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EU must adapt the energy infrastructure to the needs of the future energy system

Today the European Commission (EC) has presented the Third Report on the State of the Energy Union that shows that Europe’s transition to a low-carbon society is becoming the new reality on EU’s ground. However, it also confirms that energy transition is not possible without adapting the infrastructure to the needs of the future energy system.

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The Third State of the Energy Union Report published tracks the progress made over the past year after the publication of the Second State of the Energy Union in February 2017 and looks forward to the year ahead.

“Europe’s energy system is moving fast from an Energy System of last century to a low-carbon, more digital and consumer centric system. The energy transition is well underway, with record levels of renewable energy and rapidly falling costs. But Europe’s energy infrastructure must develop in the same direction and with the same speed to fully support this energy transition”, explained Miguel Arias Cañete, Commissioner for Climate Action and Energy.

As the report explains the EU must accelerate their cooperative efforts and deliver on their commitment to complete the Energy Union by the end of the current Commission mandate. “By 2019, the Energy Union must no longer be a policy. It must be a reality.”

“The Energy Union will only succeed if we all pull in the same direction. This will require increased ownership by all parts of society. Therefore, I see the next year as the year of engagement” commented on the report Maroš Šefčovič, the Vice-President responsible for the Energy Union.

That’s why EC are proposing to focus the new list of projects on key electricity interconnections and smart grids. “Today’s steps to boost clean energy infrastructure are another important move towards making our energy system more sustainable, more competitive and more secure – providing genuine European added value”, added Arias Cañete.

To address this, the Commission today adopted a Communication on the 2030 electricity interconnection target of 15%. It also adopted the third list of Projects of Common Interest (PCI).

Projects of common interest (PCIs) are key infrastructure projects, especially cross-border projects, that link the energy systems of EU countries. They are intended to help the EU achieve its energy policy and climate objectives: affordable, secure and sustainable energy for all citizens, and the long-term decarbonisation of the economy in accordance with the Paris Agreement. Every two years, the European Commission draws up a new list of PCIs.

 

Highlights of the report

 

Legislative Front

The Commission welcomes the strong commitment of the European Parliament and the Council to adopt, as a priority, the legislative initiatives on energy and climate proposed in 2015 and 2016, in line with the Joint Declaration of the three Presidents.

The end of the negotiations of some of the main legislative initiatives will conclude at the end of the year, as CE expects. Regarding the negotiation for the Clean Energy Package, they are also advancing. The Commission calls on the co-legislators to retain a high level of ambition and coherence between the different proposals.

Renewables

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The share of renewable energy in the EU energy mix continues to rise and is on track to reach the 20% target in 2020. In 2015, renewable energy accounted for most (77 %) of the new EU generating capacity for the eighth consecutive year. The cost of renewables is falling, for instance for solar (photovoltaic) as well as onshore and off-shore wind. This is a sign of investors’ confidence in technological progress, good policy design and electricity market reforms. In the past, investments in renewables have been negatively affected when Member States applied retro-active measures. In terms of security of supply, renewables have saved an estimated €16 billion in fossil fuel imports (2015 data).

 

A socially-fair energy transition

In 2017, the Commission started to provide tailor-made support and assistance to regions in transition which have been or remain reliant on coal and carbon-intensive industries. These regions face specific economic and social challenges. Work has started with the regions of Trenčín in Slovakia and Śląsk in Poland, in close partnership with national and regional authorities. The support includes providing research on the economic strengths of these regions, technical assistance and advice on the targeted use of a number of available EU funds and programmes. The Commission will continue to work closely with these regions and will extend the pilot to other interested Member States. This initiative will also aim to tap into the experiences of European regions that have been successful in making the transition. To that effect, an EU-wide platform of stakeholders will be set up on 11th of December 2017.

Although islands are often well placed to attract clean energy investments, they face specific challenges due to their geography, small economy and heavy reliance on imported fossil fuels. The Commission, together with 14 Member States, signed a political declaration in May 2017, in Malta, to accelerate the clean energy transition on islands. The first forum under the initiative took place in Crete, in September. The initiative aims to provide Europe’s 2400 inhabited islands with a long-term framework, helping them reduce their dependency on energy imports by making better use of their own renewable energy sources.

An energy transition that requires future-proof infrastructure

There will be no energy transition if the infrastructure is not adapted to the needs of the future energy system. Energy, transport and telecommunication infrastructure are more and more interlinked. This trans-sectorial integration will continue, with local networks becoming ever more important in the daily lives of European citizens, who will increasingly switch to electro-mobility, decentralised energy production and demand response. To bring about the next generation of smart infrastructure and optimise the use of existing infrastructure, the Commission encourages project promoters applying for financial support to seek to create synergies between energy, transport and telecommunication infrastructure. The Commission will evaluate how to continue to promote such innovative infrastructure projects in the period post 2020.

The increasing digitalisation of infrastructure already enables smart management of the grid and demand response. The Clean Energy for All Europeans package laid out a coherent framework for demand response that enables smart charging of electric vehicles, gives consumers incentives to charge at times of low electricity prices and empowers distribution system operators to actively manage the grid.

The Commission has started work with stakeholders under the Smart Grids Task Force on a network code on energy-specific cyber security until the end of 2018. A study has been launched on the risks and prevention of cyber incidents in the energy sector.

At the same time, work to improve the internal energy market integration and security of supply continues. Regional cooperation, which was initially aimed at improving physical infrastructure and its efficient use, is expanding its scope, and covers aspects such as renewables development and energy efficiency. It could further evolve towards joint renewables projects between Member States and respective project promoters or even towards joint longer-term renewables deployment strategies on regional scale.

Nevertheless, despite considerable achievements, it should be stressed that important bottlenecks remain. Four Member States (Cyprus, Poland, Spain and the UK) are expected to remain below the 10% electricity interconnection target in 202036. To address this, the Commission today adopted a Communication on the 2030 electricity interconnection target. It also adopted the 3rd list of Projects of Common Interest. The list includes the key projects needed to reach the objectives of an interconnected internal energy market, in particular those agreed by the four High Level Groups, such as the interconnectors to link the Iberian Peninsula to France and the rest of the EU ensuring the development of renewables, projects in view of the Baltic synchronisation with the European networks, gas projects bringing security of supply and competition to Central/South-Eastern Europe as well as the first projects in view of an integrated North Seas grid.

 

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