# EUR-Lex - 52015DC0082 - EN

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# 52015DC0082

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Achieving the 10% electricity interconnection target Making Europe's electricity grid fit for 2020 /* COM/2015/082 final */**

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Interconnections
  as vital parts of the Energy Union

During
the last decades, the European Union has worked intensively towards building
the most integrated, competitive and sustainable common energy market of the
world.

The
integration of the EU's energy markets is delivering tangible results: wholesale
electricity prices have declined by one-third[1];
consumers have more choice as energy suppliers compete to deliver lower
prices and better services; and the legal framework has improved competition in
the sector.

Nonetheless,
much remains to be done. Import dependency, outdated infrastructure and a lack
of investment, a retail market which is not fully functioning, high final
energy prices for citizens and for businesses harming the competitiveness of our
companies, the need to shift to a low-carbon economy in order to fight climate
change as well as challenges to our technological leadership lead to one
conclusion: the EU must overcome its fragmentation of national energy markets.
The European Union must change its ways to produce, transport and consume
energy. Europe's energy policy must be reset in the right direction: that of an
Energy Union.

It
is for these reasons that the European Commission adopted a framework strategy
for a resilient Energy Union with a forward looking climate policy. This
Communication on achieving a 10% electricity interconnection target is one
concrete step in this direction.

An
interconnected European energy grid is vital for Europe's energy security, for
more competition on the internal market resulting in more competitive prices as
well as for better achieving the decarbonisation and climate policy targets
which the European Union has committed to. An interconnected grid will help
deliver the ultimate goal of the Energy Union, i.e. to ensure affordable,
secure and sustainable energy, and also growth and jobs across
the EU.

There
are missing interconnection links between several countries. Building these
interconnections will require the mobilisation of all efforts at all levels, as
a matter of urgency, to achieve the common objective of a fully functioning and
connected internal energy market.

Energy
infrastructure has been high on the European energy agenda. The European
Council in October 2014 called for "speedy implementation of all the
measures to meet the target of achieving interconnection of at least 10 % of
their installed electricity production capacity for all Member States."
This Communication[2]
responds to this call and presents a strategy to ensure the full integration of
the internal electricity market through adequate levels of interconnection,
which will serve also an integral part of the Energy Union.

The
  benefits of an Interconnected Energy System

Interconnecting
isolated national electric power systems and building a truly European
Electrical System will bring a number of important benefits for the European
Union and its Member States.

Electricity
interconnections will increase Europe ́s security of supply.
They will improve the reliability of the electricity system, thus increase the
quality of service and reduce power interruptions and productivity losses in
the commercial and industrial sectors. Ambitious levels of electricity
interconnection will help reduce Europe ́s dependency, due to the optimisation
of the system leading to a reduction of fuel imports, generating more
opportunities for Europe in terms of investments, growth and jobs. In addition,
interconnections facilitate instantaneous help between Transmission System
Operators (TSO) providing greater cooperation and solidarity between them.

An
interconnected grid allows for more affordable prices in the internal
market, through more competition and greater efficiency, in addition to
a better and more cost-effective use of available resources. Interconnections
imply greater integration of the European Market, provide for a larger market
size and higher competition levels, as well as higher market efficiency. The
figure below shows that cross-border exchanges have increased markedly since
the end of the 1990's, the start of the market opening process.

A
more integrated market through interconnections also reduces the need for
investment in peak generation capacity and storage because the plants that each
country has would not be needed at the same time. This would result in
substantial economic and political benefits in Member States due to reduced
capital investments as well as to the reduction of the environmental impact due
to the plants that would not be necessary to be built. Increasing the exchanges
of the system balancing services also reduces the system short term operation
costs. Lower generation costs and/or lower investments in generation and
avoided fuel costs through the interconnection of electricity grids translate
into more competitive electricity prices to businesses and households. An
adequately interconnected European energy grid brings the benefits of the
market closer to European citizens, as consumers could save EUR 12-40 billion
annually by 2030[3].

A
well interconnected grid is crucial for sustainable development and
decarbonising the energy mix as it enables the grid to accommodate
increasing levels of variable renewables in a more secure and cost-efficient
way. Relying on renewable sources for a greater part of the generation mix contributes
to meeting the EU climate goals, by reducing CO2 emissions, and
moreover increasing security of supply. Higher interconnections are also
essential to meet the EU ambition to be world leader in renewable energy, which
is not only a matter of a responsible climate change policy but also an
industrial policy imperative. Europe's renewable energy and technology firms
have emerged as major industrial players employing around 1.2 million people in
2012, creating stable jobs at regional and local level as well as sustainable
growth.

In
sum, more interconnections will contribute to more
affordable electricity prices in the long term due
to the higher market efficiency, higher electricity supply security,
reliability and quality, which are essential for social and economic
activities, while
ensuring a high standard of environmental protection.  These
developments will also help reduce our energy dependency, due to the
reduction in the consumption of imported fuels and facilitate new
investments in Europe due to the more competitive prices of electricity and
the improvement in the competition levels of the European industries. More
electricity interconnections will also lower environmental impact due to
the non-built power plants and the reduction of CO2 emissions and
will increase the capacity of integrating renewable energy, unleashing a higher
potential of growth for the European renewable energy industry and ensuring
world leadership of the European renewable industry and, therefore, higher job
creation capacity of this industry in Europe with a net job creation in Europe.

For
these reasons, the interconnection of the electricity markets must be a
political priority for the European Union at all levels in the years to come.

The
  EU's energy infrastructure policy thoroughly modernised

Being
aware of the benefits of energy interconnections, Member States have increased
their interconnection capacities during the last decades. However, twelve
Member States, mainly in the periphery of the EU, remain below the 10%
electricity interconnection target and are thus isolated from the internal
electricity market.

Interconnection
levels for electricity in 2014

Member State || ||

Member States above 10% interconnection

AT || || 29%

BE || || 17%

BG || || 11%

CZ || || 17%

DE || || 10%

DK || || 44%

FI || || 30%

FR || || 10%

GR || || 11%

HR || || 69%

HU || || 29%

LU || || 245%

NL || || 17%

SI || || 65%

SE || || 26%

SK || || 61%

Member States below 10% interconnection

IE || || 9%

IT || || 7%

RO || || 7%

PT || || 7%

EE[4] || || 4%

LT4 || || 4%

LV4 || || 4%

UK || || 6%

ES || || 3%

PL || || 2%

CY || || 0%

MT || || 0%

|| Source: ENTSO-E, Scenario Outlook and Adequacy Forecast 2014 ||

In
this context, the European Union has gradually been equipping itself with
the right policy tools to enable necessary investments in grid
infrastructure, investments in interconnection being paramount among those.

In
the wake of the economic crisis, the European Commission put forward a European
Energy Programme for Recovery (EEPR) which consisted, inter alia, in the
identification of interconnection projects across the EU and the mobilisation
of EU financial resources. This programme helped realising several
interconnection projects between Member States, which due to the lack of
appropriate funds had previously not been built. The EEPR spent some
EUR 650 million on electricity interconnections (Annex 1).

Map
of EEPR-supported interconnections

The
TEN-E Regulation[5]
adopted in 2013, together with the Connecting Europe Facility (CEF)[6],
create a stable European instrument designed to identify and ensure the timely
implementation of the projects Europe needs along 12 priority corridors and
areas. These tools with, inter alia,
the introduction of Projects of Common Interest (PCI), the improvement of the
regulatory treatment and the acceleration of  the permit granting represent a
major step forward.

As
underlined by the European Council, the interconnection target should mainly be
reached through implementation of the Projects
of Common Interest. The
first Union list of PCIs was adopted in 2013; it consists of 248 projects, of
which 137 are in electricity, including 52 electricity interconnections
and one project with
anticipatory investments enabling future interconnections, out of which 37
projects are involving Member States that currently have an interconnection
level below 10%.

Map
of first PCI list for electricity interconnectors in Member States below 10%

The
PCI list is a flexible list that is updated every two years. Work to prepare
the second list is currently underway in the regional setting established by
the TEN-E Regulation, in view of its adoption by the Commission in autumn 2015.
Special priority will be given to those
projects that will significantly increase the current interconnection capacity
where it is well below the established 10% objective,
notably where this objective is particularly difficult to achieve.

The
Projects of Common Interest are designed and implemented by both transmission
system operators (TSO) and private promoters. Current projects are in different
stages of development; some are under construction but many are still in the early
phases of preparation. Some 75% of all the PCIs from the first Union list are
planned to be completed by 2020.

Below
are some examples of EEPR projects and PCIs that, if and when completed, would
help Member States reach the 10% target, some already in the months to come,
others in the medium term:

· 
The project linking Baixas, France
to Santa-Llogaia, Spain has received support
from the EEPR. After its inauguration in February 2015, the electricity
interconnection capacity between France and the Iberian Peninsula will double.
The PCI between Aquitaine, France and the Basque country, Spain
is currently subject to detailed studies financed by EC grants. This project would again double the interconnection
capacity.  All efforts shall be mobilised to complete it in 2020, moving the
interconnections level closer to reaching the target of 10%.

· 
Identified in the first PCI list, the
new interconnection between Portugal (Vila Fria - Vila do Conde –
Recarei) and Spain (Beariz – Fontefría) will increase the interconnection
capacity of currently 7% between Portugal and Spain by 2016 and bring Portugal
above the 10% target.

· 
Whilst Estonia, Latvia and
Lithuania are well interconnected among themselves, the interconnectivity
with the EU electricity market amounted in 2011 to just 4% for all three Member
States. The situation is however rapidly improving. By 2015 the Baltic States
reached 10% interconnectivity with the EU electricity market via Finland,
through the EEPR project Estlink2. The interconnection between Sweden (Nybro)
and Lithuania (Klaipeda) - known as the project Nordbalt1, funded under the
EEPR – would further improve the integration of the future power market between
the Baltic Member States and Nord Pool Spot from mid-2016.

· 
The completion of the construction of
the PCI interconnection between Lithuania and Poland known as LitPol
Link would double the level of interconnection of Poland to 4% by the end of
2015. It would also further the synchronous interconnection of the Baltic
networks with the Continental European Networks. Another identified PCI, the
interconnection between Vierraden, Germany and Krajnik, Poland,
would bring Poland's interconnectivity to above 10% by 2020.

· 
Thanks to PCIs in the United Kingdom,
comprising internal lines and ensuring interconnections with Belgium, France,
Ireland and Norway, the United Kingdom would reach the 10% target and its
interconnections would be less congested.

· 
Several Italian PCIs in the
electricity sector, mainly interconnectors between Italy and France, Switzerland
and Austria and the necessary internal reinforcements, would improve its
electricity interconnection capacities with the neighbours to around 12%, when
completed by 2020. Thus, the reliability of electricity supply would be better
ensured in Italy and the risk of congestion would be much lower.

· 
Ireland
could also substantially increase its interconnection capacity thanks to the
several PCIs included in the first list.  Ireland's interconnection level was
3% in 2011; it increased to 7% in 2013 thanks to an EEPR funded project
connecting Ireland with the United Kingdom, and its interconnectivity would
even exceed 15% in 2020 when the planned PCIs connecting further with the
United Kingdom (Northern Ireland and Great Britain) and possibly France would
be constructed.

· 
The interconnection level of Romania
would increase from the current level of 7% to above 9%, getting therefore
closer to the target through the implementation of the interconnection with
Serbia by 2017.

· 
Cyprus
is an energy island heavily dependent on oil and experiencing high electricity
prices. The future interconnection called the Euroasia Interconnector,
currently in the pre-feasibility phase, was included in the first Union PCI
list. The project will have a capacity of 2,000 MW and would take the
interconnection level for Cyprus to over 100% when completed in 2023.

· 
Thanks to support from the EEPR,
Malta's interconnection level will go from 0% now to approx. 35% with the
commissioning of the high voltage interconnection with Italy (Sicily) during
2015.

Implementation
of the PCIs will bring Europe much closer to the
achievement of the 10% electricity interconnection target between Member
States if the foreseen projects are completed[7] in
2020 (see map below). Efforts need to be stepped-up for those below the
target to achieve 10% by 2020, mainly Spain and Cyprus, through a more
coordinated approach and using all tools available.

Map
of interconnection levels in 2020 after implementation of current PCIs

The
  European regulatory framework must be fully implemented and applied

A
solid regulatory framework is a prerequisite for the necessary infrastructure
investments to happen. Since 2013 the European Union has adopted a holistic
approach to infrastructure planning and implementation. The trans-European
energy networks  Regulation (TEN-E) addresses for the first time the specific
issue of projects that cross borders or that have an impact on cross-border flows.

The
TEN-E Regulation recognizes that these projects need specific regulatory
treatment, and proposes that a cost-benefit analysis clearly demonstrates those
supra-national benefits and provides the possibility to allocate costs across
borders based on the benefits they generate in the concerned Member States. The
TEN-E Regulation also requires national regulatory authorities to provide
regulatory incentives commensurate to the risks incurred by such projects. This
means that the tariffs set for use of the infrastructure take into account e.g.
the appropriate length of time for the investments to be recouped, bearing in
mind appropriate depreciation times, need for anticipatory investments, etc.

The
large majority of the projects are promoted by transmission system operators,
with regulators approving or setting the tariffs. There are also projects,
including some PCIs, which are promoted by private parties, so called merchant
lines. These tend to recoup their costs from price differences between the two
ends of a line. Their risks are therefore of a very different nature. For this
reason, while the provisions of the TEN-E Regulation on permit granting apply,
these lines often get exemptions from parts of the regulatory framework, such
as those on third party access and use of congestion tariffs.

The
TEN-E Regulation also addresses for the first time the question of lengthy permit
granting procedures and public acceptance,
which are the main hurdles for infrastructure development, especially for
overhead electricity lines. The Regulation introduces a binding overall time
limit of 3.5 years for permit granting, which should
dramatically bring down the 10-13 year current average. The permit
granting powers have to be concentrated in one competent authority
("one-stop-shop"). Following strong enforcement by the Commission,
these will finally be in place in all Member States in spring 2015[8]. New
rules on enhanced consultation and transparency are also introduced to better
involve citizens in the planning process. The objective is to render the
process more efficient while safeguarding the EU’s high standards in
environmental protection.[9]

It
is of key importance that Member States implement and fully apply the
provisions of the TEN-E Regulation so as to avoid any delays in implementation
of the necessary projects. The Commission will ensure
full implementation and strict enforcement.

Making
  full use of all available financial instruments, CEF, ESIF and EFSI

The
Commission estimates that some EUR 200 billion are required up to 2020 to
build the necessary infrastructure to adequately interconnect all EU Member
States, that will ensure security of supply and enhance sustainability. For
electricity projects some EUR 105 billion are needed, out of which some EUR 35
billion for the interconnections which acquired a PCI status and are
necessary to reach the 10% target across the EU.

The
importance of an interconnected grid is well reflected in the multi-annual EU
budget for 2014-20. Under the Connecting Europe Facility (CEF) which
covers three sectors - transport, energy, telecommunications - energy accounts
for EUR 5.35 billion out of the total of ca. EUR 30 billion[10].
Whilst the CEF funding represents only around 3% of the investment needed up to
2020, it can leverage other funds through using financial instruments, such as
project bonds already tested in the Pilot phase 2012-2013. An important share
of the CEF will therefore be implemented through such instruments.

For
the CEF grants to make a difference they must be targeted at a few critical
projects and must be combined with the efforts of regulators to finance
projects through network tariffs other funding sources. Member States may also
use the European Structural and Investment Funds (ESIF) under certain
conditions. Preliminary estimates suggest that around €2 billion from the
European Regional Development Fund (ERDF) are expected to be allocated to large
electricity and gas infrastructures. For example, the Czech Republic (indicatively
about €200 million ) and Lithuania (indicatively € 69.5 million) plan to use
this option and foresee funding through ERDF for high-voltage smart electricity
grids..

On
13 January 2015, the Commission proposed the creation of a European Fund for
Strategic Investment (EFSI) to significantly improve EU investment
projects' access to long term financing. This instrument could cover PCIs or
other interconnection projects put forward, therefore accelerating and
complementing the current structure of support for PCIs and beyond. New
possibilities for commercial financing are offered by EFSI, which will
be established in close partnership with the European Investment Bank (EIB).
The Fund is at the very heart of the Commission's Growth, Jobs and Investment
package. The EFSI will mobilise at least EUR 315 billion in private and
public investment across the EU, against an EU budget contribution of
EUR 16 billion and a contribution by the EIB of EUR 5 billion. The
multiplier effect of the EFSI is thus estimated to be at least a factor of 15.

Energy
figures prominently among the priorities of the Fund. The Fund's investment
operations shall be in line with Union policies and support general objectives
such as development of infrastructure, including in the area of energy, in
particular energy interconnections.

Next
to the Connecting Europe Facility, the EFSI is now likely to emerge as an
important tool to help PCIs and promoters in implementing their projects. An
Investment Portal is being set up that is designed to boost the transparency of
the EU investment project pipeline to make information accessible to potential
investors. EFSI brings together project promoters and investors and ensures
more support for financial risks. As the great majority of infrastructure projects
present a solid business case, the EFSI can play a key role in leveraging the
necessary investment together with other investment and commercial banks. In
relation to access to EFSI financing, the speedy and timely preparation of a
project will be of outmost importance. The Regional Groups involved in the PCI
process will have an important role to play in this respect.

Building
on existing EIB and Commission advisory services, a European Investment
Advisory Hub (EIAH) shall provide advisory support for investment project
identification, preparation and development and act as a single technical
advisory hub (including on legal issues) for project financing within the EU.
This shall include support on the use of technical assistance for project
structuring, use of innovative financial instruments, and use of public-private
partnerships. The EIAH will not only look at EFSI, but also advice on the use
of other funding possibilities already available for infrastructure projects,
including from CEF and the European Structural and Investment Funds.

It
is equally important to underline the contribution from private investors,
either via the EFSI or via other market-based instruments such as the European
Long-Term Investment Funds which can channel private financing to long-term
investments such as energy infrastructure.

The TEN-E policy is showing first
results, but more needs to be done. To speed up the achievement of the
interconnection target the Commission intends to intensify the work of the
Regional Groups, established under the TEN-E Regulation, to closely monitor
progress of each PCI and to propose corrective and targeted early action when
necessary, especially in those Member States furthest away from the 10% target.
The Commission will also intensify its support for the critical projects
through targeted measures. The Commission will assess project by project to
look at any obstacles and risks that might delay construction and take action
as necessary such as:

- bring together the promoters to find
solutions to technical, planning, design and implementation issues and
facilitate contacts with the EIB and other banks;

- provide access to technical assistance
to better shape the project and make it bankable;

- work together with ACER and the
national regulators to find the best incentives;

- ensure compliance with the TEN-E
Regulation and launch appropriate procedures, in case provisions are not yet
implemented, for instance on permit granting;

- facilitate agreement between Member
States to solve political issues.

Regional cooperation must be
  strengthened

The
critical PCIs and interconnectors in particular are mainly large scale projects
which are inherently complex and prone to delays. Project promoters have
signalled permit granting procedures and public acceptance as the main risk
factors for swift implementation. Hence, the possibilities to speed up their
implementation require concerted action by all parties concerned, including
Member States, the transmission system operators and promoters, regulators and
planning authorities.

All
Projects of Common Interest need an approach that transcends the individual
project level. Strong regional cooperation, as established under the TEN-E
Regional Groups, is key to implementation.

The
four Regional Groups for electricity (Northern Seas Offshore Grid, Baltic
Energy Market Interconnection Plan (BEMIP), North-South interconnections in
West-Europe and North-South interconnections in Central Eastern and South
Eastern Europe) adopt a regional list of PCIs in preparation of the EU-wide
list. They follow the implementation of the PCIs in their region and report on
possible difficulties and may propose corrective measures.

However,
the Regional Group setting may not always be sufficient. In particular, regional
cooperation must be further enhanced and brought to a higher level to
tackle broader policy priorities that go beyond project specific issues of
planning and implementation. These issues are related e.g. to the need to find
innovative technological solutions, to bring the planning of the grid closer
together with the planning of generation, to urgently address security of
supply risks through synchronised regulatory and infrastructure measures, or to
engage more closely in finding sustainable and acceptable solutions in
environmentally sensitive regions.

The
Commission considers that the work of the TEN-E Regional Groups needs to be
enhanced in the following areas:

- 
In the case of the Baltic region,
the current form of enhanced regional cooperation in the BEMIP is bearing
fruits and the region will be well interconnected in electricity, and also in
gas, by 2020. The Commission is now reviewing the BEMIP structures in close
cooperation with the Member States concerned to streamline and to refocus
action on the remaining challenges, including in particular the synchronous
connection of the Baltic States with the Continental European Network,
integration of renewable energy sources and measures to improve energy
efficiency. The review process should culminate
in the planned signature of a new Memorandum of Understanding under the Latvian
EU Presidency.

- 
Another region singled out in the
October 2014 Conclusions of the European Council is the Iberian Peninsula.
The cooperation on its interconnectivity has recently been stepped up with the
signature by the Transmission System Operators of Spain, France and Portugal of
a common strategy paper for the development of interconnection in January 2015.
The common strategy paper lists common goals and indicates some options for projects.
The Commission has actively facilitated this cooperation and is creating
a new High Level Group to render the cooperation concrete. To support
this work, the Commission has launched a study on the benefits, costs and the
technical possibilities for further interconnection of the Iberian Peninsula
with the rest of the EU. In March 2015 a summit of the Heads of State and
Government of the three countries will be held. The Commission is convinced
that this summit will bring about new impetus to this process and will
accompany any new engagement accordingly.

- 
The countries surrounding
the Northern Seas are currently insufficiently interconnected to
make optimal use of existing and foreseen onshore and offshore generation
capacity. The Northern seas offer a unique opportunity to supply a substantial
amount of low-carbon, indigenous energy, produced close to some of the most
energy intensive regions of Europe. Its power generation potential may amount
to 4-12% of the EU's electricity consumption by 2030. The objective in this
region is to achieve improved interconnection to facilitate market integration
and trade flows, and integration of large amounts of offshore renewables
production, notably wind. The area also offers good possibilities for the
development of innovative technologies, such as Carbon Capture and Storage
Strategy, energy storage or power-to-gas. The Commission actively supports and
will further promote the work of this regional group and the development
of an Action Plan.

- 
The Commission has initiated
reinforced cooperation on infrastructure development priorities in Central
and South Eastern Europe. The electricity market needs to be better
interconnected and modernised in this region, also to enable tapping on the
important renewable potential. This is even more important at a time when the
region is confronted with an especially difficult situation in gas after the
abandoning of South Stream. Therefore, a High Level Group was set up in
January 2015 and its first meeting took place in Sofia on 9 February.

The Commission will work
closely with the Member States concerned for each of these forms of enhanced
regional cooperation on a region specific strategy to address the most pressing
issues and actions to take. The four regions will establish an Action
Plan with concrete milestones for implementation, including concrete
interconnection proposals to achieve the 10% target agreed at EU level. In the
specific case of the achievement of the 10% where this is more difficult to
achieve, the Commission is aware of the several proposals that have been put
forward (e.g. for the Baltic States a new phase in the LitPol Link or for the
Iberian Peninsula with France the interconnections between Navarra-Bordeaux,
Sabiñanigo-Marsillon or Monzón-Cazaril). In these cases, the Commission will
provide assistance and advice to the concerned parties in order to include new
projects in their corresponding action plans.

The Commission will monitor
closely the implementation of the Action Plans. To the extent possible, the
Commission will promote the alignment between the different regional groups'
working practises.

The Commission will also closely work
with the
European Network of Transmission System Operators for Electricity (ENTSO-E)
to make sure that the Ten-Year Network Development Plan (TYNDP), which
constitutes the sole
instrument for the selection of Projects of Common Interest (PCIs),
widens its scope and clearly identifies projects to achieve the 10%
interconnection target while proposing concrete action, including the
possibility to complement the TYNDP if need be.

The Commission will report
annually to the European Council on the implementation of PCIs and on progress
to reach 10%, which will be an important element of the comprehensive annual
stocktaking foreseen in the Strategic Framework for the Energy Union. The
Commission will ensure that the work of the regional groups benefits from the
appropriate synergies with the EFSI, once it is constituted. The Commission
will also steer the debate within the regional groups on other pressing issues,
such as the modernisation of the grids.

In addition, in late 2015
the Commission will convene the first Energy Infrastructure Forum
to discuss and find solutions to issues that are common to all regions across
Europe and, where relevant, with neighbouring countries.

Looking
  towards 2030

At
the invitation of the March 2014 European Council, the Commission proposed in
May 2014 to extend the current 10% electricity interconnection target to 15% by
2030 while taking into account the cost aspects and the potential of commercial
exchanges in the relevant regions. The October 2014 European Council mandated
the Commission to report "regularly to the European Council with the
objective of arriving at a 15% target by 2030". This target is aimed
to be achieved mainly through the implementation of PCIs.

EU
energy policy goals and the 2020 and 2030 energy and climate targets will not
be achievable without a fully interconnected European electricity grid with
more cross-border interconnections, storage potential and smart grids to manage
demand and ensure a secure energy supply in a system with higher shares of
variable renewable energy. In this respect the gradual construction of the
pan-European electricity highways will also be crucial. The Commission
announced in January 2014 its intention to monitor the deployment of smart
grids and the level of interconnections between Member States, with particular
urgency between those that are furthest away from meeting the agreed objective
of 10% of their installed production capacity.

The
completion of the internal electricity market, notably ending the isolation of
electricity islands, secure energy supplies for all consumers and a greater
share of electricity generation based on variable renewable energy sources
require more than 10 % interconnection capacity, and efforts by the EU and
Member States must be guided by the need for all Member States to reach at
least 15 % by 2030. At the same time, differences between Member States in terms
of geographic location and structure of energy mix and supply means that a
case-by-case approach based on a thorough assessment of the bottlenecks, taking
into account the costs, is needed. The regional cooperation structures will be
a valuable setting for discussing and agreeing on the way forward. The
Commission will use these forms of strengthened regional cooperation also for
the achievement of the 15% target.

Conclusion

The
European Union needs to bring its electricity interconnection level to 10% by
2020 on its way to create a resilient Energy Union with a forward looking
climate policy. It is clear that Europe needs to redouble its efforts to
respond to the energy and climate policy challenges.

The
regulatory and financial framework that has recently been put into place is
showing first results. What is needed now is political determination by the
Member States and all other actors to meet the objectives. This means an
intensification of the work in the Regional Groups set up under the TEN-E Regulation,
while the Commission will continue to deploy initiatives to deepen regional
cooperation.

The European Council agreed that a reliable and
transparent governance system without any unnecessary administrative burden
will be developed to help ensure that the EU meets its policy goals. This will
include streamlining current reporting requirements.

The
Commission will issue a report on the basis of the Member States' reports. This
report, which will be an important element of the
comprehensive annual stocktaking foreseen in the Strategic Framework for the
Energy Union, will include a full state of play on all Projects of
Common Interest; with recommendations on speeding up projects and increasing
the flexibility of the PCI list should the deadline of 2020 for the delivery of
the 10% interconnection capacity not be met. If needed, the Commission will
propose further measures in order to achieve this target.

As
demonstrated by the positive political engagement regarding the Baltic Sea
Region and the Iberian Peninsula, support at the highest level is essential to
make progress on these large projects.

[1] This
refers to the period 2008-2012; cfr COM(2014)21/2.

[2] In
line with the European Council mandate, this Communication focusses on
electricity. As regards gas, no interconnection target has been proposed
because for security of supply reasons the Member States are already obliged to
provide for the situation when their largest single gas infrastructure element
fails (so-called N-1 rule). Cfr Regulation EU 994/2010.

[3] Study: Benefits of an
integrated European energy market, July 2013, Booz & Co.

[4] The three Baltic States – Estonia, Latvia and Lithuania – are not
yet synchronised with the European grid and need therefore to be taken as one
entity. While fully integrated amongst themselves, the value of 4% for the
three Baltic States provides their level of interconnection with the European
electricity market (i.e.: via Finland). The value is provided for early 2014,
before the Estlink2 interconnection was put into operation. With the completion
of this project, the Baltic States' interconnection level substantially
increased to around 10%.

[5] Regulation 347/2013
on guidelines for trans-European energy infrastructure, OJ L 115, 25.4.2013

[6] Regulation 1316/2013
establishing the Connecting Europe Facility, OJ L 348, 20.12.2013

[7]
Annex 2 provides an overview of the projects in the Member States below 10%
interconnection capacity

[8] The deadline was
Autumn 2013 as stipulated in the TEN-E Regulation.

[9] Furthermore,
the Commission services have developed guidance for the streamlining of
environmental impact assessment procedures for energy infrastructure Projects
of Common Interest (PCI's).

[10] These figures take
into account the recent Commission proposal to establish the European Fund for
Strategic Investment (EFSI).

ANNEX
1

Projects
co-funded by the European Energy Programme for Recovery (EEPR)

Ø EstLink
2 is the second HVDC interconnection
between Estonia and Finland that increases the transmission capacity between
the two countries to 1000 MW.

Ø Nordbalt
is a new interconnection between Sweden and Lithuania with a transmission
capacity of 700 MW.

Ø The
Austria-Hungary interconnection (Wien-Györ),
with a capacity of 1 100 MVA, improved the interoperability of the Austrian and
Hungarian electricity networks

Ø The
Spain-France interconnection (Sta. Llogaia -
Baixas) is a centre-piece of an underground cable with a capacity of 1400-1800
MW crossing the Pyrenees mountains using a dedicated tunnel.

Ø The
Malta-Italy interconnection (Pembroke - Marina di
Ragusa) is a sub-sea HVAC cable rated at 250MVA which will put an end to the
isolation of the Maltese electricity grid from the rest of Europe.

Ø The
UK-Ireland interconnection (Deeside - Meath) is a
HVDC cable with a capacity of 500 MW. The project was the first electricity
interconnection between Ireland and Great Britain.

Ø The
project comprising four overhead lines between Lunes and Tavira (PT),
Lunes and Estói (PT), Tavira (PT) and Alcoutim (ES) and Ourique and
Estói (PT) contributed to the upgrade and extension of the Portuguese
electricity grid.

Ø The
reinforcement of the electrical network between the Douro region (PT)
and the Spanish border of Aldeadavila was completed in the autumn of
2011.

ANNEX
2

PCI's
increasing capacity in the Member States below 10%

Priority corridor || Project of common Interest || Commissioning date and stage of the project[1]

Priority corridor Northern Seas offshore grid ("NSOG") || 1.1.1. Interconnection between Zeebrugge (BE) and the vicinity of Richborough (UK) || 2018 Permitting

1.2 PCI Belgium – two grid-ready offshore hubs connected to the onshore substation Zeebrugge (BE) with anticipatory investments enabling future interconnections with France and/or UK[2] || 2018 Permitting

1.6 PCI France – Ireland interconnection between La Martyre (FR) and Great Island or Knockraha (IE) || 2025 Study phase

1.7.1. France – United Kingdom interconnection between Cotentin (FR) and the vicinity of Exeter (UK) [currently known as FAB project] || 2022 Study phase

1.7.2. France - United Kingdom interconnection between Tourbe (FR) and Chilling (UK) [currently known as the IFA2 project] || 2020 Study phase

1.7.3. France - United Kingdom interconnection between Coquelles (FR) and Folkestone (UK) [currently known as the ElecLink project] || 2016 Construction mid-2015

1.9.1. Ireland – United Kingdom interconnection between Co. Offaly (IE), Pembroke and Pentir (UK) || 2019 Permitting

1.9.2. Ireland – United Kingdom interconnection between Coolkeeragh - Coleraine hubs (IE) and Hunterston station, Islay, Argyll and Location C Offshore Wind Farms (UK) || 2020 Study phase

1.9.3. Ireland – United Kingdom interconnection between the Northern hub, Dublin and Codling Bank (IE) and Trawsfynyd and Pembroke (UK) || 2020 Study phase

1.9.4. Ireland – United Kingdom interconnection between the Irish midlands and Pembroke (UK) || 2017-2020 Study phase

1.9.5. Ireland – United Kingdom interconnection between the Irish midlands and Alverdiscott, Devon (UK) || 2017-2020 Study phase

1.9.6. Ireland – United Kingdom interconnection between the Irish coast and Pembroke (UK) || 2017-2020 Study phase

1.10 PCI Norway – United Kingdom interconnection || 2020 Permitting

1.11.2. Ireland – United Kingdom interconnection between North West Ireland (IE) and Midlands (UK) || 2017 Permitting

1.11.4. Ireland – United Kingdom interconnection between Glinsk, Mayo (IE) and Connah's Quai, Deeside (UK) || 2018 Permitting

Priority corridor North-South electricity interconnections in Western Europe ("NSI West Electricity") || 2.4 PCI France - Italy interconnection between Codrongianos (IT), Lucciana (Corsica, FR)  and Suvereto (IT) [currently known as the SA.CO.I.3 project] || 2022 Study phase

2.5.1. Interconnection between Grande Ile (FR) and Piossasco (IT) [currently known as Savoie-Piemont project] || 2019 Permitting FR Construction IT

2.7 PCI France - Spain interconnection between Aquitaine (FR) and the Basque country (ES) || 2020 Study phase

2.13.1. Ireland – United Kingdom interconnection between Woodland (IE) and Turleenan (UK – Northern Ireland) || 2017 Permitting

2.13.2. Ireland – United Kingdom Interconnection between Srananagh (IE) and Turleenan (UK – Northern Ireland) || 2020-2025 Study phase

2.14 PCI Italy – Switzerland interconnection between Thusis/Sils (CH) and Verderio Inferiore (IT) || 2018 Permitting

2.15.1. Interconnection between Airolo (CH) and Baggio (IT) || 2022

2.17 PCI Portugal - Spain interconnection between Vila Fria - Vila do Conde – Recarei (PT) and Beariz - Fontefría (ES) || 2016 Permitting

Priority corridor North-South electricity interconnections in Central Eastern and South Eastern Europe ("NSI East Electricity") || 3.2.1. Interconnection between Lienz (AT) and Veneto region (IT) || 2022 Study phase

3.3 PCI Austria - Italy interconnection between Nauders (AT) and Milan region (IT) || 2018 Study phase

3.4 PCI Austria – Italy interconnection between Wurmlach (AT) and Somplago (IT) || 2017 Permitting

3.10.1. Interconnection between Hadera (IL) and Vasilikos (CY) || 2018 Study phase

3.10.2. Interconnection between Vasilikos (CY) and Korakia, Crete (EL) || 2022 Study phase

3.14.1. Interconnection between Eisenhüttenstadt (DE) and Plewiska (PL) || 2022 Study phase

3.15.1. Interconnection between Vierraden (DE) and Krajnik (PL) || 2017 Permitting

3.19.1. Interconnection between Villanova (IT) and Lastva (ME) || 2017 Construction

3.20.1. Interconnection between West Udine (IT) and Okroglo (SI) || 2021 Study phase

3.21 PCI Italy – Slovenia interconnection between Salgareda (IT) and Divača - Bericevo region (SI) || 2022 Permitting

3.22.1. Interconnection between Resita (RO) and Pancevo (RS) || 2017 Permitting

Baltic Energy Market Interconnection Plan ("BEMIP Electricity") || 4.2.1. Interconnection between Kilingi-Nõmme (EE) and Riga CHP2 substation (LV) || 2020 Permitting

4.3 PCI Estonia / Latvia / Lithuania synchronous interconnection with the Continental European networks || 2023-2025 Study phase

4.5.1. LT part of interconnection between Alytus (LT) and LT/PL border || 2015 Construction

[1] According to
ENTSO-E's TYNDP 2014 (if applicable) or according to information provided by
project promoters to the Commission in 2014;

[2] Projects in blue
concern the interconnection projects which are expected to be completed by
2017/18 or where a substantial amount of work will have been done by 2017; they
could apply for support under the EFSI