CU Awards - Essay Competition 2021

FIRST PRIZE :  By - Maria Isabel Bang Jensen, Y2 MSc Smart Electrical Networks and Systems

How the decentralisation of energy networks can support a sustainable energy transition.

The energy sector is currently going through a major paradigm shift in many countries, transitioning from centralised, fossil fuel generators to distributed, renewable energy sources. This development is causing a decentralisation of energy networks with technical, economical, and social implications. This essay explores the impact of decentralization in the energy sector, arguing that with sufficient planning and investments, more distributed generation can accelerate and support a sustainable energy transition. Although the focus of the essay is on the energy transition in Europe, the conclusions and arguments are also valid from a global perspective.

Drivers of the decentralisation of energy networks

During the last decade, the energy resources that have seen the biggest growth in terms of new generation installations in Europe are wind and solar power. The latter driver, namely the improved price picture, is illustrated for solar power (PV and concentrating solar power) and wind power (onshore and offshore) expressed as the Levelized Cost of Energy is illustrated in Figure 1. The plummeting costs have inspired both larger corporate investors, but also private consumers who want to cover their own consumption.[1]. This development has two main drivers, which are arguably related by causality, namely political ambitions to act on climate change and plummeting prices of renewable technologies. The former can be linked to the Paris Agreement of 2015 which has inspired global action on climate change, which has been specified and adopted for Europe in directives of the European Union with economic and political incentives [2]

Figure 1. The falling cost of key renewable technologies over the past decade expressed in USD/kWh for the currency rate of 2020. Graphic: IRENA [3]
Figure 1. The falling cost of key renewable technologies over the past decade is expressed in USD/kWh for the currency rate of 2020. Graphic: IRENA [3]

Wind turbines and photovoltaic panels, that harness wind and solar power respectively, are geographically distributed according to the availability of the natural resources on which they depend. Moreover, both technologies can be installed as small-scale units in urban areas, often connected to the medium and low-voltage side of the grid. This is the case of residential and private generation units that are becoming ever more common giving rise to the concept of prosumers, defined as entities that both consume and generate power. In addition, the concept of microgrids is increasingly a commercial reality, where interconnected loads combined with distributed energy resources (DER), such as wind and solar power, act as a single controllable entity that can connect or disconnect from the grid, thus operating in grid-connected or islanded mode. The motivation for establishing a microgrid is generally based on energy security, economic benefits, integration of clean energy or a combination of these. [4]

Impact on grid operation


Increased penetration of DERs that have a fluctuating power output can create technical challenges in the distribution grid that deteriorate power quality and security. These include power fluctuations, frequency instability, the voltage rises and unbalance. In addition, DERs can potentially lead to increased losses and require expensive system updates. [5]

Nevertheless, both the technical and regulatory challenges of DER penetration can be addressed. It is clear that grid operators play a key role in successfully mitigating the potentially deteriorative effects of DERs. To this end, the concept of a ‘smart grid’ has been coined, which can be defined as a “set of technology, regulation and market rules that are required to address the challenges to which the electricity network is exposed in a cost-effective way”
[6]. This requires higher levels of communication and often bi-direction information flows, sophisticated control schemes and well-functioning market mechanisms. The structure of a decentralized power system with well-functioning digital management realising the potential of ‘smart grid’ schemes is illustrated in Figure 2.

Figure 2. A visual illustration of how the decentralisation of electrical networks can be sustainably operated with the help of digital tools. Graphic: Bartz/Stockmar CC BY 4.0
Figure 2. A visual illustration of how the decentralisation of electrical networks can be sustainably operated with the help of digital tools. Graphic: Bartz/Stockmar CC BY 4.0

It follows that the decentralisation of electrical networks calls for a regulatory framework and market mechanisms that support grid operators in their mission to assure power supply and quality. In addition, sufficient investments in the grid control and communication infrastructure are prerequisites to reap the potential benefits of a decentralised energy system and encourage penetration of DER.

Furthermore, some of the potential benefits of decentralised energy networks reverse the negative effects of DERs and provide advantages for both individuals and grid operators. Firstly, local energy generation can decrease losses by shortening transmission distance. Secondly, control of loads, generators and power electronic equipment can be used for DERs to enhance voltage stability and provide frequency balancing services where individuals can contribute to the market for ancillary services. Finally, with good planning of DER localisations, decentralisation can defer grid updates and thus provide economic benefits for grid operators. [7]

The energy system of tomorrow


As the energy system is adapting to increased electrification and a larger share of renewable energy generation, the decentralisation of energy networks is a welcome development. The intermittent and distributed nature of DERs creates new challenges but also opportunities to support a sustainable energy system. Socially, decentralised networks can provide energy security and invite more individuals to play an active role in the energy sector. Economically, both consumers and grid operators can reap benefits from cheap energy and deferred grid updates. Environmentally, renewable penetration can be maximized by reducing the emissions from energy generation. Making the most of a decentralized energy system sets the path for a sustainable energy transition respecting people, finances, and the planet. Nevertheless, if the decentralisation is badly managed it might lead to vertigo, with the benefits turning into pitfalls, with deteriorating power quality, instability, and high losses, impeding the smooth transition to renewable energy generation. Ultimately, grid operators






WindEurope, “Wind energy in Europe in 2018,” February 2019. [Online]. Available:


E. P. a. o. t. Council, “,” Official Journal of the European Union, 11 December 2018. [Online]. Available:


IRENA, “Renewable Power Generation Costs in 2020,” International Renewable Energy Agency, Abu Dhab, 2021.


A. P. Y. &. G. J. Hirsch, “Microgrids: A review of technologies, key drivers, and outstanding issues,” Renewable & Sustainable Energy Reviews, pp. 402-411., 2018.


F. K. a. J. R. Agüero, “Solar PV Integration Challenges,” IEEE Power and Energy Magazine, pp. 62-71, vol. 9, no. 3 , May-June 2011.


M. Bollen, “The Smart Grid: Adapting the Power System to New Challenges,” Synthesis lectures on power electronics, pp. 20-30, 2011.


H. D. L. K. Mithulananthan N., “ Intelligent Network Integration of Distributed Renewable Generation,” Green Energy and Technology, 2017.





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