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Tight timing for 2014 internal market

EUROPE: Encouraging but challenging commitments to integrate Europe's energy markets by 2014 - a crucial step in allowing the growing amount of wind-generated energy in Europe to reach users - were made at the European Council's energy summit of heads of state and governments on February 4.

The significance of the high-level agreement should not be underestimated, according to the European Commission's director general for energy, Philip Lowe. This is the first time that Europe's heads of state "spent two hours talking about energy", he told a conference on grid connections held at London's Institution of Engineering and Technology last month. When there are so many bodies involved, "the political drive behind making it work is very important".

Having acknowledged that the EU needs a fully functioning, interconnected and integrated internal energy market, the council agreed at the summit that "major efforts" are needed to modernise and expand Europe's energy infrastructure and to interconnect networks across borders. But the route to achieving this target is far from trouble-free.

According to Georg Wilhelm Adamowitsch, the commission's interconnections coordinator, politicians did not realise the scale of the grid challenge when they signed up to ambitious renewables targets. Now all parties in Europe must "communicate, explain and convince", he said, if the right infrastructure is to be put in place.

Beyond public acceptance, permitting and investment remain the two key hurdles, according to Graham Steel, chairman of the European Network of Transmission System Operators for Electricity (Entso-e). "Building 100 kilometres of overhead lines takes ten years," he said. "And we need to build a lot more than 100 kilometres."

Variable challenge

The rapid rise of renewable energy sources means that by 2017-18 there will be more renewables than fossil-fuel capacity in Europe. Variable sources of energy such as wind and solar pose a major challenge for transmission system operators (TSOs), the chief executive office of Dutch TSO Tennet, Ben Voorhorst, told an Entso-e conference in Brussels on February 10. Harmonised priority rules and cost-allocation methods across the EU are needed to solve problems and optimise reserves.

But the timeframe looks particularly tight, and willingness to make swift progress may also be lacking among the main players. The potential conflicts between national interests and regional optimisation emerged as a major concern at the Entso-e event.

National regulators - now organised in the Agency for the Cooperation of Energy Regulators (Acer) that became formally operational on March 3, 2011 - and TSOs must step up their work on market coupling and guidelines and on network codes applicable across European networks for the 2014 target to be met.

"This is achievable as long as we accept that our goal (for 2014) is to establish something that works reasonably well and then keep working on it to improve it further," says Acer's director, Alberto Pototschnig. "Clearly, the physical infrastructure needs to be there, but there is no reason why we should not be able to do it."

Others are less optimistic. "I'd be amazed if we got there by 2014, but we can try," said Paul Dawson, board member of the European Federation of Energy Traders (Efet), at the E-World trade event in Essen last month. Efet complains that disparities between support systems and lack of uniformity between markets are serious obstacles to developing a true internal market for European electricity.

At the same event, Hans-Bernd Menzel, chairman of German energy exchange EEX, said: "Whether completion of an internal electricity market by 2014 is a realistic target depends on your view of how far we've got already: whether the glass is half-full or half-empty or whether we actually have not a glass but a bucket to fill by 2014."

Also commenting, Anke Tuschek, who sits on the board of German energy and water body BDEW, is "cautiously optimistic" that Europe will have an internal market for electricity by 2014. But "the patchwork quilt of multifarious regulators, energy exchanges and transmission system operators in the 27 member countries is a problem", admitted Volker Zuleger, senior executive officer at E-Control, Austria's energy regulatory authority.

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