Piecing together the sector coupling puzzle

Tom Payre from GRDF highlights some crucial questions around energy system integration and explains how many of the answers lie with energy network operators.

Following the European strategy published in July 2020, energy system integration, also known as sector coupling, is expected to accelerate the energy transition.

By maximising the production of renewable energy, linking energy sources and optimising end uses, energy system integration refers to the planning and operating of the energy system ‘as a whole’, across multiple energy carriers, infrastructures, and consumption sectors, which are currently decoupled into separate value chains with their own market rules.

Such an objective can only be realised through a relevant integration, based on three complementary principles: The development of an efficiency-oriented circular economy; an increased use of renewable and decarbonated fuels, including hydrogen, for usages hard to electrify, such as heavy industries; and, according to the European Commission, a greater direct electrification of end-use sectors.

By strengthening the synergies between these sectors, the EU hopes to deploy efficient, lowcarbon, reliable energy services at an optimal cost for society.

The expected benefits of the integration of energy systems should make it possible to achieve climate neutrality by 2050. The Energy System Integration aims to reduce GHG emissions in hard to-decarbonise sectors, in order to make a more efficient use of energy resources and develop flexibility solutions, while strengthening the resilience and security of the energy system.

Such ambition is reflected at every level of the energy system, and particularly, for energy distributors as renewables production is more decentralised than ever.

While this trend towards widespread electrification and distributed generation is challenging the electricity distribution sector to deliver the flexibility required by the intrinsically rigid and not programmable renewable production, the EU vast gas distribution network, which increasingly incorporates renewable and decarbonised gases, is in fact already able to efficiently provide the necessary back-up needed.

An important question is how the integration of energy systems is accomplished at the distribution level, in relation to the climate neutrality and resource efficiency goals of the EU Green Deal.

Another is how gas and electricity distributors are partnering to achieve energy efficiency gains and optimize use of renewable energy.

Finally, it is important to consider all the policy and regulatory requirements to ensure successful integration of energy systems and how EU legislation can effectively steer this.

If strengthening the integration of energy systems ultimately aims to decarbonise the European energy sector, this objective is only achievable by relying on the fundamentals of the gas network and by developing appropriate and innovative regulation, fully backed by European and national institutions.

Gas networks and sector coupling

Today, the importance of investment and the requirement to improve flows of an increasingly rigid energy system make the need for innovation paramount. It is in the interest of the EU to optimise existing assets, in order to achieve climate neutrality and stimulate innovation.

These assets include all energy networks. The gas network, which is capable of receiving increasing amounts of renewable gases such as biomethane, syngas, renewable hydrogen, at a limited cost, is an effective and immediately available tool to foster the energy transition.

Thanks to innovative projects, gas networks can make sector coupling a reality. For example, power-to-gas technologies combine molecules’ flexibility with electrons’ benefits. Gas network operators can thus modulate energy needs and make a rigid system more flexible.

If gas brings the necessary flexibility to the energy system and exploits a growing share of renewable energies potential, it is mainly thanks to a widespread and available infrastructure. Indeed, gas networks represent nearly two million kilometres of pipelines in Europe.

They reach most European citizens, thanks to the distributors. The electricity network complements this action, by promoting the massive development of renewable electricity.

For such reasons, gas networks can be the backbone of the European energy transition and meet the objectives of the Green Deal. According to Paolo Gallo, President of GD4S, this can only be accomplished through better and broader cooperation between grid operators and an improved interconnection with energy systems. Indeed, at the origin of the Energy Systems Integration Strategy, the Commission has emphasised why a more integrated circular system to build higher levels of flexibility is needed.

Augustijn van Haasteren, Team Leader at the Directorate General for Energy, clearly recognises the fundamental role of DSOs in the energy transition. To have an infrastructure that meets the future demands of a more decentralised energy system, the Commission expert believes that DSOs need to be more involved in the process of setting the rules related to the development of the grid code.

If the energy transition implies deep transformations, the EU Green Deal will be a success as soon as the institutions value the role of the network operators. By strengthening their involvement, energy policies will be more adapted and coherent to meet the current challenges, particularly in terms of costs, investments, and development.

Indeed, the integration of the cross-factors between electricity, gas, hydrogen, heat and transport is required. According to the Secretary General of E.DSO, Roberto Zangrandi, this is particularly important in sectors where fully electrified solutions are not realistic for technical or financial reasons.

The complementarity of energies must be relied on, using the maximum of the electrical system that covers a large part of the EU, and promote digitalisation. At the heart of this process, distribution system operators will continue to invest in digital technologies to modernise and optimise their networks, working to build a truly
digital network able to inform consumers in real-time and optimise energy flows.

By improving the integration of energy systems and cooperation between network operators, through creating synergies between the public and private sectors without distinctions, and further digitising and promoting investments, the EU energy system will be able to expedite reaching its decarbonisation targets.

Doing so will require substantial planning, foresight and a strong and credible commitment from regulators and EU institutions.

Innovative Regulation

While energy systems and operators have a key role in the energy transition, the EU Green Deal will only be successful if appropriate regulation shapes the upcoming transformations in innovative ways.

European and national regulators must work together and reach convergent solutions to foster the integration of energy systems. Without a global approach, regulatory frameworks may not be sufficiently relevant.

Roberto Zangrandi has emphasised that the interoperability principle, which is at the heart of the regulators’ work, is only real if national regulatory approaches of the 27 Member States are coordinated.

Tom Payre is Energy & Sustainability Analyst at GRDF Regulatory coordination must be forward looking, based on present experiences and previous lessons. A detailed analysis of benefits and costs is necessary to make the most of the previous experiences and anticipate future transformations, according to Paolo Gallo.

Regulation must be at the service of European climate and financial ambitions. This requires a non-biased technological approach; otherwise it will not be possible to optimise investments to achieve climate neutrality by 2050.

According to Jean-Laurent Lastelle, Vice-Chairman of the Council of European Energy Regulators, regulation must also ensure operators’ choices are appropriate and the rights of users, producers, suppliers and consumers are fully respected.

The transition to a low-carbon society should not leave the consumer behind. The consumer should be able to satisfy their needs in an affordable way. This underlines the important work of DSOs in promoting the developing smart meters, which give operators an accurate view of the state of the networks in real time.

Decentralisation and the development of renewable energies have created new challenges for regulators. Energy flows, markets, synergies between gas and electricity and storage require greater agility in infrastructure planning. Indeed, the potential of renewable energy production must be exploited to the fullest by optimising development of the networks, to avoid stranded assets.

Solutions already exist to better consider the complementarity of energies in a flexible way: for example, end-users can benefit from sector coupling by using hybrid heat pumps – an electric heat pump combined with a gas boiler – which take all the benefits of the renewable electricity by combining it smartly with gas equipment.

Moreover, these solutions avoid the costs of full electrification linked to peak production equipment costs and electric grid reinforcement costs, while giving flexibility to securely manage the growth in intermittent electric renewable energy, improving energy efficiency in buildings and bringing relief to the electric grid by means of peak demand management.

Institutional Commitment

These transformations must be implemented with the involvement of all, including regulators and the European and national institutions.

European institutions and regulators must therefore innovate to create space for reconciliation between investments, consumer needs and the involvement of energy network operators. This needs to be done transparently and be supported by innovations such as a regulatory sandbox approach. Emphasis must also be placed on removing barriers to energy system integration, improving technologies such as electrolysis, and increasing energy efficiency.

Gone are the days when the EU’s energy policies focused solely on transmission networks. Energy distributors now have an essential role in ensuring the effective management of decentralised renewable energies and the empowerment of citizens.

DSOs must therefore be at the core of regulatory, legislative and institutional coconstruction and at the centre of network planning. Otherwise, the mismatch between network planning and the energy challenges facing Europe today will not be resolved.

About the author

Tom Payre is Energy & Sustainability Analyst at GRDF