Energy Union: getting interconnected

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Companies and campaigners have told EU member states that an interconnected North Sea energy grid should be one of the ‘building blocks’ of the EU’s Energy Union. In a letter to ten EU member states’ energy ministers, the group said the grid would boost interconnection and renewables capacity, help fight climate change and bolster the EU’s energy security, which are the central goals of the Energy Union.

The Energy Union is the EU’s response to a dependence on unstable gas supplies from Russia. The majority of Russian gas imports to Europe, currently standing at around 30%of the EU’s annual usage, is piped through Ukraine and, therefore, when Russia decides to stop that flow – as in 2009 – it causes major shortages in EU supply.

Strong winds blowing across the North Sea have the potential to generate around 10% of Europe’s electricity needs by 2020. MEPs have backed the project, which aims to connect Ireland, Scotland, the UK, France, Belgium, Netherlands, Germany, Denmark, Sweden and Norway. Scottish Conservative MEP Ian Duncan and Dutch Green MEP Bas Eickhout hosted an event in March promoting the plan. Duncan said the 2016 Dutch Presidency was the perfect opportunity to “stop talking and start delivering”. It was vital that the ten ministers backed the grid, he added.

“If we are to make progress toward a common electricity market, with reduced costs and lower bills for consumers and industry then we have to act now,” said the Scottish deputy. “We have an opportunity to connect up our domestic grids, which in the short term will provide jobs in construction and in the long term in maintaining the cables. Such opportunities would inject a much needed liftto many ports struggling with the economic downturn.”

Despite support from parliamentarians in Europe, offshore wind companies are more concerned there is not enough political support from individual member states to get results and deliver investment. The group – including businesses like Siemens, DNV-GL, Alstom, RES and Scottish and Southern Energy – stress that collaboration is needed to create an investment platform to attract vital private sector funding. The group wrote to the ten energy ministers in the North Sea region outlining concerns that references to offshore grid collaboration were left out of the final text of the European Commission’s Energy Union strategy framework.

The letter highlights grid collaboration as “key” to achieving the Commission’s vision for an “integrated and interconnected European Energy Union”. The letter states: “Coordination on planning and building a regional offshore grid infrastructure, market access and reserve sharing in the North Sea region could lead to cost savings of €5bn to €13bn per year by 2030 through a better integrated and more competitive regional market?” It continues: “However, in order for this work to achieve tangible results, including delivering the investment at the lowest cost possible, stronger political support is needed from member states.”

The group has asked for three key discussions to take place, including looking at an endorsement of the North Sea offshore grid as a key focus for “enhanced regional cooperation” as part of the European Energy Council. They have also called for a proposal to agree on a legal framework during the 2016 Dutch presidency that will define a shared electricity strategy. Furthermore, the industry group also wants the possibility of establishing a multi-country investment platform to increase future visibility of a project pipeline that will in turn “attract private investors and enable a lower cost of capital”.

Maroš Šefcovic, Commission Vice-President in charge of Energy Union, has also signalled his support for the network, saying that he believes the project is one of the “most impressive” he has seen “in a long time”.

“I would really see it as an example for the future and I would say the pattern is one we have to study very closely and maybe use more widely [throughout the EU],” he added.

Furthermore Maria Donnelly, the European Commission’s director of Energy, has echoed Ian Duncan’s call by saying she also wants the grid prioritised when the Netherlands holds the rotating Presidency of the EU in 2016.

However, advocates are concerned that the North Sea grid initiative was left out of informal Energy Council talks in Luxembourg last month and that while arrangements such as the Baltic Energy Market Interconnection Plan were specifically cited in the Commission’s Energy Union communication, the North Seas Countries Offshore Grid Initiative was not.

By citing the advantages, European officials, MEPs and industry leaders united to tell the Commission that there is cross-party support and a common vision for a connected North Sea, and that for too long it has been overlooked and hasn’t got the political priority it deserves. For businesses and consumers bills will fall because electricity will be exported and not wasted. Meeting peak demand will become easier with large exporters like Norway involved, our CO2 emissions will decrease as offshore wind, tidal and wave power get a boost from interconnectivity and, a North Sea Grid could be an alternative to importing more and more gas from the ever uncertain Russian market.