We owe it to ourselves, to the generations to come and to our planet to support the transition to a smart, secure and sustainable energy system. In order to implement the Paris Agreement and lead the global fight against the impact of climate change, the EU has committed to a drastic reduction in its greenhouse gas emissions, and this means that the energy sector will have to step up its efforts. Bringing together the digital and energy sectors could offer real benefits. Most observers believe that by the middle of this century, our energy systems will be well on the way to sustainability, driven by the ongoing switch from fossil fuels to renewables. By 2050, the share of electricity in the final energy demand is expected to be around 53 percent, and Europe will continue to lead the way towards this goal.
Fundamental progress has already been made in transforming Europe’s electricity production. The global expansion of renewable energy, led by the EU, has produced massive cost decreases in the last 10 years, in particular in solar and on- and off-shore wind. Today, more than half of Europe's electricity supply is free from greenhouse gas emissions. By 2050, more than 80 percent of electricity will come from renewable energy sources. Electrification will open up new horizons for European companies in the global clean energy market, which is already worth around €1.3 trillion. For the EU, where six of the world’s 25 largest renewable energy businesses are based (employing around 1.5 million people), this will be a unique business opportunity. It will also give an important role to so-called prosumers (people or organizations that both produce and consume energy) and to local commu-nities in encouraging the residential take-up of renewables.
Digital technology goes hand in hand with efficiency
In order to reach the ambitious targets for cutting emissions, we need greater energy efficiency as well, and this is one area where digital can play a clear role. As the number of prosumers entering the market continues to increase, digital technologies such as smart meters can help them better understand their energy consumption. Connecting meters to appliances via home energy management systems (the so-called Internet of Things) so that appliances can be activated when energy is cheaper, for example, is a key part of this approach, a "new deal" for consumers that the European Commission proposed in its package on Clean Energy for All Europeans. As the energy sector moves away from its traditional monolithic working methods based on fossil fuels towards a plethora of suppliers, prosumers and energy sources, digital technologies have a real role to play in helping to deal with this increasing complexity. We need a reliable smart grid infrastructure, as well as a data ecosystem governed by the principles of interoperability and openness. The single energy market and the digital single market must therefore go hand in hand.
Smart grids are a clear example of digital meeting energy. Smart grids are about information exchange and making necessary data available to interested parties. They are where the energy, ICT and telecom sectors come together, an embodiment of the meeting of the EU Energy Union and the Digital Single Market, both in terms of infrastructure and market.In these times when grids have to cope with an increasing share of renewable energy, decentralized generation and new loads, such as electric vehicles, making them smarter and more self-adaptive is a good solution. They are also an opportunity for European manufacturers to develop attractive smart grid solutions and boost their global competitiveness.There are already many promising examples in the EU. For instance, by connecting all electric vehicles to the grid, we could take advantage of unemployed battery storage. One car manufacturer already cooperates with a heating system producer to optimize the use of electricity between the battery of an electric car and heating systems to reduce consumption from the grid at peak hours.
All these solutions have to be digital to make them work. But if digital connections allow them to talk to each other, they also have to be able to understand each other’s language—in other words, they need to be interoperable in order to be fully efficient. Europe has also been leading the way in making sure that interoperability is possible by setting standards such as SAREF, which supports communication between appliances. Four years ago, SAREF became a standard of the European Telecommunications Standardization Institute (ETSI) and the Global initiative for Internet of Things standardization (OneM2M), clear evidence that where Europe leads, the rest of the world often follows. We are now extending this standard to other relevant domains, such as energy, smart cities, automotive, water, manufacturing, agriculture, etc. We are also working 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.
For digital technology to truly make a difference, it needs to be developed in cooperation with the many and varied sectors of industry where it has a role to play. With this in mind, the EU is supporting a number of large-scale pilot projects, funded with €400 million from the Horizon 2020 research budget, focused on the Internet of Things. The aim is to speed up the roll-out of digital technologies in a wide range of sectors, in turn developing true economies of scale. These large-scale pilots provide support tailored to a thriving ecosystem made up of developers’ communities across Europe, where APIs (Application Programming Interface) and platforms are open to SMEs (Small and Medium-sized Enterprises) and start-ups working on some of the key technologies in this field: connected cars, electric mobility, smart homes, smart and clean cities, interoperable grids. We should not underestimate the EU’s strength in the field. Many leading businesses, start-ups and SMEs are European, offering great products and services, meeting real consumer demands and expectations. The Commission is also closely involved in the development of this exciting new technology through, for example, the Alliance on Internet of Things Innovation, a forum for discussion and policy exchange on the IoT across different sectors.
As the energy sector evolves and diversifies, the many new players involved in generation, supply, distribution or consumption also bring another important source of ‘fuel’—their data. In today’s reality where everything is connected, data has become the most valuable resource of our economy. New European rules on the free-flow of non-personal data will enter into force in May 2019, helping to create a truly European data space without unjustified or disproportionate national rules restricting companies’ location choices for data storage and processing. As a result, Europe’s data economy could double its value to 4 percent of GDP in 2020 and create more than €1.9 billion additional revenue in the manufacturing sector.
The benefits of the data market for the energy sector
The energy sector, like many others, stands to gain from this expansion of the data market. But it will have to be prepared to work in new and different ways if it wants to benefit fully: in addition to sharing its own data, it must also be open, for example, to supporting the testing and application of innovative data-led services. Access to increased quantities of data is particularly important for artificial intelligence (AI), which is expected to be one of the key drivers of economic and productivity growth in the future. It is estimated that AI could contribute up to €13.3 trillion to the global economy by 2030—and the energy sector has great potential to embrace it. Concretely, machine learning could be used to forecast supply and demand in real time and optimize economic load dispatch: AI algorithms will able to recognize patterns of behavior on a weekday evening in 2025, when millions of electric vehicle drivers arrive home and put their vehicles on charge. By distinguishing between drivers who habitually use their cars overnight and those who leave vehicles charging until the following morning, the smart grid will ensure that the battery is sufficiently charged in time for the driver’s next journey, without exerting simultaneous load on the grid.
AI could also be used to help consumers choose their energy retailer based on their preferences—such as energy generation type, how much they are willing to pay and their consumption patterns—and then scanning the market for the most suitable offers.
Developing the potential of AI is a top priority for the Commission—its possible applications stretch far beyond the energy sector—and late last year we presented a Coordinated Plan on Artificial Intelligence alongside the EU Member States that sets out in concrete terms what we propose to do to reach the ambitious goals we have set ourselves in this area. The energy sector is one of the Commission’s priorities when it comes to AI research and deployment. Our policy support for AI will be backed up by financial support too. As well as ongoing support from the Horizon research budget, we have proposed a new funding program from 2021, the Digital Europe Program, which will focus specifically on digital technologies of strategic importance for Europe, including AI, supercomputing and cybersecurity. One of the key focuses for AI will be the rollout of large-scale testing and experimentation facilities for AI deployment in a number of strategic sectors, such as healthcare, autonomous and automated driving, as well as in energy. In total, €2.5 billion of the €9.2 billion proposed for the Digital Europe program will be for AI.
Perhaps the other most exciting future technology as far as the energy sector is concerned are blockchain and other distributed ledger technology applications. Blockchain has the potential to change the way consumers and the Internet of Things interact with the energy system, by providing a secure and trustworthy way to integrate actions by, for example, solar panels or an electric car battery that can inject energy into the grid. By reducing transaction time and costs, blockchain technology has the potential to empower prosumers, creating a customer-empowered energy system and contributing to the democratization of the energy system, enabling peer-to-peer trading and facilitating new models for energy market design.To support the work on blockchain, the European Commission in February 2018 launched the EU Blockchain Observatory and Forum, which aims to accelerate blockchain innovation and the development of the blockchain ecosystem within the EU, and so help cement Europe’s position as a global leader in this transformative new technology, of which the energy sector could be a key beneficiary.
Blockchain brings a superior level of trust and security to transactions and exchanges within the energy system, but we also have to ensure that all of our digital operations—and the data they carry—are safe as well. While a smarter European power grid brings clear advantages for the energy sector, it also presents new technical challenges, notably in terms of cybersecurity. Simply put, the more devices become digitally smart and connected to the energy and power system, the more they offer potential access points for cyberattacks on critical infrastructure.
The importance of maintaining cybersecurity
Because of the central role that energy infrastructure plays in our economy and society, it is paramount that we avoid any disruption and minimize the vulnerability of industrial control systems in the electrical, water, oil, gas and data parts of it. As cyber-threats know no borders, it is imperative that there is a permanent framework of operational cooperation and exchange of information when it comes to cybersecurity incidents. At EU level, such a framework is set by the Network and Information Systems Directive, adopted in July 2016, which is the cornerstone for strategic cooperation among Member States and for improving the resilience of critical sectors including energy and transport. Consistent implementation of the directive across different sectors and Member States is provided by the NIS Cooperation Group, which decided to establish a dedicated work stream on cybersecurity in the energy sector in 2018. The purpose of this dedicated work stream on energy is to provide support to Member States on identifying the particular characteristics of the energy sector when implementing the Directive.
In addition to the NIS Directive, the recently adopted Commission Package on Clean Energy for All Europeans includes provisions for the adoption of future technical rules for electricity such as a network code on cybersecurity. And last June the Cybersecurity Act, which envisages the creation of a European certification framework for the creation of tailored certification schemes, came into force. The development of certification schemes for critical or high-risk applications—including components of energy networks - is among the priority areas. Over the past five years, we have worked hard to create the regulatory and legislative framework necessary to making the Digital Single Market a reality. Now we need to take it to the next level, weaving digital technologies into every other industrial sector, including energy. The potential is great, for efficiencies, for improvements and for greater sustainability. The onus lies on us all now to make it happen.
The author: Roberto Viola
Roberto Viola is Director General of the DG Connect of the EU Commission since 2015. Previously he was Deputy Director General, President of the European Radio Spectrum Group (RSPG) and President of the European Regulatory Group (ERG). From 2004 to 2012 he was General Secretary of the AGCOM, the Italian regulatory authority for electronic communication, postal, audiovisual and media services.