How does the Belgium and Germany-based electricity transmission company Elia Group and TSOs at large capitalise on the Fit for 55 package and the digitalisation of the sector? CEO Chris Peeters shares his insights with Pamela Largue.
How is Fit for 55 impacting Elia?
Fit for 55 is ambitious.
This policy is designed to ensure that we tackle global climate change in the right way and demonstrates Europe’s ambition in this space. The challenge is about translating those policies in a way that helps you achieve your ambition.
We must quadruple the speed of integrating renewables in order to speed up electrification. This is a big challenge and it won’t happen without a number of strong measures.
First of all, we are still in an environment where infrastructure is lagging and not leading and that needs a policy change if Fit for 55 is to ensure an efficient transition. You need to progress to leading infrastructure to de-risk your system and make sure that – for example – wind farms have the stable environment to do what they have to do.
Secondly, a number of countries have more renewable potential than existing access to those renewables. So renewable development must be smart.
By smart, I mean countries must view developing renewables in the bigger picture of Europe, like feeding into other countries if the right incentive mechanisms are in place. The European environment must be managed well to reduce risk and ensure the lowest cost of capital to facilitate deals. But, you first need to find the incentives to have leading infrastructure in the TSO space.
Ultimately, Europe knows what it has to do. Elia plays an important role in defining how it gets done. We’re not policymakers, but we can support the policy with certain options. Developing future-oriented landscapes is our focus; for example, interconnecting Belgium and Germany with hybrid interconnectors to facilitate renewables integration.
We are the only operator providing hybrid interconnectors today and we have many interconnector projects in the pipeline. If you want to succeed with the transition, you need to build them all.
How is Elia preparing for the future energy landscape?
Developing infrastructure needs to be a priority; however, that infrastructure still needs to be digitised and made smart – a core focus area. DC and AC technology must be combined in a smart way. However, there are integration and grid stability challenges to be overcome. This might look simple to policymakers but technically it can be quite complex. Soon, in Germany, we will have a number of parallel DC infrastructures within the AC infrastructure, creating a challenge to ensure grid stability. The fact is that a successful transition will need an enormous investment in grid stability.
If you fast forward, Germany wants to be fully carbon free by 2045, but at the moment there are almost no stable base loads, with no rotating machines in the system. So inertia has to be created in a synthetic way. This is easier said than done, and must be carefully considered.
Also on the horizon is the development of energy hubs in the Baltic Sea and the Belgian North Sea to help integrate energy from wind farms. The hubs won’t only include hybrid interconnectors but also tripods, allowing you to connect three countries with each other via the island. This provides options to manage flows and avoid congestion.
In terms of the development of the tripod, we still have a number of technology challenges to overcome, such as developing the right DC circuit breakers.
We plan to have functioning tripod energy islands built by 2026. This will allow us to integrate the wind farms in the neighbourhood, followed by a second UK interconnector, the Danish cable and possibly other cables coming onto that island. It will then be operated as a dispatch hub.
We want to be an early investor in those technologies because they are critical. If you want to have a successful energy transition, you need to understand priority technologies early on.
How do you manage innovation at such speed?
For most, there’s an intellectual excitement coupled with a kind of fear that we need to manage all this disruption at pace.
We need to install these innovative systems at scale so the whole cycle of technological innovation is reduced. It’s exciting but we need a new mindset to achieve this.
We have to invest ourselves in understanding today how technology will scale up after 2030, and prepare for future innovation landscapes.
This really is a landscape in flux. What trends are you noticing?
Electrical mobility, more efficient buildings and houses and electrified heating will happen fast if policymakers can push through on Fit for 55. So a lot of flexibility will come on board, although fragmented.
It can be a challenge to monetise, but it will come down to decreasing OpEx and CO2 outcomes after the initial high CapEx. Using energy efficiency measures and digitalisation to make the most of the solar panels and batteries you have invested in, for example.
Also, it’s about understanding how best to balance the grid in a customer-centric way.
At Elia, we believe the consumer should decide for themselves, and by using price signals and incentives, we can influence consumer behaviour in a way that optimises the grid. We need to balance the complexity of the grid with the comfort needs of consumers.
Another trend is that there are now increasing digital layers of information exchange allowing more granular understanding of the consumer’s energy needs. We can’t pretend to know all the comfort needs of the consumer. However, we know everything about the system and we are planning for greater integration of more electrified sectors, making sure to maximise the use of that flexibility in a completely new environment.
Tonnes of data exchange is going to happen as customer needs evolve and we need to have a system that is capable of all possibilities that come with electrification, while reducing system costs. People aren’t interested in how many electrons they need. They ask: Is my house at the right temperature and can I drive my car there?
It’s about ensuring those services, maximising renewables uptake and reducing the system costs. That’s the challenge that we have to manage.
With digitalisation comes an influx of data coupled with GDPR regulation. How is Elia dealing with this?
The short answer is that at the moment we don’t interact with a huge number of clients like a telecom operator would, in terms of data transfer.
With about 2 500 employees we have had to ensure compliance. But our challenges have been manageable compared to the complexities in other sectors, which has allowed us to learn from them.
Currently, we have a handful of clients, which is relatively easy to manage. We have bilateral contracts and a relatively well defined flow of data between them and us.
But now we are moving into a world where we interact, directly or indirectly, with millions of clients. Therefore, complexity will increase in the future.
We cannot keep the lights on if we don’t know what’s happening on the outside of our system. To ensure the conveniences happen behind the meter, we need to know everything that is happening on that meter.
We need to have the data to ensure a stable grid, but this comes with an agreement with regulators that we cannot do anything else with that data, other than ensuring system equilibrium is maintained.
What is your vision for Elia and the future?
We fully embrace the energy transition and the consequences of that. Traditionally, some sectors want to continue doing what they have always done. We don’t defend a formal role. Instead, we say we need to prepare for the future, embrace the change and facilitate the energy transition.
That means that if our role has to evolve, so be it. Some look at some pilot projects or the growing trend of energy communities and say: Isn’t that bad for your business?
Why would I care? The energy transition is what we care about. That keeps us relevant as we find our new role. This is what makes us quite different.
About Chris Peeters
Chris Peeters became CEO of Elia Group in 2015. Through its subsidiaries Elia (in Belgium) and 50Hertz (in Germany), the Group operates 19,276km of high-voltage connections and supplies 30 million end users with electricity. It also provides consultancy services via its third subsidiary, Elia Grid International. Peeters holds an MSc in Civil Engineering from the University of Leuven in Belgium. He has a wife and four children with whom he would like to discover the world.