Grids – a big mess in need of a clean up

Among the many provisions set out in this month's Green Paper on energy issued by the European Commission are plans for a single EU electricity grid. The very word 'grid' brings to mind a neatly ordered system of connections criss-crossing the EU, a rather attractive prospect that will conjure up sizeable efficiency gains and economic benefits.

The reality, superficially at least, could prove messier, but is none the less appealing. The EU badly needs to iron out the regulatory complexity and inefficiency that currently characterises its electricity network. National grids are overdue a good spring clean.

At no time was the pressing need for this made clearer than after the record-breaking blackout that hit Italy in 2003 (coincidentally occurring only a month after the massive grid meltdown in Canada and the US). The Italian power cut was sparked by a minor accident on a Swiss power line that caused congestion in lines coming from France. (Confusingly, specialists use the term 'congestion' when referring to shortage of capacity - think small roads rather than big cars.) A swift round of the blame-game ensued. Italy, which at that time imported 17% of its power, blamed France. Switzerland and France blamed Italy for the poor organisation of its grid. Italians also no doubt blamed Italians for excessive reliance on external sources of energy.

On reflection, the blackout mainly highlighted the lack of co-ordination between national grid authorities, more commonly known as Transmission System Operators (TSOs). In most EU member states, TSOs own national transmission assets and operate the interconnectors that join national grids. In the ideal world of a single EU grid, TSOs would use common cross-border procedures to allocate reserve generating capacity at peak consumption times.

"For security of supply, we need much stronger co-operation in terms of network operation," says Anne-Malorie Geron, spokesperson for the industry association Eurelectric. "TSOs still have different rules and different administration procedures. This is a hindrance to the market and to the ability to trade cross-border. We need to work much more closely together." Such co-operation is going to be essential if the EU is to meet its 10% target for interconnection between member state grids set by the Lisbon Agenda.

Existing interconnectors between national grids were originally built to satisfy national planning needs, but as Una Shortall, spokesperson for the European Regulators' Group for Electricity and Gas (ERGEG), points out, "we need to get more EU-focused".

As a sensible first step towards a single EU grid, ERGEG has divided the complex market into seven bite-sized chunks. Barriers to cross-border trade are to be dismantled on a region-by-region basis in collaboration with industry, regulators, national governments and the European Commission. "It's better to focus on small groups of member states to define key issues...and to set timetables. We are trying to use a pragmatic approach," says Shortall.

At the moment, an EU-wide grid code on security and reliability standards, regulations governing transparency (largely to prevent manipulation of capacity calculation and allocation) and route-by-route electricity interconnection plans are all top priority. Building the new installations and interconnectors needed for an efficient and open market will prove costly. Eurelectric estimated in 2004 that the cost of building installations needed to cope with rising demand over the coming three decades could exceed EUR 600 billion. Shortall points out the difficulty of deciding who should foot the bill for new infrastructure, referring to the case of the privately financed Irish Sea interconnector, an EU priority project yet to be implemented, which will solely benefit Ireland, connecting the country's grid with the rest of Europe through the UK's link with France. In this instance, the UK was not expected to contribute to costs. But, not all future cases will be as clear-cut.

The hard work on laying the foundations for a single grid has only just begun. The reward will not only be a safe and reliable supply of electricity, but also a truly open and competitive market that benefits consumers. Achieving the aim of a single electricity grid, at a time when the EU so often seems to be stumbling about in the dark for much-needed inspiration, might be a potent symbol of European unity.

Article reports on the challenges surrounding the integration of electricity networks in the European Union.
Article is part of a European Voice Special Report, 'A Common EU Energy Policy'.

European Commission: DG Energy and Transport: Energy: Electricity http://ec.europa.eu/comm/energy/electricity/index_en.htm

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