Smart Grids: EU's Shale Gas?

Smart grids can reduce infrastructure needs by 30 pct. Smart appliances will turn on and off as prices move.

* EU grids need 400 bln euro investment by 2020 (Adds Sefcovic comments, breakdown of investment fund needs)

By Geert De Clercq and Barbara Lewis

BRUSSELS, April 1 (Reuters) - Smart grids balancing intermittent solar and wind energy with flexible power demand could do for Europe what shale gas has done for the United States, a senior European Union official said on Wednesday.

European Commission Vice President Maros Sefcovic said smart grids are crucial for EU single energy market plans as they could integrate more renewables into electricity networks, boost security of supply and help lower prices for consumers.

"Smart grids should become Europe's shale gas," he told a conference of Brussels-based European grid organisations ENTSO-E and EDSO.

Abundant shale gas has boosted U.S. energy independence, lowered power prices and given the country's energy-intensive industries a competitive edge.

Earlier, EU climate and energy commissioner Miguel Arias Canete said smart grids were central to the Commission's vision of making the EU the world's number one in renewable energy and reforming European power markets.

"Smart grids work. They can reduce infrastructure capacity needed to meet demand by up to 30 percent," he told the conference.

Arias Canete said some 25 percent of Europe's electricity already comes from renewables and that could increase to almost half of EU power supply in 2030, but this would require more flexibility from grids.

He said the distribution system operators, which run the low- and medium voltage networks, will have to use power storage and demand management to encourage users to adapt their demand to the price and availability of power.

Coupled with smart metering systems, smart grids could help consumers adapt power use to different prices throughout the day and save money by consuming more energy when prices are low.

SMART APPLIANCES

Smart appliances will play a key role in this, Arias Canete said. Forty million dynamic-demand refrigerators could provide more than 1000 megawatts of frequency response.

A smart appliance should be able to respond to information from grids, which could mean briefly turning itself off, or even turning itself on when it would not otherwise be operating to access cheaper energy, he said.

Demand response could save the European Union about 100 billion euros ($108 billion) per year, nearly 200 euros per citizen, he added.

The Commission says the EU needs to invest some 400 billion euros by 2020 to modernise power transmission and distribution grids. ENTSO-E and EDSO executives said they expect 150 billion of that would be spent high-voltage transmission grids, the rest on low- and medium voltage smart distribution grids.

Arias Canete said public funding would provide part of those funds but should be used to leverage private finance.

Energy projects should benefit from much of the 315 billion euros of public and private investments that Commission President Jean-Claude Juncker's investment plan will unlock over the next three years, the Commission says.

Sefcovic said that since the financial crisis, Europe had seen six years of huge underinvestment in the power sector.

"The requirements are staggering ... In some countries we have energy infrastructure that is very outdated," he said.

Sefcovic said he hoped that most of the planned investment would go to the low- and medium-voltage distribution grids.

"The smart grids are the new brain of the system. They tell us where we need energy and where we can save energy," he said.