In the three-part series "Sustainable energy calls for data strategy," the Rathenau Institute discusses how the energy supply in the Netherlands is changing and the consequences for all of us. Part three of the series addresses the key democratic issues of a digitizing energy system.
Efficient energy management in the future hinges on digitalization. But the great data dependence of the energy system also raises social questions. For example, digitization touches on security, privacy, autonomy, justice and power relations. Moreover, digitization not only makes the energy system more flexible, but also more vulnerable to, for example, software errors, unpredictable algorithms and cyber attacks.
In this article, we walk through the various social questions surrounding the digitization of the energy system step by step.
Given the critical function of the energy system, dependence on data, software and hardware must be seen as a national security issue. After all, functions such as heat and transportation are increasingly dependent on a reliable energy supply. Consider, for example, charging an electric car. That is not possible if the electricity is out. Another example is when the national emergency number 112 becomes unavailable during a power outage.
Setting up a robust digital infrastructure should therefore be a national priority. Not just for electric utilities, but for government as well. This means that we should not only be mindful of the software vulnerabilities already mentioned. We must also pay attention to how we set up the telecom infrastructure, the exchange of energy data between parties and the storage of data in (commercial) data centers.
From a privacy perspective, it is important that users have control over their energy data. They should be able to know exactly what is being collected and which parties are using their data. According to the Consumer and Market Authority, it is currently not clear to consumers who has access to their data. Moreover, it is not clear exactly for which application they grant or have granted permission. This applies, for example, when consumers install an app for energy saving.
The energy system of the future may affect consumer autonomy in numerous ways. Right now, energy managers' algorithms do not yet turn a light switch in a living room or turn the heating down by themselves. But the devices consumers themselves use to control their energy use sometimes already do. Consider, for example, Google's smart thermostat that already uses data from a cell phone to see that someone is on their way to work in the morning and then automatically turns the heating down. Now we mainly experience the convenience of this, but what if you no longer get to decide when to do your laundry or charge your car?
A range of energy data
The Dutch government is currently working on the implementation of a new European energy directive, which should lead to an Energy Act 1.0. In doing so, however, it assumes a limited spectrum of data: the so-called "data before the meter. Specifically, these are the data from the Central Connection Register and the Contract End Register (both with relatively static data regarding the connection, such as the address details, the current supplier and the standard annual consumption, or in the second case, the end date and notice period) and the so-called 'P4 data' from the smart meter (consumption data that is read remotely, currently still with a 24-hour delay).
For the broad vision of data governance that we advocate here, however, it is necessary to also look at other types of data. For example, "data behind the meter," such as that from smart thermostats, smart TVs and solar panel inverters. Currently, it is not at all clear to the user what happens to that data. Although the other types of data have the potential to play an important role in the energy transition, because they can help increase the flexibility of the energy system, they currently fall outside the plans for the new energy law.
The energy transition can undermine the fairness of the current energy system in several ways. Roles, responsibilities, rights and duties that used to be fair may, in a situation with active consumers, flexible prices and increasing costs due to grid reinforcement, actually contribute to an unfair distribution of joys and burdens. For example, subsidies for electric cars have already been shown to go mainly to wealthy Dutch people. For buying solar panels or setting up a local energy community, the wealthy and first movers are also at an advantage. Not only do they possess more money to invest in solar panels, for example, but they often also have more social and technical skills (or they can hire knowledge).
An additional problem is that while the more affluent groups benefit from their investments in renewable energy, it is the entire community that has to pay for the infrastructure that makes those investments possible. One example? The costs required for grid reinforcement for heat pumps, neighborhood batteries or electric car charging stations are borne by all consumers. In the extreme, active consumers may even become energy self-sufficient and go "off-grid. This means that they no longer contribute to the common facilities that they did benefit from when they set up their infrastructure. How do we ensure that low-income consumers do not face high energy bills?
The energy transition thus calls for a reassessment, from the point of view of fairness and solidarity, of rules and tariff structures. Good behavior may well be rewarded. Consider, for example, compensation if a person does not charge an electric car on a rainy, windless day during peak consumption between 6 and 8 p.m. at night. But in addition, the energy transition also requires guarantees for consumers who do not have the financial resources, time, or ability to make the most advantageous choices.
The energy transition needs clear conditions for access to energy information. After all, the same data that can help make energy supplies more sustainable (for the benefit of us all) can also help a company make more profit (for the benefit of the company, and at the expense of the consumer). In this context, consider a service like Uber, which, based on information about the demand for rides, raises the price at times when demand is high. Similarly, a party with extensive knowledge of consumer consumption behavior could abuse these insights. This could lead to new dependencies and skewed power relations between companies and consumers.
The question is which party can best take care of data management. The Authority Consumer & Market sees several options in this regard. For example, data management could remain in the hands of the joint network operators. But it is also possible that one national grid operator is assigned the role of data manager (as in Denmark). Alternatively, a third, commercial party could become the data manager (as in the United Kingdom). Each of these scenarios has advantages and disadvantages. It also means that different regulators will have to cooperate, such as the Consumer & Market Authority, the Personal Data Authority and the Telecom Agency.
Earlier, we argued that as the energy transition proceeds, the system task of distribution system operators will become increasingly important, and access to the right data will be crucial for this. In light of this, one can argue that it makes sense to combine the management of the physical grid with the management of data. In this scenario, grid operators become the managers of the Internet of Energy. However, the question is whether they have enough knowledge to do this and whether they have sufficient innovation power.
An alternative scenario is that the government chooses to make the current grid operators owners only of the physical power grids, but without system responsibility. This is a doomsday scenario for the grid operators, but it is also risky from the perspective of public benefit and collective values. After all, there is then a chance that commercial companies will take on the role of data managers, and that could lead to a concentration of power. Consider, for example, Google, which owns global ICT platforms, has a lot of knowledge of big data and is already investing in energy supply. The concentration of economic power makes the energy system vulnerable to security and supply threats. Moreover, national, democratic control over the power grid then comes under pressure. Thus, the arrival of new players, such as large tech companies, actually requires more national direction, and timely, clear agreements on the management of various data in which the interests of all parties are represented.
Transparency about algorithms
In situations where a smart device decides whether to turn the thermostat up or down, or to charge or discharge a home battery, one speaks of "technological paternalism. Whether algorithmic systems strengthen or weaken people's autonomy depends on the extent to which users have insight into, and control over, how they operate. If the system causes the consumer to lose autonomy, there is "hard" paternalism. If the user has control over the system and if the system helps the user make good choices, we speak of 'soft' paternalism.
As algorithms make more choices for us, we need to ask more explicitly whose goals they serve. Do they act on the wishes of users, or do they serve the interests of companies or governments entirely? In its exploration of digital innovation in the energy landscape, the Top Sector Energy stated that the values embodied in algorithms will ultimately define the digital age. In order to be able to question those values, however, we need to be able to gain sufficient insight into what they are - and that is particularly difficult with self-learning systems (often still black boxes).
If consumers are to be able to make well-informed and optimal choices in a future intelligent energy system, there must therefore be more transparency about algorithmic decisions. The Council of State emphasizes that it must remain clear to citizens how and on the basis of which conclusions automatic decisions are made, and who is ultimately responsible for them. Because, also in a digitized energy system, users must have access to (information about) decision-making processes, and procedural justice must be guaranteed. This requires that regulators also remain able to monitor such processes. And, to the extent that intelligibility remains a problem for certain socioeconomic groups, it is important that they not be further disadvantaged, but given protection.
Further digitization is creating an Internet of Energy in which decisions about storage, supply and use are increasingly made by algorithms, based on energy data. Data governance is thus becoming a critical core function of the energy sector. Therefore, there is a need for an adequate data governance model that properly regulates numerous social and policy issues: from cyber security, privacy and consumer autonomy to issues of justice, control over algorithms and fair power relations between citizens, companies and government.
Given the enormous societal importance of good governance of energy data, the rules for handling that data must also be established democratically. There is still a considerable challenge here. First, because there is currently little policy and political attention to this topic. And second, because to develop an adequate data governance model, the technical and social knowledge is lacking. We therefore need a much better understanding of what data are available, who owns or manages them, what happens to them, and how all this relates to existing principles and rules.
Finally, from a democratic point of view, it is essential that all relevant stakeholders - from old and new parties in the energy sector to civil society parties, parliamentarians and citizens - have an informed say in how we will shape the sustainable energy society and the Internet of Energy.
This article also appears in the files Information Security, Internet of Things and Digital Transformation
source: Rathenau Institute
