Tuesday, August 18, 2009

BPN 1364 Netherlands smart grids – at crucial crossroads

From the desk of Paul Budde

With the structural separation of the electricity industry now in place the Netherlands is facing the very critical issue of building smart grids.

The €18 billion fetched by those local and provincial governments who have sold off their generation plants sounds a lot, but the question is whether it will be enough to upgrade the distribution networks that remain under their responsibility.

Looking at the explosive growth in the demand for electricity, especially if we begin taking e-cars into account, it is easy to see why the new German and Swedish owners of the generators and other production facilities were so keen to buy those assets. At the same time the costs to facilitate this explosive growth throughout the distribution networks needs to be paid for by the various levels of government, and by the end-users through inevitable price increases.

As we have seen from the recent announcement of Enexis (former network operation of Essent) it makes sense to join forces with others in, for instance, building a national e-car battery-charging network. They have also indicated that first upgrading their network to a smart grid is a more efficient way to move forward. They say that one of the key reasons smart grids are needed is to facilitate the feed-in of renewable energy, in particular from the expected large input that will come from the tens of thousands of solar panels and windmills that will be installed by the end-users themselves.

This clearly shows that it is essential that the building of smart grids is carried out on the basis of a national plan. Without a proper national blueprint there will be an enormous waste of investments, planning, design and consultancy, as well as looming interoperability and standardisation problems. There is not yet any global or national smart grid standardisation, which makes cooperation even more essential. There are literally dozens of incompatible so-called smart meters, most of them without any of the proper interactivity facilities that are critical if people are to be able to take more control of their energy management.

The more that is charged for energy - and price increases are inevitable - the more need there will be to provide users with interactive communications tools that allow them to manage their network.

Building smart grids is a communications issue, not an electricity issue, and there is very little in-house telecoms expertise within the energy utilities. Traditionally these organisations have looked after their own comms - they have never seriously considered utilising existing telecoms infrastructure. The lack of a national vision could potentially make the utilities an easy target for the ICT industry which, attracted by the enormous amount of money that is now available within councils and provinces for energy investment, will be exploring the opportunities that are arising - but unfortunately more on a divide and conquer basis than on the basis of a well-coordinated national approach.

At the very same time, parallel with smart grids, telcos are building new fast broadband networks. It would be a smart idea to start looking at synergies between those infrastructure projects. Perhaps, rather than buying hardware and overbuilding other comms networks, utilities should also consider using the services of existing telecoms providers.

A trans-sector policy is necessary to maximise these national infrastructure projects. It makes enormous economic sense to look at the multiplier effect of these investments – can the same infrastructure be used for other sectors (telecoms, energy, healthcare, education, etc)?

In order to start building smart communities and smart buildings a national trans-sector policy will need to be developed, supported by the Prime Minister and the Cabinet. He is the only one who doesn’t operate within a silo and is therefore in a unique position to lead the other ministries, agencies and NGOs in introducing a trans-sector usage of this new infrastructure. The Minister for Economic Affairs is in an ideal position to implement such a policy as some of the key sectors are part of her portfolio.

There is a serious threat that in the Netherlands, with the €18 billion scattered around the country, there will not be a national approach and that a lot of this money will be squandered because of a lack of trans-sector vision by the government.

In both the USA and Australia industry and the government have come together to address these issues The Australian industry is truly trans-sectoral – energy companies, telcos, meter and network vendors, IT companies, software companies, renewable industry organisations, management consultants, together with universities and government organisations (see: Gridwise and Smart Grid Australia).

In the USA, the Obama government has developed a specific $20 billion economic stimulus package for energy that clearly mandates open networks (smart grids).

In its $100 million smart grid/smart city demo project the Australian government has stipulated that the national broadband network has to be taken into account in building a smart grid.

Because the money is there, now is not the time for a hurried, uncoordinated rollout of smart grids in the Netherlands – it is the time to first develop a national plan on how to move forward with smart grids.

Blog Posting Number: 1364


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