The European Commission’s Expert Group on electricity interconnection targets has published its report “Towards a sustainable and integrated Europe” (the “Report”). Acknowledging that the standing 10% target has given a key signal to the integration of the electricity markets in Europe the Report considers the approach to introducing the proposed 15% target by 2030.
Considering additional interconnections
Among the Report’s five key recommendations for the approach to setting interconnection targets is a three-limb test to consider when assessing the need for new interconnector projects. The Report goes on to state that additional interconnections should be considered if they would meet any two of the following thresholds:
- Minimising price differentials – does the price differential between neighbouring regions exceed an indicative threshold of €2/MWh?
- Security of supply in all conditions – is interconnector capacity below 30% of the peak load options?
- Enabling export of excess renewables production – is interconnector capacity below 30% of installed renewable generation capacity?
In particular the Report recommends that any Member State that meets either of the second and third limbs should urgently investigate the potential for new interconnector capacity. Great Britain and Ireland are named in the Report as countries that fail to meet both 30% thresholds.
According to the Report, any project that helps Member States reach the 30% thresholds must apply for inclusion in the Ten Year Network Development Plan (“TYNDP”) and future lists of Projects of Common Interest. The application process for inclusion in the TYNDP is currently open and runs until the end of November.
Other recommendations made by the Report include the rapid implementation of the Third Energy Package network codes and guidelines, including a cost-benefit analysis in the TYNDP assessment, involving the public at the earliest stage of development possible and a review of the methodologies used to measure interconnector capacity to ensure the robustness of the proposed 15% by 2030 interconnection target.
The Report recognises that increasing intermittent renewable generation across the continent constitutes a “new energy reality” which does not correspond to the current European grid architecture. It is positive that the Report acknowledges that interconnectors contribute to the management of variable power flows associated with increased renewable generation, resulting in a recommendation that existing interconnector capacity should be used efficiently. Capacity available to the market should be significantly increased compared to the current utilisation (calculated by ACER to be at 31%). The Report also acknowledges the role that interconnection plays in system flexibility, and cites the use of the BritNed (UK – Netherlands) and IFA (UK – France) for system balancing (e.g. frequency response) as examples.