"Supported by smart functionalities and grid interconnections, decentralised energy generation will alleviate the regions power woes," says the Frost and Sullivan report. The study lists the expansion of the grid interconnections, management of the grids and the application of smart grids technology as the top three priorities for allowing decentralised renewable energy generation to expand further.
First off, "interconnections help integrate regional markets and boost the reliability of power grids," said Frost and Sullivan’s energy and environmental industry analyst Pritil Gunjan. "They also eliminate the cost of building new power stations by ensuring that excess power generated by renewable energy sources is effectively backed up and used elsewhere," he added.
However, since the problem of cost sharing remains, it is essential for energy providers and end users to be confident of the incentive structures and regulatory policies on grid infrastructure. The study praises Germany, Netherlands and the U.K for having defined regulatory frameworks to support energy security through efficient management of electricity grids.
In this context, smart grid optimisation appears to be the optimal means to ensure that decentralised energy generation succeeds, concludes Gunjan.
Integration of local solutions via grid expansion
The need for much greater attention and integration of local solutions is relevant to Europe and will indeed become a global issue, Frederik Dahlmann, assistant professor of global energy at the Warwick Business School recently told pv magazine. "Particularly in developing countries where the existing grid infrastructure is still weak, there is an even greater need for and incentive towards developing more decentralized energy solutions," he added.
Specifically in the European context, Dahlmann argued that there is need for "institutional support on two levels: one is further financial and planning support for grid integration, such as interconnectors. This will be vital to ensure a strong and reliable backbone is in place to enable the development of new and renewable energy sources particularly in geographical locations that are most suitable for their application. The other area of support is market mechanisms designed to attract a wide range of developers and operators (e.g. residential users and businesses).
"The biggest challenge with these proposals remains the fact that energy policy remains largely in the hand of national policy makers," said Dahlmann.
While the financial, managerial, geographic and technical aspects of interconnecting Europe’s electricity grids are significant, political unwillingness is ultimately the biggest barrier.
The long standing dispute between Madrid and Paris is perhaps the most characteristic example. Spain’s renewable energy systems generate far more power than is needed in the domestic market and this energy is wasted because there are few transmission lines to carry it across the border to France. But France is rather reluctant to open its state-backed nuclear industry, which produces three-quarters of the countrys electricity, to competition. At the European Union energy summit in October, Spain and Portugal pushed for a binding obligation for member states to make 15% of their national generation capacity available to other EU nations. Instead, EU leaders renewed their 2002 commitment to increase energy trading through electricity connectors to 10% by 2020.
The overall trend is national governments protecting their home markets and their energy incumbents from competition, thus interconnecting capacity is either not built fast or where it exists is often under-utilised. Move the national governments away from their self-protectionist policies and power will flow easier and farther in the European grids.