There are many examples of poorly designed regulatory frameworks or legislation that fail to support the transition from a fossil-based energy system to a renewable and fossil-free society. At the same time, many laws are well-intentioned and appropriate. However, the real issue is often the lack of follow-up and enforcement — ensuring that the market actually fulfills the intention that justified the law in the first place. The law mandating the introduction of digital electricity meters and the accompanying smart grid systems is a prime example of how things can go wrong.

One of the most important tools for effective integration of renewable energy (RE) into the power supply is a well-functioning smart grid system combined with the necessary balancing and control infrastructure (see link).

During the Thorning government (2011–2014), then Minister of Climate and Energy Martin Lidegaard played a central role in shaping the regulatory frameworks and legislation that still govern much of the Danish energy sector.

In 2013, Lidegaard made a public statement on the Danish Energy Agency’s website following the passage of new legislation requiring the rollout of digital electricity meters to Danish consumers. He highlighted the expected societal benefits of these meters. Quote: "The potential is enormous. A smart energy system starts with smart electricity meters. When consumers can track their electricity use hour by hour, they can better influence their energy bills," said Martin Lidegaard, Minister of Climate, Energy and Buildings.

However, in practice, the significant investments made in online digital meters have not led to the development of the intelligent control systems Lidegaard envisioned. To use the meter data in the systems he described, the solutions would have had to be developed by actors in the energy sector — namely electricity suppliers and wholesalers. But this development has not occurred. Aside from a few successful pilot projects, there has been no meaningful progress. The only significant development has been the creation of increasingly sophisticated business models by electricity wholesalers and balance-responsible parties — models that in no way fulfill the minister’s original intentions.

Energinet, the national transmission system operator, has developed many of the overarching software systems and data hubs needed to create optimal smart grid solutions. Yet, the electricity sector has failed to deliver. For any actor to build an effective smart grid, it must interact with a balancing system that continuously matches consumption and production for a group of producers and consumers — and this must be done in real time, under the supervision of Energinet.

Martin Lidegaard was also the architect of the electricity market liberalization, which today functions more or less as a playground for unscrupulous and profit-driven actors — particularly balance-responsible parties who are free to trade and develop business concepts as they see fit. The systems they have developed focus on creating bottlenecks and distorting the so-called balancing market, where reserve capacity is bought and sold, in ways that are highly destructive to the affordable and effective integration of renewable energy. Many experts familiar with the complexities of the energy system have long called for smart grid systems that are fully integrated with balancing mechanisms and can match production and consumption 'on the fly'. These intelligent energy systems — which could have enabled the large-scale integration of RE — were the core of Lidegaard’s original vision and the foundation of the electricity market liberalization. The underlying assumptions were sound, but the follow-up and enforcement were weak or entirely lacking.

The balance-responsible parties had every opportunity to develop optimal smart grid and balancing systems — or intelligent energy systems in a broader sense. But they chose not to. On the contrary, they have effectively stifled all attempts to develop systems that could deliver cheap and efficient electricity and heating to consumers.

The political system and regulatory authorities — namely the Danish Energy Agency and the Utility Regulator — have failed gravely. Why were commercial actors allowed to behave so irresponsibly to the detriment of the green transition?

In practice, the situation is chaotic, and my own small-scale 'market investigation' illustrates the dysfunction. Last year, I contacted my electricity supplier, Norlys — eleven years after the enthusiastic promises from the Ministry of Energy. I asked whether I could access real-time data from my digital meter to determine whether my household was consuming or feeding electricity to the grid via rooftop solar panels. After much back and forth, customer service eventually provided an Excel file — with time-series data that was more than a month old. Completely useless for building a real-time, automated system to control my household’s electricity consumption in coordination with solar production based on custom parameters.

A month ago, I contacted Energinet again to ask whether the technical and administrative tools I needed were available — and they were. I then reached out to several balance-responsible parties and electricity companies. The sales department at NRGI in Aarhus was initially enthusiastic, but like the others, they ultimately gave up. The balancing systems and — especially — the business models used by the market actors simply could not handle this relatively simple task.

The project and request were presented to NRGI and other energy companies (see link).

The estimated cost of refurbishing the gas engine in Haderup was DKK 2 million — or just DKK 5,000 per household for the roughly 400 homes involved. This clearly showed that the system as a whole could integrate large amounts of RE in an affordable and efficient way.

But the fundamental problem is that no actor — not NRGI nor others — can or will implement such a system. For it to work, every household’s meter must be continuously read to determine if solar production is active or if power is being drawn from the grid. Wind turbine production must also be measured continuously. All of this data must be integrated into a central system that can manage individual household consumption and control the operation of the heat pump and gas engine at the Haderup district heating plant.

These capabilities are already available under Energinet’s framework, and district heating plants, balance-responsible parties, and energy suppliers could easily build such systems. But as my inquiries show, even twelve years after Lidegaard’s digital promises, these systems have not reached the market. The simple and rational systems never materialized — not because they couldn’t, but because market actors chose not to develop them. Their near-monopolistic structures allow them to define their own profits, which are extraordinarily high and entirely disproportionate given the remarkably poor integration of renewable electricity.

Once again, it is the political system, regulatory authorities, and the lack of self-regulation in the energy sector that have failed.

Despite the bold vision laid out by Martin Lidegaard back in 2013, very little has happened. A vast amount of renewable electricity is being wasted — or never produced — due to avoidable conflicts that could have been resolved through the deployment of smart grid systems.

Years ago, the Totalflex smart grid system was developed (see link) in cooperation with a balance-responsible firm under Energinet’s oversight. The system was capable of solving tasks like the one proposed in Herrup. After a very successful test phase, however, Totalflex was shelved. It has had no practical role in the operational energy system — largely due to the irresponsibility of balance-responsible actors and their business practices, which have harmed the overall functionality of the electricity system.

June 2025, Niels Hansen