Interview: Mats Nilsson: The Transition to a Smarter System

Mats Nilsson, Economist at Vattenfall (Sweden), discusses his view on the challenges experienced during the transition to smarter and more energy efficient systems. Mr Nilsson will also be presenting at Smart Utilities Scandinavia on 17-18 April in Stockholm.
Published: Wed 27 Mar 2013

What is your view on the development of the electricity market and what role does the smart grid play?

Intelligent grids have an important role in development of the internal electricity market, and as a tool for fulfillment of EU’s ambitious 20-20- 20 targets. The key issue is how to get the national TSOs to broaden their scope for better international cooperation, without which the market remains fragmented and interstate trades, too complex. For this to happen, we need to incentivize TSOs to better work with integrated planning and operations. 

Describe your view on capacity and new usage patternsCapacity in transmission and distribution needs to match the changes in demand and supply. These changes relate to size of consumption, but also to new patterns of energy production and usage. For example, more wind power in the system may require more capacity in certain areas and decentralized generation asks for more sophisticated load management. Consumer involvement will be a major marker of change and with greater access to hourly measurements and differentiated pricing they should change their behavior to better match price profiles. This will particularly present opportunities for large customers, but also many private households with smart meters could engage in various energy efficiency programs.

How essential are l arge scale infrastructure investments ?

From a socio-economic perspective, it is difficult to move towards a cost-efficient climate, problem-solving power system without substantial investments in infrastructure. The current plans to increase transmission capacity are large but the permitting processes are increasingly complex and slow moving as it concerns many entities, large geographical areas and political willpower. Transparent cost benefit analyses can bring more clarity to the debate and speed up investment and permitting processes. But at present we need less discussion on further plans and more building and realizing of the plans that are already presented, eg in the TYNDP 2012. Our findings show that a regional perspective, as well as environmental and political benefits, can lead to a more accurate valuation and faster provision of investments.

Johan Söderbom, a Vattenfall colleague , shares his p erspective based on Mats’s insights:

Based on the politics surrounding electricity market and the issues over investments and new patterns of production and usage, it seems that significant changes need to be made soon. There are two main options: either expand and reinforce the existing grid, or transform the system so that it can handle energy in a more efficient and consumer-inclusive way.Both options will probably be needed in the future but given the knowledge of what the future holds it is better to do things in a new way rather than the old way. It is popular to talk about tomorrow’s grids as being smarter than those of today, and to some extent they will be. But primarily they will lead to more flexibility in production and demand.

Johan Söderbom will be present ing new insights and findings from the Smart Grid Gotland project at the Smart Utilities Scandinavia on Thursday 18 April .

About Mats Nilsson

Mats Nilsson A. N. (b. 1965) obtained his Master of Science degree in Natural Resource Economics at the University of Alaska Fairbanks in 1994 and his PhD degree in Economics from Luleå University of Technology in 2000. He has worked with the Swedish Competition authority as well as the Swedish Electricity regulator. He is currently an Economist at Vattenfall AB, Strategy where he has worked since 2005. His main concern is demand and macroeconomic development. His topics of research include empirical electricity market research, and institutional and competition research within natural resource markets.