative offers", he stressed. Fereidoon P. Sioshansi, President of Menlo Energy Economics, USA spoke on electricity trading "peer-to-peer". He confirmed the development of embedded and decentralised generation, but also storage and energy management and control, as a game changer for power markets. He also referred to interesting business strategies, such as solar leasing and peer-to-peer trading, that are currently developing in the US.

Session IV panel debate moderator, Juan José Alba Rios, Chair of EURELECTRIC Markets Committee and Vice-President, Regulatory Affairs Endesa, focused the panel discussions on European power markets in the digital age: Will digitisation allow for different ways of arranging current trading? Will wholesale trading be replaced with peer-to-peer transactions? How active will small customers be? What about aggregators and the role of suppliers? More importantly, will the wholesale price continue to be a meaningful economic signal for dispatching or for investments in a renewables-focused world?

Helen Steiniger, dealing with Communications and Research at Next Kraftwerke, explained that her company – winner of the 2015 EURELECTRIC Industry Award and operator of the biggest virtual power plant in Europe-is using the flexibility potential offered by producers and consumers alike to create "new" balancing market opportunities for both. She also highlighted the need to "increase incentives to switch to smart grids as well as the need for wholesale prices to adequately reflect scarcity situations on the grid".

Ireneusz Łazor, Member of the Europex Board and President of the Management Board of TGE, highlighted that wholesale market trading and current power exchanges platforms will remain necessary in the future. However, with the development of embedded and decentralised generation, he recognised that "local power exchanges will most probably develop in regions with a high share of embedded generation to enable peer-to-peer trading between prosumers."

The afternoon continued with a CEO panel debate moderated by EURELECTRIC Vice President Alistair Phillips-Davies. He asked panellists how a European governance framework could be developed despite the existence of different national systems and ambitions. There was general agreement that a well-functioning single market needs infrastructure, market platforms and common rules. In case these obstacles are not surpassed, it will be difficult to discuss features of a common market. Regarding the sector's evolution, it was stressed that companies need flexibility to interact with customers and that less regulation is needed to be flexible and to develop disruptive innovations.

The day also included a presentation by Austrian based start-up, Eologix, winner of the 2016 EURELECTRIC Industry and Innovation Award. The award was accepted by Dr. Thomas Schlegl, who explained that between 70,000 and 100,000 wind turbines worldwide are affected by icy conditions and that he was proud to present an innovative product design that allows for retrofitting existing wind turbines. The conference also featured the traditional Student Award, which went to Mindaugas Česnavičius, student at the Kaunas University of Technology (Lithuania) for the best video creation on the digitisation theme.

This year, five Romanian students participated in the Student Award competition. Shortlisted among the final candidates was Razvan Mihai Pricope, student from the University of Iasi, who came second with an animated video on the digitisation theme.

The conference was closed by EURELECTRIC President and CEO of EDP, Antonio Mexia. He referred to the fast speed of change in the electricity sector and warned that innovation and technology will always take us by surprise. We must therefore be revolutionary if we are to survive, he stated. With final thanks to conference host, NLEA, and sponsors Accenture (Gold sponsor), Pöyry (Silver sponsor) and Ormazabal (Bronze sponsor), delegates were invited to next year′s Industry Convention in Estoril, Portugal on 19-20 June.