Smart grids: Development & benefits

Smart grids are energy networks that can automatically monitor energy flows and adjust to changes in energy supply and demand accordingly. When coupled with smart metering systems, smart grids reach consumers and suppliers by providing information on real-time consumption.

As smart grids show information on supply and demand, they are particularly beneficial for the integration of growing amounts of variable renewable energy sources, like solar and wind power, and of new loads, such as energy storage and charging of electric vehicles, while maintaining stability and efficiency of the system. In addition, smart grids open up the possibility for consumers who produce their own energy to respond to prices and sell excess amounts back to the grid. 

Smart grids enable new market actors, such as aggregators and energy service companies, to offer new types of services to consumers, allowing them to adjust their consumption and reap the benefits of flexibility provided to the grid.

For citizen energy communities, or electricity-intensive industries, their decisions will be influenced by market price changes. These new players will be seeking a wider range of models and solutions than are currently available. This should enhance competition in the retail market, contribute to consumer empowerment and incentivise reductions in greenhouse gas emissions, while providing an opportunity for economic growth and worldwide technological leadership of EU technology.

In general, the progressive development of smart grids is shifting the European energy supply industry, from being infrastructure-driven to being more and more service-driven.

Smart metering benefits

A smart metering system is an electronic system capable of measuring electricity fed into the grid, or electricity consumed from the grid, providing more information than conventional meters. Such system is capable of transmitting and receiving data for information, monitoring and control purpose, using a form of electronic communication and comes with a range of benefits for the energy system and its users. With smart meters, final customers can get as a minimum accurate and regular measurements of their energy use, and get billed on electricity they actually use. This puts an end to incorrect bills, and back billing, which are currently the biggest consumer concern.

Beyond that, smart meters can provide close to real time feedback on energy consumption and enable those consumers interested to better manage their use, save energy and lower their bill.

For consumers who wish to be more actively involved in the electricity market, on their own, or with the help of a service company, smart meters can offer even more. They allow them adapt their energy usage to different energy prices throughout the day, enabling them to consume more during lower price periods and save money on their energy bills.  

Smart meters are also relevant for those who generate electricity, for instance from a solar panel installed on their roof. With a smart meter, they can measure the electricity their household supplies to the grid and communicate this supply to the grid manager.

Accordingly, it is via smart metering that network operators get a better insight on what goes on in that part of the network. This way they can better plan their investments and manage their infrastructure to respond to the requirements of their customers, and therefore reduce the costs for the network operation and maintenance which are ultimately borne by consumers through network tariffs.

To deliver on all these fronts, smart meters must be equipped with the right functionalities, as given in the Electricity Directive (EU)2019/944. Moreover, national authorities must closely monitor that they get the most out of this sizeable investment and that the smart metering systems they install serve the system as a whole and deliver benefits and satisfaction to consumers and businesses alike.

Deployment of smart meters

Smart meters should allow consumers to reap the benefits of the progressive digitalisation of the energy market via several different functions. Consumers should also be able to timely access their energy consumption data and dynamic electricity price contracts.

study from December 2019 on the deployment of smart meters in the EU found that 

  • close to 225 million smart meters for electricity and 51 million for gas will be rolled out in the EU by 2024. This represents a potential investment of €47 billion
  • by 2024, it is expected that almost 77% of European consumers will have a smart meter for electricity. About 44% will have one for gas
  • the cost of installing a smart meter in the EU is on average between €180 and €200
  • on average, smart meters provide savings of €230 for gas and €270 for electricity per metering point (distributed amongst consumers, suppliers, distribution system operators, etc.) as well as an average energy saving of at least 2% and as high as 10% based on data coming from pilot projects.

Data protection

Consumer personal data is protected by EU rules on processing and free movement on data. Smart grids and meters may have an impact on personal data and privacy, which is why the EU has taken a series of measures to uphold data protection rules.

One example is the impact assessment template, updated by the Smart Grids Task Force in September 2018, and which serves as guidance on data protection and privacy for data controllers and investors in smart grids.

In addition to data protection and privacy, cybersecurity has increasingly become an issue related to smart grids and meters. The Commission is committed to mitigating any risks and enhancing resilience towards cybersecurity.

Smart grid projects in Europe

Deployment of smart grids is one of the three priority thematic areas under the Trans-European Networks for Energy (TEN-E) aiming to help integrate renewable energy, complete the European energy market and allow consumers to better regulate their energy consumption. 

Smart grid projects that contribute to this and have a significant impact on energy markets and market integration in at least two EU countries, are identified as Projects of Common Interest (PCI) and are considered key for implementing cross-border energy infrastructure in the EU.

The smart grid projects that apply for a PCI label are evaluated and proposed for inclusion in the Union list of PCIs by the Smart Grid Regional Group established under the TEN-E Regulation. The PCI list 2019 includes 6 smart grids projects

  • SINCRO.GRID – (Slovenia, Croatia) – An innovative integration of synergetic, mature technology-based solutions in order to increase the security of operations of the Slovenian and Croatian electricity systems simultaneously.
  • ACON (Czechia, Slovakia) – The main goal of ACON (Again COnnected Networks) is to foster the integration of the Czech and the Slovak electricity markets.
  • Smart Border Initiative (France, Germany) – The Smart Border Initiative will connect policies designed by France and Germany in order to support their cities and territories in their energy transition strategies and European market integration.
  • Danube InGrid (Hungary, Slovakia) – the project enhances cross-border coordination of electricity network management, with focus on smartening data collection and exchange.
  • Data Bridge (Estonia, Latvia, Lithuania, Denmark, Finland, France) – aims to build a common European Data bridge Platform, to enable integration of different data types (smart metering data, network operational data, market data), with a view to develop scalable and replicable solutions for the EU.
  • Cross-border flexibility project (Estonia, Finland) – aims to support renewable energy sources (RES) integration and increase security of supply  by cross-border provision of flexibility services to Estonia, Finland and Aaland provided by distributed generation.

The EU’s Joint Research Centre (JRC), in close cooperation with the Directorate-General for Energy, compiles and periodically updates an inventory of smart grid projects in the EU.

In cooperation with Eurelectric, the JRC also provides an interactive map of smart grid and meter projects.

The Commission also supports the development of smart grids through research and innovation projects, funded by Horizon2020. In particular, the European Commission initiative BRIDGE combines smart grid and energy storage projects to cooperate on themes of common interest to ensure fast development and market uptake of smart grid solutions – as they are crucial for the integration of ever-higher shares of renewable energy sources.

Smart grids task force

To advise on policy and regulatory directions for the deployment of smart grids in Europe, the Commission has set up a smart grids task force, which has issued key reports on standardscybersecurity and flexibility markets. These are largely agreed by industry, European standards organisations, public authorities and consumer organisations. 

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