European energy regulators say Covid experience opened a window into the future on digitalisation, decarbonisation, smart meters

Covid has reinforced the value of digitalisation in energy systems, according to a first report on the pandemic’s effect on Europe’s national energy systems produced by the Council of European Energy Regulators (CEER).

It said in national regulatory authorities (NRAs) hd flagged the importance of swift and complete exchange of information with stakeholders (including government, network operators etc.) and the acceleration of digitalisation and remote operations in the energy sector.

More generally, “digital tools and processes proved useful in a crisis in which direct social contact and presence on-site was largely forbidden”.  An electronic self-service environment allowed for continuity of processes, such as allowing electronic applications for system connection upgrade or electronic approval of construction designs. Some regulators reported that mobility restrictions imposed due to the health crisis pushed digitalisation efforts ahead, along with the use of digital internal processes and services such as meetings, documents and communication. For example, the German legislator swiftly adopted a law enabling digital solutions in planning and approval procedures that so far had required the physical presence of stakeholders and the delivery of paper documents.

The law also allowing for the postponement of fixed deadline regulations in relevant laws. The ability to use digital technologies helped in permitting “rapid and pragmatic changes to reporting, notification and implementation obligations” – essential, as they are usually subject to fixed deadlines. These changes enabled energy companies to focus on the crisis while being guaranteed legal certainty by the authorities. Similarly, ARERA postponed all deadlines related to information obligations and data collections.

Several NRAs reported that the switch to generalised teleworking was one of the positive lessons learnt from the health crisis: their organisations were able to maintain normal operations and productivity. Technologies to monitor infrastructure remotely also saw more use.

There were delays in the roll-out of smart meters, either because installation was not considered safe or a priority in periods of lockdown, or because procurement was affected by the crisis. But at least two regulators  found that the pandemic accelerated public acceptance of smart meters. “Consumers that might have been wary of smart meters before the crisis learned that it was an efficient and comfortable method to limit contact between consumer and employees of energy operators.” And they “became more aware of online services and ways to communicate electronically with the regulator and energy operators”.

Customers’ awareness of their rights also significantly increased. Several NRAs identified a temporary ban on disconnection as a good practice for domestic customers and business consumers also had to have opportunities to defer or stagger the payment of their energy bills, to change the contracted capacity or to suspend their energy supply contract altogether. That followed on significant changes in demand and supply patterns.

Power swings

The pandemic’s impact on the European electricity system was 7% reduction in EU electricity demand, while in March and April 2020, “residential demand during the week was up to 40% higher across certain European economies than in the same weeks in 2019”.

Along with low demand there was consistently windy weather that favoured renewable energy generation and across Europe the average share of power from renewables (40%) surpassed the share from fossil fuels (33%) for the first time ever. Coal generation registered a 30% year-on-year drop

The IEA said that for many countries the pandemic “has provided a real-time experiment in managing the operational implications of higher shares of variable renewables” and it resulted in increased balancing costs.

The unexpected reduction in supply also meant an unanticipated fall in revenue for electricity suppliers and networks. CEER said, “So far, this revenue loss may not be considered as an immediate problem as any losses can be recovered through tariffs in the following years, although this may lead to issues of affordability in the future. Hence, specific attention has to be paid regarding the consequences on final customers.”

In France and Ireland the first lockdowns had repercussions on the maintenance schedule of power plants. In Ireland, to ensure  availability during the coming winter. four units were designated ‘Must not Run’ earlier in the year. That increased system operation costs, but CEER said “the decision has proven prescient as winter 2020 raised several alerts due to forced outages on units on the system”.

Read the full report here

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