Box 4-2: Smart grid as the future of the energy sector

impacts on industrial transformation. The manufacture of

solar panels and components for wind power plants will transform industrial structures, and the increasing automation and data-driven operation will also have a significant impact on employment in the energy sector.

Box 4-2: Smart grid as the future of the energy sector

According to the definition used by the Office of Electricity (2019), a smart grid is an electric network which collects infor

mation on the energy consumption habits of service providers and consumers relying on information and communi

cation technology and adjusts accordingly to changes in energy supply and demand, thereby reducing energy imports. Using this information can automatically increase the efficiency, reliability, economic efficiency, sustainability of the grids, and the predictability of the whole national economy’s energy consumption also rises substantially (Chart 4-9).

Chart 4-9: Opportunities offered by the smart grid

Source: PWC.

With smart grid technology, grids become “smart” and flexible, as the energy network not only become more reliable, but also more efficient (facilitated by transmission lines equipped with sensors) and able to reduce weather consequences (e.g. in the case of storms). In such cases, the system automatically report power cuts, provides consumers with more accurate and proper information, automatically eliminates the faults and makes up for the lost power by sharing the surplus energy stored in batteries, which is aligned with consumers’ needs and results in major savings (OE, 2019; smsplc, 2017). As regards e-vehicles, it becomes possible for the user to set automatic charging of the vehicle during the sunny hours, or programme the use of the washing machine or dishwasher depending on the energy demand related to operation and the energy price (smsplc, 2017).

Relying on smart grids, users settle their energy consumption and costs in line with their demand, thereby curbing overconsumption, which ultimately increases their disposable income. Final consumers are conscious, committed and

actively look for the best solutions (PWC, 2018). Public utility companies and service providers also benefit from the modernised grid, and owing to the continuous integration of renewable energy resources (primarily wind and solar energy), grid overload decreases, and the modern technology provides higher security of supply and results in lower operating costs (Munuera, 2019).

The EU’s goal is to have at least 80 percent of traditional meters replaced by smart meters by 2020. However, by 2020 the share of smart meters is expected to amount only to 23 percent (European Commission, 2014). Based on Eurostat (2019) calculations, deployment of smart meters and smart grids may reduce the European Union’s CO 2 emissions, as well as households’ annual energy consumption by 9 percent. Consequently, the application of big data may provide a solution for improving energy diversity and the high quality provision of affordable electricity supply (Mordor Intelligence, 2019). a reduction in CO 2 emissions. In addition, optimising public

4.2.2 TRANSPORTATION SECTOR

The transportation sector has expanded significantly in past decades. Air passenger traffic has risen annually by 5-8 percent on average since 2010, making the largest contri

bution to growth. The primary reason for the growth is the rise in the market share of cheaper airlines, and improvements in the income position of the global middle class, particularly in China (Statista, 2019).

Chart 4-10: Global CO₂ emissions in the transportation sector, by sub-sector

manufacturing countries – must reduce the CO 2 emissions a defined health limit, to 95 gram/kilometre on average

8

7

6

5

4 (European Parliament and the Council of the European

3 Union, 2019).

2 entered into force on 31 May 2018 in Hamburg. In Frankfurt,

1

0 Gigatonnes

Road 1990

Air Water 2016

Other

Source: IEA.

As in the energy sector, the number of data sources and the volume of data is also rapidly increasing in the trans

portation sector. Sensors are used at more and more locations, for instance in air and sea ports, train and bus stations, logistic hubs and warehouses. As regards trucks, information related to loading and unloading time, travel times, driver hours, truck driver logs, pallets, transit and dwell times, strikes and other data are already available (Rusitschka and Curry, 2016). In Dublin, for example,

forwarded on the bus timetable, detectors, closed circuit

cameras and GPS updates. Based on this, it is possible to prepare a digital map of the city, and thus by using the geographic information system data, real time data can be obtained on the position of the buses in the city. Owing to the results thus obtained,

travel times decreased by

roughly 10-15 percent on the whole, which contributed to

transport and reducing emissions has helped to improve the condition of the environment. Furthermore, it managed to reduce – and in many cases terminate – underutilised lines, thereby also reducing the costs of the transport company (Tabbitt, 2014).

According to a proposal of the European Commission adopted in 2019,

starting from 2020

Member States – including Germany, as one of the largest European car

of newly manufactured cars by 35 percent compared to the

previous levels. Pursuant to the regulation adopted earlier by the European Commission and the Council, by 2021 car manufacturers must reduce their fleet level CO 2 emissions to

Due to the negative impacts of pollutant emissions on human organism and the environment, the idea of banning

older diesel cars from driving into the cities has arisen in

Germany and other European cities as well. The first ban

monitoring almost 1,000 buses every 20 seconds, data are

from February 2019 diesel cars complying with Euro 4 or older standards are prohibited from entering the city centre. Since March, the use of diesel cars was prohibited on certain road sections of Stuttgart even for local inhabitants. From summer 2019, no diesel engines with classification older than Euro 5 can be used in Cologne, Bonn, Gelsenkirchen and Essen. Since June 2019 traffic restrictions were introduced in Berlin for diesel cars meeting the Euro 1-5 standards (Kempken, 2019).

As a result of the foregoing, in the two countries that are most important in terms of the European car sales, i.e. in Germany and the United Kingdom, diesel car sales have been on a declining trend from the second half of 2016. In parallel with the change in the car mix, in Germany the ratio of newly registered petrol cars in Germany rose from 50

percent to almost 60 percent in two years, while the share of diesel cars fell from 50 percent to 35 percent. The change observed in the United Kingdom was even more distinct: the Million vehicles

100 ratio of petrol cars rose from 50 percent over 65 percent, while that of diesel cars fell from 50 percent below 29 percent within new car registrations.

An increasing number of car manufacturers are starting to 50

produce e-cars in order to comply with the requirements and to avoid high penalties. 17 However, according to a study by ADAC, the German automobile club, if we

consider all of the energy consumed over the entire lifecycle of a vehicle, gas- and hydrogen-powered cars may be more environmentally friendly than e-cars. This is partly due to the composition of the German energy mix, and partly to the high pollutant emissions of battery

from transportation. By identifying the affected areas, the

manufacturing. E-cars prove to be more environmentally friendly than the hydrogen or natural gas vehicles only if the electricity used by them comes entirely from renewable energy sources (ADAC, 2019).

Over the next 5-10 years, e-vehicles may become more economical than the vehicles with internal combustion

engines (McKinsey, 2019). Reykjavik is working on getting rid of carbon dioxide in its energy scheme, to ensure that its car traffic and public transport are fossil-free by 2040 (REN21, 2019). According to the plans of BMW, Mercedes and Volkswagen, from 2025 e-cars will account for 25 percent of their total sales, and they intend to introduce more than 100 new electric models to the market. In addition, in the area of traffic data, and then forecast the potential delays and

alternative drive, Sunfire – with financing by Audi, Boeing and ThyssenKrupp Marine Systems – is also working on an industrial development that produces synthetic fuel, e-diesel, which is one alternative to replacing the fuels used for water and air transport.

Based on the calculations, by 2030 more than 130 million electric and more than 90 million hybrid electric vehicles may be registered for use. Within this, electric passenger

Chart 4-11: Anticipated changes in the stock of e-vehicles between 2017 and 2030

250

200

150

0

2017 2018 2019 2020 2021 2022

2023

Passenger LDV, BEV Light commercial vehicles, BEV Buses, BEV Truck, BEV

Source: OECD/IEA, MNB calculation.

2024 2025 2026 2027

2028 2029 2030

Passenger LDV, PHEV Light commercial vehicles, PHEV Buses, PHEV Truck, PHEV

In cooperation with the Carbon Trust, British Telecom examined the CO 2 emissions resulting from the company’s business activity. It came to the conclusion that two thirds of

the CO 2 emissions generated company operations stem

company had the opportunity to reduce costs and CO 2 emissions. The company achieved this by also involving its suppliers in the reduction of CO 2 emissions. Since 2011, the company has achieved a 44 percent decrease in its CO 2

emissions from its operations and a 15 percent decrease in

the CO 2 emissions of the supply chain; it was also able to reduce other waste generating pollution by 40 percent (Nepal, 2014).

Since transportation is the largest emitter of carbon dioxide of all industries, all factors that are able to shorten, accelerate and optimise supply chains are of key importance. In

his analysis, Bekker (2009) presents a company, which examined the route of its suppliers, weather conditions and cars will have the highest share (Chart 4-11).

elaborated an alternative plan to ensure that production never stops due to a shortage of material. Thus, it also reduced emissions of pollutants and its costs.

By 2050, green investments amounting to USD 150-400 billion will be implemented annually in the transportation sector, which is expected to improve efficiency; these investments will also facilitate a shift toward environmentally conscious transport. According to the forecasts, by 2050 the proportion of rail and bus passengers may increase by 18-30 percent, while total passenger car traffic will decrease and over a horizon of 30 years and

17 After 2021, German manufacturers may expect major penalties, which – according to preliminary calculations – would represent a material part of their 2018 pre-tax profit. If the trends continue, according to our calculations the penalty to be imposed on the Volkswagen group, Daimler and BMW would amount to 55 percent, 26.4 percent and 25.5 percent of their 2018 profit, respectively.