Utility Week

UTILITY WEEK | 15TH - 21ST DECEMBER 2017 | 13 Policy & Regulation Market view E urope's renewable energy push has been driven by the high cost of energy as well as by security and political con- cerns about relying too heavily on imported sources of energy such as natural gas. A large number of centralised renewables have been developed in the region, so the focus has begun shiing towards distributed gen- eration (DG) and flexibility in the energy sys- tem – including demand response (DR) and energy storage, and enabling technologies such as sensors, smart meters, virtual power plants and energy-management systems. In the Global DER Deployment Forecast Database report, Navigant Research analy- ses the global market for distributed energy resources (DER) technologies and assesses key market and technology trends. Driven by these trends, Europe is poised to install 29.1GW of new DER capacity in 2017, gen- erating $25.5 billion in revenue. In 2026, Europe is expected to install 119.9GW of DER and generate $58.6 billion at an anticipated compound annual growth rate of 17 per cent. The picture looks similar for the UK. Despite reduced support for renewable energy in this year's autumn budget, DER capacity additions are expected to be 6.5 times more than central generation deploy- ments in the UK over the next decade. This includes central renewables (mostly offshore wind) and Hinkley Point C nuclear power station in 2025. Navigant Research expects the UK will install 94GW of DER capac- ity between 2017 and 2026, and the Energy Information Agency International Outlook predicts that the UK will add just 14GW of new central generation capacity. Of the total installed capacity, EV charg- ing is expected to grow the most, from 9.7 per cent of DER capacity additions in 2017 to 52.9 per cent in 2026. DER is expected to represent 14.6 per cent in 2026 (up from 3.5 per cent in 2017), and DG is projected to drop from 44.6 to 21.2 per cent. The consequences of this shi will be significant for the UK grid. It will have to be smarter, and to remain stable it will have to interact with many more devices. Perhaps the most challenging thing to predict is the role that transport electrification will play in the energy transition. Although the techno- logical, economic, and consumer behaviour stars are aligning to support a fast transition to EVs, the transport sector is going through its own transition. New business models like mobility as a service and new technologies like automated vehicles will reshape the way we use vehicles and the way vehicles interact with the grid. The EU and the UK government seem to know this change is happening. In July, the UK presented a policy paper titled Upgrading Our Energy System: Smart Systems and Flex- ibility Plan that presents its strategy to cope with the new reality. The EU is discussing legislative measures under the Energy Union framework strategy: l The Energy Efficiency Directive, which sets out design and implementation plans for a new efficiency target for 2030. l A revised Energy Performance of Build- ings Directive. l An updated Renewable Energy Directive to set a new 2030 renewables target and associated measures. l A new Electricity Market Regulation: cov- ering electricity trading rules over differ- ent timeframes, regional co-operation among transmission system operators, and conditions for national capacity mechanisms. l A Directive on Common Rules for the Internal Market in Electricity that focuses on active consumers, including self- generation, aggregation, and demand flexibility. In these circumstances, it is clear why most traditional utilities and even players from other energy sectors such as oil and gas have been investing in DER businesses and launching new services to customers. Exam- ples include Enel X, Eon's SolarCloud, and EDF's SunPlug partnership. These new busi- nesses and services will provide valuable insights into alternative business models and what customers like and dislike. While the transition to DER will not be easy for organisations in an industry built around a centralised energy model, it is already possible to see the first sprouts of DER investments: a cleaner, cheaper, cus- tomer-focused, and far more innovative power sector. Focusing on creating happy customers through innovative value proposi- tions underpinned by new business models and integrated platforms will be critical for success in the energy transition. Roberto Rodriguez Labastida, senior research analyst, Navigant Research Decentralised developments Europe generates more electricity from renewable sources than any other region, and the focus is on distributed energy resources. Roberto Rodriguez Labastida looks at the latest developments. ANNUAL INSTALLED TOTAL DER POWER CAPACITY AND REVENUE BY TECHNOLOGY, EUROPE 2017-26 Source: Navigant Research 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 $ (millions) MW $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Distributed generation Distributed energy storage Microgrids EV charging DR Energy efficiency Revenue

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