Developing electricity interconnectors should be a shared competence of the EU and individual Member States, with costs shared out at least across regions, says André Merlin, President of Medgrid, a consortium looking to facilitate the exchange of electricity across the Mediterranean, in an interview with Energy Post. Merlin, former Chairman of both RTE, the French transmission system operator (TSO) and ERDF, the main French distribution system operator (DSO), says that Europe needs regional Independent System Operators like in the US. He does not expect a demand-side revolution and regards the notion of a fully decentralised power system as utopian. “You cannot compare energy with telecoms.”
“Imagining today that we can build an economically viable power system using decentralised storage to compensate for the variability of renewables, is not realistic.” André Merlin, President of Medgrid, former Chairman of the board of RTE and ERDF in France, and also former President of CIGRE, the largest global association for high voltage power grids, is not afraid to go against the grain. He regards the talk of a telecoms-type revolution in energy, based on smart demand solutions, as “utopian”.
Instead, Merlin, who has also been special energy advisor to the European Commission, believes the EU should invest in expanding its main electricity and gas networks. This will make it possible, he says, to integrate high levels of renewables into the energy mix and at the same time to improve energy security for all member states. The energy interconnections are “vectors of solidary” in the EU, he says. He believes their financing and operations should be coordinated at a “regional” (i.e. supranational) level rather than at a national or EU-wide level.
He hails the European Commission’s Energy Union package of 25 February as a “major new strategic orientation” for the EU and a sign of a growing recognition that grids are part and parcel of EU energy policy.
Q: Is the Energy Union just repackaging existing policy?
A: No, it is a major new strategic orientation for the next 15 years. The concept is directly tied to the EU’s 2030 goals for greenhouse gas emission reductions, renewables and energy efficiency. It’s with an eye on these objectives that it needs to be fleshed out.
There was always this idea of shoring up interconnections. But we have fallen behind. Loyola de Palacio [EU Energy Commissioner from 1999-2004] set a 10% interconnection objective for Europe in Barcelona in 2002. We’re [still] pretty far from that today, at least along certain borders like that of the Iberian Peninsula with France. There is a lot to do, all the more so since we’ve set a goal of 15% for 2030. Note that this has to be adjusted according to which border you’re looking at – it should not be a uniform objective because it depends on how interesting exchanges are between neighbours.
Q: How is this different to current EU energy policy?
A: The large energy networks – gas as well as electricity – have a strategic role to play. They signify [energy] solidarity between Member States. That means security of supply, economic and environmental efficiency, and finally, the necessary flexibility to integrate renewables. That’s a big deal because 27% renewables [the 2030 EU target agreed by European leaders in October 2014] equates to 40-50% green electricity in the electricity mix. To accommodate that, you need more flexibility that you can only obtain by reinforcing electricity interconnections between Member States.
The development of interconnections should, in future, be a shared competence between the EU and its Member States. The EU would have the power – if Member States agree – to impose certain interconnections. From there stems the idea of an investment cost that must be socialised, that is spread across those Member States directly interested by the project.
Today, an interconnection – excluding private links – is financed by the two transmission system operators (TSOs) on each side of the border. These interconnections, insofar as they are strategic for Europe, should be taken on by at least the TSOs of the whole region. For example, it is difficult to accept that the cost of a grid connection between Bordeaux and Cantabrica – €1.5 billion – is only carried by France and Spain, although everyone will benefit. The same logic applies to gas interconnections.
Q: Why should Member States be interested in this?
A: In certain cases, Member States are putting on the brakes. And this is not for purely financial reasons. The difficulties of building new interconnections are often linked to environmental constraints and the difficulty for the general interest to prevail over local interests. It’s clear that if an interconnection is in the European interest, it increases the possibility of overcoming these obstacles and realising the project.
Q: And on the operational front?
A: We have to go towards a much stronger cooperation in the operational management of the high-voltage grid. We need to go in the direction of an Independent System Operator (ISO) like in the US, to better manage the flows of electricity between Member States. It doesn’t have to be a European ISO but could be, like in the US, regional ISOs.
It would be for the operational coordination not only of real time but also predictive electricity flows, that’s to say a week, a year in advance, to provide the most efficient management of the electricity systems in question. This doesn’t exclude the role of each TSO in its country but we need more coordination. The main reason is to be able to integrate renewables, with their inherent variability.
Q: Isn’t this what a body like CORESO already does?
A: CORESO is an operational aide close to real time. But we need to go much further. I see above all a regional approach, knowing that the problem is different depending on whether you are in Scandinavia, Great Britain or Continental Europe – and even there, there are several zones, such as the Baltic States for one.
Q: Yet some, such as Georg Zachmann at the Bruegel Institute, have warned against going down the regional route because we risk locking in regional systems that are incompatible with one another.
A: The question needs study because you cannot say at the outset what the right-sized regions are for this approach. A “region” could be the whole of Continental Europe. [But] creating an ISO for the whole of Europe doesn’t seem realistic to me. You need several, like in the US.
Q: Isn’t this going back to Nordel, UCTE, UKTSOA etc? [regional predecessors to the European Network of Transmission System Operators for Electricity, ENTSO-E]
A: Not at all, there’s no sense in returning to the old way of doing things. We need to keep the current associations [such as ENTSO-E], which play a consultative role. But we need to add a supplementary layer of operational coordination that doesn’t exist today. Furthermore, it seems natural for an ISO to be involved in network development because it could socialise the costs of investment.
Q: You’re not calling for change of the Lisbon Treaty [which gives EU Member States the right to determine their own energy mix]?
A: No, I’m not calling the Treaty into question, notably Member States’ exclusive right to choose their energy mix. [In fact] the plurality of energy mixes requires enhanced governance of the grid.
Q: What are the biggest obstacles you see to achieving greater coordination?
A: You first have to look at what the Lisbon Treaty legally allows, since I speak of a “shared competence” [for network development]. But since the Treaty speaks of “solidarity”, this implies being able to correctly manage interconnections which are in a way the vector of this solidarity. Apart from that, there is the inertia of existing structures.
Q: You said earlier that more flexibility – to absorb renewables – can only come from reinforcing electricity interconnections between Member States. But the Energy Union also puts a lot of emphasis on the demand side and a more decentralised energy supply.
A: We have a problem: electricity storage. It’s only possible today at very high cost, including through pumped hydro, the most efficient method. Imagining today that we can build an economically viable power system using decentralised storage to compensate for the variability of renewables, is not realistic. The fully decentralised electricity system envisaged by someone like Jeremy Rifkin, where each component is in “dialogue” with its neighbour to potentially help it out, is a dream which to me, for the moment, seems utopian. Tomorrow perhaps, with technological breakthroughs especially in the field of storage, things may change.
Q: What about demand-side management?
A: Putting the emphasis on demand vs. supply, I don’t quite understand what that means. You will always need to balance demand and supply by balancing consumption and production. We can moderate our consumption levels, but there is no major revolution here.
Q: To what extent does demand drive electricity infrastructure investments?
A: That’s where the analogy between energy and telecoms fails. The conditions are not the same: energy demand is growing a lot less fast, even shrinking in some cases. And technological change is much slower in the field of energy than telecoms, even though telecoms can help transform energy systems. Rifkin is wrong in making an analogy between energy and telecoms: the technologies are not the same and the conditions for their evolution are not the same. It suffices to look at the problem of storage: how long we have talked about it and how much the electric car is struggling to grow.
Q: We are talking more and more about distribution networks. With the energy system evolving the way it is, can we expect “big data” companies to take the lead here?
A: I would like to be convinced, but I’m not. It’s been predicted for a long time. Let them take a share of the market, sure. But that’s not going to revolutionise anything. It’s like the other – fallacious – idea that we will be able to balance our power systems locally. We would lose out economically. We have an interest in using the transmission grid as an efficient balancing tool. The day where we can produce electricity at very low prices in a decentralised way, maybe it will be different. But even then, we’re talking about intermittent electricity so from time to time you’ll need resort to external means.
Q: Where is the biggest innovation potential for transmission grids?
A: This is tied to DC lines. Their interest is to allow underwater or underground connections and therefore overcome environmental or geographic constraints. If you look long term, I imagine superconductors that can completely cut [grid] losses. But today this is still a research field, like batteries for power grids.
The vision of Medgrid is to “create new highways for sustainable electricity – through feasibility studies of a transmission network between the north and south rims of the Mediterranean, and of interconnections across the entire Mediterranean region.”
Medgrid’s founding members are: Abengoa, AFD, Alstom grid, Areva Renouvelables, Atos WorldGrid, CDC Infrastructure, EDF, Ineo, Nemo, Nexans, Nur Energie, ONE, Pan Med Trading and Investment, Prysmian, Red Eléctrica, RTE, Siemens, Soitec Concentrix Solar, Taqa Arabia, Terna and Walid Elias Establishment.