EU Energy Infrastructure Plans

The EU this week outlined energy infrastructure priorities for the next two decades. Strategically, the plans involve “corridors” for the transport of energy and include the goals of reducing dependence on Russia, increasing the security of energy supply, and meeting established climate-protection goals.

The “blueprint” presented this week focuses on infrastructure, which Energy Commissioner Günter Oettinger identified as the key to achieving “all our energy goals”. The European Commission says that investment EUR 200 billion is required.

The “blueprint” sets out the EU’s priorities in regard to the transport of oil, gas and electricity and it also sets out a broad outline for EU energy projects in the future. The main lines of action focus on improving already-existing cross-border interconnections, and ensuring that member states that are not very well integrated into the European energy markets become more fully connected and that renewable energy gets integrated into the European energy network.

Main Challenges

Electricity grids and storage

Electricity grids must be improved in order to meet increasing demand, which is due to factors such as an increase in the use of electricity in society.
 
The grids need also to be improved so as to be able, amongst other things, to facilitate the flow of energy from renewable energy sources.
 
A pan-European grid that is efficient and includes large-scale storage, which is well interconnected, will bring costs down as the efficiency savings that can be done on a pan-European level will be bigger than what is possible at a national level.
 
The grids, supported by new electricity storage and high-voltage distance technologies that can help to facilitate the increasing amount of renewable energy sources, will be pivotal in achieving the long term goal set for 2050 by the EU.

Natural gas and grids storage

Since there are some countries (especially in Eastern Europe) that are exclusively dependent on gas as their energy source, the communication makes clear the importance of having multiple gas sources and an integrated gas network. This should be achieved by 2020.
 
The communication states that Europe is today fragmented into many monopolistic markets which bring with them many impediments to free competition and that this has to change in order to free up Europe’s gas market.

Cooling networks and district heating

In order to increase efficiency and limit any loss of energy, the modernising and development of district cooling and heating networks should be supported. This will be elaborated upon in the Energy Efficiency Plan and the ‘Smart Cities’ innovation partnership that will be launched in 2011.

CO2 capture, transport and storage (CCS)

The Communication makes clear that, since CCS technologies will be important for the reduction of CO2 emissions in the future, the fact that only some countries in the EU have CCS facilities makes the construction of pipelines that will be able to transport emissions between countries a possible necessity for the future.

Oil and olefin transport and refining infrastructure

The communication elucidates that oil will make up a substantial part of the EU’s energy needs in the future. In order to secure the security of supplies it is important that the process of having crude oil turned into a commodity that can be consumed by consumers is highly flexible and integrated.

The potential of the market and existing obstacles

In the third internal energy package (which was adopted in 2009 and created the foundation for European network investment and planning) an obligation is included that stipulates that Member States should not evaluate their policies solely on the basis of what is good for their respective countries, but rather for the EU as a whole. However, the Communication points out that much of the policies enacted by regulators are still geared towards in favour of national interests.
 
The Emission Trading System (ETS) will play a pivotal role to create a coherent European carbon market which will spur on the utilisation of low carbon supply sources. 

Market and Member states funding

The Communication makes clear that around one trillion Euros will be needed in investments between today and 2020. In regard to upgrading of Europe’s electricity and gas grids it is estimated that some 200 billion Euros will be needed but market actors are expected to be willing to only fund half of this needed money. This means that Member States will have to pay for the rest since some of the projects being embarked upon will not be commercially viable and thus incapable of getting the needed funding from private institutions.

What is the Commission proposing?

The Commission list many different concrete proposals in the Communication in regard to different policy areas, such as:

A new Method for Strategic planning

The Commission will propose a new method that has an EU vision and will be able to deliver the energy infrastructure that the EU needs in 2020. This method will include:
• A focus on identifying the energy infrastructure that will gear Europe to smart super grids interconnecting networks that will operate at EU level
• A focus on a number of priorities that will have to be implemented by 2020
• Come up with a methodology that will allow the identification of concrete projects that will be based on the priorities stated above
• Creating new tools that will support the implementation of EU projects

EU Infrastructure priorities for 2020 and after

In order to ensure that generation capacities of renewable energy sources are integrated in both Northern and Southern Europe and that there is further market integration, the Commission has identified four different areas that will allow for this and thus make Europe’s electricity grids fit for 2020.
• Connect and integrate energy production capacities in the Northern Seas  in combination with consumption areas in Central and Northern Europe (and in addition to this also having hydro storage facilities in the Nordic counties and Alpine region)
• Connect the Iberian Peninsula with France and Central Europe in order to utilise North African energy sources 
• Improving the power flow directions of the regional networks in East-West and North-South so as to strengthen the integration of renewables and linkages between storage capacities and energy island integration 
• Finalising the Baltic Energy market Interconnection Plan (i.e.  Baltic states’ integration into the European market)
 
Every European region needs to have access to at least two energy sources (today some regions just have access to one). In addition to freeing up the selling and buying of gas within Europe the Commission proposes to:
• Bring in gas from Central Asia, the Caspian Basin and the Middle East. 
• Connecting the Adriatic, Black, Baltic and Aegean Seas through the North-South Corridor in South-East and Central Eastern Europe and the implementation of the Baltic Energy market Interconnection Plan. 
• Utilising to the highest possible extent alternative external supplies (for example from Africa) and improving infrastructure that is already in place (such as storage facilities). 
 
To ensure that the flow of oil to landlocked countries in Central-Eastern Europe remains reliable it is suggested that this can be materialised through reinforcing the interoperability of the Central-Eastern European Pipeline network. 

In regard to the rolling out of smart grid technologies the Commission will: 
• Assess the need to create more laws so as to keep the implementation of smart grids on track and to ensure that smart grids bring the benefits that they ought to.  The outcome of this assessment and possible future laws will be made public sometime during 2011. 
• Set up a smart girds information and transparency platform so as to allow for dissemination of the most current experiences in regard to the deployment of smart grids within Europe and to make possible the creation of a regulatory framework.

Longer-term networks preparation

The Commission proposes to immediately start working on a development plan that would allow for the commissioning of the first electricity highways (which will be able to, amongst other things, facilitate ever expanding wind surplus generation and renewable generation in certain regions, coping with the increasingly decentralised and flexible energy supply and demand) by 2020.

Turning priorities into projects

The Commission states that projects (relating to the priorities mentioned above) will have to be decided upon in accordance with agreed and transparent criteria. If a project is deemed worthy to carry out it will be rewarded a ‘Project of European Interest’ label.

Regional clusters

The Commission considers that regional platforms (such as the Baltic Energy market Interconnection Plan) would be important to establish the planning, monitoring, funding plans and implementation of the projects that have been chosen.
 
The Commission is also planning to set up a High Level Group in order to commence the new regional planning method. It would be base on cooperation between the countries in Central Eastern Europe and would have as its aim to create an action plan during 2011 for East-West and North-South interlinkages in oil, gas and electricity.

Speedier and less opaque permit granting procedures

Due to the fact that the European Council asked the Commission to propose initiatives that would streamline approval procedures in regard to permits, the Commission makes clear that it will propose measures that will improve, streamline and better coordinate the current permitting procedure.

Improved methods and information for policy makers and citizens

The Commission will develop a dedicated policy and transport support tool that will help it to help stakeholders and regions in identifying and carry out projects. The tool will accompany project development and infrastructure planning activities at both regional and EU levels.

Building a framework for funding

• Due to the fact that there is likely to be a huge investment gap in regard to the different investments that are needed, the Commission will aim to improve the allocation cost rules and optimising the EU’s public and private funding leverage. As part of this, the Commission intends to propose new tools that will combine already existing financial mechanisms.  

Next Steps

In addition to the many future proposals already mentioned in this article, the Commission aims to present an extensive roadmap towards 2050 next year. This future roadmap will focus on different energy mix scenarios, present ways to fulfill Europe’s long term decarbonisation aim and the subsequent effects this will have for future energy policy.