IEEE Power & Energy Magazine - January/February 2017 - 70

An example of European energy policies
with substantial side effects are the so-called
20-20-20 targets.
A proper price signal is key for good, active customerdemand participation; however, practical participation will
likely require the help of aggregators, who will need to be
allowed the freedom to act in the market and whose role
should be facilitated by distribution-grid companies (which
constitute a natural monopoly).
Particular attention should be paid to the challenging circumstances of a multitude of prosumers with rooftop PVs
(possibly) assisted by local battery storage. What will be
the appropriate pricing scheme for feeding back to the grid?
Guaranteed feed-in tariffs and net metering do not appear
sustainable in the long run. Also in this case, the intervention of aggregators, perhaps also employing local storage
for grid ancillary services, may be called for. In this regard,
specifications on products for ancillary services should be
made as independent as possible of technologies, allowing
for an open competition among providers of such services
(coming from supply, demand, and/or storage).
One of the cheapest means to integrate intermittent
renewables over large geographical areas is by allowing
new high-voltage lines to be constructed (be it in open air
or as cables, as ac lines, or as high-voltage dc). The crucial
stumbling block of delayed or denied permits must be overcome. This is a typical case in which the collective benefit
may supersede individual or personal desires (whereby the
enforcing authorities must appropriately compensate the
disadvantaged). The same applies to natural gas transmission grids. If there is insufficient grid capacity, there may
not be enough transport of gas during heavy winter conditions (as in New England in the United States in 2014-
2015) or because of geopolitically-inspired cuts (as on
New Year's Day of 2006 and 2009 in Europe), with serious
consequences for electricity generation and heating. Gascompressor stations should operate bidirectionally where
doing so can improve security of supply; in addition, also
for gas-infrastructure projects, permits should be granted
in a timely fashion.
Policy makers should anticipate (or avoid) conflicting or
self-neutralizing targets, as we demonstrated in our discussion of the 20-20-20 case in Europe. One should identify the
main problem (e.g., climate change and CO2 emissions) and
then impose one clear target. Because CO2 emissions lead to
external costs, these costs should be internalized, meaning
that some sort of CO2-related penalty on all CO2-emitting
sources may have to be considered (either by a simple CO2
tax or via a single cap-and-trade system, with perhaps a
CO2 budget for all emitting entities, even up to the level of
70

ieee power & energy magazine

households). Renewables and CHP should take advantage of
that simple CO2-reduction scheme in a natural way, without
extra (likely distorting) support mechanisms.
Through the interaction of the electric power sector with
the thermal sector, ample attention is currently devoted
to thermal grids (of the third and fourth generation). But a
careful regulatory framework will be needed to guarantee a
return on investment for the thermal grid and for customer
satisfaction, especially in areas where natural gas distribution
networks are also available. Who will own the thermal grid?
Will it be a natural monopoly, with distribution/independent
system operator characteristics? Will customers be forced
to connect to thermal grids (and mothball efficient gas-fired
condensation boilers)? Will there still be the freedom to
install heat pumps and/or CHPs?
Transportation will likely see changes over the coming years. Whether very efficient combustion engines will
survive or will be replaced by hybrid or battery electric
vehicles or by hydrogen-fed-fuel-cell vehicles-and over
what period-remains to be seen. It must be noted that in
many countries, car engines already pay a stiff (CO2) penalty because of high excise taxes (especially in Europe),
meaning that cheaper options are available elsewhere in the
energy economy. Also, current, seemingly cheap electric
charging may change in many countries when authorities
start levying excise taxes on electric charging (to compensate for missed revenues due to fewer fuel-consuming vehicles). Will such excise taxes be charged for self-generated
electricity by prosumers? In the end, the revenue books of
governments must balance the budget; it is important that
energy-related taxes be imposed wisely without creating or
aggravating side effects.
Long-term storage of electrical energy still needs to be
resolved. A possible attractive candidate might be the socalled power-to-gas route, whereby "superfluous" renewable
electricity is converted to hydrogen (via electrolysis) and then
made to react with CO2 (which, in turn, is captured somewhere) to produce "renewable methane." It is technically possible, but the overall cost picture in a market environment (and
when all investment costs are appropriately accounted for) is
not yet fully clear. In any case, "renewable methane" will have
to compete in the common natural gas market.
As alluded to with regard to Figure 5, appropriate market
designs will have to be developed, opting for capacity-remuneration mechanisms or energy-only markets for dispatchable units or other means of flexibility to provide the required
balancing. If no satisfactory solution is found, there will be
january/february 2017

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - January/February 2017