Europeanised energy infrastructure planning is a good idea if done right

Europe badly needs a more integrated energy system. By enabling the flow of renewable electricity between Europe’s wind-rich north and sun-rich south, more integration would reduce costs, favouring Europe’s competitiveness and avoiding the need for costly generation capacity.

Until now, however, planning in Europe of cross-border energy infrastructure has been complicated, uncoordinated and fragmented. To fix this, the European Commission proposed on 10 December to centralise grid planning at the European level and to implement various measures to speed up deployment.

The plan would update rules throughout the project cycle: more centralised identification and prioritisation of cross-border infrastructure needs, a new designation for EU-relevant projects as of “highest national significance possible”, and new ways of cost-sharing between countries, such as project bundling, with the aim of smoothing difficult discussions on who has to pay what.

This makes sense because current planning and coordination processes are not aligned, relying on different assumptions, data and targets. The main European-level energy infrastructure planning process (the so-called Ten-Year Network Development Plan, TYNDP), conducted by the organisation of Europe’s electricity network operators (ENTSO-E), has been criticised for not being aligned to EU targets and scenarios. The TYNDP is more a bottom-up process, instead of a systematic assessment of Europe’s infrastructure needs.

The Commission’s proposal would change this substantially. While previously, ENTSO-E’s TYNDP was the principal cross-border infrastructure planning exercise, the proposal would give the Commission the job of identifying the most urgent infrastructure needs, based on an integrated, cost-minimising EU scenario. ENTSO-E would then select the main projects to meet those needs. Project developers would then build – or not. Thus, this new way of infrastructure planning could help ensure that cross-border project development at local and national levels is in line with the EU’s long-term policy goals (such as emissions reductions and renewable energy targets).

Hence, the Commission would not replace ENTSO-E’s TYNDP, but would take a more active role in setting the overall priorities that projects contribute to. Furthermore, the Commission’s integrated scenarios could lead to a more efficient system compared to infrastructure planning done separately for each energy carrier – electricity, hydrogen and gas. 

In a first attempt to take a more active role on infrastructure planning, the Commission has already defined eight ‘Energy Highways’, each involving several projects. They include electricity links between France and Spain (Pyrenean crossing 1 and Pyrenean crossing 2), and the southwest hydrogen corridor from Portugal to Germany. The Commission regards these as the most urgent infrastructure needs, has promised to deal with these as priorities and wants EU countries to speed up permitting and deployment along these corridors.

Greater centralisation also brings risks. A single wrong decision taken at EU level could affect the entire EU. Thus, the Commission’s modelling results and the resulting conclusion must be reliable. For this, the Commission’s scenarios and modelling should be as transparent as possible, so that stakeholders understand how results were generated. The 10 December proposal foresees the publication of the central scenario’s input and output data but does not mention publication of the source code of the model itself. Such a ‘black-box’ approach risks replicating previous opaque EU modelling efforts, such as the EU Reference Scenario – the Commission’s long-term analysis of energy, climate and transport policies. Currently, this modelling is run by a private (Canadian-owned) company, with a closed-sourced model that external stakeholders cannot check.

Though the Commission’s proposal might bring improved identification of infrastructure needs in a cost-minimising way, with prioritisation of the most important projects, it cannot change the fact that countries will continue to have the final say on energy infrastructure connected to their territory. However, the proposal elevates cross-border energy infrastructure to a topic of political priority. National resistance to EU-relevant infrastructure might become more visible and harder to defend.

For countries, energy-market integration is double-edged: while the entire system becomes more resilient, countries expose themselves to decisions taken by neighbours and thereby implicitly cede some sovereignty over their national energy systems. Whether the Commission’s proposal will foster sufficient trust between countries for further integration remains to be seen. However, centralised infrastructure planning done right, openly and transparently, could be the right step to focus on the priorities, speed up deployment and convince countries that more integration will benefit all.