Digitalisation of the European Energy System

By Pearse O'Donohue, Director of Future networks, Directorate-General for Communications Networks, Content and Technology, European Commission, (pictured)
Spring 2023

Pearse O'Donohue, Director of Future networks, Directorate-General for Communications Networks, Content and Technology, European CommissionWhy is the Commission proposing a plan to digitalise the energy system?
To tackle the EU's dependence on Russian fossil fuels and the ongoing climate crisis, we need to accelerate the twin digital and green transformation of the EU's energy system.

Smart building systems, meters, and electric vehicles, as well as Internet of Things (IoT) devices, provide critical information for monitoring energy consumption, increasing renewable energy integration, and reducing costs. Data services, energy management systems, and applications hold enormous potential, but need further support to become widespread.

To support this transformation, the Commission will undertake a series of actions through legislative initiatives, investments, and coordination with Member States over the coming months and years.

In the medium term, digitalization will facilitate seamless interactions among diverse actors, enabling consumers to benefit from domestic energy sources such as solar panels and communityowned wind turbines. For example, consumers could participate in energy communities and collective self-consumption schemes, taking advantage of their own solar panel generation and benefit from lower cost electricity than buying from the grid.

Similarly, bidirectional electric vehicle charging would provide additional energy resources during peak hours.

In the long-term, digitalization will be a necessity for integrating decentralized forms of renewable energy into the grid, reducing dependence on imported fossil fuels and their price volatility. This integration requires more attention to grid management and more grid flexibility at local level, which can be achieved through activation of consumers and better management of prosumers’ energy assets. A seamless access to granular data about the state of the electricity grid and prosumer assets will be critical for delivering energy services but can only be achieved through widespread digital tools and shared data infrastructure.

How is the Commission encouraging investment in the development of smart grids and digital solutions related to energy?
The Commission is promoting investment in the development of smart grids and related digital solutions to ensure the energy sector reaches its full potential. Despite significant progress in digitalisation, with 51% of households and SMEs in the EU equipped with smart electricity meters, more must be done to achieve a fully smart and flexible energy environment.

To reach the goals of the Fit for 55 and REPowerEU initiatives for renewable energy and energy efficiency, the Commission estimates that approximately EUR 584 billion in electricity infrastructure investments will be required from 2020 to 2030, particularly in the distribution grid. Investments in digital solutions, such as grid optimization, can reduce capital expenditures on enhancing existing grid infrastructure and support the deployment of technologies such as electric cars and decentralised renewables. As part of the Digitalisation of Energy Action Plan, the European electricity system operators, both for the highvoltage (transmission) as the medium and low-voltage (distribution) grids, have jointly signed a Declaration of Intent to develop a digital twin of the European electricity grid: The aim is to collaborate on digitalizing the grid, promoting mutual learning, and designing for interoperability.

What measures will the Action Plan implement to address cybersecurity issues?
Digitalisation can bring many benefits to the energy system, including increased efficiency, flexibility, and resilience. However, it also introduces new challenges related to the security of the energy infrastructure and the reliability of the electricity grid.

To address these challenges, the EU has a comprehensive approach that combines specific measures for the energy sector with a broader cybersecurity framework. The recently adopted revised Network and Information Security Directive, known as NIS2, recognizes the energy sector as a critical infrastructure and outlines provisions for national crisis response, risk management, and information exchange.

The Commission will work with the NIS Cooperation Group, ENISA, and other stakeholders to identify ICT services and products that may be subject to coordinated risk assessments. Particular attention will be given to risks in the renewable energy and grid supply chain, including offshore wind.

What is the Commission proposing to address the energy consumption of the information and communication technology (ICT) sector?
The ICT sector is projected to consume 13% of the world's electricity by 2030, contributing 3-5% of global carbon emissions. To reduce energy demand and reach climate neutrality, the EU is taking steps to make ICT products more energy efficient and environmentally friendly. The Commission is extending the Eco-design for Sustainable Products Regulation to cover new ICT products and developing an energy label for computers, incentivizing manufacturers to create products that are energy efficient, reparable, reusable, and recyclable.

Data centres, seen as critical infrastructure, accounted for 2.7% of electricity demand in 2018 and will reach 3.2% by 2030 if development continues along the current trajectory. The Commission is acting by introducing energy consumption monitoring and reporting requirements in the Energy Efficiency Directive, developing an environmental labelling scheme for data centres, exploring separate reporting lines for indirect greenhouse gas emissions from cloud computing and data centre services, and improving the operating conditions of servers and data storage products through revised Eco-design rules.

What funding options will be provided to achieve the objectives outlined in the plan?
The EU has several funding instruments to accelerate the twin transition to a smart and sustainable energy system.

The Horizon Europe 2021-2027 programme will aid in enhancing interoperability, involving consumers in the new energy market, and piloting energy data spaces as well as support for the digital twin of the electricity grid. The Digital Europe Programme will play a crucial role in the deployment of a common European energy data space and support the European Cybersecurity Competence Centre and Network of National Coordination Centres. Connecting Europe Facility grants can be used for cross-border smart grid projects of common interest (PCIs). National Recovery and Resilience Plans provide a means for Member States to channel funding into the digitalization of the energy sector.

In conclusion, the digitalisation of the European energy system is a crucial step in the transition to a more sustainable and secure energy system. The EU's action plan on the digitalisation of the energy sector is an important next step in this process and will help to drive the integration of digital technologies into the energy sector. This will support the growth of renewable energy production, increase the efficiency of the energy system, and promote the development of innovative solutions that can help to reduce the costs of energy production and consumption.