Five Carbon-neutral Energy Lessons from SEV and the Faroe Islands

The global energy landscape faces unprecedented pressures, with energy demand projected to grow by over 4% annually and renewable energy sources expected to account for nearly 50% of electricity generation by 2030. For energy companies, achieving carbon neutrality isn’t just a matter of environmental responsibility—it’s a financial imperative. Incorporating renewable sources and flexible energy assets like EVs can significantly reduce costs: studies show that grid flexibility alone could save up to $20 billion annually by reducing congestion and minimizing the need for expensive, last-minute energy purchases.

In the Faroe Islands, SEV, the national utility, is leading the charge with innovative solutions that offer valuable insights for energy providers around the world. By integrating a mix of renewables and activating EVs as dynamic grid assets, SEV has not only improved grid stability but has also unlocked new efficiencies. This “living laboratory” in the North Atlantic highlights how combining energy flexibility with diverse renewables can create a resilient, cost-effective, and carbon-neutral energy system. For utilities looking to stay competitive while reducing emissions, the Faroe Islands’ approach offers a powerful blueprint for success.

1. Embracing energy flexibility as a cornerstone

Achieving carbon neutrality requires balancing fluctuating renewable energy with reliable energy availability. The Faroe Islands have leveraged energy flexibility to manage the supply-demand balance dynamically, enabling SEV to handle variations in renewable energy production. This flexibility is essential when integrating assets like electric vehicles (EVs) as active participants in the grid, optimizing energy use during low-demand periods or high renewable production.

Lesson for energy companies: Energy flexibility allows utilities to accommodate intermittent energy sources without compromising grid stability. By utilizing advanced energy flexibility tools—like real-time data monitoring and distributed energy resource management systems (DERMS)—energy companies can balance renewable energy generation with demand, supporting grid stability while maximizing renewable energy use.

2. Integrating a diversified energy mix

The Faroe Islands have found that no single energy source can reliably meet demand year-round. To address this, SEV has invested in a diversified mix that includes hydropower, wind, and tidal energy, as well as battery storage. This varied approach ensures a consistent energy supply, especially important in regions with strong seasonal energy fluctuations. In 2022 alone, the Faroe Islands increased renewable energy from 38% to 52% of their total production, a testament to the power of a well-balanced energy portfolio.

Lesson for energy companies: Relying solely on one type of renewable energy can expose grids to vulnerabilities, especially when energy demand peaks. A diversified energy matrix strengthens resilience and ensures a stable energy supply. Energy companies should invest in multiple renewable sources, optimizing them based on local conditions to maximize reliability and minimize fossil fuel reliance.

3. Leveraging electric vehicles (EVs) as central grid assets

SEV’s approach to EV integration is pioneering, treating EVs not just as consumers but as active grid assets. EVs can serve as flexible energy resources, charging during periods of low demand or high renewable generation. SEV, with True Energy’s support, has implemented advanced smart charging, allowing EV charging sessions to align with grid needs. For example, during periods of wind surplus, EV charging can be triggered to absorb excess renewable energy, helping maintain grid balance.

Lesson for energy companies: As EV adoption rises, their role as flexible assets becomes critical. Through managed charging systems, utilities can synchronize EV charging with renewable production, thereby stabilizing the grid. Energy companies should prioritize smart charging infrastructure, enabling both EV owners and utilities to benefit from cost-efficient, renewable-powered charging.

4. Building a smart, resilient grid with flexibility

A closed grid system, like the Faroe Islands', requires precise, real-time data management to adapt to changing energy conditions. SEV’s use of smart grid technology ensures grid resilience, even under fluctuating renewable generation. Real-time monitoring help SEV manage energy demand dynamically, providing the adaptability needed to respond to weather changes and demand spikes. It is part of a broader strategic prioritisation of flexibility in the energy matrix. This adaptability has been crucial in achieving a 99.998% reliability rate.

Lesson for energy companies: Smart grids are foundational to future-proofing energy systems. Real-time monitoring and implementing DERMS solutions allow utilities to respond to shifts in supply and demand swiftly, ensuring reliable energy access. By investing in smart grid technologies, energy companies can enhance grid resilience and better support renewable integration.

5. The Power of collaboration for innovation

The Faroe Islands’ success is not just the result of advanced technologies but also of effective partnerships. SEV’s collaboration with True Energy and Landis+Gyr demonstrates how utilities can accelerate innovation by joining forces with technology providers. Such partnerships facilitate access to advanced tools and expertise, fostering the development of custom solutions tailored to unique grid challenges.

Lesson for energy companies: Collaboration is a catalyst for progress. Energy companies should seek partnerships that bring complementary expertise and technology to the table. Public-private partnerships can also accelerate the implementation of green solutions, sharing both the financial and operational burdens of the energy transition.

Looking ahead: applying these lessons globally

The journey of SEV and the Faroe Islands showcases how an isolated community can achieve remarkable progress toward carbon neutrality. By embracing flexibility, diversifying the energy mix, integrating EVs, deploying smart grid solutions, and fostering strategic partnerships, they are setting an example that energy companies worldwide can follow.

For regions aiming to achieve similar sustainability goals, these insights offer a roadmap to harness the full potential of renewable energy, stabilize grids, and move closer to a carbon-neutral future. With the right mix of technology, policy support, and collaborative spirit, the green transition is within reach.