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Energy Global: In conversation with E.ON

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Energy Global,

Luis Hernandez is an expert in the area of citizen energy communities and energy network optimisation of thermal and electricity networks. He started his career at E.ON in 2013 and is currently heading the innovation domain for Energy Communities and Networks. Based on his wide expertise in business, regulations and technical topics in the energy industry, Luis is driving forward-thinking projects across Europe. He strongly supports the establishment of Citizen Energy Communities – a field which he has been following since 2017 already. Luis is convinced that by empowering people, it is possible to reach 100% renewable energy. Energy Communities will change the energy landscape and result in a faster, more affordable and sustainable energy transition.

1. As a company, E.ON is involved in many different renewable energy technologies. Considering solar energy specifically, what recent innovations have taken place at E.ON and what developments are currently in the works?

Our team follows a holistic perspective and focuses on various types of innovation related to energy systems. I expect the future energy system to be decentralised – not only because of the growing number of renewable energy sources, especially solar plants. With the increasing amount of large scale and private solar installations our energy networks need to handle more feed-in than ever before. This will be a challenge, especially in areas with less powerful infrastructure. With innovation projects, that accelerate the development and implementation of smart control systems or batteries for grid support – to name just a few – we ensure that more solar plants can be installed in existing infrastructure with minimal additional cost.

One of the new driving forces for people to install more private photovoltaic panels is the concept of citizen energy communities that appeared quite recently and has the potential to unleash a big wave of change in our energy landscape. My team is investigating this topic from two sides: On one hand, we are looking into ways to make it easy, sustainable and enjoyable for the customer, so that more and more people, who currently do not think about installing a new PV , get involved in shaping their local community. On the other hand, we make sure that the growing number of energy communities with new PVs, that need to be connected to the network, is possible without immediate need to invest millions of Euros for electric grid upgrades.

2. For those who have not heard of ‘citizen energy communities’ before, can you outline this.

Energy communities are a new player on the European energy market, introduced by the European Commission in their EU Regulatory Clean Energy Package. Their goal is to increase public acceptance of renewable energy projects, mobilise private capital and introduce grid flexibility. All EU Member states should introduce them into national regulations in 2021.

Participating in energy communities is one of the ways for the citizens to get actively involved into the energy transition. In a solar community close neighbours (in a multi-apartment building or a city quarter) can share green electricity from local PV panels with each other – also using the public grid. In this way people that do not have access to a rooftop can make sure they are using energy that is good for the environment. By doing so the community members receive benefits, such as EU subsidies promoting local green energy, and this encourages them financially and emotionally to install more PV panels in the community.

The set-up itself is more complex than just buying a PV but we are working on it to make it easy and engaging for the people.

3. Governments, citizens, and the EU are important factors in the success of European renewable projects. Can you detail why each of these need to be considered?

The energy industry is seemly regulated. This means that companies in this space cannot just do what they want or what the customers want from them, but rather what they are allowed or obliged to do. In addition, with the energy transition and decentralisation of the energy system, we see that building only large renewable generation plants and ignoring the potential contribution of individuals, such as using private rooftops for PVs, would be a waste. Thus, I believe that people’s power could drive the energy transition. To do so citizens should be put at the core of the new sustainable energy system and regulators encouraged by governments, are the ones that can make this happen.

We all know that subsidy schemes and the removal of hurdles can increase the attractiveness of participation. Thus, governmental and regulatory support is very important. Yet in the end, it will be citizens deciding whether to opt for the sustainable solution or not. The important factor in this decision-making that we have observed is how much extra effort the person would put in to make the sustainable choice. As single individuals might often be more reserved in making the decision to participate and acquire an energy asset, I think that shifting to climate-friendly energy solutions should be made hassle-free. Hence, I believe that generating a circle of trust around them, by enabling the creation of a local community that cares about and shares sustainable energy, might give them the confidence they need to make their decisions.

This consumer-centric approach is currently being promoted by the European Commission and is already being adopted by European national regulators with the support of their governments: the first front-runner European countries are popping up and an exciting market evolution is expected.

4. Can you detail a project that could have been more successful if citizens had been more involved and engaged?

In Simris, our flagship project in Sweden, our team tested many innovative energy concepts in a microgrid. There an innovative system brings up to 100% renewable, locally generated power by combining solar panels, wind turbines, battery energy storage, smart energy management and a fully committed citizen energy community. We have experienced a great support from the local people – but only at the second attempt. We have tried to bring innovative solutions to the community in another Swedish village before, but we didn’t directly succeed as we have not involved the citizens properly. This is when we learnt how important this involvement is. Today we are very proud of the community of engaged citizens that has been created in Simris. But of course, it was kind of a unique experience. Establishing customer engagement with most energy-related projects is the next step.

I fully understand that energy is not the number one priority for people – it is nothing they want to dedicate their time to. For decades electricity has been taken as a given. In average a person spends just about 8 minutes a year actively in interaction with the energy topic (mainly checking the energy bill). Our experience says that fancy energy related apps are forgotten after a few weeks or months.

We want to take a step forward by making people talk about their energy choice in a local energy community and actively helping them take action.

An interesting ‘side effect’ of active citizen participation that we have observed is the creation of new local jobs, when individuals suddenly discover a new career path by promoting a sustainable lifestyle. We would like to use this side effect in one of our pilot projects and evaluate, whether engaging communities into energy-related topics can actually support local economy. The more active citizen participation is, the more successful the project would be.

5. Is there a specific process you undertake when introducing new technologies?

Innovation is driven by technological and regulatory push, but there is also a market pull. This is why we constantly monitor new technologies and regulations as well as challenges that our customers face and propose novel products and projects.

Key for successful disruptive innovation is timing – all the needed pieces, including technology, regulations and customer´s willingness to use the product, need to be there at the right time. Clarifying these initial elements is key in order to develop a clear vision and strategic road map for a new product or service. Having that initial guiding plan helps us make the right decisions at each stage of the innovation process, without losing perspective.

A common first step for major strategic innovation topics is a holistic pilot project. A pilot helps the core team get real experience and acquire needed know-how for the further progress of the innovation project within the company. After a pilot, the team is able to assess much more effectively which ideas have higher potential to turn into innovative energy solutions and new business models. Ideas we decide to progress with are taken through our innovation maturity funnel, making sure that all the required market, business and technical questions are answered. This process helps us make sure that we have thought about everything before the market launch. After successful development of the solution, it can be eventually rolled-out, meaning it can either be handed-over to the business or exited in form of a small spin-off.

A great example of this process implemented in practice is Simris project that I have mentioned before. We know that the topic of local citizen energy communities has been part of the energy industry for the past decade, however, regulations did not allow the mass market implementation of such concepts. Already five years ago E.ON identified and acknowledged that this topic has a strong strategic relevance. Back then we decided to start a technical pilot in Simris. After the technical pilot, we evolved into commercial pilots in Hungary and are now having commercial implementations in Scotland, Italy and Spain.

6. Looking to the future, where do you see an increase in renewable assets and why?

I think that European islands have the potential to be pioneers of the clean energy transition. As islands are still strongly depending on fossil fuels, energy costs there are much higher than on the mainland; on average about 2 - 10 times. Given this fact and the perfect conditions for renewable energy production, such as wind and sun, energy innovations in islands can be developed in a cost-competitive and wholistic business case positive way. I’m pretty sure that in the upcoming years we will see a significant increase in renewable assets there and a deployment of quite interesting novel technologies, which will make their first baby steps in islands, and enter the continental mass market later on.

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