Yesterday’s local energy systems were mostly passive. Energy came down a wire from a central power station, and local consumers paid the bill.

The renewable transition will change all of this:

• Every homeowner, business and housing provider with a rooftop can now become an energy producer
• As they do, energy systems will need new incentives, management techniques and financing models to cope with a multidirectional energy system.
• And as Rolf Bastiaanssen argues in this interview, local authorities and housing providers will emerge as the new leaders of this system.

Watch this interview on Youtube

To mark European Union Sustainable Energy Week, we sat down with Rolf, Head of Energy Systems, to talk about what this new leadership means for local authorities.

Thanks for joining us, Rolf. I wanted to start with this idea of the local energy transition. How do you frame the energy transition to someone at the local level who’s trying to figure out what all of these changes mean for their energy system?

Rolf: It’s a very relevant challenge for local actors, particularly housing providers and local authorities. The transition to renewable energies changes the entire energy system.

Solar panels are the main driver of this change. You can put solar panels in a large field outside your city, but also on the roof of nearly any home or business.

This means the energy transition is much more decentralized. All of a sudden all these local actors become active or even become responsible for making the energy transition happen – and they want to see this change happen.

Many have legally binding targets to do so. So for these entities – cities and housing providers – the local energy transition represents a big opportunity to take this process into their own hands.

Will the responsibilities of the grid operator change as part of the local energy transition?

It will change very fast and entirely.

The energy grid is not built for the increase in electricity consumption that will come with the transition to renewable energy. So in cities we see that electricity consumption will rise the coming years but especially peak energy consumption will go up five times and the system energy system will collapse.

We see that in many cities across Europe, if you want to start a new business or if you want to open a supermarket or build a school you cannot connect it to the grid anymore because you cannot get the electricity that you need and that’s a big challenge that local authorities need to solve.

So this is far from just an electricity problem – would you also describe this as a planning problem?

Rolf: Absolutely. It’s not about generating renewable energy as such. We know how to do that. It’s wind energy, it’s solar energy. It’s mostly how to get it at the right destination at the right time.

It’s obvious that most people in the city have the same kind of living patterns. People wake up early in the morning, want to cook something, prepare breakfast, or they take their electric car and drive to work. Energy consumption is massive. But during working hours, household energy consumption is close to zero.

This means that the energy flow is very uneven, and it needs to be managed. And that’s what I think a new kind of capability that local authorities need to have to help manage their energy system and help make sure that the investment is necessary to get that system ready for basically distributing more electricity will be ready in the coming years.

How do municipal energy managers begin to take on this challenge? It strikes me as a big policy challenge. Essentially, it’s taking on a new role that local authorities didn’t have before. There are financial implications, policy implications. How do local authorities start to manage this problem? 

Rolf: It’s actually a new problem. We work with cities across Europe, probably about 50 or so, and none of them, literally zero, have what we would call a local energy action plan or LEAP. Because it’s that new responsibility their new role that local authorities have.

So what we see that those organizations want to do is they over the past five years they’ve been piloting projects for example they’ve learned how to install EV charge points in shopping centers. Maybe they helped industrial states to set up a local energy infrastructure. Maybe they’ve promoted households to install PV panels. But all of these are individual actions and there’s no strategy behind it.

And the concept of that LEAP, the local energy action plan, is to understand the needs of the energy system of the future and building consistent policies or investment incentives, I would almost say, to make sure that the right kind of investments take place at a time that the energy grid is ready for it and that you don’t impede the investments by others or the action by others. But it’s very new.

By 2030 you would expect every local authority to have a document, a local energy action plan, that would essentially help them to determine how to create this new reality?

Rolf: Absolutely. Over the coming five years we will see the first-moving cities  develop those plans and that will uncover a lot of new problems.

I think most local authorities have no idea what the energy bill of the city is, as I mentioned earlier on. For a city of 100,000 inhabitants, I think the households, they pay probably about 500 million euros a year for electricity. A business, another 500 million euros a year. So if you talk to local authority and they say, hey, the energy consumption in your municipality is 1 billion euros a year.

Or if you say that expected investments on upgrading energy system infrastructure is probably one to two billion euros here there’s a kind of amounts they’re not used to deal with and so once you have a a strategy you all of a sudden also find out we need new financial models and we as a public sector we can’t and we should not fund this or finance this you need the collaboration with the private sector you need collaboration and collaborative models with with the citizens in any community.

Research by Eurelectric on the need for €375-425bn as reported in Recharge News. 

How do we start finding the investment we need to transition to resilient local energy systems?

Rolf: The one thing that the energy system is very different than when we talk about sustainability as a whole is that it is revenue generating.

Energy is worth a lot. We all have seen our energy bills increase over the past two years or so. I think in most countries, you now pay €0.30 a kilowatt hour if you’re a typical consumer. So that means energy is an asset. Being able to produce energy is an asset. And the energy transition, producing renewable energy has a positive business case. And that’s a very important starting point.

So if you talk about a city of 100,000 inhabitants, and you say, well, the energy bill of that city is probably about 1 billion euros a year, that’s a lot of money. But it’s also a lot of money that can be invested in the energy transition. So if you talk about the energy transition, you’re not talking about a cost. You’re talking about an investment.

How do local authorities find the confidence to take on a role that previously hasn’t been theirs? Does it come from working with other actors, sharing knowledge, or something else?

Rolf: Absolutely, peer learning is very important. If we bring four or five cities together to scale up their investments proposals. It works if they see from each other how that works, how you can actually present a convincing case to your director.

At the same time, there also is a non-social component. It’s just the hard measures to do risk reduction. Public sector guarantees or grants, they’re absolutely crucial.

And what we see happen is that we can bring, for example, Europe closer to even a local authority. We can bring the European Investment Bank and their financing solutions, their guarantee solutions, also grants to a medium-sized city and all of a sudden they have the power of Europe behind them and that really helps in convincing all stakeholders at a local level to actually spend the time and energy and getting a project done because they know that they have peers, they have friends and they know they’re financially secure.

Members of the CREATORS consortium, a group of private companies, academic institutions and public authorities working together to advance energy communities in Europe – meet in Serbia for a meeting. Bax & Company helped to assemble the consortium, which is giving diverse group of stakeholders direct access to on-the-ground testing for energy communities.

And that’s our role. That’s the exciting thing of how we work. We see those frontrunner examples, the state of the art happen across Europe. It could be technological innovations, it could be business model innovations, it could be policy innovations. And we take those examples.

Sometimes we are lucky enough that we are part of developing those examples. And then we bring them to other frontrunner cities. And you’re absolutely right. You don’t want to reinvent the wheel. You don’t want to yourself go through the the challenge of finding out how to finance, what technology fits best, or how to create an in-house team that can develop that local energy action plan. You want to learn from the best and you want to learn from the mistakes as well.

And that’s where I think we see we get out of the experiment phase on the energy transition. And that’s what I’m very proud and very happy that we can work on us finding those ideas, make them happen and bring them to the next group of organizations that want to make the energy transition happen.

And to finish, what advice would you give to a local authority energy manager taking on the local energy transition?

Rolf: I think the most inspirational examples that we see are from the people we work with in the private sector, banks especially. They don’t see the energy transition anymore as an experiment but they think in billions of euros of investment and markets and they think of the energy transition in gigawatt hours.

When we set up with a large bank and a program to improve energy efficiency in buildings, they count billions. And what I think would be an advice to most local authorities across Europe that we work with, or most businesses, is they need to think in hundreds of millions.

Once you see that scale level, you can reverse engineer the kind of team, the kind of internal capabilities that you need to work with. Yes, you need an expert of finance.

Yes, you need to do long-term investment planning. And that’s a kind of vocabulary and a mindset that we encourage our clients and our partners to work with. Because that’s the only way to make ideas happen at the scale that we need them to happen.

The largest investments that we now see happen, the largest projects, especially the public sector, are maybe a million or so. But the projects that we’re now preparing with the municipalities in Sweden, in Belgium, in Estonia, in Spain, they reach the size of 10 to 100 million. And that, I think, is inspirational, and we’ll see the results quickly.

And luckily there, we see that it’s not those organisations operating on their own. Municipality often feels that they don’t have the expertise and they need peer collaboration to join the design projects and feel the confidence that they need, confidence from other organizations in the same stage, maybe support from the city board, but also support from European institutions or national institutions. And that ecosystem is now being developed and it’s absolutely necessary to get those results and actually see the results of how we want the world of tomorrow to be like.

We’ll leave it there. Thank you very much for your time Rolf. 

If you’re a local authority or housing provider taking on the local energy transition, get in contact with us. We’ve guided municipalities and housing providers across Europe towards first-of-a-kind energy innovations, from energy-as-a-service pilots to novel financing mechanisms.