European
Commission Press - 18.11.2010
Why do we need
new pipelines and power grids?
1.
Energy
infrastructure – pipelines, power grids – are key to all our climate and energy
goals.
2.
To
increase the share of renewable energy to 20 percent of our final energy
consumption by 2020, we need to bring the energy generated by wind parks and
solar power stations to the consumers. For this, we need a more decentralised
and differentiated network than exists today.
3.
To save
20 percent of our estimated energy consumption in 2020 via technology, we need
smart meters and smart grids, which allow consumers to control exactly their
power consumption and to save money and energy by changing their
habits.
4.
To
secure gas supply also in the event of a crisis, we need to diversify our
sources and new pipelines which bring the gas from this region directly to
Europe.
5.
To have
a functioning internal market with competition and fair and competitive prizes,
we need the interconnections between member states, allowing companies to offer
their services in all member states.
Why is there a
need for the EU to become active?
1.
It is
estimated that the investments needed to achieve the 2020 goals will not be made
on time, mainly because of two reasons:
2.
building
permits take too long to obtain;
3.
not all
the investments needed are commercially viable.
4.
The
strategy outlined in the Communication addresses this issue. A strategy at EU
level is needed to coordinate and optimise the network development in
Europe.
What is
new?
1.
The
Communication defines a limited number of EU priority corridors. Based on these
pre-defined corridors, concrete projects of "European interest" will be
identified in 2012, which should benefit from financing and faster building
permits, including a time limit for final decision while ensuring full respect
of environmental legislation and public participation. In planning and
implementing these projects, the Commission favours regional cooperation between
countries.
What are these
corridors?
In
the
electricity
sector
four EU priority corridors are identified:
1.
An
offshore grid in the Northern Seas and connection to Northern and Central Europe
to transport power produced by offshore wind parks to consumers in the big
cities and to store power in the hydro electric power plants in the Alps and the
Nordic countries.
2.
Interconnections in South Western Europe to transport power generated
from wind, solar, hydro to the rest of the continent, including Spain-France
interconnections.
3.
Connections in Central Eastern und South Eastern Europe, strengthening
the regional network.
4.
Integration of the Baltic Energy Market into the European
market.
5.
In the
gas sector, three EU priority corridors are identified:
6.
Southern
Corridor to deliver gas directly from the Caspian Sea to Europe to diversify gas
sources.
7.
Baltic
Energy Market Integration and connection to Central and South East
Europe
8.
North-South corridor in Western Europe to remove internal
bottlenecks.
Why are these
priorities needed?
Some
examples:
1.
The
interconnections in South Western Europe are needed because the Iberian
Peninsula is not sufficiently connected to the rest of Europe. To bring power
generated from renewables in Spain to Western Europe and integrate Spain into
the European network, the capacity of power lines between France and Spain needs
to be increased from around 1400 MW today to 4000 MW in
2020.
2.
The aim
of the Southern Corridor is to import gas directly from the Caspian basin /
Middle East, the largest deposit of gas in the world with estimated 90.6 billion
cubic meters. This will diversify gas sources and increase security of supply.
The objective is to get 45-90 bcm of gas per year, this is about 10-20% of EU
gas demand by 2020.
How much money
is needed? And who will pay it? The EU?
1.
About
200 billion € of investments are needed for gas pipelines and power grids until
2020. It is estimated that 100 billion € of this total investment need will be
delivered on time by the market alone, whereas the other 100 billion € will
require public action on permitting and levering the necessary private
capital.
2.
In June,
the Commission will propose a new financial instrument to support the projects
of "European interest", for the new financial perspective after 2013. Beyond
grants, innovative market-based solutions may be proposed, such as equity
participations, guarantees and public private partnership
loans.
3.
If
companies will pay the bulk of the infrastructure, will this increase prices for
consumers?
4.
Not
necessarily. Costs for the infrastructure, including network costs, represent
only 28% of total electricity bill the EU consumer has to pay, taxes and VAT
make 23% on average, while energy itself is about 48%. For gas, the
infrastructure costs, including distribution, amount to 26%, taxes 22% and
energy 52%.
5.
As EU
legislation will foster competition between energy companies they will be
careful when considering passing on higher costs to their
consumers.
Why can some
projects not be financed by the private sector?
1.
Some
power lines and gas pipelines may not be commercially viable because the market
is too small to get a good return of investment. It makes a difference if you
plan a gas pipeline for a region where annual gas consumption is only about
10bcm, as in the case of the three Baltic States and Finland or for a country as
Germany where annual consumption is about 80 bcm. Still, these countries should
be linked to the European energy market to foster competition, fair prices for
the consumer and guarantee that different gas suppliers can step in, in the
event of a gas crisis.
2.
Why can
these investments not be financed and planned on national
level?
3.
As shown
by the Offshore grid in the North Sea, working together on a regional and
international basis can save money. According to the OffshoreGrid study, a
regional approach optimising connection of all wind farms could reduce the costs
by 20-30% until 2030.
4.
What is
the Commission proposing to facilitate the granting of building
permits?
5.
Permit
granting procedures should be better coordinated and faster. One-stop-shops
should be established, which will coordinate all building permits necessary for
projects of "European interest".
Why is it
necessary to have faster building permits?
1.
The time
between the start of planning and final commissioning of a power line is
frequently more than 10 years. For the project developers this means heavy
development costs due to the time spent for the preparation and the discussion
with authorities, and uncertainty over years whether the project can be realised
or not.
2.
For the
EU 2020 targets, this means that the necessary investments will not take place
in time to meet them. The 2020 targets include the reduction of CO2 by 20
percent, and the increase of renewable energy by 20 percent and the energy
efficiency by 20 percent.
3.
Is the
Commission imposing fast building permits for all projects in the
EU?
4.
No. The
proposal to speed up permitting procedures is limited to projects of "European
interest". The list of these projects will be drawn up in
2012.
Is the
Commission setting an authorisation time limit of five
years?
No. The Communication
does not mention five years nor any other concrete deadline. It says that a
"time limit" should be explored.
Why are you
planning CO2 pipelines?
1.
Carbon
Capture and storages (CCS) will be needed to significantly decarbonise our
economies post-2020 by capturing CO2 from large point sources such as fossil
fuel power plants and storing it in such a way that it does not enter the
atmosphere.
2.
The
component technologies of CCS are proven, but they are not yet tested at an
industrial scale and are not yet commercially viable. There are currently six
large-scale demonstration projects under construction which are co-financed by
the Commission with Euro 1 billion in total. It is estimated that the commercial
roll-out will happen after 2020 and that the sites where CO2 is stored will be
distributed unevenly across Europe, making it necessary to transport the CO2
from the power plants to the storage site. Given the huge capacities, transport
via pipeline costs less than transporting it by lorries, and it is also more
environmentally friendly.
European
Commission Press Release 17/11/2010