The European Power System – Decarbonization and Cost Reduction: Lost in Transmissions

Summary:

Europe"s energy policy is commonly defined by three axes of equal importance: security of supplies, competitiveness and sustainable development. The European Commission is mandated to develop the policy tools that allow the implementation of this common policy. Early on, challenges arose from the trade-offs to be made not only between these three pillars but also between a common European policy and national approaches. The European Commission has always had to struggle in attempting to keep a balanced line.

Over the past twenty years, the EU has been engaged in the liberalization of the electricity and gas sector. For a long time, liberalization was the main objective of European energy policy. Liberalization of the electricity sector was supposed to bring many benefits. Foremost, these included the more efficient allocation of generation and transmission capacities, and the enhancement of the competitiveness of the European economy as a whole, through lower energy costs. The trading of electricity output between countries was part of this strategy. Interconnections are vital to facilitating electricity trade between Member States. It is in this context that interest in cross-border interconnections has increased. However, new constraints have emerged and have put climate change at the top of European agenda.

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