European Union Driving Smart Grid Investment in Europe

Wednesday 24 July 2013, Amsterdam

The European Union (EU) has set a target for 20% of its electricity to be generated from renewable energy sources by 2020. The European Commission is also encouraging distributed energy generation in order to develop a more stable and secure electricity supply in the region. In order to realize this target, renewable energy plants are also being deployed in small capacities, which could be used to create a decentralized power generation system and ensure greater reliability.

“The Security of Electricity Supply” (2005/89/EC) was the first directive to address smart metering systems. Article 3 of the directive states that member states should take appropriate measures to safeguard the balance between the demand for electricity and the availability of generation capacity. Following this, the EU energy package came into force, with two directives and three regulations aimed at assisting and mandating the creation of an integrated Europe-wide energy market to drive countries to adopt smart grid technology.

The EU has funded and been involved in the establishment of multiple microgrids, Electric Vehicle (EV) and other smart grid technology projects across its member countries and in 2009 mandated the installation of smart meters by 2020.

A smart cities and communications project was initiated in 2012 to provide grants to smart cities to enable them to achieve a 40% reduction target for carbon emissions by 2020, through the sustainable use and production of energy.

US, Canada, Japan and the UK Lead Smart Grid Policy Support

The US, Canada, Japan and the UK are leading countries in the EU in terms of policy and government support for smart grid technologies. The governments of these countries all employ some form of net metering system, provide support for microgrid and smart city projects, and also support the sale of EV. The UK uses time-of-use pricing available to all customers. A small number of states in the US and Canada have mandated the rollout of smart meters, and others are providing incentives or conducting pilot projects for smart meters, while others have opted out of smart meter deployment. These countries support the implementation of smart meters in their country and also have targets and incentives in place aimed at promoting smart grid technologies. Countries in the Asia-Pacific region such as India and China have recently invested in smart grid technologies in order to improve their electricity connectivity and grid stability. South Africa and Saudi Arabia are also attractive markets, but their smart grid initiatives are yet to be formulated.

Smart Grid Standards Development

Every country, while creating a smart grid roadmap or implementing a smart grid, creates its own task force or smart grid association with major stakeholders such as utilities, key equipment manufacturers, electricity market participants, research associations and government bodies. In addition, there are many international and regional tie ups between countries that support each other in terms of knowledge transfer. These agencies help to establish the policies and standards required for the promotion of the smart grid.

As  yet,  no  set  of  fixed  smart  grid  standards  has  been  established. This  is  a  major  restraint  for  the development of smart grid technology as it discourages investment due to a lack of clear standards. International agencies such as the International Electromechanical Commission (IEC), Institute of Electrical and Electronics Engineers (IEEE) and EU have written standards, which would help countries to develop their own standards.