Energy Strategy

New technologies for storing electricity and increasing energy efficiency, coupled with a huge investment in intelligent infrastructure to enable intermittent renewable sources of electricity to be fed seamlessly into the grid, are at the heart of the Commission’s ten-year strategy to build an integrated European energy market, announced yesterday (10 November).

Energy Commissioner Günther Oettinger called for a ‘Europeanising’ of energy policy to establish a competitive, sustainable and secure energy market in the EU. Presenting the new strategy, Oettinger set out the energy priorities for the next decade, including the need for €1 trillion of investment in energy infrastructure and a proposal for a €1 billion initiative to support frontier research in low-carbon energy technologies.

“To have an efficient, competitive and low-carbon economy we have to Europeanise our energy policy and focus on a few but pressing priorities,” Oettinger said, as he also acknowledged that some member states had shown less support than others towards the idea of creating a single energy market.

The overall aim of the strategy is to achieve the seemingly irreconcilable goals of reducing greenhouse gas emissions by 20 per cent, increase the share of renewable energy to 20 per cent and make 20 per cent improvements in energy efficiency, while at the same time persuading member states to support the creation of a single, integrated, sustainable and most importantly, self-sufficient, energy market.

The announcement of the ten year plan coincided with the launch of the first call for proposals in a €9 billion programme for eight carbon capture and storage (CCS) demonstrators and 34 renewable energy projects, under the NER300 climate change initiative. €4.5 million of this programme is coming from Europe’s Emissions Trading Scheme, and the remainder from industry, with the objective of showing that Europe can continue to fire its power stations with hydrocarbon-based feedstocks, while reducing CO2 emissions through CCS, and in parallel develop new renewable energy technologies to the point where they become commercial.

In addition, the Commission said it will promote the development of strategic energy research infrastructures to reduce the time taken to get from basic research to application of new energy technologies. It will also fund research into other renewable sources such as marine renewable energy and renewable heating and cooling.

The Commission will be launching four new large-scale projects, including a major European initiative on smart grids to link the whole electricity grid system, from the off-shore wind farms in the North Sea, solar plants in the South and existing hydro-electric dams, to individual households, making power networks more intelligent, efficient and reliable.

Allied to this, it will fund the development of electricity storage projects, including hydro capacity, compressed air, batteries and hydrogen storage, to create power reservoirs that will underpin the intake of electricity from small-scale and decentralised, and large-scale, centralised renewable sources, onto the grid.

The strategy also foresees the implementation of large-scale biofuel production under the €9 billion European Industrial Bioenergy Initiative, and a ‘Smart Cities’ innovation partnership to be launched early 2011 will bring together the best from the areas of renewable energies, energy efficiency, smart electricity grids and clean urban transport.

While the technology has a critical role to play, much of the work in building a single energy market is political. The Commission also set the agenda for a discussion by heads of states and government at the first ever EU Summit on Energy on 4 February 2011. The top five priorities and related actions that will be up for discussion, and for which the EU executive plans to come up with concrete legislative initiatives and proposals during the next 18 months, are:

• Energy savings, with a focus on initiatives in the transport and buildings sectors;
• Establishing a pan-European integrated energy market with the necessary infrastructure;
• Boosting Europe’s leadership in energy technology and innovation;
• For EU member states to speak with one voice in external energy policy;
• Encouraging active consumers, for which the Commission plans to put forward new measure on price comparison, switching suppliers and transparent billing.

Commissioner Oettinger said the strategy is an invitation to member states, the European Parliament, partners in research, energy and industry, as well as consumers, to tackle the energy challenge, which he said is, “One of the greatest tests for us all.”

Criticisms of the current situation were numerous in the Commission communication. Electricity and gas markets are fragmented along national lines, with numerous barriers to open and fair competition, such as incumbent companies having a de facto monopoly position, or regulated energy prices reducing competition in many member states.

Europe still lacks the grid infrastructure that will enable renewables to develop and compete on an equal footing with traditional sources. “A clear policy and common standards on smart metering and smart grids are needed well before 2020 to ensure interoperability across the network,” the Commission says.

The investment needed to replace outdated capacity, upgrade infrastructures and adapt to the changes in demand for low-carbon energy will be €1 trillion, most of which will have to come from energy companies, system operators and consumers, according to the Commission. The role for public policy is to create, “A stable and transparent framework for investment decisions,” it said.

Public procurement will also play a role with the Commission saying, “Public authorities need to lead by example. Energy criteria (regarding efficiency, renewables and smart networking) should be used in all public procurement of works, services or products.” Commissioner Oettinger said he would like to see clear-cut rules for public procurement, where energy efficiency becomes a binding criterion and it is not simply the cheapest tender that wins a contract.