Energy Outlook 2023: Energy Digitalisation

EU action plan to digitalise the energy system to play a major role

The EU’s Action plan to digitalise the energy system (“Action Plan”), published in October 2022, will play a major role in 2023, affecting almost all companies in the energy market.

The Action Plan highlights the key activities required to digitalise the energy system and shows how new technologies can improve the efficiency of energy resources, facilitate the integration of renewable energy into the grid and save costs for EU consumers and energy companies. It sets out measures to reduce the energy consumption of the tech sector, boost data sharing, promote investments in digital electricity infrastructure, ensure benefits for consumers and strengthen cybersecurity.

Efforts to reduce energy consumption in the tech sector

The tech sector is responsible for around 7% of global electricity consumption and this is set to rise to 13% by 2030.

To stop the sectors growing energy needs from becoming an obstacle to the EU's objectives on demand reduction, the Commission have announced steps to improve digital energy services while ensuring the sector is energy-efficient, including:

• Developing an energy-labelling scheme for computers
• Evaluating a possible revision of the eco-design regulation on servers and data storage products
• Explore the potential to develop common indicators for measuring the environmental footprint of electronic communications services

Building the European framework for sharing energy related data

The Commission believes that the key enabler for a digitalised energy system is the availability of, access to, and sharing of energy-related data based on seamless and secure data transfers among trusted parties. The Commission announced that by 2024 they will develop a common European energy data space. In this data space the generally applicable principles will need to be strictly upheld, including those on EU data sovereignty, cybersecurity, data privacy, consumer acceptance and interoperability.

As a first step, by March 2023 , the Commission will set up the ‘Data for Energy’ (D4E) working group as part of the Smart Energy Expert Group. This group will bring together the Commission, the Member States and the relevant public and private stakeholders to collaborate on building the European framework for sharing energy related data.

Strengthening the cybersecurity of energy networks

Ensuring the cybersecurity of a digitalised energy system is a key component of the abovementioned EU Action Plan.

On 27 December 2022, the Directive concerning measures for a high common level of security of network and information systems across the Union (NIS 2 Directive) was adopted and entered into force on 16 January 2023. It defines the energy sector as one of the EU’s critical infrastructures and provides for cyber-security obligations related to supply chain security and risk-management measures.

To increase resilience to cybersecurity-risks in the electricity system, the Commission will propose a delegated act in the form of a network code for the cybersecurity aspects of cross-border electricity flows, including rules on common minimum requirements, planning, monitoring and reporting crisis management. It’s hoped these will be adopted in early 2023.

Promoting investment in digital energy infrastructure

The EU aims to accelerate the digitalisation of the grids across its member states significantly. To achieve the targets of both the “Fit for 55” legislative package and the REPowerEU plan, the EU assumes that EUR 584 billion of investment in the electricity grid will be required between 2020 and 2030. Therefore, the Commission announced in its Action Plan that it will support TSOs and DSOs to create a digital twin of the European electricity grid.

Furthermore, to foster investments in smart energy grids the Commission will aim to ensure that by 2023 a regulatory framework that is fit for purpose to attract and guide such investment is in place. In particular, the Commission will support ACER and the national regulatory authorities in their work to define common smart grid indicators, as well as objectives for these indicators, so NRAs can monitor smart and digital investments in the electricity grid annually as of 2023 and measure progress towards the creation of the digital twin. To date, we have not seen a draft of this initiative.

For more information, please contact Ronald Hendrikx or Matthias Lang.