Integrating renewable energy into the grid will see European utilities entering into strategic alliances, according to a new report from analyst Frost & Sullivan.
Attaining grid flexibility will be key to incorporating Europe's decentralized power, says the new study 'Managing Flexibility in European Electricity Grids'.
However, the volume of power that a country grid can generate depends on its interconnectivity with other grids, says the study.
Recognising this, the European market is looking to improve grid interconnectivity and invest in flexible fuel capacity, says Pritil Gunjan, Energy & Environmental Industry Analyst at Frost & Sullivan.
Mr Gunjan said: "Interconnections help integrate regional markets and boost the reliability of power grids.
"This is particularly important in increasingly distributed electricity markets supported by multiple power generation sources.
He added: "They also eliminate the cost of building new power stations by ensuring that excess power generated by renewable energy sources is effectively backed up and used elsewhere."
Who pays for grid interconnectivity?
The problem of cost sharing still remains, says Gunjan. It is essential for energy providers and end users to be confident of the incentive structures and regulatory policies on grid infrastructure, he says. Cost allocation initiatives and political willingness are also important for successful grid integration.
Ultimately though, distribution system operators must ensure that the demand and supply scenarios are favourably correlated through more interconnections. The onus to integrate renewable energy sources into distribution networks also rests on them.
"In this context, smart grid optimisation appears to be the optimal means to ensure that decentralised energy generation succeeds," noted Gunjan.
"Smart grid technology enables the efficient management of energy by utilities and consumers as well as better delivery and consumption of distributed energy. It also helps energy suppliers, who are constantly trying to control the levelised cost of generating electricity from renewables to achieve grid parity, reduce emissions, and decrease the energy generated from fossil fuels."
Europe prepares for grid flexibility
Key countries such as Germany, Netherlands and the United Kingdom have already defined regulatory frameworks to support energy security through efficient management of electricity grids, says the report.
However, other countries still have to work out a robust strategy to integrate the large quantities of renewable energy coming on the grids.