Digitization – linking the parts of the energy transition

Digital technology has already significantly influenced the development of the energy industry. Andreas Kuhlmann, Chairman of the German Energy Agency (dena), believes that even more is possible: the merging of the energy sectors into an integrated overall system.

Vita
Andreas Kuhlmann (51) has been Chairman of the Board of dena since July 2015. Born in Recklinghausen and a committed supporter of Schalke 04, he is a member of the Executive Assembly of the World Energy Council, a member of the Global Future Council of the World Economic Forum on the Future of Energy and a member of the Advisory Board of the Society of Benefactors of the Institute of Energy Economics at the University of Cologne. Andreas Kuhlmann has had a special relationship with STEAG since he completed a school internship there in the 1980s.

Mr. Kuhlmann, the energy transition is overcoming the current separation between producers and consumers; in future there will be more and more so-called ‘prosumers’. What about you – are you just an energy user or also an energy producer?
I live in a rented apartment, on the third floor. There aren’t many opportunities yet. And if it’s a question of simply plugging balcony-mounted solar cells into the power socket, my physicist’s heart isn’t quite in it. But I also have a property in Marl. I’m thinking about doing something there. Maybe I should talk to an expert from STEAG about it?

dena also sees itself as a promoter of digitization in the energy industry. Can the energy transition succeed without digitization?
Good question. I don't think so. Digitization is taking place in all areas of our lives, including the energy industry and climate protection. Digitization technologies are a kind of ‘glue’ for the successful integration of the individual sectors into an overall system, the integrated energy transition. In the future, we will move even further away from isolated systems for electricity, heat and mobility – towards an overall view of generation and consumption.

What do you see as the advantages of this development, including those for individuals?
For the consumer, it can mean more service. New products are coming onto the market which unite once separate components, for example at some time the electric car and the solar system. In addition, consumers have the opportunity to gain more transparency as regards their energy consumption. And at some points they can then save energy much more easily. For companies, digitization is increasingly becoming the basis of new business ideas. And there is another effect: Companies that deal with these questions also attract young people with new ideas.

There are now around 1.6 million distributed generation facilities in Germany – and the number is rising. Is it really realistic to use digitization to coordinate all these producers so intelligently that they can, for example, make a reliable contribution to grid stability?
Counter question: When the first houses were electrified in 1880, was it realistic that life today would be inconceivable without electrification? You’re right, of course. The challenge is great, but solutions are already emerging in some areas: For example, thanks to advanced digital measurement and control technology, inverters in solar power systems are now so far advanced that they can be activated in certain grid situations in order to stabilize the frequency.

Critics of digitization argue that increasing networking also entails risks, for example through serious cyber attacks that paralyze entire networks. Is that criticism justified?
There is no question about it: Digitization in almost all areas of life also brings fragility with it. This is why the protection of our networks is also an issue that is being addressed with high priority, for example by the German Federal Office for Information Security. We will have to get used to adapting not only to new technologies, but also to their misuse. This must of course also include questions of resilience, and is a permanent process.

Smart metering, multichannel platforms, big data – will the energy company of the future have to be a data specialist?
Well, digital thinking will certainly be an integral part of it. But of course, the energy industry is much more than software. The core competence of the energy industry, the overall systemic understanding of generation, networks, consumption and all that, will continue to rest with energy companies such as STEAG. This expertise can also be deployed with confidence. But there is an increasing need in energy companies for people who think digitally, look for new ideas, enter into cooperation arrangements and build up new areas of expertise. All this will become even more interdependent in the future.

To what extent do you see the process of digitization being influenced by regulatory requirements – or to put it another way, do we have the right laws to successfully shape digitization in the energy industry?
As evidenced by the advent of digitization in the energy industry, some things are already possible even under the current legislation. We can identify many activities, often still in the conceptual phase and unfortunately not yet in the profitability phase. But we cannot attribute this effect solely to politics. The challenge for the legislature is, on the one hand, to ensure stability and, on the other hand, to give companies sufficient flexibility. And at this point we are all called upon to work together: We must be more precise in our demands on politicians.

STEAG embarked on digitization as early as at the beginning of the 1980s: At that time, the energy company introduced the first digital systems in its control room to control and regulate the electricity generated in the company’s own power plants. In the meantime, STEAG has advanced further with this process on the basis of digital technology: Today, the control room operates almost fully automatically and can be monitored by a single employee in shift operation (one-man control room) – possibly even via a mobile device in the future. This was one of many digital innovations presented at the STEAG digitization conference in May, where opportunities to make digital technology usable for the company were discussed. Another digital solution comprises auto-traders for intraday marketing: They enable autonomous trading of free capacity at STEAG power plants (with individual algorithms for different power plant types) on the market. This involves the automated purchase and sale of electricity on the EPEX-SPOT exchange. STEAG also makes use of digital technology for load optimization in district heating networks: A self-learning load management system avoids expensive peak loads in generation, while at the same time minimizing fuel consumption and thus also CO2 emissions.

 

„There is an increasing need in energy companies for people who think digitally, look for new ideas, enter into cooperation arrangements and build up new areas of expertise.“

German Energy Agency (dena)
dena sees itself as an independent driving force behind and pioneer in the energy transition. To this end, the company, the majority of which is owned by the German government, is oriented towards the energy policy triangle of environmental compatibility, security of supply and affordability, as well as the internationally agreed climate protection targets.

Has government established the necessary framework guidelines for this development and where, if at all, do you see a need for optimization?
This is, for example, one of dena’s functions. We ask the companies, what framework conditions do you need for your business? And then we ask the Federal Ministry of Economic Affairs and Technology, for example, what opportunities are there to provide these? Companies need a kind of space to experiment. To this end, the German government should – in a similar manner to the SINTEG funding program – create a temporary and application-related exception database. And in the area of pooling, i.e. the digitally controlled combination of generation facilities and consumers, I would like the German government to actively promote and secure competition and growth by means of an overarching strategy.

Digitization has already changed the energy industry considerably over the past five years. If you were to risk a look at the future, what will the energy market look like in five years’ time?
In general, we will have created a great deal of efficiency in the energy industry by then, and perhaps also saved process costs at various points. We will see many more electric vehicles on the roads, have more transparency about electricity and heat consumption through modern and better metering equipment, and smart home concepts will be standard in the new construction sector. We will also see the sectors move further together – digitization will be the link.

And how will you personally generate your energy?
I am a curious person and closely follow the progress that is being made. I look at what is on offer, and whenever a device leaves my home due to age or a defect, the next one will certainly be smarter, more efficient and perhaps also more networked. Furthermore, it will probably remain the case that I will look to the energy suppliers. Not every consumer has to invent his own energy transition. STEAG and many other energy suppliers will certainly continue to offer interesting products in the future, so that the energy transition can succeed.