Smart 
Energy 
Systems
Connectivity for a 
zero‑emissions future

The GSMA represents the interests of mobile 
operators worldwide, uniting more than 750 
operators with almost 400 companies in the 
broader mobile ecosystem, including handset and 
device makers, software companies, equipment 
providers and internet companies, as well as 
organisations in adjacent industry sectors. The 
GSMA also produces the industry- leading MWC 
events held annually in Barcelona, Los Angeles 
and Shanghai, as well as the Mobile 360 Series of 
regional conferences.
For more information, please visit the GSMA 
corporate website at www.gsma.com
Follow the GSMA on Twitter: @GSM
Rethink Technology Research is an analyst firm, 
based in Bristol, UK, considered a leader in video, 
wireless, IoT, and new energy technologies. Best 
known for its weekly news-based services, of 
which Rethink Energy is our newest, Rethink 
Technology Research has evolved, over its 
18-year history, to provide subscription-based 
research services, and bespoke consulting and 
research projects. Our longevity gives us an 
understanding of how markets develop, age and 
die allowing us to identify which of these phases 
an industry is currently in.
KPN is a leading telecommunications and IT 
provider and market leader in the Netherlands. 
With fixed and mobile networks for telephone, 
data and television services, KPN serves its 
customers at home and abroad. KPN focuses on 
both private customers and business users, from 
small to large. KPN is one of the world’s most 
sustainable telecom companies and sees every 
day as a chance to do better.
Smart Energy Systems
2

Foreword
Steven Moore, GSMA 4
Paul Slot, KPN 5
Executive Summary 6
Introduction: Smart Energy Systems 10
How to build a Smart Energy System 11
The foundations of Smart Energy Systems 12
The role of the Mobile Network Operators 15
The role of Smart Energy Systems in 1.5 degrees 16
Smary Energy Systems: an overview 17
Business opportunities for Mobile Network Operators and energy companies 18
Distributed Energy Resources (DERs) 19
Battery Storage 23
Virtual Power Plants (VPPs) 28
Vehicle to Grid (V2G) 33
Microgrid Trading 39
Introduction: Regulatory Landscape 45
Overview 46
The switch to Electric Vehicles 47
Charging hardware standardisation 48
How consumers profit from green decisions 49
Why price fluctuations should be kept 50
Removing market barriers for small-scale generators 51
Regulation standardisation across Europe 52
Smart Energy Systems and decarbonisation 54
Case study: the Netherlands 56
Scaling Smart Energy Systems for global impact 58
Conclusion 59
Contents
Smart Energy Systems
3

As we look toward COP26 and grapple with the 
economic recovery from the COVID-19 pandemic, 
there is an increased awareness that greater ambition 
is required if we are to meet the challenge of the 
climate crisis.  As we set this ambition and design 
our recovery plans, it’s the right time to consider the 
fundamental transformation required - to decarbonise 
we must digitise.
The mobile sector has a key role to play by increasing 
connectivity, improving efficiency and impacting 
behaviour change, mobile network enabled technologies 
help to avoid emissions. In 2018, the GSMA Enablement 
Effect  report estimated these avoided emissions. 
Compared to the global carbon footprint of mobile 
networks themselves, the level of avoided emissions 
enabled by mobile communications technologies was 10 
times greater – a tenfold positive impact.
This report, a follow up to the Enablement Effect report, 
takes an in-depth look into the most fundamental 
industry to decarbonise – energy systems. Until now, 
there has been a lot of focus on renewable technologies 
Foreword
such as solar, wind, tidal and hydropower and less 
discussion on how they will work together. This is where 
Smart Energy Systems come in.  Connectivity has a key 
role to play and in particular mobile connectivity. To 
reap the most benefit from mobile connectivity there 
needs to be greater evolution and cooperation between 
sectors such as energy, mobile network operators and 
ICT companies, and with energy regulators.
The case studies in this report represent fantastic 
innovation that could be rolled out to help achieve 
our decarbonisation targets quicker and easier.  The 
implementation of Smart Energy Systems will prevent 
an overbuild of capacity worth 16,000TWh of annual 
generation, which based on today’s electricity prices 
will save approximately $1.9 trillion per year. More 
importantly, compared to today’s energy mix, it will save 
emissions of 7.7 billion tons of CO2, making it responsible 
for over 23 per cent of global decarbonisation.
We hope this report starts a conversation about the low 
carbon future of our energy systems and the role mobile 
connectivity has to play.
Steven Moore 
Head of Climate Action, GSMA
Smart Energy Systems
4

The world around us is changing. Some people cannot 
help but fight these changes, nonetheless the changes 
are happening. In a short period of time, I have seen 
them everywhere. Small changes, such as washing 
your hands after a visit to a grocery store and bigger 
changes, like the ‘new normal’ of working from home. 
The COVID-19 pandemic has accelerated change in a 
lot of different ways. In 2020, digitalisation went into 
overdrive. Our quick adaptation to no longer being 
able to travel, to working from home, to delivering 
new services in a new way quickly showed us that we 
are able to achieve great things. Yet the experience of 
the past year has also made us more conscious of our 
own vulnerability. Not only personal and public health 
vulnerability, but also the vulnerability of our global 
supply system as well as our climate. Who doesn’t 
remember the clear sky pictures of normally polluted 
areas? Of course, we can try to fight these changes. 
But we can also embrace the changes and turn them 
into opportunities. 
With this paper, my colleagues and I from both KPN 
and the GSMA are choosing the second option. Due 
to climate change, our energy system has to change 
from a fossil-fuelled industry into a renewable energy 
based system. In order to make a successful energy 
transition, we need new and affordable technologies. 
We need inspired leaders that take action, and we 
need to be bold.  Simultaneously, the world of wireless 
connectivity is also changing. In 2020 KPN launched its 
5G-network, Wi-Fi has nearly become a necessity of life 
and it will not take long before the Internet of Things is 
as normal as the Internet of People.
This report describes how these two concurrent 
changes will result in a new revolution toward Smart 
Energy Systems. It shows how we will get one big 
step closer to being fossil-fuel free once we unite 
data with energy usage. In practice, the transition to 
Smart Energy Systems will mean weather forecasts 
and energy consumption patterns are combined. 
Our electric vehicles will be automatically charged 
when the wind is blowing, and the air-conditioning 
will turn on when it is sunny outside. This means, new 
business cases will emerge in both the energy sector 
as well as the connectivity sector. In this report they 
are described in five main areas: battery storage, 
distributed energy resources, microgrid trading, virtual 
power plants and vehicle-to-grid charging. Realising 
these business opportunities requires forward thinking 
and a collective strategy. 
I truly believe that with this report we have created a 
good start for the changes we are facing. We know 
these changes are ahead of us and we know we can 
turn them into opportunities. Now let’s get started!
Paul Slot 
Executive Vice President KPN Infrastructure 
Foreword
Smart Energy Systems
5

Executive Summary
Climate change has become the defining issue of our 
generation. For global warming to be kept below 
irreversible levels beyond 1.5°C, net global emissions 
will have to half by 2030, before reaching zero by 
2050. Innovative approaches to manage supply 
and demand are needed to accelerate the transition 
from an energy system 84 per cent dependent on 
fossil fuels, to one that runs on renewable power. 
Interconnectivity between all elements is vital to 
achieve a Smart Energy System (SES).
The mobile sector will be essential to providing 
the backbone infrastructure for this. Using wireless 
connectivity, a broad network of diverse devices can be 
aggregated that both produce and consume energy. 
Harnessing the power of AI-based cloud computing, we 
can create platforms that control and optimise the use 
and storage of renewable energy resources, and retire 
fossil-fuels from the existing energy mix. 
Through three key steps, wireless connectivity will 
prove to be a key component of a system that can 
guarantee energy demand is always satisfied by 
zero‑carbon sources: 
1	
Maximising the lifetime power output of renewable 
generation assets
2	 Minimising excessive energy consumption through 
end-use and transmission
3	 Optimising load shifting and energy storage to align 
clean power supply and demand
These SES, with optimised end-to-end efficiency, can 
save 23 per cent of global carbon emissions, based on 
2019 levels, by 2050 – more than would be achieved if 
90 per cent of today’s cars were retired overnight. 
Influencing 86 per cent of energy between production 
and consumption by 2050, the prevented wastage in 
electricity will save an overbuild of power generation 
accounting for 16,000 TWh, saving $1.9 trillion per year 
based on today’s energy prices.
As we enter a period of inevitable economic hardship 
following COVID-19, mobile networks will be key 
to optimising the transition to net zero emissions, 
despite not physically reducing emissions themselves. 
Considering the sector has a carbon footprint of 220 
Mtonnes CO2e, the level of avoided emissions it could 
enable through SES is 35-times greater through to 2050.
A Global Challenge 
Requiring Smart Solutions
Smart Energy Systems can save 
23 per cent of global carbon 
emissions, based on 2019 levels, 
by 2050 – more than would be 
achieved if 90 per cent of today’s 
cars were retired overnight
Smart Energy Systems
6

Achieving this huge impact on carbon emissions will 
not be achieved through one single application of 
wireless technologies within the energy sector, but 
through a wave of modernisation and digitalisation. 
Throughout the coming decades, this revolution will 
enable renewable energy to occupy the entirety of 
local energy mixes, facilitate the transition to electric 
alternatives for appliances like boilers or for vehicles, 
and ensure consumption on an economy-wide scale is 
as efficient as possible. 
While the mobile sector itself becomes more reliant on 
low-carbon power for its decarbonisation, this report 
sets out five key areas where significant growth will 
be enabled by the development of wireless mobile 
technologies and cloud computing. 
Within each of these five areas, wireless connectivity 
offers much greater simplicity in installation compared 
to fixed-line alternatives. It will also be put to work in 
a much more diverse range of applications including 
predictive and assisted maintenance, asset protection 
and control, and load shifting.
The use of 5G technologies will help to leverage 
beneficial characteristics of high volume, speed and 
reliability in communication between a huge number 
of devices to allow real-time analysis and optimised 
decisions to be made across the energy ecosystem.
A Multi-Pronged 
Approach to A 
Modern Power Sector
P OW ER• G RI D
2
3
4
5
1
1
2
5
4
3
Battery Storage
•	 Case study: Allowing battery projects to be 
tailored to specific corporate needs (p24)
•	 Case study: Integrating fast-response batteries 
into high‑profit markets (p26)
Distributed Energy Resources (DERs)
•	 Case study: Facilitating the adoption of modular 
and distributed hydrogen production (p20)
•	 Case study: Using drones to inspect widespread, 
critical energy infrastructure (p22)
Microgrid Trading
•	 Case study: Reducing need for grid upgrades by 
decentralising microgrids (p40)
•	 Case study: Providing energy democratisation 
using blockchain smart contracts (p43)
Virtual Power Plants (VPPs)
•	 Case study: Generating digital twins to simulate 
new energy scenarios (p29)
•	 Case study: Creating grids that rapidly self-heal 
during blackouts (p31)
Vehicle to Grid (V2G)
•	 Case study: Supporting vehicle-to-grid 
technology and smart chargers (p35)
•	 Case study: Tracking the dynamic nature of an 
electric vehicle battery swapping network (p38)
Smart Energy Systems
7
Executive Summary

Pilot tests and early developments have already 
demonstrated these technologies are ready to 
be deployed for global decarbonisation, but 
unlocking the benefits from wireless technologies 
is not guaranteed. There is currently a notable gap 
between the mobile and power industries, and few 
stakeholders understand the necessary evolution 
of both. A cohesive relationship is needed, both 
internationally and between industries.
For the energy sector, the overarching principle is 
decarbonisation. Mobile Network Operators (MNOs) 
will be key to the role of digitalisation within this. These 
MNOs will become mission critical service providers 
as their networks become entwined within SES and 
national grid infrastructure. 
This business model expansion for the MNOs 
continues their ongoing pursuit within the Internet 
of Things (IoT), as they transition from being solely 
connectivity providers to firms that provide value-add 
services on top of their networks. 
A Clear Collaborative Route 
to Successful Deployment
For the energy industry, these MNOs can provide 
systems integrations expertise, to connect the 
multitude of digital elements and services in the energy 
grid. They will serve as the essential link between other 
cloud-based applications, enabling the energy grid 
to interact with other businesses, governments, and 
consumer systems. They can also work to close the 
knowledge gap in the energy sector regarding wireless 
connectivity at massive scale.
Stakeholders in both sectors, as well as policymakers, 
will need to develop an optimised environment 
where the technology is made as accessible as 
possible for those attempting to implement climate 
change strategies. 
1	
First, distinct barriers must be removed to facilitate 
the widespread distribution of both mobile network 
coverage and clean power generation technologies. 
2	 Then, advanced computing infrastructure must 
be developed to aggregate the two on an 
international scale.
Smart Energy Systems
8
Executive Summary

The specific value wireless communication will bring to 
individual projects may not be immediately apparent upon 
installation. Most benefits will occur once they become 
part of a broader SES, covering a wide range of devices. 
To prevent this from impeding the early uptake of the 
technology, especially in markets where margins on 
electricity prices are being squeezed, it is the responsibility 
of governments and regulators to incentivise the 
interconnection between the two.
Realising the Benefits 
Requires Forward Thinking
9
Smart Energy Systems
Executive Summary

Global societies have reached a tipping point. 
Addressing the climate crisis necessitates a rapid 
transition away from fossil fuel power generation, and 
towards decarbonised and sustainable alternatives. 
The technologies are ready. What is now needed is a 
collective strategy to deploy them at the required scale 
with minimal economic disruption. Wireless connectivity 
is a key component in this carbon-neutral transition 
through enabling new Smart Energy Systems (SES).
SES are a new solution, which combine energy 
generation and storage technologies with ‘intelligent’ 
applications, controlling and optimising their usage. 
They will be key to meeting targets from companies and 
governments increasingly aiming for net zero emissions 
by 2050 or sooner. In the total energy landscape, 
renewables (including biofuels and hydropower) 
currently account for just 11 per cent of global 
consumption, with an additional 5 per cent coming from 
nuclear power, leaving an 84 per cent fossil-fuel gap 
that needs to be filled by renewable technologies.1
Introduction: 
Smart Energy Systems
1	
BP Statistical Review – 2019
The question of scale and speed is one of the most 
pressing as the new technologies being put to use 
in the energy sector need to become the bulk of the 
generation capacity. Thankfully, mobile networks and 
the new generation of AI-based cloud computing are 
well-placed to enable this rapid transition.
The combination of mobile networks and powerful 
cloud computing environments is vital because of 
their ability to aggregate emerging renewable energy 
systems into an asset to rival the gigawatt-scale of a 
nuclear power plant. By using wireless connectivity to 
combine several solar farms, or thousands of homes 
with small-scale renewables or storage systems, using 
cloud computing to manage them, new SES can be put 
to work in decarbonisation efforts. 
This will be achieved through three key steps:
•	 First, the lifetime output of renewable power 
assets can be maximised through making real‑time 
decisions to optimise performance based on 
technical characteristics and meteorological data.
•	 Second, the consumption of end-use devices can 
be minimised and shifted to periods when there is 
surplus renewable power generation.
•	 Finally, all components can be aggregated together, 
along with energy storage technologies, to create 
decentralised energy systems of maximum efficiency 
and minimum cost. 
Smart Energy Systems
10

The process of joining up lots of small components 
into an aggregated SES is not an easy feat. There 
are many moving parts to connect, as well as central 
business and government applications to configure. 
Mobile networks are a vital component, allowing 
these assets to connect in the field, with cloud-based 
computing environments acting as coordinators. 
Examples of these SES devices might be a lithium‑ion 
battery storage system designed to store energy 
from a nearby solar farm; a group of homes that 
have installed solar panels on their roofs; or a fleet 
of electric vehicles that will charge in a coordinated 
fashion when renewable power generation is high. 
The stakeholders involved in SES need to know 
their responsibilities, and each participant needs to 
know which other partners to pay, or customers to 
bill. Ultimately, if SES are going to be commercial 
successes, all the partners need to know their roles 
and obligations in creating the optimum environment 
for their operation. 
All of the different components need to be connected 
and then orchestrated, using wireless connectivity 
to link them to the internet where they can then be 
configured inside an application running in a cloud 
computing environment. New AI-based technologies 
will be especially useful in cloud applications, which 
will be put to work optimising the usage and revenue 
generation of SES deployments.
How to build a Smart Energy System
Solar Farm
Smart homes with solar panels
Lithium-ion battery storage
Co-ordinated vehicle charging
Smart Energy Systems
11
Introduction: Smart Energy Systems

The foundations of Smart Energy Systems
No two SES will be identical, however there are three 
fundamental components nearly all of them will include. 
This section will explore these foundations, which are 
Wireless Connectivity, Cloud Computing, and Platforms.
Wireless Connectivity
Wireless Connectivity has always been an enabling 
technology; it helps create a foundation new businesses 
can be built upon. Sometimes, enablement means the 
creation of a completely new application, such as the 
app industry which has grown up around smartphones. 
Other times, it means improving existing applications – 
enabling new efficiencies or revenue streams. 
The energy sector is one of the best examples of the 
latter, and there are some very convincing examples. 
Broadly, wireless connectivity has facilitated the 
deployment of new renewable energy generation 
systems. It has laid the groundwork for a new 
generation of electric vehicles and the required 
payment marketplace surrounding them, and is 
gearing up to connect all manner of buildings to a 
dynamic energy grid.
Data generated by smartphones, in-home appliances, 
business equipment, vehicles, cameras, and drones will 
power the next industrial revolution – or in this case, an 
environmental revolution. Managing tens or hundreds 
of thousands of devices is going to be immensely 
complicated if they are connected via dozens to 
hundreds of different physical networks carrying vast 
volumes of data. 
If a utility or energy management firm needs to use 
meters to monitor live usage or wants to be able to 
control appliances at their customers’ premises, relying 
on all those different networks is a significant operational 
risk. Using mobile networks can solve the problem, 
connecting these devices directly to a Mobile Network 
Operator (MNO) without needing to rely on customers, 
building owners, or governments as bottlenecks.
The advantage of wireless over wired
In many examples, the case can be made that 
wireless connections could be replaced by 
wired (fixed) connections. However, in the vast 
majority of these cases the cost of laying these 
cables and visiting every single installation 
would quickly undermine the business case. 
Also, using a wireless technology almost always 
translates to a simpler installation, where a 
technician can easily fit a new smart meter. 
This then relies on the wide-area wireless 
connectivity, rather than trying to rely on the 
WiFi connection in a customer home or hoping 
the end-user won’t accidentally unplug it. 
For mobile assets, wired connections are not 
a viable alternative. Electric vehicles (EVs) 
can be major assets to energy grids, as well 
as decarbonisation initiatives, but they also 
need to be managed at scale. Through the 
move towards being able to direct EVs to the 
best charging station based on travel data and 
usage patterns, these EVs can become mobile 
batteries to store surplus renewable energy. 
As most cars are parked for upwards of 95 
per cent of their lifetime,2 they can be seen as 
micro power stations, feeding electricity into 
the local grid when needed. These applications 
require connectivity that can travel with the 
asset, can be sufficiently ruggedised and will 
last the life of the asset. 
2	 RAC Foundation, Spaced Out: Perspectives on parking policy, 2012
Smart Energy Systems
12
Introduction: Smart Energy Systems

Cloud Computing
Cloud Computing is the new normal for enterprises 
thanks to the flexibility of its pricing schemes. It allows 
a customer to only pay for exactly the amount of 
computing power and supporting software, without 
risking wasted investments.
Instead of having to purchase, install, and support this 
computing power, the end-users can now pay for it as 
a service. Because of this flexibility, Cloud Computing 
enables customers to make use of new computing 
technologies, particularly AI-based data processing, 
leasing it on a very short-term basis. 
This is a similar dynamic to offloading the ‘cost’ of 
running a private wireless network to an MNO and 
enjoying the easier operational load that comes with the 
decision. MNOs are already becoming Cloud Computing 
providers and are looking for new services to add to 
their offerings, leveraging the distributed networking 
facilities that form their communication networks.
The key benefit of this service-based approach is the 
limited capital requirement. As demonstrated through 
the likes of Tesla in the automotive market, new 
entrants are likely to be among the most innovative 
and influential in combating climate change. Facilitating 
the rapid development of these game-changers with 
access to low-cost, high-power computing is one of the 
primary roles of MNOs through the energy transition.
MNOs are already becoming 
Cloud Computing providers and 
are looking for new services to 
add to their offerings
Centralised generation
Distributed generation
H2
MNO
MNO
MNO
Smart Energy Systems
13
Introduction: Smart Energy Systems

Platforms
A Platform is the term used to describe the 
combination of technologies, usually from multiple 
vendors, that act as a foundation on which users can 
build new business applications. Unsurprisingly, Cloud 
Computing is a key part of this and acts as a central 
hub for data gathered from several different sources. 
These Platforms can unite data from multiple 
different partners or stakeholders, processing it and 
then running the results through complex business 
applications and software in a collaborative fashion. 
This process enables new business applications that 
were not possible before Cloud Computing to become 
influential. In combination with the emergence of 
Platforms, MNOs have begun connecting a wide range 
of Internet of Things (IoT) devices, many of which play 
an important role in the energy sector. 
A good example would be a platform that ingested 
data from smart meters, weather stations, and energy 
generation resources, and then compares this view of 
the system against historic consumer behaviour. Using 
this system, the energy sector could determine how 
customer demand will change throughout a day, based 
on current and historic patterns, and the effect weather 
will have on this particular day. This allows the energy 
mix to be optimised in near real-time. 
This is the power of such a platform – one that could 
be run by a single business and filled with partners 
and customers, such as an MNO, Cloud Computing 
provider, or a government entity. The Platform is 
the glue that joins all the component parts together, 
creating a SES that acts as a unified whole and helps 
decarbonisation efforts.
Combined, Wireless Networks and Cloud Computing 
Platforms provide the foundations that help transform 
regular energy systems into SES. A new wave of 
startups is bringing these systems to the fore, but to 
become a transformational wave, these startups need 
to be able to integrate them into the world of business 
software. This is where the Platforms have an effect, 
with wireless connectivity able to connect all manner of 
new applications to this global ecosystem.
Rest 
API
MQTT
CoAP
Custom
Data
Push
Data
Push
Data
Pull
Data
Pull
Cloud
Cloud
Cloud-to-cloud 
inergration
Application
Application
Rules 
Engine
Rules 
Engine
Storage
Storage
Rest 
API
MQTT
CoAP
Custom
Connectivity
Connectivity
Device
Device
MNOs have begun connecting 
a wide range of Internet 
of Things devices, many of 
which play an important role 
in the energy sector
Data flow in a SES
Smart Energy Systems
14
Introduction: Smart Energy Systems

Put simply, SES require wireless connectivity to scale 
to connect the assets deployed in the field with the 
centralised coordinating applications. MNOs are 
becoming mission critical service providers as their 
networks connect the SES deployments with national 
energy grids. 
Additionally, MNOs are already expanding their business 
models, looking to transition from being just connectivity 
providers to companies providing value‑add services 
on top of their networks. This expansion is already well 
underway, with the IoT being a major cross-industry 
trend to pursue as every new device and connection is a 
sales opportunity for MNOs. 
The aforementioned shift towards native connectivity 
that will occur through 2050 is only possible if 
there are pervasive wireless networks. MNOs are 
integral to enabling these new connections, acting 
as conduits between devices in the field and the 
business applications that will make use of these new 
connectivity options. 
The role of the Mobile 
Network Operators
MNO networks will transport data from the network 
edge into the Cloud Computing ecosystem. Many 
MNOs have already created Cloud Computing 
divisions and, through the period, nearly all MNOs 
are going to move into this line of business. They will 
look to provide both the wireless connections and the 
supporting business software. 
For the energy industry, MNOs can provide systems 
integrations expertise to connect the multitude of 
digital elements and services in the energy grid. They 
will serve as conduits between other cloud-based 
applications, enabling the energy grid to interact with 
other business, government, and consumer systems, 
and work to close the knowledge gap in the energy 
sector regarding wireless connectivity at massive scale. 
Smart Energy Systems
15
Introduction: Smart Energy Systems

To prevent climate change from causing irreversible 
damage to the planet, the Intergovernmental Panel 
on Climate Change has stated the world needs 
to reach net zero carbon emissions by 2050. This 
necessitates global collaboration between industry 
and policymakers, and without hesitation. 
To achieve this goal, global energy demand needs 
to fall at a rate of at least 0.19 per cent per year from 
current levels, while the penetration of renewables is 
pushed above 85 per cent of production by 2050. 
For many industries, including transport and 
heating, the best way to do this is through 
electrification, with electricity needing to account 
for at least 49 per cent of global energy demand by 
2050 - hitting interim targets of 29 per cent and 38 
per cent in 2030 and 2040 respectively. 
This rise in electricity demand has to be satisfied 
through renewable technologies, with wind and 
solar power currently providing the lowest cost to 
decarbonisation and already undercutting fossil 
fuel generation in most parts of the world. These 
technologies depend on weather patterns, and once 
penetration of renewables surpasses 30 per cent in the 
electricity mix of different regions, starting in Europe, 
it will be essential to deploy SES to facilitate them. 
This will serve the purpose of continuing the 
reduction in energy intensity in the power sector, 
which currently sits at 475 tons per TWh on average 
but is much higher in countries like India (700 tons 
per TWh). A large part of this reduction will come 
from preventing an overbuild of capacity and 
maximising the output of renewables assets. 
The role of Smart Energy 
Systems in 1.5 degrees
To maximise the benefits from SES, they must be 
deployed in parallel with renewable projects through 
an international electrification process. In an optimum 
scenario, all new renewables projects would be fitted 
with infrastructure that will allow them to participate in a 
globalised smart grid system. 
Rather than the 67 per cent penetration in 2050 
expected through market forces alone (see page 53), 
support from policymakers for SES and the wireless 
communication infrastructure required to facilitate 
it will need to drive penetration of SES to 13 per cent 
by 2030, 52 per cent by 2040 and then 86 per cent in 
2050 as the system starts to mature. 
By facilitating this, SES will prevent an overbuild of 
capacity worth 16,000TWh of annual generation, which 
based on today’s electricity prices will save approximately 
$1.9 trillion per year. Perhaps more importantly, compared 
to today’s energy mix, it will save emissions of 7.7 billion 
tons of CO2, making it responsible for over 23 per cent 
of global decarbonisation. 
This will also see a rapid transformation from utilities 
into the digital age as they expand their operations 
from power to include electrified transport and the 
production and distribution of green hydrogen, which 
will be crucial in decarbonising the remaining portion of 
non-electrified primary energy demand. 
Global Penetration of Smart Energy Systems: 1.5 degree C Scenario
0
20K
40K
60K
80K
100K
120K
140K
160K
180K
2020
2024
ELECTRICITY DEMAND
YEAR
2026
2030
2034
2022
2028
2032
2036
2038
2040
2042
2044
2046
2048
2050
  Total Primary Energy
  Electricity Generation
  Smart Energy System Generation
Smart Energy Systems
16
Smart Energy Systems and decarbonisation

There are immense environmental and societal 
benefits that will be realised through the adoption of 
SES, and while the process of deploying them can be 
complex, there are very clear business cases. This also 
means great investment opportunities in enabling and 
operating these new SES. 
Realising the benefits of SES will not be achieved 
through one single application of wireless 
technologies within the energy sector but through 
a wave of modernisation and digitalisation. 
Smart Energy Systems: 
an overview
There are five main areas that best illustrate the scope 
of these systems as shown above:
1	
Battery Storage
2	 Distributed Energy Resource
3	 Microgrid Trading
4	 Virtual Power Plants (VPPs)
5	 Vehicle to Grid Charging (V2G)
P OW ER• G RI D
2
3
4
5
1
  Energy
  Data
Smart Energy Systems
Smart Energy Systems
17

This section will explore examples of these use 
cases that are already taking hold, illustrating the 
progress already being made and the role MNOs will 
play and how the benefits of wireless technologies 
can be leveraged to allow for real‑time analysis and 
decision‑making across the energy ecosystem. 
Both utilities and network operators will be key 
partners for the startups which often drive the 
innovations behind these SES. 
In terms of the business cases, MNOs will provide 
wireless connectivity for new appliances and devices 
deployed for SES. MNOs are also expanding into the 
services market, and for SES this will encompass 
Cloud Computing and business applications, including 
entire platform support too. Also, MNOs can leverage 
their engineering and integration teams to gain new 
business in the SES marketplace and become digital 
service providers. Any new installation is also an 
opportunity for network densification, which is a key 
objective for MNO’s 5G deployment roadmaps. 
For utilities, SES present major decarbonisation 
opportunities and enable the use of new, low-cost 
renewable electricity sources to improve profit 
margins. The utility can begin laying the groundwork 
for microgrids and Distributed Energy Resources, 
and then leverage new SES as part of an expansion 
into providing high-value ancillary services, such as 
frequency response and grid balancing. New SES will 
allow utilities to optimise their purchasing decisions to 
favour the cheapest and most environmentally‑friendly 
options – maximising asset utilisation. 
Business opportunities for Mobile Network 
Operators and energy companies
Smart Energy Systems
18
Smart Energy Systems: an overview

The first of the five areas is called Distributed Energy 
Resources (DERs), which are energy generating 
systems deployed in a non-centralised fashion. 
Historically, power stations have been built where 
most convenient, and the distribution networks that 
transported this electricity from the generation source 
to the end customer were unidirectional – flowing from 
the centre outwards towards the end-users. 
This was very centralised production and distribution, 
involving large, gigawatt‑scale power stations 
(mostly coal, gas and nuclear). It is most efficient 
to transport electricity over powerlines at very high 
alternating current (AC) voltages, which suited these 
giant generators as they produce sufficient power to 
warrant investment in large transmission projects. The 
electricity grid is then used to move this power over 
long distances before stepping the voltage down to 
a safe enough level near the consumer and delivering 
it as Direct Current (DC). The process of stepping 
electricity voltage up and down does have some 
wastage, as does the transport, and is generally agreed 
to be in the 5 per cent to 10 per cent range. 
DERs differ greatly. As the name implies, they are 
deployed in a distributed fashion, meaning they can 
be located much closer to the end‑users. Also, they 
have much smaller power generation capacity and are 
usually measured in kilowatts or megawatts. Because 
of their smaller scale, they often do not interact with 
the very high voltage transmission grids, and in many 
cases the DERs are only used to supply electricity to 
the building or campus on which they are deployed. 
However, as these DERs are aggregated into SES, their 
impact will be realised on a much broader scale. This 
will open opportunities to include the smart distribution 
of all forms of energy including heat and gas – largely 
in the form of green hydrogen. 
Distributed Energy Resources (DERs)
MNO Network
H2
Control
P OW E R
G RI D
  Energy
  Data
  Wireless Data
How to create an SES using DER
Smart Energy Systems
19
Smart Energy Systems: an overview

Use case: facilitating rapid cost reductions 
for green hydrogen production
Despite years of false starts, the global hydrogen energy 
market is finally starting to gain traction, with Europe 
vying to become a global leader. The European Union 
(EU) will want to avoid the dramatic ‘boom and bust’ it 
saw when it lost out to China in the early development 
of its solar supply chain.3 Cutting the cost of hydrogen 
technology will hinge on a distributed approach, where 
unit costs are cut through economies of scale.
Green hydrogen, produced through the electrolysis 
of water using renewable electricity,4 is being slated 
as one of the key routes to decarbonising industries 
which cannot simply replace fossil fuels with renewable 
electricity. Using hydrogen in sectors including heavy-
duty transport, and steel and cement production 
could be responsible for as much as 34 per cent of 
anticipated global emissions reductions.5
For it to be used as a commercial fuel, green hydrogen 
from renewables will have to reach cost parity with 
grey hydrogen from steam methane reforming (using 
natural gas). Costs will need to fall from around €6 to 
€1.50 per kilogram, and the market where this happens 
first is likely to dominate the global supply chain. 
Gains will be made through the cost of renewable 
electricity, product cycle and efficiency, but the 
majority of this price reduction will come through 
reaching economies of scale. It is estimated every 
time the number of units in operation doubles, costs 
could fall by at least 12 per cent.6 Between November 
2019 and August 2020, the announced project 
pipeline for green hydrogen grew from 3.5 GW to 
over 10 GW: nearly 40 times the amount of globally 
installed capacity today.7
To stay ahead of this cost-reduction curve, companies 
like Enapter in Germany are aiming to reach a 
point of serial fabrication much sooner than those 
manufacturing utility scale electrolysers by focusing on 
compact, modular units, which can reach a commodity 
status similar to what has been seen in solar panels or 
lithium-ion batteries. These both plummeted in cost 
in a short period, enabling their adoption. By doing 
this, Enapter believes a commercial price for green 
hydrogen could be reached before 2025. 
Achieving this status on a commercial level will require 
Enapter to make its modular electrolyser as flexible as 
possible. As with batteries, this relies on implementing 
a ‘smart’ management system to optimise the rate and 
time at which the device chooses to operate. 
Enapter’s Energy Management System uses Universal 
Communication Modules to communicate with local 
energy devices and grid electricity prices. By doing 
this, the decentralised device can be optimised to suit 
the customer’s needs and offer the best rate of return 
by selecting the most profitable and necessary times 
to generate or store hydrogen from excess electricity. 
This also presents the opportunity for micro-energy 
trading similar to that seen with residential storage 
in the power sector, where distributed resources 
can be harnessed across a ‘smart grid’ system. With 
optimised trading, costs of both electricity and 
hydrogen will fall further.
Maximising the benefits and output from the device 
therefore relies on secure and consistently available 
connectivity and data transfer. Early applications for 
Enapter’s devices have included microgrids on islands 
in the Indian Ocean, rural settlements in Uganda and 
in remote alpine cabins in Europe, where broadband 
connectivity is often weak or intermittent. The cost 
of installing fibre-based networks for these systems 
will be uneconomical, especially as devices are added 
one module at a time, and access to mobile networks 
will enable a distributed approach to electrolysis to 
proceed at maximum speed, and the cost of Europe’s 
green hydrogen to fall faster than in other markets.
3 Reuters, German solar firms go from boom to bust, 2011
4	 Enapter, Enapter White Paper, 2020
5 BloombergNEF, Hydrogen Economy Outlook, 2020
6 EU Horizon 2020, Report on experience curves and economies of scale D7.5
7 WoodMackenzie, Green hydrogen costs to fall by up to 64 per cent by 2040
20
Smart Energy Systems
Smart Energy Systems: an overview

Total cost of green hydrogen8
0
4
3
2
1
5
6
7
8
9
10
12:00
14:00
16:00
18:00
20:00
22:00
00:00
02:00
04:00
06:00
10:00
12:00
08:00
€/KG
EL OPEX 
€2.75/kg
€0.18/kg
€0.17/kg
€2.4/kg
EL CAPEX 
€1.4/kg
EL CAPEX 
€1.4/kg
EL CAPEX 
€1.4/kg
EL OPEX 
€2.75/kg
€0.18/kg
€0.17/kg
€2.4/kg
EL OPEX 
€2.75/kg
€0.18/kg
€0.17/kg
€2.4/kg
  EL CAPEX (Electrolyser Capital Expense)       Electricity Cost       Water Cost       Maintenance Cost
EL OPEX (Electrolyser Operating Expenses)
€3.22/kg
El Model T – 2023/24 
Electricity at €0.03/kWh
€1.75/kg
El Model T – 2023/24 
Electricity at €0/kWh
€4.15/kg
El Model T – 2023/24 
Electricity at €0.05/kWh
When most people talk about DERs, they are referring 
to renewable sources of energy, and the most familiar 
examples are rooftop solar panel arrays and wind 
farms. Solar can be installed in small-scale arrays on 
top of homes, or at larger scales in solar farms. Wind 
turbines can vary considerably in size, but you 
generally will not find a wind turbine in an urban 
environment. Smart management is, however, 
becoming increasingly applicable for offshore wind 
applications, providing communications for vessels 
having to spend longer amounts of time further from 
shore and allowing for remote inspection and 
predictive maintenance. Projects that have deployed 
private 4G networks so far include Norther and 
Mermaid in Belgium, deployed by nCentric and Nokia.
Of course, many non-renewable energy sources also 
fall under the DERs umbrella, including gas peaker 
plants, backup diesel generators, and even small 
modular nuclear reactors (SMR). The nuclear example 
is still in development, but gas peakers and diesel 
generators tend to be used in emergencies. They are 
fired up when the main electricity supply has suffered 
an outage, or when there is an imbalance on the main 
energy grid that needs to be corrected. However, 
renewables are proving very capable alternatives to 
these fossil fuel-based methods when paired with 
storage in a SES and will replace them in time. 
As the energy system transforms to incorporate these 
DERs, alterations will need to be made through 
construction and operation, and greater quantities of 
data will be required to monitor a larger number of 
generational and transmission resources.
8 Enapter  - https://www.enapter.com/media-coverage/h2-view-exclusive-calculating-the-cost-of-green-hydrogen
Smart Energy Systems
21
Smart Energy Systems: an overview

Use case: allowing drones to inspect 
widespread critical infrastructure
While the bulk of the future of SES will lie in the 
digitalisation and automation of utilities to optimise 
the efficiency of DERs, mobile networks will also be 
essential in facilitating the transition by improving 
the performance and reducing the operating costs of 
existing energy assets. 
The easiest way to achieve this is to make sure 
generating assets are generating for as much of the 
time as possible and ensuring broken components 
in a plant are accurately identified and repaired with 
minimal downtime. 
While traditional generating assets, like coal-fired or 
nuclear power stations, are highly centralised and 
easy to inspect on site, renewables projects take 
up considerably more room. Solar installations, for 
instance, take up 5 acres per MW of capacity, meaning 
it is not cost-effective to perform physical inspection 
on a regular basis.9
For solar farms, in particular, a more cost-effective 
solution to minimising downtime is to perform remote 
inspection using drone technology. Powered by low 
latency networks, these drones can be controlled to 
collect and send live data to project operators to give 
the operational status of components and panels 
within a project. 
One of the most important inspections to be made is 
thermal imaging to identify hotspots within solar panels. 
These ‘hotspots’ occur when there is a defect within 
a solar cell, and as local temperature increases, the 
efficiency of the solar panel itself decreases. The hotspot 
itself indicates excess energy is being wasted as heat, 
rather than being converted to electricity. Hotspots are 
generally unstable and usually intensify until the overall 
performance of the panel is eventually nullified.
Studies have indicated that at any one time, a typical 
solar farm can have 1.5 per cent of panels hosting a 
hotspot between 10°C and 20°C above operating 
temperature and another 2.5 per cent had hotspots 
more than 20°C above operating temperature.10
Rather than using a team of professionals to manually 
inspect each panel, drone operators can use a 
two‑person team with minimum disruption, reducing 
time on site and lowering maintenance costs. Software 
like Raptor Maps can be used to collate facility-scale 
data to give a comprehensive overview of a plant’s 
performance and can often use AI and machine 
learning to perform predictive maintenance and 
prevent future failures.
Similarly, for wind farms, an inspection of components 
like the blades can be performed during brief, planned 
shutdowns, and inside the turbine tower of the turbine 
while operating. Drones may also be used for the 
inspection of power lines to identify any failures or risks 
within electricity transmission.
With all of these projects operating over a significant 
geographical footprint, beyond visual line of sight 
operation is a common requirement, and radio-
controlled drones, with ranges topping out at around 2 
kilometres, can often be insufficient. 
Mobile networks, including those using 5G for large 
data applications, can be deployed to deliver low-
latency drone control for inspection over the full 
project area. These 5G-based networks will enable real-
time transfer of data from equipment the drones carry, 
such as thermal imaging and machine-vision cameras 
and sensor suites, which can be seamlessly integrated 
into cloud-based applications. 
While sensors are being developed to allow 
for devices to identify their faults, this full-level 
digitalisation is a long way down the line, and in 
the years before utilities go fully digital, smart 
maintenance solutions will be critical to optimising 
utilities’ infrastructure. Drones, enabled by mobile 
networks, will be key to this transition.
9 Solar Trade Association – Explainer: Solar Farms
10 Sunfields Europe, Key Points to avoid solar panel hot spots [https://www.sfe-solar.com/en/noticias/solar-modules/solar-panels-hot-spots-temperature-key-points/]
22
Smart Energy Systems
Smart Energy Systems: an overview

The second main trend is Battery Storage. As 
the penetration of renewables in the energy mix 
increases, the intermittent nature of the sun shining 
or the wind blowing mandates energy must be 
stored and then released when generational output 
is low to ensure a consistent supply of renewable 
electricity to consumers. 
Most examples concern large lithium-ion battery 
storage arrays, which can store surplus energy 
from renewables when there is greater supply than 
demand, and then discharge their batteries when 
demand exceeds supply. 
Battery Storage helps ensure grid-scale DERs can be 
deployed more easily as they smooth out the variability 
in generation output found in wind and solar farms. 
There are also Battery Storage arrays more focused on 
the Ancillary Services use case, which is used to correct 
imbalances in the electricity grid.
For example, Fast Frequency Response (FFR) is an 
application that lets a battery act as an emergency 
asset, ready to respond to a change in grid frequency 
at an incredibly fast speed. If that frequency imbalance 
is left uninhibited, there is a risk of a power outage. In 
FFR applications, the batteries are ready to respond to 
a change in the transmission frequency, and the battery 
owner or operator is paid for this service.
Battery Storage
FFR or
Ancillary
DER
Storage
MNO Network
P OW E R
G RID
  Energy
  Data
  Wireless Data
How battery storage enables DER and other grid services
Smart Energy Systems
23
Smart Energy Systems: an overview

Use case: accelerating the deployment of 
tailored corporation battery projects
One of the significant challenges for a system-wide 
shift to clean energy is the specific requirements of 
each energy consumer. With vastly contrasting energy 
demands, businesses across the world are starting 
to find value in accelerating their transition, many by 
signing power purchase agreements with renewables 
developers, and many developing their in-house projects. 
In collaboration with various companies across the 
energy sector, Dutch telecommunications company 
KPN is one of those exploring options for its 
decarbonisation, indicating an early cohesion between 
the energy and communications sectors in the shift to 
smart energy systems. 
As part of its Energy Innovation Lab, KPN has started a 
pilot project to assess how backup batteries in telephone 
exchanges can increase the company’s adoption of green 
energy while reducing its spend on electricity. 
The pilot will assess how backup batteries in KPN’s 
telephone exchanges can store green energy during 
periods of the day when output from wind and 
solar is high, and discharging when the supply from 
renewables is low, while also providing a fail-safe 
mechanism to prevent loss of connection through local 
power outages in the system.
Using mission critical batteries to prevent power cuts 
is not a new application for the telecommunications 
industry, but in countries like the Netherlands 
failures occur very rarely, and very little value can be 
prescribed to the batteries.
Increasing this value through KPN’s method hinges on 
a smart approach to power purchasing decisions when 
deciding to store electricity in the battery system. While 
KPN will partially fill its batteries with its solar panels, the 
battery will aim to purchase the rest of the energy from 
the grid at optimum times. These will be defined as when 
the price of energy is low or even negative to prevent 
wind power being curtailed, or when the penetration of 
renewables in the electricity mix achieves a high ‘Green 
Score’ – which often occurs overnight. 
This shift will allow cost savings within KPN’s electricity 
purchasing, while also facilitating its shift to net 
zero emissions. Through its connection, the battery 
management system – provided by EnergyNXT – can be 
configured to optimise both the Green Score and energy 
prices, with sufficient access to data in decision making.
KPN’s initial study is currently underway using a 
230kWh Nickel Metal Hybrid battery installed at 
a single telephone exchange to support fixed-line 
operations in Amersfoort. Rather than installing a 
fixed‑line network to allow network access to the 
battery, which will allow operations to be managed and 
findings to be assessed, KPN has adopted a wireless 
network due to increased simplicity and minimal 
disruption through deployment.
The data collected will also be used as a minimum 
viable product for KPN’s data service hub, which aims 
to provide more accurate modelling and forecasting 
of consumer energy characteristics. The project will 
run through 2021, with any success likely to propagate 
throughout many of the company’s server locations 
across the country. 
For KPN, the energy demand for its telephone exchanges 
is fairly consistent and only varies slightly on a seasonal 
basis as cooling required to prevent data centres from 
overheating. But for other companies with different 
requirements, the flexibility that such battery projects 
can provide can allow the value of battery projects to be 
tailored to specific operations and maximised in all cases. 
With KPN preferring the use of wireless networks for 
deployment, it has demonstrated that such networks can 
be crucial to allowing organisations of various sizes to 
deploy clean energy pilot projects as part of their internal 
decarbonisation efforts.
24
Smart Energy Systems
Smart Energy Systems: an overview

However, there are many examples of Battery Storage 
units that can be installed in a home to serve the same 
purpose the larger grid-scale units perform on the main 
electricity grid. Here, they store energy during quiet 
periods of demand and can release this in an optimised 
manner, either to the grid or to the battery owner. For 
utilities, these batteries enable them to make the best 
use of renewables, including rooftop solar installed at 
the home and larger grid-scale resources.  
For example, while the household sleeps, the battery 
can be charged using available wind power. The 
morning rush, when the occupants get ready for 
the day, can be powered solely by the energy in the 
battery. Once the occupants have left, this battery 
can be replenished using solar and wind to serve the 
evening demand once the occupants return home. 
This requires a great deal of coordination between the 
utility’s main power generation assets, the batteries in 
these homes, and devices like smart thermostats and 
household heating, ventilation and air conditioning 
(HVAC) systems. Connected at scale, many thousands 
of homes can be controlled by a utility system to 
make sure it can use a far higher amount of low-cost 
renewable electricity in its energy mix, which will have 
enormous environmental benefits. 
While the bulk of energy storage will continue to be 
in the form of ‘front-of-the-meter’ utility-scale plants, 
residential storage offerings like the Tesla Powerwall 
are set for a dramatic 500 per cent growth in adoption 
between 2018 and 2024, with 6.6GWh set to be 
distributed across Europe.11
This will be partially driven by the cost reductions being 
seen in lithium-ion battery manufacture, but the uptake 
in the installation will depend on the rate of return 
available for customers when feeding electricity back 
into the grid. This depends on three things:
1	
Purchase price: the time and price of purchased 
electricity for charging.
2	 Feed-in volume: how much electricity is sold back 
to the grid over a given time.
3	 Payback tariffs: the price grid operators pay for 
batteries to absorb or release energy.
11 Wood Mackenzie, Europe Residential Energy Storage Outlook, 2019
Smart Energy Systems
25
Smart Energy Systems: an overview

Use case: integrating fast-response 
batteries into grid services markets
While the purchase price depends on how ‘smart’ the 
battery is in optimising purchase decisions based on 
live electricity prices, feed-in volume and payback 
tariffs depend on which market the battery system can 
compete in. Because of their reduced scale, residential 
storage is unable to compete in markets like the grid-
scale capacity market, where premiums are available for 
guaranteeing a large amount of available battery storage 
at any given time.
The markets where residential batteries are currently 
competing are the day-ahead and intraday markets 
(with Norway’s Nord Pool being an example, 
operating in 18 European countries including the 
Nordics and the Baltics), where electricity is bought 
or sold ahead of time based on inexact forecasts for 
supply and demand. The closer one gets to the time 
of use, the more accurate the forecast is, the more 
frequent the charge/discharge cycles of the battery, 
and the more revenue available to the system. For 
any batteries competing in these markets, their ability 
to do so is more to do with regulation and network 
capability than the technology itself.
Taking this one step further, however, there is the 
Balancing or Frequency Response Market, which must 
keep the frequency of the grid’s electricity within an 
acceptable range to prevent blackouts due to sudden 
and unexpected changes in demand/supply. 
This market accounts for smaller variations in 
electricity. Electricity systems are designed to 
withstand small fluctuations but, to keep within 
safe limits ancillary services are needed to keep a 
reasonable equilibrium. For instance, the European 
grid operates on an alternating current (AC), with a 
frequency of 50Hz. If supply drops below demand, 
this frequency falls, with the opposite happening if 
supply rises compared to demand. The system itself 
can typically withstand a +/- variation of around 2Hz 
before a blackout occurs. 
To stay within this range, a frequency response is 
needed. Balancing markets are split into 1st, 2nd and 
3rd Control, based on the speed of response, although 
only 1st Control is appropriate for batteries, with the 
capability to both absorb excess generation and supply 
power in times of shortage. 
Electricity systems are designed 
to withstand small fluctuations, 
but to keep within safe limits 
ancillary services are needed
26
Smart Energy Systems
Smart Energy Systems: an overview

For Frequency 1st response, high prices are paid to 
suppliers for the amount of available ancillary capacity 
they can provide or absorb, nearly instantly, at any 
time of day, similar to the capacity market, while they 
are also paid for the amount of electricity they end up 
feeding into the grid. 
Systems of large ‘inertia’ are often slow to ramp up/
down their generation for this market, which is why 
agile batteries are becoming such a popular choice in 
bridging that gap as they fire up. There is a big market 
for these service providers, as they help the grid 
operators to keep the grid load balanced. Batteries are 
beginning to replace older technologies, such as gas-
fired ‘peaker’ turbines, and these batteries are enabling 
quicker adoption of renewable energy. 
Ireland’s ‘DS3’ market12 is a good example of the 
revenues available for enhanced fast frequency 
response (FRR) providers, where revenues for 
electricity provided are multiplied by 3 if a system 
can respond within 0.15 seconds.
This 0.15-second response time is dependent on the 
sequence of events, from the over/undersupply in 
the grid to the point of response from the battery. 
Naturally, this speed relies on rapid communication 
and decision making from each storage system, 
creating a need for fast and guaranteed connectivity 
between devices, which may be more feasibly 
achieved using mobile networks than by relying on 
household internet. Low latency 5G technologies will 
prove to be a crucial enabler.
This is compounded by the fact that several of these 
market places have requirements for devices to be 
available for use nearly all the time – DS3, for example, 
states a service availability of 97 per cent for battery 
owners to get the full remuneration rate. 
While incorporating residential batteries on an 
individual basis is relatively impractical for these 
markets, if aggregated into virtual power plants (VPPs) 
then the greater amount of capacity in a diversified 
portfolio will be attractive for system balancing. As 
resources are pooled together, the amount of data 
transfer required increases in tandem, while the need 
for low-latency remains high. 
Revenue multiples for fast response storage in Eirgrid’s DS3 Programme, Ireland.
0
2
4
6
8
10
12
14
16
18
20
0.1
1
10
100
1000
TOTAL SCALAR VALUE
TIME OF RESPONSE(S)
  Renewables>70%       Renewables 60%–70%       Renewables 50%–60%       Renewables<50%
Enhanced FFR
FFR
POR
SOR
TOR1
TOR2
12 Eirgrid, DS3 Programme, 2020 
27
Smart Energy Systems
Smart Energy Systems: an overview

This is the point where the third main trend comes 
into play. Virtual Power Plants (VPPs) are the next 
evolution from the traditional centralised power station 
model. Using cloud-based orchestration technologies 
connected via mobile networks and the internet, several 
different DERs can be aggregated into a single VPP and 
treated as if it were a single ‘virtual’ unit – which can 
collectively rival the largest fossil fuel generation assets.
Pooling resources into a single supply system also 
provides access to a more diverse range of resources. 
As more energy consumers shift to become ‘prosumers,’ 
who also generate or store their own power through 
residential solar panels, batteries or even electric vehicles, 
the number of ‘nodes’ available for such VPPs increases. 
Any collection of DERs can be aggregated in this fashion, 
but most current examples focus on using Demand 
Response (DR) technologies as the basis. Put simply, DR 
requires a two-way communication between the energy 
supplier and the consumer. 
The largest challenge here is in the transmission of data 
and electricity. In early VPPs, efforts have been focused 
on AI, with Neural Networks running optimisation 
problems to calculate the cheapest way of supplying 100 
per cent of electricity demand while using as much of all 
the available resources as possible – whether that is a 
few solar panels on a home’s roof or an entire solar farm. 
In this case, the utility will also use many cloud-based 
tools to forecast its future demand, and if it sees 
it might face an energy shortage – due to cloudy 
weather affecting solar production, for instance – it 
can incentivise its customers to change their demand. 
This means the utility does not have to make use of 
expensive, fossil fuel-based emergency capacity – like 
gas peaker plants. 
In commercial settings, this might mean installing 
meters and controllers on large industrial appliances, 
so their operation can be remotely synchronised to suit 
the incentive program the utility offers. For consumer 
homes, this might mean a smart thermostat being 
triggered to heat or cool a home at the most cost 
efficient or environmentally friendly time – all without 
the end-user being inconvenienced.
Virtual Power Plants (VPPs)
VPP
App
VPP
P OW ER
G RID
  Energy
  Data
  Wireless Data
Virtual Power Plants
Smart Energy Systems
28
Smart Energy Systems: an overview

Use case: digital twinning using larger 
data to simulate new energy scenarios
One of the key features of SES, often overlooked, is 
that the wealth of data processing can be used in 
hypothetical virtualised scenarios to trial different ways 
of distributing low-cost, decarbonised energy across 
networks of various scale. 
As a model can be built with more and more elements, 
systems can be modelled more accurately, and informed 
decisions can be made that maximise the efficiency of 
energy distribution. For both virtual and practical systems, 
a wealth of connected sensors allows more data to be 
collected and forecasts to fall more accurately in line with 
supply and demand characteristics in a certain region. 
Wireless connectivity is essential to this data collection. 
The key example is smart meters. In their current 
iteration, rather than controlling smart devices, the bulk 
of these primarily operate as monitors of consumption. 
Nonetheless, their implementation can allow more tailored 
data about an individual’s consumption habits, rather than 
grouping them in with grid-level data. 
But smart meters are far from the only sensor that could 
be used to monitor consumer habits in real-time. Use of 
weather monitors to predict the output of renewables, 
consumer proximity to homes, as well as traffic data 
are among sources that can be collected to minimise 
the wastage in energy consumption and optimise grid 
conditions to match real-time and future demand.
Through aggregating all such data in large service hubs, 
real-time information can be compiled to generate 
a ‘Digital Twin’ of an area, where the system can be 
analysed in a granular approach, rather than as an entire 
entity. Live three-dimensional models are currently 
being developed to feature components such as electric 
vehicles, domestic batteries and generators and turbines. 
With requirements for low-latency and large quantities 
of data to reliably connect devices that are often not 
stationary, developers of these systems are currently 
trialling 5G mobile networks for interconnection of 
devices. Virtual dashboards are therefore able to show the 
energy network’s main features and model a live 5G data 
connection to key assets.
With this Digital Twin simulator system generated, 
virtual tests can be run with greater accuracy, allowing 
project developers to learn by simulation and build up 
more advanced business cases for investors. In terms of 
infrastructure, renewable energy projects are relatively 
capital intensive, and demonstrating that generation 
output can all be satisfied locally means that there is less 
risk of redundant infrastructure or wasted finance. 
One such project, where a 5G-powered Digital Twin has 
been developed is the Orkney 5G Centre in Scotland, 
which entered operation in April 2020, led by Heriot-Watt 
University’s Grid facility and supported by the Scotland 
5G Centre. The project aims to capture the supply and 
demand characteristics of Orkney as the islands reduce 
their carbon emissions and ramp up renewable power 
generation, as well as other decentralised infrastructure. 
With the islands generating 120 per cent of their own 
electricity needs, largely through clean technologies, this 
testing model “is the ideal testing ground for principles 
that could be applied on a larger scale elsewhere,” 
according to Gordon Ross, innovation strategist at 
Heriot‑Watt University, who identified that “the future 
of energy is going to be defined by smart, distributed 
networks, and micro-grids.” 
In reference to the project, Heriot-Watt chief 
entrepreneurial executive David Richardson said: 
“Our digital twinning system will demonstrate how 
Orkney’s new energy network will operate, what 
the different component parts are, how people can 
interact with it and collaborate to create a genuinely 
democratised energy system.”
29
Smart Energy Systems
Smart Energy Systems: an overview

While one side of this solution is maximising the 
availability of renewable power, the other is about 
shifting demand peaks to minimise the instances 
where demand for renewables outweighs supply. 
In commercial hubs like ports, for example, where 
multiple businesses may ramp up demand at a given 
time, complementary peak shifting throughout the 
ecosystem of the area means the overall area will be 
serviced by clean energy for a greater proportion of 
the time. 
Within a VPP, risk is defined by the ability of the 
system to maintain a constant energy supply to its 
customers. Data must be transferred to assess the 
systems operational characteristics and to maximise 
the returns from any available capacity across the 
VPP’s network of resources. 
Early examples of this, including those seen in 
California and China, have focused on using fixed-line 
communication. However, as utilities look to improve 
the capability of their VPPs, using wireless and 
mobile communication will allow access to a wider 
range of generation assets to places where fixed‑line 
installation is not practical. Machine-to-machine 
communication can allow wider access to these VPPs 
by providing the automatic collection of generation 
data, communicating the capacity and pricing, and 
enabling payment.
This has two primary benefits. Firstly, it will mean 
access to more types of energy market. More 
generation assets mean more power and a larger 
amount of capacity which can be harnessed at any 
given time – meaning rapid response markets can 
be accessed, as VPPs surpass barriers for minimum 
capacity requirement. 
Secondly, it can provide access to locations poorly 
served by fixed-line communications, widening the 
geographic distribution of the energy system. This, 
in turn, means the system becomes more resilient 
to local weather patterns, with a diverse portfolio of 
generation assets also limiting exposure to extreme 
climate-related events damaging individual assets. 
In terms of market access, this can allow VPP 
operators to provide electricity capacity with a higher 
percentage of availability, although the transmission 
system needs careful management.
Demand surge without smart load shifting
0
20
40
60
80
100
01:00
03:00
ELECTRICITY DEMAND
TIME
TIME
04:00
06:00
08:00
02:00
05:00
07:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
00:00
  Plant A       Plant B       Plant C       Plant   D       Plant E
Suppressed peak power demand with collaborative load shifting 
0
20
40
60
80
100
01:00
03:00
ELECTRICITY DEMAND
04:00
06:00
08:00
02:00
05:00
07:00
09:00
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11:00
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13:00
14:00
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17:00
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19:00
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23:00
00:00
Smart Energy Systems
30
Smart Energy Systems: an overview

Use case: decentralised, self-healing grids 
to keep blackouts small, safe and short
To reach climate targets rapidly, a wealth of new 
electricity transmission infrastructure will have to be 
developed. With this, the safety and security of the 
system cannot be overlooked. As technologies become 
electrified through the energy transition, the risk and 
consequence of electrical outages increase in parallel. It 
is of paramount importance these faults are prevented 
where possible and identified rapidly when they occur 
to minimise disruption.
Unpredictable events that disrupt transmission are 
often unavoidable; the electrical grid will always be at 
some risk of outage due to weather, equipment failure, 
wildlife, human error, or even sabotage. The frequency 
of these events is also increasing as a result of climate 
change. The UK has seen a 320 per cent increase in 
major storms over the past 5 years, while wildfires in 
California are substantially increasing in both scale and 
frequency over recent decades.13,14
Consequences depend on the magnitude, cause, 
location and duration of the fault. In places like Texas in 
the US, for example, electrical failures from powerlines 
(often caused by weather storms) have caused 4,000 
wildfires in the past three and a half years, while 
downed lines, if not disconnected, pose a significant 
threat to human life.15
In high risk residential areas and dry woodlands, 
it is essential that faults are detected and that 
circuits are opened to disconnect powerlines 
almost instantaneously to keep the fault and any 
consequences localised. 
While these systems aim to limit any immediate damage 
from the fault, accurate identification of the location is 
necessary to minimise the response time for emergency 
services and maintenance crews in the repair process. 
Knowing where to precisely find the fault, instead of 
having to check the entirety of a line from point to point, 
means repairs can begin much quicker. 
Smart protection systems are being developed by 
companies like Efacec using both ‘selective blocking’ 
or ‘synchrophasor’ technologies to coordinate different 
nodes throughout the system, which measure the 
voltage properties of distribution. 
These approaches compare values between 
incremental points within the network. If values vary 
significantly from those expected over time or between 
locations, then precautionary shutdowns can be 
imposed to prevent catastrophic failure.
Communication speed is paramount to reduce 
the time of fault identification, and current radio 
skimming methods cannot provide in-depth analysis 
of system performance. With synchrophasor 
approaches, in particular, a continuous stream of 
data being sent to operators is likely necessary with 
low latency requirements that are currently only 
available with 5G technologies. 
As technologies become 
electrified through the 
energy transition, the risk and 
consequence of electrical 
outages increase
13 Swinton Insurance, 320 per cent INCREASE IN Major UK STORMS FROM (2010 -2014) TO (2015-2020) 
14 NASA’s Earth Observatory, Six trends to know about fire season in the western U.S.
15 Texas Wildfire Mitigation Project, How do power lines cause wildfires? [Online]. 2014 https://bit.ly/3b1kT7b
31
Smart Energy Systems
Smart Energy Systems: an overview

With access to high speed, wireless networks, which 
can be powered through outages using battery 
energy storage, these mechanisms can operate 
through rapid device-to-device communication 
between the nodes in the system. 
In a decentralised system using distributed energy 
resources, transmission can also be operated more 
flexibly and rerouted so transmission ‘self-heals’ when 
faults occur, minimising the extent and length of any 
disruption in the area. Projects like SliceNet in Portugal, 
Efacec, EFA and Altice Labs are hoping to prove 5G 
technology can be deployed in a system that can 
identify faults more rapidly and ‘self-healing’ will allow 
for minimal homes to be disrupted.
Through current iterations of fault location, isolation 
and service restoration (FLISR) technology, the 
minutes of customer interruption have been reduced 
by as much as 51 per cent, with the number of 
customers interrupted falling by up to 45 per cent. The 
frequency of interruption events also fell by up to 58 
per cent, while the number of miles travelled by service 
trucks was significantly reduced, as grid operators 
deployed maintenance teams more effectively.16
While this offers utilities an option to employ a private, 
low-latency network to ensure communication, the use 
of public mobile networks presents the opportunity for 
such grid management to be used at any point in the 
network, also covered by an MNO.
16 U.S. Department of Energy, Distribution Automation, September 2016
Ordinary scenario
‘Healed’ scenario after fault
Home
Home
MNO
MNO
MNO
MNO
Main connection
Main connection
Secondary 
connection (VPP)
Becomes 
main supply
Secondary 
connection (VPP)
Main connection
Main connection
(Fault detected)
Factory
Factory
Main Grid
Main Grid
H2
H2
Solar PV
Solar PV
Wind
Wind
32
Smart Energy Systems
Smart Energy Systems: an overview

Currently, most people understand VPPs to consist 
of more commercial DERs than consumer ones, but 
this is changing. The shift of consumers to ‘prosumers’ 
that both generate and consume energy is seeing 
more homes equipped with DERs like rooftop solar, 
battery storage, and DR capable appliances. With a 
rapid acceleration in EV adoption, the inclusion of 
these mobile batteries brings the opportunity for 
Smart Charging (which falls under both DER and 
DR classifications) as well as the fourth main trend – 
Vehicle to Grid (V2G). 
The shift towards EVs is one of the most achievable 
decarbonisation goals. The number of EVs on the roads 
is forecast to rise 14-fold in just 10 years, with 116 million 
expected to be in global operation in 2030, bringing 
a combined battery capacity of over 7TWh.17 When 
plugged in and sufficiently charged, these EVs can be 
aggregated as part of a dynamic VPP to serve as a 
battery that balances the electricity grid.
Some anticipate the annual electricity to charge EVs 
could exceed 1,100TWh by 2030 – roughly the same 
as from Europe’s entire industrial sector.18 To ensure 
a mass of consumers arriving home and plugging 
in their cars does not cause rolling power outages, 
charging infrastructure needs to be implemented to 
control and optimise EV charging times based on local 
grid conditions. Brownouts or restrictions would be 
extremely detrimental to EV adoption, so it’s important 
to ensure these vehicles can be charged in an optimised 
fashion. Mobile networks will be vital for the secure 
connectivity required for V2G to be adopted at scale.
Vehicle to Grid (V2G)
V2G Cloud
Application
P
MNO Network
P OW ER
G RID
17 BloombergNEF, Electric Vehicle Outlook, 2019 - https://about.bnef.com/electric-vehicle-outlook/
18 IEA, Global EV Outlook, 2019
  Energy
  Data
  Wireless Data
The role of vehicles in a SES
Smart Energy Systems
33
Smart Energy Systems: an overview

Early uptake has focused on pushing the technology 
to market with ‘dumb charging’ infrastructure, where 
a car is essentially charged in the same way as a 
mobile phone. But both cost of ownership and grid-
wide electricity demand will be slashed significantly 
by the emergence of smart charging technologies, 
where charging is managed based on live electricity 
grid data. The only way this can be managed is 
through a secure and increased level of connectivity.
To increase smart EV adoption, this charging 
infrastructure must also be developed to allow for 
home charging. Tesla’s Supercharger network is 
the best example of this market power but remains 
exclusive to Tesla owners due to the required 
smartphone applications, as well as the proprietary 
plug that connects the car to the charger. 
Smart charging aims to track consumer energy habits, 
and then manage the charging of their vehicle to 
optimise energy consumption against renewable 
supply. For example, rather than charging a vehicle 
at 8pm when electricity usage is typically high, the 
system can make use of hours in the early morning 
when renewable electricity can account for a larger 
share in the energy mix.
From the consumers’ point of view, this also has 
benefits in terms of cost. Electricity prices, like with 
any other commodity, follow supply and demand 
dynamics, and by capturing lower prices, users 
are able to save up to €80 per year in charging 
costs.19 With the installation of smart chargers being 
approximately €550, a payback time of around 
8 years is similar to what has been deemed as 
acceptable within the residential solar market.
19 Indra, Indra Smart Charger Data Sheet
Smart Energy Systems
34
Smart Energy Systems: an overview

Use case: supporting the exponential 
growth of smart EV charging
Cloud connectivity is required to manage purchasing 
decisions and the flow in and out of the vehicle’s 
battery, based on real-time electricity statistics. 
Currently, V2G and smart chargers usually rely on a 
consumer’s home broadband network, which makes 
sense when users are on fixed rates tariffs. In this case, 
the connectivity incurs no additional cost compared to 
the data cost through a 4G connection, which would 
likely exceed €1 per month. 
However, as the market scales, charge points will 
become pieces of critical national infrastructure. If 
V2G applications are to be used to help balance the 
electricity grid or to replace the need for fast‑response 
fossil-fuel generators, they need to be reliable. 
Home broadband connections can’t be relied upon 
for this, and MNOs will be called upon to provide 
mission‑critical mobile networks. 
Significant security protocols will have to be put in 
place to ensure close to 100 per cent availability if 
V2G is to be part of the first response to events like 
power outages. The speed at which the EV’s battery 
can respond to these events, by rapidly absorbing or 
supplying electricity, also determines how much revenue 
is awarded to the EV owners by grid operators. 
To compete within this market and provide guaranteed 
availability, companies like Indra in the UK have 
identified it will be necessary for smart charging 
operators to physically harden their connectivity 
through local 4G or 5G networks to allow a form of 
foolproof backup network access to the increasing 
number of devices installed across the electricity grid. 
Vehicle-to-grid example charge/discharge schedule
-4000
0
20
40
60
80
100
-2000
-2000
-2000
0
2000
4000
6000
8000
Vehicle Plugged In: 18:15
Consumer Demands
Minimum Charge 
Level: 38%
Time Fully 
Charged: 07:00
12:00
14:00
16:00
18:00
20:00
22:00
00:00
02:00
04:00
06:00
10:00
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POWER (W)
TIME
STATE OF CHARGE (%)
  Power       State of Connected Battery Charge
1
2
3
4
1
3
4
35
Smart Energy Systems
Smart Energy Systems: an overview

For MNOs, the inclusion of 4G and 5G small cells in 
charging units also opens up opportunities to use the 
new V2G infrastructure as repeaters to extend the 
reach of their mobile networks. There is arguably no 
better place for such a device than on the outside of 
someone’s house to help expand 5G coverage. 
One of the key opportunities in this market is within the 
emerging market for car sharing, with companies like 
Car2Go offering flexible vehicle renting schemes. If the 
ownership of the battery shifts to a company, then the 
cars’ batteries can be aggregated into a dedicated VPP. 
Early trials of such schemes have used AI to forecast 
the demand for rental cars and used the batterie’s 
capacity to feed into the grid when not in use. By doing 
this, research has shown sharing companies can access 
an additional 7 per cent of net profit, which could 
rise to 12 per cent if battery technology continues to 
advance as expected.20
Impact of V2G on household electricity demand
0
100
200
300
400
500
600
12:00
14:00
16:00
18:00
20:00
22:00
00:00
02:00
04:00
06:00
10:00
12:00
08:00
CONSUMPTION (KWH)
  House load       House load with EVs (unmanaged)       House load with EVs (smart charger - managed)       House load with EVs (V2G - managed)
If the ownership of the 
battery shifts to a company, 
then the cars’ batteries 
can be aggregated into a 
dedicated VPP
20 Powertac, Smart Charging and Virtual Power Plants, 2015
36
Smart Energy Systems
Smart Energy Systems: an overview

Research also suggests the increased flow of electricity 
in and out of a car’s battery may be less damaging 
than keeping the battery stored at full capacity for 
long periods, inferring smart charging will lower the 
maintenance costs of EV ownership.
In addition to smart charging, V2G charging is 
also starting to become increasingly attractive to 
consumers, with the possibility to sell the stored 
electricity in the car’s battery back to the grid at times 
of high demand. Because of the increased complexity 
in the equipment, V2G installation costs are currently 
close to €6,000, but these are falling. With the average 
payment to the consumer often exceeding €400 
per year, attractive returns for consumers could be 
achieved by 2023 if appropriate support is seen for 
early infrastructure development.21
There is a huge nascent market surrounding the 
adoption of V2G charging infrastructure, particularly 
in the home, as well the public networks at workplaces 
or parking complexes. As these V2G-powered 
VPPs emerge, they require business applications 
and payments systems to facilitate their usage, and 
smartphones and their supporting networks are central 
to this. These mobile networks are mission critical.
21 Indra, Indra V2G Charger Data Sheet
Smart Energy Systems
37
Smart Energy Systems: an overview

Use case: tracking the dynamic nature 
of an EV battery-swapping network
As vehicles transition from gasoline and diesel to 
electricity, passenger cars are becoming an increasing 
part of the utility business model. While the batteries 
within these vehicles have largely been explored for 
use by the consumer in V2G charging, if mindsets 
are changed around battery ownership then battery 
swapping could present a wealth of challenges and 
opportunities for both the automotive and smart 
energy industries. 
The concept of battery swapping alleviates one of 
the largest barriers to the uptake in electric vehicles 
– charging time. Currently, even the most rapid EV 
charging station takes at least 20 minutes.22 With modern 
EVs being designed on ‘skateboard’ style platforms, 
vendors such as Canoo, Rivian, Nio and Williams are 
exploring the idea of swapping stations, where batteries 
can be replaced regularly, in as little as 3 minutes. 
There are some significant barriers to this approach 
when it comes to defining who is accountable in 
the eyes of insurers if a battery fails and causes a 
car collision, or when a warranty claim is made. For 
this idea to take off, it will require a huge change in 
mentality from car owners. Imagine if you had to swap 
out your engine for one of unknown age every time 
you went to refuel a petrol or diesel-powered vehicle.
One of the key possibilities, however, is for battery 
swapping to be included within “lease-and-swap” 
networks. Fisker and Canoo are among manufacturers 
that have both recently launched plans to distribute 
vehicles through “flexible leases” in a subscription 
format, which could bundle things like road tax and 
insurance into one package which takes into account 
the risk of battery failure. 
This could similarly be incorporated through Tesla’s 
scheme of selling insurance alongside vehicle 
ownership. Chinese companies like Nio and BAIC are 
similarly aiming to sell batteries and vehicles separately 
to accelerate the EV penetration in China – and then 
expand into the rest of the global market. 
BAIC already has 187 battery-swap stations across the 
country and plans to expand this to 3,000 by 2022. The 
company offers an all-you-can-swap deal to owners 
of its BJEV model for $60 a month. Nio offers a similar 
deal where users can rent additional batteries for $10 
per day to swap in themselves.
Even if these technologies only account for a small 
percentage of the vehicle market, through fleet leases 
for instance, as the global electric vehicle market scales 
to reach 140 million units sold by 2030 then monitoring 
the movement and stock of each battery at different 
swapping locations will be essential, and will require 
mobile data solutions for operators to manage.
If combined with V2G technology, for example, the 
batteries at each swapping location could be used as 
a form of energy storage for the electricity grid, but 
the location and availability of capacity will need to be 
accurately monitored and reported to system operators 
via wireless connectivity and Cloud Computing 
environments. Research has shown car sharing 
companies can access an additional 7 per cent of net 
profit from electricity sales on top of their existing rental 
revenues, which could rise to 12 per cent if battery 
technology continues to advance as expected.23
22 Podpoint, How long does it take to charge an electric car? [Online] https://pod-point.com/guides/driver/how-long-to-charge-an-electric-car
23 Powertac, Smart Charging and Virtual Power Plants, 2015
38
Smart Energy Systems
Smart Energy Systems: an overview

On the subject of supporting infrastructure is the fifth 
main area central to decarbonisation. Microgrid Trading 
concerns energy trading among members of a microgrid, 
which is a small and often independent energy grid that 
has a focus on resilience and self‑sufficiency. 
Currently, transmission systems are blind to where 
producers or consumers are physically located. All 
electricity fed into the grid is pooled into a centralised 
system and then redistributed, meaning producers 
of solar power in the south of the country could be 
powering a factory in the north. 
Decentralised microgrids using DERs can be deployed 
to minimise the distance between electricity generation 
and consumption, reducing both the cost and losses 
associated with transmission. Through a smart energy 
system, where the output of distributed energy 
resources can be tracked alongside live consumer 
demand within a microgrid’s domain, locally sourced 
renewable power can be guaranteed. 
Microgrids are more commonly found in commercial 
settings, where a single customer requires emergency 
backup capabilities for mission‑critical business 
applications. Production lines and data centres are 
good examples of microgrid candidates, but large 
enterprise parks and hospitals, where a lot of real 
estate footprint can provide a lot of rooftop solar 
capacity, are also ideal.
Neighbourhoods are also excellent candidates for 
microgrid adoption, but these will differ from today’s 
microgrids by having multiple customers or users. 
Collectively, the homes in a street or the houses in a 
village could be pooled together using rooftop solar 
panels to generate electricity, battery units in the home 
to store it, and other decarbonisation initiatives such as 
ground-source heat pumps and insulation.
Microgrid Trading
Microgrid
App
P OW E R
GRI D
  Energy
  Data
  Wireless Data
How energy is traded between microgrid participants and central power grid
Smart Energy Systems
39
Smart Energy Systems: an overview

Use case: reducing need for grid 
upgrades by decentralising microgrids
One of the key challenges facing the entire energy 
sector is the rate at which electricity demand will 
increase. With continued economic development as 
well as the penetration of technologies like electric 
vehicles and electric heaters, global demand for 
electricity will nearly double between now and 2050.24 
With the share of renewables rising from 27 per cent to 
85 per cent in this time, with resources that generate 
electricity in patterns that don’t follow demand, there 
will be significant periods where generation levels are 
more than triple those of today.25
Anticipating this rise in production, grid operators 
are having to address the fact transmission lines will 
need to be significantly upgraded to handle a surge 
of capacity installations. However, decentralised 
smart grids may provide savings in both cost and 
efficiency, using mobile networks to manage a 
household‑to‑household energy trading system, 
preventing the need for long‑distance transmission. 
Transmission options generally trade off lifetime cost 
against the losses through wasted electricity between 
production and consumption. In the UK, electricity 
distribution losses account for 8 per cent of electricity 
generated, varying between 3.1 per cent to 10 per 
cent for the individual District Network Operators. 
While this naturally accounts for a similar per cent in 
lost revenue, losses on the power networks are also 
responsible for approximately 1.5 per cent of the UK’s 
greenhouse gas emissions. 
Historically, reducing this figure has relied on using 
more powerful transmission, such as high voltage direct 
current (HVDC), which has losses of around 3 per cent 
per 1,000 kilometres, compared to overground cables 
with a figure closer to 7 per cent. However, the increase 
in cost between the two is a substantial drawback 
for grid operators: overhead lines cost between 
£2.2 million and £4.4 million per kilometre through 
their lifetime, while HVDC connections cost between 
£10.2 million and £24.1 million per kilometre.26
Decentralised smart grids 
may provide savings in both 
cost and efficiency
24 IRENA, Global Energy Transformation: A Roadmap to 2050
25	 IEA, Fuels & Technologies, 2020
26 IEA ETSAP, Electricity Transmission and Distribution, 2014 
40
Smart Energy Systems
Smart Energy Systems: an overview

Either way, it is either relatively expensive or inefficient 
to transport electricity over long distances. However, 
if electricity can be consumed close to the source 
of production, gains are made in upgrade cost and 
efficiency simultaneously. 
Part of this will include minimising the use of battery 
storage, which, while necessary to account for the 
intermittency of renewable production, still incurs energy 
conversion losses of around 20 per cent due to the 
process of converting from AC voltage to DC for storage 
in the battery, and then back to AC for use in the home.27  
By using a system where nearby homes share energy 
with each other to balance local energy harvesting 
and demand in microgrids, energy losses within local 
Alternative Current (AC) lines can be reduced by 64 
per cent, while the necessity to implement expensive 
nationwide grid upgrades is significantly reduced. 
This will involve a household‑to‑household trading 
system, which is likely to use blockchain-based 
‘smart contracts’ where the point of generation and 
consumption of each unit of electricity can be tracked 
and directed – and then the bill between households 
and the utilities can be settled.
For such microgrids to be as inclusive as possible, 
this will demand significant volumes of real-time 
data transmission across areas that may not 
always be reliably served by fixed-line broadband. 
Wireless networks such as LTE and 5G provide a key 
opportunity to optimise the deployment of such smart 
microgrids and facilitate cost and efficiency savings 
on a national level.
Centralised
Decentralised
27 Huang et. Al., Minimizing transmission losses in smart microgrids by sharing renewable energy, 2016
41
Smart Energy Systems
Smart Energy Systems: an overview

This microgrid would have a connection to the main 
electricity grid both to import and export energy, 
for example if the home’s batteries were full and 
the sun was still shining. The external connection 
to this ‘islanded’ microgrid is always helpful in 
emergencies or periods of unusual weather, but the 
goal is to try and create as self-sufficient a microgrid 
neighbourhood as possible. 
But because the usage of each home differs, there 
needs to be a way to share electricity between the 
households. This is where the trading technologies 
take effect. One home can ‘sell’ surplus solar output to 
another home with a current need for electricity, or top 
up a depleted battery or EV. 
A list of these transactions needs to be kept so each 
home can be credited for the energy it produces and 
billed for the energy it takes in from its neighbours or 
the national electricity grid. Similarly, each home needs 
to be able to tell its neighbours its available capacity 
and expected needs, as a microgrid such as this can 
only work if all participants are working in unison. 
This requires smart meters in each home, as well as a 
Home Energy Management System (HEMS) that can 
coordinate the battery and solar panels, and likely 
control the HVAC system and EV charging too. These 
will require a robust wireless connection, linking them 
to an orchestration system hosted in a cloud platform, 
which can connect the utility business systems with the 
technology vendors that supply the equipment in play. 
These microgrids can be incredibly complex systems, 
but the computing technology to operate them is 
available today. Similarly, utilities can begin viewing 
their customers as assets – it is clear certain microgrids 
could be configured as VPPs. These assets could then 
support other nearby microgrids too. 
If the point is reached where enough self-sufficient 
microgrids have been installed, decarbonisation can 
turn its focus to solving the high-capacity needs of the 
industrial sector, where sectors such as steelmaking 
and aviation are among the most challenging. There 
have been very promising tests using blockchain-based 
technologies to track the trading between members 
within these microgrids, and between the microgrids 
and the national electricity grids.
Currently, microgrids have been installed in industrial, 
military, and commercial environments, but residential 
deployments are now being explored. Several 
research and development microgrids are active, 
with Alabama Power’s Smart Neighborhood of 62 
homes being one of the best documented examples.28 
Partners include the US Department of Energy, 
and the Electric Power Research Institute (EPRI). In 
Europe, residential microgrids have centred around 
the energy trading application, whereas in the US, 
the nature of many rural communities has prioritised 
energy islanding and redundancy.
28 Greentech Media, How a residential microgrid can earn its keep beyond the neighborhood, 2019
Smart Energy Systems
42
Smart Energy Systems: an overview

Use case: allowing energy democratisation 
using blockchain smart contracts
While smart and renewable energy systems are a huge 
part of decarbonisation, there is a growing school of 
thought that technology alone cannot be the silver 
bullet to fix climate change. Societal change is needed. 
One of the most promising signs comes from a shift of 
consumers, who simply buy and use electricity from 
the grid, to prosumers, where the user also generates 
some level of their demand themselves. Enabling such 
behaviour is key to changing larger consumer habits 
surrounding both energy usage and production and a 
shift towards an ‘energy democracy’.
One of the key arguments in support of allowing the 
development of small-scale assets is that of computing. 
Personal Computer (PC) technology advanced 
so quickly that mainframe computers were made 
largely redundant, and if Google had just focused on 
large‑scale computing then there would not be cloud 
networks today.
For clean technology, this necessitates the growth 
of technologies such as rooftop solar power, home 
battery storage, and even hydrogen production 
through small-scale modular electrolysers. While the 
EU has no specific legislation to promote prosumers, 
feed-in tariff schemes have meant over one million 
households in both Germany and the UK now have 
installed solar panels. 
By collating these resources into virtual power 
plants (VPPs), local purchasing of electricity and 
household-to-household trading can be enabled by 
the use of blockchain and smart contracts between 
prosumers and consumers. 
In such a system, excess electricity produced by a 
household will be sold locally, with prices defined based 
on supply and demand to match that available from the 
grid. Beyond this, excess production on a community 
level can be sold to the centralised grid. 
Such schemes have been piloted in countries like 
Switzerland by Quartierstrom and the Water and 
Electricity Works Walenstadt (WEW), which tested 
a blockchain project that created a local energy 
market between 37 homes for a year. The goal was 
to see how homes that produced rooftop solar 
electricity could trade with other participants and 
the role the central grid would play in the process, 
using a blockchain system to keep track of these 
transactions acting as a digital ledger. 
Through the project, most solar power was consumed 
locally. Within the winter months of December and 
January, around 90 per cent of the solar was used by 
the generating home itself, or its neighbours. In the 
summer months, over half the generated solar was 
sold off to WEW.
Technology alone cannot 
be the silver bullet to fix 
climate change. Societal 
change is needed
43
Smart Energy Systems
Smart Energy Systems: an overview

One of the most interesting aspects of the project 
was the impact it had on consumer habits. With 
access to their production and consumption data on 
a community level, there was an uptick in residents 
scheduling their appliances to run when the sun was 
brightest. To this end, they became very aware of how 
the energy market functions, which is a promising 
indicator for utilities wanting to deploy such projects at 
national scale. It suggests consumers would understand 
how such a system would operate, and could change 
their behaviour accordingly due to price sensitivity.
This increased engagement in the local energy 
system can be essential to promoting a 
democratised energy transition. In a more efficient 
system, smart contract trading between households 
will reduce bills as well as boost the uptake of 
residential energy products and community 
renewables projects – chiefly community solar. 
Such information provision, along with production 
of accurate price forecasts within the VPP, depends 
largely on the transfer of large amounts of data. 
With a data platform active on top of the ‘microgrid’ 
system, full characteristics can be viewed at a granular 
level, with the potential to further include things like 
the location of EVs and other mobile forms of energy 
storage and demand. 
Alongside this, while the system aims to decrease 
total energy consumption, the infrastructure needed 
for the project consumed 4 per cent of the total 
produced energy. As systems start to scale, this 
efficiency becomes increasingly important, and the 
need for wireless communication with low energy 
intensity becomes essential – something 4G LPWA and 
emerging 5G technologies are well-placed to do.
44
Smart Energy Systems
Smart Energy Systems: an overview

For the first time in history, EU member states are 
pulling in the same direction for renewable energy 
legislation. In November 2019, the Clean Energy 
Package29 (CEP) directive was finalised giving the 
region a top-down set of guidelines that should enable 
the transition to decarbonised energy grids. 
SES have two main areas to address in terms of 
regulations. The first are those regarding the wireless 
networking technologies that connect these systems 
to the internet and their supporting applications. The 
second is the specific energy network regulations that 
govern how they can be connected to energy grids, 
and these are the bigger concern. 
On the MNO side of things, the roadmap for future 
regulation is clear, and many MNOs are already 
deploying 5G networks for testing and evaluation. 
Some MNOs have launched commercial 5G networks 
too, and the industry is confident it fully understands 
the regulatory environment. 
Introduction: 
Regulatory Landscape
For those developing SES technologies, the regulatory 
roadmap is significantly more complex, and this 
lack of clarity is a major barrier to adoption for SES 
deployments. The CEP directive should significantly 
change this for the better. 
Currently, the DERs outlined in the second chapter 
already encounter these problems. As SES are 
going to be more complex, they are more likely to 
be hindered by a lack of regulatory clarity because 
of their two-way communication and position in 
mission‑critical applications. 
Similarly, in nascent stages of commercial 
development, global stakeholders have continuously 
struggled to define regulations for battery storage 
and decide whether or not it should be treated as a 
generation asset (like solar or wind power) or given a 
standalone classification.
29 European Commission, Clean Energy for All Europeans Package, 2019 
Smart Energy Systems
45

This section aims to identify examples of current 
regulations or national policy benefiting SES. 
Technical standards do not drive adoption. 
Government regulation, industry advocates, and 
influential vendors do. To this end, there will be no 
discussion of the standards themselves. 
There are already many examples of national regulations 
that help lay the groundwork for SES adoption. 
However, the different approaches of each of the EU 
member states should be harmonised at the EU level, 
to create a better business environment. This would 
accelerate the implementation of SES technologies and 
the environmental benefits that SES enable. 
The following sections aim to demonstrate that while 
there are already positive examples of regulations in 
place, there are problems that should be addressed 
with either national or EU policies. 
Overview
Smart Energy Systems
46
Introduction: Regulatory Landscape

There are purchasing incentives for EVs in 12 EU 
countries, which usually take the form of a tax credit 
or bonus payment. In the UK, a discount of up to 
£3,500 is available,30 which could rise to £6,000 in 
coming months,31 and in Germany there is a €4,000 
bonus for battery and fuel-cell vehicles.32 
Also looming are proposed bans on internal 
combustion engines (ICE) inside major cities and 
countries. Norway plans to ban the sale of new ICE 
vehicles in 2025, as does Sweden by 2030,33 while the 
UK hopes to do the same in 2035, and France plans to 
do so in 2040.34 The Netherlands is proposing an ICE 
ban in 2030,35 while Athens, Madrid, and Paris all plan 
to ban diesel vehicles from their roads in 2025.
Several schemes aim to restrict areas of cities to ICE 
vehicles within certain hours of the day as a means 
of reducing air pollution. EVs are exempt from these 
‘clean air zones’, which serves to create another 
purchasing incentive for consumers. These zones 
are common among capital cities in Europe but have 
been slower to be rolled out to other municipalities.
The switch to 
Electric Vehicles
30 Gov.uk, Low emission vehicles eligble for a plug in grant, 2020 
31 Electrek, UK drivers may get £6k taxpayer-funded incentive to switch to electric cars, 2020
32 BMWI.de, Government policy for Electric Mobility, 2016 
33 NY Teknik, New government – now a ban on petrol cars awaits, 2019 
34 Quartz, Nine countries say they’ll ban internal combustion engines. So far, its just words., 2018
35 Bloomberg, Electric car subsidies have rendered Renaults free in Germany, 2020 
Smart Energy Systems
47
Introduction: Regulatory Landscape

Many of the proposed sales restrictions are not yet 
active legislation, meaning there is room for them to 
slip or be ignored by future political regimes. Enshrining 
these proposals as law would be a welcome first step, 
which could then be expanded upon. SES like V2G 
would benefit greatly from any increase in EV adoption. 
Another example is the different types of plugs 
for EVs. In Europe, the two main approaches are 
CHAdeMO, which is generally favoured by the Japanese 
automakers, and CCS, which is used by most European 
and American manufacturers. Tesla has its own plug 
design too, and there are two different generations of 
both CHAdeMO and CCS to contend with.36
In its current iteration, the CHAdeMO protocol is far 
better suited for V2G charging, and with regulations 
steering companies like Nissan towards CCS for its 
Ariya EV model, growth in vehicles available for V2G 
over the next few years could be stunted. 
Something as seemingly trivial as the type of plug 
could have significant knock-on effects for years to 
come. Any consumer confusion here is detrimental to 
their purchasing decision to switch from ICE vehicles to 
EVs. Given the long lifetime of vehicles, the impact of 
confusion here is going to be compounded over time. 
Charging hardware standardisation
Standardisation at the regional level could enable 
faster and smoother adoption of EV charging stations 
and V2G, as well as remove one of the persistent 
barriers to purchasing – the concern over where 
consumers will be able to charge their EVs. Carrying 
around an adapter cable is a short-term solution, but 
automakers could be compelled to standardise and 
agree upon a universal design. 
Just as the EU addressed the waste incurred by the 
different ways of charging mobile phones, it could also 
address the problem of differing types of EV plugs and 
charging technologies. 
Harmonisation would improve the consumer 
experience and reduce waste, but most importantly 
it would accelerate the adoption of EVs and hasten 
decarbonisation, as well as reducing urban air pollution. 
Each potential barrier to consumer adoption that 
can be removed through a top-down regulatory or 
incentive-based approach is a win for climate change 
and carbon emission reduction.
36 Rethink Research, Google Maps EV filter highlights just how fractured charging is, 2019
Smart Energy Systems
48
Introduction: Regulatory Landscape

The various feed-in tariffs and net metering initiatives 
are good examples of current successful approaches, 
but again are ones that could be considerably expanded. 
These schemes track the amount of electricity generated 
by a home’s rooftop solar panels and then fed back into 
the main grid. They require smart meters to track the 
electricity imported and exported by the home, but also 
upgrades from the utilities and electricity distributors to 
accommodate this two-way traffic. 
Utility efficiency schemes have proven popular, where 
local or national governments provided tax incentives 
or financing schemes designed to improve the energy 
efficiency of consumer homes. Adding new insulation, 
installing solar panels, and upgrading to more efficient 
appliances were the most popular examples, but now EV 
chargers and associated tariff schemes are emerging too.
How consumers profit from green decisions
Consumer awareness campaigns have had some 
success too, and smart meters play an important role 
here. The in-home display shows live and historic 
usage, which influences consumers to reduce their 
consumption, turning off lights and appliances, and 
seeking out ‘vampire loads’ on their energy usage. 
In time, these displays will evolve, with the help of 
smartphone apps, to enable DR applications, which can 
be used to balance the energy grid according to the 
available renewable generation capacity.  
Smart Energy Systems
49
Introduction: Regulatory Landscape

The cost of new technologies is still too high and 
poses a significant barrier to entry. Maximising the 
uptake of small-scale systems like residential solar 
or home battery storage depends on the number of 
consumers who are willing to take on the initial capital 
cost. Increasing this uptake can be done by either 
subsidising the purchase cost for the buyer or by 
decreasing the pay-back time through increasing the 
revenue generated by the system. 
This is especially prevalent for systems that can both 
buy and sell electricity from the grid, including V2G 
chargers and home electricity storage. The margins 
made are dependent on fluctuations in electricity prices. 
If a system can buy electricity at €20 per MWh on the 
German Intraday market at 5.45am when power supply 
is high and demand is low, then can sell it at 8.30am 
when demand ramps up, it may be able to sell it for over 
€60 per MWh making a 200 per cent gross profit. 
As the penetration of renewables increases, the extent 
of this price fluctuation, and thus the business case for 
smart storage systems, increases in tandem. With wind 
power providing excess electricity overnight, negative 
electricity prices are becoming increasingly common in 
Europe. Through a slump in demand through COVID-19, 
European countries on average saw negative day-
ahead power prices around 0.8 per cent of the time 
during the first nine months of 2020 – a rate nearly 4 
times higher than seen between 2015 and 2018.37
Why price fluctuations should be kept
While these negative prices need to be managed 
carefully and not used to penalise developers of 
renewable power systems, the variation in electricity 
prices is essential for smart energy systems. 
Regulatory approaches that must be avoided in relation 
to this include the UK’s Targeted Charging review, 
which aims to reduce uncertainties in forward-looking 
charges by keeping electricity prices in a narrower 
band. Providers of V2G charging like Indra Renewable 
Technologies have identified that such rulings could 
reduce consumer revenues by as much as 70 per cent. 
While the revenues from load-shifting and selling 
electricity to the grid could have potentially brought 
£500 to the customer each year in the previous 
system, the figure is now below £200. The cost of 
installation of a V2G charger is normally in the range 
of £4,000 to £5,000, and the resulting pay‑back 
periods of over 20 years will dramatically reduce the 
number of interested consumers.
Typical price pattern intraday market
0
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€/MWH
TIME
37 EnAppSys, Negative UK spot power also dampens Dutch, Belgian prices, 2020 
Smart Energy Systems
50
Introduction: Regulatory Landscape

One of the key opportunities presented by new 
mobile technologies is the ability to aggregate energy 
storage systems to provide ancillary services to the 
grid. These services help balance any variation in 
power generated from renewable power sources like 
solar and wind. As these variations are not entirely 
predictable and can occur suddenly, regulation can 
incentivise a fast response within these systems. In 
Ireland’s DS3 energy market, for example, revenues 
for electricity provided are multiplied by 3 if a system 
can respond within 0.15 seconds. 
The benefit of connected systems in these markets is 
also compounded by high availability requirements. 
For instance, the DS3 requires a system providing first 
frequency response to be available to the grid for at 
least 97 per cent of the time, otherwise the rate of 
revenue is reduced.
Removing market barriers for 
small-scale generators
Data hubs have proven to be important first steps 
towards embracing SES. In Estonia, Elering launched 
its Estfeed platform,38 which acts as a hub, collating 
data from smart meters, energy market prices, weather 
station data, and the electricity grid, and then acting as 
an interchange with third-party applications. 
This data can then be accessed by companies and 
organisations, with the best example being WePower’s 
use of the data platform to model Estonia’s energy 
market and demonstrate how transactions could be 
made using the Ethereum blockchain to record who 
produced what power, and then who bought it and 
then settle payments accordingly. 
Denmark’s Energinet launched a platform called 
DataHub in 2013, which had similar goals, while Dutch 
MNO KPN is currently establishing its own Data Service 
Hub. As blockchain technologies were not yet mature, 
that element is absent from Energinet’s operations, but 
the system still collated smart meter and grid data so 
that consumers were able to sell energy produced by 
the solar panels back to the Danish grid.
38 Rethink Research, Google Maps EV filter highlights just how fractured charging is, 2019
Smart Energy Systems
51
Introduction: Regulatory Landscape

The grid-services markets, specifically Fast Frequency 
Response (FFR) and Intraday, would benefit from 
regulatory clarity. Currently, the rules and rates vary 
greatly between EU member states, meaning the 
renewables and storage vendors competing at a 
European scale face an overly complicated regulatory 
environment. 
Standardised regulation across Europe will hugely 
simplify any collaborative approach to the EU’s 
decarbonisation and adoption of renewable resources. 
With a fixed and clear route to market, a foundation 
will be laid for Europe’s clean technology vendors to 
reach economies of scale more rapidly and become 
more competitive in other global markets. As seen 
through the dramatic ‘boom and bust’ of the solar 
sector, fractured regulatory guidance in the current 
environment makes it increasingly difficult for 
European majors to emerge in this sector, ceding 
ground to Chinese and American vendors.  
Creating regulations that allow solar, wind, and 
storage to compete in the same capacity markets 
and energy auctions would open the door for faster 
decarbonisation. Similarly, laying the legal groundwork 
to enable VPPs to compete in the same markets 
as fossil fuel‑based power plants should help exert 
pressure on those high‑carbon resources, leading to 
their earlier retirement. 
Regulation standardisation across Europe
Reforms to Europe’s carbon pricing market, the EU 
Emissions Trading System (ETS), to account for 
more ambitious decarbonisation targets will provide 
negative pressure on fossil-fuel power generation by 
increasing prices and accelerating the uptake of clean 
technologies and SES. Adjusting the energy capacity 
markets to allow renewables and SES to compete with 
carbon-heavy approaches is also imperative. 
Continent-wide grid participation rules
Harmonised grid participation rules would speed the 
adoption of new SES, as well as application specific 
technologies like FFR battery storage. If a set of 
industry standards could be agreed upon, it would help 
smaller firms compete in multiple national markets 
within Europe, as well as enable the largest vendors to 
target Europe-wide deployments. 
Solar Jobs in Germany
38,600
57,000
64,700
107,800
100,300
56,000
38,300
31,600
110,900
2007
2008
2009
2010
2011
2012
2013
2014
2015
Smart Energy Systems
52
52
Introduction: Regulatory Landscape

Consistent buyer-side subsidies
While buyer-side subsidies will be needed to increase 
consumer adoption of smart energy systems, 
available revenues from these systems also need to be 
protected. This needs to happen without penalising the 
revenue available to power producers, and Contract 
for Difference (CfD) auctions can allow project owners 
to receive stable revenue, while intraday variations 
in electricity prices are not reduced. If governments 
are insistent on protecting consumers from these 
variations, then the revenue for fast responding energy 
storage systems must be boosted through generous 
feed-in tariffs and compensation for high levels of 
availability to the grid. 
Access to open source data
There are a few specific problems that could be 
addressed with gentle regulation and industry 
consensus. Perhaps the best candidate is the need 
for open source data platforms, which should foster 
cooperation between businesses and governments, 
as well as enable citizens to engage with the data 
generated by these SES. 
The trend of ‘Open Data’39 has focused on the 
democratic power that free access to public data can 
bring, and in the context of nationally important energy 
networks there is considerable anticipated overlap 
between the push for Open Data and the adoption of 
the cloud-computing data platforms that are going to 
enable SES. 
To this end, open source data platforms like Powertac40  
appear to be fundamental parts of the transition to a 
decarbonised energy mix, which in turn is enabled by 
the collective power of these data platforms and the 
resources they control. Every energy asset deployed 
needs to be connected to such platforms, and wireless 
mobile connectivity is key to this transition.
39 European Commission, European Data Portal  
40 Powertac, www.powertac.org 
Smart Energy Systems
53
Introduction: Regulatory Landscape

SES will allow us to provide the global population 
with low-cost, zero-carbon electricity. Each SES 
installation helps reduce the amount of conventional 
energy generation capacity that needs to be created 
by getting more out of the existing capacity through 
usage and load optimisation.
Once solar and wind power reaches a combined 20 
per cent in a country’s electricity generation mix, as 
they have in many countries, technologies such as 
smart grids and energy storage become mandatory 
to prevent wastage. Smart grids alone can help push 
the penetration of renewables from 20 per cent to 
70 per cent,41 and become noticeably effective once 
renewables penetration surpasses 15 per cent.42  
Otherwise, utilities are required to have gas-fired 
peaker plants on standby in case of a sudden shortfall 
in renewable generation or surge in demand. 
On a microgrid level, by maximising generation 
from renewables and optimising demand patterns 
to create a balanced grid, the efficiency of the 
power sector can be improved by as much as 35 
per cent. Using today’s best available technologies 
and projections for future energy mixes, SES enable 
an additional 25 per cent of the renewable energy 
generated to be used in the grid-load.43,44
Smart Energy Systems 
and decarbonisation
Without SES, there would be a need to build more 
generation capacity to achieve the same results. By 
shifting renewable power supply and energy demand 
through a SES, an overbuild of power generation 
capacity can be prevented, starting with the abolishment 
of fossil fuels, before providing cost savings to a 
renewable-driven power sector.
While the early penetration of SES supported 
renewable deployments will involve advanced metering 
infrastructure (AMI), advances in Cloud Computing and AI 
will result in optimised electricity distribution – reducing 
renewable oversupply, and forcing carbon‑intensive 
methods of generation into early redundancy. 
Smart grids alone can help push 
the penetration of renewables 
from 20 per cent to 70 per cent
41 European Commission, Horizon 2020: Testing and Evaluating Sophisticated information and communication Technologies for enabling a smarter grid, 2020 
42 Irena, Smart Grids and Renewables: A Guide for Effective Deployment, 2013
43 ITU, Boosting energy efficiency through smart energy grids, 2012
44 i-Scoop, Smart grids: what is a smart electrical grid – electricity networks in distribution, 2019
Smart Energy Systems
54

The primary benefit of this enabling technology comes 
into play as renewables become a larger part of the 
global energy mix. The risk of a disparity between 
supply and demand increases significantly as economies 
become more reliant on weather patterns for their 
electricity instead of on traditional coal or gas plants. 
Despite the increased need for SES, global investment 
in electricity grids has fallen for 3 consecutive years, 
falling 7 per cent between 2018 and 2019 to just under 
$275 billion per year. Digital technologies accounted for 
around 15 per cent of this. Transmission grids remain 
almost entirely centralised and nearly all SES projects 
are still in the pilot phase while countries continue to 
evaluate how different technologies can maximise 
energy utilisation. However, by 2023 it is expected 
65 per cent of power, gas and water companies will 
have invested in edge analytics and Cloud Computing to 
optimise their assets as SES start to materialise.45
A wide range of technology companies and startups 
claim to have developed products that can provide 
significant material savings for utilities. Advances in 
Cloud Computing will continue to drive the evolution 
of devices from ‘connected’ to ‘intelligent,’ and 5G 
technologies will eventually be included as standard 
in many designs. Governments, regulators and utilities 
must help facilitate the adoption of novel assets for grid 
operators, including non-wired alternatives to machine-
to-machine communication within the system. 
While bodies like the EU set out directives for a 
continent-wide target to reach net zero emissions by 
2050, the success of SES implementation will naturally 
fall to national policy. Countries like the Netherlands 
highlight how considerations must be made for a 
tailored approach based on national objectives.
Smart Energy Systems
55
Smart Energy Systems and decarbonisation
45	 ITC, Top 10 Worldwide Utilities Predictions, 2019

As part of the EU, the Netherlands is aligned in 
terms of its ambitions to reach net zero emissions. 
Independent of the EU’s net zero directives, the 
country has published its 2019 Climate Agreement, 
which sets targets to achieve a 49 per cent reduction in 
its 1990 emissions levels by 2030, before a 95 per cent 
reduction by 2050. 
Through a drive to improve energy efficiency, the 
country is on track to decouple its energy demand 
from its economic growth. Between 2010 and 2019, the 
country’s GDP has grown at an average of 1.34 per cent 
per year compared to its energy demand, which has 
shrunk by 1.53 per cent each year over the same period. 
Through this time, electricity consumption in the country 
has stayed fairly constant, rising from 116.4TWh in 2010 
to 116.9TWh in 2019, accounting for between 14 per cent 
and 16 per cent of total energy consumption. Renewable 
sources accounted for approximately 8.6 per cent of 
this. In the context of Europe, the Netherlands’ sizeable 
petrochemicals and natural gas industry remain hard to 
decarbonise, meaning its electricity consumption per 
capita is 14 per cent above the EU average. 
Case study: the Netherlands
Moving forwards, however, the Netherlands has 
been one of the clearest in publishing its strategy to 
decarbonisation. Reducing emissions in these ‘hard to 
decarbonise’ sectors will focus on the country’s new 
Government Strategy on Hydrogen,46 while the country 
is set to introduce a ban on the sales of new petrol and 
diesel vehicles from 2025, which will create a surge in 
orders for EVs and activity in V2G technology. 
The country’s grid operator, Enexis Netbeheer, is 
currently building an IoT-based smart grid, pooling 
the data from 900,000 connected smart meters. The 
Intelligent Grids Innovation Program, run by the Dutch 
Government, is also funding 94 pilot projects aiming to 
improve grid technology and smart metering.
The Netherlands Energy Mix (2019)
Population:	
17.28 million 
Annual CO2 Emissions: 	
150 Million Metric Tons (MTons) 
Primary Energy Supply: 	
824 Terawatt Hours (TWh) 
Electricity Generation: 	
117 Terawatt Hours (TWh)
46	 Government Strategy on Hydrogen – Government NL 2020
  9 per cent Coal
  45 per cent Gas
  2 per cent Nuclear
  2 per cent Wind and Solar
  6 per cent Biofuels
  36 per cent Oil
Smart Energy Systems
56
Smart Energy Systems and decarbonisation

While the Netherlands has placed itself at the leading 
edge of this market, active SES still account for less 
than 1 per cent of the electricity grid. Accelerated by 
a rise in connected EVs and an expansion of 20GW 
of wind power, electricity generation will account for 
approximately 21 per cent of the country’s energy 
demand by 2030, up from 15 per cent today. This will 
then rise to 30 per cent by 2040 and 43 per cent by 
2050, following a similar growth curve to solar and 
wind power in the energy mix. 
The share of renewables in this electricity mix will 
rise from 18 per cent to between 27 per cent and 35 
per cent by 2030, according to the country’s plan, 
before it pushes towards full decarbonisation over the 
following decades. This early penetration will see the 
share of SES in transmission rise from nearly nothing 
to 26 per cent of electricity supply, before a huge 
rise to 70 per cent in 2040 and 82 per cent in 2050 
as utilities look to digitalise and maximise returns 
through the energy transition. 
With this level of penetration, SES will handle 176.3TWh 
of the Netherlands’ annual electricity supply in 2050, 
with efficiency improvements savings 44TWh per 
year compared to 2019. This level of generation is 
comparable to that which could be expected from over 
9GW of offshore wind capacity at a capital cost of over 
$25 billion – a massive saving for the country, which 
can be spent on other decarbonisation efforts. 
The other way to look at this is that it prevents the 
need to generate electricity from fossil fuels. At the 
Netherlands’ current carbon intensity of electricity of 
450 Tons per TWh, SES could reduce today’s emissions 
from the power sector by 20.4 per cent and the 
Netherlands’ total carbon footprint by 13.2 per cent 
by 2050. This equates to 17 million tons of CO2 each 
year, the same reduction that could be achieved by 
removing nearly half of the country’s passenger cars.47
Penetration of Smart Energy Systems (The Netherlands)
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ENERGY SUPPLIED (TWH)
YEAR
 Total Primary Energy      Electricty Generation      Smart Energy System Generation
47 EPA, Greenhouse gas emissions from a typical passenger vehicle, 2018
Smart Energy Systems
57
Smart Energy Systems and decarbonisation

In terms of market development and smart grid 
penetration, the Netherlands is roughly 3 years 
ahead of the global average. Using the same 
approach to development across the global energy 
landscape, SES can be deployed to significantly 
reduce global emissions from current levels of 33,100 
MTons per year. 
Unlike in the Netherlands, the current trajectory 
will see global energy demand increase by 
approximately 50 per cent by 2050, driven by 
population growth and urbanisation in developing 
economies. Electricity demand will nearly double in 
this timeframe and the share of the power sector in 
global demand is set to rise to around 21 per cent. 
With renewable technologies accounting for the bulk 
of this growth, the penetration of SESwill rise from 
0.1 per cent today to approximately two-thirds of 
electricity transmission.
With the global average for emission intensity from 
electricity sitting around 475 tons per TWh, this 
penetration would save 8,500TWh of electricity, 
Scaling Smart Energy 
Systems for global impact
which would otherwise be wasted, and over 4.0 
million tons of CO2 every year – more than that 
released by the whole of Europe. 
This approach, however, is conservative and does 
not align itself with the global ambition to limit 
climate change to 1.5°C. 
Global Energy Mix (2019)
Population:	
7.7 billion 
Annual CO2 Emissions: 	
33,100 Million Metric Tons (MTons) 
Primary Energy Supply: 	
162,194 Terawatt Hours (TWh) 
Electricity Generation: 	
27,004 Terawatt Hours (TWh)
Penetration of Smart Energy Systems (Global) - business-as-usual scenario
0
50K
100K
150K
250K
300K
200K
2020
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2024
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2028
2030
2032
2034
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2038
2042
2040
2046
2044
2050
2048
ENERGY SUPPLIED (TWH)
YEAR
  Total Primary Energy       Electricty Generation       Smart Energy System Generation
  27% Coal
  23% Gas
  5% Nuclear
  3% Hydropower
  2% Wind & Solar
  9% Biofuels
  31% Oil
Smart Energy Systems
58
Smart Energy Systems and decarbonisation

Conclusion
The technologies needed for Smart Energy Systems already 
exist and are being deployed in electricity grids around the 
world. This report has provided case studies in each of the 
five main areas of SES and how they can work together. 
A new generation of power stations will be created 
by harnessing abundant renewable resources through 
decentralised energy generation, along with fast 
wide‑ranging mobile networks, together with powerful cloud 
computing and low-cost battery storage. 
There are already many examples of regulations beneficial 
for the adoption of SES. However, there should be further 
concerted efforts to harmonise the approaches different 
countries and local governments are taking.
If technology uptake and regulatory reform happen swiftly 
in the coming years, then SES will be a major contributor to 
efforts to decarbonise not only our electricity systems, but 
also the global economy as we move away from a reliance 
on fossil fuels.
Smart Energy Systems
59

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