The system will be increasingly interconnected, but also more decentralised. Centralised production work in parallel, and integrated with, decentralised production. A new energy landscape is emerging.
Key drivers of this change are the 20-20-20 targets adopted by the EU. The goal is to reduce CO2 emissions by 20 per cent over 1990 levels by 2020, increase the share of renewable energy sources in the energy mix to 20 per cent and increase energy efficiency 20 per cent. Based on the 20-20-20 targets, the EU has produced Roadmap 2050, which also takes into account the EU's long-term goals for security of supply and prerequisites for economic growth. Another important political driver of change is the Energiewende (energy transition) in Germany that, among other things, concerns the phase-out of nuclear power and sets targets for renewable energy and energy efficiency.
Technology development facilitates the transformation of the energy market. Households and businesses can be allowed not only to provide for themselves, but also to distribute the surplus into the power system.
Switch towards renewable energy sources
Renewable electricity is produced less regularly than traditional electricity from hydro or nuclear power. This places demands on the grid. As electricity generation from wind power and other sources of intermittent generation increases, a need is growing for intelligent and flexible distribution networks. Transmission capacity needs to be increased and integration improved to manage this.
A traditional grid is built to distribute electricity from a smaller number of power plants that produce large, even quantities of electricity over time. Grids are now being adapted to a greater number of geographically dispersed power plants that produce less, more intermittent electricity. The grid will also need to be monitored in more detail for two-way distribution of electricity from producer to consumer.
Deregulation has led to increased awareness and changing behaviour among consumers, as well as new expectations and demands. This awareness will continue to increase as consumers are more able and willing to control their own energy consumption, and more consumers turn into "prosumers" that participate as both consumers and producers.
Smart grids allow traditional electricity consumers to transition into full or partial net producers of electricity by installing solar panels on their roofs, for instance. Information will also flow in both directions between producers and consumers.
Consumers increasingly expect innovative solutions like contracts for buy-back of self-produced energy surplus, home energy management, energy optimization and solutions for electric transportation.
The EU aims to increase energy efficiency by 20 per cent over 1990 levels by 2020. One way to achieve this is to encourage consumers to use electricity at times of day when electricity production is high. Another method is to give companies and households simpler tools, like smart meters, for monitoring and managing their electricity consumption. Both households and businesses can reduce their energy costs quite substantially by using energy in a smarter way.
Integrated European market
In order to make electricity distribution more efficient, the new European energy system will need to be more interconnected. Market integration calls for a rapid expansion of infrastructure on all voltage levels. This requires substantial investments in stronger grids and networks within countries and expanded connections between countries. Transmission capacity needs to be extended between, for example, the Nordic region and continental Europe and within Germany from north to south.