Energy infrastructure: Questions & Answers
we need new pipelines and power grids?
Energy infrastructure – pipelines, power
grids – are key to all our climate and energy
To increase the share of renewable energy to 20
percent of our final energy consumption by 2020,
we need to bring the energy generated by wind
parks and solar power stations to the consumers.
For this, we need a more decentralised and
differentiated network than exists today.
To save 20 percent of our estimated energy
consumption in 2020 via technology, we need
smart meters and smart grids, which allow
consumers to control exactly their power
consumption and to save money and energy by
changing their habits.
To secure gas supply also in the event of a
crisis, we need to diversify our sources and new
pipelines which bring the gas from this region
directly to Europe.
To have a functioning internal market with
competition and fair and competitive prizes, we
need the interconnections between member states,
allowing companies to offer their services in
all member states.
Why is there a need for the EU to become active?
It is estimated that the investments needed
to achieve the 2020 goals will not be made on
time, mainly because of two reasons:
- building permits take too long to obtain;
- not all the investments needed are
The strategy outlined in the Communication
addresses this issue. A strategy at EU level is
needed to coordinate and optimise the network
development in Europe.
What is new?
The Communication defines a limited number
of EU priority corridors. Based on these
pre-defined corridors, concrete projects of
"European interest" will be identified in 2012,
which should benefit from financing and faster
building permits, including a time limit for
final decision while ensuring full respect of
environmental legislation and public
participation. In planning and implementing
these projects, the Commission favours regional
cooperation between countries.
What are these corridors?
In the electricity sector four EU priority
corridors are identified:
- 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 the 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, including
- Connections in Central Eastern und South
Eastern Europe, strengthening the regional
- Integration of the Baltic Energy Market into
the European market.
In the gas sector, three EU priority corridors
- Southern Corridor to deliver gas directly from
the Caspian Sea to Europe to diversify gas
- Baltic Energy Market Integration and
connection to Central and South East Europe
- North-South corridor in Western Europe to
remove internal bottlenecks.
Why are these priorities needed?
The interconnections in South Western Europe are
needed because the Iberian Peninsula is not
sufficiently connected to the rest of Europe. To
bring power generated from renewables in Spain
to Western Europe and integrate Spain into the
European network, the capacity of power lines
between France and Spain needs to be increased
from around 1400 MW today to 4000 MW in 2020.
The aim of the Southern Corridor is to import
gas directly from the Caspian basin / Middle
East, the largest deposit of gas in the world
with estimated 90.6 billion cubic meters. This
will diversify gas sources and increase security
of supply. The objective is to get 45-90 bcm of
gas per year, this is about 10-20% of EU gas
demand by 2020.
How much money is needed? And who will pay it?
About 200 billion € of investments are
needed for gas pipelines and power grids until
2020. It is estimated that 100 billion € of this
total investment need will be delivered on time
by the market alone, whereas the other 100
billion € will require public action on
permitting and levering the necessary private
In June, the Commission will propose a new
financial instrument to support the projects of
"European interest", for the new financial
perspective after 2013. Beyond grants,
innovative market-based solutions may be
proposed, such as equity participations,
guarantees and public private partnership loans.
If companies will pay the bulk of the
infrastructure, will this increase prices for
Not necessarily. Costs for the
infrastructure, including network costs,
represent only 28% of total electricity bill the
EU consumer has to pay, taxes and VAT make 23%
on average, while energy itself is about 48%.
For gas, the infrastructure costs, including
distribution, amount to 26%, taxes 22% and
As EU legislation will foster competition
between energy companies they will be careful
when considering passing on higher costs to