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What now? Policymakers mull options for greater energy system integration

Consumers will be at the centre of EU efforts to create a more integrated energy system, with local authorities playing an essential role to bring energy users closer to suppliers in a bid to maximise efficiency and cut greenhouse gas emissions

By: EBR - Posted: Monday, April 5, 2021

“We need to break the silos between separate flows of energy production and use,” said EU climate chief Frans Timmermans, saying the current energy system “is quickly becoming a relic of the past.”
“We need to break the silos between separate flows of energy production and use,” said EU climate chief Frans Timmermans, saying the current energy system “is quickly becoming a relic of the past.”

by Frederic Simon

Consumers will be at the centre of EU efforts to create a more integrated energy system, with local authorities playing an essential role to bring energy users closer to suppliers in a bid to maximise efficiency and cut greenhouse gas emissions, officials say.

Last year, the European Commission presented an “energy system integration strategy,” saying the current energy system built on several parallel, vertical energy value chains needs to be broken down.

Sector integration means linking the various energy carriers – electricity, heat, cold, gas, solid and liquid fuels – with each other and with end-use sectors, such as buildings, transport or industry, the EU executive says.

“We need to break the silos between separate flows of energy production and use,” said EU climate chief Frans Timmermans, saying the current energy system “is quickly becoming a relic of the past.”

The strategy, presented in July, was broadly well received by industry players, consumer groups and environmental organisations.

“One of the big questions is ‘then what’?, said Morten Petersen, a Danish lawmaker who is vice-chair of the European Parliament’s committee on industry, research and energy.

“I think we have to discuss among ourselves how we can find new ways of collaboration – between public and private entities, and all the various layers of government, be it at supranational, national or local level,” he told a EURACTIV event on Tuesday (30 March).

Consumers and local governments at the centre

The role of local governments in the energy transition was emphasised by all speakers at the event, which was supported by Danish technology firm Danfoss.

Paul Voss, from district heating lobby group Euroheat & Power, said he would like to see “a much bigger role for local authorities” in shaping the energy system. “Because those are the people who understand the resources and the needs on the ground,” especially when it comes to heating, which Voss said is “inherently a local issue”.

Lisa Fischer from climate think tank E3G agreed, saying more involvement was needed from consumers, citizens and local authorities in shaping the future energy system. In that regard, she said buildings should be seen as a central node in Europe’s revamped energy infrastructure, with consumers firmly put in the driving seat.

“We should be considering our building stock as a key infrastructure” that can make energy demand more flexible, thereby increasing energy security and “removing the need for thermal back up generation,” she said.

This consumer-centric approach to the energy transition is very much in line with recent policy reforms adopted at EU level. Just over two years ago, the European Union passed new electricity market rules that enshrined into law the unprecedented right of consumers to produce, sell and share their own electricity in newly defined “citizen energy communities”.

Today, the same decentralised approach is being applied to the current wave of policy proposals that are being put forward under the European Green Deal.

“Don’t forget that the energy system integration strategy is about integration of the demand side, first of all,” said Guido Bortoni, senior advisor at the Commission’s energy directorate.

“The real news here is that we’re integrating the demand,” Bortoni told participants at the EURACTIV event. “Legislation is the most important piece of the pie but it’s not sufficient. We have also to empower consumers, players and investors in this new culture of energy system integration.”

The electrification of transport is cited by the EU executive as a good example of the potential for integration. “At present, we know that electric vehicles connect the transport and power sectors, but also buildings, where the charging points are often located. Currently, there is only a very limited interface between these three sectors,” he added.

Jurgen Fischer, President of Danfoss Climate Solutions, agreed on the need to foster a culture of cooperation across energy supply and end-use sectors. But he said policymakers could also bring about change, both at EU and local level.

Taking his home town of Hamburg as an example, he said only heating systems with at least 20% renewables will be authorised for new installations as of July this year. “You can’t replace it with a gas heating system, you would at least have to have solar thermal applications or solar panels on the roof,” he said.

However, he said the new local rules have unintentionally created “a boom” in demand for gas heaters because there were no parallel incentives put in place to make renewable alternatives more affordable. “Everybody wants to replace their heating system with gas because it’s cheaper. And that actually shows you that people will only act on commercial pressure. So the sooner we embed that into an incentive, the faster we will change it,” he said.

As a technology company, Fischer said Danfoss looks at the energy system as a whole. “But to make a good case out of that, we need to talk to the producer, the network company, the investor, the planner, the contractor and the final user. And that is super complicated to create a compelling case,” he added.

Those links, he said, can be established with legislation in areas like building codes. It also requires educating people involved in the entire value chain, from public servants to contractors, installers and everybody involved in the industry, he added.

One example of successful energy system integration is to capture the waste heat that supermarkets produce for cooling food, which can be injected in district heat networks for use in nearby residential areas. Data centres are another source of waste heat that is currently all too often left untapped, he said.

Over time, Fischer said, new service models will emerge where energy companies become service providers, not just energy suppliers to end consumers. In such a model, “companies, investors, technology companies and utilities are merging into a service provider. Because only companies who understand the whole system can release the value of an integrated system.”

*first published in: www.euractiv.com

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