Hello, and welcome back. In this session we want to talk about the challenges to managing urban electricity systems, and these challenges come from three different angles, from three different perspectives, and all these challenges affect the management functions that we have identified: the grid management, the grid reinforcement, the grid development, the customer relations, and the purchasing. Each of these challenges affect these functions differently. The three challenges are basically the market liberalization, the electricity market liberalization, environmental challenges, and climate change in particular, and then the role of the information and communication technologies. Let's look at each of them separately, and let's start with electricity market liberalization. So, in many countries, electricity markets have been liberalized, or are in the process of being liberalized. Basically, liberalization means that the infrastructure and the services are being unbundled. It means that the producer can now compete for different customers, the customers can buy electricity from different producers. They are still obliged to be hooked to the network, they have no choice on the infrastructures, but they have a choice on the energy, the electricity they buy, and from whom they buy it. This change, this market liberalization, has substantial challenges for the urban electricity infrastructure managers. Let us start with electricity purchasing. Basically, the challenge here is that the retail prices become competitive, and the customers can now switch, so if you are an urban electricity operator that has a series of customers, and some of them go away, that means that you have to professionalize your management in order to keep these customers, perhaps to offer them new services, like energy savings, and things like that, in order to retain these customers. You may actually even want to buy customers from other cities, but I think that's a little bit another story. Now, the second challenge here is that you have to change the customer relations, and you have a shrinking customer base, and especially the lucrative customers are leaving you. The big industrial customers are leaving you, and you have to make sure that you can keep these customers with all kind of services, additional services. Sometimes even metering and billing is being liberalized. This means that you can lose even technical activities. Metering is actually a very lucrative technical activity and if you lose it to the competitor, you lose an additional source of revenue. It means customers must be treated differently, and managed more proactively. Non-paying customers now really become a problem, because you cannot cross-subsidize from paying customers to non-paying customers, and actually they must be disconnected, which creates a challenge with the political authorities if you disconnect a customer, and social tariffs, which the political authorities may allow you to do, or may force you to do, must now be compensated by the political authorities. In terms of grid management, what this means is that there is an increased complexity because of unbundling. You, as a grid operator, are no longer necessarily informed about all the energy activities that are going on on your grid, and therefore managing the grid, balancing the grid, becomes a more demanding activity. The second big challenge is our environmental challenge, in particular, greenhouse gas emissions, climate change. Overall, the consumption of fossil fuels must be reduced, including the consumption of fossil fuels for electricity production. And not only that, overall energy and electricity consumption must be reduced if we want to address these environmental challenges, in particular climate change. What does that mean for the manager of urban infrastructure, electricity infrastructure systems? It basically means that in terms of operations and managers you will have more intermittent production because of renewables, and therefore you will have more balancing needs. It will be more complicated to balance the urban electricity system. In terms of grid development, it means that self-production will probably force you to add new grid developments to the existing grid, and that can be a challenge. This is mainly a financial challenge, because you need to find the money for these grid reinforcements. And there's also, of course, a regulatory issue. And if there is less electricity consumption due to energy efficiency measures, for example, it is easy to understand that the grid costs will actually, the proportionate grid costs will actually increase. There is less electricity to bill, less customers, less electricity to bill the grid costs to, which will be another financial challenge. In terms of energy purchasing, you now have to look also to buy electricity from non-renewables. And you have to add a mix, you have to find producers with certificates that will sell you renewable electricity produced from renewables. In terms of customer relations, it means that consumers are now also becoming producers, and that's a different relation. It's not just the consumer you are selling something to, you are also now a consumer, a buyer, from the same customers, and that creates new challenges in terms of how to manage the relationships with your customers. And also, here, I think you have to find new business models for energy savings. Basically, you want to try-- I mean, if electricity consumption must be reduced, then that means that you actually need to make money from energy savings, and that is a new challenge in terms of business models, and it is-- We do not have any answer yet how to respond to that challenge, but it will be a challenge, and it already is a challenge for urban electricity managers. The third challenge are the information and communication technologies. We have already seen that the information communication technologies-- we have seen that in the second block-- that they can make the usage of the infrastructure more efficient, they can involve the users more actively in the management of the infrastructures, and actually they can allow for the development of new infrastructure services, in this case energy services. Now let's look at what that actually means for the managers of urban electricity systems. In terms of operations and maintenance, it means that actually, thanks to the whole smart metering and ICTs, the balancing energy can actually become commercialized. There are companies that-- There are customers that can now sell their ability to balance the system, for example, by turning off their fridge, by turning off machines. So in case there is a need for balancing energy, the customers can become more actively involved in balancing. Overall, I think the ICTs will make the electricity system much more resilient because of the different measuring points and the coordination that is allowed thanks to the ICTs. In terms of grid development, it is clear that the ICTs, as I said before, is a means to increase energy efficiency and actually will reduce the need for grid development. In terms of energy purchasing, we have already talked before, you can now also purchase energy from your consumers, who become producers, at least in the case of balancing energy, as we have seen before. So it's clearly a new service that the ICTs allow for. And in terms of customer relations, this allows for much more flexible pricing, peak load pricing, all kinds of prices that are related to the usage of the infrastructure to the energy price, things like that. ICTs also offer the opportunity to develop new services like the energy-- We already saw energy services companies, the service to operate one's own internal energy system, not necessarily in the household, but in a supermarket, in a big industrial area. Now in this block, in this session, we have now seen the three main new trends that will affect the management of urban electricity systems. In the next session, we will hear from a practitioner how he looks at all these things. Stay tuned.
