Report from the Commission to the Council and the European Parliament on progress concerning measures to safeguard security of electricity supply and infrastructure investment
Date: 2010-06-25
Institutions: European Commission
Subjects: electrical energy, energy grid, energy supply, investment, power plant, security of supply

EN 

EN 

   EN 

 
 
EUROPEAN COMMISSION 

Brussels, 25.6.2010 
COM(2010)330 final 

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

on progress concerning measures to safeguard security of electricity supply and 
infrastructure investment 

EN 

   EN 

 
 
 
  
REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

on progress concerning measures to safeguard security of electricity supply and infrastructure 
investment 

I. INTRODUCTION 

This  report  fulfils  the  requirements  as  set  out  under  Article  9  of  the  Directive  2005/89/EC  (the 
"Directive") of 18 January 2006 concerning measures to safeguard security of electricity supply and 
infrastructure investment. It outlines the progress made by Member States on the implementation of 
the Directive and key changes in monitoring electricity security of supply.  

The  Directive’s  purpose  is  to  establish  measures  to  safeguard  the  security  of  electricity  supply,  to 
guarantee an adequate level of generation capacity to guarantee an adequate balance between supply 
and demand and to set up an appropriate level of inter-connection between EU countries. Further, the 
Directive establishes a framework within which Member States are to define transparent, stable and 
non-discriminatory  policies  on  security  of  electricity  supply  that  are  compatible  with  a  competitive 
internal  market  for  electricity.  The  Directive  complements  the  measures  already  in  the  Electricity 
Directive  2003/54/EC  and  the  Regulation  1228/03  on  Cross  Border  Electricity  Exchanges.  Taken 
together,  the  provisions  in  these  pieces  of  legislation  provide  a  set  of  coherent  basic  rules  on  those 
important issues that contribute to ensuring generation and transmission adequacy. 

II. DETAILED FINDINGS 

ARTICLE 3: MAIN PROVISIONS  

The  provisions  of  the  Directive  aim  at  ensuring  a  high  level  of  security  of  electricity  supply  by 
establishing  a  favourable  investment  climate  and  by  defining  the  roles  and  responsibilities  of  the 
competent  authorities  and  all  relevant  actors.  In  doing  so,  Member  States  must  take  into  account 
factors  such  as  the  need  for  a  stable  regulatory  environment,  the  promotion  of  renewable  energy 
sources (“RES”) and the need for regular maintenance and renewal of electricity networks. 

Overall,  Member  States  have  adequately  transposed  this  article  either  through  new  legislative 
requirements or by using provisions of other directives that cover the same objectives. The provisions 
of  the  Directive  will  be  reinforced  through  the  Third  Internal  Energy  Market  package  (the  "Third 
Package"), which requires transmission operators to strengthen their cooperation in a number of areas, 
in  particular  with  regard  to  investment  planning.  The  Third  Package  also  establishes  the  European 
Network of Transmission System Operators for Electricity (ENTSO-E) whose tasks are to elaborate 
network  development  plans,  undertake  integrated  network  modelling  and  develop  scenarios  and 
assessments  concerning  the  resilience  and  deliverability  of  the  integrated  system.  The  development 
plans should be sufficiently forward looking so as to allow for the early identification of investment 
gaps, in particular with regard to cross border capacities.  

However,  some  important  obstacles  still  exist  in  the  European  market.  Price  risk  is  a  key  issue 
concerning the feasibility of investment projects. Coexistence of open energy markets and regulated 
energy prices is still quite common among EU Member States: more than half of the Member States 

EN 

2 

   EN 

 
have  regulated  prices1.  Systems  of  regulated  prices  that  are  of  a  general  character  and  are  not 
transparent  and  targeted  exclusively  to  vulnerable  customers  are  not  considered  as  indispensable. 
Regulated tariffs often do not reflect wholesale price levels, which can be detrimental to investments 
in  new  generation  capacities.  In  the  medium  term,  this  may  compromise  the  security  of  electricity 
supplies. 

Updating or renewing generation and network assets, particularly in relation to achieving RES targets, 
will  require  considerable  investment  over  the  coming  years.  These  investments  will  need  to  be 
financed, which means that investors must be confident that they can recover the long run marginal 
cost.  The  majority  of  this  funding  will  almost  certainly  come  from  the  market.  How  measures  with 
regard  to  RES  targets  interact  with  the  overall  electricity  market  and  how  transmission  system 
operators develop the grid will become increasingly important. A deep and liquid integrated European 
electricity market can help reduce price volatility and bring forward investment that will enhance the 
integration of the internal electricity market. 

ARTICLE 4: OPERATIONAL NETWORK SECURITY  

For  operational  network  security,  the  Directive  specifies  that  Member  States  or  other  competent 
authorities  must  ensure  that  the  transmission  system  operators  (“TSOs”)  set  minimum  operational 
rules and obligations on network security and that system operators must comply with these rules. In 
particular,  the  Member  States  shall  ensure  that  interconnected  transmission  and  distribution  system 
operators  (“DSO’s”)  exchange  information  relating  to  the  operation  of  networks.  Amongst  other 
requirements,  obligations  are  also  placed  on  the  achievement  of  quality  of  supply  and  network 
security performance objectives. 

Electricity  network  operators  are  at  the  centre  of  solving  possible  disturbances  in  electricity  supply. 
Transparency  and  information  sharing  with  other  grid  operators  is  very  important.  Improved  co-
ordination  reduces  the  risk  of  blackouts  and  protects  European  consumers.  Interconnection  capacity 
between  TSOs  plays  a  very  important  role  in  maintaining  and  enhancing  system  security  during 
generator outages. The network failures and electricity black-outs in 2003 and 2006 were  caused or 
exacerbated  by  insufficient  coordination  of  network  operation  and  missing  links  in  the  electricity 
networks. They clearly showed the limit of voluntary cooperation.  

In most EU Member States, the network operational rules are drawn up by the TSO from a technical 
perspective  with  some  form  of  approval  system  that  involves  regulators  and/or  government.  In  all 
Member  States,  the  operational  network  security  criteria  for  emergency  operation  procedures  are 
defined  in  advance  and  provisions  for  cooperation  with  adjacent  TSOs  in  issues  of  relevance  for 
operational security exist. For example, in the Czech Republic, Luxembourg, Portugal and the Slovak 
Republic,  the  government  has  an  explicit  role  in  the  fulfilment  and  development  of  operational 
security.  

The 2005/89/EC Electricity Directive requires that TSOs and, where appropriate, DSOs set and meet 
quality  of  supply  and  network  security  performance  objectives.  In  2008,  the  CEER  carried  out  a 
benchmarking exercise on the quality of electricity supply2. The survey noted that all Member States 
monitor unplanned interruptions of more  than three  minutes and  overall  the continuity of electricity 
supply  in  Europe  is  improving  with  customer  minutes  lost  per  year  decreasing  almost  continually 
since 2002. The survey also noted that most Member States collect some information on the cause of 

1 
2 

http://ec.europa.eu/energy/gas_electricity/benchmarking_reports_en.htm 
4th Benchmarking Report on Electricity Quality of Supply Ref. C08-EQS-24-04, 10 December 2008. The survey 
did not provide information on Ireland, Greece, Bulgaria, Cyprus, Latvia, Malta or the Slovak Republic. 

EN 

3 

   EN 

 
                                                 
interruptions.  As  one  would  expect,  the  continuity  of  supply  is  better  in  urban  rather  than  rural 
regions.  However,  work  is  continuing  with  the  European  Committee  for  Electrotechnical 
Standardisation  (CENELEC)  on  the  development  of  harmonised  continuity  indicators,  so  as  to 
improve the effectiveness of continuity of supply monitoring schemes. 

The Commission convenes biannual Electricity Cross-Border Committee meetings, where summer or 
winter electricity outlooks are discussed. The purpose of the meetings is information sharing so as to 
raise awareness with regard to potential supply issues. The seasonal (summer or winter) outlook report 
is  prepared  at  European  level,  presenting  the  summary  of  the  national  or  regional  power  balances 
between  forecast  generation  and  peak  demand  on  a  weekly  basis  for  the  coming  summer/winter 
period. Should the situation require so, the Commission can establish ad-hoc "cellules de vigilance" 
for the critical periods, in order to ensure quick information sharing between neighbouring countries 
and transmission operators. Such a "cellule de vigilance" was established during the summer months 
of  2007-2009.  The  main  conclusion  from  the  meetings  held  during  2007-2009  is  that  national 
generation-load  balances  in  most  countries  are  generally  considered  adequate  for  secure  system 
operations under normal conditions. During severe weather conditions or other identified periods with 
potential  risk  for  power  shortage,  mitigation  measures  are  put  in  place  –  the  necessary  imports  are 
achievable with the existing interconnection capacity. 

The Third Package has augmented the duties of regulators to include monitoring compliance with, and 
reviewing,  the  past  performance  of  network  security  and  reliability  rules  and  setting  or  approving 
standards and requirements for the quality of service and supply or contributing thereto together with 
other competent authorities. The regulators also have the duty of ensuring that TSOs and DSOs adhere 
to their responsibilities under the Directive, including ensuring that networks are capable of meeting 
reasonable demands for electricity. In addition, at the transmission level, regulators have the duty of 
monitoring  TSOs  investment  plans  and  their  consistency  with  the  Community-wide  network 
development  plan,  which  includes  a  generation  adequacy  outlook  that  will  be  produced  by  the 
ENTSO-E.  

ARTICLE 5: MAINTAINING BALANCE BETWEEN SUPPLY AND DEMAND  

In  order  to  maintain  a  balance  between  supply  and  demand,  Member  States  must  take  appropriate 
measures to maintain a balance between the demand for electricity and the availability of generation 
capacity. This must be done by encouraging the establishment of a wholesale market framework that 
provides suitable price signals for generation and consumption and by requiring TSOs to ensure that 
an appropriate level of generation reserve capacity is available for balancing purposes and/or to adopt 
equivalent market based measures. 

Electricity Demand  

Electricity  demand  trends  as  presented  by  the  European  Commission  in  the  2nd  Strategic  Energy 
Review3 show an increasing demand for electricity, which is consistent with what European electricity 
industry  stakeholders  have  forecasted,  albeit  at  a  somewhat  lower  level.  The  Commission  estimates 
that under current trends and policies the annual increase in electricity demand will be around 1% for 
the  next  20  years4.  The  recently  published  ENTSO-E  system  adequacy  forecast5  for  2010-2025 
indicates  that  electricity  demand  is  expected  to  increase,  with  most  Member  States  reporting  quite 
strong load growth post 2015.  

3 
4 

5 

http://ec.europa.eu/energy/strategies/2008/doc/2008_11_ser2/strategic_energy_review_wd_future_position2.pdf 
Trends 
Site/en_GB/-/EUR/ViewPublication-Start?PublicationKey=KOAC07001 
www.entsoe.eu/fileadmin/user_upload/_library/publications/entsoe/outlookreports/SAF_2010-2025_final.pdf 

to  2030-  update  2007;  http://bookshop.europa.eu/is-bin/INTERSHOP.enfinity/WFS/EU-Bookshop-

EN 

4 

   EN 

 
 
                                                 
ENTSO-E annual 
average load growth 

2010 to 2015 

2015 to 2020 

2020 to 2025 

January 7 p.m. 

July 11 a.m. 

1.32% 

1.49% 

1.45% 

1.66% 

1.21% 

1.32% 

Data source: ENTSO-E System adequacy forecast report 

These forecasts have to be put in perspective with the recent economic crisis, which has caused sharp 
decreases in demand for electricity across Europe. Year on year, EU monthly electricity consumption 
dropped by more than 5%, 10%, 6% and 5 % in March, April, May and June 2009 respectively. The 
European electricity consumption  even  decreased to a historically low level in June 2009, i.e. -23% 
compared  to  the  beginning  of  the  year6.  The  fall  in  electricity  consumption  levelled  out  and  some 
growth returned, however, levels remained substantially lower compared to the previous years. 

A number of countries, such as Germany, France, Poland and Portugal, foresee an influence of energy 
saving  programs  and  higher  technological  efficiency  on  their  energy  consumption  growth.  Others 
noted  that  the  transition  towards  low  carbon  energy  systems  can  increase  electricity  use,  especially 
with regard to consumption by heat pumps and electrical vehicles. 

Direct energy savings and investments in energy efficiency are one of the most cost-effective ways to 
counterbalance  future  demand  increases.  Following  obligations  of  the  Directive  2006/32/EC  on 
energy end-use efficiency and energy services, all Member States have prepared their National Energy 
Efficiency  Action  Plans  (NEEAPs)  with  a  comprehensive  listing  of  actions  and  measures.  As  the 
analysis  of  NEEAPs  carried  out  by  the  European  Commission  shows,  apart  from  direct  financing 
measures such  as grants  or loan  schemes,  a number of Member  States are planning  or  have already 
implemented  tax  rebates  for  investments  in  energy  efficiency  in  certain  sectors  (e.g.  housing, 
industries, etc) and are using energy taxation to directly incentive energy savings in other cases. In the 
medium  term,  effective  implementation  of  measures  such  as  these  will  be  crucial  to  ensuring  the 
security of supply in electricity. 

In  the  long  run,  electricity's  role  in  final  energy  consumption  is  likely  to  continue  to  grow.  The 
decisions taken today are of key importance in ensuring that we can deliver the reductions in carbon 
emissions  necessary  after  2020  to  effectively  tackle  the  climate  challenge.  The  challenge  for  policy 
makers is to ensure that the energy markets in Europe, both regulated and unregulated, can deliver an 
environment which allows investors to undertake the major capital investments required. Appropriate 
support will also be necessary to develop technologies to deliver low-carbon or carbon free solutions 
in the electricity sector. 

Generation Adequacy 

Between  1997  and  2007,  EU-27  installed  generation  capacity  increased  by  18%  at  779  GW.  The 
installed capacity of thermal power plants grew by 16%, hydro capacity rose by 5% and there was an 
eleven  fold  growth  in  RES  generation7.  According  to  the  latest  data  of  the  European  Wind  Energy 
Association8, renewable power installations accounted for 61% of all new installations in 2009, which 

6 

7 

8 

For  detailed  analysis,  see  the  Quarterly  reports  on  European  Electricity  Markets  at  the  following  address: 
http://ec.europa.eu/energy/observatory/electricity/electricity_en.htm 
For  details,  see  also  2009  Annual  Report  of  the  Market  Observatory  for  energy  of  the  European  Commission, 
SEC(2009) 1734 
http://www.ewea.org/fileadmin/emag/statistics/2009generalstats/ 

EN 

5 

   EN 

 
 
 
                                                 
is  the  second  consecutive  year  that  RES  accounted  for  the  majority  of  new  power  installations. 
Investment in EU wind farms in 2009 was €13 bill ion, which corresponds to about 10,2 GW of new 
wind power capacity or 39% of all new generation capacity. The incorporation of large scale off-shore 
wind generation will present the internal market with considerable issues with regard to infrastructure 
development, balancing and cost recovery.  

Notwithstanding  the  increase  in  RES,  thermal  generation  continues  to  provide  the  majority  of 
electricity  across  the  EU.  In  2007,  the  majority  of  EU-27  total  installed  capacity  was  provided  by 
thermal  power  plants  (58%),  followed  by  hydro  plants  (18%)  and  nuclear  plants  (17%),  while  the 
capacity of other RES (excluding hydro) had a 7% share in 2007 compared to 1% in 1997.  

To  date,  EU  generation  capacity  has  kept  pace  with  steadily  growing  demand.  A  detailed  analysis 
performed  by  ENTSO-E  in  its  system  adequacy  forecast  suggests  that  there  will  be  sufficient 
generation  capacity  for  the  period  between  2010  and  2025.  However,  national  reports  submitted  by 
Member  States  indicate  that  national  generation  adequacy  depends  on  important  assumptions,  in 
particular  extending  the  lifetime  of  existing  units.  Without  replacing  existing  generation  units, 
additional capacity of 100-300 GW between 2009 and 2025 would be required. 

ENTSO-E's  system  adequacy  report  suggests  that  net  generating  capacity  will  increase  in  both 
(conservative (ScA) and best estimate (ScB)) of its scenarios as presented in the figure bellow9: 

9 

This includes EU-27 plus other ENTSO-E members 

EN 

6 

   EN 

 
 
 
                                                 
Generation  adequacy  can  be  assessed  by  comparing  the  difference  between  demand  and  reliably 
available capacity, which is referred to as Remaining Capacity. The table below shows that Remaining 
Capacity is positive, however, given a low level of new generation development under Scenario A, the 
level declines sharply after 2015.  

It is clear that generation adequacy will vary across Member States and within each jurisdiction there 
will be different circumstances for base, mid-merit and peak generation segments. It is important not 
only to consider new generation installations but also the age of existing generating plants. 

The  2nd  Strategic  Energy  Review  provided  a  detailed  overview  of  the  age  of  operational  generation 
capacity.  In  summary,  as  of  end  of  2008,  the  majority  of  European  gas  generators  were  less  than  5 
years old. However, the majority of coal and nuclear plants was more than 21 years old. Many of them 
are  approaching  the  date  of  decommissioning,  which  is  around  40  or  more  years  after  the  start  of 
operations, depending on the generation type. Combining the need for replacing aging plants with the 
increasing  share  of  RES  based  generation,  notably  on-  and  offshore  wind,  as  a  result  of  2020 
commitments,  and  of  the  Large  Combustion  Plant  Directive  2001/80/EC,  presents  a  significant 
challenge  to  system  operators  over  the  coming  years  both  in  terms  of  balancing  and  network 
adequacy. After 2015, additional investments in generating capacity would be required to maintain the 
level  of  adequacy  at  an  appropriate  level.  ERGEG  has  expressed  concerns  that  the  financial  crisis 
might delay necessary investments that are already under consideration as the economic viability for 
these projects is put into question due to lower electricity demand.  

Most  countries  leave  generation  adequacy  to  be  achieved  by  the  market.  The  Directive  2005/89/EC 
does, however, set out a range of possible measures that Member States may use to ensure security of 
supply. Such interventions may be considered in addition to the tendering procedure included in the 
Directive  2003/54/EC.  Article  7  of  Directive  2003/54/EC  already  notes  that  the  tender  procedure 
should  be  considered  as  a  last  resort  in  the  event  that  the  authorisation  process  has  failed  to  bring 
about sufficient capacity to meet demand.  

Tendering constitutes a major intervention in the market, which can create distortion between existing 

EN 

7 

   EN 

 
 
 
and new capacities, and can bring about failure of the investment cycle where generators are likely to 
be reluctant to invest if a subsequent tender could substantially reduce the value of their investment. 
National  approaches  nearly  always  have  some  effects  on  neighbouring  markets.  A  tender  for  new 
generation  capacity  near  the  border  of  a  neighbouring  country  can  influence  investment  behaviour 
there  too  (relocation  of  planned  investments)  and  have  effects  on  cross  border  trade.  Therefore, 
tendering must be used only as the final measure to avoid physical shortage in supply when there is 
absolutely  no  other  way  to  ensure  the  necessary  capacity  at  the  indicated  time  of  the  potential 
shortage. Several Member States (Spain, Italy, Greece, Denmark and Ireland) have employed different 
schemes for provision of generation capacities. 

The situation with regard to tenders is different however, when it comes to RES production capacity, 
which is still in most cases not economically viable without particular incentives. Therefore, tendering 
procedures  are  often  used  by  Member  States.  Wind  based  generation  is  becoming  a  noticeable 
addition to the EU's electricity generation mix and the use of tendering procedures for its promotion 
should in general go hand in hand with a careful assessment of the effect on the market. 

ARTICLE 6: NETWORK INVESTMENT 

Member States are required to establish a regulatory framework that provides investment signals for 
both  transmission  and  distribution  system  network  operators  to  develop  their  networks  in  order  to 
meet  feasible  demand  from  the  market.  The  framework  must  also  facilitate  investment  and  network 
renewal,  where  necessary.  With  the  exception  of  the  Netherlands  and  Romania,  Member  States  did 
not have to modify existing energy legislation to give effect to this provision. 

Grid reinforcement can be necessary to allow power plants to generate at their maximum levels and 
transport  electricity  from  generators  to  consumers.  The  winter  of  2009  highlighted  the  fragility  of 
existing  electricity  grids  when  coping  with  increased  consumption  of  electricity.  However,  grid 
reinforcements  can  be  adversely  affected  by  long  national  planning  and  permitting  procedures.  In 
most Member States, network operators are obliged to develop and maintain the network according to 
the  needs  and  requirements  to  ensure  operational  and  long  term  security  of  supply,  either  by 
legislation or by licence when costs of investments are recovered through transmission or distribution 
tariffs. The Directive requires that transmission and, where appropriate, distribution system operators 
set  and  meet  quality  of  supply  and  network  security  performance  objectives.  This  implies  the 
introduction  of  regulatory  incentives  to  invest  in  efficient  and  effective  networks.  As  reported  by 
Member States, this requirement has been implemented by most since 2008. 

Electricity is usually produced short distances from consumption. However, the physics of electricity 
means  that  it  can  be  transmitted  long  distances  instantaneously,  thus  facilitating  cross  border  trade. 
National  policies  on  generation  capacity  combine  with  existing  interconnection  capacities.  Some 
Member States have chosen not to invest into local generation, but rather rely on interconnection and 
supply contracts with neighbours: 

EN 

8 

   EN 

 
In the last ten years, EU-27 net imports of electricity were relatively stable; however, large differences 
can be noted amongst the Member States. In 2007, net imports of electricity in the EU-27 amounted to 
10.5  TWh.  Among  EU-27  Member  States,  France  has  traditionally  been  the  largest  net  electricity 
exporter,  while  Italy  was  the  largest  net  importer.  For  countries,  in  which  domestic  electricity 
generation  capacity  will  not  be  sufficient  to  cover  the  electricity  consumption  during  peak 
consumption periods, interconnection capacity is usually sufficient to meet demand. 

Adequacy  of  interconnection  capacity  is  not  defined  in  European  legislation  and  Directive 
2005/89/EC  did  not  introduce  a  specific  level  of  interconnection  required  between  Member  States. 
However, a target interconnection level of at least 10% of installed generation capacity was agreed at 
the European Council in Barcelona on 15 and 16 March 2002. Low levels of interconnection have the 
effect of fragmenting the internal market and are an obstacle to the development of competition. The 
existence of adequate physical transmission interconnection capacity, whether cross-border or not, is 
crucial, however it is not a sufficient condition for competition to be fully effective. The complete list 
of cross-border interconnection lines is provided in the ENTSO-E statistical yearbook10. 

Physical  values  of  cross-border  interconnection  lines  differ  considerably  from  the  actually  available 
capacity  in  the  highly  meshed  interconnected  transmission  networks  in  Europe.  For  planning 
purposes,  Total  Transfer  Capacity  (TTC)  and  Net  Transfer  Capacity  (NTC)  values  are  needed  for 
market  actors  to  anticipate  and  plan  their  transactions.  The  graph  below  illustrates  the  actual  cross-
border transmission capacity for the 2009 winter period11: 

10 
11 

http://www.entsoe.eu/index.php?id=55, Statistical Yearbook, Tie-lines data Table T9. 
ENTSO-E transmission NTC values for winter 2009-2010 have been used by summing import values per country, 
and taking into account overall import limitations when they have been declared. For installed generation capacity 
Eurostat 2007 values have been used. 

EN 

9 

   EN 

 
 
                                                 
140%

120%

100%

80%

60%

40%

20%

0%

Electricity cross-border capacities

Winter 2009-2010
Summer 2001

10%

y
t
i
c
a
p
a
c
n
o
i
t
a
r
e
n
e
g
d
e

l
l

a
t
s
n

i
/

y
t
i
c
a
p
a
c
t
r
o
p
m

I

Latvia

Lithuania
Estonia

Luxembourg
Slovenia
Hungary

Slovakia

Denmark

Czech Republic
Finland
Belgium
Austria

Netherlands
Sweden
Bulgaria
Germany

Greece

Portugal

Romania
France

Italy
Ireland

Spain UK

Cyprus

Malte

Poland

The  implementation  of  the  2020  renewable  energy  target  will  require  further  development  and 
reinforcement  of  grid  infrastructure,  including  intelligent  networks  and  interconnections.  Directive 
2009/28/EC  requires  Member  States  to  take  the  appropriate  steps  for  ensuring  these  necessary 
developments  and  to  accelerate  authorisation  procedures  for  grid  infrastructure  and  to  coordinate 
approval  of  grid  infrastructure  with  administrative  and  planning  procedures  for  the  further 
development  of  electricity  production  from  renewable  energy  sources.  As  regards  cross-border 
interconnection  projects  planned  in  the  near  future  and  reported  by  national  authorities  (or  known 
otherwise), a list is provided in Annex 1 of this report.  

ARTICLE 7: REPORTING 

Monitoring  and  reporting  of  security  of  supply  is  already  an  obligation  imposed  by  Article  4  of 
Directive  2003/54/EC.  According  to  this  article,  Member  States  are  obliged  to  produce  a  biennial 
report with specific reference to the supply/demand balance on the national market for the next five 
years, planned new investment for the next five or more years, capacity, quality and level of network 
maintenance; and measures to cover peak demand and potential shortfalls. The content and scope of 
the monitoring report is further explained in Article 7 of the Directive 2005/89/EC. 

Most  Member  States  provide  reports  with  information  on  consumption  and  generation  forecasts  as 
well as generation and investment network needs with timeframes of more than 20 years. The general 
conclusion from the national reports on power system adequacy is that it is to remain similar to the 
current situation.  

The  quality  of  reporting  varies  across  Member  States.  Some  Member  States  publish  comprehensive 
data and cover all items identified by the Directive (for example Finland), while some reports could be 
improved by providing more detail. The reports from less mature electricity markets, for example, do 
not sufficiently describe how the functioning of their wholesale markets will contribute to generation 
and transmission adequacy. 

EN 

10 

   EN 

 
 
 
 
 
The Third Energy Package has brought important changes for monitoring arrangements. The ENTSO-
E System Adequacy Forecast report for 2010-2025 was the first attempt to evaluate electricity system 
adequacy at European level. The new 10-year development plan will cover all aspects that are relevant 
for monitoring the security of supply – both on the side of generation and transmission adequacies. 

The  Commission  has  proposed  to  improve  the  current  regulatory  framework  that  imposes  reporting 
obligations  on  Member  States  on  energy  infrastructure  via  a  draft  Regulation  concerning  the 
notification  to  the  Commission  of  investment  projects  in  energy  infrastructure  within  the  European 
Community. 

CONCLUSIONS 

Member  States  have  effectively  implemented  the  provisions  of  the  Directive  either  through  the 
creation of new legislative provisions or the use of existing provisions emanating from other European 
legislation. Over the short term, there appears to be sufficient network capacity and generation to cope 
with European electricity demand. However, the picture becomes less clear over the medium and long 
term.  Aging  generation  plants  will  have  to  be  replaced.  For  this  to  happen,  there  needs  to  be  clear 
market  signals  for  new  investment,  and  Member  States  should  be  mindful  of  the  delays  that  their 
planning  procedures  could  cause.  Access  to  funding  may  also  be  more  difficult  in  the  current 
economic climate.  

Member States should fully consider and prepare for the effects of introducing large amounts of RES, 
in particular on- and offshore wind, into their systems. As penetration levels increase, such integration 
will require changes to balancing rules and procedures in addition to considerable network investment 
that  over  time  will  be  needed  in  order  to  accommodate  the  new  profile  of  generation.  Similarly, 
changes in demand patterns may need to be factored in as energy efficiency measures including Smart 
Meters  take  effect.  As  supported  by  the  regulators,  incentive  based  schemes  should  be  employed  to 
facilitate new network investment, and consideration should be given to the utilisation of Smart Grid 
technology. 

The Third Energy Package will bring important changes for monitoring security of supply. ENTSO-
E's  obligation  to  produce  a  biennial  10  year  development  plan  that  covers  all  aspects  relevant  for 
monitoring  of  security  of  supply  –  both  on  the  side  of  generation  and  transmission  adequacies,  is  a 
significant  step  forward.  Although  non-binding  in  nature  it  will  provide  an  appropriate  basis  for 
ENTSO's network codes on network security and reliability.  

As  the  EU  approaches  its  2020  climate  targets,  Member  States  should  be  increasingly  vigilant  of 
potential security of supply issues and take early enough appropriate measures to modernise and adapt 
their  systems  to  the  new  challenges  so  that  consumers  can  enjoy  a  high  quality,  low  carbon  and 
continuous supply of electricity.  

This report explained some of the future evolutions in the European electricity system, notably with 
regard  to  the  integration  of  massive  amounts  of  electricity  from  renewable  energy  sources  and  the 
need to curb greenhouse gas emissions in the energy sector: fuel shift towards electricity in the overall 
energy  mix;  increasing  distance  between  production  and  consumption  due  to  higher  reliance  on 
renewable  energy  sources;  intermittency  of  the  major  renewable  sources  (wind  and  solar 
photovoltaic), increasing the need for balancing capacity, be it conventional or renewable; potentially 
increased role of electricity imports from outside the EU, due to high "green electricity" potential in 
neighbouring  regions.  These  evolutions  will  require  massive  investments  and  appropriate  incentive 
schemes  for  delivering  these  investments  in  a  timely  manner,  while  ensuring  competition, 
sustainability  and  security  of  supply.  The  European  Commission  is  therefore  currently  preparing  an 
Energy Infrastructure Package, whose role will be to encourage the development of European energy 

EN 

11 

   EN 

 
infrastructure.  This  new  package  will  build  upon  the  current  TEN-E  framework  and  establish  a 
complete  set  of  policies,  taking  into  account  existing  procedures  and  financing  for  infrastructure 
development.  

EN 

12 

   EN 

 
List of reported cross-border interconnection investment intentions  

for the next five years 

Annex 1 

1. France-Belgium;  

2. France-Spain; 

3. France-Italy; 

4. Bulgaria-FYROM;  

5. Denmark-Norway;  

6. Estonia-Finland;  

7. Estonia-Latvia;  

8. Finland-Sweden;  

9. Sweden-Norway; 

10. Sweden-Lithuania;  

11. Lithuania-Poland; 

12. Greece-Turkey;  

13. Germany-Poland;  

14. Germany-The Netherlands;  

15. Ireland-United Kingdom;  

16. United Kingdom-The Netherlands; 

17. United Kingdom-Belgium; 

18. United Kingdom-France; 

19. Romania-Serbia;  

20. Slovakia-Hungary;  

21. Slovenia - Italy;  

22. Austria – Hungary; 

22. Austria - Italy; 

23. Malta – Italy;  

24. Portugal-Spain.  

The European Economic Recovery Programme also envisages support to grid integration of offshore 
wind energy. The two offshore grid integration projects are the Baltic-Kriegers Flak and the North See 
Grid. 

EN 

13 

   EN