Innovation is on full power, regulations must keep up
Regulations must keep up with the increasing speed of innovation in the transition to decentralised renewable energy, agreed experts from business, politics and academia at a fully-powered Erasmus Energy Forum in June. Speakers at the event, organised by Rotterdam School of Management, Erasmus University (RSM), highlighted the need for governments and industries to make way for innovation – and for a multi-faceted approach from all stakeholders.
The annual Erasmus Energy Forum takes an international and multi-stakeholder perspective; this year it collaborated with the Port of Rotterdam to focus on the transition to decentralised sustainable energy in ports and cities, an area of research that’s a speciality of the Erasmus Centre for Future Energy Business (ECFEB) at RSM.
The Erasmus Energy Forum is a two-day event. Day 1, Business Day took place at the World Trade Center in Rotterdam. It was introduced by Volker Beckers, former Group CEO of RWE Npower and chairman of the Erasmus Centre for the Future of Energy Business (ECFEB) to an audience of just over 220 people.
Day 2, Science Day was held on RSM’s Woudestein campus at Erasmus University Rotterdam and is included in a separate report.
As Business Day progressed it became clear that every stakeholder has a role to play – and that includes governments, regulatory organisations, businesses, academia and customers. The reluctance of consumers to change their habits is a challenge for industries developing the new energy landscape. The call to ‘do something now’ was also a message from several of the event’s speakers.
Award winners 2015
- Business Award
Sebastian Massmann of Berlin-based company Solarkiosk, for the company’s E-HUBB portable solar-powered modular building unit that provides energy and accommodation in African countries.
- Science Award
Serkan Özdemir and Rainer Unland for their paper The broker strategies of a winner agent in Power TAC.
City and port collaborations
Representatives of the city and the port set the scene during the first sessions of the morning. The collaboration between Rotterdam city and its port is well established. Advanced actions are underway to switch to renewable sources of energy for houses and industries, and to re-use waste energy from the port in the city. Both port and city welcome innovations for generating and re-using energy said Mayor of Rotterdam Ahmed Aboutaleb and CEO of the Port of Rotterdam, Allard Castelein. The city and port support each other in any way they can, with a versatile and unprecedented infrastructure. Opening the event, Ahmed Aboutaleb agreed the Forum is a great opportunity to rethink the structures used in energy and energy consumption, especially in growing cities. Rotterdam is in transition towards the new economy, he said.
Allard Castelein said that around half of the Port’s throughput is related to energy, which means it must also focus on its current status while exploring how to make the transition and recognise business opportunities; for example the Port aims to become Europe’s top import, export and bunkering hub for Liquefied Natural Gas (LNG) and is investing in a LNG breakbulk terminal, in parallel with other ports such as Singapore and Copenhagen. The city is already the largest industrial cluster using energy from renewables, and is also extending its role in the €800 million heat-capture and transport project, Deltaplan Energy; the city and government are also to become co-owners and investors. It also co-creates the environment and facilities required for the offshore wind industry.
“There’s no quick fix or solution,” said the CEO, saying the Port must dare to invest in the future, as do other world-class companies.
Sustainable Smart Markets
Professor Wolf Ketter, director of the ECFEB, described new developments in sustainable smart markets which use avatars or intelligent software agents to allocate resources in an efficient manner while acting on behalf of individuals and companies. But he warned that only developed nations would benefit from the growth of smart markets and intelligent software agents unless sustainable smart markets ensure the welfare of all nations and future generations. In addition, he presented work on cars as virtual power plants and the smart charging of electric vehicles.
The key is co-operation
All sectors of industry are becoming digitalised said Colette Maloney, Head of Unit Smart Cities and Sustainability in the European Commission Directorate General for Communications, Networks, Content and Technology, and it should be regarded as an opportunity, not a threat. New services must increase consumer choices and give better supply and demand. Digitalisation through standardisation and further developing what already exists is needed to enable smart grids and to reach the EC’s 2020 and 2030 targets. “Smart grids must be integrated to make sure they work coherently. This can be ensured through standardisation: not by reinventing the wheel but further developing what we have and what is needed. If we don’t get that right, there are others who will,” said Maloney warning that failure to adapt standards would result in loss of control and the task of upgrade the digital part of energy systems would be left to large companies. “This is not good for owners of operational systems, and the EC is looking to create standards for a level playing field at EU level to establish an international market.” Maloney said the key to success for this is constructive co-operation between energy and ICT sectors.
Energy transition is not science fiction
Mark Dierikx said the energy transition is often talked about as if it is science fiction. The Director General for Energy, Telecommunication and Competition in the Netherlands’ Ministry of Economic Affairs showed evidence – science facts of the energy transition – from his appointments diary from the first half of 2015.
He listed local and international achievements that rarely make headlines, such as agreements and developments in security of supply, market systems and energy efficiency. They all show the transition to sustainable energy is underway, and is producing results, he said. Examples included an international ministerial conference during which 70 countries adopted new cross-border targets for achieving sustainable energy, and a new flow-based coupling system for import-export launched by four European countries. The system showed a large increase in trades during the first eight days; energy prices dropped, and prices converged up to 40 per cent of the time, compared to only four per cent of the time before the market system was introduced.
In other moves, government and industry, as well as employers’ organisations, had come together with the aim of increasing the competitiveness of energy-intensive industries in the Netherlands. Their working agenda concentrates on energy efficiencies, ‘and innovation is the key here’, he said.
Concluding, Mark Dierikx said it is possible to integrate smart energy systems into business models; his snapshots show that important steps at global, regional, national and local levels activities have already been taken.
Highly regulated, but different in every state
Professor Stephan Reimelt, CEO of GE Europe, says fragmentation is preventing Europe from making an impact in the transition to decentralised sustainable energy. GE is one of the largest investors in Europe, he said, but it was hard to perform in ‘a very regulated place that’s different in every member state’. More investment is needed for industries in the data sector to make progress, and he called for an aspirational leadership in the European Union.
He described the current megatrends identified by GE as the ‘4 Ds’: de-carbonisation, democratic change, demographic change, and digitalisation, and urged Europe to speed up with digitalisation. The speed of innovation will be faster than regulation or standardisation, he warned, and said regulations are too slow. “We must innovate, or we’ll miss something,” he said.
Panel debate: evolution or revolution?
The morning’s speakers joined a panel to debate whether the transition to decentralised sustainable energy is evolution or revolution, moderated by Peter Molengraaf, Chairman Netbeheer Nederland and CEO of Alliander, and joined by Wilco Van Der Lans, business development manager industry and energy for the Port of Rotterdam. Subjects covered included large companies matching the activities of smaller companies; regulations catching up with innovations; actions while waiting for regulations; longer regulation horizons; and using every opportunity from technology and local resources to make the transition across Europe.
Faster than the grid can be replaced
Peter Molengraaf from grid operator Alliander gave a clear prediction of changes in the grid coming soon – from consumers installing solar cells, using electric vehicles and heat pumps. The transition will happen more quickly than the existing grid can be replaced at its usual rate of 2.5 per cent per year, although the challenge will be to transition using the existing grid, he said.
First push, then regulate
Sumit Bose asked the panel if it would be an evolution or a revolution, a free market or a policy change? Stephan Reimelt of GE said regulations should be ‘let go’ prior to innovation and competition. “First push and promote, then regulate,” he said. Professor Wolf Ketter and Colette Maloney also agreed, the latter saying: “We need maybe deregulation at this stage.” Wilco Van Der Lans, business development manager industry and energy for the Port of Rotterdam spoke up for a partnership approach and evolution, but Peter Molengraaf suggested that with the current speed of technology,’ it will be a revolution.’
The Forum then split into two streams of presentations and debates; one for the port and one for a city perspective.
Energy Port – energy delta for Shell
Speaking of a port-specific transition, Ewald Breunesse, Manager Energy Transitions for Shell Netherlands, explained the Netherlands is one big energy delta for Shell. The company uses metaphors for picturing energy landscapes; the ‘mountain scenario’ is the long view practised by a vertically-organised and stable society. In this scenario, the government is important, and ownership is concentrated in certain elite strata of society. Shell’s ‘ocean’ scenario describes a society that is organised from the bottom up; it is fluid and unpredictable, but can also be very dynamic. In this scenario, cities are potentially more powerful than states, and society is market-led.
Shell has invested in a liquefied natural gas (LNG) break-bulk facility in the new Maasvlakte area of the Port. The LNG supply would be extended to other port terminals. He said he thought road transport would be done by quieter and less polluting trucks fuelled by LNG. The next stage is to supply LNG vessel-to-vessel.
Energy Port - Investing in the grid now
Pieter Trienekens, CEO of distribution system operator Stedin addressed the role of natural gas – responsible for building wealth in all of Western Europe – in the future energy landscape. Reducing the household demand for natural gas is a real challenge, he commented, but the company is already working on a heat network that links the port to the city. Solar power, heat pumps and electrical storage are customers’ favourite new energy technologies, he said, and the company currently has 20 pilot projects underway; one investigates the use of excess power in the grid to manufacture syngas, or synthesis gas, another study explores ‘demand-side management’ and the use of heat pumps for 300 householders in The Hague.
Stedin uses models of customer behaviour as well as optimising additional capacities and investing in its grid. “If we don't do anything, there will be a massive requirement for more grid investments; that’s not optimal from an economic point of view,” he said. His conclusion was that the grid will be used as a storage or exchange facility. The ECFEB is currently investigating large-scale electric vehicle pilot schemes with Stedin to facilitate this transition.
Energy Port - Proven technology needed
Raedthuys’ founder is sustainability pioneer and entrepreneur Alfons Wispels. The company is a major supplier of wind-generated power from its Puur Energie project. “We sell only home-made energy and we don't sell more than we make. 90 per cent of our profit goes into new projects in the Netherlands, the other 10 per cent goes into good causes,” he said. Despite Raedthuys being the biggest developer of onshore wind power in the Netherlands, it takes longer to install new wind turbines now than it did 20 years ago. In the Port of Rotterdam, further expansion is restricted because of the impact of wind turbines on surrounding homes, commercial properties, pipelines, power lines, highways, quays and the area’s ecology. Even adding photovoltaic cells on every roof in the Port wouldn’t produce enough energy for industries there to make the switch to sustainable energy, said Wispels. So offshore wind energy is also needed in the Port. He recommended using proven technology and companies. “Worthless guarantees are no good for the future of renewable energy,” he said.
Energy Port – panel questions
The Energy Port workshop session concluded with questions to the panel and extra guests, Prof. Paulien Herder, Head of the Engineering Systems & Services department of the faculty of Technology, Policy and Management of the Delft University of Technology, and Ruud Melieste, corporate strategist for the Port of Rotterdam. The panel answered questions from the audience. Topics discussed included taking the ‘no regret’ decisions now about technologies that industry knows will be part of any future energy landscape: storage, solar and wind power, proper interconnections, and proper incentives and CO2 markets; the Port becoming an ‘energy balancer’, which may include large offshore windfarms and smaller windfarms next to industrial sites onshore that can capture and store electricity; taking a European-scale view of the transition to decentralised sustainable energy; Shell becoming a trading company rather than an exploration or production company; and the usefulness of research agent-based software models for exploring various future scenarios and for researchers to find ‘robust futures’ by adjusting market levers and variables within the models.
Energy City - faster charging continues apace
In the Energy City track, first speaker was Michiel Langezaal, founder and CEO of Fastned, which operates the infrastructure for fast charging electric cars along the Dutch motorway network spoke of a race between manufacturers of reasonably priced electric cars because battery prices are dropping by about 20-25 per cent annually. The trend for faster charging will continue. Despite being seen as an inconvenient 20-minute stop on a long journey, fast charging will exist alongside slow charging, but three-quarters of EV drivers in the Netherlands still cannot depend on public charging. Fastned continues to build a charging station every week.
Energy City - Second generation batteries
Yukihiro Sonoda is the Vice President of Energy Research, Advanced Technology & Technical Affairs Planning for Toyota Motor Europe. He explained Toyota’s vision of mobility zones such as those in Toyota City in Japan where analysis and incentives show people how to change their daily habits to reduce energy consumption. The company is developing second generation batteries such with lithium-air and all-solid-state technologies, as well as its ‘HiGrid’ concept for combining hybrid electricity and a hydrogen grid. Toyota is also working on the Ha:mo RIDE ultra-compact EVs, a self-service car sharing system with 35 stations in Toyota City.
Energy City - Prosumers as a resource
Marc Borrett, co-founder and CEO of Reactive Technologies said customers and ‘prosumers’ are a valuable resource because of their flexibility and should be made a more visible part of the energy industry. The company develops new technologies for making efficient decisions in the power grid, connecting different levels of grids in countries, districts, cities, business, houses and even devices. Pulling supply and demand together gives opportunities from billions of devices, and there’s a drive towards more open standards because grids allow better control, said Borrett.
Energy City – panel questions
The Energy City workshop concluded with questions to a panel consisting of the session speakers and extra guests Maria Molenaar, CEO of housing association Woonstad Rotterdam, and Paula Verhoeven, director of the City of Rotterdam’s general department of city development.
The panel answered questions from the audience. Topics discussed updating the energy efficiency of rented housing, new technologies to develop more sustainable places to live in Rotterdam as the city becomes more densely inhabited; the energy tax system being a barrier to the transition to renewable energy supplies; whether or not the public sector should support EV charging infrastructure; the potential for companies to contribute to city infrastructure and eco-model city projects through subsidies; and the kind of mindset needed for supporting ICT rather than the old ‘heavy engineering’ that still drives the energy industry.
Erasmus Energy Business Award 2015
When the two workshops sessions came back together for the final plenary session, the speakers stepped aside for a moment to allow for the 2015 Erasmus Energy Business Award. The award was presented by Volker Beckers to Sebastian Massmann of Berlin-based company Solarkiosk, for the company’s E-HUBB portable solar-powered modular building unit that provides energy and accommodation in African countries. The judges said it is a well-engineered product with ‘good product development targeted at providing energy in areas that matter’ and commended the way it involves local people and uses a local business model.
Linking port and city
In the final plenary session, and trend watcher for technology and innovation, and Partner at Interim IC, Vincent Everts gave his expert – and entertaining – overview. Technology will move society in a sustainable direction, said Everts. He described one of his long-running consumer tests; he added electronic devices to a Nissan Leaf EV so he could monitor its battery power. At the time there were only three fast-charging points for EVs in the Netherlands, but now there are many more.
He predicted energy will be 100 per cent solar ‘at some point’ and very cheap. By 2017, EVS capable of 400 km on one battery charge will be available for around €34,000. By 2020, EVs will be cheaper still, with greater range.
Everts predicted the use of hydrogen power would be limited to road freight, but also predicted 50 per cent of new cars will be completely electric by 2025 – by which time self-driving cars will also be ‘completely normal’.
Shaking it up and accelerating it
Prof. Han Gerrits of the Vrije Universiteit Amsterdam and partner at KPMG described how small start-up companies are shaking up innovations in the sector, influencing bigger companies to adapt. There are no rules for innovation, and learned behaviour inhibits new ideas from being brought to life. Start-ups and small companies search for new business models, he said.
The energy industry is moving to a value network, with several contributors collaborating, explained the professor. Good ideas come from transferring knowledge from one area to another, and by bringing people from different backgrounds together.
The Energy Debate
The Energy Debate concluded Business Day at the Erasmus Energy Forum, and featured Chris Faulkner, CEO and chairman of Breitling Energy Corporation, an oil and natural gas company based in Dallas, Texas which specialises in fracking. He gave his responses to questions that were also put to the audience.
- The majority of the audience, 63.5 per cent, indicated that they thought a transition period to a non-fossil fuel environment was underway while new and viable technologies are being developed. Chris Faulkner said he thinks fracking is also a source of a transition fuel.
- More than 85 per cent of the Forum’s audience said that the European public won’t accept the US shale gas model and fossil fuels should be kept in the ground. Chris Faulkner admitted that the fracking industry has not done a good job of earning trust. “We’re late at the party with a new message,” he said.
- Asked who should pay for a decentralised energy sector, 44.4 per cent of the audience indicated they thought consumers should pay, rather than government or suppliers. Faulkner said the USA’s energy sector is built by the private investor sector. Some Americans are prepared to pay more for green energy – for example in California – but such states still have some of the highest rates of oil use in the country.
- The final question of the day asked if existing cities can become energy efficient. Almost 70 per cent of the audience indicated they thought it was possible if solid legislative framework was created. Faulkner agreed. Efficiency must be part of the plan because of population growth, despite rising demand for gasoline, he said.
- Business Day concluded with a networking dinner in Rotterdam’s historic Stadhuis (city hall). Dinner guests were welcomed by Paula Verhoeven, Director General Department of City Development of the City of Rotterdam. CEO of Breitling Energy, Chris Faulkner was after-dinner speaker.
Day 2 of the Erasmus Energy Forum took place the following day, Friday 19 June, on campus at RSM. Read the report of Science Day here.