COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Energy infrastructure priorities for 2020 and beyond - A Blueprint for an integrated European energy network 
Date: 2010-11-17
Institutions: European Commission
Subjects: European cooperation, energy consumption, energy transport, natural gas

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EUROPEAN COMMISSION 

Brussels, 17.11.2010 
COM(2010) 677 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Energy infrastructure priorities for 2020 and beyond -  
A Blueprint for an integrated European energy network 

{SEC(2010) 1395 final} 
{SEC(2010) 1396 final} 
{SEC(2010) 1398 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Energy infrastructure priorities for 2020 and beyond -  
A Blueprint for an integrated European energy network 

TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

2.6. 

2.7. 

3. 

4. 

Introduction .................................................................................................................. 4 

Infrastructure challenges call for urgent action............................................................ 6 

Electricity grids and storage......................................................................................... 6 

Natural gas grids and storage ....................................................................................... 6 

District heating and cooling networks.......................................................................... 6 

CO2 capture, transport and storage (CCS) ................................................................... 7 

Oil and olefin transport and refining infrastructure ..................................................... 7 

The market will deliver most of the investments but obstacles remain ....................... 8 

Investment needs and financing gap ............................................................................ 9 

Energy infrastructure Blueprint: A new method for strategic planning....................... 9 

European infrastructure priorities 2020 and beyond.................................................. 10 

4.1. 

Priority corridors for electricity, gas and oil .............................................................. 10 

4.1.1.  Making Europe’s electricity grid fit for 2020 ............................................................ 10 

4.1.2.  Diversified gas supplies to a fully interconnected and flexible EU gas network....... 11 

4.1.3.  Ensuring the security of oil supply............................................................................. 11 

4.1.4.  Roll-out of smart grid technologies............................................................................ 11 

4.2. 

Preparing the longer term networks ........................................................................... 12 

4.2.1.  European Electricity Highways.................................................................................. 12 

4.2.2.  A European CO2 transport network ........................................................................... 12 

4.3. 

From priorities to projects.......................................................................................... 13 

5. 

5.1. 

5.2. 

5.3. 

Toolbox to speed up implementation......................................................................... 13 

Regional clusters ........................................................................................................ 13 

Faster and more transparent permitting procedures ................................................... 14 

Better methods and information for decision makers and citizens ............................ 15 

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5.4. 

Creating a stable framework for financing................................................................. 15 

5.4.1.  Leveraging private sources through improved cost allocation .................................. 16 

5.4.2.  Optimising the leverage of public and private sources by mitigating investors risks 16 

6. 

Conclusions and way forward.................................................................................... 17 

ANNEX.................................................................................................................................... 18 

1. 

2. 

3. 

Introduction ................................................................................................................ 18 

Evolution of energy demand and supply.................................................................... 19 

Priority corridors for electricity, gas and oil .............................................................. 25 

3.1. 

Making Europe's electricity grid fit for 2020............................................................. 25 

3.1.1.  Offshore grid in the Northern Seas ............................................................................ 25 

3.1.2. 

Interconnections in South Western Europe................................................................ 29 

3.1.3.  Connections in Central Eastern and South Eastern Europe ....................................... 30 

3.1.4.  Completion of the Baltic Energy Market Interconnection Plan in electricity............ 31 

3.2. 

Diversified gas supplies to a fully interconnected and flexible EU gas network....... 31 

3.2.1.  Southern Corridor....................................................................................................... 31 

3.2.2.  North-South gas interconnections in Eastern Europe ................................................ 33 

3.2.3.  Completion of the Baltic Energy Market Interconnection Plan in gas ...................... 34 

3.2.4.  North-South Corridor in Western Europe .................................................................. 35 

3.3. 

3.4. 

4. 

4.1. 

4.2. 

Ensuring the security of oil supply............................................................................. 35 

Roll-out of smart grid technologies............................................................................ 36 

Preparing the longer term networks ........................................................................... 41 

European electricity highways ................................................................................... 41 

A European CO2 transport network ........................................................................... 42 

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1. 

INTRODUCTION 

Europe's  energy  infrastructure  is  the  central  nervous  system  of  our  economy.  EU  energy 
policy  goals,  as  well  as  the  Europe  2020  economic  aims,  will  not  be  achievable  without  a 
major shift in the way European infrastructure is developed. Rebuilding our energy system for 
a  low-carbon  future  is  not  just  a  task  for  the  energy  industry.  Technological  improvements, 
greater  efficiencies,  resilience  to  a  changing  climate  and  new  flexibility  will  be  necessary. 
This is not a task which a single Member State can achieve on its own. A European strategy, 
and funding, will be necessary. 

The Energy Policy for Europe, agreed by the European Council in March 20071, establishes 
the Union’s core energy policy objectives of competitiveness, sustainability and security 
of supply. The internal energy market has to be completed in the coming years and by 2020 
renewable sources have to contribute 20% to our final energy consumption, greenhouse gas 
emissions  have  to  fall  by  20%2  and  energy  efficiency  gains  have  to  deliver  20%  savings  in 
energy  consumption.  The  EU  has  to  assure  security  of  supply  to  its  500  million  citizens  at 
competitive  prices  against  a  background  of  increasing  international  competition  for  the 
world's  resources.  The  relative  importance  of  energy  sources  will  change.  For  fossil  fuels, 
notably  gas  and  oil,  the  EU  will  become  even  more  dependent  on  imports.  For  electricity, 
demand is set to increase significantly. 

The Energy 20203 Communication, adopted on 10 November 2010, called for a step change 
in  the  way  we  plan,  construct  and  operate  our  energy  infrastructures  and  networks.  Energy 
infrastructures are at the forefront of the flagship initiative4 "Resource efficient Europe". 

Adequate,  integrated  and  reliable  energy  networks  are  a  crucial  prerequisite  not  only 
for  EU  energy  policy  goals,  but  also  for  the  EU's  economic  strategy.  Developing  our 
energy  infrastructure  will  not  only  enable  the  EU  to  deliver  a  properly  functioning  internal 
energy  market,  it  will  also  enhance  security  of  supply,  enable  the  integration  of  renewable 
energy  sources,  increase  energy  efficiency  and  enable  consumers  to  benefit  from  new 
technologies and intelligent energy use. 

The EU pays the price for its outdated and poorly interconnected energy infrastructure. 
In January 2009, solutions to the gas disruptions in Eastern Europe were hindered by a lack of 
reverse  flow  options  and  inadequate  interconnection  and  storage  infrastructures.  Rapid 
development  of  offshore  wind  electricity  generation  in  the  North  and  Baltic  Sea  regions  is 
hampered  by  insufficient  grid  connections  both  off-  and  onshore.  Developing  the  huge 
renewables  potential  in  Southern  Europe  and  North  Africa  will  be  impossible  without 
additional interconnections within the EU and with neighbouring countries. The risk and cost 
of  disruptions  and  wastage  will  become  much  higher  unless  the  EU  invests  as  a  matter  of 
urgency  in  smart,  effective  and  competitive  energy  networks,  and  exploits  its  potential  for 
energy efficiency improvements. 

In the longer term, these issues are compounded by the EU decarbonisation goal to reduce our 
greenhouse gas emissions by 80-95% by 2050, and raise the need for further developments, 

1 
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4 

Presidency conclusions, European Council, March 2007. 
30% if the conditions are right. 
COM(2010) 639. 
Europe 2020 strategy - COM(2010) 2020. 

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such as an infrastructure for large-scale electricity storage, charging of electric vehicles, CO2 
and hydrogen transport and storage. The infrastructures built in the next decade will largely 
still be in use around 2050. It is therefore crucial to keep in mind the longer term objective. 
In  2011,  the  Commission  plans  to  present  a  comprehensive  roadmap  towards  2050.  The 
roadmap  will  present  energy  mix  scenarios,  describing  ways  to  achieve  Europe’s  long-term 
decarbonisation  goal  and  the  implications  for energy  policy  decisions.  This  Communication 
identifies  the  energy  infrastructure  map  which  will  be  needed  to  meet  our  2020  energy 
objectives. The 2050 low carbon economy and energy roadmaps will further inform and guide 
EU energy infrastructure implementation by offering a long term vision. 

The  energy  infrastructures  planned  today  must  be  compatible  with  the  longer  term  policy 
choices. 

A  new  EU  energy  infrastructure  policy  is  needed  to  coordinate  and  optimise  network 
development on a continental scale. This will enable the EU to reap the full benefits of an 
integrated  European  grid,  which  goes  well  beyond  the  value  of  its  single  components.  A 
European strategy for fully integrated energy infrastructures based on smart and low-carbon 
technologies will reduce the costs of making the low-carbon shift through economies of scale 
for  individual  Member  States.  A  fully  interconnected  European  market  will  also  improve 
security of supply and help stabilise consumer prices by ensuring that electricity and gas goes 
to  where  it  is  needed.  European  networks  including,  as  appropriate,  with  neighbouring 
countries,  will  also  facilitate  competition  in  the  EU’s  single  energy  market  and  build  up 
solidarity  among  Member  States.  Above  all,  integrated  European  infrastructure  will  ensure 
that  European  citizens  and  buinesses  have  access  to  affordable  energy  sources.  This  in  turn 
will  positively  contribute  to  Europe's  2020  policy  objective  of  maintaining  a  strong, 
diversified and competitive industrial base in Europe. 

Two  specific  issues  that  need  to  be  addressed  are  project  authorisation  and  financing. 
Permitting  and  cross-border  cooperation  must  become  more  efficient  and  transparent  to 
increase public acceptance and speed up delivery. Financial solutions must be found to meet 
investment needs– estimated at about one trillion euros for the coming decade of which half 
will be needed for energy networks alone. Regulated tariffs and congestion charges will have 
to pay the bulk of these grid investments. However, under the current regulatory framework, 
all necessary investments will not take place or not as quickly as needed, notably due to 
the  non-commercial  positive  externalities  or  the  regional  or  European  value-added  of  some 
projects,  whose  direct  benefits  at  national  or  local  level  is  limited.  The  slowdown  in 
investment in infrastructure has been further compounded by the recession. 

Moves for a new energy strategy for the EU have the full support of Europe's heads of state 
and government. In March 2009, the European Council5 called for a thorough review of the 
trans-European  Networks  for  Energy  framework  (TEN-E)6  by  adapting  it  to  both  the 
challenges outlined above and the new responsibilities conferred to the Union by Article 194 
of the Treaty of Lisbon. 

This Communication outlines a Blueprint which aims to provide the EU with a vision of 
what  is  needed  for  making  our  networks  efficient.  .  It  puts  forward  a  new  method  of 
strategic  planning  to  map  out  necessary  infrastructures, qualify which ones are  of European 

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European Council Presidency Conclusions of 19/20 March 2009, 7880/09. 
The  TEN-E  Guidelines  and  TEN  Financial  Regulation.  See  the  TEN-E  implementation  report  2007-
2009 - COM(2010) 203. 

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interest on the basis of a clear and transparent methodology, and provide a toolbox to ensure 
their  timely  implementation,  including  ways  to  speed  up  authorisations,  improve  cost 
allocation and target finance to leverage private investment.  

2. 

INFRASTRUCTURE CHALLENGES CALL FOR URGENT ACTION 

The challenge of interconnecting and adapting our energy infrastructure to the new needs is 
significant, urgent, and concerns all sectors7.  

2.1. 

Electricity grids and storage 

Electricity  grids  must  be  upgraded  and  modernised  to  meet  increasing  demand  due  to  a 
major shift in the overall energy value chain and mix but also because of the multiplication of 
applications and technologies relying on electricity as an energy source (heat pumps, electric 
vehicles,  hydrogen  and  fuel  cells8,  information  and  communication  devices  etc.).  The  grids 
must  also  be  urgently  extended  and  upgraded  to  foster  market  integration  and  maintain  the 
existing  levels  of  system's  security,  but  especially  to  transport  and  balance  electricity 
generated  from  renewable  sources,  which  is  expected  to  more  than  double  in  the  period 
2007-20209.  A  significant  share  of  generation  capacities  will  be  concentrated  in  locations 
further  away  from  the  major  centres  of  consumption  or  storage.  Up  to  12%  of  renewable 
generation  in  2020  is  expected  to  come  from  offshore  installations,  notably  in  the  Northern 
Seas.  Significant  shares  will  also  come  from  ground-mounted  solar  and  wind  parks  in 
Southern Europe or biomass installations in Central and Eastern Europe, while decentralised 
generation  will  also  gain  ground  throughout  the  continent.  Through  a  well  interconnected 
and  smart  grid  including  large-scale  storage  the  cost  of  renewable  deployment  can  be 
brought  down,  as  the  greatest  efficiencies  can  be  made  on  a  pan-European  scale.  Beyond 
these  short-term  requirements,  electricity  grids  will  have  to  evolve  more  fundamentally  to 
enable  the  shift  to  a  decarbonised  electricity  system  in  the  2050  horizon,  supported  by  new 
high-voltage 
technologies  which  can 
accommodate ever-increasing shares of renewable energy, from the EU and beyond. 

long  distance  and  new  electricity  storage 

At  the  same  time  the  grids  must  also  become  smarter.  Reaching  the  EU's  2020  energy 
efficiency  and  renewable  targets  will  not  be  possible  without  more  innovation  and 
intelligence in the networks at both transmission and distribution level, in particular through 
information  and  communication  technologies.  These  will  be  essential  in  the  take  up  of 
demand side management and other smart grid services. Smart electricity grids will facilitate 
transparency  and  enable  consumers  to  control  appliances  at  their  homes  to  save  energy, 
facilitate  domestic  generation  and  reduce  cost.  Such  technologies  will  also  help  boost  the 
competitiveness and worldwide technological leadership of EU industry, including SMEs. 

2.2. 

Natural gas grids and storage 

Natural gas will continue, provided its supply is secure, to play a key role in the EU's energy 
mix  in  the  coming  decades  and  will  gain  importance  as  the  back-up  fuel  for  variable 
electricity  generation.  Although  in  the  long  run  unconventional  and  biogas  resources  may 

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9 

For  more  detailed  analysis,  see  the  Annex  and  the  Impact  assessment,  accompanying  this 
Communication. 
Large  scale  roll-out  will  require  the  development  of  a  substantial  hydrogen  trasnport  and  storgae 
infrastructure. 
Based on the national renewable energy action plans notified by 23 Member states to the Commission. 

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contribute to reducing the EU's import dependency, in the medium term depleting indigenous 
conventional natural gas resources call for additional, diversified imports. Gas networks face 
additional  flexibility  requirements  in  the  system,  the  need  for  bi-directional  pipelines, 
enhanced  storage  capacities  and  flexible  supply,  including  liquefied  (LNG)  and  compressed 
natural  gas  (CNG).  At  the  same  time,  markets  are  still  fragmented  and  monopolistic,  with 
various barriers to open and fair competition. Single-source dependency, compounded by a 
lack  of  infrastructure,  prevails  in  Eastern  Europe.  A  diversified  portfolio  of  physical  gas 
sources  and  routes  and  a  fully  interconnected  and  bidirectional  gas  network,  where 
appropriate10, within the EU are needed already by 2020. This development should be closely 
linked  with  the  EU's  strategy  towards  third  countries,  in  particular  as  regards  our  suppliers 
and transit countries. 

2.3 

District heating and cooling networks 

Thermal  power  generation  often  leads  to  conversion  losses  while  at  the  same  time  natural 
resources are consumed nearby to produce heating or cooling in separate systems. This is both 
inefficient and costly. Similarly, natural sources, such as sea- or groundwater, are seldom used 
for cooling despite the cost savings involved. The development and modernisation of district 
heating and cooling networks should therefore be promoted as a matter of priority in all larger 
agglomerations where local or regional conditions can justify it in terms of, notably heating or 
cooling  needs,  existing  or  planned  infrastructures  and  generation  mix  etc.  This  will  be 
addressed in the Energy Efficiency Plan and the 'Smart Cities' innovation  partnership,  to be 
launched early 2011. 

2.4. 

CO2 capture, transport and storage (CCS) 

CCS  technologies  would  reduce  CO2  emissions  on  a  large  scale  while  allowing  the  use  of 
fossil  fuels,  which  will  remain  an  important  source  for  electricity  generation  over  the  next 
decades.  The  technology,  its  risks  and  benefits,  are  still  being  tested  through  pilot  plants 
which  will  come  on  line  in  2015CCS  commercial  rollout  in  electricity  generation  and 
industrial  applications  is  expected  to  start  after  2020  followed  by  a  global  rollout  around 
2030. Due to the fact that potential CO2 storage sites are not evenly distributed across Europe 
and the fact that some Member States, considering their significant levels of CO2 emissions, 
have only limited potential storage within their national boundaries, construction of European 
pipeline infrastructure spanning across State borders and in the maritime environment could 
become necessary. 

2.5. 

Oil and olefin transport and refining infrastructure 

If climate, transport and energy efficiency policies remain as they stand today, oil would be 
expected  to  represent  30%  of  primary  energy,  and  a  significant  part  of  transport  fuels  are 
likely to remain oil based in 2030. Security of supply depends on the integrity and flexibility 
of  the  entire  supply  chain,  from  the  crude  oil  supplied  to  refineries  to  the  final  product 
distributed  to  consumers.  At  the  same  time,  the  future  shape  of  crude  oil  and  petroleum 
product  transport  infrastructure  will  also  be  determined  by  developments  in  the  European 
refining  sector,  which  is  currently  facing  a  number  of  challenges  as  outlined  in  the 
Commission Staff Working Document accompanying this Communication. 

10 

See the regulation on security of gas supply, (EC) No 994/2010 

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2.6. 

The market will deliver most of the investments but obstacles remain 

The policy and legislative measures the EU has adopted since 2009 have provided a powerful 
and  sound  foundation  for  European  infrastructure  planning.  The  third  internal  energy 
market package11 laid the basis for European network planning and investment by creating 
the  requirement  for  Transmission  System  Operators  (TSOs)  to  co-operate  and  elaborate 
regional and European 10-year network development plans (TYNDP) for electricity and gas 
in  the  framework  of  the  European  Network  of  TSOs  (ENTSO)  and  by  establishing  rules  of 
cooperation  for  national  regulators  on  cross-border  investments  in  the  framework  of  the 
Agency for the Cooperation of Energy Regulators (ACER).  

The third package creates an obligation for regulators to take into account the impact of their 
decisions  on  the  EU  internal  market  as  a  whole.  This  means  they  should  not  evaluate 
investments solely on the basis of benefits in their Member State, but on the basis of EU-wide 
benefits. Still, tariff setting remains nationally focussed and key decisions on infrastructure 
interconnection  projects  are  taken  at  national  level.  National  regulatory  authorities 
traditionally  have  aimed  mainly  at  minimising  tariffs,  and  thus  tend  not  to  approve  the 
necessary  rate  of  return  for  projects  with  higher  regional  benefit  or  difficult  cost-allocation 
across borders, projects applying innovative technologies or projects fulfilling only security of 
supply purposes.  

In addition, with the strengthened and extended Emission Trading System (ETS) there will 
be  a  unified  European  carbon  market.  ETS  carbon  prices  influence  already  and  will 
increasingly shift the optimal electricity supply mix and location towards low carbon supply 
sources. 

The regulation on security of gas supply12 will enhance the EU's capacity to react to crisis 
situations, through increased network resilience and common standards for security of supply 
and additional equipments. It also identifies clear obligations for investments in networks. 

Long and uncertain permitting procedures were indicated by industry as well as TSOs and 
regulators,  as  one  of  the  main  reasons  for  delays  in  the  implementation  of  infrastructure 
projects,  notably  in  electricity13.  The  time  between  the  start  of  planning  and  final 
commissioning of a power line is frequently more than 10 years14. Cross-border projects often 
face  additional  opposition,  as  they  are  frequently  perceived  as  mere  "transit  lines"  without 
local  benefits.  In  electricity,  the  resulting  delays  are  assumed  to  prevent  about  50%  of 
commercially viable projects from being realised by 202015. This would seriously hamper the 
EU’s  transformation  into  a  resource  efficient  and  low  carbon  economy  and  threaten  its 
competitiveness. In offshore areas, lack of coordination, strategic planning and alignment of 
national regulatory frameworks often slow down the process and increase the risk of conflicts 
with other sea-uses later on. 

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13 

14 
15 

Directives  2009/72/EC  and  2009/73/EC,  Regulations  (EC)  No  713,  (EC)  No  714  and  (EC)  No 
715/2009. 
Regulation (EC) No 994/2010 
Public consultation on the Green Paper Towards a secure, sustainable and competitive European energy 
network - COM(2008) 737. 
ENTSO-E 10-year network development plan, June 2010. 
See accompanying impact assessment. 

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2.7. 

Investment needs and financing gap 

Around  one  trillion  euros  must  be  invested  in  our  energy  system  between  today  and 
202016 in order to meet energy policy objectives and climate goals. About half of it will be 
required for networks, including electricity and gas distribution and transmission, storage, and 
smart grids. 

Out  of  these  investments  about  200  bn  €  are  needed  for  energy  transmission  networks 
alone. However, only about 50% of the required investments for transmission networks will 
be taken up by the market by 2020. This leaves a gap of about 100 bn €. Part of this gap is 
caused by delays in obtaining the necessary environmental and construction permits, but also 
by difficult access to finance and lack of adequate risk mitigating instruments, especially for 
projects with positive externalities and wider European benefits, but no sufficientcommercial 
justification17. Our efforts also need to focus on further developing the internal energy market, 
which is essential to boosting private sector investment in energy infrastructure, which in turn 
will help to reduce the financial gap in the coming years.  

The  cost  of  not  realising  these  investments  or  not  doing  them  under  EU-wide 
coordination would be huge, as demonstrated by offshore wind development, where national 
solutions  could  be  20%  more  expensive.  Realising  all  needed  investments  in  transmission 
infrastructure would create an additional 775,000 jobs during the period 2011-2020 and add 
19  bn  €  to  our  GDP  by  2020 18,  compared  to  growth  under  a  business-as-usual  scenario. 
Moreover, such investments will help promote the diffusion of EU technologies. EU industry, 
including  SMEs,  is  a  key  producer  of  energy  infrastructure  technologies.  Upgrading  EU 
energy  infrastructure  provides  an  opportunity  to  boost  EU  competitiveness  and  worldwide 
technological leadership. 

3. 

ENERGY 
PLANNING 

INFRASTRUCTURE  BLUEPRINT:  A  NEW  METHOD  FOR  STRATEGIC 

Delivering  the  energy  infrastructures  that  Europe  needs  in  the  next  two  decades  requires  a 
completely new infrastructure policy based on a European vision. This also means changing 
the  current  practice  of  the  TEN-E  with  long  predefined  and  inflexible  projects  lists.  The 
Commission proposes a new method which includes the following steps: 

– 

– 

– 

16 
17 
18 

Identify  the  energy  infrastructure  map  leading  towards  a  European  smart  supergrid 
interconnecting networks at continental level. 

Focus on a limited number of European priorities which must be implemented by 
2020 to meet the long-term objectives and where European action is most warranted.  

Based  on  an  agreed  methodology,  identification  of  concrete  projects  necessary  to 
implement these priorities – declared as projects of European interest – in a flexible 
manner  and  building  on  regional  cooperation  so  as  to  respond  to  changing  market 
conditions and technology development.  

PRIMES model calculations. 
See accompanying impact assessment. 
See accompanying impact assessment. 

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– 

Supporting  the  implementation  of  projects  of  European  interest  through  new  tools, 
such  as  improved  regional  cooperation,  permitting  procedures,  better  methods  and 
information for decision makers and citizens and innovative financial instruments. 

4. 

EUROPEAN INFRASTRUCTURE PRIORITIES 2020 AND BEYOND 

The  Commission  proposes  the  following  short  term  and  longer  term  priorities  to  make  our 
energy infrastructure suitable for the 21st century. 

4.1. 

Priority corridors for electricity, gas and oil 

4.1.1.  Making Europe’s electricity grid fit for 2020 

The  first  10-year  network  development  plan  (TYNDP)  19  forms  a  solid  basis  to  identify 
priorities in the electricity infrastructure sector. However, the plan does not take full account 
of infrastructure investment triggered by important new offshore generation capacities, mainly 
wind  in  the  Northern  Seas20  and  does  not  ensure  timely  implementation,  notably  for  cross-
border interconnections. To ensure timely integration of renewables generation capacities in 
Northern  and  Southern  Europe  and  further  market  integration,  the  European  Commission 
proposes  to  focus  attention  on  the  following  priority  corridors,  which  will  make  Europe’s 
electricity grids fit for 2020: 

1. 

2. 

3. 

4. 

19 

20 

21 

Offshore  grid  in  the  Northern  Seas  and  connection  to  Northern  as  well  as 
Central  Europe  –  to  integrate  and  connect  energy  production  capacities  in  the 
Northern Seas21 with consumption centres in Northern and Central Europe and hydro 
storage facilities in the Alpine region and in Nordic countries. 

Interconnections  in  South  Western  Europe  to  accommodate  wind,  hydro  and 
solar, in particular between the Iberian Peninsula and France, and further connecting 
with Central Europe, to make best use of Northern African renewable energy sources 
and the existing infrastructure between North Africa and Europe. 

Connections in Central Eastern and South Eastern Europe – strengthening of the 
regional  network  in  North-South  and  East-West  power  flow  directions,  in  order  to 
assist market and renewables integration, including connections to storage capacities 
and integration of energy islands. 

Completion  of  the  BEMIP  (Baltic  Energy  Market  Interconnection  Plan)  – 
integration  of  the  Baltic  States  into  the  European  market  through  reinforcement  of 
their internal networks and strengthening of interconnections with Finland, Sweden 
and  Poland  and 
internal  grid  and 
interconnections east and westward. 

reinforcement  of 

the  Polish 

through 

The  500  projects  identified  by  national  TSOs  cover  the  whole  of  the  EU,  Norway,  Switzerland  and 
Western  Balkans.  The  list  does  not  include  local,  regional  or  national  projects,  which  were  not 
considered to be of European significance. 
It is expected that the next edition of the TYNDP planned for 2012 will take a more top-down approach, 
assuming  the  achievement  of  the  2020  legal  obligations  concerning  integration  of  renewables  and 
emissions reductions with a view beyond 2020, and address these shortcomings. 
This includes the North Sea and North-Western Seas. 

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4.1.2.  Diversified gas supplies to a fully interconnected and flexible EU gas network 

The aim of this priority area is to build the infrastructure needed to allow gas from any source 
to be bought and sold anywhere in the EU, regardless of national boundaries. This would also 
ensure  security  of  demand  by  providing  for  more  choice  and  a  bigger  market  for  gas 
producers  to  sell  their  products.  A  number  of  positive  examples  in  Member  States 
demonstrate  that  diversification  is  key  to  increased  competition  and  enhanced  security  of 
supply.  Whilst  on  an  EU  level,  supplies  are  diversified  along  three  corridors  -  Northern 
Corridor from Norway, Eastern corridor from Russia, Mediterranean Corridor from Africa – 
and through LNG,  single source dependency still prevails in some regions. Every European 
region  should  implement  infrastructure  allowing  physical  access  to  at  least  two  different 
sources. At the same time, the balancing role of gas for variable electricity generation and the 
infrastructure  standards  introduced  in  the  Security  of  Gas  Supply  Regulation  impose 
additional flexibility requirements and increase the need for bi-directional pipelines, enhanced 
storage  capacities  and  flexible  supply,  such  as  LNG/CNG.  In  order  to  achieve  these 
objectives, the following priority corridors have been identified: 

1. 

2. 

3. 

Southern Corridor to further diversify sources at the EU level and to bring gas from 
the Caspian Basin, Central Asia and the Middle East to the EU. 

Linking the Baltic, Black, Adriatic and Aegean Seas through in particular:  

– 

– 

the implementation of BEMIP and  

the North-South Corridor in Central Eastern and South-East Europe. 

North-South  Corridor  in  Western  Europe  to  remove  internal  bottlenecks  and 
increase  short-term  deliverability,  thus  making  full  use  of  possible  alternative 
external  supplies,  including  from  Africa,  and  optimising  the  existing  infrastructure, 
notably existing LNG plants and storage facilities. . 

4.1.3.  Ensuring the security of oil supply 

The  aim  of  this  priority  is  to  ensure  uninterrupted  crude-oil  supplies  to  land-locked  EU 
countries in Central-Eastern Europe, currently dependent on limited supply routes, in case of 
lasting  supply  disruptions  in  the  conventional  routes.  Diversification  of  oil  supplies  and 
interconnected  pipeline  networks  would  also  help  not  to  increase  further  oil  transport  by 
vessels, thus reducing the risk of environmental hazards in the particularly sensitive and busy 
Baltic Sea and Turkish Straits. This can be largely achieved within the existing infrastructure 
by  reinforcing  the  interoperability  of  the  Central-Eastern  European  pipeline  network  by 
means  of  interconnecting  the  different  systems  and  removing  capacity  bottlenecks  and/or 
enabling reverse flows. 

4.1.4.  Roll-out of smart grid technologies 

The  aim  of  this  priority  is  to  provide  the  necessary  framework  and  initial  incentives  for 
rapid  investments  in  a  new  “intelligent”  network  infrastructure  to  support  i)  a  competitive 
retail  market,  ii)  a  well-functioning  energy  services  market  which  gives  real  choices  for 
energy savings and efficiency and iii) the integration of renewable and distributed generation, 
as well as iv) to accommodate new types of demand, such as from electric vehicles.  

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The  Commission  will  also  assess  the  need  for  further  legislation  to  keep  smart  grid 
implementation on track. In particular, promoting investment in smart grids and smart meters 
will  require  a  thorough  assessment  of  what  aspects  of  smart  grids  and  meters  need  to  be 
regulated  or  standardised  and  what  can  be  left  to  the  market.  The  Commission  will  also 
consider further measures to ensure that smart grids and meters bring the desired benefits for 
consumers,  producers,  operators  and  in  terms  of  energy  efficiency.  The  results  of  this 
assessment and possible further measures will be published in the course of 2011.  

In  addition,  the  Commission  will  set  up  a  smart  grids  transparency  and  information 
platform  to  enable  dissemination  of  the  most  up-to-date  experiences  and  good  practice 
concerning deployment across Europe, create synergies between the different approaches and 
facilitate the development of an appropriate regulatory framework. The timely establishment 
of technical standards and adequate data protection will be key to this process. To that end, 
focus on smart grid technologies under the SET-Plan should be intensified. 

4.2. 

Preparing the longer term networks 

In the context of the longer term perspective due to be presented in the 2050 Roadmap, the 
EU  must  start  today  designing,  planning  and  building  the  energy  networks  of  the  future, 
which will be necessary to allow the EU to further reduce greenhouse gas emissions. There is 
only a limited window of opportunity. It is only through a coordinated approach towards an 
optimised European infrastructure that costly approaches at Member State or project level and 
sub-optimal solutions in the longer run can be avoided. 

4.2.1.  European Electricity Highways 

Future  ‘Electricity  Highways’  must  be  capable  of:  i)  accommodating  ever-increasing  wind 
surplus  generation  in  and  around  the  Northern  and  Baltic  Seas  and  increasing  renewable 
generation in the East and South of Europe and also North Africa; ii) connecting these new 
generation hubs with major storage capacities in Nordic countries and the Alps and with the 
major consumption centres in Central Europe and iii) coping with an increasingly flexible and 
decentralised electricity demand and supply22.  

The  European  Commission  therefore  proposes  to  immediately  launch  work  to  establish  a 
modular  development  plan  which  would  allow  the  commissioning  of  first  Highways  by 
2020.  The  plan  would  also  prepare  for  their  extension  with  the  aim  of  facilitating  the 
development  of  large-scale  renewable  generation  capacities,  including  beyond  EU  borders 
and  with  a  view  to  potential  developments  in  new  generation  technologies,  such  as  wave, 
wind and tidal energy. The work would be best carried out in the framework of the Florence 
Forum, organised by the European Commission and ENTSO-E, and building on the SET-Plan 
European Electricity Grid Initiative (EEGI) and European Industrial Wind Initiative.  

4.2.2.  European CO2 transport infrastructure 

This  priority  area  includes  the  examination  and  agreement  on  the  technical  and  practical 
modalities of a future CO2 transport infrastructure. Further research, coordinated by the 
European  Industrial  Initiative  for  carbon  capture  and  storage  launched  under  the  SET-Plan, 
will allow a timely start of infrastructure planning and development at European level, in line 

22 

Whilst  it  is  likely  that  such  a  grid  would  ultimately  be  based  on  DC  technology,  it  needs  to  be  built 
stepwise, ensuring compatibility with the current AC grid. 

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with the foreseen commercial roll-out of the technology after 2020. Regional cooperation will 
also be supported in  order  to stimulate the development of focal points for future European 
infrastructure.  

4.3. 

From priorities to projects 

The  above  mentioned  priorities  should  translate  into  concrete  projects  and  lead  to  the 
establishment  of  a  rolling  programme.  First  project  lists  should  be  ready  in  the  course  of 
2012  and  be  subsequently  updated  every  two  years,  so  as  to  provide  input  to  the  regular 
updating of the TYNDPs. 

Projects  should  be  identified  and  ranked  according  to  agreed  and  transparent  criteria 
leading to a  limited number of  projects. The Commission proposes to base the work on the 
following  criteria,  which  should  be  refined  and  agreed  upon  with  all  relevant  stakeholders, 
notably ACER: 

– 

– 

Electricity:  contribution  to  security  of  electricity  supply;  capacity  to  connect 
renewable generation and transmit it to major consumption/storage centres; increase 
of  market  integration  and  competition;  contribution  to  energy  efficiency  and  smart 
electricity use.  

Gas:  diversification,  giving  priority  to  diversification  of  sources,  diversification  of 
supplying  counterparts  and  diversification  of  routes;  as  well  as  increase  in 
competition through increase in interconnection level, increase of market integration 
and reduction of market concentration.  

The  projects  identified  would  be  examined  at  EU  level  to  ensure  consistency  across  the 
priorities and regions and ranked in terms of their urgency with regard to their contribution 
to the achievement of the priorities and Treaty objectives. Projects meeting the criteria would 
be  awarded  a  ‘Project  of  European  Interest’  label.  This  label  would  form  the  basis  for 
further assessment23 and consideration under the actions described in the following chapters. 
The label would confer political priority to the respective projects. 

5. 

TOOLBOX TO SPEED UP IMPLEMENTATION 

5.1. 

Regional clusters 

Regional  cooperation  as  developed  for  the  Baltic  Energy  Market  Interconnection  Plan 
(BEMIP)  or  for  the  North  Seas  Countries’  Offshore  Grid  Initiative  (NSCOGI)  has  been 
instrumental  in  reaching  agreement  on  regional  priorities  and  their  implementation.  The 
mandatory regional cooperation set up under the internal energy market will help to speed up 
market  integration,  while  the  regional  approach  has  been  beneficial  for  the  first  electricity 
TYNDP.  

The  Commission  considers  that  such  dedicated  regional  platforms  would  be  useful  to 
facilitate  the  planning,  implementation  and  monitoring  of  the  identified  priorities  and  the 
drawing  up  of  investment  plans  and  concrete  projects.  The  role  of  the  existing  Regional 

23 

The  economic,  social  and  environmental  impacts  of  the  projects  will  be  assessed  according  to  the 
common method referred to in the next chapter. 

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Initiatives,  established  in  the  context  of  the  internal  energy  market,  should  be  reinforced, 
where relevant, with tasks related to infrastructure planning, whilst ad hoc regional structures 
could also be proposed where needed. In this regard, the EU strategies for so called macro-
regions (such as the Baltic Sea or the Danube Region) can be used as cooperation platforms to 
agree on transnational projects across sectors. 

In  this  context,  to  kick  start  the  new  regional  planning  method  in  the  short  term,  the 
Commission intends to set up a High Level Group based on cooperation of the countries in 
Central  Eastern  Europe,  e.g.  in  the  Visegrad  group24,  with  the  mandate  to  devise  an  action 
plan, in the course of 2011, for North-South and East-West connections in gas and oil as well 
as electricity. 

5.2. 

Faster and more transparent permit granting procedures 

In March 2007, the European Council invited the Commission "to table proposals aiming at 
streamlining approval procedures" as a response to the frequent calls of the industry for EU 
measures to facilitate permitting procedures.  

Responding  to  this  necessity,  the  Commission  will  propose,  in  line  with  the  principle  of 
subsidiarity, to introduce permitting measures applying to projects of "European interest" to 
streamline, better coordinate and improve the current process while respecting safety and 
security standards and ensuring full compliance with the EU environmental legislation25. The 
streamlined  and  improved  procedures  should  ensure  the  timely  implementation  of  the 
identified  infrastructure  projects,  without  which  the  EU  would  fail  to  meet  its  energy  and 
climate  objectives.  Moreover,  they  should  provide  for  transparency  for  all  stakeholders 
involved  and  facilitate  participation  of  the  public  in  the  decision-making  process  by 
ensuring open and transparent debates at local, regional and national level to enhance public 
trust and acceptance of the installations.  

Improved decision-making could be addressed through the following: 

1. 

2. 

24 
25 
26 

The establishment of a contact authority ("one-stop shop") per project of European 
interest, serving as a single interface between project developers and the competent 
authorities  involved  at  national,  regional,  and/or  local  level,  without  prejudice  to 
their  competence.  This  authority  would  be  in  charge  of  coordinating  the  entire 
permitting process for a given project and of disseminating the necessary information 
about  administrative  procedures  and  the  decision-making  process  to  stakeholders. 
Within  this  framework,  Member  States  would  have  full  competence  to  allocate 
decision-making  power  to  the  various  parts  of  the  administration  and  levels  of 
government.  For  cross-border  projects,  the  possibility  of  coordinated  or  joint 
procedures26 should be explored in order to improve project design and expedite their 
final authorisation. 

The introduction of a time limit for a final positive or negative decision to be taken 
by the competent authority will be explored. Given the fact that delays often occur 
due to poor administrative practice, it should be ensured that each of the necessary 
steps in the process is completed within a specific time limit, while fully respecting 

See Declaration of the Budapest V4+ Energy Security Summit of 24 February, 2010. 
See accompanying impact assessment.  
Including in particular the relevant EU environmental legislation 

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Member States' applicable legal regimes and EU law. The proposed schedule should 
provide for an early and effective involvement of the public in the decision-making 
process, and citizens' rights to appeal the authorities' decision should be clarified and 
strengthened, while being clearly integrated in the overall timeframe. It will further 
be explored whether, in case a decision has still not been taken after the expiry of the 
fixed time limit, special powers to adopt a final positive or negative decision within a 
set  timeframe  could  be  given  to  an  authority  designated  by  the  concerned  Member 
States. 

The development of guidelines to increase the transparency and predictability of 
the process for all parties involved (ministries, local and regional authorities, project 
developers and affected populations). They would aim at improving communication 
with  citizens  to  ensure  that  the  environmental,  security  of  supply,  social  and 
economic costs and benefits of a project are correctly understood, and to engage all 
stakeholders  in  a  transparent  and  open  debate  at  an  early  stage  of  the  process. 
Minimum requirements regarding the compensation of affected populations could be 
included.  More  specifically,  for  offshore  cross-border  energy  installations  maritime 
spatial  planning  should  be  applied  to  ensure  a  straight-forward,  coherent  but  also  a 
more informed planning process. 

In order to enhance the conditions for timely construction of necessary infrastructure, 
the possibility of providing rewards and incentives, including of a financial nature, to 
regions or Member States that facilitate timely authorisation of projects of European 
interest  should  be  explored.  Other  mechanisms  for  benefit  sharing  inspired  by  best 
practice in the renewable energy field could also be considered.27 

3. 

4. 

5.3. 

Better methods and information for decision makers and citizens 

In order to assist the regions and the stakeholders in identifying and implementing projects of 
European interest, the Commission will develop a dedicated policy and project support tool 
to  accompany  infrastructure  planning  and  project  development  activities  at  EU  or  regional 
level.  Such  a  tool  would  inter  alia  elaborate  energy-system  wide  and  joint  electricity-gas 
modelling  and  forecasting  and  a  common  method  for  project  assessment28  appropriate  to 
reflect  short  and  long  term  challenges,  covering  notably  climate  proofing,  to  facilitate 
prioritisation  of  projects.  The  Commission  will  also  encourage  Member  States  to  better 
coordinate  existing  EU  environmental  assessment  procedures  already  at  an  early  stage. 
Moreover,  tools  will  be  developed  to  better  explain  the  benefits  of  a  specific  project  to  the 
wider  public  and  associate  them  with  the  process.  These  tools  should  be  complemented  by 
communication on the benefits of infrastructure development and smart grids for consumers 
and citizens, in terms of security of supply, decarbonisation of the energy sector and energy 
efficiency. 

5.4. 

Creating a stable framework for financing 

Even if all permitting issues are resolved, an investment gap estimated at about 60 bn €
 is 
likely to remain by 2020, mainly due to the non-commercial positive externalities of projects 
with  a  regional  or  European  interest  and  the  risks  inherent  to  new  technologies.  Filling  this 

27 
See e.g. www.reshare.nu 
28 
See e.g. "Guide to cost-benefit analysis of investment projects", July 2008: 
http://ec.europa.eu/regional_policy/sources/docgener/guides/cost/guide2008_en.pdf  

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gap is a significant challenge, but a prerequisite if infrastructure priorities are to be built on 
time.  Therefore,  further  internal  energy  market  integration  is  needed  to  boost  infrastructure 
development  and  EU  coordinated  action  is  required  to  alleviate  investment  constraints  and 
mitigate project risks.  

The Commission proposes to work on two fronts; further improving the cost allocation rules 
and optimising the European Union's leverage of public and private funding. 

5.4.1.  Leveraging private sources through improved cost allocation 

Electricity  and  gas  infrastructure  in  Europe  are  regulated  sectors,  whose  business  model  is 
based  on  regulated  tariffs  collected  from  the  users,  which  allow  recovering  the  investments 
made (“user pays principle”). This should remain the main principle also in the future. 

The third package asks regulators to provide appropriate tariff incentives, both short and long 
term, for network operators to increase efficiencies, foster market integration and security of 
supply and support the related research activities29. However, while this new rule could cover 
some innovative aspects in new infrastructure projects, it is not designed to address the major 
technological changes, notably in the electricity sector, concerning offshore or smart grids. 

Moreover,  tariff  setting  remains  national  and  hence  not  always  conducive  to  advance 
European priorities. Regulation should recognise that sometimes the most efficient approach 
for  a  TSO  to  address  customer  needs  is  to  invest  in  a  network  outside  its  territory. 
Establishing  such  principles  for  cost-allocation  across  borders  is  key  for  fully  integrating 
European energy networks.  

In the absence of agreed principles on European level, this will be difficult to do, particularly 
as  long  term  consistency  is  required.  The  Commission  envisages  to  put  forward,  in  2011, 
guidelines  or  a  legislative  proposal  to  address  cost  allocation  of  major  technologically 
complex or cross-border projects, through tariff and investment rules. 

Regulators  have  to  agree  on  common  principles  in  relation  to  cost-allocation  of 
interconnection investments and related tariffs. In electricity, the need for the development of 
long  term  forward  markets  for  cross-border  transmission  capacity  should  be  explored, 
whereas  in  the  gas  sector,  investment  costs  could  be  allocated  to  TSOs  in  neighbouring 
countries, both for normal (based on market-demand) investments, as well as those motivated 
by security of supply reasons. 

5.4.2.  Optimising the leverage of public and private sources by mitigating investors risks 

In  the  Budget  Review,  the  Commission  emphasised  the  need  to  maximise  the  impact  of 
European  financial  intervention  by  playing  a  catalytic  role  in  mobilising,  pooling  and 
leveraging  public  and  private  financial  resources  for  infrastructures  of  European  interest.  It 
requires maximising societal returns in view of scarce resources, alleviating constraints faced 
by  investors,  mitigating  project  risks,  reducing  cost  of  financing  and  increasing  access  to 
capital. A “two-front” approach is proposed: 

Firstly,  the  Commission  will  continue  strengthening  EU’s  partnerships  with  International 
Financial Institutions (IFI) and build on existing joint financial and technical assistance's 

29 

Cf. Article 37 of Directive 2009/72/EC and Article 41 of Directive 2009/73/EC. 

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initiatives30. The Commission will pay particular attention at developing synergies with these 
instruments and for some of them, will examine the possibility to adjust their concepts to the 
energy infrastructure sector.  

Secondly, without prejudice to the Commission’s proposal for the next multi-annual financial 
framework  post  2013,  due  in  June  2011,  and  taking  into  account  the  results  of  the  Budget 
Review31,  as  regards  the  mainstreaming  of  energy  priorities  into  different  programmes,  the 
Commission intends to propose a new set of tools. These tools should combine existing and 
innovative  financial  mechanisms  that  are  different,  flexible  and  tailored  towards  the 
specific  financial  risks  and  needs  faced  by  projects  at  the  various  stages  of  their 
development.  Beyond  the  traditional  support  forms  (grants,  interest  rate  subsidies), 
innovative market-based solutions addressing the shortfall in equity and debt financing may 
be  proposed.  The  following  options  will  notably  be  examined:  equity  participation  and 
support to infrastructure funds, targeted facilities for project bonds, test option for advanced 
network  related  capacity  payments  mechanism,  risk  sharing  facilities  (notably  for  new 
technological risks) and public private partnerships loan guarantees. Particular attention will 
be paid to foster investments in projects which contribute to meeting the 2020 targets or cross 
EU borders, in projects enabling the roll-out of new technologies such as smart grids, and in 
other projects where EU-wide benefits cannot be achieved by the market alone. 

6. 

CONCLUSIONS AND WAY FORWARD 

The constraints on public and private funding possibilities over the coming years should not 
be  an  excuse  to  postpone  building  of  the  identified  infrastructure  and  making  the 
corresponding  investments.  Indeed,  today's  investments  are  a  necessary  condition  for  future 
savings, thereby reducing the overall cost of achieving our policy goals.  

Based  on  the  views  expressed  by  the  institutions  and  stakeholders  on  this  blueprint,  the 
Commission  intends  to  prepare,  in  2011,  as  part  of  its  proposals  for  the  next  multiannual 
financial framework, appropriate initiatives. These proposals will address the regulatory and 
financial  aspects  identified  in  the  Communication,  notably  through  an  Energy  Security  and 
Infrastructure  Instrument  and  mainstreaming  of  energy  priorities  in  different  programmes. 

30 

31 

Notably  Marguerite,  Loan  Guarantee  Instrument  for  TEN-T,  Risk  Sharing  Finance  Facility,  Jessica, 
Jaspers. 
EU Budget Review, adopted on 19 October 2010. 

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ANNEX  

Proposed energy infrastructure priorities for 2020 and beyond 

1. 

INTRODUCTION 

This  annex  provides  technical  information  on  the  European  infrastructures  priorities,  put 
forward in chapter 4 of the Communication, on progress of their implementation and the next 
steps  needed.  The  priorities  chosen  grow  out  of  the  major  changes  and  challenges,  which 
Europe's  energy  sector  will  face  in  the  coming  decades,  independently  of  the  uncertainties 
surrounding supply and demand of certain energy sources. 

Section  2  presents  the  expected  evolutions  of  supply  and  demand  for  each  energy  sector 
covered under this communication. The scenarios are based on the "Energy Trends for 2030 – 
update  2009"32,  which  rely  on  the  PRIMES  modelling  framework,  but  do  also  take  into 
account scenario exercises done by other stakeholders. While the PRIMES Reference scenario 
for  2020  is  based  on  a  set  of  agreed  EU  policies,  notably  two  legally  binding  targets  (20% 
renewables share in final energy consumption and 20% greenhouse gas emission reductions 
compared  to  1990  in  2020,  PRIMES  baseline  is  based  only  on  the  continuation  of  already 
implemented  policies,  whereby  these  targets  are  not  achieved.  For  the  period  between  2020 
and 2030, PRIMES assumes that no new policy measures are taken. These evolutions allow 
identifying  major  trends,  which  will  drive  infrastructure  development  over  the  coming 
decades33. 

In sections 3 and 4, the infrastructure priorities (Map ) identified in the Communication are 
presented by looking at the situation and challenges faced in each case and by providing, as 
relevant,  technical  explanations  on  the  recommendations  made  in  the  Communication.  It  is 
understood that the presentations of the priorities vary in terms of: 

– 

– 

– 

nature  and  maturity:  Certain  priorities  concern  very  specific  infrastructure  projects, 
which  can  be,  for  some,  very  advanced  in  terms  of  project  preparation  and 
development. Others cover broader and often also newer concepts, which will need 
considerable additional work before being translated into concrete projects. 

scope: Most priorities focus on a certain geographic region, both electricity highways 
and  CO2  networks  covering  potentially  many  if  not  all  EU  Member  States.  Smart 
grids however are a thematic, EU -wide priority. 

the  priorities, 

level of engagement proposed in the recommendations: Depending on the nature and 
maturity  of 
recommendations  concentrate  on  concrete 
developments  or  address  a  broader  range  of  issues,  including  aspects  of  regional 
cooperation, planning and regulation, standardisation and market design or research 
and development. 

the 

32 
33 

http://ec.europa.eu/energy/observatory/trends_2030/doc/trends_to_2030_update_2009.pdf 
In the absence of further policy measures and under certain assumptions 

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Map 1: Priority corridors for electricity, gas and oil 

2. 

EVOLUTION OF ENERGY DEMAND AND SUPPLY 

The  latest  update  of  the  "Energy  Trends  for  2030  –  update  2009"34  based  on  the  PRIMES 
modelling  framework  foresees  slight  growth  of  primary  energy  consumption  between  today 

34 

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and  2030  according  to  the  so-called  Baseline  scenario  (Figure  1),  while  growth  is  set  to 
remain largely stable according to the Reference scenario35 (Figure 2). It should be noted that 
these  projections  do  not  include  energy  efficiency  policies  to  be  implemented  from  2010 
onwards, a possible step-up of the emission reduction target to -30% by 202036 or additional 
transport policies beyond CO2 and cars emissions regulation. They should therefore rather be 
seen as upper limits for the expected energy demand. 

e
o
t
M

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Oil

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Nuclear

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e
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600

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2020

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Renewables

Oil

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Savings compared to Baseline

Figure 1: Primary energy consumption by fuel 
(Mtoe), PRIMES baseline 

Figure 2: Primary energy consumption by fuel (Mtoe), 
PRIMES Reference scenario 

1 600 000

1 400 000

1 200 000

1 000 000

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0
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NATURAL GAS product ion

NATURAL GAS net  imports

Figure 3: EU-27 fossil fuel consumption by origin in Mtoe (including bunker fuels),  
PRIMES reference scenario 

35 

36 

Under this scenario, it is assumed that the two binding targets for renewables and emission reduction 
are  achieved.  In  the  PRIMES  baseline,  based  only  on  continuation  of  already  implemented  policies, 
these targets are not achieved. 
For  a  more  detailed  analysis  of  its  implications  see  Commission  Staff  Working  Document 
accompanying the Commission Communication "Analysis of options to move beyond 20% greenhouse 
gas  emission  reductions  and  assessing  the  risk  of  carbon  leakage"  -  COM(2010)  265.  Background 
information and analysis Part II - SEC(2010) 650. 

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In these scenarios, the share of coal and oil in the overall energy mix declines between today 
and 2030, while gas demand remains largely stable until 2030. The share of renewables is set 
to increase significantly, both in primary and final energy consumption, while the contribution 
of  nuclear,  at  about  14%  of  primary  energy  consumption,  is  set  to  remain  stable.  The  EU's 
dependency on imported fossil fuels will continue to be high for oil and coal and will increase 
for gas, as shown in Figure 3. 

As  regards  gas,  the  dependency  on  imports  is  already  high  and  will  be  growing  further,  to 
reach  about  73-79%  of  consumption  by  2020  and  81-89%37  by  2030,  mainly  due  to  the 
depletion  of  indigenous  resources.  Based  on  the  different  scenarios,  the  additional  import 
need ranges from 44 Mtoe to 148 Mtoe by 2020 and from 61 to 221 Mtoe by 2030 (compared 
to 2005).  

Increased flexibility will be required due to the increasing role of gas as primary back-up for 
variable electricity generation. This means a more flexible use of the pipeline systems, need 
for  additional  storage  capacities,  both  in  terms  of  working  volumes,  as  also  withdrawal  and 
injection capacities and need for flexible supplies, such as LNG/CNG. 

The recently adopted regulation on security of supply requires investing in infrastructures to 
increase the resilience and robustness  of the gas system in the event of a supply disruption. 
Member  States  should  fulfil  two  infrastructure  standards:  N-1  and  reverse  flow.  The  N-1 
formula describes the ability of the technical capacity of the gas infrastructure to satisfy total 
gas demand in the event of disruption of the single largest gas supply infrastructure, during a 
day of exceptionally high gas demand occurring with a statistical probability of once every 20 
years. The N-1 can be fulfilled at national or regional level and a Member State may use also 
production and demand-side measures. The Regulation also requires that permanent physical 
bi-directional  capacity  is  available  on  all  cross-border  interconnection  between  Member 
States (except for connections to LNG, production or distribution). 

Currently five countries do not meet the N-1 criterion (Bulgaria, Slovenia, Lithuania, Ireland 
and  Finland),  taking  into  account  the  projects  underway  under  the  European  Energy 
Programme  for  Recovery  but  excluding  demand  side  measures38.  Regarding  investments  on 
reverse flow, according to Gas Transmission Europe's study on reverse flow (July 2009), 45 
projects  have  been  identified  in  Europe  as  vital  for  enhancing  reverse  flows  within  and 
between  Member  States  and  providing  a  greater  flexibility  in  transporting  gas  where  it  is 
needed.  The  main  challenge  is  to  finance  projects  to  fulfil  the  infrastructure  obligations, 
notably when the infrastructures are not required by the market. 

Oil demand  is expected to  see two  different developments in parallel: decline in the EU-15 
countries and constant growth in new Member States, where demand is expected to grow by 
7.8% between 2010 and 2020. 

The main challenges for electricity infrastructure is growing demand and increasing shares of 
generation from renewable sources, in addition to additional needs for market integration and 
security  of  supply.  EU-27  gross  electricity  generation  is  projected  to  grow  by  at  least  20% 
from about 3,362 TWh in 2007 to 4,073 TWh in 2030 under the PRIMES reference scenario 

37 

38 

All lower figures refer to the PRIMES reference scenario, while the higher figures are derived from the 
Eurogas Environmental Scenario published in May 2010, based on a bottom-up collection of Eurogas 
members' estimates. 
See the impact assessment at http://ec.europa.eu/energy/security/gas/new_proposals_en.htm 

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and  to  4,192  TWh  under  PRIMES  baseline,  even  without  taking  into  account  the  possible 
effects  of  strong  electro-mobility  development.  The  share  of  renewables  in  gross  electricity 
generation is expected to be around 33% in 2020 according to the Reference scenario, out of 
which variable sources (wind and solar) could represent around 16%39. 

Figure  4  shows  the  evolution  of  gross  electricity  generation  by  source  according  to  the 
PRIMES Reference scenario for the 2010-2030 period: 

4 500

4 000

3 500

3 000

h
W
T

2 500

2 000

1 500

1 000

500

0
2010

2015

2020

2025

2030

100%

90%

80%

70%

60%

%

50%

40%

30%

20%

10%

0%

Oil

Solids

Nuclear energy Gas

Renewables

2010

2015

2020

2025

2030

Figure 4: Gross power generation mix 2000-2030 by source in TWh (left)  
and corresponding shares of sources in % (right), PRIMES reference scenario 

More detailed information for the horizon up to 2020 is provided by the national renewable 
energy action plans (NREAP) that Member States have to notify to the Commission according 
to article 4 of directive 2009/28/EC. Based on the first 23 national renewable energy action 
plans and largely in line with PRIMES reference scenario results for 2020, there will be about 
460  GW  of  renewable  electricity  installed  capacity  that  year  in  the  23  Member  States 
covered40, against only about 244 GW today41. Approximately 63% out of this total would be 
related  to  the  variable  energy  sources  wind  (200  GW,  or  43%)  and  solar  (90  GW,  out  of 
which about 7 GW concentrated solar power, or 20%) (Table 1). 

RES type 

Installed capacity 
2010 (GW) 

Installed capacity 
2020 (GW) 

Share 2020 (%) 

Variation 2010-
2020 (%) 

Hydro 

Wind 

Solar 

39 

40 

41 

116.9 

82.6 

25.8 

134.2 

201 

90 

29% 

43% 

19% 

15% 

143% 

249% 

The respective figures for 2030 are 36% and 20%. Note that the 2030 Reference scenario does not take 
into account potential future renewable energy policies in the EU or in individual Member States after 
2020. 
Austria,  Bulgaria,  Czech  Republic,  Cyprus,  Germany,  Denmark,  Greece,  Spain,  Finland,  France, 
Ireland,  Italy,  Latvia,  Lithuania,  Luxembourg,  Malta,  the  Netherlands,  Portugal,  Romania,  Sweden, 
Slovakia, Slovenia and the United Kingdom. 
"Renewable  Energy  Projections  as  Published  in  the  National  Renewable  Energy  Action  Plans  of  the 
European  Member  States",  update  for  19  countries.  L.W.M.  Beurskens,  M.  Hekkenberg.  Energy 
Research Centre of the Netherlands, European Environment Agency. 10 September 2010. Available at: 
http://www.ecn.nl/docs/library/report/2010/e10069.pdf  

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RES type 

Installed capacity 
2010 (GW) 

Installed capacity 
2020 (GW) 

Share 2020 (%) 

Variation 2010-
2020 (%) 

Biomass 

Other 

TOTAL 

21.2 

1 

247.5 

37.7 

3.6 

466.5 

8% 

1% 

100% 

78% 

260% 

88% 

Table 1: Projected evolution of installed renewables capacities in GW, 2010-2020 

Renewables  in  the  23  Member  States  are  projected  to  account  for  over  1150  TWh  of 
electricity generation, with about 50% of it from variable sources (Table 2). 

RES type 

Generation 2010 
(TWh) 

Generation 2020 
(TWh) 

Share 2020 (%) 

Variation 2010-
2020 (%) 

Hydro 

Wind 

Biomass 

Solar 

Other 

342.1 

160.2 

103.1 

21 

6.5 

364.7 

465.8 

203 

102 

16.4 

32% 

40% 

18% 

9% 

1% 

TOTAL 

632.9 

1151.9 

100% 

Table 2: Projected evolution of renewables electricity generation in GW, 2010-2020 

7% 

191% 

97% 

386% 

152% 

82% 

Most of the growth in wind capacities and generation will be concentrated in Germany, the 
United  Kingdom,  Spain,  France,  Italy  and  the  Netherlands,  while  solar  capacities  and 
generation  growth  will  be  even  more  concentrated  in  Germany  and  Spain  and  to  a  lesser 
extent Italy and France. 

Alongside  renewables,  fossil  fuels  will  continue  to  play  a  role  in  the  electricity  sector. 
Ensuring compatibility with climate change mitigation requirements of fossil fuel use in the 
electricity  and  industrial  sectors  may  therefore  require  the  application  of  CO2  capture  and 
storage (CCS) on a large and trans-European scale. PRIMES scenarios envisage the transport 
of about 36 million tons (Mt) of CO2 by 2020, on the basis existing policies, and 50-272 Mt42 
by 2030 as CCS becomes more widely deployed. 

According to the analysis carried out by KEMA and Imperial College London based on the 
PRIMES  reference  scenario,  electricity  generation  capacity  in  2020  should  be  sufficient  to 
meet  peak  demand  in  virtually  all  Member  States,  despite  the  development  of  variable 
generation  from  renewable  energies  (Map  2  and  Map  343).  However,  while  imports  should 

42 

43 

50 Mt according to the PRIMES reference scenario and 272 Mt according to PRIMES baseline, given 
the higher CO2 price. 
The maps show the capacity margins, i.e. the ratio of firm capacity (excluding variable renewables) / all 
capacity  (including  variable  renewables)  vs.  peak  electricity  demand,  as  modelled  by  KEMA  and 
Imperial College London for all EU Member States plus Norway and Switzerland in 2020, on the basis 
of the PRIMES reference scenario (source: KEMA and Imperial College London). 

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therefore  not  be  necessary  for  Member  States  to  ensure  their  security  of  supply,  more 
integration  of  the  27  European  electricity  systems  could  significantly  reduce  prices  and 
increase overall efficiency by lowering the cost of balancing supply and demand at any given 
moment in time. 

Map 2: Firm capacity vs. peak demand in 2020, 
PRIMES reference scenario 

Map 3: All capacity vs. peak demand in 2020, 
PRIMES reference scenario 

The evolution of electricity trade across borders is shown on Map 4 and Map 544. Under the 
PRIMES  Reference  scenario,  today's  general  pattern  of  electricity  exports  and  imports  is 
likely to remain as such until 2020 for most Member States. 

Map 4: Net import/export situation in winter 
(October to March) 2020,  
PRIMES reference scenario 

Map 5: Net import/export situation in summer 
(April to September) 2020,  
PRIMES reference scenario 

This  would  result  in  the  following  interconnection  capacity  requirements  between  Member 
States,  based  on  the  optimisation  of  the  existing  European  electricity  grid  as  described  in 
ENTSO-E's  pilot  Ten-Year  Network  Development  Plan45  (Map  6).  It  should  however  be 
noted that these requirements have been calculated on the basis of simplifying assumptions46 
and  should  be  seen  as  indicative  only.  Results  could  also  be  significantly  different,  if  the 

44 
45 
46 

Source: KEMA and Imperial College London 
https://www.entsoe.eu/index.php?id=282 
The grid modelling done by Imperial College London and KEMA uses a "centre of gravity" approach, 
according  to  which  each  Member  State's  electricity  grid  is  represented  by  a  single  node,  from  and  to 
which  transmission  capacity  is  calculated.  The  associated  investment  model  compares  the  costs  of 
network  expansion  between  Member  States  with  the  costs  of  additional  generation  capacity 
investments,  based  on  certain  input  cost  assumptions  and  evaluates  the  cost-optimal  interconnection 
level between Member States on this basis. 

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24 

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European  energy  system  was  optimised  on  the  basis  of  a  newly  designed,  fully  integrated 
European grid, instead of existing nationally centred electricity networks. 

Map 6: Interconnection capacity requirements 2020 in MW47, PRIMES Reference scenario 
(source: KEMA, Imperial College London) 

3. 

PRIORITY CORRIDORS FOR ELECTRICITY, GAS AND OIL 

3.1.  Making Europe's electricity grid fit for 2020 

3.1.1.  Offshore grid in the Northern Seas 

The  2008  Second  Strategic  Energy  Review  identified  the  need  for  a  coordinated  strategy 
concerning  the  offshore  grid  development:  "(…)  a  Blueprint  for  a  North  Sea  offshore  grid 
should be developed to interconnect national electricity grids in North-West Europe together 
and  plug-in  the  numerous  planned  offshore  wind  project"48.  In  December  2009,  nine  EU 
Member  States  and  Norway49  signed  a  political  declaration  on  the  North  Seas  Countries 
Offshore  Grid  Initiative  (NSCOGI)  with  the  objective  to  coordinate  the  offshore  wind  and 

47 

48 

49 

The  following  interconnection  capacities  are  not  shown  on  the  map  for  the  sake  of  clarity:  Austria-
Switzerland (470 MW); Belgium-Luxemburg (1000 MW); Germany-Luxemburg (980 MW); Norway-
Germany (1400 MW); Switzerland-Austria (1200 MW). 
COM(2008)  781.  The  communication  also  underlined  that  "[the  North  Sea  Offshore  Grid]  should 
become, (…) one of the building blocks of a future European supergrid. The Blueprint should identify 
the steps and timetable that need to be taken and any specific actions that need to be adopted. It should 
be  developed  by  the  Member  States  and  regional  actors  involved  and  facilitated  where  necessary  by 
action  at  Community  level."  In  the  Conclusions  of  the  Energy  Council  on  19  February  2009,  it  was 
clarified that the blueprint should cover the North Sea (including the Channel region) and the Irish Sea. 
Countries participating in the NSCOGI are Belgium, the Netherlands, Luxembourg, Germany, France, 
Denmark, Sweden, the United Kingdom, Ireland and Norway. 

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infrastructure developments in the North Seas. The nine EU members will concentrate about 
90%  of  all  EU  offshore  wind  development.  According  to  the  information  contained  in  their 
NREAPs,  installed  capacity  is  projected  at  38.2  GW  (1.7  GW  other  marine  renewable 
energies)  and  production  at  132  TWh  in  202050.  Offshore  wind  could  represent  18%  of  the 
renewable electricity generation in these nine countries. 

Applied research shows that planning and development of offshore grid infrastructure in the 
North  Seas  can  only  be  optimised  through  a  strong  regional  approach.  Clustering  of  wind 
farms in hubs could become an attractive solution compared to individual radial connections, 
when distance from the shore increases and installations are concentrated in the same area51. 
For  countries  where  these  conditions  are  met,  such  as  Germany,  the  connection  costs  of 
offshore  wind  farms  could  thereby  be  reduced  by  up  to  30%.  For  the  North  Sea  area  as  a 
whole,  cost  reduction  could  reach  almost  20%  by  203052.  In  order  to  realise  such  cost 
reductions, a more coordinated, planned and geographically more concentrated offshore wind 
development  with  cross-border  coordination  is  absolutely  necessary.  This  would  also  allow 
reaping the combined benefits of wind farm connection and cross-border interconnections53, if 
the  connection  capacity  is  well  dimensioned  and  hence  results  in  a  positive  net  benefit. 
Offshore  development  will  strongly  influence  the  need  for  reinforcements  and  expansion  of 
onshore networks, notably in Central Eastern Europe, as highlighted in the priority 3. Map 7 
is an illustration of a possible offshore grid concept as developed by the OffshoreGrid study54. 

50 

51 

52 

53 

54 

Ireland  has  also  prepared  a  baseline  and  a  more  ambitious  export  scenario.  According  to  this  latter 
scenario, the respective figures would be: over 40 GW offshore wind, 2.1 GW other marine renewables 
generating  139  TWh  in  2020.  For  the  EU  as  a  whole  (taking  into  account  the  baseline  for  Ireland), 
offshore  wind  installed  capacity  is  estimated  to  be  over  42  GW  in  2020,  with  a  possible  yearly 
electricity generation of over 137 TWh. 
Based on a cost-benefit analysis, the OffshoreGrid study, carried out by 3E and partners and financed 
by the Intelligent Energy Europe Programme, finds that radial grid connections make sense up to 50 km 
distance from their connection points onshore. For larger distances (in the range of 50 to 150 km) from 
the  onshore  connection  point,  the  concentration  of  the  wind  farms  is  a  determining  factor  for  the 
benefits of clustering. If the installed capacity is in a radius of 20 km (in certain cases 40 km) around 
the hub, and if it is in the order of the largest available rating for high voltage direct current cables, a 
cluster through a hub connection would be beneficial. Above 150 km distance, offshore grid hubs are 
considered  as  typical  solutions.  More  information  is  available  at:  www.offshoregrid.eu.  These  results 
seem to be corroborated at the Member State level: The benefits of clustering or a more modular design 
were considered in the Netherlands for its second phase of offshore wind development. Given the small 
size  of  the  wind  farms  and  their  short  distance  from  shore,  the  assessment  however  showed  that 
clustering is not the most cost effective approach in this phase. 
According  to  the  OffshoreGrid  study,  strong  offshore  grid  infrastructure  development  would  cost  32 
billion euros until 2020 and up to 90 billion euros until 2030 considering radial connections. In case of 
clustering, the infrastructure cost could be reduced to 75 billion euros by 2030.  
Integrated  development  could  follow  two  main  drivers.  In  case  an  interconnector  is  developed  first, 
wind farms could be connected later. If connections for wind farms are developed first, interconnectors 
could be developed later between hubs, instead of building new interconnectors from shore to shore. 
Work package D4.2 "Four Offshore Grid scenarios for the North and Baltic Sea" (OffshoreGrid study, 
July 2010). More information is available at 
http://www.offshoregrid.eu/images/pdf/pr_pr100978_d4%202_20100728_final_secured.pdf. 

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Map 7: Illustration of a possible offshore grid concept for the North Seas and the Baltic Sea ("mixed 
approach" scenario showing existing (red), planned (green) and commissioned (pink) transmission lines as 
well as additional lines (blue) necessary according to OffshoreGrid calculations) 

Existing  offshore  development  plans  in  certain  Member  States  show  that  significant 
development in the North Seas will take place along or even across the borders of territorial 
waters  of  several  Member  States,  raising  planning  and  regulatory  issues  of  European 
dimension55.  Onshore  reinforcements  of  the  European  network  will  be  needed  to  transmit 
electricity  to  the  major  consumption  centres  further  inland.  However,  ENTSO-E's  pilot  Ten 
Year Network Development Plan (TYNDP) does not include an adequate assessment of the 
infrastructure  needed  to  connect  upcoming  new  offshore  wind  capacities.  ENTSO-E  has 
committed to addressing this urgent issue more in detail in the second edition of it's TYNDP 
to be published in 2012. 

Member  States  have  adopted  or  are  planning  to  adopt  different  approaches  concerning 
offshore  grid  development.  Most  Member  States  (Germany,  Denmark,  France,  Sweden, 
Ireland) have assigned the offshore extension of their onshore grid to national TSOs. The UK 
has  so  far  chosen  to  tender  the  connection  of  each  new  offshore  wind  farm  separately56.  In 
Belgium  and  the  Netherlands,  grid  development  is  currently  the  responsibility  of  the  wind 
farm  developer.  In  addition,  current  national  regulatory  frameworks  encourage  exclusively 
point-to-point  solutions  connecting  wind  farms  with  an  onshore  connection  point,  with  the 
aim to minimise the connection cost for each project. Connection of wind farm clusters via a 
hub,  with  the  associated  advanced  capacity  provision  and  technology  risk,  is  not  covered 
under  current  national  regulation.  Finally,  optimisation  across  borders,  in  order  to  facilitate 
electricity trade between two or several Member States, does not take place. 

55 

56 

Integrated  solutions  combining  offshore  wind  power  plant  connections  and  trade  interconnections  to 
another country, or cross-border connections of a wind power plant (sitting in the territorial waters of 
one country, but connected to the grid of another country) need to be developed. 
Any  company  can  participate  in  these  tenders,  which  creates  a  competitive  environment  for  the 
development and operation of the new network. 

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As  a  consequence,  the  opportunities  offered  by  a  regional  approach  for  integrated  offshore 
and onshore infrastructure development as well as the synergies with international electricity 
trade are missed. This might lead to suboptimal and more expensive solutions in the longer 
term.  

Other challenges for the development of an offshore grid are related to permitting and market 
design.  As  for  other  infrastructure  projects,  authorisation  procedures  are  frequently 
fragmented  even  in  the  same  country.  When  a  project  crosses  the  territory  of  different 
Member  States,  this  can  considerably  complicate  the  overall  process,  resulting  in  very  long 
lead  times.  Furthermore,  the  insufficient  integration  of  electricity  markets,  the  insufficient 
adaptation of connection regimes and national support schemes to offshore renewable energy 
generation  and  the  absence  of  market  rules  adapted  to  electricity  systems  based  on  more 
variable renewable energy sources can impede the development of offshore projects and of a 
truly European offshore grid.  

Planning  offshore  wind  development  and  the  necessary  offshore  and  onshore  grid 
infrastructure  requires  coordination  between  Member  States,  national  regulatory  authorities, 
transmission system operators and the European Commission. Maritime spatial planning and 
definition  of  offshore  wind  and  ocean  energy  development  zones  can  enhance  development 
and ease investment decisions in this sector. 

Recommendations 

Structured  regional  cooperation  has  been  set  up  by  the  Member  States  in  the  NSCOGI57. 
While the commitment of the Member States to develop the grid in a coordinated way is very 
important,  it  should  now  be  turned  into  concrete  actions  for  it  to  become  the  major  driving 
force for the development of a North Seas offshore grid. The initiative should, in line with the 
strategy  presented  in  the  Communication,  establish  a  working  structure  with  adequate 
stakeholder  participation  and  set  a  work  plan  with  concrete  timeframe  and  objectives 
concerning grid configuration and integration, market and regulatory issues and planning and 
authorisation procedures. 

Under  the  guidance  of  the  NSCOGI,  different  options  should  be  prepared  on  grid 
configuration by national TSOs and ENTSO-E in its next TYNDP. The design options should 
consider  planning,  construction  and  operational  aspects,  the  costs  associated  to  the 
infrastructure and the benefits or constraints of the different design options. TSOs should in 
particular  review  planned  wind  farm  development  in  order  to  identify  possibilities  for  hub 
connections and interconnections for electricity trade, also taking into account possible future 
wind  development.  Regulators  should  consider  overall  development  strategies  and  regional 
and longer-term benefits when approving new offshore transmission lines. Options to revise 
the  regulatory  framework  and  make  it  compatible  should  be  examined,  covering  inter  alia 
operation  of  offshore  transmission  assets,  access  to  and  charging  of  transmission,  balancing 
rules and ancillary services. 

57 

The  NSCOGI  has  a  regional  approach,  is  driven  by  the  participating  Member  States  and  builds  on 
existing works and other initiatives. Its members intend to agree on a strategic work plan by means of a 
memorandum of understanding to be signed by end 2010.  

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3.1.2. 

Interconnections in South Western Europe 

France,  Italy,  Portugal  and  Spain  will  host  significant  future  developments  of  variable 
renewable  electricity  generations  capacities  over  the  coming  decade.  At  the  same  time,  the 
Iberian  Peninsula  is  almost  an  electric  island.  Interconnections  between  France  and  Spain 
suffer already today from insufficient capacity, with only four tie-lines (2 of 220 kV and 2 of 
400  kV)  between  the  countries,  the  last  one  having  been  built  in  1982.  All  face  continuous 
congestions58. A new 400 kV line in the Eastern Pyrenees should be ready by 2014, increasing 
the  current  interconnection  capacity  from  1,400  MW  to  about  2,800  MW,  but  some 
congestion might remain even afterwards59. 

Moreover,  these  countries  play  a  key  role  in  connecting  to  Northern  Africa,  which  could 
become increasingly important because of its huge potential for solar energy.  

By 2020, about 10 GW of new renewables generation could be built in the countries East and 
South  of  the  Mediterranean,  out  of  which  almost  60%  solar  and  40%  wind  capacities60. 
However, as of today, there is only one interconnection between the African and the European 
continent (Morocco-Spain) with about 1,400 MW capacity, which could be increased to 2,100 
MW in the coming years. A direct current submarine 1,000 MW power line is being planned 
between  Tunisia  and  Italy,  to  be  operational  by  2017.  The  use  of  these  existing  and  new 
interconnections  will  create  new  challenges  in  the  medium  term  (after  2020)  with  regard  to 
their  consistency  with  the  evolutions  of  the  European  and  North  African  network,  both  as 
regards 
the  corresponding  regulatory  framework.  Any  further 
interconnection  must  be  accompanied  by  safeguards  to  prevent  risks  of  carbon  leakage 
through power imports to increase. 

their  capacity  and 

Recommendations 

To  ensure  the  adequate  integration  of  new  capacities,  mainly  from  renewables,  in  South 
Western  Europe  and  their  transmission  to  other  parts  of  the  continent,  the  following  key 
actions are necessary up to 2020: 

–  the adequate development of the interconnections in the region and the accommodation of 
the  existing  national  networks  to  those  new  projects.  An  interconnection  capacity  of  at 
least  4,000  MW  between  the  Iberian  Peninsula  and  France  will  be  needed  by  2020. 
Corresponding  projects  will  have  to  be  developed  with  the  utmost  attention  to  public 
acceptance and consultation of all relevant stakeholders. 

–  concerning  connections  with  third  countries,  the  development  of  Italy's  connections  with 
countries of the Energy Community (notably Montenegro, but also Albania and Croatia), 
the  realisation  of  the  Tunisia-Italy  interconnection,  the  expansion  of  the  Spain-Morocco 
interconnector,  the  reinforcement,  where  necessary,  of  South-South  interconnections  in 
North African neighbour countries (including as regards the efficient management of these 

58 
59 

60 

ENTSO-E pilot TYNDP. 
During the merger procedure for the acquisition of Hidrocantábrico in 2002, EDF-RTE and EDF had 
offered to increase the commercial interconnection capacity of then 1,100 MW by a minimum of 2,700 
MW (Case No COMP/M.2684 - EnBW / EDP / CAJASTUR / HIDROCANTÁBRICO – decision dated 
19 March 2002). 
"Study on the Financing of Renewable Energy Investment in the Southern and Eastern Mediterranean 
Region", Draft Final Report by MWH, August 2010. The countries included in this study are Algeria, 
Egypt, Israel, Jordan, Lebanon, Morocco, Syria, Tunisia, West Bank / Gaza. 

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infrastructures)and  preparatory  studies  for  additional  North-South  interconnections  to  be 
developed after 2020. 

3.1.3.  Connections in Central Eastern and South Eastern Europe 

The  connection  of  new  generation  is  a  major  challenge  in  Central  and  Eastern  Europe.  For 
example, in Poland alone about 3.5 GW are foreseen until 2015 and up to 8 GW until 202061.  

At  the  same  time,  power  flow  patterns  have  recently  changed  significantly  in  Germany. 
Onshore wind power capacities, summing up to about 25 GW at the end of 2009, and offshore 
development, together with new conventional power plants, concentrate in the Northern and 
North-Eastern  parts  of  the  country;  demand  however  rises  mostly  in  the  Southern  part, 
increasing distances between generation and load centres or balancing equipment (e.g. pump 
storage). Huge North-South transit capacities are therefore needed, taking fully into account 
the grid development in and around the Northern Seas under priority 3.1.1. Given the impact 
of the current interconnection insufficiencies on the neighbouring grids especially in Eastern 
Europe, a coordinated regional approach is vital to solve this issue. 

In South Eastern Europe, the transmission grid is rather sparse compared to the grid of the rest 
of  the  continent.  At  the  same  time,  the  whole  region  (including  the  countries  of  the  Energy 
Community) has a lot of potential for further hydro generation. There is a need for additional 
generation  connection  and  interconnection  capacities  in  order  to  increase  power  flows 
between  South  East  European  countries  and  with  Central  Europe.  The  extension  of  the 
synchronous zone from Greece (and later Bulgaria) to Turkey will create additional needs for 
reinforcement  of  the  grids  in  these  countries.  Ukraine  and  the  Republic  of  Moldova  having 
expressed their interest to join the European continental interconnected electricity networks, 
further extensions will have to be examined in the longer term. 

Recommendations 

To ensure adequate connection and transmission of generation, notably in Northern Germany 
and  better  integration  of  South-Eastern  European  electricity  networks,  the  following  key 
actions are necessary up to 2020 and should notably be supported by the countries of Central 
Eastern Europe, by extending the already existing cooperation in the gas sector: 

–  the  development  of  adequate  interconnections,  notably  within  Germany  and  Poland,  to 
connect new, including renewable, generation capacities in or close to the North Sea, to the 
demand centres in Southern Germany and to pumped storage power plants to be developed 
in  Austria  and  Switzerland,  while  also  accommodating  new  generation  in  Eastern 
countries.  New  tie-lines  between  Germany  and  Poland  will  become  important,  once  new 
interconnections  are  developed  with  the  Baltic  States  (in  particular  the  Poland-Lithuania 
interconnection, see below). Due to increasing North-to-South parallel flows, cross-border 
capacity  expansion  will  be  necessary  between  Slovakia,  Hungary  and  Austria  in  the 
medium term (after 2020).  Internal  relief of  congestion through investments  is  needed to 
increase cross-border capacity in Central Europe. 

–  the increase of transfer capacities between South East European countries, including those 
of  the  Energy  Community  Treaty,  in  view  of  their  further  integration  with  Central 
European electricity markets. 

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ENTSO-E pilot TYNDP. 

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This cooperation should be covered under the Central Eastern European cooperation already 
existing in the gas sector. 

3.1.4.  Completion of the Baltic Energy Market Interconnection Plan in electricity 

In October 2008, following the agreement of the Member States of the Baltic Sea Region, a 
High Level Group (HLG) chaired by the Commission was set up on Baltic Interconnections. 
Participating  countries  are  Denmark,  Estonia,  Finland,  Germany,  Latvia,  Lithuania,  Poland, 
Sweden  and,  as  an  observer,  Norway.  The  HLG  delivered  the  Baltic  Energy  Market 
Interconnection Plan (BEMIP), a comprehensive Action Plan on energy interconnections and 
market improvement in the Baltic Sea Region, both for electricity and gas, in June 2009. The 
main objective is to end the relative "energy isolation" of the Baltic States and integrate them 
into the wider EU energy market. The BEMIP provides an important example of successful 
regional  cooperation.  The  lessons  learnt  from  this  initiative  will  be  taken  into  account  for 
other regional cooperation structures. 

Internal market barriers had to be cleared in order to make investments viable and attractive. 
This involved aligning regulatory frameworks to lay the foundation for the calculation of fair 
allocation  of  costs  and  benefits,  thus  moving  towards  the  "beneficiaries  pay"  principle.  The 
European  Energy  Programme  for  Recovery  (EEPR)  was  a  clear  driver  for  timely 
implementation  of  infrastructure  projects.  It  provided  an  incentive  to  quickly  agree  on 
outstanding  issues.  The  EU's  Strategy  for  the  Baltic  Sea  Region  has  also  provided  a  bigger 
framework for the energy infrastructure priority. The strategy already proposed a framework 
to  focus  existing  financing  from  structural  and  other  funds  into  the  areas  identified  by  the 
strategy as priority areas. 

Several factors have led to this initiative being seen by stakeholders around the Baltic Sea as a 
success: (1) the political support towards the initiative, its projects and actions; (2) the high-
level  involvement  of  the  Commission  as  a  facilitator  and  even  driving  force;  (3)  the 
involvement  of  all  relevant  stakeholders  in  the  region  from  inception  to  implementation 
(ministries, regulators and TSOs) to implement the defined infrastructure priorities. 

Despite the progress achieved so far, further efforts are still necessary to fully implement the 
BEMIP: continuous monitoring of the Plan's implementation by the Commission and the High 
Level Group will be necessary in order keep to the agreed actions and timeline. 

In  particular  support  is  necessary  for  the  key  but  also  more  complex  cross-border  projects, 
namely the LitPolLink between Poland and Lithuania, which is essential for integration of the 
Baltic market into the EU, and for which an EU coordinator was assigned.  

3.2. 

Diversified gas supplies to a fully interconnected and flexible EU gas network 

3.2.1. 

Southern Corridor 

Europe's  growing  dependence  on  imported  fuels  is  evident  in  the  gas  sector.  The  Southern 
Corridor  would  be  –  after  the  Northern  Corridor  from  Norway,  the  Eastern  corridor  from 
Russia,  the  Mediterranean  Corridor  from  Africa  and  besides  LNG  –  the  fourth  big  axis  for 
diversification  of  gas  supplies  in  Europe.  Diversification  of  sources  generally  improves 
competition  and  thus  contributes  to  market  development.  At  the  same  time,  it  enhances 
security  of  supply:  as  seen  also  in  the  January  2009  gas  crisis,  the  most  severely  affected 
countries  were  those  relying  on  one  single  import  sources.  However,  often  the  defensive 
attitude  of  gas  producers  and  incumbent  players  in  monopolistic  markets  hampers 

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diversification.  The  implementation  of  the  Southern  Corridor  requires  close  co-operation 
between several Member States and at European level, as no country individually requires the 
incremental  gas  volumes  (new  gas)  sufficient  to  underpin  the  investment  in  pipeline 
infrastructure. Therefore, the European Union must act to promote diversification and provide 
for the public good of security of supply by bringing Member States and companies together 
in  order  to  reach  a  critical  mass.  This  is  the  underlying  principle  for  the  EU  Southern  Gas 
Corridor  strategy.  Its  importance  was  underlined  in  the  Commission’s  Second  Strategic 
Energy Review of November 2008, which was endorsed by the European Council of March 
2009. 

The aim of the Southern Corridor is to directly link the EU gas market to the largest deposit of 
gas in the world (the Caspian / Middle East basin) estimated at 90.6 trillion cubic meters (for 
comparison, Russian proven reserves amount to 44.2 tcm62). Furthermore, the gas fields are 
geographically even closer than the main Russian deposits (Map 8). 

The  key  potential  individual  supplier  states  are  Azerbaijan,  Turkmenistan  and  Iraq;  yet,  if 
political  conditions  permit,  supplies  from  other  countries  in  the  region  could  represent  a 
further significant supply source for the EU. The key transit state is Turkey, with other transit 
routes being through the Black Sea and the Eastern Mediterranean. The strategic objective of 
the corridor is to achieve a supply route to the EU of roughly 10-20% of EU gas demand by 
2020, equivalent roughly to 45-90 billion cubic meters of gas per year (bcma). 

The  operational  objective  for  the  development  of  the  Southern  Corridor  strategy  is  that  the 
Commission  and  Member  States  work  with  gas  producing  countries,  as  well  as  those 
countries which are key for transporting hydrocarbons to the EU, with the joint objective of 
rapidly  securing  firm  commitments  for  the  supply  of  gas  and  the  construction  of  gas 
transportation  infrastructures  (pipelines,  Liquefied/Compressed  Natural  Gas  shipping) 
necessary at all stages of its development. 

Map 8: Comparison of distances of main Eastern gas supplies to main EU consumption hubs 

62 

BP Statistical Review of World Energy, June 2009. 

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The major challenge for the success of the Southern Corridor is to ensure that all elements of 
the  corridor  (gas  resources,  infrastructure  for  transport  and  underlying  agreements)  are 
available both at the right time and with significant scope. To date, substantial progress has 
been made to this end. With the financial support from the Commission (EEPR and/or TEN-E 
programmes) and great effort of pipeline companies, concrete transportation projects, namely 
Nabucco, ITGI, TAP and White Stream, are already in development stage and other possibly 
options  are  being  studied.  Nabucco  as  well  as  Poseidon,  the  Italy-Greece  subsea 
interconnector  which  is  part  of  ITGI,  have  received  partial  exemption  from  Third  Party 
Access  (so  called  "Article  22  exemption").  Moreover,  the  Nabucco  Intergovernmental 
Agreement,  signed  in  July  2009,  has  provided  Nabucco  with  legal  certainty  and  terms  for 
transporting  gas  through  Turkey  and  created  a  precedent  for  further  extension  of 
transportation regimes. 

The  key  challenge  for  the  future  is  to  ensure  that  gas  producing  countries  become  ready  to 
open  towards  exporting  gas  directly  to  Europe,  which  for  them  may  often  imply  accepting 
high political risk linked to their geopolitical situation. The Commission, in cooperation with 
the  Member  States  involved  in  the  Southern  Corridor,  needs  to  further  emphasize  its 
engagement  to  build  long  term  relations  with  gas  producing  countries  in  this  region  and 
provide them with a stronger link to the EU.  

The Southern Gas Corridor pipeline components are also reinforced by preparation of options 
for delivering substantial additional quantities of Liquefied Natural Gas (LNG) to Europe in 
particular  from  the  Middle  East  (Persian  Gulf  and  Egypt).  In  the  first  phase  it  encompasses 
the  development  of  LNG  reception  points  in  Europe  (and  connecting  them  to  the  wider 
network).  Furthermore,  cooperation  with  producer  countries  on  developing  energy  policies 
and  long-term  investment  plans  which  are  conducive  to  LNG,  is  expected  to  be  gradually 
built. 

3.2.2.  North-South gas interconnections in Eastern Europe 

The strategic concept of the North-South natural gas interconnection is to link the Baltic Sea 
area  (including  Poland)  to  the  Adriatic  and  Aegean  Seas  and  further  to  the  Black  Sea, 
covering the following EU Member States (Poland, the Czech Republic, Slovakia, Hungary, 
Romania, and possibly Austria) and Croatia. This would provide the overall flexibility for the 
entire Central East European (CEE) region to create a robust, well-functioning internal market 
and promote competition. In the longer term, this integration process will have to be extended 
to  the  non  EU  member  countries  of  the  Energy  Community  Treaty.  An  integrated  market 
would provide the necessary security of demand63 and attract suppliers to make the best use of 
existing and new import infrastructures, such as new LNG regasification plants and projects 
of the Southern Corridor. The CEE region thus would become less vulnerable to a supply cut 
through the Russia/Ukraine/Belarus route. 

There  is  one  main  supplier  in  the  CEE  region;  the  current  linear  (from  East  to  West)  and 
isolated  networks  are  the  heritage  of  the  past.  While  the  proportion  of  gas  imported  from 
Russia constitutes 18% of the EU-15 consumption, in the new Member States this indicator is 
60%  (2008).  Gazprom  deliveries  are  the  overwhelming  bulk  of  gas  imports  in  the  region 
(Poland: 70%, Slovakia: 100%, Hungary: 80%, certain Western Balkan countries: 100%). 

63 

The net import demand of the biggest market (Hungary) among the eight countries was 8.56 Mtoe in 
2007  (Eurostat),  while  the  demand  of  all  seven  markets  together  was  41  Mtoe,  compared  to  German 
imports of about 62 Mtoe. 

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Due  inter  alia  to  monopolistic,  isolated  and  small  markets,  long-term  supply  contracts  and 
regulatory  failures,  the  region  is  not  attractive  for  investors  or  producers.  The  lack  of 
regulatory  coordination  and  of  a  common  approach  towards  missing  interconnections 
jeopardises  new  investments  and  hinders  the  entrance  of  new  competitors  on  the  market. 
Moreover,  security  of  supply  constitutes  a  concern  and  the  investments  needed  to  comply 
with  the  infrastructure  standards  imposed  by  the  Security  of  Gas  Supply  Regulation  are 
concentrated in this region. Finally, a considerable share of the population spends a relatively 
high share of their income on energy, leading to energy poverty.  

The  declaration  of  the  extended  Visegrad  group64  expresses  already  a  clear  commitment 
within  the  region  to  tackle  these  challenges.  Based  on  the  BEMIP  experience  and  work 
already  concluded  by  the  signatories  of  the  declaration,  the  High  Level  Group  (HLG) 
proposed  in  the  Communication  should  provide  a  comprehensive  action  plan  to  build 
interconnections and to complete market integration. The HLG should be assisted by working 
groups focusing on concrete projects, network access and tariffs. The work should include the 
experiences gained through the New Europe Transmission System (NETS) initiative65. 

3.2.3.  Completion of the Baltic Energy Market Interconnection Plan in gas 

While  implementation  of  electricity  projects  within  the  BEMIP  is  well  underway,  little 
progress  has  been  achieved  in  gas  since  the  Action  Plan  was  endorsed  by  the  eight  EU 
Member State Heads of State and President Barroso in June 2009. The HLG managed only to 
define a long list of projects with overall investment costs too high compared to the size of the 
gas markets in the region. Internal market actions were not agreed at all. The gas sector now 
enjoys the strong focus of the BEMIP work on two fronts: East-Baltic and West-Baltic areas.  

The Eastern Baltic Sea region (Lithuania, Latvia, Estonia and Finland) requires urgent action 
to  ensure  security  of  supply  through  connection  to  the  rest  of  the  EU.  At  the  same  time 
Finland, Estonian and Latvia enjoy derogations from market opening under the third internal 
market  package  as  long  as  their  markets  are  isolated.  The  derogation  will  end  once  their 
infrastructure is integrated with the rest of the EU, for example through the Lithuania-Poland 
gas interconnection. Even though the annual gas consumption of the three Baltic States and 
Finland  together  is  only  about  10  bcm,  all  the  gas  they  consume  comes  from  Russia.  As  a 
share  of  total  primary  energy  supply,  Russian  gas  amounts  to  13%  for  Finland,  15%  for 
Estonia and to about 30% for Latvia and Lithuania, while the EU average is around 6.5%. The 
main  supplier  also  has  decisive  stakes  in  the  TSOs  of  all  four  countries.  Moreover,  also 
Poland is very reliant on Russian gas. Therefore there is little market interest to invest in new 
infrastructure.  The  minimum  necessary  infrastructure  has  been  agreed  and  a  major 
breakthrough in this area is the now ongoing dialogue – politically supported by both sides – 
between  the  companies  on  the  Polish-Lithuanian  gas  link.  Discussions  on  a  regional  LNG 
terminal are also ongoing within an LNG task force. 

64 

65 

See  the  Declaration  of  the  Budapest  V4+  Energy  Security  Summit  of  24  February,  2010 
(http://www.visegradgroup.eu/).  V4+  countries,  in  the  sense  of  the  Declaration,  are:  the  Czech 
Republic, the Republic of Hungary, the Slovak Republic and the Republic of Poland (as Member States 
of the Visegrad Group), the Republic of Austria, Bosnia and Herzegovina, the Republic of Bulgaria, the 
Republic of Croatia, the Republic of Serbia, the Republic of Slovenia and Romania. 
The  New  Europe  Transmission  System  (NETS)  aims  to  facilitate  the  development  of  a  competitive, 
efficient  and  liquid  regional  gas  market  that  also  reinforces  security  of  supply,  by  creating  a  unified 
infrastructure platform to increase the level of cooperation/integration between the regional TSOs. 

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In the West Baltic, the task force's objective are to find ways to replace supply from depleting 
Danish  gas  fields  expected  from  2015  onwards,  as  well  as  to  enhance  security  of  supply  in 
Denmark, Sweden and Poland. An action plan will be delivered at the end of 2010. Both task 
forces  also  focus  on  regulatory  obstacles  and  the  identification  of  common  principles  that 
would allow regional investments to take place. 

As  a  key  action,  regional  cooperation  needs  to  be  kept  strong  to  establish  the  following 
projects: PL-LT, regional LNG terminal and a pipeline connecting Norway and Denmark and 
possibly Sweden and Poland. The objectives of market opening and improved security of gas 
supply  can  be  achieved  more  cost-effectively  on  a  regional  level  than  a  national  scale. 
Commission's support is also continuously requested by the Member States in order to steer 
the BEMIP process. Finally, solutions must be found to break the vicious circle of "If there's 
no market, there is no incentive to invest in infrastructure; and without infrastructure, market 
will not develop". 

3.2.4.  North-South Corridor in Western Europe 

The strategic concept of the North-South natural gas interconnections in Western Europe, that 
is  from  the  Iberian  peninsula  and  Italy  to  North-west  Europe  is  to  better  interconnect  the 
Mediterranean  area  and  thus  supplies  from  Africa  and  the  Northern  supply  Corridor  with 
supplies  from  Norway  and  Russia.  There  are  still  infrastructure  bottlenecks  in  the  internal 
market  which  prevent  free  gas  flows  in  this  region,  such  as  for  example  the  low 
interconnection  level  to  the  Iberian  peninsula,  preventing  the  use  of  the  well-developed 
Iberian gas import infrastructure to its best. The Spain-France axis has been a priority for over 
a  decade,  but  is  still  not  completed.  However,  progress  has  been  achieved  in  recent  years, 
thanks to the better co-ordination of the national regulatory frameworks – taken up also as a 
priority  by  the  South-West  Gas  Regional  Initiative  –  and  the  active  involvement  of  the 
European Commission. Another indication for imperfect market functioning and the  lack of 
interconnectors are the systematically higher prices on the Italian wholesale market compared 
to other neighbouring markets. 

At  the  same  time,  as  the  development  of  electricity  from  variable  sources  is  expected  to  be 
particularly prominent in this corridor, the general short-term deliverability of the gas system 
needs to be enhanced to respond to the additional flexibility challenges to balance electricity 
supply. 

The main infrastructure bottlenecks preventing the correct functioning of the internal market 
and competition need to be identified in this corridor and stakeholders, Member States, NRAs 
and  TSOs,  shall  work  together  to  facilitate  their  implementation.  Secondly,  an  integrated 
analysis  between  the  electricity  and  gas  system  –  taking  into  account  both  generation  and 
transmission  aspects  –  should  lead  to  the  assessment  of  the  gas  flexibility  needs  and  the 
identification of projects with the objective to back-up variable electricity generation. 

3.3. 

Ensuring the security of oil supply 

Contrary  to  gas  and  electricity,  oil  transport  is  not  regulated.  This  means  that  there  are  no 
rules,  e.g.  on  rates  of  return  or  third  party  access  for  new  infrastructure  investments.  Oil 
companies  are  primarily  responsible  for  ensuring  continuous  supply.  Nonetheless,  there  are 
certain aspects, mainly concerning the free access to pipelines supplying the EU, but lying in 
countries  outside  the  EU  (in  Belarus,  Croatia  and  Ukraine  in  particular),  which  cannot  be 
addressed through commercial arrangements only and need political attention. 

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The Eastern European crude oil pipeline network (an extension of the Druzhba pipeline) was 
conceived and built during the Cold War period and had, at that time, no pipeline link with the 
Western  network.  As  a  result,  insufficient  connections  between  the  Western  European 
pipeline  network  and  Eastern  infrastructures  exist.  Hence  alternative  pipeline  supply 
possibilities  of  crude  oil  or  petroleum  products  from  Western  Member  States  to  CEE 
countries  are  limited.  In  case  of  an  enduring  supply  disruption  in  the  Druzhba  system 
(currently used capacity: 64 million tons/year), these limitations would lead to a big increase 
in  tanker  traffic  in  the  environmentally  sensitive  Baltic  area66,  in  the  Black  Sea  and  in  the 
extremely busy Turkish Straits67, increasing the risks of accidents and oil spills. In case of the 
Lithuanian Mažeikiai refinery68 the alternative supply requires shipping approximately 5.5 to 
9.5 million tons/year through the Baltic Sea to the Lithuanian Butinge oil terminal. 

According  to  a  recent  study69,  the  potential  responses  to  supply  disruptions  include:  (1)  the 
creation of the Schwechat-Bratislava pipeline between Austria and Slovakia; (2) the upgrade 
of  the  Adria  pipeline  (linking  the  Omisalj  oil  terminal  in  on  the  Croatian  Adriatic  coast  to 
Hungary  and  Slovakia);  and  (3)  the  upgrade  of  the  Odessa-Brody  pipeline  in  Ukraine 
(connecting the Black Sea oil terminal to the Southern branch of Druzhba at Brody) and its 
planned extension to Poland (Brody-Adamowo). These routes represent an alternative supply 
capacity  of  at  least  3.5,  13.5,  and  33  million  tons/year  respectively.  An  additional 
improvement  would  be  the  creation  of  the  Pan-European  Oil  Pipeline  to  link  the  Black  Sea 
supply with the Transalpine Pipeline with an envisaged capacity between 1.2 million and 1.8 
million barrels per day. 

For  the  above  reasons,  political  support  for  mobilising  private  investment  in  possible 
alternative  infrastructures  is  a  priority,  in  order  to  ensure  the  security  of  oil  supply  of  land-
locked EU countries, but also to reduce oil transport by sea, thereby reducing environmental 
risks. This does not necessarily require the building of new pipeline infrastructure. Removing 
capacity bottlenecks and/or enabling reverse flows can also contribute to security of supply. 

3.4. 

Roll-out of smart grid technologies 

Smart grids70 are energy networks that can cost efficiently integrate the behaviour and actions 
of  all  users  connected  to  it.  They  are  changing  the  way,  in  which  the  electricity  grid  is 
operated  in  terms  of  transmission  and  distribution  and  re-structuring  the  present  generation 
and  consumption  pathways.  Through  integration  of  digital  technology  and  a  two-way 

66 

67 

68 

69 

70 

The  Baltic  Sea  is  one  of  the  busiest  seas  in  the  world,  accounting  for  more  than  15%  of  the  world’s 
cargo  transport  (3,500-5,000  ships  per  month).  About  17-25%  of  these  ships  are  tankers  transporting 
approximately 170 million tons of oil per year. 
The Turkish Straits comprise the Bosporus and Dardanelles and connect the Black Sea, through the Sea 
of Marmara, with the Aegean Sea. Less than a kilometre wide at their narrowest point, they are among 
the  world's  most  difficult  and  dangerous  waterways  to  navigate,  due  to  their  sinuous  geography  and 
high traffic (50,000 vessels, including 5,500 oil tankers, per year). 
In 2006, noting some leaks on the Druzhba pipeline, Transneft, the Russian pipeline operator, stopped 
the  delivery  of  crude  to  the  Lithuanian  Mažeikiai  refinery,  the  only  oil  refinery  in  the  Baltic  States. 
Since then this particular pipeline segment remains closed. 
"Technical Aspects of Variable Use of Oil Pipelines coming into the EU from Third Countries", study 
by ILF and Purvin & Gertz for the European Commission, 2010. 
ERGEG and the European Task Force for Smart Grids define smart grids as electricity networks that 
can  cost  efficiently  integrate  the  behaviour  and  actions  of  all  users  connected  to  it  –  generators, 
consumers  and  those  that  are  both  –  in  order  to  ensure  economically  efficient,  sustainable  power 
systems  with  low  losses  and  high  levels  of  quality  and  security  of  supply  and  safety.  See 
http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm for more information. 

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communication system, smart grids establish direct interaction between the consumers, other 
grid users and energy suppliers. They enable consumers to directly control and manage their 
individual  consumption  patterns,  notably  if  combined  with  time  differentiated  tariffs, 
providing,  in  turn,  strong  incentives  for  efficient  energy  use.  They  allow  companies  to 
improve and target the management of their grid, increasing grid security and reducing costs. 
Smart  grid  technologies  are  needed  to  allow  for  a  cost-effective  evolution  towards  a 
decarbonised power system, allowing for the management of vast amounts of renewable on-
shore and off-shore energy, while maintaining availability for conventional power generation 
and  power  system  adequacy.  Finally,  smart  grid  technologies,  including  smart  metering, 
enhance the functioning of retail markets, which gives a real choice to consumers, as energy 
companies  as  well  as  information  and  communication  technology  companies  can  develop 
new, innovative energy services.  

Many  countries  have  developed  smart  grid  projects,  including  smart  meter  deployment, 
namely Austria, Belgium, France, Denmark, Germany, Finland, Italy, Netherlands, Portugal, 
Sweden,  Spain  and  UK71.  In  Italy  and  Sweden  almost  all  customers  already  have  smart 
meters. 

The  Bio  Intelligence  2008  Study72  concludes  that  smart  grids  could  reduce  the  EU  annual 
primary energy consumption of the energy sector in 2020 by almost 9%, which equals to 148 
TWh of electricity or savings reaching almost 7.5 billion euros/year (based on average 2010 
prices). Industry estimates for individual consumption argue that an average household could 
save 9% of its electricity and 14% of its gas consumption, corresponding to savings of ca. 200 
euros/year73. 

The Commission promotes the development and deployment of smart grids through financial 
support  for  research  and  development  (R&D).  The  SET  Plan  European  Electricity  Grids 
Initiative (EEGI), launched in June 2010, has been developed by a team of network operators 
in  electricity  distribution  and  transmission  supported  by  the  Commission  and  aims  at 
developing  the  technological  issues  of  smart  grids  further.  It  will  consolidate  smart  grids 
experiments  so  far  through  large  size  demonstrations  and  promote  R&D  and  innovation  in 
smart  grid  technologies.  It  will  also  stimulate  wider  deployment  by  addressing  challenges 
stemming from technology integration at system level, user acceptance, economic constraints 
and regulation.  

In addition to this technology push, market pull for the Europe-wide implementation of smart 
grids has been created with the adoption of the third internal energy market package in 2009, 
which foresees the obligation for Member States to ensure wide implementation of intelligent 
metering systems by 202074. Moreover, the Directive on energy end-use efficiency and energy 

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An  ERGEG  report,  presented  and  disseminated  at  the  annual  Citizens'  Energy  Forum  in  London  in 
September  2009,  gives  the  most  up-to-date  and  complete  overview  regarding  the  smart  meter 
implementation status in Europe. Available at: 
http://ec.europa.eu/energy/gas_electricity/forum_citizen_energy_en.htm  
"Impacts  of  Information  and  Communication  Technologies  on  Energy  Efficiency",  Bio  Intelligence 
Service Final Report, September 2008. Supported by the European Commission DG INFSO. 
http://www.nuon.com/press/press-releases/20090713/index.jsp 
Annex 1 of  the  Directive  2009/72/EC and Annex 1 of  the  Directive  2009/73/EC request  the  Member 
States to ensure implementation of intelligent metering systems that shall assist the active participation 
of consumers in the energy supply market. Such obligation might be subject to an economic assessment 
by Member States by 3 September 2012. According to the Electricity Directive, where roll-out of smart 

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services75  has  identified  smart  meters  as  one  of  the  main  contributors  to  energy  efficiency 
improvement.  The  Renewables  Directive76,  finally,  views  smart  grids  as  an  enabler  for 
integration of increasing renewable energy into the grid and obliges Member States to develop 
transmission  and  grid  infrastructure  towards  this  aim.  Jointly,  these  directives  constitute  the 
main policy and legal framework on which further action to stimulate the development of and 
deployment of smart grids will be built.  

To  ensure  that  smart  grids  and  smart  meters  are  developed  in  a  way  that  enhances  retail 
competition, integration of large-scale generation from renewable energy sources, and energy 
efficiency  through  the  creation  of  an  open  market  for  energy  services,  the  Commission  has 
established a Task Force on smart grids in November 2009. It consists of about 25 European 
associations  representing  all  relevant  stakeholders.  Its  mandate  is  to  advise  the  Commission 
on  the  EU  level  policy  and  regulatory  actions  and  to  coordinate  the  first  steps  towards  the 
implementation of smart grids under the provisions of the third package. Initial work of the 
Task  Force  has  been  led  by  three  Expert  Groups77,  each  focusing  on  (1)  functionalities  of 
smart  grid  and  smart  meters,  (2)  regulatory  recommendations  for  data  safety,  data  handling 
and  data  protection,  and  (3)  roles  and  responsibilities  of  actors  involved  in  the  smart  grids 
deployment. 

Despite the expected benefits of smart grids and the aforementioned policy measures in place, 
the transition towards smart grids and meters is not progressing as fast as needed to reach the 
EU's energy and climate objectives.  

The  success  of  Smart  Grids  will  not  just  depend  on  new  technology  and  the  willingness  of 
networks to introduce them, but also on best practice regulatory frameworks to support their 
introduction, addressing market issues, including impacts on competition, and changes in the 
industry  (i.e.  to  industry  codes  or  regulation)  and  the  way,  in  which  consumers  use  energy. 
Creating the right regulatory framework for a well-functioning energy services market is the 
main challenge. It will require enabling the cooperation of a wide range of different market 
actors (generators, network operators, energy retailers, energy service companies, information 
and  communication  technology  companies,  consumers,  appliance  manufacturers).  This 
regulatory  framework  will  also  have  to  ensure  the  adequate  open  access  and  sharing  of 
operational information between actors and might also have to address tariff setting issues in 
order to provide proper incentives for grid operators to invest in smart technologies. National 
regulatory authorities also have a very important role as they approve tariffs that set the basis 
for  investments  in  smart  grids,  and  possibly  meters.  Unless  a  fair  cost  sharing  model  is 
developed and the right balance between short-term investment costs and longer term profits 
found, the willingness of grid operators to undertake any substantial future investments will 
be limited. 

Unambiguous  (open)  standards  for  smart  grids  and  meters  are  needed  to  ensure 
interoperability, addressing key technological challenges and enabling successful integration 
of  all  grid  users,  while  providing  high  system  reliability  and  quality  of  electricity  supply. 
Given competing efforts to develop worldwide standards, relying and investing in one specific 

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metering is assessed positively, at least 80% of consumers shall be equipped with intelligent metering 
systems by 2020.  
Annex 3 of Directive 2006/32/EC. 
Article 16 of Directive 2009/28/EC. 
Task Force Smart Grids – vision and work programme: 
http://ec.europa.eu/energy/gas_electricity/smartgrids/doc/work_programme.pdf 

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(European) technical solution today might tomorrow translate into stranded costs. This is why 
the  Commission  launched  a  smart  meters  standardisation  mandate  for  relevant  European 
standardisation bodies in 2009. A new mandate to review related standards and develop new 
standards for smart grids will be launched by the Commission to the same standard bodies at 
the  beginning  of  2011.  International  collaboration  is  therefore  essential  to  ensure  the 
compatibility of solutions. 

Persuading  and  winning  the  trust  of  consumers  as  regards  the  benefits  of  smart  grids 
constitutes another challenge. As long as price elasticity of electricity remains low, the overall 
benefits of smart grids unverified and the risk of data abuse unaddressed78, it may be difficult 
to  overcome  consumer  reluctance,  given  the  time  and  behavioural  changes  required  to  reap 
the benefits of smart technologies.  

Last but not least, the possible lack of skilled workforce that would be ready to operate the 
complex smart grid system is another, non-negligible challenge. 

The transition towards smart grids is a complex issue and a single leap from existing network 
to  smart  grids  is  not  realistic.  A  successful  transition  will  require  fine-tuned  cooperation 
between all stakeholders in order to find the right cost-effective solutions, avoid duplication 
of  work  and  exploit  existing  synergies.  To  gain  public  awareness  and  acceptance  and 
customer  support,  the  benefits  and  costs  of  smart  grids  implementation  will  have  to  be 
objectively  discussed  and  carefully  explained,  through  active  participation  of  consumers, 
small and medium enterprises and public authorities.  

Recommendations 

To ensure such approach and to overcome identified challenges the following key actions are 
recommended: 

•  Specific  legislation:  As  outlined  in  the  Communication,  the  Commission  will  assess 
whether  any  further  legislative  initiatives  for  smart  grid  implementation  are  necessary 
under  the  rules  of  third  internal  energy  market  package.  The  assessment  will  take  into 
account  the  following  objectives:  i)  ensuring  the  adequate  open  access  and  sharing  of 
operational  information  between  actors  and  their  physical  interfaces;  ii)  creating  a  well-
functioning energy services market; and iii) providing proper incentives for grid operators 
to  invest  in  smart  technologies  for  smart  grids.  Based  on  this  analysis,  the  final  decision 
concerning specific legislation for smart grids will be taken during the first half of 2011. 

•  Standardisation and Interoperability: The Task Force has defined a set of six expected 
services  and  about  30  functionalities  of  smart  grids.  The  Task  Force  and  the 
CEN/CENELEC/ETSI Joint Working Group on Standards for the Smart Grid will produce 
by  end  2010  a  joint  analysis  on  the  status  of  European  standardization  for  smart  grid 
technologies  and  identify  further  work  needed  in  this  area.  By  beginning  of  2011  the 
Commission  will  set  up  a  standardisation  mandate  for 
the  relevant  European 
standardisation  bodies  to  develop  smart  grid  standards  and  ensure  interoperability  and 
compatibility with standards being elaborated worldwide. 

78 

A draft bill on smart grid deployment was refused by the Dutch Parliament in 2009 on grounds of data 
protection concerns. 

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•  Data  protection:  Based  on  the  work  of  the  Task  Force,  the  Commission,  in  close 
cooperation  with  the  European  Data  Protection  Supervisor,  will  assess  the  need  for 
additional  data  protection  measures,  the  roles  and  responsibilities  of  different  actors 
concerning  access,  possession  and  handling  of  data  (ownership,  possession  and  access, 
read  and  change  rights,  etc.),  and  propose,  if  necessary,  adequate  regulatory  proposals 
and/or guidelines. 

•  Infrastructure investments: Large parts of the necessary investments for the deployment 
of  smart  grids  can  be  expected  to  come  from  network  operators,  notably  at  distribution 
level, and private companies, under the guidance of national regulatory authorities. Where 
funds  are  missing,  public-private  alliances  could  provide  solutions.  Where  the  rate  of 
return  for  an  investment  is  too  low  and  the  public  interest  evident,  public  finances  must 
have the opportunity to step in. The Commission will encourage Member States to set up 
funds  for  the  support  of  the  Smart  Grid  deployment.  The  Commission  will  also  examine 
particular support for smart technologies under the policy and project support programme 
mentioned in the Communication, as well as innovative funding instruments targeted at a 
rapid roll-out of smart grid technologies in transmission and distribution networks. 

•  Demonstration,  R&D  and  innovation  projects:  In  line  with  the  above  infrastructure 
investment policy, a clear European R&D and demonstration policy is necessary to boost 
innovation  and  accelerate  the  evolution  towards  smart  networks,  based  on  the  EEGI  and 
the  smart  grids  activities  of  the  European  Energy  Research  Alliance,  which  focuses  on 
longer-term research. Particular attention should be paid to electricity system innovations 
combined  with  R&D  on  power  technologies  (cables,  transformers,  etc.)  with  R&D  on 
information  and  communication  technologies  (control  systems,  communications,  etc.). 
Proposed  measures  should  also  address  consumer  behaviour,  acceptance  and  real-life 
barriers  to  deployment.  Member  States  and  the  Commission  should  promote  R&D  and 
demonstration  projects,  e.g.  with  a  combination  of  public  support  and  regulation 
incentives, ensuring that the EEGI can start the proposed projects as planned, despite the 
current difficult financial situation in the EU. This work should be closely coordinated with 
activities  proposed  in  the  Communication  concerning  Europe's  electricity  highways.  
To ensure full transparency on ongoing demonstration/pilot projects and their results and 
the development of a future legal framework, the Commission might create a platform to 
enable  dissemination  of  good  practices  and  experiences  concerning  practical  deployment 
of smart grids across Europe and coordinate the different approaches so that synergies are 
ensured. The SET Plan Information system, managed by the European Commission's Joint 
Research Centre (JRC), includes a monitoring scheme that can be used as a starting point. 

•  Promoting new skills: To fill the gap between low-skilled and high-skill jobs due to smart 
grid  deployment  requirements,  ongoing  initiatives  could  be  used  such  as  the  training 
actions under the SET Plan, the Knowledge and Innovation Communities of the European 
Institute  of  Technology,  the  Marie  Curie  Actions79  and  other  actions  such  as  the  "New 
Skills  for  New  Jobs"  initiative.  However,  Member  States  will  need  to  address  seriously 
possible  negative  social  consequences  and  launch  programmes  to  retrain  workers  and 
support the acquisition of new skills. 

79 

http://cordis.europa.eu/fp7/people/home_en.html 

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4. 

PREPARING THE LONGER TERM NETWORKS 

4.1. 

European electricity highways 

An  electricity  highway  should  be  understood  as  a  an  electricity  transmission  line  with 
significantly more capacity to transport power than existing high-voltage transmission grids, 
both  in  terms  of  the  amount  of  electricity  transmitted  and  the  distance  covered  by  this 
transmission. To reach these higher capacities, new technologies  will have to be  developed, 
allowing notably direct current (DC) transmission and voltage levels significantly higher than 
400 kV.  

For the period beyond 2020 and up to 2050, a long-term solution will be needed to overcome 
the  main  challenge  electricity  networks  are  facing:  accommodating  ever-increasing 
windsurplus generation in the Northern Seas and increasing renewable surplus generation in 
the South Western and also South Eastern parts of Europe, connecting these new generation 
hubs  with  major  storage  capacities  in  Nordic  countries  and  the  Alps  and  with  existing  and 
future  consumption  centres  in  Central  Europe,  but  also  with  the  existing  alternating  current 
(AC) high-voltage grids. The new highways will have to take account of existing and future 
surplus areas, such as France, Norway or Sweden, and the complexity of the existing Central 
European  North-South  transmission  corridor  bringing  surplus  electricity  from  the  North 
through Denmark and Germany to Southern German and Northern Italian deficit areas. 

Despite technological uncertainties, it is clear that any future electricity highway system will 
need  to  be  built  stepwise,  ensuring  compatibility  of  AC/DC  connections  and  local 
acceptance80,  on  the  basis  of  the  other  priorities  up  to  2020  described  in  chapter  3.1,  in 
particular concerning offshore grids.  

This highway system will also have to prepare for possible connections beyond EU borders to 
the South and the East, in order to fully benefit from the considerable renewables potential in 
these  regions.  In  addition  to  the  already  synchronous  connections  with  the  Maghreb  and 
Turkey,  connections  with  other  Mediterranean  and  Eastern  countries  might  therefore  be 
necessary  in  the  long  term.  To  this  end,  a  dialogue  with  Northern  African  states  on  the 
technical  and  legal  requirements  for  the  development  of  trans-Mediterranean  electricity 
infrastructures could be envisaged.  

While there is growing awareness about the future need for a pan-European electricity grid, 
there  is  significant  uncertainty  concerning  the  moment  in  time,  when  this  grid  will  become 
necessary,  and  the  steps  to  be  taken  to  build  it.  Action  coordinated  at  EU  level  is  therefore 
indispensable  to  start  coherent  development  of  this  grid  and  reduce  uncertainties  and  risks. 
European coordination will also be necessary to establish an appropriate legal, regulatory and 
organisational  framework  to  design,  plan,  build  and  operate  such  an  electricity  highway 
system.  

This action will need to integrate ongoing research and development work, notably under the 
SET  plan  European  Electricity  Grid  Initiative  (EEGI)  and  European  Industrial  Wind 
Initiative,  to  adapt  existing  and  to  develop  new  transmission,  storage  and  smart  grid 

80 

This  could  include  the  need  for  partial  underground  of  electricity  lines,  taking  into  account  that 
investment costs for underground cables are at least 3-10 times higher compared to overhead lines. See 
"Feasibility  and  technical  aspects  of  partial  undergrounding  of  extra  high  voltage  power  transmission 
lines", joint paper by ENTSO-E and Europacable. November 2010. 

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technologies.  In  this  context,  it  will  also  need  to  integrate  the  potential  for  large-scale 
hydrogen  transport  and  storage.  When  coupled  with  fuel  cells,  it  is  particularly  suited  for 
distributed and transport applications. Commercialisation for residential applications could be 
expected as of 2015 and for hydrogen vehicles around 2020.81 

Recommendations 

The following key actions are necessary to prepare European electricity highways: 

–  In line with the conclusions of the June 2009 Bucharest Forum, initiate dedicated work on 
the Electricity Highways, in the framework of the  Florence  Forum, to structure  the work 
carried  out  by  all  stakeholders  for  the  preparation  of  the  electricity  highways.  This  work 
should  be  organised  by  the  European  Commission  and  ENTSO-E  and  bring  together  all 
relevant  stakeholders.  It  should  focus  on  establishing  mid-  and  long-term  generation 
development  scenarios,  assessing  concepts  of  pan-European  grid  architecture  and  design 
options, analysing socio-economic and industrial policy consequences of deployment, and 
designing an appropriate legal, regulatory and organisational framework. 

–  Develop  the  necessary  research  and  development,  building  on  the  SET-plan  European 
Electricity Grid Initiative (EEGI) and European Industrial Wind Initiative, to adapt existing 
and develop new transmission, storage and smart grid technologies as well as needed grid 
design and planning tools. 

–  Establish a modular development plan, to be prepared by ENTSO-E by mid-2013, with 
the aim of commissioning first Electricity Highways by 2020. The plan would also prepare 
for  the  extension  with  the  aim  of  facilitating  the  development  of  large-scale  renewable 
generation capacities beyond the borders of the EU. 

4.2. 

European CO2 transport infrastructure 

Given  that  potential  CO2  storage  sites  are  not  evenly  distributed  across  Europe,  large-scale 
deployment  of  CO2  capture  and  storage  in  Europe,  may  be  needed  to  achieve  significant 
levels  of  decarbonisation  of  the  European  economies  post-2020,  and  will  necessitate  the 
construction of an infrastructure of pipelines and, where suitable, shipping infrastructure, that 
could  span  across  Member  State  borders,  if  countries  do  not  have  adequate  CO2  storage 
potential. 

The  component  technologies  of  CCS  (capture,  transport  and  storage)  are  proven.  However, 
they have not yet been integrated and tested at an industrial scale, and, currently, CCS is not 
commercially  viable.  To  date,  the  implementation  of  the  technology  has  been  limited  to 
smaller-scale plants often designed to demonstrate one or two of the components in isolation. 
At the same time it is commonly agreed that in order to have a profound impact on emission 
reductions, and thus enable a ‘lowest-cost’ portfolio of climate change mitigation measures, 
the viability of CCS technologies has to be demonstrated on large scale around 2020.  

In  response,  the  2007  Spring  European  Council  decided  to  support  deployment  of  up  to  12 
large-scale CCS demonstration plants in Europe by 2015 in order to drive the technology to 

81 

To  this  aim,  in  the  framework  of  the  SET  Plan,  the  Fuel  Cells  and  Hydrogen  Joint  Undertaking  will 
launch  a  first  study  on  EU  hydrogen  infrastructure  planning  by  end  2010,  leading  the  way  for 
commercial deployment starting in a 2020 timeframe. 

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commercial  viability.  There  are  currently  six  large-scale  CCS  projects  under  construction 
designed to demonstrate the technology in electricity generation. They will have an installed 
capacity  of  at  least  250MW  and  will  also  feature  transport  and  storage  components.  These 
projects  are  co-financed  by  the  Commission  with  grants  amounting  to  €1  billion  in  total.  A 
further funding mechanism, embedded in the Emission Trading System, became operational 
in  November  201082.  In  addition,  the  Commission  supports  CCS  related  research  and 
development and has established a dedicated knowledge sharing network for large-scale CCS 
demonstrators. 

The  Joint  Research  Centre  (JRC)  prepared  in  2010  an  assessment  on  the  requirements  for 
investment in CO2 transport infrastructure83. Under PRIMES baseline assumptions, the study 
shows that 36 Mt of CO2 will be captured in 2020 and transported in 6 EU Member States. 
The  resulting  CO2  transport  network  stretches  for  approximately  2,000  km  and  requires  2.5 
billion  euros  of  investment  (Map  9).  Nearly  all  pipelines  are  planned  to  accommodate  the 
additional CO2 quantities anticipated to flow in the following years84. 

For  2030,  the  study  finds  that  the  amount  of  CO2  captured  increases  to  272  Mt  (Map  10). 
Many of the pipelines built earlier now operate at full capacity, and new pipelines are built, to 
become fully utilised in the ramp-up towards 2050. The CO2 transport network stretches now 
for  about  8,800  km  and  requires  cumulative  investment  of  9.1  billion  euros.  First  regional 
networks  form  across  Europe  around  the  first  demonstration  plants.  The  JRC  analysis  also 
highlights the benefits of European coordination if Europe is to achieve an optimal solution 
for CO2 transport, as its results indicate that up to 16 EU Member States could be involved in 
cross-border CO2 transport by 2030. 

82 
83 

84 

http://ec.europa.eu/clima/funding/ner300/index_en.htm 
"The  evolution  of  the  extent  and  the  investment  requirements  of  a  trans-European  CO2  transport 
network", European Commission, Joint Research Centre, EUR 24565 EN. 2010. 
Oversized pipelines are shown in red, while pipelines operating at full capacity are shown in blue. 

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Map 9: CO2 network infrastructure in 2020,  
PRIMES baseline 

Map 10: CO2 network infrastructure in 2030,  
PRIMES baseline 

A second analysis, done by Arup in 2010 and focussing on the feasibility of Europe-wide CO2 
infrastructures85,  aims  at  determining  the  optimal  CO2  transport  network  in  Europe  and  its 
evolution  over  time,  based  on  predefined  volumes  of  CO2,  identification  of  suitable  storage 
sites and a cost-minimisation approach. The most conservative scenario calculates a network 
of 6,900 km for 50 Mt of CO2 transported in 2030. The study argues that, as certain countries 
will  lack  storage  capacity,  only  a  trans-boundary network  could  allow  wider  deployment  of 
CCS.  

These  conclusions  are  corroborated  by  the  EU  Geocapacity  study  (2009)  on  European 
86:  a  future  CO2  transport  network  depends  critically 
capacity  for  geological  storage  of  CO2
upon the availability of onshore storage or the availability and development of offshore saline 
formations. Considering the level of public awareness on CO2 storage and CCS technology in 
general,  the  study  suggests  that  priority  should  be  given  to  storage  in  saline  formations 
offshore.  The  study  also  points  out  that  availability  of  storage  capacities  can  not  yet  be 
confirmed,  additional  work  is  therefore  necessary  to  verify  the  real  storage  potential. 
However,  the  main  driver  for  CCS  development  in  the  near  future  will  be  the  CO2  price, 
which is highly uncertain and dependent on the evolution of the ETS. Any analysis outlining a 
possible CO2 network beyond 2020 should thus be treated with great caution. 

All studies confirm that the evolution of the CO2 network in Europe will be determined by the 
availability of storage sites and the level of CCS deployment and the degree of coordination 
for  its  development  already  now.  The  development  of  integrated  pipeline  and  shipping 
networks,  planned  and  constructed  initially  at  regional  or  national  level  and  taking  into 

85 

86 

"Feasibility of Europe-wide CO2 infrastructures", study by Ove Arup & Partners Ltd for the European 
Commission. September 2010. 
"EU GeoCapacity - Assessing European Capacity for Geological Storage of Carbon Dioxide", Project 
no. SES6-518318. Final Activity Report available at: http://www.geology.cz/geocapacity/publications  

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account  the  transport  needs  of  multiple  CO2  sources  would  take  advantage  of  economies  of 
scale and enable the connection of additional CO2 sources to suitable sinks in the course of 
the  pipeline  lifetime87.  In  the  longer  run,  such  integrated  networks  would  be  expanded  and 
interlinked  to  reach  sources  and  storage  sites  spread  across  Europe,  similar  to  today's  gas 
networks. 

Recommendations 

Once  CCS  becomes  commercially  viable,  the  pipelines  and  shipping  infrastructure  built  for 
demonstration projects will become focal points for a future EU network. It is important that 
this  initially  fragmented  structure  can  be  planned  in  a  way  that  ensures  Europe-wide 
compatibility  at  a  later  stage.  Lessons  learned  about  the  integration  of  initially  fragmented 
networks as those for gas would have to be taken into account to avoid a similarly laborious 
process for creating common markets. 

The examination of the technical and practical modalities of a CO2 network should be pursued 
and an agreement on a common vision sought. The Sustainable Fossil Fuels Working Group 
for stakeholder dialogue (within the Berlin Forum) should be used for discussions on possible 
actions in this area. The CCS Project Network could be used for gathering experience from 
the operating demonstration projects. This in turn will allow assessing any need and extent of 
potential EU intervention. 

Regional cooperation should also be supported in order to stimulate development of clusters 
constituting the first stage of a possible, future integrated European network. Existing support 
structures,  including  the  CCS  Project  Network  and  the  Information  Exchange  Group 
established  under  Directive  2009/31/EC  on  the  geological  storage  of  CO2,  could  speed  up 
development of regional clusters. This could include i.a. establishing focused working groups 
and sharing knowledge on the subject in the context of the CCS Project Network, exchanging 
best practice on permitting and cross-border cooperation of competent authorities within the 
Information  Exchange  Group.  Global  CCS  discussion  fora  will  also  be  used  by  the 
Commission to exchange existing knowledge on regional clusters and hubs worldwide. 

The Commission will also continue working on a European CO2 infrastructure map that can 
facilitate  advance  infrastructure  planning,  concentrating  on  the  issue  of  cost  efficiency.  An 
important part of this task will include identification of the location, capacity and availability 
of storage sites, especially offshore. In order to make sure that the results of such a mapping 
exercise  are  comparable  across  the  continent  and  can  be  used  for  optimal  network  design, 
efforts will be undertaken to elaborate a common storage capacity assessment methodology. 
For the sake of transparency with regard to storage and CCS in general, the Commission will 
pursue the publication of a European CO2 Storage Atlas to visualise storage potential. 

87 

The Pre-Front End Engineering Design Study of a CCS network for Yorkshire and Humber showed that 
initial  investment in spare pipeline capacity would be cost effective even if subsequent developments 
joined the network up to 11 years later. The study also confirmed experience from other sectors, i.e. that 
investing  in  integrated  networks  would  catalyse  the  large  scale  deployment  of  CCS  technologies  by 
consolidating  permitting  procedures,  reducing  the  cost  of  connecting  CO2  sources  with  sinks  and 
ensuring that captured CO2 can be stored as soon as the capture facility becomes operational.  

EN 

45 

   EN