To meet our commitments in the context of the UN Paris Agreement on Climate Change, the EU needs to rethink the way it produces and consumes energy.

Published 2 August 2017
Updated 2 August 2017

Roberto Viola Dominique Ristori

Authors: Roberto Viola, Director-General, DG Communications Networks, Content and Technologies and Dominique Ristori, Director-General, DG Energy

The transition to a smart, secure and sustainable energy system is no longer a choice for Europe; it is a responsibility towards all citizens, our future generations and the planet. At the same time, this transition represents a real economic opportunity as it will bring new investments, jobs and growth and will empower consumers to participate actively in the market and benefit from new technologies.

This transition requires first and foremost bridging energy and digital economy. The electricity system is becoming more decentralised and more decarbonised, and we need it to become more digitalised to keep our electricity supply competitive and affordable, and maintain our high standards of security of supply.

Synergies should therefore be developed between the Energy Union and the Digital Single Market agenda, as well as synergies between the energy and ICT sectors in order to stimulate joint investments and coherence in regulatory frameworks. Energy and digital will come together most closely if we enable European companies to deliver energy intelligent products and services across Europe and if the energy sector actively contributes to horizontal Digital Single Market policies.

The single energy market and the digital single market must go hand-in-hand, as in reality they feed each other. Digital technologies already play an important role in the energy sector. This holds particularly true for smart grids and smart metering systems, smart home appliances, smart charging solutions for electric vehicles and smart cities. In all these areas, digital technologies create various opportunities. They can help the consumer to participate actively in the energy market and use energy more efficiently. They can also foster a better use of energy from renewable sources. On the other side, without electricity there is no access to internet.

Innovation, data and smart grids

Smart grids are a clear example of digital meeting energy, as they are about information exchange and making necessary data available to interested parties. Smart grids, as the interface between the energy, IT and telecom sectors, are one of the enablers for realising the Energy Union and the Digital Single Market – both in terms of infrastructure and market.

They are part of the solution for managing our grids in times of increasing shares of renewables, decentralised generation and new loads, such as electric vehicles, but also for creating new value streams (i.e. services and products). Smart Grids are also part of an innovative and competitive Energy Union. They provide an important opportunity for European manufacturers to develop attractive smart solutions and boost their global competitiveness.

Moreover, smart technologies, including smart metering systems, will enable consumers to reap benefits from the energy market by taking control of their energy consumption and providing their flexibility to the system. This is part of the "new deal" for consumers we advocate in the Energy Union.

And we already see many promising examples in the EU. For instance, by connecting to all electric vehicles that are not in use during the day, we could take advantage of unemployed battery storage to integrate more renewables. One car manufacturer already cooperates with a heating system producer to optimise the use of electricity between the battery of an electric car and the heating systems to reduce consumption from the grid at peak hours. All these solutions require digital solutions to steer the optimisation.

A key step to allow different appliances to communicate and make decisions on their energy consumption is to increase their interoperability. Europe made progress in this direction with standards like SAREF which support communication between appliances that "speak the same language" to communicate on their energy footprint. SAREF became a standard of European Telecommunications Standardisation Institute (ETSI) and the Global initiative for Internet of Things standardisation (OneM2M) in 2015. This was a first important step. We are now moving forward to spread the use of these standards and turn them into new services for consumers so that they can fully benefit from the opportunities that smart appliances, smart buildings and smart grids enable.

This will require close cooperation between different industry sectors like digital, energy, telecoms, and home automation. We intend to provide support for this kind of collaboration under Horizon 2020 in 2018 through large-scale pilots in the Focus Area 'Internet of Things' (IoT) that targets smart home architectures and standards. Such pilots will allow companies to work together on connected objects and test new business models across different sectors. Energy and utility companies will benefit from the development of IoT: they will become more agile, flexible and efficient.

Intelligent objects supported by artificial intelligence, and micro-transactions enabled by blockchain technology will fundamentally change the energy market: They will unlock the value in energy efficiency, demand response and small-scale generation at the consumer's level. However, to exploit this potential, we need to set up markets that give this flexibility a value. This is the direction foreseen in the Clean Energy for All Europeans Package, and will be supported by projects to test how this will work in practice. Data and communication are key to put this in practice, and Energy and ICT companies therefore need to cooperate with each other to share and exploit the value of energy data.

Sharing data beyond sectors and national borders within 'data value chains' that enable the development of innovative energy services in a smart home will be essential for achieving a functioning Energy Union, as well as an effective Digital Single Market. Furthermore, it can be combined with other services, for example health or mobility.

In order to get there, energy companies need to move to a culture of data sharing but this also requires a well-integrated regulatory framework that is coordinated across sectors and Member States. This is what we are aiming for with our initiative on the EU data economy, and through our Directorates-General joint support for research and innovation for the use and exchange of 'big data' in the energy sector in the next Horizon 2020 work programme (2018-2020). Equally important is the work of the Smart Grids Task Force, which is currently focussing on the alignment of energy data formats and on developing network codes for demand-response.

Making smart grids more secure

Another important aspect is cybersecurity: a key issue in the energy sector in particular in our transition to a decarbonised, decentralised and digitalised system. We are currently reviewing the EU Cyber Security strategy that will include a proposal for the creation of a voluntary, flexible European Certification and Labelling Framework for ICT products and services (including for IoT products and services that need to integrate cybersecurity in their design).

This comes in addition to the ongoing work on the implementation of the Directive on security of network and information systems (NIS Directive). In this context, DG CNECT and DG ENER are developing a comprehensive strategy on how to reinforce the operation of the NIS directive in the energy sector, and are jointly supporting R&D.

We have already been working towards the digitalisation of the energy sector for a number of years - not only by proposing legislation, but also by spearheading a number of EU-wide initiatives to help overcome barriers in the take-up of smart energy solutions.

The EU strategies on Digitising European Industry and the Strategic Energy Technology Plan of the Energy Union aim to help European industry, and we support research and innovation financially via Horizon 2020. We also support collaboration via the Connecting Europe Facility, as well as the European Fund for Strategic Investments that can support smart and sustainable infrastructure, buildings and cities, and the co-deployment of energy and telecommunication infrastructures.

Because it is clear we need to invest in hardware, in a smart way: For digital innovation to happen we need a reliable and intelligent energy and communication infrastructure that covers the entire EU. This means investing in the roll-out of future mobile networks like 5G and of smart meters but also in the installation of charging stations for electric cars.

The opportunity is there but more work needs to be done! And it can only be done together: by the Commission proposing the framework and by energy companies and by digital companies who have a lot of crucial competences to share and contribute in this domain.

We need your help to progress on further developments by sharing, commenting on and discussing what it takes to change our energy markets for a better future. The Energy Union and the Digital Single Market are for the benefit of our society, and your actions will help shape it!