The Summer 2010 Davos Forum was held in Tianjin from the 13th to the 15th. During the meeting, Espen Mehlum, Deputy Director of the Power Industry Group of the World Economic Forum accepted an interview with NetEase Finance. In an exclusive interview, Merram stated that an open and transparent global standard is very important for the development of smart grids. Standards need to be generated from the bottom up and combined with dialogue at the international level. These standards must be open and must not discriminate against any technology, so it is a platform for promoting innovation. In this regard, the Internet can be imitated, the Internet has open protocols, and similar global standards are needed in the smart grid field. He believes that developing different solutions for different countries and regions is a natural thing, because the needs of different regions are different. But some standards must be as open and global as possible.
Merram stressed that the government should provide smart grid investors with incentives. Any transformation of electricity and energy systems will take a lot of time. Because the system is very large, the cost will be high. To make the smart grid develop, huge investments must be made. To encourage investment, investors and companies must be provided with incentives. In many countries, these policies are not yet in place because the regulations of the electric power system were established before the smart grid has become a topic. Some power companies do not have the incentive to develop smart grids and invest in them. Because their income depends on selling more electricity instead of saving electricity. From this perspective, regulations and policies must be adjusted. The smart grid pilot project provides important lessons and lessons that must be considered in future rulemaking. To achieve this, companies must engage in dialogue with policy makers to find the right incentives, which in turn encourage large investments into the field. The government can play an important role in pilot projects and stimulate investment, and the government should also support the development of standards. The government can also educate consumers because consumer adoption of smart grid solutions is critical and communication with consumers is key.
When asked how to protect consumer data privacy and security, Merram said that smart grids will generate a lot of information, in addition to the smart grid will become an important infrastructure of any country's power system, so there must be related security issues, it should be Take it seriously and solve it. He is optimistic about this. He said: "I have experience working in the banking system. The financial system is also a vital infrastructure. It has been closely protected in terms of security, and of course there are some challenges that need to be continued. In data privacy protection I'm equally optimistic. Take the Internet as an example. If you sign up for a website or service, you usually need to tick a box to accept the terms and conditions of the service agreement. These terms and conditions are often several pages long. Few people read it carefully to understand its meaning, so I think people are willing to accept that new information about electricity consumption is generated and used, and I think there must be a guarantee, even if people believe that this data will be used to provide them with valuable information. Services, they can get a return. The key is to use data to provide new services to consumers. From this perspective, I think that similar to the Internet, it can be done.â€
Merram said that in many countries, the smart grid business model is still very weak, partly because of lack of incentives in policy regulations. Therefore, companies do not create the driving force for smart grids. The society can benefit from smart grids, such as universal access to clean energy, improved energy efficiency, improved reliability, and reduced carbon emissions. However, investors are unable to benefit from this, so they cannot be commercialized. Another issue is the distribution of incentive policies throughout the value chain. In less regulated markets, such as Europe, the situation is more complex than in China because of disparate enterprises in the value chain, power generation companies, power distribution companies, and transmissions. Enterprises, how to make these companies cooperate? How to distribute incentives between them? The regulatory authorities have not yet solved this problem. In addition, how do you ensure that IT and communications companies are as motivated as the power companies? All these issues must be carefully considered. This problem is easier to solve in markets with higher levels of integration. However, it is a challenge for any country. The business sector must seriously consider and come up with creative solutions, and the regulatory authorities must do the same.
NetEase Finance: Mr. Espan Melam, hello. The report (“Accelerating the Success of Smart Grid Pilot Projectsâ€) pointed out that building global standards is very important, especially in the case of the emergence of multiple regional standards and competing standards development organizations, how to strengthen global cooperation. Build an open and transparent global standard to break the barriers of different industry standards?
Meram: It is a great honour to accept your interview. You are right. Standards are very important for the development of smart grids. This is not the only important thing, but it is indeed one of the most important factors. In my opinion, standards need to be generated from the bottom up and combined with dialogues at the international level. Therefore, in China, the United States, and Europe, industry companies are working with standard setting organizations to develop standards. These standards must be open and must not discriminate against any technology, so it is a platform for promoting innovation. You have to strike a balance between the different requirements of the standard, ensure transparency, and at the same time not cost too much. In addition, there must be an international dialogue between standard setting bodies and important companies in the industry to ensure that standards are as global as possible. The Internet can be seen as an example. The Internet has open protocols and similar global standards are needed in the smart grid field.
NetEase Finance: We know that the situation varies from region to region, such as economy and science and technology. How does this affect the construction of a unified standard for smart grids?
Merram: Different countries, cities, and regions are developing different solutions. This is a natural thing, because different regions have different needs. The concept of smart grid is popular for a variety of reasons. I think that you can generally call it a fundamental transformation of the power system through the integration of IT, communications, and energy technologies. The current power system is already very outdated. The details of various smart grids will depend on historical starting points and the needs of different countries, so different technical solutions will emerge, but I think some standards must be as open and global as possible.
NetEase Finance: According to the current grid policy and framework, what is the main resistance of smart grid development? What kind of incentive policies should the government provide to private sector investors?
Merram: This is very important. We must stress that any transformation of electricity and energy systems will take a lot of time. Because this system is very large, the cost will be high. To make the smart grid develop, huge investments must be made. To encourage investment, investors and companies must be provided with incentives. In many countries, these policies are not yet in place because the regulations of the electric power system were established before the smart grid has become a topic. Some power companies do not have the incentive to develop smart grids and invest in them. Because their income depends on selling more electricity instead of saving electricity. From this perspective, regulations and policies must be adjusted. We believe that the smart grid pilot project provides important lessons and lessons that must be considered in future rulemaking. To achieve this, companies must engage in dialogue with policy makers to find the right incentives, which in turn encourage large investments into the field. We also believe that the government can play an important role in pilot projects and stimulating investment. The government should also support the development of standards. The government can also educate consumers because consumer adoption of smart grid solutions is critical and communication with consumers is key.
NetEase Finance: The participation of consumers is regarded as the key to the success of the smart grid, but there are challenges in terms of data privacy and security. How can we solve this problem and have any learning experience available?
Merram: You are right, data security and privacy will be a big problem. The smart grid will generate a lot of information. In addition, the smart grid will become an important infrastructure for any country's power system, so there must be related security issues and it should be Take it seriously and solve it. I am optimistic about this because I have experience working in the banking system. The financial system is also a vital infrastructure. It has been closely protected in terms of security, and of course there are some challenges that need to be continued.
I am equally optimistic about data privacy protection. Take the Internet as an example. If you register for a website or service, you usually need to tick a box to accept the terms and conditions of the service agreement. These terms and conditions are often several pages long. Few people read it carefully and understand it. meaning. So I think people are willing to accept that new information about the consumption of electricity is generated and used. I think there must be a guarantee, and even if people believe that this data will be used to provide them with valuable services, they can get a return. The key is to use data to provide new services to consumers. From this perspective, I think that similar to the Internet, it can be done.
NetEase Finance: Developing economies are increasing their investment in smart grids, such as China. It is expected that China will invest 60 billion to 100 billion U.S. dollars in smart grid upgrades in the next 10 years. What do you think of the future of smart grid development?
Merram: I think the outlook is bright, but it is also full of challenges. People should not underestimate the difficulties in all aspects, including investment, technology, cooperation with IT, telecommunications and regulatory authorities, new policy regulations, laying infrastructure. There are challenges in connecting infrastructure and electric vehicles and other equipment, as well as solutions to new energy generation in the country that are connected to the power grid. I think that in the development of smart grids, China is at the forefront of the world. Our study found that China is now the country that invests the most in smart grids. The Chinese government has formulated an ambitious plan and plans to build a strong smart grid by 2020. Ambitious plans for different stages have been formulated. Of course, we still have a long way to go. There are problems that need to be solved in such issues as policy regulations and business models. In the Shanghai World Expo, the State Grid Corporation of China also showed several very good demonstration projects. I think that China is very likely to lead the development of the smart grid, and it may be one of the earliest countries that really applied the smart grid. However, I must emphasize that this is a long-term development process and requires a lot of effort.
NetEase Finance: China plans to build an informatized, automated, and interactive power grid by 2020. The strong smart grid is particularly stressed. What do you think of this smart grid? What are the advantages of China in building a smart grid?
Merram: I think the smart grid should be seen as a whole system, including the entire process and different stages from generation, transmission, to electricity use. In our report, we distinguish between grid-oriented pilot projects and consumer-oriented pilot projects. I know that the State Grid Corporation of China has ambitious plans for the entire value chain, from power generation facilities to strong UHV transmission lines. , and then to consumer technology infrastructure. I think that fully integrated development is the right way. However, it may be necessary to carry out adequate testing in each phase. We recommend that pilot projects be used to test the various elements of the smart grid, and then the lessons learned from the application should be applied to the overall deployment. In terms of interaction, I wish to emphasize that smart grids are expected to become innovative platforms for providing energy services to consumers. I think one of the elements of the smart grid interaction is that it will enable consumers to participate more actively in energy and carbon footprint management if they can get more information and tools. In my opinion, this is the meaning of interaction. Smart grids can also integrate a small amount of electricity generated by the application of new environmental protection technologies. Even consumers can use solar panels to generate electricity and contribute to the entire power system.
NetEase Finance: With regard to the high input you just mentioned, from generating electricity to transmission to electricity, what are the new profit models for smart grids in various stages?
Merram: This is one of the major challenges we talked about in the report. In many countries, the smart grid business model is still very weak, in part because of the lack of incentives in policy regulations. Therefore, companies do not create the driving force for smart grids. The society can benefit from smart grids, such as universal access to clean energy, improved energy efficiency, improved reliability, and reduced carbon emissions. However, investors are unable to benefit from this, so they cannot be commercialized. Another issue is the distribution of incentive policies throughout the value chain. In less regulated markets, such as Europe, the situation is more complex than in China because of disparate enterprises in the value chain, power generation companies, power distribution companies, and transmissions. Enterprises, how to make these companies cooperate? How to distribute incentives between them? The regulatory authorities have not yet solved this problem.
In addition, how do you ensure that IT and communications companies are as motivated as the power companies? All these issues must be carefully considered. This problem is more easily solved in markets with higher levels of integration, but it is a challenge for any country. I think that the business sector must seriously consider and come up with creative solutions, and the regulatory authorities must do the same. .
NetEase Finance: Some Chinese people participated in the preparation of the smart grid report this year. What new information and contributions did they bring to the report?
Meram: We are very pleased that Chinese companies can participate in the preparation of this report, including Huawei, and they have made positive contributions. Of course, this report does not necessarily reflect the views of all participating companies, but it is a good starting point for discussion. The views of China have strengthened the depth and diversity of the report, and because China is one of the leaders in this market, it is very important to us. We are interested in strengthening ties with Chinese companies and hope that our report will serve as a good starting point for dialogue and provide practical advice for investors or policy makers to use.
NetEase Finance: Some Chinese experts put forward the concept of “interactive smart gridâ€. What do you think of this concept? What is the difference between it and the current smart grid concept?
Merram: I'm not quite sure what "interactive" means in the Chinese context, but I think that smart phones can enable consumers to interact more with power companies. To achieve this, power companies must understand consumers. Needs, and factors that influence consumer behavior. Is it the price? Or green? Or is it convenient and comfortable? What do consumers want to directly participate in? Our research finds that starting with small and medium-sized enterprises is a good starting point for enhancing interaction because they are very professional in energy management and there are more economic incentives to make efforts in this regard. This is a good way to start testing the interactivity of the power system. I think that in the future, consumers will consume much more energy, information and options. In the digital age, even an iPhone can be used to obtain interactive information and use iPhone applications for energy management. In this way, you can realize the interaction of energy consumption at any time. I think that smart grids have the potential to do this in the future.
Merram stressed that the government should provide smart grid investors with incentives. Any transformation of electricity and energy systems will take a lot of time. Because the system is very large, the cost will be high. To make the smart grid develop, huge investments must be made. To encourage investment, investors and companies must be provided with incentives. In many countries, these policies are not yet in place because the regulations of the electric power system were established before the smart grid has become a topic. Some power companies do not have the incentive to develop smart grids and invest in them. Because their income depends on selling more electricity instead of saving electricity. From this perspective, regulations and policies must be adjusted. The smart grid pilot project provides important lessons and lessons that must be considered in future rulemaking. To achieve this, companies must engage in dialogue with policy makers to find the right incentives, which in turn encourage large investments into the field. The government can play an important role in pilot projects and stimulate investment, and the government should also support the development of standards. The government can also educate consumers because consumer adoption of smart grid solutions is critical and communication with consumers is key.
When asked how to protect consumer data privacy and security, Merram said that smart grids will generate a lot of information, in addition to the smart grid will become an important infrastructure of any country's power system, so there must be related security issues, it should be Take it seriously and solve it. He is optimistic about this. He said: "I have experience working in the banking system. The financial system is also a vital infrastructure. It has been closely protected in terms of security, and of course there are some challenges that need to be continued. In data privacy protection I'm equally optimistic. Take the Internet as an example. If you sign up for a website or service, you usually need to tick a box to accept the terms and conditions of the service agreement. These terms and conditions are often several pages long. Few people read it carefully to understand its meaning, so I think people are willing to accept that new information about electricity consumption is generated and used, and I think there must be a guarantee, even if people believe that this data will be used to provide them with valuable information. Services, they can get a return. The key is to use data to provide new services to consumers. From this perspective, I think that similar to the Internet, it can be done.â€
Merram said that in many countries, the smart grid business model is still very weak, partly because of lack of incentives in policy regulations. Therefore, companies do not create the driving force for smart grids. The society can benefit from smart grids, such as universal access to clean energy, improved energy efficiency, improved reliability, and reduced carbon emissions. However, investors are unable to benefit from this, so they cannot be commercialized. Another issue is the distribution of incentive policies throughout the value chain. In less regulated markets, such as Europe, the situation is more complex than in China because of disparate enterprises in the value chain, power generation companies, power distribution companies, and transmissions. Enterprises, how to make these companies cooperate? How to distribute incentives between them? The regulatory authorities have not yet solved this problem. In addition, how do you ensure that IT and communications companies are as motivated as the power companies? All these issues must be carefully considered. This problem is easier to solve in markets with higher levels of integration. However, it is a challenge for any country. The business sector must seriously consider and come up with creative solutions, and the regulatory authorities must do the same.
NetEase Finance: Mr. Espan Melam, hello. The report (“Accelerating the Success of Smart Grid Pilot Projectsâ€) pointed out that building global standards is very important, especially in the case of the emergence of multiple regional standards and competing standards development organizations, how to strengthen global cooperation. Build an open and transparent global standard to break the barriers of different industry standards?
Meram: It is a great honour to accept your interview. You are right. Standards are very important for the development of smart grids. This is not the only important thing, but it is indeed one of the most important factors. In my opinion, standards need to be generated from the bottom up and combined with dialogues at the international level. Therefore, in China, the United States, and Europe, industry companies are working with standard setting organizations to develop standards. These standards must be open and must not discriminate against any technology, so it is a platform for promoting innovation. You have to strike a balance between the different requirements of the standard, ensure transparency, and at the same time not cost too much. In addition, there must be an international dialogue between standard setting bodies and important companies in the industry to ensure that standards are as global as possible. The Internet can be seen as an example. The Internet has open protocols and similar global standards are needed in the smart grid field.
NetEase Finance: We know that the situation varies from region to region, such as economy and science and technology. How does this affect the construction of a unified standard for smart grids?
Merram: Different countries, cities, and regions are developing different solutions. This is a natural thing, because different regions have different needs. The concept of smart grid is popular for a variety of reasons. I think that you can generally call it a fundamental transformation of the power system through the integration of IT, communications, and energy technologies. The current power system is already very outdated. The details of various smart grids will depend on historical starting points and the needs of different countries, so different technical solutions will emerge, but I think some standards must be as open and global as possible.
NetEase Finance: According to the current grid policy and framework, what is the main resistance of smart grid development? What kind of incentive policies should the government provide to private sector investors?
Merram: This is very important. We must stress that any transformation of electricity and energy systems will take a lot of time. Because this system is very large, the cost will be high. To make the smart grid develop, huge investments must be made. To encourage investment, investors and companies must be provided with incentives. In many countries, these policies are not yet in place because the regulations of the electric power system were established before the smart grid has become a topic. Some power companies do not have the incentive to develop smart grids and invest in them. Because their income depends on selling more electricity instead of saving electricity. From this perspective, regulations and policies must be adjusted. We believe that the smart grid pilot project provides important lessons and lessons that must be considered in future rulemaking. To achieve this, companies must engage in dialogue with policy makers to find the right incentives, which in turn encourage large investments into the field. We also believe that the government can play an important role in pilot projects and stimulating investment. The government should also support the development of standards. The government can also educate consumers because consumer adoption of smart grid solutions is critical and communication with consumers is key.
NetEase Finance: The participation of consumers is regarded as the key to the success of the smart grid, but there are challenges in terms of data privacy and security. How can we solve this problem and have any learning experience available?
Merram: You are right, data security and privacy will be a big problem. The smart grid will generate a lot of information. In addition, the smart grid will become an important infrastructure for any country's power system, so there must be related security issues and it should be Take it seriously and solve it. I am optimistic about this because I have experience working in the banking system. The financial system is also a vital infrastructure. It has been closely protected in terms of security, and of course there are some challenges that need to be continued.
I am equally optimistic about data privacy protection. Take the Internet as an example. If you register for a website or service, you usually need to tick a box to accept the terms and conditions of the service agreement. These terms and conditions are often several pages long. Few people read it carefully and understand it. meaning. So I think people are willing to accept that new information about the consumption of electricity is generated and used. I think there must be a guarantee, and even if people believe that this data will be used to provide them with valuable services, they can get a return. The key is to use data to provide new services to consumers. From this perspective, I think that similar to the Internet, it can be done.
NetEase Finance: Developing economies are increasing their investment in smart grids, such as China. It is expected that China will invest 60 billion to 100 billion U.S. dollars in smart grid upgrades in the next 10 years. What do you think of the future of smart grid development?
Merram: I think the outlook is bright, but it is also full of challenges. People should not underestimate the difficulties in all aspects, including investment, technology, cooperation with IT, telecommunications and regulatory authorities, new policy regulations, laying infrastructure. There are challenges in connecting infrastructure and electric vehicles and other equipment, as well as solutions to new energy generation in the country that are connected to the power grid. I think that in the development of smart grids, China is at the forefront of the world. Our study found that China is now the country that invests the most in smart grids. The Chinese government has formulated an ambitious plan and plans to build a strong smart grid by 2020. Ambitious plans for different stages have been formulated. Of course, we still have a long way to go. There are problems that need to be solved in such issues as policy regulations and business models. In the Shanghai World Expo, the State Grid Corporation of China also showed several very good demonstration projects. I think that China is very likely to lead the development of the smart grid, and it may be one of the earliest countries that really applied the smart grid. However, I must emphasize that this is a long-term development process and requires a lot of effort.
NetEase Finance: China plans to build an informatized, automated, and interactive power grid by 2020. The strong smart grid is particularly stressed. What do you think of this smart grid? What are the advantages of China in building a smart grid?
Merram: I think the smart grid should be seen as a whole system, including the entire process and different stages from generation, transmission, to electricity use. In our report, we distinguish between grid-oriented pilot projects and consumer-oriented pilot projects. I know that the State Grid Corporation of China has ambitious plans for the entire value chain, from power generation facilities to strong UHV transmission lines. , and then to consumer technology infrastructure. I think that fully integrated development is the right way. However, it may be necessary to carry out adequate testing in each phase. We recommend that pilot projects be used to test the various elements of the smart grid, and then the lessons learned from the application should be applied to the overall deployment. In terms of interaction, I wish to emphasize that smart grids are expected to become innovative platforms for providing energy services to consumers. I think one of the elements of the smart grid interaction is that it will enable consumers to participate more actively in energy and carbon footprint management if they can get more information and tools. In my opinion, this is the meaning of interaction. Smart grids can also integrate a small amount of electricity generated by the application of new environmental protection technologies. Even consumers can use solar panels to generate electricity and contribute to the entire power system.
NetEase Finance: With regard to the high input you just mentioned, from generating electricity to transmission to electricity, what are the new profit models for smart grids in various stages?
Merram: This is one of the major challenges we talked about in the report. In many countries, the smart grid business model is still very weak, in part because of the lack of incentives in policy regulations. Therefore, companies do not create the driving force for smart grids. The society can benefit from smart grids, such as universal access to clean energy, improved energy efficiency, improved reliability, and reduced carbon emissions. However, investors are unable to benefit from this, so they cannot be commercialized. Another issue is the distribution of incentive policies throughout the value chain. In less regulated markets, such as Europe, the situation is more complex than in China because of disparate enterprises in the value chain, power generation companies, power distribution companies, and transmissions. Enterprises, how to make these companies cooperate? How to distribute incentives between them? The regulatory authorities have not yet solved this problem.
In addition, how do you ensure that IT and communications companies are as motivated as the power companies? All these issues must be carefully considered. This problem is more easily solved in markets with higher levels of integration, but it is a challenge for any country. I think that the business sector must seriously consider and come up with creative solutions, and the regulatory authorities must do the same. .
NetEase Finance: Some Chinese people participated in the preparation of the smart grid report this year. What new information and contributions did they bring to the report?
Meram: We are very pleased that Chinese companies can participate in the preparation of this report, including Huawei, and they have made positive contributions. Of course, this report does not necessarily reflect the views of all participating companies, but it is a good starting point for discussion. The views of China have strengthened the depth and diversity of the report, and because China is one of the leaders in this market, it is very important to us. We are interested in strengthening ties with Chinese companies and hope that our report will serve as a good starting point for dialogue and provide practical advice for investors or policy makers to use.
NetEase Finance: Some Chinese experts put forward the concept of “interactive smart gridâ€. What do you think of this concept? What is the difference between it and the current smart grid concept?
Merram: I'm not quite sure what "interactive" means in the Chinese context, but I think that smart phones can enable consumers to interact more with power companies. To achieve this, power companies must understand consumers. Needs, and factors that influence consumer behavior. Is it the price? Or green? Or is it convenient and comfortable? What do consumers want to directly participate in? Our research finds that starting with small and medium-sized enterprises is a good starting point for enhancing interaction because they are very professional in energy management and there are more economic incentives to make efforts in this regard. This is a good way to start testing the interactivity of the power system. I think that in the future, consumers will consume much more energy, information and options. In the digital age, even an iPhone can be used to obtain interactive information and use iPhone applications for energy management. In this way, you can realize the interaction of energy consumption at any time. I think that smart grids have the potential to do this in the future.
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