Cross-border interconnectors and the European Commission long-term development plan
The installation of cross-border interconnectors between European Union Member States and from the EU to its neighbours has been highlighted by the European Commission as an integral component in its long-term vision for growth of the European electricity and to guarantee energy security. With proposed interconnectors being announced regularly in publications across the EU, this view may be in line with the outlook of private investors and national authorities.
The long term energy infrastructure development plan published by the European Commission details a wide variety of Projects of Common Interest (PCI) focusing particularly on the transmission and distribution of gas and power supplies throughout the region.
The investment basis
The Commission details an investment requirement of approximately €200bn required up to 2020 to upgrade and expand the energy network. Linked savings on this expenditure through competition and technology advances, according to the Commission, can have a net result in significant overall savings to consumer energy bills. Crucial to securing these savings is the development of new technologies such as Carbon Capture and Storage and marine energy solutions into commercially viable large scale generation alternatives.
The headline expenditure figure is likely to include the development of 40% more transmission capacity (compared to 2010 levels) within the European Union and increases of up to 146% within the next decade after that.
Development plans explained
The Commission highlights major influencing factors on the future demands on the European energy market. These relate to increasing diversity in demand requirements resulting from a wider spread to densely populated areas and increased power usage through the development of new European centres of business. The solutions for dealing with this new pressure on the current system involve flexible supply models and innovative transport methods for capacity around the region. As well as cross-border interconnectors, the Commission indicates that the introduction of smart grids (including smart appliances, and smart metering) will be vital to ensure that consumers support how the transmission system develops.
The longer term vision focuses on the challenge of cross-border co-operation both within the Member States and also with its neighbours in the East Mediterranean, Middle-East and North Africa. This will focus on the installation of electricity and gas interconnectors with the view to developing energy super highways of sufficient potential to link Europe to sub-Saharan Africa power generation infrastructure. These super highways will be engineered to avoid bottle-necks and ensure reliable supplies.
The Commission's bottom-line
The Commission believes the European Union and its neighbours, working together, have the ability to secure a single energy market. It hypothesises that by removing barriers to transmission and developing an increasingly renewable dependent network, global carbon reduction goals can be achieved whilst still maintaining high standards of supply security. These goals are thought to be achievable through step-by-step measures, within the existing framework of the third energy package and the TEN-E guidelines, to result in a stable and attractive long-term environment for continued infrastructure development. It remains to be seen whether the Commission's vision is achievable and we expect there to be significant regulatory, technology, environment, corporate and project finance considerations necessary to aid in the development of plans, both centrally and for investors.
If any of these issues raise questions, please contact those listed below.
To view the Commission's report, follow the link here.
