Power management company Eaton is in the ‘sweet spot’ of the energy transition and paradigm shift to a carbon-neutral society, says Karina Rigby, its president for critical electrical systems in Europe, the Middle East and Africa. In conversation with Energy Monitor, the energy industry veteran – she has held multiple senior management positions, notably at Siemens – discusses Europe’s readiness for transition, what policymakers must deliver in ‘Fit for 55’ and beyond, and where the flexibility needed in a greener, more distributed energy system can come from.
Rigby has a doctorate in engineering from the Massachusetts Institute of Technology. She joined Eaton in July 2021 and spoke to Energy Monitor from her office in Morges, Switzerland.
How does Eaton help deliver the energy transition?
Our core capabilities are in electrical and mechanical power management. This means we are well placed to help our customers across a wide range of industries – you will find us inside cars, planes, distribution grids, data centres, office buildings, warehouses, factories, hospitals and homes – navigate the transition to a zero-carbon future.
Eaton is going through the most significant transformation in the company’s 110-year history. We are developing technologies and services to accelerate the energy transition. We are helping our customers move to more distributed generation and electrify consumption. The energy transition is happening in the distributed system. That is where most of the renewable energy is connected. It is increasing bidirectional flows of energy and an associated requirement for intelligent power management to balance the grid. We are on the journey from a hardware to a hardware, services and software company.
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How ready is Europe for the energy transition? What is the main takeaway from your Energy Transition Readiness Index 2021?
Europe has a lot of ambition, but there is a mismatch between ambition and action in most countries, with larger economies faring worst. There is a big need for more flexibility in the market, to help balance a more dynamic, renewables-dominated system. Distributed resources will play an increasingly important role but their deployment is low. Norway is an exception with its large fleet of electric vehicles (EVs).
The countries with the biggest need for flexibility – France, the UK, Germany, Italy and Spain – face the greatest risk of a shortfall in its provision. Smaller economies like the Nordics, the Netherlands and Ireland show more progress. Smaller countries are more flexible in their policies and better at bringing smaller, newer, innovative, flexible solutions onto the grid. In Ireland they are tapping into the flexibility of data centres and in Norway we see the integration of EVs.
If we want to reach a net-zero society, there are two alternatives. One, we can build huge assets into our distribution network, or two, we can use assets already or soon to be connected to the grid, such as batteries in cars and data centres. We think we should be doing the second. This means we need to incentivise the private sector – the owners and operators of EVs and data centres – to access the grid and sell services into it.
However, larger countries are less open to remuneration of these private assets. This is likely to result in high levels of balancing costs and present risks to security of supply and decarbonisation targets.
Will 'Fit for 55' help Europe establish flexibility markets?
With 'Fit for 55', the good thing we see is that policy, legislation and regulation are all getting aligned and going in the same direction, towards a climate-neutral Europe by 2050. However, policymakers are also still learning things, like the flexibility that data centres can introduce. This is a very new idea. It is not yet included in a lot of the legislation. Did you know that 14% of the energy produced in Ireland is used for data centres, and that this will be nearly a quarter by 2030? Data centres’ potential for bringing flexibility to the system is similar to that of EVs. The difference is that policymakers know about EVs but not yet about data centres.
How can data centres contribute to energy system flexibility?
Data centres have uninterruptible power supply (UPS) units, which have a very large battery in them. They also have backup generators, which are often transitioning from diesel to renewables. These large amounts of storage and backup power could be used to bring flexibility into the grid, just like EVs.
Most data centre storage systems are overdimensioned because the UPS is usually installed first. So you have more UPS and backup power than you need at the beginning [until the data centre is completed]. In addition, these components are usually sized to take into account the waning power of an ageing battery. So for many years – until that time – you have double digit percentages of additional storage capacity over and above what the data centre needs.
Selling flexibility into the grid is an opportunity for data centres to monetise underutilised assets. They could be remunerated for providing a fast frequency response service to grid operators, for example. This will increasingly be needed as renewables take over from fossil fuels [and the grid loses the inertia of the latter’s rotating mass]. We have a product called EnergyAware that is designed to deliver this kind of service. Microsoft is working on this, too.
What are the most important regulatory changes to facilitate flexibility?
We need clarity about remuneration for bringing this kind of flexibility into the grid. We need a lower threshold for participation. We need better grid access. Regulators should give priority to grid connections that bring flexibility. We need to make sure grid codes recognise different kinds of assets and what they bring. Prosumers should be rewarded based on their ability to bring flexibility.
In December 2020, the UK energy regulator Ofgem published price controls that require DSOs [distribution system operators] to use ‘flexible' solutions before building expensive new network capacity. The controls will enter force in April 2023 and run for five years. They mean DSOs effectively have to prioritise storage and demand response. We need these kinds of policies to unlock flexibility.
Conversely, in Germany, a draft law foresaw load-shedding if there was over-demand for energy. It would have meant that private sector assets, such as electric storage, could be taken off the grid. The plan was dropped after protests from the German automotive industry and consumer protection groups. Nevertheless, in markets like Germany, the power traditionally remains with the grid operators rather than the more downstream parts of the grid we now need for flexibility.
Ireland is thinking about making flexibility a condition for grid connectivity. Do you support this?
Yes. In the past, government budgets have gone into networks. The paradigm shift now is that we need to engage the private sector. It is the private sector that owns the buildings, vehicle fleets and data centres. Instead of only putting money up for grid operators to expand – the distribution grid will have to be massively enhanced – we need policies that ensure remuneration of private operators for investments in flexibility. This will reduce the need for grid spend and it is the only feasible way to create a cost-effective and carbon-neutral network.
Everyone is moving in this direction – this is sector coupling. We are coupling the grid, buildings and vehicles and managing it all with software.
We need to mandate smart metering. Everything we have spoken about today is very complex and we will not be able to do it without more intelligence in the grid and on the prosumer side. We have a platform – Brightlayer – connecting all assets into one sector coupled network, and smart metering is a key element of that. We cannot do it without smart metering.
Is there a trade-off between flexibility and energy efficiency?
Data centres are currently evaluated based on their energy efficiency, but this is really a bit short-sighted. We could get a lot more out of them if they were evaluated based not only on the efficiency of what is happening in their own four walls but on their contribution to grid flexibility. They could help the grid digest much larger quantities of solar and wind power. The energy efficiency criterion should be replaced by one that looks at their overall contribution to a carbon-neutral society.
Are climate-neutral data centres by 2030 a real possibility?
Data centres can purchase carbon-neutral power. However, if a data centre does not purchase carbon-neutral power but does contribute to the flexibility of the grid, it can have a much more dramatic impact on the overall system.
Energy efficiency is very important and well-understood. As we move forward with sector coupling, flexibility needs to be fleshed out more and better defined.
How do you see the interface to other networks, notably transmission and gas?
The transmission network is going to stay. We are still going to need to bring power across large distances. We see hydrogen as a storage possibility. However, the music is really going to be in the middle of that – everything which is the [power] distribution grid and which is attached to that. All the congestion, the knots, the complications are going to be on the medium-voltage part of the network. We are asking governments to focus on this. This is where we have most to gain from granular policies that incentivise the private sector to get involved.
What is the biggest opportunity and challenge for Eaton going forward?
The biggest opportunity is sector coupling. For us, that means thinking about everything as a grid. The biggest hurdle is the policy and regulations we need to unlock the flexibility required by a net-zero energy system.