The Utility Series is a series of interviews with CEO’s from small to medium sized utilities in Europe. Hear about the challenges and opportunities they face during this energy transition.
Series 2: Shaping the new energy system and why new technology and a new marketplace will help put a value on flexibility. Interview with Tom Nysted, CEO of Agder Energi, Norway
- What is your vision of the energy market today?
The transformation taking place in Europe, where we are moving from a fossil fuel-based energy system towards a renewable energy system, has triggered big developments in several areas.
Naturally the transformation will lead to increased demand for renewable energy. We are already seeing large-scale development of both solar and wind power. Various technologies, like batteries, are getting better and cheaper. As a result, we are also seeing more carbon-free solutions, such as electric and hydrogen cars.
We are also experiencing rapid technological development. Artificial intelligence, algorithms, big data and sensor technology enable us to control both generation and distribution in a completely new way. This enables interaction between the different sources of energy, which is crucial for the decarbonisation we are seeing in Europe.
- What are the main challenges today for your company?
As we in Norway become more integrated with the European continent, we will face greater competition, including from companies who traditionally have not been involved in the power industry. Technology companies are suddenly getting a role in the energy market, which will especially affect competition in the consumer market.
There is a race between companies and technologies. Not everyone will cross the finish line. We have to think and move faster to keep up, and also change the way we think. In the past, for example, we responded to increased consumption with increased generation. When there was a need for more capacity in the grid, the solution was to upgrade the grid.
In Norway, as in the rest of Europe, the growth in solar power and EVs is creating challenges for our grid.
But new technology allows us to utilise the capacity we already have, and in the end become more customer-focused and offer a better service at a better price.
In a joint project with Microsoft, we have developed a working concept for how to use new technology, like sensors and machine learning, to make better use of the grid capacity that we already have.
There’s a race between companies and technologies. Not everyone will cross the finish line. We have to think and move faster to keep up.
Agder Energi provides dispatchable hydropower, and it is important that we give value to one of its main properties – flexibility. We believe that flexibility will play a key role in the future power system.
The rise of wind and solar power will lead to numerous hours with lower power prices. That could, in the long run, put pressure on our traditional income, but it will increase the value of our flexibility. In order to make use of that, we have to rethink the way in which we operate and trade in today's market.
- In today’s complex market, what is your strategy for navigating the transition?
There are two solutions to the changes and challenges facing the electricity market: innovation and business development.
I believe new technology will solve tomorrow’s energy challenges by enabling us to use our existing resources more intelligently. We believe that the key to future power systems is flexibility, and we have already developed a working concept together with Microsoft. This is the start of a solution that we strongly believe will address the challenges associated with an increasingly decentralised power sector – where distributed power generation and consumer flexibility need to work efficiently together.
In this project we saw the need for a new marketplace that puts a value on flexibility and bridges the gap between current wholesale power markets and local flexibility markets that we see arising as a result of the future energy system.
Together with the power exchange Nord Pool we have established a new marketplace called NODES. New technology makes it possible to connect entities at different levels of the power system. A digital platform based on cloud technology can use advanced analytics and machine learning to optimise our existing resources. In order to exploit available flexibility, we need a new transparent and independent marketplace, capable of providing a link between supply and demand and performing transactions in real time. Using available flexibility can offer an alternative to investing in grid. It also creates opportunities for customers by providing new services, and enables greater integration of renewable energy. A flexibility market is therefore, in our view, an important contribution to Europe’s green transition.
We have also invested in German companies, in order to learn and develop the technology that will enable us to make use of our flexibility. We believe that we, with the help of new technology, can play a role in shaping the new energy system.
In the next piece in our series, Tom Nysted will explain about how the role of the utility is changing in today’s energy market and in the flexibility market specifically, and how they are connecting local and central power markets to create an integrated market.
Agder Energi will be sharing more on the future of the energy market during EUW in Vienna, on the Energy Market track of the programme, focusing on energy market design, trading and blockchain
o read our Utility Series 1 with
Santi Martínez, CEO of Estabanell Energia.