This document summarizes a presentation on smart grids given at a workshop in Barcelona, Spain in 2017. It discusses how the electricity system may look different in 20 years due to digitalization, with smart connected products changing competition. It also notes the potential for prosumers, or consumer-producers, to have significant market power if they collectively participate in energy markets. Finally, it discusses the case for transitioning to smart grids but also reasons why change may not fully materialize, such as certain large infrastructure investments undermining alternatives or business cases being too dependent on local conditions.

1. European cooperation Network on Energy Transition in Electricity
Andreas Sumper
CITCEA-UPC
SESSION 2:
SMART GRIDS CHALLENGES: THE VISION OF TECHNOLOGICAL CENTRES
WORKSHOP
“DEFINING SMART GRIDS: CONDITIONS FOR SUCCESSFUL IMPLEMENTATION”
Barcelona, 9th February 2017

2. 2
Will the electricity system look
very different 20 years from
now?

3. 3
Smart, connected products are changing how
value is created for customers, how companies
compete, and the boundaries of competition
itself. These shifts will affect virtually every
industry,directly or indirectly.
Michael E. Porter and James E. Heppelmann, Harvard Busines Reviews:
Is every “thing” now going SMART?
• Electricity is a connected product
• Smartness is creating a non-commodity
• The value is shifting to the customers (Prosumers)
• Competition is changing in the electricity sector
• The electricity sector is heavily impacted

4. • The prosumer is inevitably an energy market
participant
• The prosumer is an economically motivated entity
• A potential co-player or an adversary to the
establishment
• A collection of prosumers can execute significant
market power
Prosumers

5. The case for change… … and why it might still not happen
Rapidly increasing volatility of electricity
markets, creating the need for flexible response
of the system
A few big infrastructure investments
could mitigate volatility – and destroy the
business case for alternatives
Price differences in 2025 Summer Winter
Denmark Norway Denmark Norway
Average price (€/MWh) 52.0 50.3 59.1 60.1
Minimum price (€/MWh) 42.9 39.6 46.3 54.8
Maximum price (€/MWh) 57.9 55.6 70.9 64.2
Difference max-min
(€/MWh) 15.0 16.1 24.6 9.4
McKinsey 2011

6. The case for change… … and why it might still not happen
Significant value creation from smart grid
for all stakeholders – utilities, regulators,
customers and equipment vendors
Business cases are highly dependent on
local specifics and regulatory
environment
Source: http://facilityexecutive.com/2009/07/power-supply-trends-powering-up/

7. The case for change… … and why it might still not happen
Innovative products and solutions across
the whole value chain – many with multiple
impact on the overall power system
Capturing the value often requires
complex partnerships or integrated
solution approaches
Source: Bremdal, SRG Symposium, Barcelona

8. The case for change… … and why it might still not happen
Attractive business models in the making –
opening opportunities for „unorthodox“
coalitions and new players‘ entries
Both established and new players might
lack sufficient clout and speed to really
change the market
Smart Grid
Smart Home/
Internet of Things
Service in the
cloud
Source: Bremdal, SRG Symposium, Barcelona

9. The case for change… … and why it might still not happen
Disruptive technologies under development
such as electric vehicles – attracting talent,
capital and attention
Breakeven points to reach economically
attractivebusiness cases might be too far
out to be reached
The Smart Rural Grid
Concept
Bottom-up development
Local
market
Local
market
Normal operation
DSO
Island operation
Data flow

10. • Digital revolution is
changing the value chain.
• Prosumers will gain market
force.
• For the target of
decarbonisation the
electricity system is crucial.
• The DSO is core of the
digitalization,
decarbonisation and
decentralization strategy.
Digital-
ization
De-
carbon-
isation
DSO
De-
central-
ization