Energy union aims for elusive 10% power grid interlinkage

Underground power cable

Underground cable routing Spanish electricity to the French network in the Pyrenees.. []

European Commission proposals for an Energy Union will include a target for 10% interconnection of electricity grids across borders. But the objective, initially decided in 2002, has remained elusive because of entrenched national interests.

The 10% interconnection target is a central part of the Commission’s Energy Union package of proposals, due to be presented later today (25 February).

Interconnectivity – of both gas and electricity grids – is seen as a key for EU member states to wean off their dependence on Russian gas and manage higher shares of variable energy sources.

The EU executive estimates that about €105 billion are required to upgrade Europe’s ageing electricity infrastructure, with €35 billion needed for cross-border interconnections alone.

“An interconnected grid will help deliver the ultimate goal of the Energy Union, i.e. to ensure affordable, secure and sustainable energy,” the Commission says in its draft communication to be published later today. The policy paper is not a legally-binding document but will set the course of policy action in the area for the years to come.

“The European Union needs to bring its electricity interconnection level to 10% by 2020 if it wants to create a resilient Energy Union with a forward looking climate policy,” the paper says, adding that Europe needs to “redouble its efforts” on that front.

Infrastructure development is also seen as a prerequisite for the uptake of renewable energy.

Thomas Becker, the CEO of the European Wind Energy Association (EWEA), says EU countries are currently working with “archaic grid infrastructures, which are over 60 years old”.

“Much like the free flow of information, electricity generated in the Scottish Highlands must be granted free passage across national frontiers to power homes and businesses along the Black Sea coast in Bulgaria and Romania,” Becker wrote in an opinion piece for EURACTIV.

A decade of failures

The 10% interconnection target can hardly be seen as new, having already been decided by EU leaders over a decade ago, in 2002.

However, the target has somehow remained elusive. Twelve EU countries, mainly located on the EU’s periphery, remain below the 10% interconnection target, according to the Commission. These are:

  • Ireland (9%)
  • Italy, Romania, Portugal (7%)
  • Estonia, Lithuania and Latvia (4%)
  • The United Kingdom (6%)
  • Spain (3%)
  • Poland (2%)
  • Cyprus and Malta (0%)

Special priority will be given to projects that will “significantly increase the current interconnection capacity where it is well below the established 10% objective,” the Commission paper says, citing Spain and Cyprus as countries where “efforts need to be stepped up”.

An existing list of Projects of Common Interest will be updated in the autumn, the Commission indicates. But regional cooperation “must be further enhanced” for those to be completed on time by 2020, it adds, singling out the Baltic region and the Iberian Peninsula as insufficiently interconnected. The North Sea and Central and South Eastern Europe were also listed as the two other regions of focus for which special regional groups have already been set up.

If everything goes according to plan, some 75% of PCIs are expected to be completed by 2020.

10% interconnection insufficient in the long run

Spain and Portugal would not disagree. Both countries were pushing for a higher interconnection target of 15% to be made legally-binding on all member states ahead of an EU summit in October last year, which decided on the bloc’s climate and energy policy for 2030.

The two Iberian countries argued they were being prevented from selling their surplus renewable energy to France, which they accused of protecting its nuclear industry and holding up the construction of new power lines across the Pyrenees. 

But instead of a 15% figure, EU leaders renewed their commitment to the 10% interconnection target agreed in 2002.

>> Read: EU leaders adopt ‘flexible’ energy and climate targets for 2030

This is an objective the Commission itself admits is insufficient in the long run.

Europe’s energy vision for 2030, based on a 27% share of renewable energy, “requires more than 10% interconnection capacity,” the Commission remarks in its communication, saying “all efforts by the EU and member states must be guided by the need to reach at least 15% by 2030”.

And even where cross-border interconnector capacity does exist, it is frequently underused, according to the Agency for the Cooperation of Energy Regulators (ACER) and Council of European Energy Regulators (CEER).

Due to the significant variations in costs, needs and potential gains across the EU, a single 15% target could “result in perverse incentives and pressures for inefficient solutions”, the CEER said in a paper shared with EU policymakers in October last year.

>> Read: Electricity linkage target dropped ahead of EU summit

There are also doubts related to financing. E3G, an environmental think tank based in London, said, “existing financial resources as well as the design of financial frameworks, such as the Connecting Europe Facility and the new European Fund for Strategic Investments, might not be sufficient or suitable to attract the necessary capital to accelerate the development of grid projects.”

Pyrenees link

The Franco-Spanish standoff over the Pyrenees power linkage illustrates the difficulties in reaching higher amounts of interconnection.

Paris appeared to bow down to European pressure when it agreed last December to boost interconnection to 10% of Spain’s power generation capacity by 2020. A brand new underground cable connecting Spanish renewable production to the French electricity grid was inaugurated in February, doubling interconnection capacity to 2,800-megawatt (MW), equivalent to the output of three nuclear plants.

But in France, where electricity interconnection is good – especially in the north – the EU’s 10% target does not appear like a priority – at least until recently.

Michel Derdevet, the Secretary General of the French network distribution operation ERDF, prepared a report on the issue for French president Hollande. The report, published on 23 February, harshly criticised the lack of coordination on energy policies, saying “national choices in the EU are like a kaleidoscope”.

France is cautious about renewable energy, whose rapid growth has put downward pressure on the wholesale price of electricity. New interconnections with Spain might undermine much needed investments in the electricity grid, Paris believes. But France has won another part of the Energy Union deal, with the launch of capacity markets, a scheme that will reward existing electricity production capacities.

>> Read : Energy Union targets renewables subsidies, boost idle coal plants

When he was Prime Minister of Poland, Donald Tusk has spearheaded the idea of an EU energy Union.

The idea has since been taken up by the European Commission which nominated a special commissioner and vice-president, Maroš Šef?ovi?, to steer the project.

Details of the proposal started to emerge on 4 February, when the College of Commissioners discussed the plan for the first time.

The final package, due to be published on 25 February, will involve an action plan, and include an annex of “concrete proposals”, including legislation, decisions and analysis.

The final Energy Union will cut across a number of policy sectors including energy, transport, research and innovation, foreign policy, regional and neighbourhood policy, trade and agriculture, Šef?ovi? said.

The Commission believes there is strong political momentum behind the plan because the EU is dependent on outside imports for more than 53% of the energy it consumes.

  • 25 Feb. 2015: European Commission expected to table plans for an 'Energy Union'
  • 5 March 2015: Energy Council to discuss Commission proposals for energy union and 10% electricity interconnection target
  • Autumn 2015: Commission to proposed updated list of Projects of Common Interest (PCI)
  • By 2020: About 75% of PCIs are expected to be completed
  • 2020: Target date to meet the 10% electricity interconnection objective

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