COMMON ENERGY MARKET –
INTERCONNECTORS
Filip Černoch
FSS MU
Drivers of investment
 Development of IEM (gas, electricity)
 Security reasons - gas
 Development of RES (decentralization of energy) –
electricity.
 Binding targets – 20 % of RES by 2020, 27 % by 2030.
2
Common market and energy lines
„Despite… Directive 2009/72/EC … and Directive 2009/73/EC …the market
remains fragmented due to insufficient interconnections between national energy networks
and to the suboptimal utilisation of existing energy infrastructure. However, Union-wide
integrated neworks and deployment of smart grids are vital for ensuring a competitive and
properly functioning integrated market, optimal utilisation of energy infrastructure,
increased energy efficiency …“
Regulation 347/2009
 Art. 194 TFEU:
 1) Ensuring the function of the energy market
 2) Ensurign security of supply in the Union
 3) Promoting energy efficiency and energy saving and the development of
new and renewable forms of energy
 4) Promoting the interconnection of energy networks
3
Import dependence
4
Import dependence
5
Import dependence
6
RES expansion
7
Estimated investments (2010 – 2020)
8
1) Electricity sector – TYNDP (2010) stipulates about 70 bn. euro
for transmission infrastructure, of which 28 bn. euro to be
devoted to cross border interconnections.
2) Gas sector – 28 bn. euro for import pipelines, 21 bn. for intra-EU
interconnectors.
3) CO2 pipelines infrastructure – 2,5 bn. Euro.
Estimated investments (2010 – 2020)
9
Investments - challenges
10
2 problems:
Financing
Lengthiness of permition and administration procedures (incl. local
opposition)
= involvement of the EU
EU financing
11
TSO´s own equity financing complemented by loans from commercial banks and
international financial institutions (EIB etc.)
= role of the EU in the economicaly non-viable cross-border interconnectors
EU financing
 TRANS-EUROPEAN ENERGY NETWORK – TEN-E
 Since 90s, upgraded in 2006 by Decision 1364/2006/EC.
 Limited budget of about 22 million euro annually, with a total of 155
million euro for the period of 2007-2013.
 Too many candidates for too small an amount of funding.
 Support mainly to feasibility studies and studies related to the project (up
to 50 % of costs). The project itself only up to 10 %.
 Mainly gas and electricity sector.
 Inclusion of a given project in TEN-E means the chance to gain
resources from other EU instruments (EIB, structural funds, Instrument
of Pre-accession Assistance EIA, European Neighbourhood Policy…).
12
EU Financing -EIB
13
.
Major source of EU infrastructure
financing
Plays an important role in facilitating
the implementation of the TEN-E – in
2007-2009 up to €6 bn. (3,4 bn. natural
gas, 2,6 bn. electricity).
In addition to the conventional loan
financing also Trans-European
Network Investment Facility – for
priority TEN projects (€0,5 – 1 bn. per
year for energy)
Structured Finance Facility – since
2001, high-risk profile projects.
Infrastructure Equity Fund, JESSICA,
JASPERS…
EU financing
 The European Economic Recovery Plan
 A special one-time impetus aimed at boosting EU economies (due to the financial
crisis 2008) through a combination of short-term measures to stimulate demand
and long-term investments in strategic sectors.
 Regulation 663/2009, aim was to co-finance projects in energy infrastructure,
offshore wind energy and CCS. Rapid allocation,96,3 % (€3,8 bn. out of 3,9
bn.total) by the end of 2010 in the form of commitments to 59 projects.
 44 gas and electricity projects, 9 offshore wind farms and 6 CCS.
14
18 gas infrastructure
projects= 1,440 million
Central and South East
Europe = 310 million
EU financing

15
Gas Crisis in 2009
16
EEPR
17
EEPR
18
Protracted permit granting procedures
 Difficult and time consuming procedures
 Public opposition
 ENTSO-E = new power generation equivalent to 1/3 of present capacity
will be built in the EU (220 out of 250 GW net increase from RES). 100 grid
bottlenecks are expected to the end of the decade .
 53 300km of new and upgraded high-voltage routes (104 bn.euro) needed.
1/3 of investments of this kind are being delayed „…mostly because of social
resistance and longer than initially expected permitting procedures…they are lengthy and
often cause commmissioning delays…it is of utmost importance to smooth the
authorisation processes“.
 GB: a 2005 proposal to expand a 200km transmission line carrying wind
power across Scottish mountains to south cities attracted 20 244 objections.
(approved in 2010).
19
Energy Infrastructure Package
 2011, to speed up and complete the EU transmission infrastructure
(strategic energy networks and strage facilities) by 2020.
 Regulation No 347/2013 on guidelines for trans-European energy
infrastructure
 12 priority corridors and areas
 Projects of Common Interests (PCIs) – label for the projects contributing to
implementing these priorities. Projects displaying economic, social and
environmental viability, with at least 2 MS.
 Streamlining of bureaucracy and permitting procedures to reduce their duration
for PCI, increase public participation and acceptance of the implemantation of
such projects. Facilitating the regulatory treatment of PCI, providing marketbased
and direct EU financial support.
20
Energy Infrastructure Package
 In the field of energy the amount of EU financial support
shouldn´t exceed 50 % of the eligible cost of studies and/or
works. Co-financing no mere than 80 % for actions with a
high degree of regional or EU-wide security of supply or
strenghten solidarity of the EU or comprise highly
innovative solutions.
 Co-financing rates may be increased by up to 10 % for
actions having cross-sector synergies, reaching climate
mitigation objectives, enhancing climate resilience or
reducing the greenhouse gas emissions.
21
Energy Infrastructure Package
Connecting Europe Facility
 Plan to invest 50 bn. euro (€5,1 bn. to energy infrastructure).
 Providing the financial resources for the PCI.
23
Energy Corridors
 The electricity sector
 An offshore grid in the Northern Seas and connection to Northern and
Central Europe to transport power produced by offshore wind parks to
consumers in big cities and to store power in the hydro electric power
plants in the Alps and the Nordic countries.
 Interconnections in South Western Europe to transport power generated
from wind, solar, hydro to the rest of the continent.
 Connections in Central Eastern und South Eastern Europe,
strengthening the regional network.
 Integration of the Baltic Energy Market into the European market.

24
Energy Corridors
 The gas sector
 Southern Corridor to deliver gas directly from the Caspian sea to Europe
 Baltic Energy Market Integration and connection to Central and South
East Europe
 North-South corridor in Western Europe
 The oil corridor
 Oil supply connections in Central Eastern Europe ("OSC")
 3 priority areas
 Smart grids deployment:
 Electricity highways: first electricity highways by 2020, in view of
building an electricity highways system across the Union;
 Cross-border carbon dioxide network
25
PCIs
26
PCIs
27
PCIs
28
PCIs
29
PCIs
31
Electricity Network Integration
 In the last decade interconnectors to link the Nordic market
to the continent were built, and interconnections in the CE
market reinforce. Europe is turning into a large synchronous
frequency area, to the genuine European network.
 Interconnectors amount to a total 11 % of installed
generation capacities across EU. Not enough to meet
essential parts of domestic demand via external supply.
 Central West Europe have interconnection levels of around 10-30%,
states located at periphery in the South West and the Baltic States
below 5 %.
32
33
Gas network integration
 One new import pipeline on stream (Nord Stream). Trans
Adriatic Pipeline (From Azerbaijan to Greece, Albania, Italy)
to be build. Other in planning stage.
 Since 2008 new gas storage capacity added in Germany,
Austria, the Netherlands, Poland, Czech Republic and
Hungary. Total capacity has grown by 15% from 2009 –
2013. Under TPA rules.
 Commercial network investment in natural gas is effectively hampered by
the low gas demand – that slows down upstream development outside
the EU.
 Until end 2014 also regulatory uncertainty due to the changing network
rules – esp. on capacity allocation and congestion management.
34