Action on energy

EU Energy Commissioner Andris Piebalgs talks to Stacey Sheppard about the progress Europe is making in its pursuit for sustainable, competitive and secure energy supplies.

“The goal of the Commission's SET Plan is to step in and support the technologies' R&D and their deployment until this maturity is reached”
-Andris Piebalgs

EUINFRA. The EU has set the target of 20% renewable energy by 2020. What is the likelihood that all 27 Member States will be able to achieve this target by the deadline? What will happen if any of the EU members fail to reach the target and in what ways is the EU supporting the efforts of the individual nation states?
Andris Piebalgs. The 2020 national renewable energy targets set by the new Directive are not political objectives, but legally binding targets. Based on a detailed assessment of the European Commission, these are achievable, and we assume that they will be realised, as Member States have a legal obligation.

The Commission has provided assistance to Member States in the preparation of the National Renewable Energy Action Plans. We will also assist with the monitoring and follow up of implementation. In addition to that there are several Community programmes (7th framework Programme for Research, dissemination activities in the framework of Intelligent Energy for Europe programme) that are also supporting Member States in the implementation of the Directive.

What is the Intelligent Energy Europe programme?
The Intelligent Energy - Europe (IEE) programme supports the deployment of sustainable energy and contributes to the achievement of the general goals of environmental protection, security of supply and competitiveness. The programme stands for the removal of market barriers and the creation of a more favourable business environment with the aim of increasing energy efficiency and strengthening renewable energy markets (including clean transport). The IEE programme also seeks to raise awareness and change behaviour thereby fostering the understanding and better implementation of EU energy policy in Europe's cities and regions.

Intelligent Energy - Europe (2007-2013), with a total budget of €730 million, builds on the experience gained from its predecessor, the first Intelligent Energy - Europe (2003-2006) Programme. Since 2007, Intelligent Energy - Europe has been included in the overall Competitiveness and Innovation Framework Programme (CIP) in order to tackle EU energy policy objectives and to execute the Lisbon Agenda.

Specific actions eligible for IEE co-funding are detailed in the annual IEE work programmes adopted annually by the Commission after opinion of the programme committee and scrutiny of the Parliament. The operational objectives and the priorities set out in the annual work programmes tie in with the most recent EU energy policy developments.

The implementation of the IEE programme is largely based on two means: grants (Call for Proposals) and procurement (Calls for Tenders). Until now, the largest share of the IEE budget was allocated to small-scale projects (around 500K€). Projects are selected and managed on behalf of the Commission by EACI (the Executive Agency for Competitiveness and Innovation).

One of the main criticisms of renewable energy sources, such as solar and wind energy, is the fact that production is unreliable, supply is not particularly secure and it is very difficult to store the energy. What is the Commission doing to help overcome these challenges and appease the doubts of the critics?
The new Directive requires Member States to improve their energy infrastructure and the operation of it with the view to accommodate higher shares of renewable energy sources in the energy mix. Reinforcements, intelligent network solutions, new storage capacities, new interconnections, and revision of operational and market rules will all support this objective. It is true that certain sources are variable, but the difficulties can be overcome as we can see in the Danish and Spanish wind integration experience.

In what ways is the Commission working to improve the regulatory framework with a view to ensuring that the EU can benefit from a liberalisation of the internal market in terms of secure, competitively priced and sustainable energy?
The third liberalisation package adopted this summer is a big step in providing a proper regulatory framework for the EU electricity and gas markets. Firstly, the national regulatory authorities will become more independent from the Member States' governments and their powers will be enhanced. This is the backbone for the energy market regulation in Europe. Secondly, for the co-operation of regulators at the European level a regulatory Agency will be created. This Agency will have the important tasks of monitoring how the markets work, giving opinions on the work of transmission system operators and making binding decisions on European infrastructure. The Agency will rely on its own staff as well as the resources of the national regulators. Finally, the third package provides a system to make detailed legally binding rules for the European energy markets.

The Internal Energy Market increases the interdependence of Member States in energy supply. In what ways would the development of a truly pan-European electricity super highway help to ensure solidarity between Member States in the event of an energy crisis?

It is true that there is an interdependence of Member States in energy supply in the Internal Energy Market. Interdependence means that a country does not take energy decisions in isolation but takes the opportunities provided by other Member States into account. This is where huge welfare gains have already been reached and can further be developed. In electricity, an efficient transmission system is vital for reaching these welfare gains. In the history of electricity transmission the evolution has been to use higher and higher voltages in overhead transmissions lines. Currently it is the 400kV network that provides the backbone for electricity transmission. New transmission challenges are coming from integration of wind energy, in particular off-shore wind, which needs to be transported long distances to the customers. Similar challenges face projects such as bringing solar electricity from Northern Africa to Europe. As these new transmission needs include transporting electricity in seas, cables using direct current technology seem suitable for this purpose. Some people think that direct current could also be interesting on land. As a result, a meshed direct current network could become a new pan-European electricity super highway, ensuring our renewable energy goals and enabling solidarity between Member States. 

European transmission infrastructure is currently unable to maximise the benefits of renewable energy resources. What improvements need to be made to our infrastructure and how will this be funded?
Our electricity system has to be adapted to the new circumstances: more distributed generation, more variable generation, more large-scale distant (and variable) generation. The electricity transmission and distribution infrastructure has to be reinforced; new lines have to be built: incorporating intelligent solutions, building new interconnections, using operational measures.

By means of the Economic Recovery Plan, the EU has designated community funds for interconnections and offshore wind energy and other electricity links. The future financing of European energy infrastructure is also being discussed in the framework of the TEN-E revision. 

Which of the member states are demonstrating the highest commitment to increased generation of renewable energy and improvements in transmission infrastructure and how can they help those member states that are currently lagging behind to come up to the standards required to meet the EU targets?
I mentioned before the Danish and Spanish experience in wind energy integration. The two cases are different: Denmark is strongly interconnected with other Scandinavian countries, making use of their hydro capacity in balancing power. On the other hand, Spain can be considered as an island from the point of view of electricity infrastructure.

But there is something common: they both have Transmission System Operators (TSO) strongly committed to finding solutions and adequate answers to the challenges they face. They can serve as models, and the active participation of these TSOs in the European Network of Transmission System Operators for Electricity (ENSTO-E) in European research programmes, certainly gives an opportunity to make others aware of these activities. The Commission is also planning to launch a concerted action with the Member States on the implementation of the renewable energy directive, which will encourage exchange of experiences between Member States.

In light of the gas crisis that we experienced last winter, how important is it that EU member states promote diversity of energy sources, suppliers and transport routes?
The diversification of energy sources, transport routes and suppliers is crucial for ensuring energy security; its importance has been underlined by the gas crisis in January 2009, but it has been recognised also before the crisis. In the Second Strategic Energy Review 'An EU Security and Solidarity Action Plan' adopted by the Commission on 13 November 2008, the Commission proposed a number of initiatives aimed at increasing EU energy security.

Despite the fact that at the EU level, gas supply is reasonably well diversified, at national level, however, a number of Member States rely on a single supplier for 100 percent of their gas needs and a number of others on just a few suppliers. Diversification is thus important to spread and reduce individual risk, as well as to fully benefit from an integrated and interconnected market-based system.

The first of the five priorities of the Second Strategic Energy Review was 'Infrastructures needs and the diversification of energy supply'. Within this priority concrete actions have been proposed at EU level, including: the interconnection of isolated energy markets (including a Baltic Interconnection Plan covering gas and electricity), the development of the Southern Gas Corridors, the increasing of the capacity of gas storage and LNG to ensure sufficient liquidity and diversity of EU gas markets, and the development of North-South gas interconnections within Central and South-East Europe. A Communication on the Mediterranean Ring has also been announced for 2010.

By 2020, it is estimated that the necessary capacity expansion for power generation will amount to approximately 360 GW which corresponds to about half of the current installed capacity. As renewable energy will only account for 20% by 2020 this obviously leaves 80% of power generation from alternative sources. What are the main priorities for the EU in terms of capacity expansion outside of the renewable energy sector?
Fostering the transition towards a low carbon power generation system is a high priority for the European Union. The massive deployment of renewable energy in the electricity sector will require a lot of investment, both in power generation capacities and in transmission networks. By 2020, according to the scenarios prepared by the Commission in 2008, renewable energy should represent 33% to 58% of the total power generation capacity necessary to meet the future demand and to replace ageing facilities. Appropriate policies are needed to support this deployment. National plans for the promotion of renewables - to be adopted by Member States in 2010 - will be crucial. Any investment or choice of technology contributing to decarbonising the electricity sector will be relevant.

Renewable energy is currently quite a costly investment. What role will technology play in reducing the cost of renewable energy and how is the Commission helping to support research and innovation in technology?
Renewable energy sources have traditionally gained the reputation of being a costly investment. In the 1990s, this was true, as the oil price was low. It is however important to realise that costliness is relative to the alternatives. As the oil price rose, even in the years before the financial crisis, renewable energy sources became more and more attractive.

Another important factor is the price of carbon and its meaning. Carbon allowances are issued to or bought by those who emit greenhouse gases. This means we place a price on emissions. Conversely, renewable energy sources have low or no emissions at all and therefore do not carry with them the price of carbon, as no allowances have to be bought.

Technology is nowadays helping to reduce production costs of equipment used to generate renewable energy sources. Production processes become mature and their costs are lower, while raw materials meet an increasing demand and factors of scale are reducing their market price. As a result, these types of product become commonplace with more producers and a growing market putting pressure on price. 

We are for instance seeing this chain of maturity have its effect in the wind sector and some biomass areas. Solar photovoltaics are also likely to approach this level of maturity soon. The goal of the Commission's SET (Strategic Energy Technologies)-Plan is to step in and support the technologies' R&D and their deployment until this maturity is reached. As such, we will be able to cover the cost-gap to traditional generation options until renewable energy sources are fully competitive, thereby mitigating the risk for market entrants.

Today, we see the need to accelerate our work on technology. This implies an increase of the R&D budget level. In the Communication on Investing in Low-Carbon Technologies adopted by the Commission on 7 October 2009, we set out the needs and technology roadmaps that can take us there. We estimate that we will need to spend €8 billion per annum, by public and private sectors combined, on the technologies identified in these roadmaps during the next 10 years. The debate on this is just beginning. Mobilising these resources will make a crucial contribution to achieving our 2020 objectives.