Smart Grid policies in the European union and lessons for India
Student name: Ms Neena Sekharan
Guide: Dr Kaushik Ranjan Bandyopadhyay
Year of completion: 2012
Host Organisation: Freie University, Berlin
Supervisor (Host Organisation): Dr Kirsten Jorgensen
Abstract:
Executive summary
The importance and potential of Smart Grids is now a known and accepted idea. However,
for Smart Grids to translate into an established system, research institutes, business entities
and various other stakeholders need to actively participate in the sector. This can happen
only if an attractive environment is created so that the various stakeholders have enough
confidence to participate and invest their resources in the idea of Smart Grids. The
participants would seek a degree of certainty in terms of technology, return on investments in
the long term as well as short term and overall environment specific to them.
Smart Grids are a part of the electricity sector, which in turn is a part of the larger energy
sector. The energy sector, by virtue of being highly capital intensive as well as being a
strategic aspect of any nation’s development goals and economic progress is a natural
monopoly. In such circumstances, the environment for Smart Grids for can be created only by
serious assistance from the Government and their policies.
Policy formulation is however, not an easy task. Policymakers need data and a clear
understanding of the problem in hand in order to have an effective solution for the
stakeholders. In the case of Smart Grids, the stakeholders would include all citizens of the
nation in varying degrees of involvement.
While India is in the early stages of moving to a Smart Grid based intelligent energy system,
few of the developed nations have already embarked on the journey to have a Smart Grid
based intelligent energy system. India cannot emulate policies and solutions of other nations
since the circumstance and broad environment around Smart Grids are unique to India. In my
Master’s thesis, I have researched to understand the European Union’s experience in
developing policies for a Smart Grid system. Learning from the European Union, with its
own unique challenges can help India to develop an understanding of the various challenges
with the deployment of a Smart Grid based intelligent energy system.
My research is a broad analysis of the policies required for Smart Grid systems and therefore
explores business dimensions related to policies as well. Smart Grids create an opportunity
for new business models to develop. This report tries to understand some of the new business
ideas that are being tried and tested as a part of the Smart Grids system. The report tries to
understand the business models of four young European companies that work in the Smart
Grids space - YelloStrom, Dezem, Powerit Solutions and Efergy. By understanding new
business models, policies can be formed for a creating a vibrant environment for similar
businesses to exist for the benefit of all stakeholders.
The key observations based on my research are:
• “Smart grid is a process and not a product†1
• There is no specific ‘Smart Grid’ policy for Europe as yet however, the European
Commission has issued directives that indirectly support Smart Grids
• Smart grids will radically change the electricity sector and add more complexity in the
entire electricity value chain
• Stakeholders in Europe are still seeking clarity on various aspects related to Smart grids
• Extensive research is being conducted in Europe to formulate policy around smart grids
Some of the key action points for India based on my research are:
• Develop a clear understanding of what Smart Grids are and what they should achieve in
the Indian context
• Develop a time bound roadmap for the deployment of Smart Grids in India
• Invest in capacity building in higher education institutes (engineering, management,
finance), vocational training institutes, and Government and private agencies that are
part of the electricity value chain
• Explore areas of opportunity arising from Smart Grids where India can become a
significant player in the world arena. Some of these could be Energy Consulting, IT
application development for energy management, network management, manufacturing
of advanced metering devices etc
The policies around Smart Grids are very new and are only unfolding now. More importantly,
this is an area that interferes with many other socio-economic activities touching upon
numerous sectors as explained in this report. The challenge is to achieve energy efficiency
without compromising on economic efficiency. In my research, I have been able to capture
the recent discussions around Smart Grids among experts from various related fields. To that
end, my research would be of help to policymakers, business entities and other stakeholders
that seek to understand the wider implications and opportunities of Smart Grids and find a
meaningful role to play in this field.
