Unioncamere Europa – Interview to Carmen Gimeno, GEODE Secretary General
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- Can you quickly introduce us to the association and its priorities?
GEODE is a strong and reliable European network platform on energy distribution that proactively provides expert advice to GEODE members and policy makers to facilitate their decision-making process, for the benefit of the end-users. GEODE represents about 1400 local utilities from 15 European countries. GEODE is as a reliable partner of expertise for the European Commission, Regulators (CEER), the EU DSO Entity and for the European stakeholders. GEODE is engaged in defining the new roles for DSOs in the decarbonization transition. While empowering the consumer’s role, GEODE is actively working in the development of distributed flexibility and enabling new energy services for consumers.
- The State of the Energy Union 2021 was recently published by the Commission. What is your assessment of it?
This year’s State of the Energy Union report stands out from the crowd in a couple of ways.
First, it is the first state of the energy union report since the adoption of the European Climate Law and the second since the adoption of the European Green Deal. It is therefore, from now on, undertaking the important mission of assessing the progress of the Energy Union towards its binding decarbonization target, to be achieved by 2050.
Secondly, this year’s report is published against a particular background. While the energy system has been and is still being challenged by the impacts of the COVID-19, it has seen, more recently, a sharp spike in gas and electric prices across Europe. Partly due to an increased global demand for gas as the economy is picking up, these high energy prices have triggered severe concerns for European citizens and industries.
As a very positive sign The Stage of the Energy Union 2021 reports that, in 2020, for the first time, renewables overtook fossil fuels as the EU’s main power source. The latest available data and external analyses existing indicate that the EU as a whole, and the majority of Member States individually, were on track to achieve the targets, thanks partly to the lowering prices for key technologies such as wind and solar over the years.
Also worth noting, the Annex of the report, which analyses the progress on the competitiveness of clean energy technologies, is highlighting that the take-up of smart grid technologies is expected to remain a robust trend during this decade and beyond, in close correlation with electrification, decentralization -which makes distribution networks crucial infrastructure for the energy transition- and the need for improved grid reliability and operating efficiency and increasing investments to upgrade aging grid infrastructure. Technologies such as smart metering, distribution grid automation or electrification of mobility will each contribute with around 8% of the estimated investment in EU and UK in power distribution grids until 2030.
- The increase in energy prices is one of the key issues in the European debate: how do you position yourself in this respect?
Indeed, the unprecedented increase in energy prices is the hottest issue at the moment in the energy debate. However, DSOs as regulated entities performing as core task the distribution of electricity and/or gas – a regulated activity as well, have no interaction no responsibility with the energy markets and their current volatility nor with high energy prices.
Drivers are well-known now, a bad combination of very high gas prices – have increased 4 times in last 6 months- and rising ETS allowance prices, showing how countries with higher gas dependency and lower interconnectivity are more exposed. Citizens and businesses the ones directly affected for the record-high energy prices. DSOs will not scape to the indirectly effects – such as inflation rates- that may impact them as well. National Governments have adopted emergency measures to alleviate price for vulnerable consumers, mainly through tax reduction – 35% of EU electricity bills taxes, levies, and VAT) and other social policy measures.
The very high energy prices have questioned the need and the “price” to be paid for the energy transition. On this respect GEODE members fully subscribe the words of Ursula von der Leyen, “the energy transition is not the problem but the solution” and it has to be accelerated as much as possible. The recent legislative initiatives of the European Commission both, “Fit for 55” and the “Hydrogen and decarbonized gas markets” package contained the measures to achieve the energy transition and reduce Europe’s dependency on imported fossil fuels as gas.
Power Distribution Grids are key assets in the European Energy Transition as they are the base for electrification and capacity expansion, the connecting point for renewables, the enabler for flexibility and demand management and system integration and a key element to enable customer participation in the Energy Transition. It is crucial that the role of DSOs is recognized and incentivized as a key actor to contribute to make the energy transition a reality.
- The ambitious EU target of zero emissions by 2050 implies major changes in the energy sector. How can local distribution networks contribute?
Indeed, DSOs will – and are already – rising in importance in the context of the energy transition, which was also recognized in the Clean Energy Package, contributing to reaching the climate objectives. Our members now play a key role managing the connection of increasingly distributed generation and flexibility resources, which means that they have to adapt their traditional role as a passive one-way network to an active two-way network.
The majority of RES are and will be connected in the coming years (currently up to 70% as European average). DSOs contribute to empowering consumers, for instance by enabling energy communities. Having received their legal recognition in the European regulatory framework through the Clean Energy Package, energy communities – while still a relatively new phenomenon – are key players within the EU’s vision of the decarbonized and decentralized energy system of the future. From a technical side, DSOs enable energy communities and guarantee a reliable and efficient grid operation (full DSO service). In turn, energy communities can contribute to decarbonization by enabling the integration of renewable energies into the existing grid, as more consumers can be active and generate their own energy with renewable sources as well as new technologies, e.g. electric vehicles.
In parallel, molecular energy sources such as hydrogen and renewable and low-carbon gases will continue to play a key role in the future energy mix, for example, in sectors that are difficult to electrify or as dispatchable power. In this regard, Europe’s extensive distribution networks – encompassing approximately 2 million km of pipelines – will also play a key role in reaching climate neutrality by 2050. Provided with an enabling framework, this very valuable existing infrastructure can be used or retrofitted for blending and/or repurposed for the distribution of pure hydrogen in the future. The gas distribution grid is also very important for sector integration that entails a more energy- and cost-efficient decarbonization than an electrification-only approach. The gas grid can actively support the electricity grid in keeping the network stable, for instance when the storage of fluctuating, renewable energies is facilitated through P2G solutions or through the use of the gas grid as a storage facility.
In addition, thanks to the DSOs’ expert knowledge of the grid and the local potential for production, they are well positioned to adequately evaluate the optimal location for the production/sourcing of renewable and low-carbon gases – to the benefit of citizens and the environment alike.
GEODE Secretary General