Digitalising the energy system – The EU’s one way ticket to a decarbonised future?

Digitalising the energy system – The EU’s one way ticket to a decarbonised future?

Authors: Amélie Snijders & Maria Nowicka

Cutting our energy use and ramping up renewable energy has been the talk of the town over the past months in Brussels. Recently, policymakers have been scrambling to find solutions that will swiftly alleviate the spiralling impacts of the energy crisis on households. But what about long-term solutions? How do we make sure our energy system is ready for a decarbonised future? The upcoming EU Action Plan on Digitalising the Energy System is expected to address some of these concerns.

Data-enabled solutions can unlock a new, long-term approach, whereby all actors in the energy system play an equally important role in achieving greater energy efficiency. There is massive potential for energy savings in for example, predictive maintenance or smart metering. With this Action Plan in the pipeline, the Commission is finally harnessing the power of digitalisation for sustainability, making this one of the first tangible examples of the twin green and digital transition policy. It will support the EU’s ambitions to integrate high shares of renewable energy as planned in its Fit for 55 reforms, as well as solidify the European Data strategy by putting forward concrete steps to create an ecosystem for energy data. While this Action Plan promises a bright future for smart energy systems, it will need to address a host of issues. FleishmanHillard’s energy and digital experts share their take on the major debates to watch.

Data sharing ecosystem

The bloc’s departure from the comfort of an energy system centred around constant supplies of fossil fuels presents a challenging ultimatum: EU electricity grids will need to accommodate the flexibility of renewables, enable the smart and bidirectional charging of EVs and harness the full potential of energy communities, smart buildings and smart heating. However, for this to materialise, a significant increase in cross-sectoral data exchanges will have to take place. In this context, the Commission’s vision for the common European Energy Data Space is much welcomed, but the data space can only be the tip of the iceberg.

Enabling the full potential of energy data will realistically require a major technical leap in terms of ensuring data accessibility. To that end, the Action Plan should address the development and adoption of sector-specific interoperability standards to guarantee a harmonised approach across different parts of the energy system. At the same time, an overall increase in the number of available data sources by introducing new instrumentation at an infrastructural level will be key to providing a real-time outlook necessary to effectively conduct smart grid management. ?

Investing in the right infrastructure

One of the major upfront challenges to achieve the noble twin transition goals set by the Commission will be the required investments in smart infrastructure. While the main aim is for this infrastructure to be adapted to a world of intermittent energy supply, the advantage of a smart system is also the fast identification of any grid issues, thus preventing and solving blackouts more quickly. Before these investments can take place however, it will be vital that the Action Plan focusses on setting standards for smart grids, to help direct Member States' investments and to overcome the issue of non-compatible pre-existing infrastructure. Besides these national-level efforts, this issue can also be brought closer to home. Edge devices should be seen as an extension of our future grids consuming energy and feeding it back in when needed. The Action Plan could be instrumental in promoting virtual models of our grid, enabling a holistic interpretation of the energy system and ensuring future infrastructure investments consider distributed resources, from electric vehicles to future smart waffle irons.

Greener tech

Unfortunately, digitalisation is not all sunshine and rainbows; the rapid expansion of ICT infrastructure significantly increases EU energy consumption. Recently the energy consumption of datacentres has continued to attract attention from policymakers in their negotiations on the Energy Efficiency Directive, but also by the wider public. The upcoming Action Plan could therefore further explore how to make datacentres more sustainable, setting standards for their water & energy usage and emission levels, as well as ensuring their positive contribution to our system by reusing waste heat or integrating battery storage.

Another energy efficiency challenge ahead is blockchain technology which has become a core component of the rapidly expanding crypto-asset market. With a single cryptocurrency transaction nearing the energy consumption equivalent to fifteen regular card transactions, developing EU standards to curb the adverse environmental effects is only comme il faut.

In essence, full digitalisation of our energy system will be crucial for Europe to meet its sustainability targets by 2050. Creating a robust data-based system enabling smart integration of renewables will however require major investment. The European Commission has understood this and is forging ahead with its upcoming new Action Plan. Corporations need to prepare themselves for this wind of change, defining their role in the EU’s digitalised and decarbonised future.

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The impact of digitalisation is being felt by all sectors from technology to financial services, healthcare, transport, manufacturing and energy. The EU is undertaking major policy reforms to make Europe fit for the digital age. This entails legislation on horizontal topics such as data, artificial intelligence and cybersecurity, as well as sector-specific initiatives from smart energy and connected mobility to microchip production.

Our FH Digital Transformation Practice combines digital policy expertise, deep sectoral experience, and the strength of our integrated communications and reputation management practice to help companies navigate the financial, political, environmental and legislative impacts associated with the digital transformation.

For more information get in touch with Maria Nowicka ([email protected]).