Energy Sector Digitalisation, Green Transition and Regulatory Trade-offs

The green transition relies on electricity generation from intermittent renewable energy sources and the electrification of end-consumption such as heating, cooling, or mobility. At the same time, an increasing number of previously passive consumers are becoming active actors in the energy system, while the quantity of electric devices connected to the grid increases. These trends pose new operational, economic, and regulatory questions as the traditional roles of certain agents are mutating and multiplying. Digitalisation offers the possibility of implementing innovative solutions to the new challenges faced by grid operators, especially at the distribution grid level. In the EU Grid Action Plan, investments in grid digitalisation and real-time monitoring are deemed as crucial to achieve an efficient and fast energy transition. In this paper we present potential digital solutions to overcome the operational challenges posed by the ‘future-proof’ energy systems currently being devised and we address their economic implications. We also address some key aspects related to the digitalisation of the energy sector (efficiency and innovation, interoperability and standardisation, centralised vs decentralised solutions) from an economic perspective. Finally, a successful digitalisation of the sector requires adjustments in the regulatory frameworks. In the conclusion, we detail some recommendations needed for regulatory improvements.