Europe's energy future: Looking towards the digital TSO

IT and digitalisation will underpin the future TSO business, says new ENTSO-E Secretary General Laurent Schmitt in an interview with Engerati.

Europe’s power system arguably is undergoing the most far-reaching transformation of any in the world.

Like others the system is being adapted and decarbonised by integrating a growing share of distributed renewables and the emergence of prosumers.

But in addition, the previously independent and disparate markets of the member states are being more closely integrated into what ultimately is intended as a single market through interconnections and common rules and regulations.

For those involved in this traditionally slow-moving sector, it is an exciting time pioneering cutting-edge technologies and at the forefront of developments such as smart cities and the Internet of Things.

At the same time it is bringing challenges, requiring adaptation not only of the power system architecture but also of the stakeholder organisations, especially the transmission system operators (TSOs) and distribution system operators (DSOs).

It is into this environment that former GE/Alstom executive Laurent Schmitt has stepped as the new Secretary General of the European Network of Transmission System Operators for Electricity (ENTSO-E).

“At this mid-stage in my career I wanted to find a way to help the European industry transform further, particularly in the context of the recent Clean Energy Package,” Schmitt told Engerati in an exclusive interview.

“ENTSO-E plays a key role in shaping the energy transition and also is going into domains that are important such as IT and digital and this role gives me the opportunity to have some influence on these.”

He adds that he also sees it as a natural move from the technology environment, which is in something of a valley at present. “The technology has been demonstrated but the complexity of the transformation is high and the regulatory framework isn’t fully in place to support these developments.”

IT strategy for TSOs

ENTSO-E is the legally mandated body of Europe’s TSOs and since its foundation under the former incumbent Konstantin Staschus, has developed a significant body of work on the status and future of the region’s networks.

Indeed, Schmitt suggests that the organisation provides the most comprehensive view of Europe’s current and future energy system.

These – including the network development plans, seasonal outlook and mid-term adequacy forecast and the new capacity allocation and congestion management reviews – will continue to form the core of ENTSO-E’s activities.

But Schmitt also has plans for other activities, especially around IT and digitalisation, which he sees as key to the future operations of both ENTSO-E and the TSOs individually.

One of his first actions was to initiate the development of an IT strategy, which is expected to become available in the second half of the year.

“There are two key challenges currently facing TSOs – one is the implementation of the new network codes towards the Integrated European Market and the other is the need for deeper coordination and cooperation both among the TSOs but also with the DSOs,” Schmitt comments. “From the IT point of view, digital is central to these as well as to other TSO topics.”

He adds that it is not that the TSOs are not ‘smart’ already, but rather about “leveraging the next wave of digital to build a new layer of smartness on top. As ENTSO-E we want to enable the TSOs to align their IT systems to facilitate interoperability and to move towards the new digital grid business model.”

Schmitt anticipates that the network codes will be fully implemented by 2020 and providing a key milestone towards the implementation of the Clean Energy Package.

TSO-DSO cooperation

For Schmitt, Europe’s transmission and distribution systems amount ultimately to a single network, albeit managed by independently regulated bodies.

“We are seeing the emergence of national data hubs, such as in the Nordics, and the Common Grid Model, on which we are working hard to bring live in March 2018, will comprise a hub to pool, analyse and exchange shared data among all the relevant parties.

“All of these will require new IT applications and closer collaboration between TSOs and DSOs to ensure the required outputs.”

He adds on national hubs that as each country is different, these are unlikely to be able to align on a single architecture. “But we want alignment of the architectures so they work consistently with the IEM with common processes interacting across the entire market.

“The networks need to be optimised at the physical level in a coordinated way and so we envisage new mechanisms of coupling between TSOs and DSOs to achieve this.”

As an example of this closer collaboration to optimise the transmission and distribution systems, he cites the Nice Grid project in France in which he was closely involved at GE.

Security of supply

Day to day the business of the TSOs is focused primarily on sharing energy across countries and managing congestion constraints, without mitigating security of supply.

Questioned on the potential impact of Brexit on the system, Schmitt says he believes it will be minimal.

Britain is connected via interconnections to mainland Europe and rules are in place for managing those. However, while anticipating that the UK’s National Grid remains a key member of ENTSO-E, he says that issues such as trading arrangements will hinge on the political agreements that are reached, which are outside the scope of ENTSO-E.

While the new network codes are supporting the day to day activities, there are also disruptive technologies – or as Schmitt prefers, “opportunities” – emerging which will have an impact. Among these he mentions blockchain, although as yet there aren’t any blockchain pilots at the transmission level.

“There are a lot of new technologies emerging and if one doesn’t consider how they might impact the business model then they will be disruptive,” he comments. “We saw the need with Nice Grid to be able to incentivise prosumers to be zero CO2 electricity consumers and one can envisage a system of ‘gridcoins’ which can be linked to individual electrons and transacted by consumers. This would link electrons to both production and consumption and could totally change the perception of prosumers who want green electricity.”

TSO business model

Another ‘disruptive opportunity’ Schmitt sees is the Internet of Things which amounts to what he says is “a new way of developing software – developing an app and bringing it online as fast as possible and getting faster feedback from users.

“I believe this process and technology will go across the entire value chain and it will influence the way TSOs develop software. I wouldn’t be surprised in the future if TSOs become platform operators with an app store.”

However, this doesn’t mean that the traditional business will change and rather he believes the two will go in parallel.

“The network development plans demand major investments on the hardware side of the grid and with the software development in parallel it can be used to optimise the hardware development. For example, instead of dealing with congestion with new investment in capacity and wires, new apps can be brought in.

“The question comes back to how the TSO and DSO platforms can be connected and how the organisations can cooperate within the overall regulatory environment.”

But he assures the process will be gradual with no sudden changes. “It will be an evolution rather than a revolution.”

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