The e-harbours journey: Point of arrival; smart energy networks in the North Sea Region.
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VERBEECK, J., KUIJPER, F., WELBROCK, P., GRAY, D., SKOG, D., SCHREUDER, J. and KOOISTRA, S., 2014. The e-harbours journey: Point of arrival; smart energy networks in the North Sea Region. [online] Viborg: North Sea Region Programme. Available from: http://eharbours.eu/wp-content/uploads/e-harbours-report-Point-of-Arrival-Final.pdf [Accessed 27 August 2015]
Background The European Union has agreed upon ambitious targets to address climate change, energy security and economic competitiveness. By 2020 primary energy consumption must be cut by 20% across Europe and the share of renewable energy must be increased to 20%. Without smart demand management, the grid will physically not be able to cope with a substantial increase in decentralized and intermittent renewables. In some parts of Europe, this is already a reality. Why e-harbours? Large industrial cities and harbour areas, with a dense variety of production and consumption processes, are a perfect testing ground for smart energy concepts. The aim of e-harbours is to explore the possibilities for largescale implementation of smart energy networks, specifically through four pillars of energy optimisation: 1. Optimising capacity in the system for additional renewable energy, intermittent by nature 2. A strong improvement in energy efficiency, supporting savings 3. The integration of electric mobility, reducing fossil fuels and possibly adding a buffer to the grid 4. Enhanced stability for the energy network, and greater energy-security The e-harbours consortium The e-harbours project comprised seven ‘showcase’ locations in Belgium, Germany, The Netherlands, The United Kingdom (Scotland) and Sweden. These showcases had different approaches: some were searching for flexibility among industrial consumers, while others created awareness by practical application of a smart grid, the development of energy labelling or business case benchmarking. Things that e-harbours found: our top 10 1. Costs form a key driver. Our case studies show that (local) uptake of renewable resources, combined with the exploitation of flexibility, can result in an energy cost reduction of around 15%. In some instances, this cost reduction can be realised with limited investments, resulting in profitable business cases. Local green energy can be profitable in both large and small harbours. For e-mobility applications electrical storage potentially can bring even higher rewards. 2. For large harbours, finding flexibility is the key. Flexibility is needed to profit from local green production. Our energy audits have demonstrated a large amount of flexible electric loads available at large industrial users. Their exploitation could reduce total electricity costs in the order of 5-15%. 3. The potential to find flexibility and deliver smart energy varies. We expected to find a lot of exploitable flexibility in cold stores, for example, but in fact we found more flexibility in large industrial production facilities (such as chemical plants). 4. E-mobility is a key element of a future smart system concept. Electric cars, boats and vessels, Heavy Goods Vehicles, cranes and reefers offer great potential as part of smart energy systems. Our showcases have shown this at a small scale. The challenge is to scale up and get these pilots into the mainstream. Vehicle technology is improving but the high cost of e-mobility and battery load cycle limitations remain barriers that have to be overcome. 5. The theory (and technology) works but the business cases do not. There are profitable business cases for smart energy, but they are not exploited yet. We encountered a lack of awareness of the economic value of flexibility, and of its potential. Also, organisations are reluctant to modify their ‘core business’, even when they are aware of the potential benefits of exploiting flexibility. 6. Existing regulatory and fiscal regimes are not helpful. Present tariff structures in the energy sector do not reward the exploitation of flexibility. In countries like The Netherlands, there is a trend towards higher taxes on energy tariffs at the expense of variable base pricing, reducing the difference between on peak and off peak energy. This dampens the potential to find costs savings and undermines the economic value of any flexibility within the system. Concerning the exploitation of flexibility, there is no such thing as best practice that can be exchanged internationally. Markets, tariffs, fiscal and regulatory regimes vary too much between countries. What works in Sweden might not work in Germany. The present definition of private networks needs be reconsidered. Energy regulation should encourage opportunities to develop ‘private energy areas’. 7. One size does not fit all. While a lot of flexibility can be found in large harbours, the small harbours in the region tell a different story. These ports, with only a handful of significant energy consumers in a limited range of industries, can provide little or no usable flexibility. However there are significant opportunities for raising energy efficiency and awareness. Many of these small harbours are situated in - often remote - regions where there is great potential for renewable energy, like on the Shetlands and Orkney islands. 8. Regenerating harbour areas provides opportunities. The City of Malmö puts smart energy at the heart of its efforts to regenerate the Western and Northern harbours. That is the way to do it. Embedding smart energy in regeneration and new development provides better opportunities than retrofitting, finding business cases in existing harbour operations. 9. Despite the challenges, our message is getting across. We experienced a gradual rising of awareness among e-harbours industrial partners and other stakeholders on topics like renewable energy and smart energy systems. They are interested in energy saving and – in particular - cost reduction as long as it does not impact on their core business. 10. …And occasionally you uncover something exciting. Who had thought reefers (refrigerated containers) can be an important source of flexibility? Another example: we carried out some work to develop an energy label for fish. In doing this work, we generated some fascinating data on the vast differences in the energy embedded in catching, processing and distributing different species of fish. This will lead to new research. Key recommendations for policy makers 1. We strongly support the shift we perceive in European energy policy, from subsidizing renewable energy resources, towards exploiting smart energy concepts. Help find solutions which provide a clear return on investment and align with the long-term investment strategies of industry, investors and developers. 2. Encourage the development of “private network energy” concepts, enabling ‘pro-sumers’ to exchange energy. This will support local communities in their energy transition. 3. Reward flexibility in the system. Flexibility is not exploitable in the current energy market, partly because of an increasing unbalance between base price and levies on energy. Taxes, distribution and transport fees, subsidies, and other ‘contributions’ form an increasing part of the overall energy price and are no incentive for smart behaviour. Redesign the system of incentives and penalties in line with smart energy concepts. What next? We are ready for the next step in the development of smart energy systems; during the last years many pilot projects in this field have shown that technology is not an obstacle anymore, both residential developers and industrial companies are ready for further implementation. By implementing a few policy changes as recommended, we think the next step to a more sustainable energy supply is within reach. Then the next generation of pilot-projects could focus on (virtual) taxing, fair pricing of network costs, balancing, and encouragement of reserve capacity. Working towards the same goal: Green energy and energy management as a starting point, fossil resources as a backup resource. REPORT FOR THE E-HARBOURS PROJECT OF THE NORTH SEA REGION PROGRAMME - project statement - ‘Investing in the future by working together for a sustainable and competitive region.’