Montel Weekly Special – Belgium “not ready” for supply challenge

The CEO of Belgian TSO Elia urges the country’s politicians to take steps to ensure the lights remain on after 2025. Belgium is currently “not ready to face that challenge”, Chris Peeters tells Montel, adding that technology such as blockchain will help balance the grid. 

Host: 

• Richard Sverrisson, Editor-in-Chief Europe, Montel. 

Guest: 

• Chris Peeters, CEO of Elia. 

Transcript

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:05

Hello listeners and welcome to Montel Weekly special. Joining me, Richard Sverrisson is Chris Peeters, the CEO of Belgian TSO area. We are outside at the Event Horizon Conference in Berlin Elia. Has been quite involved in in in blockchain and is currently very involved in it. So could you tell me a little bit about your involvement and how. Why is blockchain important for, for the TSO? Like your yourselves, one of Europe's largest TSOs.

Chris Peeters, CEO of Elia: 0:33

IA has developed a digital vision already a couple of years ago. And part of that digital vision, we took the opportunity two years ago to join the Energy Web Foundation who was developing at that point of time a blockchain that could be public for the whole sector. And so. We thought, this is interesting, because this is new technology, it reinforces us in a number of capabilities that we don't typically have inside of A TSO that we get access to. And secondly, we can do real testing on how we use this for real products. So not only to have the theory about blockchain, but also about how can we make this, make this a reality. And so based on that, we developed a. Pilot project in which we really are using it now to try to see if we can activate very granular flexibility and settle it in, in, in a very efficient way. That is a relatively successful pilot project that we've done in which still a couple of things need to be further, let's say, clarify before we can scale it up, but it's really for us, the way to go. Because we see that the world is changing from, in the energy sector, at least from a world that is full of large entities producing energy, that you can easily steer to an environment where you have both renewables coming in and that you need to have some flexible demand that you can activate easily on the other side. And that is something where we want to be a first mover. To make sure that we are ready for that change coming to us.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:57

But how does that, I mean, you, because a lot of this distributed energy is decentralized energy. Uh, where does that, isn't this more of a role for the DSO rather than the TSO? I would completely disagree with that.

Chris Peeters, CEO of Elia: 2:08

Of course. T so for something, but I will explain you as well. Why? Because what you see today in the market is that you see many successful pilots happening all over the place. Yeah. If you. Uh, start to scratch around a little bit. Then you see that on many places people do pilots at a scale of 15 households, 30 cars, this kind of level of thing. But if you start to think about it in the larger system, at one point of time, you need to be able to do these things at scales of the million. And when you touch the scale of the millions, you start, you, you touch as well the equilibrium of the system. And that's where TLS are sitting. And so if we are not involved today, you will hit a a wall very soon. At the moment you start to scale. And so to make sure that those pilots become scalable, we need to make sure that we are early involved, that we can link. This flexibility, the flexibility of the system as a whole, and not only to something which is marginal as, as such, so, so successful products need to be able to be scaled and therefore you need to link it to the, to the broader system, which is in the hands of the DSOs.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:11

And do you then work closely with the DSOs with this as well? I mean, obviously that. See that goes without saying sense. Yeah. Obvious obviously. So

Chris Peeters, CEO of Elia: 3:16

what you see happening is that by digitalize, digitalizing the system, that the system becomes much closer, DSOs and DSOs together. At the DS O site, you see that they have built a grid, which was never built to have this solar PV at that intensity that was never built to charge so many electrical cars at the same mobile. So they have as well system problems coming to them soon and to make sure that they can handle that. The system needs at, at the same time, look at those local congestion issues that you have and at the other side make sure that you keep that equilibrium. We think that if you do that by going through blockchain, artificial intelligence and and digitalization of the system, you can reduce drastically the investment cost that is needed to upgrade the grid because a lot of of that can be sold just. By having this digital technology working in the right way.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:04

So the the current infrastructure, just a more smarter way of using it, if you like. Yes, yes. I mean,

Chris Peeters, CEO of Elia: 4:09

you still will have to do some investments of course, because the change is so, so big and so we are building that infrastructure. But if you only would build that infrastructure in the old way of looking at things, you would have built a massive amount of new infrastructure. People are not willing, willing to pay for that. People are not willing to have that in their backyard. And so digital. Blockchain are the elements that we need to integrate to make sure that our assets are sweating the most they can so that we deliver the service to clients in the way that it needs to be delivered.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:39

Absolutely. So you mentioned a lot of prototypes and pilot projects. We see a lot of these in the blockchain space, but very few of them have actually. Seeing the commercial light of day. I mean, what will it take to, to push these? I mean, you, you have your own prototype, uh, now you mentioned other pilots out there. I mean, what will it take to, to make these commercially viable?

Chris Peeters, CEO of Elia: 4:58

We are not that far away from commercial viable products today.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 5:01

Mm.

Chris Peeters, CEO of Elia: 5:02

We're maybe, let's say two years from, from, from commercial viable products as, uh, as we speak. And I think this is quite normal, that if you. See the level of testing that we still had to do at a technical level that you are not yet ready to make some, some of these products at the commercial level. But if you see where we stand in terms of, of, of technical readiness, I would say two years from now, you would, you, you would start to see real commercial products in the market that are, let's say, beneficial

Richard Sverrisson, Editor-in-Chief Europe, Montel: 5:28

for all these startups. Interesting. I. As a TSO, you are responsible, of course, for security of supply if the lights go out, fingers point in your direction. Would it be fair to say that in some cases the TSO slows down the development because it's an inherently conservative business as you, as you mentioned on, on the panel.

Chris Peeters, CEO of Elia: 5:49

You seem to be an expert in having, uh, statements, all which I fully disagree. Perfect. I think that, that, that, that that's what we're here for. Yeah. No, I don't think so. Look at Ilia and Belgium. I, and Belgium is one of the TSOs, which is most challenged by this, keeping the lights on if you're on the other side, see where does Ilia. Stand in terms of integrating flexibility. We started at the higher level, so the industrial flexibility were probably the, the, the one of the top players in the world. We have a lot of aggregators that started their life in Belgium with the kind of products that we developed. If you see now these days in looking at the. Lower voltage levels and, and, and integrating that flexibility. We launched last year, again, a project where we are setting the mark for everybody else. So actually by being challenged by keeping the lights on in the way we are challenging that actually it drives us. To actually move much, much faster than anybody else to make these things happen.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:43

That's absolutely fair enough. So in fact, you're a driver rather than, and, and then a break on, on this kind of progress because of your situation. I mean

Chris Peeters, CEO of Elia: 6:50

our, our opinion is really the faster this can develop, the better. Of course it needs to be technically sound. Yeah. We're not willing to have that. Things get. Scaled up and that they're not sound, and that we then have something which we cannot control. We want to make sure that the system role that we have in keeping the lights on, that we can do that in a professional way, but for the rest, the more earliest flexibility can become commercially viable, the better for us. So we really develop these days, ecosystems where players come in, try to find good commercial products. Are able to monetize them and so that we in return, get the flexibility back to balance the system.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:23

Absolutely. You touched on the difficulty of balancing the Belgian grid challenges that involves there. There have been a few supply issues in Belgium with, uh, some winters with a, a number of the nuclear plants offline. Are you confident that these, this, this will be resolved in the future? That we won't see these problems reappear?

Chris Peeters, CEO of Elia: 7:41

We will issue again, a report on that situation because it is a very difficult and critical situation. Uh. Belgium has decided already in 2003 to, uh, phase out nuclear by 2025, which is actually tomorrow if you look in terms of such a size of capacity that you, that you are phasing out. And what we see is that we are not yet fully ready. To face that challenge. Mm. And so we issue a report where, again, we, we, we, we repeat or call to action that we did already a couple of years ago where we say a couple of things have maybe evolved in a positive way, but we're not yet there to be fully ready. And so we urge the political world to take decisions necessary to, uh, keep the lights on after 2025.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 8:25

There was a recently a top level meeting between, uh, heads of state or the ministers of Belgium and Germany. And, uh, one of the major issues in the region is these loop flows that come from renewables, specifically in Northern Germany.

Chris Peeters, CEO of Elia: 8:37

Has this been resolved,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 8:38

this

Chris Peeters, CEO of Elia: 8:38

issue? Well, it has not been resolved, but what Ilia has done meanwhile is, as you know, we are a group which is present in both sides of the markets with 50 hertz. We are present in Germany, and we launched a internal think tank about what is the best way to think about the European integrated market. Mm. That will issue a report by November this year. On what are possible ways that the challenges of the future with more and more offshore wind in feed in the north, which basically is the one that is driving the congestions that we see on the market and the loop flows that we have to, to, to some extent. Mm. How can we make the market model evolve so that we don't have this kind of issues? And again, as a, as what I said in the beginning, that the assets sweat as much as they can and that they deliver the best. Value to society by maximizing the welfare.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 9:24

A few weeks ago there was an incident on Apex Spot, an IT failure, which saw prices spike and then come down in the second auction. What's your view on, on what happened here? Um.

Chris Peeters, CEO of Elia: 9:34

At that point of time, there was a software mistake that made the interconnection capacity not, not available in the way it should have been in a, in a normal, uh, flow-based market integration. And as a consequence, of course, if you have that combined with quite high wind in feed in some of those markets, then people don't get rid of their, of their, uh, renewable energy in a reasonable way. And then you have next to that, still a couple of. Uh, must run nuclear plants or coal plants that are running into the system. And that is what created, in the end, the situation that we were able to manage again, as DSOs in a, in a relatively positive way. But it, it shows as well of, uh, again, of course, that. We can dream about making a big step. We should do them in a, in a conscious way, and that we should make each step robust enough that we can keep the lights on.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 10:21

Yeah. So what have we learned from that incident, do you think?

Chris Peeters, CEO of Elia: 10:23

Well, we learned from that incident that on the one hand, I think an interesting learning would be the opposite. Like you learn from the fact that something is not functioning, how important it's that it functions. So you see that the integration of the European market is key If we want to win this battle against climate change. Uh, we really need to make sure that market integration becomes more and more prevalent in the, into the market. And if you look at that distinct tank that we have around better functioning of that market is for us key so that we further into integrate that. And then of course there is another dimension, which is more about how do we make software more reliable, more robust. Cybersecurity issues that of course pop up as well when you hear these kind of things. Privacy issues if you have about functioning of markets. Yeah, so a couple of things that we need to have as learnings from this moving forward. I think it shows that the direction is the right one, it's not an easy one, and that we need to make sure that on all of those challenges that we have the right answers.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:19

Hopefully it was just a one off. That's we what we all hope every time. Absolutely. Chris, thank you very much for joining the podcast. Thank a pleasure. Thank you. Thank you. And that's all in this week's episode of The Weekly Starting Now. The podcast takes four weeks of a summer break so we can recharge our batteries and come back with even more interesting discussions. And interviews with key experts in the energy sector, the weekly returns on the 2nd of August, you can find the show on Apple Podcasts, Spotify, and via the website. Please feel free to subscribe, rate, and review our podcast. It really helps others find the show. Thank you to our guests and thank you for listening. Tune in on the 2nd of August.