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Grid Operator Boss Urges Speedy Upgrade to Smart Grid (interview)

Ljubljana, 03 July (STA) - Slovenia should start implementing concrete projects for upgrading its power grid to a smart grid as soon as possible. This will provide new opportunities for the Slovenian economy, Ivan Šmon, the technical director of the electricity distribution system operator SODO, said in an interview with the STA.

"It is not as if the grid has been stupid so far," he noted, explaining that the upgrade to a smart grid is a change of concept that will allow the grid to effectively function as a whole, incorporating both traditional elements and new ones like dispersed renewable sources, virtual power plants and energy storage.

The main requirements for a successful upgrade to smart grids are introducing smart meters and reducing investment costs of connecting producers of renewables to the grid, he said.

Based on a directive from 2009, EU members are obliged to prepare a smart grid cost-benefit analysis by September 2012, and to install smart metering systems with at least 80% of the consumers where it is economically reasonable by 2020.

Deriving from a 2010 assessment, which was updated in 2011 to the newest technological standards, the upgrade would be reasonable for the entire Slovenian electricity market, Šmon said, adding that SODO proposes a massive roll-out of smart meters in the 2014-2019 period with two years of preparations.

The grid operator is now waiting for a green light from the government, which received the proposal in 2011. Šmon hopes a response will come soon, since simply letting progress take its own pace would mean that only 30% of consumers would have smart metres by 2020.

According to Šmon, several electricity distributors in Slovenia have been running pilot projects for smart metering systems and some 13% of retail consumers already had smart meters in 2010. However, only 6% of these fully met the functional requirements.

"Harmonised activity in the technological, regulatory, economic and sociological area is crucial for an effective introduction of a smart grid," Šmon pointed out.

Regulation must go hand in hand with the development of innovative and economically attractive solutions, which must be appropriately supported through communication with the general public, he elaborated, adding that consumers must be told that their costs would be reduced.

Starting the project as soon as possible will allow Slovenian industry to take part and stay competitive, he stressed and added that information and communication technology would play a major role technically in connecting together the entire system.

If any of the aspects are neglected, the upgrade may be unsuccessful and Slovenia may consequently also fail to meet the EU's 20-20-20 energy and environment targets, he pointed out.

One of the main difficulties in the upgrade to a smart grid may prove to be funding, as Šmon said SODO and distribution companies were already unable to secure the funding according to the current national ten-year energy network development plan.

The current development plan, which will be revised for 2013-2022 at the end of the year, envisages EUR 1.7bn investments needed in the grid until 2020, he noted.

However, in the difficult economic situation, the planned investments by SODO and distribution companies this year only cover EUR 97.6m of the envisaged EUR 164.1m.

The upgrade is estimated to cost an additional EUR 320m by 2020, with 60% of the total planned for the introduction of smart metering systems, Šmon explained.

He proposed several ways of collecting funds, ranging from higher fees for encouraging efficient energy use to a special surcharge on the electricity bill. This would increase the monthly bill of an average household by 75 cents for the next five years.

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