Local Governance and the Purpose of Smart Grids: An Interview with Wolfgang Teubner

On October 1, I interviewed Wolfgang Teubner of ICLEI – Local Governments for Sustainability. Mr. Teubner is ICLEI’s Regional Director for Europe and Managing Director of the ICLEI European Secretariat. I originally met him at the S3C Final Conference and was delighted to interview him one-on-one (via Skype) a week later.

(Note: The following interview was recorded, and has been edited and condensed for length and clarity. The interviewee reviewed this writeup before its publication.)

Priya: What is your definition of Smart Grid?
Mr. Teubner: A Smart Grid is a grid that combines hardware and software so that it is highly flexible in balancing production, load, and demand at any time. It is able to combine a lot of decentralized production sites with storage capacities and demand.

Priya: Does ICLEI focus more on local government or local governance? In other words, do you work only with municipal governments, or do cooperatives also fall under the ICLEI umbrella?
Mr. Teubner: ICLEI’s members are all local governments. However, the approaches that we promote for planning, managing, and ultimately governing focus on governance, in the sense of bringing in all stakeholders and making best use of the energy and transition capacities emerging from grassroots initiatives. In a wider context, this is sometimes captured under the term “social innovation.”

Priya: You asked during the S3C Conference what the purpose or goal of a Smart Grid is, and I thought it an apt question. So now I’ll ask you — what do you personally think the purpose of a Smart Grid is?
Mr. Teubner: The ultimate purpose of a Smart Grid is to enable the transition to a 100% renewables-based energy supply. Our baseload may not be as stable with 100% renewables as it is today with sources like nuclear energy or coal, since we can only produce wind energy when there’s wind and solar energy when there’s sun. We also have a limited capacity coming from bioenergy resources, but bioenergy has issues of land use and competition from food production, and so always has to be carefully evaluated in terms of resource availability. We have to avoid this competition for land even across borders, countries, and continents.
….Therefore, it is a key necessity to intelligently combine different energy sources, storage, and end-use devices on various levels, from large-scale to smaller-scale. You need real-time information exchange and communication between these devices to manage the transition, and there needs to be parallel development on the production and grid sides. Smart Grids are also an opportunity to manage the grid as a network of grids, from micro-grids up to a large scale grid. The question is then at which level we ultimately decide to manage and balance loads, and how we connect and create interfaces between the different levels of grids that will emerge.

Priya: Do communities view the energy transition as being only about energy, or is local governance also an aim? For instance, are citizens likely to set up energy cooperative structures because they want self-governance?
Mr. Teubner: I think the energy transition has multiple purposes that, in a sense, mix. One is the transition to renewables. Then there’s the notion of transparency and control — knowing who is managing your energy, and having a say in the composition of energy production sources. Another part is the capturing of economic value for public services. For example, in Germany there exists a standard cross-subsidizing model under public utilities where public transport creates monetary losses and energy creates the profits. Finally, you can also help generate local business opportunities for energy producers, cooperatives, and small-scale biogas producers. There are various models that allow people to enter into business themselves or become investors, which captures value and creates business opportunities in the region. So there are multiple elements — the business part, the public income-capturing part, and the political control and strategy part.
….By the way, a cooperative structure is only one form of local governance. Some countries in Europe have a strong role of local utilities, which are partly privatized but still majority-owned by public authorities. These utilities often play a strong role in the field, and they’re even partnering up with other cooperative forms of energy production.

Priya: Are there any disadvantages to taking a local government approach, and how can these be overcome?
Mr. Teubner: The advantages and disadvantages partly depend on the overall setting within a country’s energy market and energy system. You need political strategy and a supporting framework from the national government in terms of grid access, pricing structures, and delegation of power to local entities. Energy security becomes an issue if you don’t have a grid-balancing guarantee; if your regional renewable sources are not able to provide the necessary grid load at a certain point of time, you have to have energy imported. You cannot insulate yourself and at the same time avoid the risk of outages. Stability has to secured by a full integration and support.

Priya: Earlier, I asked about the goal of Smart Grids. Expanding the scope even further, what is the goal of Smart Cities in Germany?
Mr. Teubner: I think the perspective on Smart Cities differs based on whom you ask. The view differs if you ask industry (especially technology suppliers) versus a city or a mayor, perhaps more than it differs between different countries. I think it’s definitely an energy topic, and I think that’s what most people think.
….We say Smart Cities are about intelligent hardware, or data and information that is tacked to hardware. But the question is still how far intelligent hardware is embedded in the overall infrastructure, and for what purpose. It’s not fully clarified to which end and means these technologies should be used. Perhaps we can gather information via apps for citizens about ongoing changes such as climate change impacts. Perhaps we can bring citizens into decisionmaking. Perhaps it’s sensoring, inter-modal transformation platforms and information-sharing, or self-driving cars. There’s a myriad of options around. The question is how these technologies are really best combined, and to which end.
….We’re only at the start of development, and as we saw at last week’s conference, some of the technology is not really working well. We have a lot of issues about interfaces between different technologies that don’t yet work well with data transmission protocols. And the big question is also, of course, who owns the data. We talk a lot about cities that are better managed by the availability of big data and information, since you can monitor the impact of certain decisions and strategies. However, what we see is that large parts of the data are ultimately owned by private companies and not necessarily by the city, so it’s not easy even for the city to access the data that has been collected. That’s clearly an issue that has to be considered.
….I think the meaning and definition of Smart City will emerge as we go. Overall, I’d say it’s a way to intelligently manage a city with the help of communication technology and data management, and of making the hardware more intelligent.

Priya: What are some major roadblocks in realizing the 100% renewable energy vision?
Mr. Teubner: One predominant roadblock is that a lot of capital is bound in conventional production facilities, which need to be run over a certain period of time to avoid large-scale economic losses. I recently read an article saying that a lot of the money needed to build back capacity from the nuclear energy plants we’re obligated to close down is currently bound in conventional energy production facilities, and if we have to close those down as well, the companies will not have the money to pay the cost. Then ultimately the taxpayer would have to pay.
….Another obstacle is adapting the grid. Because of the market framing under the EEG, more than 90% of renewable energy is produced in a very decentralized way, with a lot of decentralized investment and ownership structures. That trend that has been reinforcing itself to an extent and would be hard to stop. But there’s no real structural support; the current grid is based on fairly big production structures and high load stability. We need the structures in the grid and energy market to be more adapted to fully support this push coming from the bottom. We need to introduce Smart Grid elements and facilities that can handle the load disparities that occur with renewable energies, and also introduce different technologies for being able to store energy.
….There’s of course the question of who makes the necessary investments. The problem is that some of the technologies are fairly new or not fully matured, and the needed investments are too big to be carried by decentralized producers. These investments are also in principle too big for the large-scale producers because they’re struggling with the changes in the market. I think we need a bit more clarity in the direction, as well as more test beds and technological innovation.
….Additionally, many countries still have de facto monopolized energy markets, even though they’re on the surface liberalized according to European regulation. You see that in France and southern Europe quite a bit. So there, we need to decentralize renewable-based production facilities.
….Finally, we don’t yet have a full assessment of the renewable energy potential. It’s not entirely clear which components are available, how much should be coming from solar or wind or bio-based fuels within a given region or country, or which sources are the most cost-efficient. We do have the broad costs down, and I think wind and solar are currently at grid parity.
….In Germany, people are definitely ready for the transition and are potentially even ready to pay a slightly higher cost for it, which is not true in all countries. I don’t think we’re seeing that many obstacles in terms of strategies and regulation. It’s more the grid technology, the energy market structures, and the capital investment still bound in conventional sources.

Priya: Do you think we can achieve the transition to 100% renewables while still keeping our current attitude towards production and consumption, or do you think those patterns have to fundamentally change?
Mr. Teubner: One of the key factors will be energy efficiency. I think if we look at the realistic renewable energy potentials we have, we will have to considerably scale down the use of final energy — so mostly electricity and heating. Mobility will also play a role that is not yet fully estimated. If we were to bring same number of cars that we use currently on the classical fuel-based power train to the electric power train, this would create a huge additional demand for electricity. This will be the crucial factor in the mid- to long-term: Can we really match the transition to electric mobility? If we do not considerably bring down the demand from households, industry, and mobility, we will really struggle to achieve 100% renewables.

Priya: Do you think the efficiency you mentioned can be brought about by technology — like building retrofits and energy management — or do you think people will have to actually change their lifestyles?
Mr. Teubner: I tend to say that a sustainable society will have to become more local. Think about the way we move — the increase in aviation, the increase still in car use in many parts of the world. Efficiency is certainly based on technology, but we often underestimate the energy use of data systems and communication systems. If we just replace one system with another, then energy efficiency might be better overall, but some of the backup systems will increase. So there is more in the transition to energy efficiency than just technology. I think it has to be a socio-cultural transition as much as a socio-economic one, in the way we live and interact as much as the way we produce and consume. Socio-cultural transition is often triggered by technology transitions. However, it moves more slowly than technological transition and is more comprehensive.

Priya: Do local governance approaches help mediate the interaction between technology and socio-cultural transformation?
Mr. Teubner: Even in a highly mobile age with many virtual networks, a lot of our lives and interactions happen locally. I think the local perspective therefore influences the transition more than the top-down, global perspective. However, it’s all a dialectic interaction process between central and local. We need non-inhibiting framework conditions that create space for new ideas/initiatives coming from the bottom and allow a certain level of local creativity. But the issue is that we really need a longer-term perspective. You can’t evaluate these processes in the business cycle of 3-5 years; you have to evaluate them after 30 years.

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