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How will smart grid applications change the energy eco system?

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Podcast: Smart grid energy eco system
Today, smart applications are a powerful driver of change. DNV GL talks to Merten Foerster, Head of Smart Grid Applications at Siemens Energy Management about how they will affect the energy ecosystem.

In our interview, Merten explores the different energy ecosystems around the globe, particularly with regard to how their markets differ in maturity. What are the main barriers to development? We discuss three items. Firstly, infrastructure and what it means for funding. Secondly, market liberalisation and the growth of competition. Thirdly, we talk about technology and the challenge of standardisation.  Finally, we pose an important question: are we doing enough to reach the climate change goals we have set ourselves?

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00:00:00

NARRATOR    Welcome to the DNV GL Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.

MATHIAS STECK    As today's guest for our podcast series we have Merten Foerster, Head of Smart Grid Applications Asia Pacific, Siemens Energy Management. Good morning.

MERTEN FOERSTER    Good morning.

00:00:30

MATHIAS STECK        The topic we want to talk about today is how has Smart Grid Applications changed the energy ecosystem. But before we come to this maybe you could briefly describe your role in Siemens, and what you are doing there.

MERTEN FOERSTER    Sure. Thanks for being here today. So, as you said I'm responsible within the energy management division for Smart Grid Applications in Asia Pacific and what basically includes everything that is not related to SCADA software. So, coming to meter data management, related applications like demand response, engagement, customer engagement, topics like that, non-technical losses. So, everything that is related to software in the Smart Grid field context, what is not distribution software.

MATHIAS STECK        Right, to get into this topic, if we look at your profession, Smart Grid Applications, and if we look a bit around these applications worldwide can you tell us a bit about the differences of the energy ecosystems in for example US, Europe, ASEAN? What is your view on that?

MERTEN FOERSTER    Yes, probably the key difference comparing all this market is coming from the maturity level as well as different kind of market liberalisation levels and rules. My focus as I said before is more on Asia and even here you see a lot of differences, a lot of different kinds of market levels here. So, when you look through Japan, Australia, ASEAN maybe a bit China as well you see different trends, all of them going in the same direction which is quite interesting. But the focus of these particular countries is quite different. Starting with Japan after the earthquake and all these correlated changes afterwards there's a strong focus on energy efficiency in any kind of technology infrastructure as well as software related. What helps to make it a more greener economy, a more greener energy ecosystem. Australia, having different kinds of challenges, huge amounts of own resources, comparably small amount of renewable still, at the same time a big place with a lot of rural places, very remote places. So, topics like micro-grids are very relevant there as well as integrating them with an increasing number of renewables. And coming to South-East Asia what is probably on its own already a small world, there are different kinds of trends in all the different countries. But here there's still a huge focus on infrastructure, electrification in some countries but it's more and more going towards making this infrastructure smarter. With different kinds of levers, we have some island rich countries where we talk more about micro-grids, we have some more wide areas and a lot of people where we talk about more green initiatives, smart metering, maybe even early kind of demand response initiatives. So again, each and every country has its own challenges, its own status and tries to tackle its challenges with different kinds of measures but it all goes in the direction of making it smarter, making it more decentralised, and you need software doing so in all of the aspects to be successful.

00:03:55

MATHIAS STECK        So even in Asia Pacific or ASEAN itself we have quite a diverse picture of what is going on. Actually, I wanted to ask you to draw a map of what is going on in Asia Pacific but I think you just did that already. And I would be interested, it seems there are quite a lot of opportunities for companies like you but also maybe if we look at the bigger scale for the improvement of the electricity system. What would you see as the main barriers today for these developments really to happen?

00:04:30

MERTEN FOERSTER    Again it depends a bit on each country. When we say we put it a bit more neutral, what are the key drivers or the key negative aspects we need to tackle? Without any order I would probably say there are three items we need to talk about. One is talking about infrastructure you have to talk about funding. Who is paying for what? Who has an incentive to put in money? Who is finally paying for it? Is it taxpayers? Is it private equity companies? Is it utilities providing this on their own funds? This is one aspect that we basically see in each and every country, finding a funding party who sees a strong business case in whatever needs to be done, micro-grids, smart metering, demand response, it needs to have a business case for funding. Having this is one of the key aspects in some of the areas. The second aspect, and here some countries are a bit more ahead than others, is this whole market liberalisation. When we talk about software we talk about Smart Grids, the aspect of new markets, of new business models, value added services for clients or partners comes up very high in the prioritisation. At the same time in order to do so you need a more and more open market to attract new players, to basically offer this and otherwise we come again to the funding issue that when there is no value, I mean it's great that technology enables a lot of new things, but when nobody is interested to pay for it or to see any gains there it will just remain a fancy technology. So, in order to overcome this burden, to really commercialise ideas, there is no way around competition and this is in the energy sector, market liberalisation going away from one player who manages everything, to different kind of players in retail, in demand response aggregation there are different kind of examples where new players could be attracted when the market was alright. So, this is one key aspect. And then the final one is more technology-related aspects. It's about standards. We went quite a distance already when it comes to for example smart metering or substation automation, communication standards, I think that we are quite far already in having unique technologies and standards across the industry. When we talk about more new areas, for example demand response, internet of things, there we still have quite a way ahead of us in order to conclude what are the industry-wide common denominators we will base further technology on. There are also some things on its way that go in the right direction, on the demand response side we open ADR communities if they're a good example, one certifying formats and standards around, AR events, the communication related to it and topics like that. But it's for sure not at its finishing point.

00:07:39

MATHIAS STECK        I'd like to pick on that point that technology needs to make sense to find people investing into it. And lift this up a bit on the bigger scale. We have COP21, we have the temperature increase targets and we have the imperative of decarbonising the energy ecosystem. So, if we look at smart grids which is kind of a buzzword since maybe decades, and we look at the developments which are going on from a technical point of view, you also mentioned standards and everything, is that going into the right direction? Is that helping us to meet the climate change targets we have set ourselves?

00:08:25

MERTEN FOERSTER    I think you put the question in the right manner and the straightforward answer would be yes it helps. But, there is a but, it's probably not enough to finally achieve where we want to be and especially in terms of timeline as well. The new technology is, and all the new technology areas, is a strong enabler and will help us doing a lot of good things in terms of customer engagement, energy efficiency, managing peaks, maybe avoiding to build new power plants, new generation just for peak times. All those aspects are very likely covered. It's just a question of time until they all mature completely and have applications all around the place and it helps us in this dimension to meet the targets. Is this for sure helpful? What we need is basically or are many triggers to accelerate this path? And here we again at the obligation of governments to provide these triggers and there are a variety of tools you can have to create these triggers. It can be policies, it can be again liberalisation to drive competition in the market and to put pressure on established players to try new things and to give the consumers a chance to make choices in a greener way, what will finally lead to a lower carbon emission. So, there are two aspects. So, for sure we are on the right way and we have a lot of enablement around, we have a lot of enabling technologies but we need additional pressure from a policy perspective, from a competition perspective to basically translate these levers into tangible outcomes on the roadmap we have agreed on, or most of the countries have agreed.

MATHIAS STECK        So maybe then as a last question and you mentioned consumers getting more power in this whole scenario, the other buzzword which is around at the moment and it's bigger than only smart grids and energy is the internet of things where electricity and energy certainly plays a big role. If we look into five years, ten years from now, how will our world have changed if we look at smart grid technology, internet of things, what will we as consumers actually see?

00:10:51

MERTEN FOERSTER    It's a very interesting question, probably nobody can for sure answer what we will see. I think for me from my understanding this whole internet of things concept probably for the end consumer means one of the biggest changes in lifestyle since the internet came up and since the smart phones came up. Just imagine how much time many people spend currently with all the applications on their phone and imagine there is a huge amount of other smart cars coming up, there is another amount of smart in-home displays coming up. So how much time you can spend on all these devices and how much time you want to spend is a key question. And it probably will come down to the overall direction where customers see value from. You can do your fridge smart, the question is do you want to interact with your fridge for 24 hours. So, it will very probably come down to the question where you see value where you want to spend money and where it helps you in terms of either convenience, so this buzzword of set and forget devices for example saying I deal with this topic now for once and it probably helps me moving forward to save a lot of time thinking about this particular aspect, or it will help me forward automating topics I had to spend brainpower for in the last year. So, this kind of doing it once and then forget about it, this will probably be something where consumers see value and where they at the end of the day will also spend money. On the other side the same for the industry itself. How can they provide services the customer sees value from and probably provide data and information. The industry is willing to spend money on to gain this information and to make their offerings and products better. So, it's all about, especially on the IOT forgetting all this for the standard barriers and any kind of additional technologies which might be required to make it a mass product, but it will come down to value generation and who's willing to spend money on getting data or using these kinds of services. When there are intelligent solutions on the market it probably will change our daily life a lot, hopefully not with spending more time with smart devices instead of with each other, but more in terms of convenience, meeting again also targets on energy efficiency, and helping to make the whole development a more successful one.

00:13:33

MATHIAS STECK        Great. Thank you very much Merten. Now we understand a bit better how Smart Grid Applications can change the energy ecosystem. Thanks for your time. And thank you for listening.

MERTEN FOERSTER    You're welcome. Thank you very much.

NARRATOR                Thank you for listening to this DNV GL Talks Energy podcast. To hear more podcasts in the series, please visit dnvgl.com/talksenergy.

00:14:00