Speech at InnoGrid2020+ conference (Check Against Delivery)
Thank you Nick for this introduction. And thanks to both you and Joao (Torres) for inviting me to this major event. I would like to use this opportunity to discuss the "smart transition" – some would even say "revolution" – that is unfolding before our very eyes.
Ladies and gentlemen, our children are very much part of a 'smart' generation - the generation for which smart phones and smart appliances are taken for granted. Smart technologies are now surrounding us. The ICT revolution, of citizens and consumer empowerment, entails a fundamental transformation of the way we live our lives and this also has a dramatic impact on how we conceive our energy consumption. Europe is undergoing a profound energy transition. Transition to a low carbon economy with renewables at its forefront. Transition towards a more decentralised system which will be a game changer when it comes to the traditional roles of consumers and energy providers. In fact, even this distinction is becoming obsolete as we are now talking about 'prosumers'. This transition is what the Energy Union is all about. It intimately links research and innovation, information and communication, transport and energy systems.
Today's event touches one of the core elements of the Energy Union. In fact, when I presented the Energy Union Strategy to the press on 25 February – I had exactly this image in mind: Europe's brightest energy experts from all sectors, creating synergies to bring our energy infrastructure to its next smart phase. As discussed with my colleague Commissioner Arias Cañete who intervened yesterday, the quality of participation in this event is very impressive: it brings together the "real" key players - over 350 participants from distribution and transmission system operators, European and national institutions, industry, research institutes, technology developers, NGOs and policy-makers. Addressing the role of innovation and R&D in preparing Europe’s energy infrastructure for the future – should be done exactly in this kind of inclusive forums. I read it in your press release yesterday and I completely agree: "Smart grids are a prerequisite to achieving a real Energy Union".
As I have already alluded to, what shale gas did to the US economy, smart grids can and should do in Europe. Thus I would like to thank EDSO and ENTSO-E, not only for today but for your daily work; for your pivotal role in making this sustainable transition happen. You bring smart grids from vision to reality through research, development and demonstration (RD&D), and most importantly: investing in the interconnection of Europe's electricity grids, storage and smart meters.
Ladies and gentlemen,
In a rapidly changing energy landscape, electricity grids will play a key role. At transmission and distribution levels, new 'smart' technologies need to be incorporated so that the grid can respond to the new challenges, introduce flexibility particularly via demand response, and incorporate a growing share of renewables, some of which are variable. An example of how this can be done is the FP7 project "e-Highway2050". It has 28 partners coordinated by RTE France that represents transmission system operators and ENTSO-e, companies, universities, research institutions, energy associations and an NGO. The project develops a methodology to support the planning of the Pan-European Transmission Network, by 2050, to ensure the reliable delivery of renewable electricity and pan-European market integration in line with the EU climate and energy framework.
It will deliver soon and will rely strongly on the application of cutting-edge technologies. This is an example of the fresh thinking and collaboration we need to smarten our grids. But we need to look at the wider picture and apply this fresh thinking across the board, to this smart transformation. We need to level up our ambitions, accelerating the ongoing deployment of smart metering systems. Speed is the name of the new game where all market players react in real time, with dynamic pricing, trading, and consumption. As I have discussed with some of you, there is a strong case for predictable and a stable regulatory environment which allows you to plan and invest for the years to come. You also need consistency across Member States because you cannot work with 28 different sets of rules. Finally, you need smart investments and funding.
What is needed to achieve this?
First, a new market design. Energy markets and grids must be fit (and flexible enough) to integrate renewables. This market design will need to be both cross border and builds across energy technologies. For instance, building on synergies between district heating, gas and electricity networks. We also need electricity grids to be fitter for the electrification of our transport system. Commissioner Arias Cañete has already presented to you the ongoing work on the new electricity market design so I will not dwell on it.
Second, interoperability of solutions will be critical. Smart metering systems need to be fully interoperable – we cannot afford to build different system in every country. The same applies for infrastructures upgrades. We must develop the standards and protocols that help realise the full benefits of home automation.
Third, we must also look at the standards concerning security. Because they must be open to allow the management of consumption, smart metering and smart grids will generate massive amounts of data. They thus raise important questions on the roles of incumbent, access rights, data privacy and cyber security. Last year the Commission issued a Recommendation on data protection – we will look at how this could be improved. We will also work on ensuring cyber security in the electricity, gas and oil sectors as a whole.
Fourth, national regulatory frameworks should incentivise investment in smart grids and innovative solutions. The Commission will work with ACER, the national regulators, TSOs and DSOs to push this forward.
Fifth, regional cooperation: the Energy Union will enhance regional co-operation between Member States for example to deliver cost reductions to the offshore energy systems for the Northern and Baltic Seas. Integrated offshore electricity grid development in Northern Seas is also an explicit priority corridor of the TEN-E regulation and several projects are already being implemented.
A key element to achieve these cost reductions will be robust long term planning framework for both generation and grids, which will enable the actors to do necessary investment both in research, demonstration and final deployment.
So last but not least, a great focus on research and innovation.
When it comes to R&I, funds for energy research have almost doubled under the new Horizon 2020 programme compared to the previous Framework Programme (FP7). This year the Commission will update the strategy underpinning our energy research and innovation efforts. This Integrated Strategic Energy Technologies Plan - (SET PLAN) will focus on a limited number of priorities, and on making sure that all players work smoothly together seamlessly to achieve them. All of this is closely linked to the next ingredient of our recipe: investment. "Greening" our whole energy system will offer great opportunities, but it will also require a huge effort in terms of investments. For instance, it is estimated that by 2020 about €200bn investments are needed to upgrade and expand European energy transmission networks, of which €150b will be spent on electricity grids. Many of the projects will benefit from advanced and highly innovative solutions ensuring the uptake of technologies, mostly developed by European companies.
We must therefore put in place the right instruments and make sure that they complement each other well. Importantly, we need to leverage private investments through public support. That's what we are doing through:
- Horizon 2020: 5.9 billion are allocated for the energy challenge, supporting the development of innovative technologies and their market uptake, as well as new solutions creating synergies across energy landscape and adequate business models for these new holistic solutions.
- The EU Investment Plan launched last November. Over the next three years, this plan will unlock public and private investments worth at least 315 billion euros. The focus will be on energy infrastructure but also renewables and energy efficiency.
- Structural funds: with 23 billion dedicated for energy projects, ESIF will support the transformation of the EU energy system and paving the way towards an internal energy market.
- And CEF has 5.85 billion allocated to energy infrastructure projects
As for the Energy Union strategy, this field of work will benefit greatly from the new organisation of the Commission. As VP for Energy Union, I will work closely not only with Commissioner Arias Cañete to deliver on the new energy system, but also with Vice President Ansip, Commissioners Oettinger on the digital dimension, Bulc on transport and Vestager on competition issues. But as we saw, we also need to link innovative solutions and citizens together in this smart transition. So I am also involving Commissioners Bienkowska, Moedas and Jourova. The development of new innovative solutions are needed on the supply, network and consumer sides. And more importantly, I will continue working with the main actors in the field, stepping up our cooperation on the smartening of the grids.
I will do this both at European and national level. At EU level I look forward to continuing to work with you as we develop detailed proposals to take these ideas forward. At national and even regional level, I will conduct High Level Energy Union Dialogue in order to analyse what the Energy Union means for each Member State and address specific challenges and opportunities. By the end of the year, the Commission will publish the "State of the Energy Union" Report where we will provide the broad picture of where we stand. Next year we will start putting concrete legislation proposals on the table. So, the ball is rolling and you are key players in this innovative game. I am confident that we also can work together to convince EU national governments and citizens of the benefits they can reap from this smart transition.
Thank you for your attention.