Networks - The right rules pay off

EUROPE: Co-operation across Europe to boost offshore grid connections may make some planned wind projects more cost-effective. Germana Canzi looks at the regulatory reforms being discussed. The European Union's target of generating 20% of the energy it uses from renewable sources by 2020 is expected to require a significant increase in offshore wind power generation, which in turn is putting high-voltage grids in the spotlight.

The connection of new offshore wind projects to the grid has so far been largely a national issue, with more rapid and extensive installation of single-user point-to-point subsea connections to each wind farm. Industry bodies such as the European Network of Electricity Transmission System Operators (Entso-e), however, say this system may not be the most efficient in the long run.

Not everybody agrees that a pan-European supergrid based on high-voltage direct current technology is needed (see page 61). But many think that more international co-operation in specific areas such as the North Sea would help. Several projects are planned there that could provide electricity for more than one country.

According to a recent Entso-e report, "fewer assets require fewer subsea cable routes and significantly fewer landing points onshore, making consenting... more manageable from a societal point of view". This could improve financial viability for some projects and share the benefits of electricity trading among countries.

"We would like the North Sea offshore grid to become a reality," says Raffaele Piria, programme director at the Smart Energy for Europe Platform. This is a new non-profit body based in Berlin, Germany, whose remit is to encourage European co-operation to build an electricity grid capable of sustaining a huge increase in renewables leading to the decarbonisation of Europe's electricity by 2050. But there are many hurdles to overcome, ranging from the technical and regulatory to the financial.

Laws and permits

The Institution of Engineering and Technology (IET) is particularly concerned about the legal challenges involved. "There are significant differences in the ways EU member states apply laws relating to electricity in their coastal waters, and their legal frameworks are at different stages of development," the IET states in its submission to a recently launched UK parliamentary inquiry into a European supergrid.

Regulatory differences between countries can directly affect the financial viability of projects. Countries have various ways of remunerating transmission network operators and the different support mechanisms for renewable energy are currently not transferable between member states, as each has its own systems and targets. "This means that a generator in one country will be subsidised by the customers of that country, regardless of where the energy is finally used," says the IET.

Some believe co-operation between countries will help solve these problems. The regulatory framework is crucial to ensure we can make best use of the renewable resources in the North Sea, says Piria. "Stakeholders must collaborate to find an agreement on relevant planning issues and on sharing benefits and costs," he adds.

Finding the money

Even if the conditions were in place to kick-start massive investment in a European supergrid, where would the money come from? The EU has already allocated around EUR925 million for electricity infrastructure as part of its Economic Recovery Plan. But much more will be needed.

According to an adviser to the European Commission, Georg Adamowitch, there is a huge funding gap that may have to be filled with help from the international financial markets. But these will require certainty that projects will be built on budget and on time.

Countries tend to have different rules for issuing permits. This means a wind farm earmarked to produce electricity for several countries could be delayed by inconsistencies between regulatory regimes. The commission is working on proposals - due later this year - to better co-ordinate permitting procedures for grid development and other infrastructure projects. This would also include the option of declaring some projects of "European interest", which could force relevant authorities to issue permits much faster.

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