Interview with Frieder Schmitt, Head Corporate Technology & Innovation, MVV Energie, Germany

A few years ago the German government started with the energy turnaround program directed towards a system based mainly on renewable energies. What are the implications of this change in direction for Germany as a whole and for German utilities in particular?

Actually it is not a turnaround as a literal translation would imply. Germany already started to develop in this direction by massively supporting the integration of renewables into the energy system long before Fukushima. Such a system, as characterized by a high degree of fluctuating and dispersed renewable generation, is a catalyst for a tremendous shift in the way we generate, transport, distribute, store and consume energy.

Utilities are now converting existing and building new, increasingly IT-based energy system infrastructure, finding new business models focused on the efficient usage of renewables and (for the time being) fossil energies, and most importantly shaping this new system in an affordable and customer-oriented way.

What do you see as the most significant barriers for introducing smart grids in Germany, and what are the critical success factors for rollouts?

From the socio-economic point of view, we first need to determine the conditions under which smart grid can be economically viable, so that the overall long term benefits of its rollout outweigh the initial costs.

As it stands today, the roadmap for the development of smart grids remains a challenge as it attaches too much importance to individual value added chains, their stakeholders and their own benefits. As cost-benefit analyses are only valid if their assumptions are stable over longer periods, creating a comprehensive and long lasting policy that equally benefits all stakeholders is a fundamental requirement upon which our energy future fully depends.

Nevertheless, and despite the initial surge in energy costs, renewables have and will continue to achieve a series of benefits. They reduce emissions and conserve primary energy usage and thereby help economic growth by reducing energy imports with a saving of billions of euros per year. Renewables have already stimulated technology innovation and a green economy in Germany and other progressive countries. Some applications are on the cusp of becoming competitive in the open market, and others are following. Another advantage is from the growing decentralized generation: local economies are strengthened and citizens are progressively involved, leading to awareness and acceptance of the new energy ecosystems. More than 500 small and medium sized energy cooperatives have been founded in the last 4 years in Germany, driving the transformation away from centralized and towards decentralized energy sources.

To what extent are these projects and findings interesting for the European and the Russian energy sector – what knowledge could be transferred?

There is close cooperation all over Europe in the development of smart grids involving government bodies, industry, utilities, standardization boards and research institutions. The European Electricity Grids Initiative is covering all functional levels from new generation technologies to smart customers. A special standardization mandate has been given to coordinate smart grids developments in a pan-European context. The European Strategic Energy Technologies (SET) Plan has been set up under the directorate for research and development to cover the ambitious decarbonization goals of 80 to 95 % by 2050.

As of now I am not in a position to give a precise estimate on the quantitative value of these activities for the Russian energy sector. The Russian Federation is one of the most important partners for Europe and the largest neighbor of the EU. It is a key player in geo-political and energy terms at both the global and regional levels. Russia is also a major supplier of energy products to the EU. I think that Europe has a strong interest in working together with Russia not only to foster political and economic stability, but also stability in energy terms in the region and worldwide. This will also provide opportunities for improving Russia’s export portfolio, particularly energy, and open it up towards more value-added products. I see obvious motivations to discuss smart grid approaches, particularly the new trends such as smart integration of existing or new decentralized generation into distribution systems, setting up virtual power plants to lower or even save investments into the reinforcement of networks and total costs of ownership. Against the backdrop of the rapidly increasing energy demand in big cities, rising primary energy prices and the intention to reduce subsidies, all cumulative savings on the demand side, helped by efficient new technologies such as CHP and heat pump, are extremely valuable.

Ongoing activities show a distinct global trend towards mega cities. 21st century urban developments demand low carbon emissions, reliable and efficient energy supply, home and building automation, e-mobility and the safety and quality of life. They need a smart and integrated community energy management system that combines urban development and smart energy philosophy. Isn’t this a promising approach for smart urban and regional utilities in Russia to manage together with their municipalities as they prepare for an exciting and challenging future?

Frieder Schmitt is a speaker at Smart Utilities Russia 2013.