The European Commission aims to reduce energy expenses across Europe; however, this effort needs to be balanced with encouraging substantial investments into the outdated electricity transmission and distribution network. Additionally, there is growing pressure to enhance protection against outside attacks.
The EU has already identified electrification as a crucial path towards decreasing reliance on fossil fuels, particularly oil and gas sourced from Russia. However, during an event organized by Poland’s permanent representation in Brussels earlier this week, EU officials highlighted a more immediate concern.
Energy infrastructure is consistently a major target during wars, and Ukraine’s infrastructure has faced relentless attacks ever since Russia launched its invasion in February 2022.
sabotage of undersea cables
In the Baltics, recent developments have exposed the weakness of the EU’s power grid infrastructure.
“These threats are getting increasingly close to us, so we must focus on enhancing the security and resilience of our infrastructure,” stated Asta Sihvonen-Punkka, vice-president of ENTSO-E, during the policy forum held on Wednesday (March 26th).
Sihvonen-Punkka also highlighted the issue of obtaining cables and components required for repairing damaged energy infrastructure, citing sluggish supply chains and extended delivery periods.
We currently have spares available to repair the broken cable—but when it comes to ordering additional cables, the delivery time is approximately seven years. This is far too lengthy,” she stated. “Therefore, I believe we are quite exposed in this regard.
While the CEO of Finland’s national transmission grid operator was addressing the audience, the European Commission released a comprehensive Resilience Union Strategy. Among its suggestions is for the EU to “learn from the impacts of Russia’s invasion of Ukraine” when developing its energy security plan.
Prior to that, a stockpile management plan will be developed by the end of the year. This plan will cover essential raw materials, key components, and necessary technologies aimed at ensuring energy security.
Christian Zinglersen, who leads the European Union’s regulatory body for energy, suggested that harmonizing the kinds of components and gear utilized throughout Europe could enhance efficiency. However, he cautioned that incorporating additional flexibility and backup measures within the system—such as excess capacity or supplementary facilities—would come with significant financial implications.
“But we are shifting three, four, or even five percent of our GDP towards security and defense in numerous regions; thus, why should this be significantly distinct,” Zinglersen questioned.
The price problem
The EU’s highly complex electricity market has faced criticism for causing significant price hikes and for not encouraging enough investment in the power grid, particularly in cross-border high-power transmission lines. This was even recognized by EU officials during their discussions.
“We can confirm that additional investment is necessary,” stated EU Director-General for Energy Ditte Juul-Jorgensen. “The pace of investments has been insufficient, and the expansion of power grids and infrastructure has also progressed at an unacceptably slow rate,” she added.
Furthermore, according to Juul-Jorgensen, the EU’s “bottom-up” planning approach, which follows a recurring decade-long schedule, fails to account for all necessary infrastructure and transboundary connectors. This was highlighted by referencing the significant price surges observed throughout South-Eastern Europe in the previous year.
She was alluding to market volatility that led to Greek Prime Minister Kyriakos Mitsotakis taking action.
write
To Commission President Ursula von der Leyen last September regarding a scenario where prices reached nearly €1,000 per megawatt hour in Hungary, whereas neighboring Austria was only paying €61. This disparity caused widespread disruption throughout the system—a troubling issue within what should be an integrated EU-wide single market.
‘Politically unacceptable’
Mitsotakis criticized a system “that is overly complicated and unclear, making it nearly impossible to comprehend exactly what influences pricing at any specific moment,” and he stated that it was “politically untenable” for his administration to be unable to clarify to citizens why prices were skyrocketing.
As part of the ‘Affordable Energy Action Plan’ introduced last month by Energy Commissioner Dan Jørgensen, the European Union administration is set to unveil a strategy for standardizing network charges throughout Europe before the summer. This initiative may be supported by legislative measures if needed.
Statistics from the Commission’s data office, Eurostat, reveal significant discrepancies in how much electricity bills include for network costs, ranging from almost negligible levels in Luxembourg up to more than 30% in countries like Germany and Hungary.
In an action plan unveiled at the end of 2023, the European Union administration anticipated
a requirement for $872 billion in investment
In the rest of this decade, we aim to update the power grid to align with several goals for deploying renewable energy sources and electrifying sectors like heating and transportation, which currently depend heavily on fossil fuels.
The Commission plans to present a more extensive ‘grid package’ at the beginning of next year, aligning with the aim to boost the economy-wide electrification rate (the proportion of electricity in Europe’s total energy use) from 21.3% currently to 32% by 2030.
Next week, the European Court of Auditors plans to release a report examining the condition of Europe’s 11.3 million kilometres of electrical network, as well as assessing how effectively the EU has supported these maintenance and improvement efforts so far.
