As the European Union develops its smart grid plans, some key strategic decisions must be made — especially regarding how to involve consumers as active players in the energy market.
Earlier this month the European Parliament held a lunch debate on saving energy in buildings and putting customers in control. Several industry players and consumer groups presented their views on demand response, demand management, and how to avoid running power plants unnecessarily (or building new ones)…
This event was hosted by Dr. Peter Liese, a member of parliament, and, in part, the Smart Energy Demand Coalition. Liese noted that each year the EU spends €400 billion to import fossil fuel to run power plants that operate only in response to demand spikes. Demand response could reduce Europe’s dependence on imported fuels while creating local jobs and generating local business opportunities.
Liese also pointed out that the current EU Energy Efficiency Draft Directive does not include demand response per se. He rightly foresees that a power generation mix that includes more weather-dependent renewable resources (wind and solar) requires demand response.
Therefore Liese asked that the EU Energy Directive amendments now being considered should consider demand response more specifically. Along these lines, he supports the modification of Article 12, which covers power transmission and distribution. As currently drafted, this part of the Energy Directive presents challenges for achieving the full potential of demand response.
Jessica Stromback of the Smart Energy Demand Coalition discussed how demand response can support energy efficiency. She pointed out that governments must be involved in this cross-sector issue.
Stromback echoed Liese by commenting that demand response could help transfer to local businesses and communities the considerable money that the EU has been spending to import fossil fuels.
For this reason, once wholesale capacity or reserve markets recognize demand response (shifting, consumption reduction, or peak shedding), savings opportunities will arise for Europe’s businesses and consumers. Demand response will enable them to better utilize renewable resources, especially wind — thus decreasing dependence on fossil fuels.
Monica Stajnarova of BEUC (an EU-wide consumer organization) mentioned that demand response should begin with a smart metering system that gives consumers energy-saving tools such as in-home displays or automation.
Manuel Sanchez Jiminez of DG Energy, who heads the European Commission’s Smart Grids Task Force noted that demand response offers more benefits besides energy efficiency. He said demand response also will help complete the liberalization of the EU energy market by enhancing competition.
Jiminez also noted the need for a smart grid market model that involves various stakeholders (suppliers/retailers, energy services companies, distribution network operators, and consumers).
Robert Denda, Smart Metering Project Coordinator for the Spanish utility Endesa, noted that regulations should ensure that current investments in European smart meter rollouts are grandfathered into the regulations so that they do not become stranded assets.
From my perspective, I think the EU smart grid model should identify both roles and responsibilities for the various stakeholders. In the new smart grid model, consumers should understand their energy — not only how they consume and sometimes also produce it, but also where their grid-connected power comes from, and its real cost.
A liberalized and competitive energy market that includes smart meters, data, time-of-use rates, demand response, and automation will enable consumers to understand the real cost of the electricity they consume, and to easily alter how they use energy through an array of available choices.