Contribution of the electricity sector to smart sector integration : fourth report of the European Commission Expert Group on electricity interconnection targets.
Date: 2020-10-26
Institutions: Directorate-General for Energy
Subjects: climate change policy, electrical energy, electricity supply, energy cooperation, energy grid, energy market, energy research, energy technology, reduction of gas emissions, renewable energy, report

Contribution of the Electricity  
Sector to Smart Sector Integration

Fourth report of the European Commission expert group  
on electricity interconnection targets 

Energy

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOURTH REPORT OF THE EUROPEAN COMMISSION EXPERT 
GROUP ON ELECTRICITY INTERCONNECTION TARGETS 

 
 
 
 
 
 
 
 
 
 
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Manuscript completed in October 2020 

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Luxembourg: Publications Office of the European Union, 2020 

ISBN 978-92-76-24380-9 
doi: 10.2833/96862 

© European Union, 2020 
Reproduction is authorised provided the source is acknowledged. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
report 

Fourth 
the  European 
of 
Commission expert group on electricity 
interconnection targets 

Contribution of the Electricity Sector to Smart 
Sector Integration 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contents 

EXECUTIVE SUMMARY .................................................................................................... 9 

1. 

INTRODUCTION .................................................................................................. 11 

CLIMATE NEUTRAL SCENARIOS ............................................................................................. 12 
WHAT IS SMART SECTOR INTEGRATION? ................................................................................. 13 

HOW CAN THE ELECTRICITY SECTOR CONTRIBUTE TO CLIMATE NEUTRALITY 

2. 
THROUGH SSI? ............................................................................................................. 15 

ELECTRIFICATION OF ADDITIONAL SECTORS .............................................................. 15 
MORE RENEWABLE ELECTRICITY IN EUROPE AND NEIGHBOURING COUNTRIES .................... 16 
INCREASING THE FLEXIBILITY OF THE ELECTRICITY SYSTEM ............................................ 19 
TRANSFORMING SOME SECTORS THAT CANNOT EFFICIENTLY REACH CLIMATE NEUTRALITY 

2.1. 
2.2. 
2.3. 
2.4. 
THROUGH DIRECT ELECTRIFICATION ....................................................................................... 22 

3.  MAIN RISKS FOR THE CONTRIBUTION OF SSI TO CLIMATE NEUTRALITY ................. 24 

3.1. 
3.2. 
3.3. 
3.4. 
3.5. 

TECHNOLOGY MATURITY QUESTIONS ....................................................................... 24 
HUGE INVESTMENT FOR ELECTRIFICATION, RENEWABLE GENERATION AND INFRASTRUCTURE . 26 
ISSUES RELATED TO MARKETS AND PRICES............................................................... 28 
OBSTACLES FOR THE INTEGRATION OF RENEWABLE ENERGY FROM SPECIFIC AREAS ............. 32 
ISSUES ASSOCIATED WITH THE IMPORTATION OF CLIMATE-NEUTRAL ENERGY ..................... 33 

4. 

RECOMMENDATIONS .......................................................................................... 34 

REFERENCES ................................................................................................................ 40 

COMPOSITION OF THE EXPERT GROUP AND PROFILES OF ITS MEMBERS ........................ 42 

 
 
 
 
 
EXECUTIVE SUMMARY 

In this report on the “Contribution of the Electricity Sector to Smart Sector 
Integration”, the Expert Group considers avenues to make an optimal use of 
the  opportunities  offered  by  sector  integration.  The  report  focuses  on  the 
contribution of the electricity system to a climate-neutral European energy 
system through smart sector integration.  

This  report  highlights  four  complementary  dimensions  for  an  effective 
contribution  of  smart  sector  integration  to  climate  neutrality  in  Europe  by 
2050:  1)  increased  electrification,  2)  generation  of  sufficient  amounts  of 
renewable electricity, 3) availability of flexibility tools, and 4) transforming 
some sectors that cannot efficiently reach carbon neutrality through direct 
electrification.  

Smart sector integration requires careful considerations for electricity grids, 
thermal  grids  and  storage,  gas/liquid  fuel  grids  and  storage,  given  that  in 
long-term  projections,  climate  neutrality  and  smart  sector  integration  rely 
essentially on infrastructures that still need to be planned or deployed, and 
also  on  technologies  that  still  need  to  be  scaled  up.  Therefore,  the  report 
investigates  five  main  risks  likely  to  have  an  impact  on  electricity 
infrastructure:  1)  technology  maturity  risks,  2)  capability  to  generate  and 
host  massive 
in  electrification,  renewable  energy,  and 
infrastructure,  3)  improved  market  design  and  regulations  to  ensure  an 
efficient use of the infrastructure and mitigate investors’ risks on both end 
consumer  and  energy  industry  sides,  4)  specific  obstacles  for  the 
deployment  of 
in  terms  of  space  and 
in  particular 
infrastructure  planning,  and  5)  uncertainties  regarding  the  imports  of 
carbon-neutral energy. 

investments 

renewables, 

To address these risks, the Expert Group emphasizes that the operation and 
development  of  the  entire  energy  system  should guide  efficient  decisions 
regarding energy consumption, production and energy related investments. 
It  stresses  two  guiding  criteria.  First,  the  need  to  continuously  assess  the 
SSI risks and their interactions with other elements and decisions. Second, 
the need to ensure the appropriate functioning of markets to coordinate all 
the decisions regarding energy consumption, production and energy-related 
investments to that purpose. In particular, the energy market design should 
be consistent with three principles: 

•  Fully  internalising  the  cost  of  carbon  emissions  and  of  other 

significant environmental costs in energy prices. 

•  Ensuring a level playing field between energy carriers to incentivise 

the right choice of carrier in any given situation. 

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•  Markets should reflect the varying supply and demand, incentivising 

thereby flexibility of consumption and generation. 

In  addition,  the  report  provides  fourteen  specific  recommendations  to 
mitigate and tackle the risks and uncertainties associated to electricity and 
SSI. 

10 

 
 
 
 
 
1.  INTRODUCTION 

The  European  Commission  set  up  the  Expert  Group  on  electricity 
interconnections targets in 2016. The group has issued three reports, on the 
EU  electricity  interconnection  targets,  on  electricity  interconnections  with 
neighbouring  countries  and  on  public  engagement  and  acceptance  in  the 
planning and implementation of European electricity interconnectors. 

For  the  present  report,  the  Expert  Group  has  decided  to  look  beyond  the 
specific  aspect  of  electricity  interconnections.  Already  in  its  first  report 
(November  2017),  it  identified  the  following  trend:  “further  integration  of 
the electricity, gas, heat and  transport sectors,  including through power  to 
hydrogen  and  synthetic  gas,  and  hybrid  technologies  for  transport  and 
heating. As electricity is only one part of the energy system, the emerging 
smart  energy  systems  approach  emphasises  the  need  to  look  across 
sectors to  identify synergies and  cost-effective energy storage options  as 
well  as  energy  efficiency  and  energy  savings  options.”  The  Expert  Group 
thus recommended a “holistic view on  energy infrastructure  development” 
and in particular stepping up the EU’s “efforts to develop a consistent and 
interlinked electricity gas market and network model.” 

The  adoption  in  December  2019  of  the  European Green Deal  by  the 
European Commission, with the introduction of the climate neutrality target 
by 2050, has created a very different context for the development of the 
EU’s  energy  policy.  This  ambitious  target  requires  the  mobilisation  of  the 
whole  energy  system  towards  full  climate  neutrality:  gradual  progress  in 
the  electricity  sector  is  no  longer  sufficient  and  the  contribution  made  by 
renewable  sources  must  create  benefits  for  the  system  as  a  whole. 
Considering  energy  carriers  in  isolation  has  become  insufficient,  just  as 
demand  sectors  cannot  remain  locked  in fossil-based  energy  vectors,  and 
the  energy  infrastructure  must  contribute  to  the  integration  of  these 
different  sectors.  The  efforts  to  increase  the  renewable  energy  electricity 
penetration  must  be  integrated  with  other  sectors  to  increase  the  pace 
toward the climate  neutrality of  the European energy  system  as a  whole. 
Energy  storage  outside  the  electricity  sector  as  well  as  waste  heat  and 
green  gases  also  need  to  be  considered  part  of  the  solutions,  see 
Mathiesen,  B.  V.  et  al  (2015).  For  these  reasons,  the  Expert  Group  has 
decided  to  consider  the  potential  contribution  of  the  electricity  sector 
through smart sector integration (SSI) to the new objectives established by 
the European Green Deal. 

11 

 
 
 
Climate neutral scenarios  

The target of “No net emissions  of greenhouse  gases by 2050”  has been 
proposed by the European  Commission in the  framework of  the European 
Green  Deal,  a  “new  growth  strategy that  aims  to  transform  the  EU  into  a 
fair  and  prosperous  society,  with  a  modern,  resource-efficient  and 
competitive  economy”.  This  strategy  derives  from  the  EU’s  ratification  of 
the Paris Agreement, which aims to limit global warming to well below 2°C, 
whilst pursuing efforts to limit it to 1.5°C. The cumulative greenhouse gas 
emissions must be limited to a value still to be defined, currently estimated 
at  between  60-65  GtCO2eq,  according  to  the  European  Commission.  The 
current  binding  EU  target  for  2030  includes  a  40%  decrease  in  annual 
greenhouse gas emissions, a 32.5% energy efficiency improvement and a 
32%  increase  in  renewable  energy.  These  targets  refer  to  the  energy 
system  as  a  whole,  not  to  specific  sectors  such  as  transport,  industry, 
buildings  or  agriculture.  The  future  energy  system  design,  as  well  as  the 
supply and demand for heat, liquid fuels, electricity or gas must be aligned 
to  this.  Moreover,  as  future  energy  systems  will  be  connected  across 
sectors, targets will also need to be more interconnected.  

In  2018  the  European  Commission  issued  “A  Clean  Planet  for  all  -  A 
European strategic long-term vision” (the so-called EU Long-Term Strategy), 
where, for the first time, it put forward key scenarios to achieve the Paris 
Agreement’s 1,5°C target. The publication contains eight scenarios in which 
the  long-term  climate  obligations  would  be  met.  In  September  2020  the 
European  Commission  published  the  “Climate  Target  Plan”  proposing  to 
increase  the  greenhouse  gas  emission  reduction  target  to  55%  by  2030, 
along with a set of updated scenarios. 

Many other stakeholders and organisations have also issued scenarios for 
the future European energy system, including in particular the scenarios for 
the  Ten-Year  Network  Development  Plan  (TYNDP)  2020  by  the  two 
European  networks  of  transmissions  system  operators,  ENTSO-E  and 
ENTSOG. Nevertheless, two remarks on all scenarios are in order. First, they 
do  not  deliver  enough  detailed 
required  for  planning 
infrastructure  in  an  integrated  energy  system  for  2050  yet:  among  other 
things,  they  do  not 
include  proper  assessment  of  district  heating 
infrastructure. Second, all scenarios indicate larger shares of electrification, 
while  there  are  differences  in  the  balance  between  energy  efficiency  and 
renewable  energy  electricity,  the  level  of  other  resources  that  should  be 
used and the energy system design. The level of electrification differs but 
increases in all scenarios. Therefore, for the purpose of this report, further 
electrification and further efforts on energy efficiency are considered as a 
starting point.  

information 

12 

 
 
What is smart sector integration? 

The concept of smart sector integration (SSI) that will be used in this report 
encapsulates the challenge of making an optimal use of the opportunities 
offered by sector integration to create pathways for the climate neutrality 
of  the  energy  system  in  the  most  cost-efficient  and  sustainable  manner 
through,  particularly,  promoting  energy  efficiency  and  the  efficient  use  of 
infrastructures by supporting the most efficient allocation of energy vectors 
to demand areas.  

Through  sector  integration,  the  different  energy  carriers  in  the  energy 
system  (electricity,  gas,  liquids,  heat)  are  progressively  linked  with  each 
other,  but  also  with  the  end-use  sectors  (buildings,  mobility,  industry, 
agriculture).  This  creates  the  opportunity  for  synergies  across  sectors  by 
optimizing the energy system as a whole, instead of addressing each sector 
independently;  in  particular,  it  allows  for  the  achievement  of  climate 
neutrality  of  additional  end-use  sectors.  A  good  example  of  sector 
integration  is  the  electrification  of  road  transport,  which  is  more  energy 
efficient, links a demand sector to a different energy carrier and opens up 
the opportunity for electricity from renewable sources to feed more energy 
demand.  Electrification  of  road  transport  can  contribute  to  the  cost-
efficiency of the energy system and increase demand flexibility through the 
management  of  the  charging  and  the  usage  of  the  vehicle  fleet.  Another 
example is the connection of district heating with large-scale heat pumps, 
combined heat and power, as well as excess heat from electrolysers. As the 
energy  efficiency  of  buildings  improves,  large-scale  heat  pumps  become 
more performant, reducing overall costs.  

Embedded in SSI is sector coupling, which refers to linking the supply side 
of  electrons  and  molecules  as  well  as  their  related  transmission  and 
distribution networks, also in order to enable the optimisation and climate 
neutrality  of  the  energy  system.  Admittedly,  both  gas-fired  power  plants 
and  combined  heat  and  power  generation  have  long  brought  a  sector 
coupling  element  to  the  energy  system.  Part  of  these  generation  plants 
may  gradually  switch  to  renewable  or  climate  neutral  gas,  whereas  non 
climate-neutral power plants will run less in a renewable energy system. In 
addition to large-scale heat pumps and the deployment of district heating, 
a  new  technological  pathway  that  could  reinforce  sector  coupling  are 
power-to-gas installations (electrolysers), which convert energy in the form 
of electricity to energy in the form of gas or liquid and can provide waste 
heat  for  district  heating.  The  production  of  these  fuels  through  sector 
coupling  can  enable  the  climate  neutrality  of  other  sectors,  such  as 
aviation,  heavy  transport  or  industrial  demand  requiring  high-temperature 

13 

 
 
processes,  where  direct  electrification  is  not  possible.  This  would  also 
represent  a  form  of  sector  integration  through  indirect  electrification  and 
inject a potentially significant demand flexibility to the electricity system. 

SSI implies an optimisation of involved processes and sectors, as well as an 
overarching  coherence  and  complementarity  of  the  policy,  legislative  and 
regulatory frameworks. Sector integration can only be considered smart if it 
addresses  multiple  policy  objectives  consistently, 
including  climate 
neutrality, but also energy efficiency, security of supply, sustainability and 
inclusion.  There  is  also  no  one-size-fits-all  approach  to  SSI,  since  the 
starting  point  of  each  Member  State  is  different.  These  multidimensional 
interactions  will  ultimately  determine  the  feasibility  and  success  of  the 
sector integration process. 

The purpose  of this report is to explore how  the  electricity  sector and SSI 
may  support  progress  towards  a  climate-neutral  EU  energy  system.  The 
composition  and  purpose  of  the  Expert  Group  are  the  reasons  behind  the 
emphasis  on  the  electricity  sector.  The  report  is  limited  to  technologies 
closely  related  to  SSI;  other  relevant  climate-neutral  technologies  are  not 
analysed.  Two  initial  observations  are  in  order.  First,  while  the  Group 
acknowledges  that  different  technologies  have  different  environmental 
impacts,  the  report  does  not  assess  each  of  them  individually,  instead,  it 
assumes that all efforts are made to prevent and reduce negative impacts. 
Second,  the  COVID19  crisis  is  likely  to  alter  some  scenarios  and 
assumptions underpinning this report, but its impacts are not considered. 

The report is organised as follows: Section 2 investigates four main paths 
for  the  electricity  sector  to  contribute  to  climate  neutrality  through  SSI, 
while section 3 explores the related risks and difficulties. Section 4 presents 
the Expert Group’s recommendations. 

14 

 
 
 
 
2.  HOW CAN THE ELECTRICITY SECTOR CONTRIBUTE TO CLIMATE 

NEUTRALITY THROUGH SSI? 

The  general  consensus  is  that  sector  integration  is  an  essential  piece  for 
the climate neutrality of the EU energy system. Although the energy system 
designs  put  forward  by  the  different  scenarios  diverge  substantially, 
electrification and sector integration are common elements to all of them, 
as  means  to  reach  climate  neutrality.  The  potential  contribution  of  SSI  to 
the  climate-neutrality  process  should  therefore  be  carefully  assessed  to 
identify  both  the  major  risks  linked  to  the  deployment  of  different 
technologies, as well as the most promising opportunities to reach climate 
neutrality.  

The main paths through which SSI can support climate neutrality are the 
following:  

1.  Electrification of additional sectors 
2.  Sufficient amounts of renewable electricity and availability of 

infrastructure 

3.  Availability of strong and diverse flexibility services  
4.  Climate neutrality of demand sectors that cannot be easily electrified  
5.  Creation of a circular economy  
6.  Energy efficiency 
7.  Use of heat as carrier of climate-neutral energy 
8.  Diversification of supply and improved reliability of energy systems. 

These paths tend to complement and support each other towards the goal 
of  climate  neutrality,  provided  that  the  technological,  economic,  political 
and  societal  conditions  enable  the  decisions  of  consumers  and  investors. 
SSI  implies  the  optimization  of  diverse  opportunities:  it  leverages  the 
complementarity  of  actions  and  measures  by  matching  the  needs  of 
different  actors  and  by  targeting  cost-efficient  climate  neutrality  in  the 
different energy sectors. However, due to the experience and background of 
the Expert Group, only the first four paths are discussed in this report.  

2.1.  Electrification of additional sectors 

The  main  path  for  the  electricity  sector  to  support  climate  neutrality 
through SSI is an increase in the share of total energy consumption covered 
by  electricity  generated  with  renewable  resources.  Electrification  of  end-
user  demand,  where  this  is  practicably  and  economically  feasible,  is  the 
most  important  path  through  which  SSI  contributes  to  climate  neutrality. 
Indeed, direct electrification offers opportunities to avoid conversion losses 
and  reach a  very  high  energy-system  efficiency  at  a  low  cost,  due  to  the 

15 

 
 
intrinsic  efficiency  of  electricity  and  the  technological  maturity  of  areas 
such  as  wind  and  solar  as  well  as  heat  pumps  and  e-vehicles.  Moreover, 
the opportunities for electrification are reinforced by the declining costs of 
electricity  generation  from  wind  and  solar,  the  high  efficiency  or  electric 
engines  and  the  strongly  decreasing  cost  of  batteries.  Several  scenarios 
coincide in pointing out that electrification is the main path.  

For instance, Eurelectric (2018) indicates that electricity will play a leading 
role in transport where up to 63% of total final energy consumption will be 
electric  in  the  most  ambitious  scenario.  District  heating  and  cooling  are 
expected to keep playing critical roles in some regions, while 45% to 63% 
of energy consumption in buildings could be electric in 2050, driven by the 
adoption  of  electric  heat  pumps.  A  series  of  industrial  processes  can 
technically  be  directly  electrified  with  up  to  50%  direct  electrification  in 
2050. 

Since  additional  electrification  leads  to  a  reduction  in  overall  primary 
energy  needs,  it  is  by  default  a  good  option.  However,  some  sectors  are 
difficult  to  electrify,  for  example  heavy 
industry,  high-temperature 
processes,  long-haul  transport,  shipping  and  aviation.  For  these  sectors, 
alternative climate-neutral energy carriers must be available. In addition, it 
should  be  acknowledged  that  higher  electricity  demand  will  require  more 
renewable capacity and significant infrastructure deployment and that the 
system costs should be kept under control. For example, a conversion from 
gas boilers to electric heating with heat pumps can be very expensive if it 
requires  the  expansion  of  the  electricity  distribution  grid.  Several  studies 
point to a large potential for district heating in Europe, since it can provide 
cheaper  infrastructure,  lower  upstream  costs  and  a  more  robust  energy 
system.  

2.2. 

 More  renewable  electricity  in  Europe  and  neighbouring 
countries 

The  electrification  of  final  demand  is,  as  already  mentioned,  a  central 
feature  of  SSI.  In  an  increasingly  electrified  energy  system,  renewable 
energy generation gradually  becomes the main  source.  SSI  is expected to 
support electrification in sectors that are  not  electrified today, but also to 
contribute to providing the required flexibility in order to deal with variable 
generation  from  renewable  sources.  However,  for  SSI  to  contribute 
dynamically  to  the  goal  of  climate  neutrality,  sufficient  (and  efficient) 
renewable  energy  generation  must  be  made  available,  in  order  to  satisfy 
the increasing electricity demand. Already available opportunities in the EU 
must be strengthened, diversified and enhanced, including in particular the 

16 

 
 
integration  of  renewable  electricity  across  the  EU  countries  and  between 
the EU and third countries. 

Better integration of renewable electricity across the EU was the focus of 
the  Expert  Group’s  first  report,  and  it  will  not  be  discussed  again  here. 
Nevertheless,  two  of  its  recommendations  should  be  underlined.  First, 
interconnection  targets  must  have  a  triple  dimension,  measuring:  a)  the 
degree of market integration, b) the capacity of interconnectors and related 
internal grid  reinforcement for importing electricity,  and  c) the capacity  of 
interconnectors  and  related  internal  grid  reinforcement  for  exporting 
renewable electricity. Second, priority should be given to the more efficient 
functioning of the European electricity market. 

The  Expert  Group  highlights  the  contribution  of  SSI  to  climate  neutrality 
through  the  timely,  efficient  and  sustainable  integration  of  renewable 
energy  from  four  specific  sea  basins  with  very  high  RES  potential.  It  is 
essential to  plan  infrastructure development  so that additional renewable 
energy  resources  (wind  power  and  PV)  can  address    new  and  existing 
electricity demand centres. This will be particularly important in developing 
the  renewable  energy  potential  from  the  following  four  regions  (in 
alphabetical  order):  the  Atlantic  Ocean,  the  Baltic  Sea,  the  Mediterranean 
and  the  North  Sea.  These  regions  provide  a  dense  geographical 
concentration  of  renewable  energy,  while  the  countries  in  these  regions 
comprise an interesting mix of EU Member States, EEA and EFTA countries, 
as  well  as  third  countries.  These  features  and  particularities  offer  new 
opportunities and present new challenges.  

•  The Atlantic Ocean (including the Irish Sea and the English Channel) 
has  an  offshore  wind  potential  of  about  85  GW  in  2050  as 
estimated by WindEurope (2019). As of 2019, less than 1 GW per 
year is installed in this region. However, given cooperation over the 
past  10  years  between  the  United  Kingdom  and  the  Republic  of 
Ireland  in  Northern  Seas  Offshore  fora  related  to  the  North  Sea 
basin, there is  a  strong overlap between  developments  in  this  sea 
basin and in the North Sea and adjacent basins as discussed below. 
•  The  Baltic  Sea  region  is  already  developing  fast  in  terms  of 
infrastructure 
electricity 
offshore  wind 
interconnections.  It  has  eight  interconnectors  linking  the  Nordic, 
Continental  Europe  and  Baltic  States.  The  High-Level  Group  on 
Baltic energy market interconnection plan (BEMIP HLG) has proved 
truly successful in driving the integration of regional electricity and 
gas systems forward. Moreover, the ensuing synchronisation of the 
Baltic States with the Continental Europe network will enhance the 

parks 

and 

for 

17 

 
 
processes of market integration in the wider region. This region has 
already today over 2.2 GW of offshore wind capacity installed and 
operating (Denmark: 872 MW, Finland: 68 MW, Germany: 1.074 MW 
and Sweden: 192 MW). WindEurope (2019) estimated that installed 
offshore  wind  capacity  in  the  Baltic  Sea  could  reach  9.5  GW  by 
2030  and  85-93  GW  by  2050.  New  generation  and  infrastructure 
projects, in both the electricity and gas sectors, are emerging quickly 
in the region.  

•  The potential for affordable and cost-competitive renewable energy 
production  in  the  Mediterranean  Sea  region  is  huge,  particularly  in 
terms  of  solar  and  wind  energy.  Southern  EU  Member  States  and 
North  African  countries  are  among  those  with  the  highest  Direct 
Normal Irradiance (DNI) in the world, more than 2300-2500 W/m2 
around 
the  Mediterranean  Sea.  Although  widely  accepted 
estimations of solar potential in the Mediterranean are lacking, the 
figures suggest between 50 and 60 GW by 2030. For example, the 
National Energy and Climate Plans (NECP) of Italy and Spain alone 
indicate  that  the  installed  photovoltaic  capacity  will  reach  52  GW 
and  39  GW  respectively.  Although  it  depends  on  the  development 
of  floating  offshore  wind  technology,  which  is  not  mature  yet,  the 
region’s  offshore  wind  potential  is  very  significant:  WindEurope 
(2019)  estimates  it  at  about  70  GW  for  2050.  This  offshore  wind 
potential  is  concentrated  in  Portugal,  Spain,  France,  Italy,  Greece, 
Tunisia and Libya. In addition, the European Commission’s initiative 
“Clean  Energy  for  EU 
in  2017,  creates 
opportunities  for  islands  in  the  Mediterranean  Sea  to  become 
innovation  leaders  in  the  clean  energy  transition,  for  Europe  and 
beyond. The political cooperation between the European Union and 
the  Mediterranean  third  countries  takes  place  in  the  framework  of 
the  Union  for  the  Mediterranean  supported  by  MedTSO,  where 
cooperation  in  energy  and  climate-related  sectors  is  a  major 
component. 

launched 

Islands”, 

•  The installed offshore wind capacity in the North Sea, today about 
20 GW, is expected  to increase to 212 GW  by  2050 (WindEurope, 
2019).  This  would  require  up  to  1000  more  offshore  substations, 
cable  routes  and  onshore  substation  connections.  Taking  into 
account  the  related  increase  in  on-  and  offshore  cross-border 
interconnections,  required  to  best  manage  variable  renewable 
generation, which the Expert Group has previously recommended to 
be linked to capacity of renewable electricity sources, it follows that 
the  total  grid  infrastructure  requirements  would  be  even  larger. 
Today  several  subsea  interconnectors  are  either  in  operation  or 
under  construction  and  will  be  complemented  by  planned 

18 

 
 
interconnections  between  the  region’s  four  synchronous  areas  – 
including  the  UK  and  Ireland.  The  capture  of  massive  North  Sea 
wind  energy  resources  also  opens  up  many  opportunities  for  the 
energy  chain:  production,  storage,  transformation  (power-to-gas, 
power-to-X), 
use 
(industrial/commercial/domestic).  Some  energy  island  projects  are 
already envisaged combining it all. The North Sea region also offers 
the  potential  for  demonstration  of  cross-sector 
integration 
considering  the  significant  oil  and  gas  energy  footprint  and  the 
advances  being  made  in  Carbon  Capture  Utilisation  and  Storage 
(CCUS) with geological storage in this region. 

transportation 

final 

and 

In  summary,  the  opportunities  for  large-scale,  efficient  renewable  energy 
generation  in  these  four  sea  regions  are  huge,  offering  options  both  for 
direct integration into the EU electricity network and for transformation into 
other energy carriers. The effective contribution of these regions to climate 
neutrality  requires  integrated  approaches  that,  in  turn,  demand  long-term 
planning,  huge  capital  investments  and  political  support.  Financial  and 
technological risks, unavoidably attached to investments of this  scale, are 
compounded  by  political  and  regulatory  risks,  which  themselves  are 
amplified  by  the  mix  of  EU  and  third  countries  existing  in  each  of  these 
regions. This has implications for the design of market arrangements, which 
should  be  flexible  to  accommodate  these  regional  opportunities  and  to 
encourage the participation of EEA, EFTA and third countries in this shared 
challenge of climate neutrality. Finally, it is essential for the exploitation of 
resources in these regions to ensure the availability of sufficient transport 
capacity,  the  planning  of  which  should  go  hand-in-hand  with  generation 
planning to reduce delays and the risk of stranded assets.  

2.3. 

Increasing the flexibility of the electricity system 

Flexibility  is  an  important  feature,  a  valuable  service  which  requires 
appropriate  tools  for  the  energy  system,  particularly  electricity  systems, 
increasingly  characterized  by  variability  in  both  supply  and  demand.  A 
power system employing large amounts of wind and solar energy requires 
proper  tools  and  components  to  increase  system  flexibility,  so  that  it  can 
cope  effectively  and  efficiently  with  variability,  while  minimizing  system 
costs  and  avoiding  generation  overcapacity.  An  adequate  geographical 
planning  of  local  renewable  energy  sources  may  also  facilitate  flexibility 
management and reduce costs. 

Increasing  demand-side  flexibility  is  an  important  step  to  achieve  a 
climate-neutral energy system. Demand-side management is in general a 

19 

 
 
cost-efficient way  to avoid curtailment  and consume electricity when it is 
most economical. Its effective exploitation can reduce the need for back-up 
capacity,  including  imports  of  fossil  fuels.  Demand-side  management, 
complemented by an optimal use of distributed resources, can also reduce 
the  need  for  additional  transmission  and  distribution  capacity.  The  most 
promising  options  for  demand-side  management  are  in  sectors  and 
technologies such as electric vehicles, large-scale heat pumps, industry and 
new  electrolysis  plants.  The 
illustrate  how 
electrification must be combined with demand-side management, in order 
to  actually  increase  its  contribution  to  overall  efficiency,  reduced  fossil-
based generation needs for flexibility purposes and lower conversion losses: 
•  Electric  vehicles  are  able  to  charge  batteries  at  night  and  will 
increasingly  be  able  to  delay  charging  up  to  a  week,  mainly 
consuming electricity when renewable generation is high and prices 
are low. 

following  examples 

•  Large heating systems, including district heating, may use electricity 
when the load is low and electricity prices are low or medium, while 
using  other  energy  carriers  such  as  waste  heat  from  industry, 
bioenergy  or  climate  neutral  gases  at  peak  hours  when  electricity 
prices are higher.  

•  Local  heating  systems  may  also  invest  in  heat  storage,  which  is 
relatively cheap and may become cheaper in the future, to increase 
flexibility  and  reduce  dependence  on  other  energy  carriers.  Heat 
pumps may also be flexible, in particular when combined with heat 
storage, or with a gas boiler as hybrid heat pumps or large storage 
batteries. 

In  addition  to  the  abovementioned  demand  flexibility  options,  supply-side 
flexibility tools are also needed in order to compensate for the variability of 
renewable  electricity  supply  that  cannot  be  compensated  with  demand 
measures.  Available  options  will  change  over  time  but  already  today,  in 
some European regions, especially in its geographical periphery, there is a 
need for solutions and tools that can promptly offer technologically mature, 
cost-efficient  flexibility,  while  at  the  same  time  reduce  harmful  air  and 
climate  emissions  to  a  minimum.  Hydro  storage,  both  pumped  (PHS)  and 
with water reservoir, has long been an available option to increase supply-
side flexibility. However, the potential storage capacity of water reservoirs 
in the EU is limited, while PHS has a much larger potential. Relevant studies 
estimate  that  the  existing  PHS  capacity  has  the  potential  to  more  than 
double in the next decade (JRC, 2013). For EU Member States and for EEA 
and  EFTA  countries  with  rich  hydro  resources,  pumped  storage  is  a  prime 
opportunity.  However,  consideration  must  also  be  given  to  how  the 

20 

 
 
potential 
for  supply-side 
interconnection between power systems.  

flexibility  can  be 

increased  by  more 

Other flexibility options such as natural gas power plants are available, but 
their  impact  on  emissions  advise  limiting  their  use  to  those  hours  with 
insufficient renewable energy production, unless they run on biogas, syngas 
or  green  hydrogen  or  are  equipped  with  carbon  capture,  utilisation  and 
storage  (CCUS)  systems.  An  alternative  could  be  gas-fired  power  devices, 
be  it  small  decentralised  or  in  larger  units  fuelled  by  green  hydrogen  or 
other  power-to-X  fuels.  In  some  regions,  batteries  in  buildings  are 
promoted.  So  far,  batteries  are  expensive,  but  costs  are  declining  rapidly 
and  batteries  in  buildings  may  in  future  contribute  substantially  to 
flexibility. Batteries  may also be  beneficial at the distribution grid  level  to 
ensure  grid  stability,  prolong  the  lifetime  of  transformer  stations  and 
facilitate  electrification  while  limiting  grid  investments.  Electric  vehicle 
charging  guided  by  well-designed  electricity  markets  and  grid  tariffs  can 
also increase demand flexibility. 

Given the right incentives  from  market prices and good regulations,  many 
flexibility  options  may  be  developed  with  the  involvement  of  renewable 
power generation facilities, demand-side actors or grid operators. 

is  constrained  by 

SSI  offers  opportunities  for 
increasing  system  flexibility  both  by 
incorporating  sectors  with  complementary  and  flexible  loads  and  by 
transforming variable renewable power supply into storable energy through 
power-to-gas  or  power-to-liquids.  However,  the  capacity  to  provide  such 
technological  uncertainties  and  cost 
flexibility 
in  future  energy  systems  need  to  be 
inefficiencies.  Electrolysers 
dispatchable and  use renewable electricity to reduce infrastructure  needs. 
Moreover,  incentives  to  the  flexible  use  of  electricity  transmission  and 
distribution  grids  are  important  in  order  to  avoid  costly  infrastructure 
expansion  due  to  the  deployment  of  electrolysers.  Efficient  market  prices 
may,  together  with  good  planning  processes,  lead  to  a  localisation  of 
electrolysers that is beneficial to the grid and to the use of the waste heat 
they generate. 

Given  the  increasing  share  of  intermittent  renewable  generation,  the 
flexibility  of  the  power  system  needs  to  be  promoted  further  by  an 
appropriate  functioning  of  the  short-term  energy  markets  to  dispatch 
efficiently  the  flexibility  sources  both  on  the  demand  (interruptible  load, 
demand-side management) and the supply sides (hydro reservoirs, pumped 
hydro  storages,  batteries).  Gas-fired  power  plants  using  renewable  or 
climate-neutral  gases  are  expected  to  remain  expensive  options  in  the 

21 

 
 
years leading to 2030 because of higher fuel costs. However, they will be 
key  to  providing  firm  capacity  and  contributing  to  a  flexible  and  secured 
energy  system  in  the  long  term.  In  addition,  interconnections  between 
power systems also contribute to flexibility. 

Notice  that  options  to  provide  flexibility  strongly  depend  on  the  system 
context. Regions with easy access to complementary regions by means of 
transmission  networks  are  in  a  very  different  situation  than  islanded 
regions,  be  it  islands  or  peninsulas,  which  have  to  use  local  resources  to 
limited 
flexibility.  Moreover,  EU  Member  States  with 
provide 
interconnections  to  the  European  grid  and  increasing  shares  of  renewable 
generation  have 
rising  needs  for  electricity  flexibility.  The 
development  and  realisation  of  the  large  European  PHS  potential  (70-75 
GW  until  2030,  according  to  the  JRC(2013)  study  “Assessment  of  the 
European  potential  for  pumped  hydropower  energy  storage”),  which  has 
been  relatively  slow  so  far,  should  be  put  at  the  forefront  of  actions  to 
ensure the flexibility required for SSI.  

rapidly 

2.4.  Transforming  some  sectors  that  cannot  efficiently  reach 

climate neutrality through direct electrification 

Electrification  is  not  expected  to  cover  all  energy  demand.  European 
mainstream scenarios  estimate  a future electrification  rate  between 50% 
and  70%.  Climate  neutrality  requires 
increasing  electrification  and 
renewable  electricity  generation,  as  well  as  solutions  for  sectors  that 
cannot be directly electrified. It is of paramount importance to bring clarity 
as  to  in  which  particular  sectors,  and  under  what  circumstances,  can  the 
use of renewable gases or liquid fuels be viable and cost efficient, so as to 
adopt  relevant  preparatory  measures  and  actions  for  them.  With  the 
current  level  of  knowledge,  it  appears  that  some  high-temperature 
industrial  processes,  feedstock  for  chemical  industries  and  liquid  fuels  for 
air and maritime transport may require such solutions. 

Currently synthetic hydrogen is mostly produced from fossil fuels, whereas 
only  a  small  part  of  methane  is  produced  in  a  renewable  way  from 
biomass. However, power-to-gas technologies can use renewable electricity 
to produce synthetic hydrogen through electrolysis. This hydrogen can either 
into  synthetic  methane  through 
be  used  directly  or  be  converted 
is  captured  from 
If  the 
methanation  using  carbon  dioxide. 
biomass/biogas  or  directly  from  the  air,  it  can  further  reduce  the  carbon 
footprint of the full cycle. The advantage of methanation is that methane 
can  be  used  directly  in  any  of  today’s  standard  gas  infrastructures  and 
applications;  at  the  same  time,  each  conversion  step  leads  to  additional 
energy losses, increasing the production cost of the final carrier. CCUS can 

latter 

22 

 
 
contribute  to  hydrogen  development  when  sourced  directly  from  a  fossil 
fuel,  in  particular  natural  gas.  It  can  enable  hard-to-electrify  industries  to 
contribute  to  a  climate-neutral  economy.  However,  the  usefulness  and 
extent  of  CCUS  will  be  determined  by  the  availability  of  suitable  storage 
facilities, by the technology costs and, last but not least, by the degree of 
public acceptance. Some EU countries show resistance to CCUS, due to lack 
of experience with geological risks especially in seismically active regions.  

Electrolysers  producing  hydrogen  from  water  using  renewable  sources  are 
likely  to  play  the  most  significant  role  in  the  long  term.  IRENA  (2018) 
highlights the potential of hydrogen to channel large amounts of renewable 
energy  to  sectors  for  which  electrification  is  otherwise  difficult,  such  as 
industry and transport, as well as in niche applications, such as in remote 
locations.  Hydrogen  from  renewable  power  can  directly  displace  hydrogen 
produced from fossil fuels, as well as replace fossil fuels and feedstocks in 
several  processes.  Moreover,  the  addition  of  hydrogen  storage  facilities  is 
necessary  to  decouple  the  variable  operation  of  electrolysers  from  the 
continuous  hydrogen  demand.  Nevertheless,  attention  should  be  given  to 
ensuring that the use of renewable electricity for hydrogen production does 
not increase emissions in the overall energy system.  

Finding  the  best  locations  for  electrolysers  will  represent  a  challenge  for 
infrastructure  planning  processes.  Locations  close  to  excess  renewable 
generation,  water,  and  affordable  transportation  to  hydrogen  demand 
clusters,  in  particular  via  repurposed  natural  gas  infrastructure,  would 
contribute  to  maximizing  their  benefits.  In  other  cases  where  sufficient 
electricity transmission lines to demand centers are available, proximity to 
demand sites may prove more beneficial. 

23 

 
 
 
 
 
3.  MAIN RISKS FOR THE CONTRIBUTION OF SSI TO CLIMATE 

NEUTRALITY  

The  review  of  different  scenarios  and  the  analysis  of  the  opportunities 
offered  through  the  main  SSI  paths  provide  a  perspective  for  the 
contribution of SSI to the goal of climate neutrality of the EU energy sector. 
However,  it  is  essential  to  underline  the  risks  and  difficulties  surrounding 
the  realisation  of  those  projections  and  processes.  The  Expert  Group 
recognises that there is a large variety of risks hampering the attainment of 
the  climate  neutrality  goal  by  2050;  this  report  focuses  on  the  specific 
category of risks affecting the potential contribution of SSI.  

3.1.  Technology maturity questions  

SSI involves a wide range of technologies and services and many of them 
are  at  an  early  stage  of  development  and  deployment.  For  example, 
applications  for  power-to-gas  and  power-to-x  production  are  still 
characterised  by  low  technology  readiness  levels  and/or  relatively  high 
costs in comparison to prospective assumptions in scenarios. The same can 
be  said  about  other  technologies,  such  as  floating  offshore  wind 
technologies.  In  other  words,  the  potential  unavailability  of  technologies 
that are assumed to be available in the different scenarios would prevent 
the realisation of the corresponding investments and results. Although such 
technologies  should  be  included  in  long-term  projections,  sensitivity 
analysis  must  inform  regulatory  and  investment  decisions  to  properly 
consider  the  related  uncertainties  and  evaluate  and  manage  the  risks 
associated. 

The following list provides examples of divergences in the range of existing 
scenarios that point to substantial uncertainties on cost and availability of 
the following technologies:  

•  Climate-neutral  natural  gas  imports:  the  TYNDP  2020  Global 
Ambition scenario (one of the three scenarios developed by ENTSO-
E and ENTSOG in the framework of the EU-wide Ten-Year Network 
Development  Plan)  forecasts  1800  TWh/year  of  climate-neutral 
natural  gas  imported  from  outside  Europe  in  2050  against  no 
imports of climate-neutral natural gas on 2020.  

•  Hydrogen and  methane produced  from electricity on  a  large  scale: 
the  Eurelectric  90%  scenario  forecasts  200  GW  in  2050  against 
650 GW in the 1.5TECH scenario in the EU Long-Term Strategy, and 
less than 1 GW in 2020. 

•  Demand response solutions: the Eurelectric 90% scenario forecasts 

150 GW in 2050 against 30 GW in 2020. 

24 

 
 
•  Battery storage: the Eurelectric 90% scenario forecasts 150 GW in 
2050  (60  GW  in  TYNDP  2020  Global  Ambition  scenario)  against 
less than 1 GW deployed in 2020. 

•  Domestic biomethane production: the TYNDP 2020 Global Ambition 
scenario forecasts 750 TWh/year  in 2050  against  450 TWh in  the 
baseline  scenario  in  the  EU  Long-Term  Strategy.  Lack  of  clear 
consensus on the use of methane may pose risks of investing more 
into natural gas infrastructure. 

•  There are large divergences between the level of energy efficiency 
in  both  buildings  and  industry,  even  from  the  baseline  scenario  in 
the EU Long-Term Strategy for 2050 compared to other scenarios. 
•  Use of hydrogen in heavy-duty vehicles transport. The uncertainty in 
the level of electrification in the transport sector leads to difficulties 
in energy infrastructure planning decisions. 

•  Direct  electrification  on  high  temperature  industrial  processes  is 
also  uncertain,  both  in  terms  of  technical  feasibility  and  of 
economic viability. 

Power-to-gas  pilot  projects  show  that  these  technologies  enable  closer 
integration between power and end-use sectors. However, they are not yet 
economically  viable,  due  to  several  factors,  the  most  relevant  being:  high 
technology costs, high life-cycle energy losses, slow progress in scaling-up 
pilot  projects,  relatively  low  carbon  prices,  and  lack  of  consensus  on 
whether  and  how  market  models  need  to  adapt.  According  to  Mathis  W. 
(2020), if hydrogen costs reach $1 per kilogram, a price of at least $50 per 
ton  of  carbon  dioxide  would  enable  the  switch  from  fossil  fuels  to  clean 
hydrogen in steel-making by 2050 and at least $60 per ton to enable the 
switch to hydrogen for heat in cement production. To switch to hydrogen in 
chemicals  production,  including  ammonia,  a  price  of  at  least  $78  is 
required, while it would take at least $145 for the switch to happen in the 
ship transport sector.  

If  technological  uncertainties  are  not  properly  taken  into  account  in 
investment  decisions,  this  may  lead  to  the  construction  of  infrastructure 
that  may  become  stranded.  This  may  in  turn  prevent  the  construction  of 
other  infrastructure  that  would  have  provided  a  better  contribution  to  the 
goal  of  climate  neutrality.  SSI  solutions  demand  consistent  changes  over 
multiple networks (e.g. electricity, gas, heat, transport, and other) that must 
be timely planned and implemented to reach the projections of some long-
term scenarios. Delays in the deployment of one or the other infrastructure 
may lead to significant economic losses. 

25 

 
 
3.2.  Huge investment for electrification, renewable generation and 

infrastructure  

According to the EU Long-Term Strategy, climate-neutral scenarios require 
annual  investments  for  the  period  2030-2050  between  500  and  575 
billion  2013  euros  (excluding  transportation).  Such  investment  would 
represent around 2.8% of the EU´s GDP, while today around 2% of the EU's 
GDP is invested annually in the energy system and related infrastructure. In 
most  climate-neutrality  scenarios,  the  investment  needs  are  concentrated 
on  power  grids  (17%-23%),  renewable  generation  (10%-20%)  and  the 
residential  sector  (43%-50%).  These  figures  give  an  idea  of  the  efforts 
required  by  consumers  and  investors  and  the  associated  financial  risks 
during the coming 20-year period.  

The  Expert  Group  envisions  relevant  obstacles  for  investments  supporting 
SSI  and  climate  neutrality.  The  EU  is  spending  about  20%  of  its  overall 
budget  for  2014-2020  in  climate  change-related  action.  The  European 
Council agreed in July 2020 to increase this climate mainstreaming to 30% 
for the future EU budget for 2021-2027. Although EU spending remains a 
catalyst  to  leverage  private  and  public  investment,  the  currently  planned 
increase  is  insufficient  compared  to  the  required  additional  investments. 
Although the obstacles can affect all kinds of investment, there are specific 
issues and difficulties associated to: 1) electrification of additional sectors 
and 2) Deployment of infrastructure and renewable generation. 

1) Electrification of additional sectors.  

The  huge  investment  needs,  together  with  the  energy  prices  and  tax 
structure  in  place  today  are  challenges  for  most  sectors  and  in  particular 
for the electrification of additional sectors. For example, according the EU’s 
Long-Term Strategy, the transformation of buildings would require around 
200  billion  euros  per  year.  In  most  EU  countries,  currently  the  return  on 
investments transforming fossil-based heating systems to electricity is still 
negative.  This  may  largely  be  the  result  of  too  low  carbon  prices  and 
distorting  taxation  on  energy  carriers.  Moreover,  even  in  those  cases  in 
which  the  transformation  options  generate  positive  present  value,  full 
investment  recovery  takes  many  years,  thus  requiring  long-term  financing 
schemes  as  well  as  sustainable  and  innovative  regulatory  frameworks 
reflecting  this  situation.  Therefore  incentives  and  risk-management  tools 
may  be  too  weak  for  private  investments  and  communities  to  undertake 
such transformations. To mitigate the lack of incentives for electrification, 
individual sector analysis are required, since challenges and hurdles differ. 
The European Commission launched in October 2020 a “Renovation wave” 

26 

 
 
initiative  in  the  buildings  sector,  with  a  set  of  measures  to  promote  the 
transformation of buildings and increase renovation rates. 

Although  building  renovation  could  reduce  demand  and  trigger  more 
electrification,  there  are  also  other  relevant  complementary  options  that 
balance  supply  and  demand.  Research  shows  that  there  is  enough  waste 
heat to cover all heat demand in buildings in Europe and up to 50% of the 
buildings  in  Europe  could  be  cost-effectively  supplied  by  district  heating 
grids. In this framework, electricity can cover between 15% and 40% of the 
heat  demand  via  heat  pumps  and  demand-side  efficiency  measures. 
Thermal  grids  can  have  much  lower  costs  than  expanding  the  local 
electricity distribution grid and, contrary to individual heat pumps, they can 
ensure  a  flexible  electricity  demand  by  switching  between  electricity  and 
other energy carriers and by using heat storage.  

2) Renewable and infrastructure deployment.  

Electrification  of  additional  sectors  will  increase  demand  for  electricity,  a 
demand  that  needs  to  be  covered  by  climate  -neutral  electricity.  As  a 
consequence,  it  is  estimated  that  renewable  electricity  generation  and 
related  grid  infrastructure  require  annual  investments  between  180  and 
220  billion  euros  per  year  in  most  scenarios,  as  shown  in  the  EU’s  Long-
Term  Strategy.  The  development  and  deployment  of  the  required 
renewable  generation  and  grid  infrastructure  face  major  risks  associated 
with  a  lack  of  appropriate  market  signals  for  investment  and  flexibility 
tools, as well as space scarcity and public acceptance.  

in  most  Member  States.  With 

Europe  is  generally  densely  populated  and  space  scarcity  is  already  a 
increasing  deployment  of 
challenge 
renewables, conflicts among competing land uses will intensify. To manage 
these  conflicts  new  approaches  are  urgently  needed,  such  as  involving  a 
large  variety  of  stakeholders  in  energy  infrastructure  planning  to  find 
solutions and compromises and invest in promising emerging technologies, 
such as offshore generation. In particular, the participation and contribution 
of environmental protection civil society groups to the planning process is 
necessary to ensure the protection of ecosystems. Other elements, such as 
the development of distributed resources, can help reduce social opposition 
to  energy  infrastructure  projects.  The  third  report  published  by  this  Expert 
Group  provided  a  set  of  recommendations  on  how  to  deal  with  public 
opposition. 

27 

 
 
 
3.3. 

Issues related to Markets and Prices  

SSI  is  about  optimizing  the  whole  energy  system  by  exploiting  synergies 
between  energy  sectors  that  have  traditionally  operated  separately.  This 
optimization increases resource efficiency and lowers the total cost of the 
energy system. Markets would play a key role in achieving this optimization, 
since  most  investment  and  consumption  decisions  will  be  taken  through 
markets,  by  using  prices  for  individual  and  collective  choices.  Therefore, 
core elements in the development of SSI are: 
1.  Internalization  of  the  cost  of  carbon  and  other  environmental 

externalities in energy prices. 

2.  A common level-playing field for the different energy carriers and grids 
for electricity, heat and gas by harmonizing carbon prices between ETS 
and  sectors  outside  ETS,  and  by  removing  distorting  taxes  and 
regulations. 

3.  Development  of  efficient  markets  with  prices  reflecting  the  balance 
between  supply  and  demand  in  each  region  and  hour.  This  is 
particularly relevant to the power market, where market conditions may 
change significantly hour by hour, depending on  variations in  demand, 
solar radiation, wind etc.  

If  these  three  elements  are  not  working  appropriately,  the  SSI  energy 
investment  and  operation  decisions  will  not  be  coordinated  and  desired 
results  may  not  be  reached.  This  is  because  millions  of  large  and  small 
investments  related  to  energy  supply  and  consumption  are  strongly 
influenced  by  current  energy  prices  and  expectations  on  future  ones,  as 
well as by profitability and risks associated with present and future energy 
markets and regulations.  

Although  progress  has  been  made  in  eliminating  price  distortions,  issues 
related  to  energy  prices  and  market  structures  remain.  This  section 
analyses five pending developments. 

1. Electricity Market signals do not yet sufficiently promote investment.  

A  set  of  EU  electricity  market  failures  still  prevent  adding  renewable 
investment and injecting flexibility into the system. In competitive markets, 
capacity  providers  offer  available  electricity  at  a  price  equal  to  their 
marginal or opportunity costs. In peak periods, in which supply is lower than 
demand, prices are expected to reflect scarcity and be higher than marginal 
generation costs.  However, during off-peak periods, the price of  electricity 
on  the  markets  is  equal  to  the  marginal  cost  of  the  most  expensive 
capacity required to cover the load. When renewable sources can cover the 
entire  load,  the  marginal  cost  is  close  to  zero  because  their  variable 

28 

 
 
operating costs are extremely low. Inadequate subsidy schemes might even 
steer the electricity price to negative values in such situations. Since market 
prices  tend  to  reflect  marginal  costs,  the  recovery  of  fixed  costs  is 
challenging and subject to high uncertainty, especially in systems with high 
shares  of  renewable  electricity.  This  jeopardises  any  new  investment  and 
endangers  the  market-based  revenues  of  high  capital-intensive  assets, 
which  can  in  turn  slow  down  the  deployment  of  renewable  generation 
assets.  

2. Carbon Prices. 

Optimal  carbon  prices  and  their  proper  internalization  are  key  pending 
issues  for  investment  and  consumption  decisions  required  for  SSI  to 
materialise. Although defining the right level of carbon prices is not a task 
of this group, the gradual inclusion of additional sectors in the ETS system 
would  lead  to  a  significant  increase  of  current  prices.  Such  carbon  price 
increase  would  push  individual  decisions  of  consumers  and  investors 
towards low-carbon energy.  

Notice  that  optimal  carbon  prices  would  also  contribute  to  improve  the 
functioning  of  electricity  markets.  Higher  carbon  prices  will  increase 
electricity  prices  the most during  hours when  the  least efficient and most 
polluting  power  generation  will  be  needed  to  cover  demand.  Conversely, 
electricity prices will generally be pushed down when solar and wind power 
production  is  very  high  and  demand  is  low  (cannibalization).  These  two 
price  effects  will  increase  price  variations  and  give  incentives  to  develop 
many  types  of  flexibility,  both  in  generation  (e.g.  biogas,  hydrogen  fuel 
cells) and in demand. Periods of high power prices incentivise solutions that 
can replace fossil power generation and periods with low prices incentivize 
the  efficient  utilization  of  power  in  hours  of  high  solar  and  wind  power 
production. In addition, both incentivise energy storage. 

3. Framework for promoting climate-neutral flexibility services  

Traditionally, there have been two stochastic processes in power systems, 
which  defined  the  need  for  reserve  capacities  and  flexibility.  These  were 
the  variation  of  demand  and  the  failures  of  components.  The  growth  of 
renewable energy resources has added a third stochastic process to power 
systems,  namely  the  variation  of  generation  from  variable  resources. 
Moreover,  this  third  process  is  the  most  dynamic  among  them  and  will 
become the dominant one in terms of size in the foreseeable future. As a 
consequence,  ensuring  flexibility  in  all  time  frames  will  become  a  much 
more  central  challenge  in  future  energy  systems,  starting  with  very  fast 

29 

 
 
responses (seconds or minutes), continuing with variations caused by rapid 
changes of wind or solar irradiation over flexibility within a few hours or a 
day, and ending with seasonal balancing of generation and demand.  

Since  the  early  days  of  adding  variable  renewable  resources  to  power 
systems and markets, several improvements have ensured a more efficient 
provision  of  flexibility.  For  example,  shortening  market-closure  time  down 
to 15 minutes today in some countries (for example, Germany) has shifted 
coverage of short-term flexibility needs from power plants participating in 
system  control  (with  up-front  reserved  capacity  and  unused  market 
flexibilities) to the intra-day markets. Moreover, over the last years, markets 
have opened to a variety of actors and this trend should further continue. 
An example is  the acceptance of  smaller  generators  and pools as market 
participants. 

Nevertheless,  all  of  the  market  improvements  introduced  so  far  assume 
sufficient  dispatchable  capacity  as  last  fall-back  option.  With  increasing 
shares of variable renewable energy and in the absence of investments in 
firm capacity  to  replace decommissioned or phased-out units, this cannot 
be taken for granted any more. Future power markets will therefore require 
a  stronger  focus  on  physical  availability  and  delivery  in  time  in  the  short 
term  and  the  market  design  will  have  to  provide  the  long-term  visibility 
needed by investors and market participants. In other words, since revenues 
largely depend on short-term prices, visibility on future needs and tools to 
ensure  appropriate  market  reactions  will  play  an important  role  to  secure 
the energy supply in the long term.  

Demand-side  management  is  a  complementary  no-regret  option,  but 
current  practices  and  regulations  in  some  EU  systems  constrain  it.  For 
instance, in some national power systems (e.g. Germany, Greece or Spain) 
the  cost  of  back-up  facilities 
is  distributed  among  retailers  quite 
independently  of  the  retailer  load  variability.  On  the  supply  side,  hydro 
storages  and  other  assets  offering  primarily  flexibility  should  be  properly 
remunerated  for  the  services  they  offer  (flexibility  and  contribution  to 
system  adequacy)  and  on  equal  footing  with  the  remuneration  of  other 
technologies. The market design must provide the right incentives to ensure 
sufficient  investments,  efficient  operation  and  maintenance  and  trigger 
innovation as a means to guarantee the most efficient approach to all of 
these  requirements  in  line  with  the  climate-neutrality  challenge.  A  well-
designed  framework  must  define  all  functions  required  to  ensure  balance 
between demand and supply. 

30 

 
 
 
4) Markets and opportunities for new climate-neutral products and 
associated services 

SSI is expected to bring new products and services, some of which will not 
participate  in  existing  markets.  The  regulation  of  new  markets  should 
promote  an  optimised,  coordinated  and  coherent  interaction  between  all 
energy  sources,  including  a  functioning  and  competitive  hydrogen  market 
based  on  a  pan-European  transmission  infrastructure  dealing  with  large 
volumes of hydrogen.  Appropriate  market regulation is a pre-condition for 
an  optimal  realisation  of  the  full  potential  of  SSI,  including  the  potential 
role  of  power-to-gas  and  hydrogen  to  support  power  grid  balancing  in  a 
cost-effective way.  

5) Relative prices for final users  

The  relative  prices  of  fuel,  gas,  heat  and  electricity  often  discourage 
electrification,  power-to-gas  and  heating  investments  related  to  SSI.  With 
the current relative prices, the net present value of efficient electrification 
investment  in  some  EU  countries  is  negative.  The  same  can  be  said  of 
power-to-gas,  which  is  also  hampered  by  low  technological  maturity.  The 
current  structure  of  energy  prices  faces  two  main  issues:  lack  of 
internalisation of the negative externalities and the methodologies for the 
recovery of regulated fixed costs.  

First, many energy prices for final users do not reflect the negative impact 
of  fossil  fuels  on  climate  change.  The  ETS  carbon  system  addresses  this 
externality, but it is too low to reflect the societal cost of carbon emissions. 
Incentives  for  SSI  are  weakened  by  the  non-inclusion  of  a  number  of 
economic  sectors  in  ETS.  Other  relevant  externalities  to  be  internalised  in 
prices  are  local  and  regional  pollution  resulting  in  biodiversity  losses  and 
impacts  on  food  production  and  health.  A  partial  adjustment  of 
externalities  could  be  achieved  by  the  expansion  of  the  ETS  to  additional 
sectors or the introduction of similar levels of carbon pricing on fossil fuels 
outside ETS.  

Second, regulated fees and tariffs for using electricity networks are set to 
recover  the  total  costs  of  the  infrastructure.  However,  the  regulatory 
imputation methods for setting and distributing such costs among users are 
quite different among Member States (there is no EU-level regulation) and 
often inconsistent with policies aiming at climate neutrality. For example, in 
some countries (e.g. Germany or Spain) the cost of ramping up renewables 
at a time when they still required strong financial support was stacked on 
top  of  the  existing  electricity  prices.  This  created  a  misperception  among 

31 

 
 
consumers that other sources may be cheaper because their costs were not 
visible in the electricity bill. 

3.4.  Obstacles for the integration of renewable energy from specific 

areas  

The main challenges and risks for the efficient integration of the renewable 
energy  from  the  four  regions 
identified  (Atlantic  Sea,  Baltic  Sea, 
Mediterranean Sea and North Sea) are related to the level of investments, 
the  impact  on  the  security  and  stability  of  the  EU  power  system  and  the 
lack  of  harmonised  regulatory  frameworks  across  the  different  third 
countries. Next, an overview of these challenges.  

First, the high levels of investments needed are the result of the consensus 
view  that  single-purpose  energy  developments  would  not  be  sufficient. 
Projects  must  be  integrated  into  multi-purpose  energy  initiatives,  such  as 
energy hubs, that can demonstrate SSI benefits. The practical approach for 
this  integration  development  is  modular  and  incremental,  evaluating 
technical  and  economic  parameters  on  a  case-by-case  basis.  Without  a 
well-planned  project  calendar,  the  efficient 
integration  of  offshore 
renewable generation in the EU system may be delayed. This risk affects all 
four regions, with nuances. 

The  second  major  obstacle  is  the  significant  impact  on  Europe’s  future 
energy  supply  and  system  stability,  as  the  integration  of  these  resources 
will  change  flows  and  operational  patterns.  A 
level  of  system 
interoperability  that  provides  enough  flexibility  to  grid  development  is 
essential in order to avoid lock-in effects of purely commercially developed 
projects.  Addressing  these  risks  requires  that  technology  providers  should 
strive for compatible modular systems. It also needs consistent unbundling 
rules  for  both  on-  and  off-shore  grid  infrastructure  developments,  since 
these  rules  are  critical  to  ensure  neutrality,  non-discrimination,  fair 
competition and security. 

The  third  major  obstacle  is  the  availability  of  space  required  for  offshore 
infrastructure.  Seas  are  very  busy  and  exploited  sites  with  diverging  and 
multiple  interests.  Moreover,  the  cumulated  environmental  impacts  of 
human  activities  is  already  critical.  It  is  therefore  necessary  to  carefully 
plan  the  offshore  expansion  involving  a  large  number  of  users  and 
stakeholders,  while  finding  solutions  for  environmental  protection.  The 
ecosystem-based  approach  embedded  in  the  Maritime  Spatial  Planning 
Directive (2014/89) is a good starting point. 

32 

 
 
Finally,  regulatory  and  political  risks  can  act  as  a  hurdle  to  investments 
and/or  undermine  the  return  on  investment.  In  the  absence  of  EU-level 
initiatives  to  address  such  risks,  the  regulatory  structures  of  the  different 
countries  may  lead  to  an  unfair  treatment  of  infrastructure  investors  and 
developers.  

3.5. 

Issues  associated  with  the  importation  of  climate-neutral 
energy 

Several scenarios predict that the EU and EEA countries will not manage to 
produce  enough  climate-neutral  energy  to  cover  their  entire  energy 
demand. Therefore, an integrated view on all energy sectors in the sense of 
SSI implies the need to continue importing energy. Such energy imports will 
have to be compliant with Europe’s objective of climate-neutrality. 

In  principle,  energy  imports  can  take  the  form of electricity  or  of  gaseous 
and  liquid  carriers.  Electricity  imports  would  limit  sources  to  neighbouring 
countries  with  interconnectors  to  the  European  power  system.  Meanwhile, 
gaseous or liquid carriers can in principle be sourced from anywhere in the 
world.  Importing  primarily  gaseous  or  liquid  carriers  would  increase 
flexibility  on  the  supply  side  and  reduce  the  risk  of  dependencies  by 
providing  access  to  international  markets.  Moreover,  importing  climate-
neutral  energy  allows  an  optimized  use  of  the  scarce  space  available  for 
renewable generation in Europe. 

The problems that may arise from energy imports are related to the global 
availability  of  climate-neutral  energy.  The  uncertainty  to  establish  at  this 
point  the  future  availability  and  cost  of  imports  of  climate-neutral 
hydrogen or biomethane is indeed reflected in the divergences between the 
scenarios:  the  TYNDP  2020  Global  Ambition  scenario  forecasts  2500 
TWh/year  in  2050  against  0  TWh  in  the  EU  Long-Term  Strategy  baseline 
scenario.  However,  even  if  availability  were  not  the  issue,  clear  rules  for 
assessing  climate  neutrality  of  energy  imports and  compliance  with  other 
EU standards would still be needed in order to mitigate the risks of directly 
or indirectly importing non climate-neutral energy. 

33 

 
 
 
 
 
 
 
4.  RECOMMENDATIONS  

In  the  context  of  the  adoption  by  the  European  Commission  of  a 
Communication  on  Energy  System  Integration  in  June  2020,  the  Expert 
Group’s  central  recommendation  is  the  incorporation  of  a  detailed  vision 
plan on the contribution of SSI to climate neutrality by 2050, that includes 
attainable  energy  efficiency  on  the  demand  side,  while  considering  the 
roles  of  different  energy  infrastructures  at  transmission  and  distribution 
level electricity grids, district heating, district cooling and gas networks. The 
implementation of this plan must then be continuously monitored, including 
the assessment of risks and their interactions with the overall vision plan. It 
stresses two guiding criteria. First, the need of continuously assess the SSI 
risks and their interactions with other elements and decisions. Second, the 
need to ensure the appropriate functioning of markets to coordinate all the 
decisions  regarding  energy  consumption,  production  and  energy-related 
investments to that purpose. In particular, the energy market design should 
be consistent with three principles: 

•  Fully internalising the cost of carbon emissions and of other 

significant environmental costs in energy prices. 

•  Ensuring a level playing field between energy carriers to incentivise 

the right choice of carrier in any given situation. 

•  Markets should reflect the varying supply and demand, incentivising 

thereby flexibility of consumption and generation. 

In addition to this holistic recommendation, the Expert Group put together 
more  specific  recommendations  to  guide  the  design,  implementation, and 
risk management of such a vision plan. 

 Related to technology maturity  

I. 

II. 

Infrastructure  planning  (for  electricity,  heating,  gases  and  liquid  fuels) 
and  public  decisions  should  be  based  on  a  wide  range  of  realistic 
scenarios  where  climate-neutrality 
targets  are  most  efficiently 
achieved,  even  if  the  assumptions  on  expected  cost  decreases  and 
technological developments do not materialize.  

Decisions  on  both  investments  and  public  interventions  should  give 
preference to projects that have the best cost/benefit balance in most 
climate-neutral  2050  scenarios.  The  purpose  would  be  to  engage 
immediately  projects  that  achieve  climate  neutrality  with  the  lowest 
risk of regret in terms of stranded costs and reject those with high risks. 
High-risk  options  can  be  first  supported  through  research  and 
development  programmes  and  then  deployed  once  their  risk  profile 
improves. 

34 

 
 
III.  Non-regulated  activities  should  be  facilitated  by  markets  that  provide 
efficient  signals,  motivating  massive  investments  in  climate-neutrality 
assets and equipment. From this perspective, the Expert Group stresses 
that: 

•  Where relevant, it is necessary to adapt the European and national 
frameworks  for  State  aid  and  energy  taxation  to  introduce 
economic  signals,  in  order  to  mitigate  the  risks  that  private 
investors cannot effectively manage.  

•  Special attention should be given to technologies related to: 

I. 

Green hydrogen, green gases and synthetic liquid fuels that 
are not yet profitable, but are needed for SSI between gas 
and electricity. In this respect, obstacles hampering progress 
towards  competitive  markets  for  hydrogen  and  other 
climate-neutral  gases  and  associated  services  should  be 
monitored and addressed in due course.  

II.  Non-regulated district grids (heating and cooling), in order to 
ensure energy efficiency, use of waste heat, use of low-cost 
thermal energy storage and the integration of large 
additional, flexible electricity demand. 

Related to electrification and renewable energy deployment 

IV. 

V. 

Establishing  an  EU  commitment,  accompanied  by  a  calendar  of 
implementation,  to  undertake  a  revision  of  energy  prices  and  taxes 
across all sectors and Members States to identify price distortions that 
prevent both the efficient  operation  of  the current energy system and 
the  investments  needed  for  the  system’s  sectorial  transformation  in 
order  to  reach  climate  neutrality.  Special  attention  should  be  given  to 
ensure  both  the  viability  of  the  investments  needed  to  support  the 
electrification  of  additional  demand  sectors  and  the  affordability  of 
electricity prices for low-income consumers. 

Revising  EU  wholesale  electricity  markets  to  identify,  taking  into 
account,  consumer  preferences  and  decisions,  which  new  market 
elements  are  needed  to  promote  both  renewable  investment  and 
flexibility  in  demand  and  supply,  while  minimizing  overcapacity,  ,. 
Addressing  such  issues  may  require  appropriate  long-term  market 
signals  for  renewable  capacity,  climate-neutral  dispatchable  capacity, 
storage,  specific  demand  flexibility  mechanisms  and  other  flexibility 
tools, but also the evaluation and when appropriate gradual removal of 
ad-hoc  supporting  schemes.  Such  signals  should  be  implemented 

35 

 
 
based on the new regulation on the internal market for electricity (EU) 
2019/943, entered into force in January 2020.  

VI. 

Completing  the  RES  Directive  2018/2001  with  more  specific  and 
targeted  EU  initiatives  and  actions  in  order  to  promote  reliable  and 
simple  administrative  and  licensing  procedures,  and  address  the 
regulatory  challenges  associated  with  the  development  of  renewable 
generation  and  electricity  grid  projects 
in  progressively  difficult 
environments.  Moreover, innovative approaches must  be developed to 
ensure local value creation where projects are being implemented. 

VII. 

The  Expert  Group  would  like  to  reiterate  the  recommendations  put 
forward  in  its  report,  “Public  engagement  and  acceptance  in  the 
planning  and  implementation  of  European  electricity  interconnectors”, 
(June 2019), and in particular the following:  

•  Develop  coherent  guidelines  for  the  interpretation  and  application 
(EIA)  and  Nature 

of  the  Environmental 
Directives to minimise impacts and avoid unnecessary opposition.  
•  Create new opportunities for stakeholder engagement that carefully 
consider and address opinions, concerns and needs of citizens and 
impacted communities.  

Impact  Assessment 

•  Seek opportunities to create and enhance local value. 
•  Actively pursue political coordination at local, national, regional and 

European level. 

Related to the integration of renewable energy production from resource-
rich regions 

VIII. 

Ensuring a swift implementation of the projects included in the 4th  PCI 
list that are essential to support the integration of renewable energy, as 
delays  in  their  implementation  would  put  the  utilization  of  renewable 
energies  at  risk.  In  addition,  in  the  ongoing  revision  of  the  TEN-E 
regulation, put a renewed emphasis on electricity infrastructure so as to 
ensure effective deployment of the projects listed in the TYNDP for the 
electricity transmission network whose benefits outweigh costs1. In this 
sense,  the  revision  provides  an  opportunity  to  reinforce  the  role  of 

1  ACER  has  a  dissenting  view  and  stresses  the  need  for  any  assessment  to  be  technologically 
neutral,  both  between  different  energy  carriers  as  well  as  between  network-based  and  non-
network based solutions. 

36 

 
 
                                                 
 
smart  grids  for  the  integration  of  the  internal  energy  market,  for 
enhancing  flexibility  and  for  facilitating  the  secure  incorporation  of 
renewable  generation.  The  cost-effectiveness  of  such  solutions  in 
comparison  with  other,  highly  complex  network  alternatives  requiring 
high investments deserves to be underlined. 

IX. 

The  planning  approach  in  geographical  areas  where  there  is  a  high 
concentration  of  renewable  energy  should  ensure  the  consistency  of 
national,  regional  and  European  planning.  The  new  approach  should 
consider the development of multi-purpose energy infrastructure. While 
taking  into  account  the  specific  features,  environmental  conditions, 
particularities and needs of each region and Member State involved, it 
should be guided by the following common criteria:  

•  Coordination  and  optimization  of  land  and  resource  use,  while  at 
the  same  time  maximizing  local  and  regional  added-value  and 
avoiding environmental damage and disruption for habitats, people 
and communities. This may require circular-economy structures and 
broad  support  from  environment  conservation  bodies  and  relevant 
stakeholders. 

•  Common  rules  and  standards  for  ensuring  security  and  proper 
integration of the energy from non-EU regions into the EU system. 
In  particular,  special  attention  should  be  given  to  rules  and 
standards for the operation of the electricity transmission grid. 
•  Adequate regulatory frameworks and structures to ensure that grid 
investors and developers are treated equitably, and are allowed to 
pursue  the  most  efficient  development  options.  These  regulatory 
frameworks  should  also  facilitate  anticipatory investment,  in  order 
to deliver the most economical infrastructure in the medium to long 
term. 

•  Geographical  focus  on  technical  innovation  and  supply-chain 
development  at regional level, with  significant potential  for export 
of  relevant  capability  from  the  EU.  Priority  should  be  given  to 
circular-economy principles. 

•  Prioritize  the  planning,  development  and  investment  support  for 
“accelerator”  pilot  projects,  at  a  scale  that  can  demonstrate  the 
benefits  of  sharing and efficiently integrating  renewable resources 
into the energy systems of both the EU and third countries. 

37 

 
 
 
 
 
 
Related to flexibility in the electricity system 

X. 

XI. 

XII. 

Designing  and  promoting  the  execution  of  a  Flexibility  Pilot  Program, 
funded  by  the  appropriate  EU  mechanisms,  composed  by  a  variety of 
pilot projects in different countries, in order to identify new technologies 
and  Member  States  suited  to  develop  efficient  flexibility  options  that 
offer capacity to a wide range of regional and EU markets. The project 
selection  criteria  should  include,  in  addition  to  cost,  the  commitments 
and  capacity  to  offer  short,  medium  and  long-term  flexibility  to  other 
EU markets, and the availability of infrastructures for so doing.  

Performing a detailed analysis, both at EU and Member State levels, to 
quantify  flexibility  needs  and  available  means  to  provide  such 
flexibility, including cost-benefit evaluations to identify net benefits for 
European, regional and national electricity systems. The analysis should 
include  a  large  variety  of  options  to  cover  flexibility  needs  such  as 
improvement  of  market  design,  storage,  demand-side 
further 
mechanisms,  electricity  interconnection  with  neighbouring  countries, 
imports of gaseous or liquid fuels combined with backup power plants 
using  them.  The  analysis  should  also  identify  barriers  that  the 
employment  of  such  options  is  facing  in  today’s  framework  and 
solutions  to  promote  efficient  flexibility  options.  If  the  recommended 
analysis  is  included  within  the  framework  of  the  European  Resource 
Capacity  Assessment  required  by  Article  23  of  Regulation  (EU) 
2019/43, the Expert Group want to stress the importance of its timely 
completion. 

Developing  and  implementing  EU  Guidelines  for  a  proper,  dedicated 
and  effective  operational  and  pricing  framework  for  optimal  flexibility 
options  in  Europe  and  in  the  Member  States,  ensuring  that  flexibility 
and  other  required  system  services  will  be  offered  to  energy  markets 
when  needed  and  be  fairly  and  fully  compensated.  The  Electricity 
Balancing  Guideline  2017/2195  and 
the  Electricity  Regulation 
2019/943 refer to short-term markets. When fully implemented all over 
Europe, the  corresponding signals are expected  to efficiently  drive the 
operation  of  the  electricity  system.  However,  the  Expert  Group 
recommends  focusing  on  ensuring  fair  and  reliable  remuneration  for 
these services, especially those that may be useful to manage network 
congestions at local level and providing reliable long-term signals (see 
also recommendation V.) taking into account the particularities of each 
Member State and regional market. 

38 

 
 
 
Related to climate-neutral imports 

XIII. 

XIV. 

Identifying the possible sources and required infrastructures for imports 
of climate-neutral energy should be a priority. In the case of electricity, 
it  implies  at  first  an  analysis  of  neighbouring  countries  with  regard  to 
their climate-neutral export potential and the complementarity of their 
offerings  to  European  load  and  generation  profiles;  and  secondly,  the 
preparation  of  cooperation  agreements  and 
required  network 
expansions. In case of gaseous or liquid carriers, domestic infrastructure 
needs must also be identified and implemented. 

Establishing  agreements  with  exporting  countries  on  how  to  ensure 
correct measurements  of  the  carbon footprint of the imported energy. 
Such  agreements  should 
two 
include  at 
requirements: 

the  following 

least 

•  First,  clear  settlement  mechanisms 

the 
contribution  to  climate  neutrality  is  counted  appropriately  by 
transparent multi-stakeholder processes. 

for  ensuring 

that 

•  Second,  embedding  all  agreements  between  countries  on  energy 
trade into an  overall  monitoring process  to meet the  objectives of 
the Paris agreement. 

39 

 
 
 
 
 
 
REFERENCES 

1.  BlombergNEF (2020a), “Sector Coupling in Europe: Powering 

Decarbonization, Potential and policy Implications of Electrified 
Economy” 
https://www.eaton.com/content/dam/eaton/company/news-
insights/energy-transition/documents/bnef-sector-coupling-report-
feb-2020.pdf 

2.  EU (2018), “A Clean Planet for all; A European long-term strategic 
vision for a prosperous, modern, competitive and climate neutral 
economy”, In-Depth Analysis in support of the  

3.  EU(2019), Commission Com The Green Deal, COM (2018) 773 

4.  EU(2020), “Stepping up Europe’s 2030 climate ambition. Investing 
in a climate-neutral future for the benefit of our people”, COM 
(2020) 562. 

5.  Eurelectric (2018)  “Decarbonisation pathways: EU electrification 

and decarbonisation scenario modelling ” , May 2018 
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all-slideslinks-29112018-h-4484BB0C.pdf 

6.  Joint Research Center (JRC), “Assessment of the European potential 
for pumped hydropower energy storage -  a GIS-based assessment 
of pumped hydropower storage potential” Marcos Gimeno-Gutiérrez 
& Roberto Lacal-Arántegui 
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european_phs_potential.pdf  

7.  Mathis, Will (2020b), “Hydrogen-Fueled Climate Goals Need Radical 

Carbon Price Hike” Bloomberg NEF 
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fueled-climate-goals-need-radical-carbon-price-hike 

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145, 139–154.  

9.  Mathiesen, B.V. et.al (2019). Towards a decarbonised heating and 

cooling sector in Europe: Unlocking the potential of energy 
efficiency and district energy. Aalborg Universitet. 

40 

 
 
 
10. WindEurope (2019), Offshore Wind in Europe: Key trends and 
statistics 2019, February 2020 https://windeurope.org/wp-
content/uploads/files/about-wind/statistics/WindEurope-Annual-
Offshore-Statistics-2019.pdf 

11. ENTSO-E and ENTSO-G (2020), TYNDP 2020 Scenario Report, joint 

publication, June 2020 https://www.entsos-tyndp2020-
scenarios.eu/  

41 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COMPOSITION OF THE EXPERT GROUP AND PROFILES OF ITS MEMBERS 

Ms  Gaia  Morleo,  Energy  Regulatory  Affairs  Specialist,  representing 

1. 
the Agency for the Cooperation of Energy Regulators (ACER);  

2. 
Mr  Robert  Schroeder,  Manager  System  Development,  and  Ms 
Concha  Sanchez  Perez,  System  Development  Advisor,  representing  the 
European  Networks  of  Transmission  System  Operators  for  electricity 
ENTSO-E; 

3. 
Mr  Anne  Boorsma,  ENTSOG,  Business  Area  Manager  System 
Development,  and  Mr  Malcolm  Arthur,  Business  Area  Manager  Markets, 
representing the European Networks of Transmission System Operators for 
gas ENTSOG; 

4. 
Ms Paulina Beato Blanco, member in a personal capacity, Professor 
of  economics,  former  CEO  of  Red  Electrica  de  Espana,  former  principal 
economist of the Interamerican Development Bank; 

Mr  Maciej  Jakubik,  Executive  Director,  representing  Central  Europe 

5. 
Energy Partners (CEEP); 

6. 

Mr Yannick Phulpin, Senior Engineer EDF, representing Eurelectric; 

7. 
Mr  Nikolaos  Vasilakos,  Member  of  EREF  Advisory  Board,  former 
President  of  the  National  Regulatory  Authority  for  Energy  in  Greece, 
representing the European Renewable Energies Federation; 

Mr  Pierre  Bernard,  CEO,  representing  Friends  of  the  Sustainable 

8. 
Grids; 

Mr  Daivis  Virbickas,  CEO,  and  his  alternate  Mr  Liutauras 

9. 
Varanavicius, Director of Strategy Department, representing Litgrid AB; 

Mr Brian Vad Mathiesen, member in a personal capacity, Professor 

10. 
in Energy Planning and Renewable Energy Systems at Aalborg University; 

Mr  Michal  Smyk,  Head  of  Strategy,  Polska  Grupa  Energetyczna 

11. 
(PGE), representing Polish Electricity Association (PKEE); 

Mr  Morris  Bray,  Director  European  Business  Development, 

12. 
representing National Grid; 

Ms Antonella Battaglini, CEO representing Renewable Grid Initiative 

13. 
(RGI); 

Mr Auke Lont, CEO and his alternate Mr Tor Eigil Hodne, Senior Vice 

14. 
President European Affairs, representing Statnett; 

42 

 
 
 
 
15. 
Mr Jochen Kreusel, Market Innovation Manager Power Grids Division 
and  Senior  Vice-  President  at  ABB;  Professor  RWTH  Aachen,  T&D  Europe 
Vice- President, representing T&D Europe; 

Ms Cécile George, alternate member in a personal capacity, former 

16. 
Director of Electric Grid Access at the French energy regulatory authority; 

Chair  of  the  Expert  Group:  Mr  Joachim  Balke,  Head  of  Networks  and 
Regional 
Initiatives  Unit,  Directorate-General  for  Energy,  European 
Commission 

43 

 
 
 
 
 
 
Getting in touch with the EU 

In person 

All over the European  Union there are hundreds of Europe Direct information centres. 
You  can  find  the  address  of  the  centre  nearest  you  at:  https://europa.eu/european-
union/contact_en 

On the phone or by email 

Europe Direct is a service that answers your questions about the European Union. You 
can contact this service: 

– by freephone: 00 800 6 7 8 9 10 11 (certain operators may charge for these calls), 

– at the following standard number: +32 22999696 or  

– by email via: https://europa.eu/european-union/contact_en 

Finding information about the EU 

Online 

Information about the European Union in all the official languages of the EU is available 
on the Europa website at: https://europa.eu/european-union/index_en 

EU publications 

can 

download 

You 
at: 
https://publications.europa.eu/en/publications.  Multiple  copies  of  free  publications  may 
be  obtained  by  contacting  Europe  Direct  or  your  local  information  centre  (see 
https://europa.eu/european-union/contact_en). 

priced  EU 

publications 

order 

free 

and 

or 

EU law and related documents 

For access to legal information from the EU, including all EU law since 1952 in all the 
official language versions, go to EUR-Lex at: http://eur-lex.europa.eu 

Open data from the EU 

The  EU  Open  Data  Portal  (http://data.europa.eu/euodp/en)  provides  access  to  datasets 
from the EU. Data can be downloaded and reused for free, for both commercial and non-
commercial purposes. 

44 

 
 
 
 
 
 
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doi: 10.2833/96862