It’s all about the wires

The recent EU recovery fund should help to propel the continent into a greener, cleaner post Covid-19 world. 

This week’s episode welcomes Susanne Nies who discusses the outlook for electricity demand in Europe, the importance of smart networks as well as insights in to the political bubble of Brussels. 

Host: 

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

Guest: 

• Susanne Nies, Country Manager Germany, Smart Wires. 

Transcript

Anna Siwecka, freelance journalist/podcaster: 0:01

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Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:29

Hello listeners and welcome to the Montel Weekly podcast, bring You Energy Matters from Under My stairs. My name is Richard Sverrisson, and today we're talking to someone with a very wide and rich background in energy from the TSO side as well as the utility side. She's also an expert in EU policy, having worked in the Hub hub of Brussels for many, many years. A warm welcome to you, Susanne Nies, country manager at Smart Wires.

Susanne Nies, Country Manager Germany, Smart Wires: 0:56

Thank you very much, Richard.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:58

I think before we go into the nitty gritty of sort of wires, wind turbines and the inner workings of Brussels, let's talk first of all about the EU recovery plan that came out this week. I see the wind lobby has called it, you know. A big bazooka, what do you make of it?

Susanne Nies, Country Manager Germany, Smart Wires: 1:14

No, I must say I'm for the first announcement. Yeah. Really positive. Yeah. And when you look back on this commission from the line, that was a total surprise for everyone. Yeah. And then starting off being before a Minister of Defense with a Green Deal being even more ambitious than the Greens have been with the 55 or 50% C2 reduction, greenhouse gas reduction. That was fantastic. It came as a maybe shock also to the commission that was just like surviving the clean energy package. And then in COVID, before COVID many people were saying, Hey on the line hasn't made any mistakes so far. And I was a bit the perception in Brussels and I was still there. Yeah. And then came COVID and no one spoke about the Green Deal anymore. And now to see in this. Recovery plan of seven 50 billion that was unveiled or discussed in the parliament yesterday to align this with the green deal. I think this is really very well done. Yeah. We can discuss a lot details, but the overall direction I think is absolutely right.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 2:23

What is new in it? I mean, and, and what does it mean for the green transition? In your view.

Susanne Nies, Country Manager Germany, Smart Wires: 2:27

Exactly. So I see a bit of accents have changed from the initial green deal to what we see now in this, let's call it the Green Marshall Plan, something like that. Yeah. When you recall after Second World War, this a huge recovery plan that was very conditional to corporation, et cetera. It is a new plan. We see, for example, that renovation of buildings is much more important. Yeah. You also see that insisting on renewables is much more important because many policy makers and industry alike are afraid of seeing a renewable investments slow down. The cleaner transport is more emphasized and also the just transition, it's taking everyone along is really important. In COVID times. So I see bit a change in priorities. I'm happy also to see infrastructure and innovation being important here.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:20

Are there any losers here? I mean, um, you know, obviously renewables, the innovation, the, you know, infrastructure are, are certainly gonna do well out of this, but who, who's not, I

Susanne Nies, Country Manager Germany, Smart Wires: 3:29

don't really see losers there. This. Some delays for some of the projects. Yeah. And we also see, I didn't mention that there's a, maybe a hype in the moment. There's a lot of attention for sector coupling, hydrogen, these kind of things. And they also made it to it, but you don't see it on the front page of this package. Yeah. We need, of course, to see how this is gonna be implemented. So I think it's announcement at this point in time. It's not yet adopted. We need to see if it's really gonna deliver. There's a lot of fears related to. On the EU level, so let's wait and see how it's gonna be implemented. But I wouldn't see losers. Lots of promise. A bit a Christmas package also. Yeah. Yeah.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:11

Absolutely. Big Santa Claus package. Absolutely. Yeah. Yeah.

Susanne Nies, Country Manager Germany, Smart Wires: 4:13

So let's see how this is gonna work out. Yeah,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:16

for sure. Moving on to the post COVID-19 energy market. I mean, how do you see this evolving? Do you see the demand for, certainly for electricity recovering to pre coronavirus levels?

Susanne Nies, Country Manager Germany, Smart Wires: 4:29

Yes. I think so. Yeah. It's quite spectacular to see like in countries like Germany, we have seen demand go down by something like 15% Yeah. In electricity. And we saw especially conventional being stopped while renewables have been continuing to grow. Yeah. So we don't know yet. This depends also on the vaccine and that kind of thing. Yeah. When will we really start to see a recovery in an economic sense? Yeah. But there was a clear trend to see electricity grow. In the energy mix and this trend will not be stopped. Yeah. Then we will rather see changes when it comes to fossil fuels, changes in how people behave, post COVID, less travel. There's indeed a question mark on what it means for e mobility. The low oil price is certainly not helpful here. It's a lot of lobbying going on to get hard hit and car industry back on track and I really think that governments need to be very strong on keeping momentum on immobility in these days. So those are the mo most at risk I would say, but I have no doubt that electricity demand is going to return and even to go beyond pre-crisis level.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 5:40

Okay.'cause the crucial thing here is really is the electrification of transport. You mentioned sector coupling earlier as well, but is there a chance here in the post COVID-19 that people just won't have the funds or the money to buy electric vehicles as they did in previous time? And it's a much easier to fall back on fossil fuel fire vehicles or cars. Yeah,

Susanne Nies, Country Manager Germany, Smart Wires: 6:00

exactly. So I would say in the. Free market environment. Yeah. That would happen exactly as you describe it. However, look at Germany also. Yeah. The I which is the surcharge for renewables that has become a huge part of the retail price is now put on tax. That is on the oil For the cars. Yeah. On the fuels. Yeah. So you see here that governments intervene. And then they put additional taxes on the fuels and then they tried to intervene that way. I also saw that there will be some primes for buying electric cars and that kind of thing. So these are government intervention discussion at this point in time. And if it's done right and depending on country, we'll not see what you described before.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:44

So it's much easier to add taxes and levies rather than getting into sort of difficult state aid areas, isn't it? Exactly.

Susanne Nies, Country Manager Germany, Smart Wires: 6:51

And this is exactly the point. You cannot say, I'm now going to give subsidies to, let's say BMW or Volkswagen or something, because then this would be the end we already saw. And I think everyone was shocked how fast it's. It's possible to get the sheen borders back again and to have a nation state that is really the game maker. Yeah. So we shouldn't see now the internal market dismantled with strong state aid using the crisis as an advantage. We need to go for measures, but not for companies that.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:21

I think also crucial here, and as you've mentioned both in the recovery plan and the green transition post COVID to 19, you know, we'll see a massive growth in renewables. Now the flip side of that is of course the infrastructure and the grids and the networks. And I know this is, uh, you're quite an expert on this, Susanne, so is the key question, do we need to build more grids or can we make, do with what we have and use them more efficiently?

Susanne Nies, Country Manager Germany, Smart Wires: 7:46

But this is a, it is a very good question and I think the, the. Tension for infrastructure has clearly been on the rise in the last years. They're kind of the decisive element in this energy system transition that was started in particular in countries like Germany here, and as you said there, there's really a bottlenecks and huge cost in really dispatch and cut containment. In countries like Germany, they go beyond a billion a year. We had the 1.4 billion. Yeah. So do we need more infrastructure? The answer is yes. We need more infrastructure because you need for this flexible operation of the network with renewables. And that is increasing. Yeah. You need more infrastructure. However, you need to say that the existing networks are absolutely not used today. To their optimum. You saw the European provision for 70% of the capacity of interconnectors be available to market just as a sign today. It's not even 30% in many cases. Yeah. So we need to see this change and the technologies are there. There we see sometimes, unfortunately, obstacles that are partly say attitude. The good news is that the COVID crisis takes everyone out of comfort zone. We change our habits, everyone. Yeah. The other side is also the incentive regulation. And we need to get regulation ministries to add much more on new solutions as to really take every kilowatt hour out of the networks and get every renewables, especially offshore, that's gonna be built massively into the power grids.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 9:19

I mean, that leads me to my next question, Susanna, which is, you know, you come from a Brussels background, more of which later, but you've moved to smart wires. Could you tell us a little bit about your role and, and what you do now and why you made that move?

Susanne Nies, Country Manager Germany, Smart Wires: 9:33

Yes, many thanks for, for that question. Yes. So, so I'm really passionate about electricity. I found it absolutely fascinating. I'm not an engineer, but since like 15 years I'm working in this area, and it's the governance of. Something that moves near to speed of light, like 297,000 kilometers a second. Yeah. Manage that. It's just unbelievable. Yeah. I'm really impressed with that and especially on the European, how to get it in a regional context. Yeah. And after this tour that took me from research with E three and then to your electric generation distribution to Anso e SmartWire is a new kid on the block. We should say it's a very new company. It emerged with a blackout. Very often. It's that kind of context. Yeah. There was in 2003 a huge blackout in Eastern Canada and the us. And at once there was students in Georgia Tech University that have a very important program on new solutions Yeah. That have been looking at solutions. Yeah. And that has been further expanded since then. And today's solution that are there from Smart Wires, that's a company based in in near San Francisco in Silicon Valley with like 300 collaborators. Yeah. It's a technology that optimizes precisely. The power networks and it's already up and running in the UK and the US and several countries. Yeah. And even that for its game changing nature. It got an award yesterday. World Economic Forum. It's an award about how utilities can change the flexibility of the grids, how can flexibility on the grids.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:10

Be increased. Could you give us an example, Zen, I mean, how could it work? Um, how could it benefit the GY vendor in, in Germany, the energy transition there.

Susanne Nies, Country Manager Germany, Smart Wires: 11:19

Exactly. Yeah. So that's, that's a very good point. So Germany is of course the, the mastermind, I would say it was the early adopter and the starter refinanced in Germany the learning curve of solar and wind. And so now today, Germany has these huge costs. System costs of the energy transition has the hugest amount of neighbors in Europe globally, the most neighbors are ever China and Russia. But in Germany we have nine neighbors. Yeah. So we are responsible also for avoiding loop flows and impacts on neighboring systems. Yeah. So using SMART via devices in Germany would mean that we could swap. From what's used today, state of the art more conventional technology that's called face shifting technology to our technology that is hybrid in having hardware and software combined. Modular so it can be moved. Once the situation changes, you can put it to another place, which is not the case for these phase shifters, and you could save a huge amount of money. I should mention also here that we do not know exactly how the energy transition is gonna play out. Means what exactly is the need of every year? And you need extremely flexible solutions that are not leading to huge. That are stranded. Yeah. So we are currently working with Ahan University that's famous for its competence in power networks, professor MOA and his team Mrs. Kla. Yeah. And some others have, we are working or we have been working on a study that precisely looked into the benefits. Of such a solution and the result is outstanding. So we are going to deliver this study on 22nd of June publicly. Yeah. But we see that we can save double amount of the costs today of curtailment and of the renewables. Uh, so curtailment and re patch. That we are flexible, et

Richard Sverrisson, Editor-in-Chief Europe, Montel: 13:14

cetera. Excellent. I mean, I was an Erasmus student in Arken actually, but but I studied history, so I wasn't on the technical side. But what do you make Susan, of the debate around the bidding zones? I mean, could something like the technology that Smart Wise provides, could that prevent the, the splitting of markets? So could it keep the, the larger bidding zones, or is it completely separate?

Susanne Nies, Country Manager Germany, Smart Wires: 13:35

I think it's not completely separate. Yeah. Because the big picture, of course. Now when we look at Germany is that we have north, south problem. Yeah, of course the Germany, Germany is aware of this since long time. And the huge HVDC network called Zoo Link, that is there to ease a lot of generation, especially onshore, but in the future, offshore, A lot of, let's say, interaction there to a south that has seen nuclear phase out. Deadline is 2022, as we know. A lot of industrial demand. Yeah. So we need to ease that situation. Yeah. And the grids are the bottleneck here. You believe that zoo link, or that's the official assumption? Yeah. It's not there before 20 26, 20 27 at earliest. So you need to find a solution through optimization technologies. And this is also recognized by regulator and government with what they call a NOVA principle. Yeah. This means optimization ahead of reinforcement, ahead of more grids. Yeah. More efficient that way. So the answer is clearly yes. We can help to ease that. And we should also say that the approach chosen by the European Commission, the 70%. Interconnection. So capacity to market is in a way, an alternative to living zone splits that Germany doesn't want. Yeah. Germany doesn't wanna be split after, you know, you know that discussion.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 14:57

No, exactly. And, and certainly, I mean, you have the TSO background, but there's been a lot of resistance from some TSOs to the seventies percent target as well, hasn't there?

Susanne Nies, Country Manager Germany, Smart Wires: 15:05

Yes. But because it's challenging, I honestly honest. Yeah. Yeah. It's challenging because when you do build an inter interconnect our internal networks Yeah, of course you have some assumptions when doing so and having such a target changes entirely, the business cases and the way of operating of the networks that you have or that you have just released. Yeah. So it is a challenge to update plans. You've maybe seen Germany has released an action plan bidding zone, as it's called, that is there to address by 2025 and the 70%. Yeah. And this doesn't work. And here we are back to our discussion. Yeah. Doesn't work with what's called a talk measures. A talk measures today being pay shifting technologies in the future, hopefully being a smart devices like our smart valve devices.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 15:55

So the ad hoc being sort of the, the plaster on the system rather than the actual optimized solution. Let's talk Suzanne, a little bit about your background. I mean, you, you've mentioned your electric and, uh, NOE. What changes did you see in your, in your time there? And what insights did you gain into the hubbub of the Brussels political, I think you've called it the bubble in the past.

Susanne Nies, Country Manager Germany, Smart Wires: 16:15

So I worked in your electric between 2010 and 2015. Yeah. And for example, renewables. Was not a working group at that time. Yeah. But there was a working group on each technology, but it was simply a kind of a task force. Yeah. So I was like assisting the change. Taking renewables serious in these five years. You might believe that's really late, but it was like that. Yeah. So there was really a bit we could say donkey shot fighting the wind mill, at least for some of the companies. Yeah. And then there was a total change. Yeah. When I left your electric, we did this innovation action plan, looking at how utilities would adopt. The world in the future. Yeah. And how they see their business change. And I was amazed how much they are aligned from Poland to Portugal on how they saw this picture. Yeah. You know, when I came from your electric to ansi, I had not the best opinion of ansi, uh, was a common fashion to bash, uh, those that had an outstanding role as per third package. Hmm. I learned in an this amazing and important role in writing network codes, these fantastic insights of the engineers from all these was 34 countries and uh, 42 TSOs writing up the rules of the game. Yes, that was quite amazing. But also of course the certain fiction between what is the national agenda, what is the European agenda and the regional somehow stick in between. Yeah. So that was was interesting to to learn. So after 10 years associations, you really need to turn a page. It's also kind of working for the United Nations. Yeah. You always find ideas and your compromise and you need to turn the page. And a company like smart Myers are of course they are a page of a book of the future. It's just like changing the world is the fourth industrial revolution. Yeah. It's just a amazing opportunity to be part of that story now.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 18:11

Absolutely. I mean, how easy was it, for example, to have access to the commission, the European Commission, and to explain to them your views both on the utility side and from the TSO side later? I

Susanne Nies, Country Manager Germany, Smart Wires: 18:21

would say that the brass is really well organized. Yeah. I don't like that, uh, this Brussels bubble bashing. Yeah. As having been myself part of that bubble. Not only for that reason. Yeah. But you need to really be efficiently organized. If you want to take on the one hand stakeholders views into account and have transparency and on the other hand you wanna move forward. Yeah. And what I saw, I give you the example of the clean energy package. Yeah. It's really a fair process. Yeah. So there, these are us, your electric and z. You have access or solar Europe, or in Europe, you have access. You talk to the, the people. You have very competent people on commission and parliament side and on council side, you also need to be competent the same way and you can interact with them. And this is framed in a good way also with these forums, France Forum, Madrid Forum, the infrastructure, these groups, but also should mention here, France School of Regulation. There's some players that are really adding a lot of value. Their moderation papers. Think tanks. Yeah. So it's really good based, of course, I should say that a difference between N and your electric for the simple reason that N two E writes rules. Your electric doesn't. Yeah. So there's more access and more constraints. So more control over enri.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:40

Fascinating. Fascinating. I mean, I'd like to, to talk a little bit about German. I, I could talk about, uh, the nitty gritty of, of the policy world in Brussels for, for ages here. It's fascinating. But, but I think, uh, I'd like to, to move the discussion onto or onto Germany and, and what do you make of recent developments there in terms of. The country's coal exit. I, it seems to be a little bit postponed at the same time. He's planning a Coex exit, but it's starting, uh, you know, a hyper modern coal plant this weekend. Isn't there some kind of contradiction here?

Susanne Nies, Country Manager Germany, Smart Wires: 20:09

Battle, yeah. Yeah, battle. Yeah. It's interesting. Yeah, exactly. Yeah. Maybe, uh, the big picture. Yeah. We are 20, 20, next year we have elections. Yeah. And, uh. It seems, I just checked for this, this, uh, podcast also, where are we in the so-called Zantax who would, uh, win those elections? Yeah. When you look at this, uh, for the last weeks, you see clearly a black green coalition emerging. Yeah. And that's what you kind of feel also when you're in Germany. On the one hand, people want this traditional, but also I would say the Mac macro type, innovative approach. Yeah. But still very grounded. And they also want something new, which would be more the Greens than today. Maybe the social Democrats, at least. You feel this and looking through the polls. Yeah. So what does that mean for the future? Yeah. That means that the greens. Would push even more for getting cold phase out accelerated. You mentioned it, so it's 2038. That's the agreement, but it could be faster. And honestly if you wanna see in Germany, it's already agreed you 55% reduction by 2030 and. There's no way to keep cool to 28, 38. Just impossible. Yeah. But again, I should mention grits as a bottleneck to be able Yeah. To do this. Yeah. And then we had a lot of twos andros, but that's normal also in policymaking in everyday life. Yeah. On, let's say this solar carbon, 52 gigawatts. Yeah. The question was not, would it be taken off? So this so-called zula. Yeah. But it's, it's already agreed it's gonna be taken off. It was agreed in May. So, uh, it's a matter of, is it in June? Is it in the end of May or something like that? Yeah. And on Lin. Yeah. Yes, I agree. It's an interesting, uh, one, yeah. You see on the one hand this is gone in the fourth block of this older plant is now in operation. Yeah. And people are demonstrating against it. Yeah. This is how Germany is these days. It's only a matter of time. It's not gonna survive the coal exit in any sense. There is no such risk. The same for nuclear. There's absolutely no risk that Germany will turn back to nuclear. No way. You also mentioned clearly the, the council presidency. So Germany will go for the presidency in the second half of the year, and it's also there to show direction. You know, that hop has been now moved to the next year is not gonna take place in Glasgow this year. It makes it even more important that the green deal, uh, climate law and Germany's credibility are really proven in the presidency.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 22:37

Absolutely. And that would mean, you know, greater expansion of renewables, even more so

Susanne Nies, Country Manager Germany, Smart Wires: 22:41

what it means, uh, it's, it's offshore wind. Yeah. We should mention also the. There wind onshore constraints. There is this law that says you can only have all the so-called RI that says you can only have a wind mill. And this can also mean a repowered one, one that is upgraded one kilometer from the houses. This has been a bit relaxed with a rule that says the 16 lender can decide themselves on those rules. But let's see how that goes. We see a decrease on onshore wind in Germany and offshore wind gains momentum. It has been upgraded in the ambition to 2032 now 20 gigawatts. And when you talk to experts, you see them talking about 180 gigs in 2050 or so. Yeah, so that's important. And the networks are not the right ones today. We need a multi platforms. We need all these innovations. Materializing there. Commission was talking, by the way, potentially about a regional security coordinator in that region. That's interesting. And so that's important. Then the sector coupling is on the German agenda. Hydrogen, very important as well. And then the 10 E and that goes in the alignment direction of networks and green deal.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:51

Plenty to look out for in the coming weeks and months, and certainly one of the German presidency takes up a office. But that's all for now. Many thanks to users, Suzanne Anise for joining the Monte Weekly podcast today. Many

Susanne Nies, Country Manager Germany, Smart Wires: 24:02

thanks Richard.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 24:05

Remember listeners, keep up to date with all our stories on Monte News. Follow us on Twitter and LinkedIn and subscribe on Apple Podcasts, Spotify, or wherever you get your podcasts from. That's all for now. Goodbye.