EU throws €2.3bn at gas, power connections


The European Commission yesterday (4 March) cleared €2.3 billion from the EU's five-billion euro economic stimulus package to help finance 43 pipeline and electricity projects.

The decision granted €0.91 billion for 12 electricity interconnection projects and €1.390 billion for 31 gas pipeline projects.

The funding decision followed the approval last December of a series of offshore wind and carbon capture and storage projects that will receive €1.565 billion from the EU's €5bn stimulus package (EURACTIV 10/12/09).

Energy Commissioner Günther Oettinger described the funding as "a milestone in the history of EU energy policy".

"Never before has the Commission agreed such an important amount for energy projects. We have selected key projects which will help create a more integrated energy network in Europe ensuring flexible energy flows across member states' borders," he said.

Among the projects are key interconnectors linking up the currently isolated Baltic States and neighbouring Finland, Sweden and Poland. Others include an array of reserve flow projects to bring flexibility to responses in crisis situations.

The total sum dispatched is lower than the 2.365 billion originally allocated to gas and electricity infrastructure in the regulation on the economic recovery package.

A Commission official explained that this was due to the fact that there was no proposal for a Slovakia-Poland interconnection, adding that some projects did not request the full amount allocated.

The official said that the Commission is currently examining "the full options" of what to do with the unspent money and would detail these in its implementation report in April. She said that there is a possibility to allocate it to renewables or energy-efficiency projects in line with the European Parliament's demands (EURACTIV 17/04/09).

Nabucco funding questioned

The energy commissioner was quizzed about the EU executive's decision to allocate €200 million to the construction of the planned Nabucco pipeline, which is scheduled to bring gas from the Caspian region to European markets.

Critics say the pipeline, which has yet to secure gas supplies, does not fill the criteria of a mature project, which is the prerequisite for funding under the stimulus package. The plan requires that all funds are committed by the year's end in order for the projects to contribute to economic recovery.

Oettinger dismissed the claims, stressing the importance of Nabucco in diversifying the sources of gas away from dependence on Russia.

"Nabucco is not just a possible new pipeline. It's a European project," he said, adding that the fact that talks about funding had started makes the project more credible.

A Commission official said the final decision was expected this autumn, when the EU executive could assess whether it would slightly extend the deadline or terminate the funding.

"The Commission's funding is very welcome," said Jeremy Ellis, head of business development at RWE Supply & Trading, which is involved in the projects. But he stressed that Nabucco has a sound base of investors even if the EU recovery funds, which need to be committed by the end of the year, could not accommodate Nabucco's timetable.

"That's not going to result in Nabucco not happening," he said.

"The timetable for Nabucco is now in the suppliers' hands, not ours," Ellis said. He added that the consortium was expecting to have the supply of gas cleared over the coming months so that the final investment decision could be taken by the end of this year.

The European Wind Energy Association (EWEA) said the projects were a good start for developing the interconnectivity of its electricity grids. It cited the France-Spain interconnection as an example of a vital connection.

"Despite the importance of this connection, which will allow Spain to exchange more electricity with other European countries and ensure interconnectivity between continental Europe and the Iberian peninsula, the project has suffered continual setbacks since its conception in the 1980s," said Paul Wilczek, EWEA's regulatory affairs advisor. "This funding is a great boost for the integration of wind power in Europe and will improve the operation of Europe's electricity markets and benefit consumers," he added. 

In March 2009, EU leaders approved a plan to spend €3.98 billion in support of clean coal projects and offshore wind farms as part of a broader European recovery plan (EURACTIV 20/03/09).

The Commission approved the first batch of projects in December 2009, allocating over €1.5 billion to offshore wind and carbon capture and storage (EURACTIV 10/12/09). 

  • April: Commission report on implementation to detail how unspent money will be used.
  • By end of 2010: All recovery funds to be committed.
  • Nabucco Gas Pipeline International GmbH:Homepage

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