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Better grid policy for full scale electrification

Without a European grid up to the task of not only meeting more demand for electricity, but also assimilating it from distributed renewables, green electrification of heating and transport is stymied from the start. Decarbonisation requires new infrastructure, yet the public is having none of it.

Winning over the people to grid expansion needs to be a political priority, while a more immediate fix is to make the existing wires work better

PUBLIC APPROVAL
Convincing local stakeholders of the need for new transmission links is the biggest barrier to expansion

TEN-E TALKS
A revision of the TEN-E regulation could unlock new momentum in expanding the transmission network

KEY QUOTE
The lengthy permitting processes for energy infrastructure seen across Europe are hampering deployment

There is no way around it. From Ireland to Italy, Europe’s decarbonisation goals will not be met without significantly more grid investment, both in distribution and transmission networks. Leveraging those investments may be more of a political, than a regulatory or even a financial issue. Ireland is aiming for 70% of its electricity to come from renewable energy sources by 2030, requiring up to 9.2 GW of new power capacity, primarily wind and solar, equivalent to about 80% of the country’s total generating capacity today. Such a major expansion requires an exceptionally large investment in the Irish electricity industry and not only in the generation facilities themselves,” states the Irish Academy of Engineering (IAE) in an October 2020 briefing paper on the future of the country’s electricity transmission network. Warning that 2030 goals could be endangered without large-scale investments in the network, the academy also notes that Ireland has faced increased public resistance to transmission projects over the past few decades. One key piece of planned infrastructure, a 150 kilometre north-south interconnector cable first proposed in 2005, is still in the permitting process. It and other planned projects are bedevilled by objections from concerned citizens.

Public opposition is the single biggest obstacle to building the necessary transmission infrastructure and that in turn is a political issue, believes Don Moore, chair of the IAEs energy and climate change committee. We don’t think this is a matter that can be left to power companies or to grid companies anymore. The government has to take the lead. Politicians are reluctant to stick their neck out for things like this, but they have to convince the public that, if it wants decarbonisation—and people say they do—this is a price that needs to be paid. It can’t be done without infrastructure.” Ireland is not alone in the need to scale up renewables generation and grid infrastructure and in facing difficulty doing so. Eurelectric, an electricity industry trade association, estimates solar capacity in Europe will need to nearly triple and wind capacity to double by 2030 to reach emission reduction goals. Required investments in transmission and distribution grids, including their optimisation and digitalisation, are estimated in a range of €60 billion to €110 billion, every year.

Yet the lengthy permitting processes for energy infrastructure seen across Europe are hampering the deployment of both new generating capacity and electricity grids, increasing the cost of development and worsening investment cases, Eurelectric warns in a recent appeal to policymakers to streamline the authorisation process.

GERMAN BOTTLENECKS

Germany’s central location in the middle of the European power network makes its grid problems those of its neighbours, too. In a report on the German power market released in January 2020, think tank Agora Energiewende highlighted the slow progress of the country’s grid expansion, with only 1150 kilometres of the 7700 kilometres that lawmakers had resolved to build to meet 2030 goals installed by the end of 2019. On the other hand, significant progress” was made in awarding new permits, with an additional 1000 kilometres in projects authorised and progress made in the completion of cross-border interconnectors. Beefing up links between power systems enables additional electricity exchange with neighbours, says Agora Energiewende, facilitating the integration of renewables and underpinning security of supply. As Germany works to bolster its grid, integrating renewable energy has proved to be a complex endeavour. Wind energy capacity is concentrated in the north, on land and offshore, while much of demand lies in the south. Yet deployment of new grid infrastructure to take the power south has struggled to keep pace with the growth in wind generation. The mismatch has resulted in frequent transmission constraints, says Andreas Jahn of the Regulatory Assistance Project, an energy system advisory body. Manon van Beek, the CEO of TenneT, the transmission system operator (TSO) for the Netherlands and part of Germany, has acknowledged that grid constraints in northern parts of both countries have at times forced the TSO to reduce electricity generation from wind farms while at the same time it is ramping up fossil fuel generation in the south, increasing carbon dioxide emissions. TenneT expects to face challenges with grid bottlenecks until the needed expansions are in place, in particular the 700 kilometre, 4 GW north-south SuedLink to run between Schleswig-Holstein in northern Germany and Bavaria and Baden-Württember in the south. It is billed as the backbone of the European energy transition. SuedLink was initially slated for completion in 2022 but from the perspective of 2020 is not expected to be finished until the end of 2026.

PUBLIC PAYS FOR OPPOSITION

The project was revised to use underground cables after a December 2015 German government decision that they should be favoured over overhead lines to avoid public protests. Underground cables are more expensive. The estimated cost to the public for SuedLink ballooned to up to €10 billion from an initial €3 billion to €4 billion, but it is now less likely to trigger widespread protest and the added problem that brings of opposition from local politicians. It’s a balancing act,” says Moore of IAE. The more expensive cost of underground cables will be reflected in the price of electricity and at the end of the day, you also want to have a competitive price for energy.”

Paul Wilczek, head of distribution and market facilitation at Eurelectric, stresses the importance of an approach based on dialogue. Explain why you are building this power line and why, for example, it can’t or perhaps can be an underground line. In some cases, there could be underground solutions found and in other cases it might be too complicated or too expensive.”

THE POWER OF DIALOGUE

While SuedLink will not be operational for several years, TenneT highlights recent progress in bringing new grid infrastructure online, including the commissioning in October 2020 of the 150 kilometre Mittelachse power line in Schleswig-Holstein. Public meetings with TenneT and representatives of national and regional governments on the one hand and stakeholders including local residents, landowners and environmental associations on the other are increasingly translating into greater acceptance of grid expansion, the company says, noting that the energy transition is supported by the vast majority of Dutch and Germans. In the face of Germany’s ambitious grid expansion goals, TenneT stresses it needs the support of politicians at all levels.

Policy alternatives may also exist to new grid infrastructure, but neither are they necessarily easy to implement. Jahn of RAP notes that one possible and widely discussed solution to easing bottlenecks in Germany is the introduction of two or more bidding zones for electricity purchases in the country. Germany has so far considered its single bidding zone to be a national asset, but with electricity changing hands at a single price on the wholesale electricity market, prices do not reflect scarcity due to the lack of transmission infrastructure. As a result there is no incentive for large power consumers to relocate closer to generation sources. In other words, to move north from south.

INCENTIVISE GRID OPTIMISATION

The slow pace of deployment of new grid infrastructure and the urgency of the energy transition means lawmakers should focus on grid optimisation technologies as a no-regrets solution available here and now, argues trade association WindEurope. Whilst grid expansion is crucial and needs to accelerate, grid optimisation and timely solutions must be addressed first,” it argues in a policy paper published in November 2020. We should be exploring ways to maximise the use of the existing grid while complying with safety and security rules. The transmission grid—existing and under development—must more than ever be utilised to its maximum potential until new transmission assets are built.” The association believes TSO investment in grid optimisation should match investment in new grid developments and can be facilitated through regulatory frameworks. Making the existing grid capable of delivering more electricity is a short-to-medium-term solution that leads to savings in total costs, both capital expenditure and operating expenditure, and complements traditional long-term investment in electricity infrastructure.

KEY REGULATION IN REVISION

Key to pan-European policy on power grid assets is the Trans-European Networks for Energy (TEN-E) regulation, which identifies cross-border energy infrastructure priorities in Europe and so-called projects of common interest” (PCIs) needed to deliver on those priorities. The regulation covers wide territory that includes what sort of infrastructure should be considered a priority in Europe, the criteria for financing them through the Connected Europe Facility (CEF), streamlining permitting for priority projects and increasing public acceptance through public consultation. TEN-E was enacted by the European Union in 2013, before the adoption of the Paris Agreement to hold average global temperature increases to well under 2°C compared with pre-industrial levels. The regulation is, in 2020, going through a revision process to align it to Europe’s Green Deal and that agreement’s objective for the EU as a whole to produce no more emissions than it offsets by 2050, known as climate neutrality”. Following a consultation process earlier this year, the European administration aims to present a legislative proposal for the revision of the regulation by the end of 2020. Lina Strandvåg Nagell, sustainable economy coordinator at climate pressure group Bellona, describes TEN-E as a very important tool in facilitating interconnectedness” of power systems in Europe. It is difficult to assess the regulation’s contribution to Europe achieving its 2020 emission reduction targets, but that was never its intended objective at the start. When TEN-E was created it was focused on security of supply,” she notes. As it now stands, TEN-E encompasses so-called priority corridors” in electricity, gas and oil. While oil is widely expected to cease being considered a priority in a new TEN-E regulation, the debate is open over gas. Although gas companies are lobbying for gas projects to still qualify as PCIs, Nagell sees no need for further gas investments on a security of supply basis and no room for subsidising natural gas with public funds. Some people argue that gas infrastructure could be useful because you could repurpose it for hydrogen, for example, but if you are going to base an investment decision on this you would also need to incorporate the cost of retrofitting, the delay in emissions reductions and the risks of stranded assets and investment lock-in,” she says. Gas will not be competitive in a cost-benefit analysis that includes the climate impact.”

DISTRIBUTION NETWORKS TOO

Aside from incorporating the climate impact of infrastructure, there is also a push for a revised TEN-E to take into account the changing nature of power grids. We are progressively moving from a highly centralised to a dual system in which decentralised structures are increasingly important,” says Renewables Grid Initiative, a collaboration between European TSOs and non-government organisations (NGOs), in its response to the TEN-E consultation process. Facilitating interactions and synergies across the voltage levels is an element which must be taken into account by the revised TEN-E.”

Distribution networks will be increasingly important for absorbing higher shares of renewables electricity. Most solar and wind installations connect to the network at the level of the distribution grid, as will most electrified road transport and newly electrified heating technology, says Wilczek of Eurelectric. The European Union and instruments like TEN-E have addressed high-voltage lines but we now need to look more at medium and low-voltage lines,” he says. To that end, Eurelectric and E.DSO, the European association of electricity distribution system operators, are now evaluating the investment needs for lower voltage networks. Power transmission lines have never been pretty, but they used to be associated with economic progress,” notes Ireland’s Moore. Politicians must find a way to better highlight the benefits communities can gain from cutting emissions as well as work to mitigate the negative impacts that may be associated with new electricity infrastructure. With the public on board, plans can proceed, investment can flow, jobs will follow and all can enjoy the benefits of a green energy economy. •

TEXT Heather O’Brian ILLUSTRATION Hvass & Hannibal