Public opposition still largest obstacle in European grid development – ENTSO-E

Convincing the public to accept power grid projects remains the main obstacle in building European electricity grid infrastructure, according to the secretary-general of the European Network of Transmission System Operators for Electricity (ENTSO-E) Konstantin Staschus.

Consequently, grid projects could still be delayed despite a significant improvement in the regulatory framework, Staschus said.

But Staschus disagreed with outgoing energy commissioner Guenther Oettinger who said recently that monopolies in the French power and natural gas wholesale markets are hindering progress on planned Spanish-French electricity interconnectors.

“I see no evidence whatsoever that the market power of one generator or supplier is having any influence on our transmission plans,” Staschus said.

One soon-to-be-complete project, which will see existing grid capacity between France and Spain double to 2.8GW ( see EDEM 8 October 2014 ), is expected to come on line in the second quarter of next year.

Acceptance

The statement concerning public acceptance puts into context the challenges which new European Commissioner for Climate and Energy Miguel Arias Canete faces.

Canete said he wants to mobilise funds to progress on physical interconnectors in a push to finalise the internal electricity market ( see EDEM 2 October 2014 ).

Of particular concern are four European regions: the Iberian Peninsula, the UK, Italy, and the Baltic states, where grid bottlenecks exist or might develop in future.

Attracting investment in infrastructure projects was mainly a question of regulatory treatment, Staschus told ICIS during an interview in Brussels.

The cost of constructing or upgrading 48,000 km of high voltage power lines across Europe has been estimated at €150bn by transmission system operators (TSOs) across the continent.

The EU took an important step towards speeding up the permitting process for cross border infrastructure projects last year.

Developers of key grid projects are now able to ask for planning permission at only one authority where as previously they might have needed to apply at local, regional and national level. In addition, authorities were given a three-and-a-half year deadline within which a decision has to be made on permit issuance ( see EDEM 3 December 2014 ).

“The legal framework at a European level is better now than it was for many years in the past,” Staschus said. However, he said concerns remain that, because of legal challenges to permitting decisions, infrastructure building will still face delays.

“We hope that the clarity of the discussion is improving in Europe and in the member states and it will have a positive effect on public acceptance, which remains the most difficult challenge for building new infrastructure,” he said.

Capacity markets

While improving the ability of electricity to flow across European borders the TSO’s are also faced with a new potentially disruptive factor: national capacity markets.

“National capacity market mechanisms, without cross-border participation, are something that has caused some discussion at ENTSO-E,” Staschus said.

In a recent paper on the future power market design, the group identified three points which it says should be improved over the next years to make the European target model function better.

These are full responsiveness of demand to prices; full responsiveness of renewable energy sources to prices; and full cost reflection of imbalance prices ( see EDEM 23 September 2014 ). Staschus said the question of capacity markets and capacity in general can be seen as one of hedging against future shortages.

“In our interpretation various national capacity mechanisms are actually a way to hedge the capacity in the best way that they [governments] can, given that the market in the three dimensions we highlight [demand responsiveness, renewables responsiveness and appropriate imbalance prices] is not perfect.”

However, if these three parameters were to be improved it could allow a smooth transition from administered capacity markets to a more market-based capacity market mechanism.

“We like to contribute to finding a market design which can make the best possible use of the innovation and flexibility potential. It will lead to the freest and most empowered customers and also to the lowest prices.

“So we are advocating, ‘let’s not block the innovation potential, but let’s support them as best we can when we design the precise capacity mechanism conditions’,” Staschus said.

In regard to demand responsiveness, Staschus said that given the interest and investments of IT companies in that area “we see quite enormous potential for flexibility and responsiveness of demand” in the next ten years. Martin Degen