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TIR-CG_Luxembourg-Final-Report_Long-Version TIR-CG_Luxembourg-Final-Report_Long-Version

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Third Industrial Revolution Consulting Group projects aim to develop, deploy, and evaluate advanced tools and ICT services for distribution grid operators, production cooperatives, and medium-sized retailers (Nobel Grid), 55 while others are focused on experimenting with cooperative models for district heating companies (Smart Reflex). 56 Together, these community renewable and energy efficiency projects are examples of successful projects that encourage citizens to cooperate in the development of renewable energy and energy efficiency initiatives. The results are compelling: European cooperatives have made cumulative investments of €977 million between 2012 and 2014. Together, they attracted 109,801 new members and, in 2014, produced around 129,050 toe/year of renewable energy. 57 While these initiatives are providing important early learnings from largely small-scale experiments, they lack the scale necessary to provide sufficient evidence to inform Luxembourg’s future energy policy at the national level. The following section provides a recommendation for Luxembourg that can create an experimental grid cluster large enough to inform decisions at the distribution system operator (DSO) level, and possibly at the EU level. First Nationwide Smart Grid The European Climate Change Programme 58 aims to provide reliable and affordable energy for all, to apply the efficiency first principle, and to make the EU the global leader in renewable energy. 59 The EU’s energy and climate objectives for 2030 are expected to increase the share of renewables to up to 50% of total electricity produced. “Achieving these goals will require a fundamental transformation of Europe’s energy system, including the redesign of the European electricity market” 60 by providing greater predictability, linking the wholesale and retail markets, and attracting further investments. This will contribute to delivering a new deal for Europe’s energy consumers. To achieve that objective, the European Commission needs to demonstrate this new energy system in practice. Such a demonstration environment requires a combination of an energy system with a high degree of renewable energy production, and the simultaneous development 55 See http://nobelgrid.eu/ 56 See http://www.smartreflex.eu/en/home/ 57 European Commission. “Energy cooperative projects celebrate 10 years of the UN’s International Day of Cooperatives”. July 2015. Available at: https://ec.europa.eu/easme/en/news/energy-cooperative-projectscelebrate-10-years-un-s-international-day-cooperatives 58 See http://ec.europa.eu/clima/policies/eccp/index_en.htm and links therein. 59 See http://ec.europa.eu/clima/policies/eccp/index_en.htm and links therein. 60 https://ec.europa.eu/energy/en/news/new-electricity-market-consumers 52

Third Industrial Revolution Consulting Group of a smart energy system that interconnects these energy sources. Although, as outlined above, many demonstration projects are already developed (or under development), none of them has a significant scale with an integrated solution that combines the requirements of all the stakeholders. The scale of such a demonstration project should be at least 100,000 end users, both commercial & industrial (C&I) and residential, before it would provide sufficient proof to both the EU, and especially to the DSO that need to optimize the solutions, and evaluate the effectiveness of such solutions on their networks. Before implementing this throughout Europe, significant and hard evidence is required. Luxembourg should take on this experiment and demonstrate this new market model for Europe (i.e., the first nationwide smart grid). This, in turn, would establish Luxembourg as the first mover and attract many new, smart energy businesses. European funds (e.g., Horizon 2020) would surely be available to support this initiative and, ultimately, European energy policymaking would benefit from the scale of the evidence base provided. In addition, the scale of this experiment would aid in catalyzing Luxembourg’s journey towards commercializing the smart energy business. Luxembourg would effectively become the smart energy transaction hub for Europe, enabling many new smart energy FinTech products for export throughout Europe. Summary of TIR Proposals for Energy The following summarizes our proposals for the TIR roadmap for Energy. We have organized them into two broad groups: 1. Building Block Proposals. The Building Block Proposals summarized in this section build from the work initiated by the Energy WG, and discussed in detail in the preceding sections. These proposals represent our recommended subset of priority actions (within the next 10-15 years) in which Luxembourg can, and should, take a leadership role. These priority actions (building blocks) represent prerequisites for many of the other actions, some of which will largely be directed by initiatives and influences occurring outside of Luxembourg’s control and/or jurisdiction (such as global technology innovations). 2. Innovation Proposals. The Innovation Proposals summarized in this section are conceptual ideas to foster the vision, goals, and actions described in the TIR roadmap for Energy. These Innovation Proposals are predicated on the assumption that, over time, Luxembourg would apply increased research and development investments into targeted measures, rather than in general studies. Furthermore, Luxembourg’s aim to 53

Third Industrial Revolution Consulting Group<br />

projects aim to develop, deploy, and evaluate advanced tools and ICT services for distribution<br />

grid operators, production cooperatives, and medium-sized retailers (Nobel Grid), 55 while<br />

others are focused on experimenting with cooperative models for district heating companies<br />

(Smart Reflex). 56<br />

Together, these community renewable and energy efficiency projects are examples of<br />

successful projects that encourage citizens to cooperate in the development of renewable<br />

energy and energy efficiency initiatives. The results are compelling: European cooperatives<br />

have made cumulative investments of €977 million between 2012 and 2014. Together, they<br />

attracted 109,801 new members and, in 2014, produced around 129,050 toe/year of renewable<br />

energy. 57<br />

While these initiatives are providing important early learnings from largely small-scale<br />

experiments, they lack the scale necessary to provide sufficient evidence to inform<br />

Luxembourg’s future energy policy at the national level. The following section provides a<br />

recommendation for Luxembourg that can create an experimental grid cluster large enough to<br />

inform decisions at the distribution system operator (DSO) level, and possibly at the EU level.<br />

First Nationwide Smart Grid<br />

The European Climate Change Programme 58 aims to provide reliable and affordable energy for<br />

all, to apply the efficiency first principle, and to make the EU the global leader in renewable<br />

energy. 59 The EU’s energy and climate objectives for 2030 are expected to increase the share of<br />

renewables to up to 50% of total electricity produced. “Achieving these goals will require a<br />

fundamental transformation of Europe’s energy system, including the redesign of the European<br />

electricity market” 60 by providing greater predictability, linking the wholesale and retail<br />

markets, and attracting further investments. This will contribute to delivering a new deal for<br />

Europe’s energy consumers.<br />

To achieve that objective, the European Commission needs to demonstrate this new energy<br />

system in practice. Such a demonstration environment requires a combination of an energy<br />

system with a high degree of renewable energy production, and the simultaneous development<br />

55 See http://nobelgrid.eu/<br />

56 See http://www.smartreflex.eu/en/home/<br />

57 European Commission. “Energy cooperative projects celebrate 10 years of the UN’s International Day of<br />

Cooperatives”. July 2015. Available at: https://ec.europa.eu/easme/en/news/energy-cooperative-projectscelebrate-10-years-un-s-international-day-cooperatives<br />

58 See http://ec.europa.eu/clima/policies/eccp/index_en.htm and links therein.<br />

59 See http://ec.europa.eu/clima/policies/eccp/index_en.htm and links therein.<br />

60 https://ec.europa.eu/energy/en/news/new-electricity-market-consumers<br />

52

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