ENTSO-E Hosts High-Level Roundtable on European Grid Action Plan Progress

(IN BRIEF) ENTSO-E recently convened a High-Level Roundtable, bringing together key stakeholders to assess advancements made since the inception of the EU Grid Action Plan for electricity and to pinpoint areas requiring further attention. With notable attendees including Minister of Energy Ms Tinne Van der Straeten and EU Commissioner for Energy Ms Kadri Simson, discussions revolved around coordinated regional planning, financing mechanisms, and regulatory enhancements to bolster Europe’s grid infrastructure. Emphasizing the critical role of grids in achieving energy transition goals, the roundtable underscored the necessity for collaborative efforts to address challenges in supply chains, financing, and regulatory frameworks. Participants advocated for strengthened cooperation across the entire value chain, with a focus on political leadership and ongoing engagement with regulators to ensure continued momentum in advancing grid infrastructure in Europe.

(PRESS RELEASE) BRUSSELS, 6-Apr-2024 — /EuropaWire/ — The High-Level Roundtable hosted by ENTSO-E gathered key stakeholders to take stock of progress made since the launch of the EU Grid Action Plan for electricity1 and identifies areas where further steps are needed.

The attendees to the roundtable included Minister of Energy Ms Tinne Van der Straeten also in charge of the Belgian EU Presidency and EU Commissioner for Energy, Ms Kadri Simson. The roundtable also saw the participation of Executive representatives from CEDEC; CEER; CEN-CENELEC; DG Energy; DSO Entity; E.DSO EIB; ENTSO-E; Eurelectric; Europacable; GEODE; RGI; SolarPower Europe; T&D Europe and WindEurope.

Keynote introductions
Ms Tinne Van der Straeten, Federal Minister of Energy of Belgium, and President of the EU Energy Council, highlighted how energy independence is still high on the political agenda. A forward-looking approach is needed to implement the Fit-for-55 package based on political decisions taken already such as the Green Deal. Together with all Energy Council colleagues, grids were put clearly at the centre of the debate. Further solution areas in focus of the Council are:

Coordinated regional planning to complement European and national levels,
Further efforts to attract finance and look beyond tariffs only,
Equitable cost sharing mechanisms,
Inclusion of non-economic parameters in business case calculations,
New permitting approaches with nature inclusion respected,
Viable supply chains and
Appropriate incentives for grid infrastructure.

Ms Kadri Simson, EU Commissioner for Energy, highlighted that the 2030 energy and climate targets are to be achieved via massive electrification and renewables. This also brings industrial policy into the picture. To reap benefits, the right infrastructure needs to be in place and the EU Action Plan for grids gives a clear way forward. Supply chains are crucial for facilitating the roll out of grids: efforts have already been made to upgrade our regulatory regime with the Net-Zero Industry Act (NZIA) for instance, and important work is undergoing on standardization. Investments are substantial, also at distribution level, and go far beyond the CEF capacity. We cannot put everything on tariffs, and we need to do more to attract private capital. The Investors Dialogue for Energy and initiatives of the EIB are essential. On the regulatory dimension, we need to implement the EMD reform, including on anticipatory investments aspects. All this feeds into the upcoming Energy Council on 15 and 16 of April, the Energy Council of 30 May and the upcoming Energy Infrastructure Forum taking place in June in Copenhagen.

Mr Thomas Östros, Vice President of the European Investment Bank (EIB), underlined the need for grid extension and upgrades, more interconnectors and digitalisation. An increasingly decentralised set-up and present market conditions with high interest rates are a challenge when affordable, stable prices are sought. The EIB has longstanding experience in providing long-term financing for grids and it is ready to further support the whole value chain of the electricity grids sector with its broad range of financing instruments and advisory services.

Mr Damian Cortinas, Chair of the Board of ENTSO-E, stated how investments in grids are scaling up to accommodate a carbon-neutral energy system. Grid infrastructure is one of the key building blocks to achieve carbon neutrality in addition to system flexibility, coordinated systems operation and market design.

On grid infrastructure, efforts are particularly needed on three key areas: supply chains, financing and regulation. Strengthening the supply chains to reduce delivery times and costs and also to keep most of the added value within the European economy is key and will require joint collaboration of all the stakeholders of the value chain. ENTSO-E is already setting up an important collaboration with manufacturer associations and DSOs to explore solutions that grids operators and industry can set up themselves. In this context, political leadership and support will also be needed to provide the visibility needed for stakeholders and investors to develop the manufacturing capacity needed and at the right time.

On financing, action is needed to de-risk grid investments and facilitate access to capital (equity and debt) to grid operators.

On regulation, we need to consider changes to facilitate anticipatory investments, as well to public procurement regulations to facilitate long-term agreements with manufacturers including some form or risk sharing, as well as allowing provisions that facilitate investments and growth in Europe. Grids are essential to achieve the energy transition, this is a long-term challenge that will be with us for the next 20 years, it is essential to keep the momentum in the years to come.

Summary of roundtable debate

Transmission and distribution system operators confirm common challenges and their commitment to find solutions with industry actors and policy makers.

Strengthening Supply-Chains for grid infrastructure including standardization and common practices

Participants recognise that supply chains need to be adequate and ensure equipment is available in the needed volumes and times, at reasonable prices, and supporting European economic growth and jobs. TSOs, DSOs and manufacturers can work together and collaborate in an efficient and transparent way. Part of the solution is to further harmonise practices throughout Europe, which includes both long-term solutions including technical standardisation and network codes, and short-term ones including common practices and specifications. Also, manufacturers recognise that grid operators are already working to increase the visibility of the pipeline of projects, but they should go further and work with regulators on securing timely implementation of the projects in order to facilitate investments in manufacturing capacity in Europe.

Europe has today world-class manufacturers in electricity components and cables, and the energy transition should help them keep a competitive edge. Competition in manufacturing within Europe needs to be respected, but European procurement rules should evolve to facilitate long-term agreements between grid operators and manufacturers, providing predictability while ensuring competitive processes are ensured to protect consumers. These agreements should allow some form of risk and benefit sharing between system operators and manufacturers, as well as smart and fast procurement in certain cases.

There remains a need to address the skills gap in the engineering workforce for grid projects, both for manufacturers and for grid operators.

Participants suggested to look for solutions at the scale of regional level, on top of the national and European levels, that could be easier to achieve in the short term. Participants also suggested to integrate into this discussion other critical components beyond grids, like inverters.

Financing the grid infrastructure scale-up

As investments are scaling up, action is needed to de-risk grid investments. The regulatory environment affects the access to capital (equity and debt) on a global market and its costs for TSOs and DSOs. Authorities need to set up strategies that highlight the importance of grids and the continued political support as a reliable signal for investors in realizing the energy transition. Access to public funding and tailored new instruments can be more challenging for smaller grid operators. More awareness and best practice sharing is essential. While public funding such as CEF can only cover a fraction of the total investment need in grids, an upscaling of grid investments in line with political targets would merit an equitable allocation of public funds.

Participants questioned whether the scale of investments can be covered only from direct tariffs on end users, but this is a political topic that is not in the scope of the work of this roundtable.

Regulatory framework to facilitate infrastructure delivery

Participants expressed diverging views on whether today’s regulatory schemes are adequate for the upscaling of grid investments. Principles of efficiency and long-term planning exist today already. Further work is needed on how to handle long-term uncertainty in context of timely delivery so that energy and climate targets are met.

Further dialogue and engagement between operators, manufacturers and regulatory authorities will be needed to bridge this gap in perception.

Participants recognize the essential role of anticipatory investments, and the need for clear definitions and guidelines. Anticipatory investment schemes need to be better defined and seen as a proper balance of short-term risk of low utilisation and longer-term timely availability of infrastructure. Participants were informed of the publication of an CEER/ACER position in this regard.

Final remarks

Any decision on infrastructure investments needs to consider nature inclusion and possible synergies, both offshore and onshore. Also, participants outline the need to associate citizens and local authorities in any infrastructure development and recognized the added value of the ‘pact for engagement’ included in the EU Grid Action Plan.

All participants agreed that the topics discussed at this roundtable are common challenges that need a strong cooperation through the whole value chain, including grid operators at transmission and distribution level, manufacturers, generation and flexibility providers. This cooperation needs a strong political leadership that both the Council and the Commission can provide, as well as forward-looking engagements with regulators.

An industrial roundtable that regularly meets in a similar manner to the present meeting would provide the needed drive to keep the momentum over the coming years. ENTSO-E will work with the Commission to see how this could be organized.

1. European Commission, COM/2023/757 ,“An EU Action Plan for Grids”, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2023:757:FIN

Media Contact:

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SOURCE: ENTSO-E

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