22May2018

The smartest energy system in the world

In 2016 Jorma Ollila was commissioned by the Nordic Council of Ministers to prepare a proposal for the development of the Nordic energy market. The proposal – Nordic Energy Co-operation: Strong today – stronger tomorrow, was published in May 2017. One of main conclusions of the proposal is: The target needs to be to create the smartest energy system in the world and to find the most cost-efficient solution in moving towards the low-carbon green economy. In fall 2017, CLC established a high-level think tank of international energy-sector CEOs and other stakeholders. The think tank, in collaboration with the CLC board, was tasked with creating a plan for the development of the world’s smartest energy system for the Nordics. This document sets out the main proposals.

Status

The Nordic energy market has been a global front-runner in many ways: the first cross-border electricity market, successful decoupling of GDP growth from CO2 emissions, exceptional cost efficiency. This front-runner status has been beneficial to society, industry and citizens. The inclusion of Baltic countries in the NordPool has further improved opportunities for market development.

The Nordic market is now facing significant changes and challenges which must be tackled in order to maintain a competitive and stable operating environment and provide a fruitful platform for development:

  • Electrification of transport, heating/cooling and industrial processes and the integration of consumers as prosumers present increased and significant pressure on the electricity network. Bottlenecks in the grid are already forming and driving regional price segregation.
  • Cheap and plentiful solar electricity production in Southern Europe and Northern Africa will present very enticing prospects for electricity-intensive industry – Nordic countries need to be very smart in order to remain a compatible environment for industry
  • Increased share of weather-dependent renewables will present challenges for managing peak demand and power balancing

Proposals

With the right policies, the Nordic market has every opportunity to become first a piloting ground and then a global leader in next-generation smart and flexible energy solutions. In order to achieve this, we propose five development projects to be launched in 2018:

  • Develop pan-Nordic standards for smart flexibility solutions. The region would greatly benefit from joint standards for data exchange, interfaces between appliances and networks, as well as data security. Joint standards would also create a platform for new flexible energy services with significant export potential.
  • Encouraging and harmonised taxation of new flexibility solutions. Several countries within NordPool are currently reviewing taxation of energy storages, and it would be beneficial to coordinate and strive for harmonisation.
  • Enable energy as a service business models. Similar to mobile services, the energy market is moving towards result/benefit based business models. These offer better opportunities for efficient use of assets, peak demand optimisation and flexibility. There may, however, be regulatory and fiscal structures that hamper this transformation. Also, better marketplaces are required for business models to function. The goal should be a retail market for energy-related services.
  • Investigate benefits of opening up data and infrastructure. Although electrical grids have been opened up to competition, a significant part of infrastructure (e.g. buildings, heating and cooling networks) remains closed, which may hinder the development of new low-carbon innovations and business models.
  • Develop and strengthen electricity grid within the Nordic-Baltic market and to Central and Eastern Europe. In recent years the differences between regional NordPool market prices have increased. A strong and well-functioning Nordic-Baltic market will strengthen the position of the Nordics within Northern Europe and support rapid electrification.

More information

Kaisa Hernberg, Development Director, kaisa.hernberg@afabla.fi, +358 405623242

Jouni Keronen, Executive Director, jouni.keronen@clc.fi +358 504534881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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  • 22 May, 2018
  • Unna Lehtipuu
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