https://publications.europa.eu/en/publication-detail/-/publication/6700ba89-713f-11e9-9f05-01aa75ed71a1/language-en/format-PDF/source-96288082

Concrete evidence that:• TSOs are not taking up innovative solutions to be future-proof• Smart grid PCIs abandoned due to lack of regulatory approval• TSOs lack incentives to invest in Security of Supply unless commercially

viable

Aim of the study• To assess how the regulatory framework in Europe supports the necessary

transmission infrastructure investments, with a particular focus on innovative technologies and security of supply

IEA World Energy Investment 2019:Grid investments 30 % lower than needs in projected Neutral Path ScenarioEach region has its own story, often one of lower spending

Background for launching the study

Ecorys lead consortium (Ramboll, Consentec,

ShepherdWedderburn, Energy

Law Group and Technische Universitat

Wien)

Legal review: Identification of principles and

criteria

Interviews with individual TSOs (electricity and gas) and NRAs

EC invited NRAs to cross-check the

findings

In-depth analysis of the regulatory framework in 26 member states

Recommendations, options for

improvement at EU level and at national level

About the study; Methodology and Structure

1. Legal review –findings2. Interviews, Key concepts3. Legal review + interviews main findings4. Recommendations and assessment - SoS5. Recommendations and assessment - Innovation6. Recommendations and assessment per country7. Conclusion

Structure of the Presentation

SoS Innovation• Regulatory frameworks largely driven by

EU legislation, 3rd energy package, TEN-E regulation, security of gas supply

• Similar roles and duties for TSOs, NRAs and MS in electricity and gas

• Difficult to compare countries. Important to understand each jurisdiction in its own context

Regulatory frameworks remain national, with large variety between MS:• Explicit reference - law / regulatory instruments• Implicit reference - efficient network

development• No evidence of support for innovative

investments

1. Findings of the Study: Legal Review

Typo

logi

cal • Investment

categories to be undertaken by any TSO

• Infrastructure related

Secu

rity

of s

uppl

y • Technical solution by constructing new transmission assets

• Upgrading to more efficient use of existing assets

Inno

vativ

e In

vest

men

ts

• Aims at providing desired level of grid capacity in a way superior to conventional way

• Immediate or prospective cost reduction; provide improvements

• Not R&D

2.Interviews –Key concepts

Examples of typological investments:Electricity:New transmission lines based on innovative technology/ change in technology of existing lines; e.g. new HVDC lines, Dynamic line rating, Installation of power flow control components; e.g. phase-shifters, components related to ancillary services provision, new or extended power system control and automation technology, partial automation of system operation processes, approaches to curative congestion management; e.g. generation and demand-side flexibilities, technologies for sector coupling, and storage components.Gas: Increased need for flexibility for market development and SoS e.g. power to gas, Incentivising and facilitating upgrade of biogas to the transmission system, Digitalisation of operations e.g. drone inspections and AI and building and upgrading of interconnectors, e.g. reverse flow systems

2. Definition of innovation or “What I talk about when I talk about Innovation”

Most common barriers to investment• Socially beneficial but (not for the TSO) viable projects• Lack of clarity of mandate for TSOs in certain innovative fields• No specific provision related to innovation• TSOs are deterred from investments due to perceived high risk and

strict penalties for not meeting deadlines• Bias towards CAPEX based solutions instead of OPEX• Smart grid technologies reducing need for physical investments lower

TSOs’ financial return

3. Main findings of the Study:Legal Review + Interviews with TSOs and NRAs

High level of consistency between the 26 MS

SoS duties explicitly set out

SoS seen as the core TSO business

No noticeable legal barriers in implementing SoS projects

Still scope for fine-tuning at national level

4. Security of supply - Findings of the study:

The legal framework for SoS seems largely in place

Recommend to revise TSO / regulatory practice with regards to:• Socially beneficial but (not for the TSO) viable projects• Bias towards CAPEX based solutions instead of OPEX• Smart grid technologies reducing need for physical investments lower TSOs’ financial return

4. Security of Supply – EC assessment:

Room for improvement!

In many cases, innovative solutions not supported by the regulatory framework

Where innovation may reduce the asset base over time, TSOs have less to gain

TSOs only pursue projects “likely to be approved by the NRA”

“Innovation” has a MS-specific connotation (electricity)

5. Innovation - Findings of the study:

Introduce an EU statutory requirement to consider innovative solutions

Example I: EU-level policy guideline / recommendation setting a long-term strategy and encouraging the uptake of innovative technologies

Basis for MS to develop policies and incentives

Example II: EU legislation to require an innovation strategy and require TSOs to consider innovative solutions and new technologies

5. Innovation - recommendation of the study

Agrees with the recommendation, to introduce requirement to consider innovative solutions

• Need to accelerate efforts on uptake of innovative technologies • E.g. Although increasing, Smart grids remain a very small share of total grids and less than 4 %

of electricity PCIs on the 3rd list

Suggested follow-up: To organise a roundtable before the next Forum

5. Innovation – EC assessment:

40 tailored options for improvement (both SoS andInnovation) in individual country reports

Most common:• Requirement to consider innovative solutions• Perform SCBA for larger projects• Mitigation of CAPEX bias• Consultation on national development plans/projects• Requirement to consider OPEX-based solutions

6. National level – Recommendation of the study:

• The study is the most comprehensive work on comparing national energy regulatory frameworks in Europe

• EC recommends a per country revision of regulatory practice in light of the individual recommendations in the study

Disclaimer: High number of recommendations to a country can be a signal of thorough and honest answers to the consultants. Low number can be a sign of sloppy answers.

6. National level – EC assessment:

EC recommended follow-up:

• On Innovation – Look into an EU-wide requirement to consider uptake of innovative technologies

• On Innovation and SoS: Per country revision of regulatory practice in light of the individual country recommendations

7. Conclusion

European Commission contacts – PCI process:

For general inquiries: ENER-B1-PROJECTS@ec.europa.eu

Email: Henriette.NESHEIM@ec.europa.eu

Thank You for your Attention!