Risk-preparedness: The quest for a more resilient EU energy sector
Better risk-preparedness for Europe’s electricity sector could result in huge cost savings, says Ludek Niedermayer.
Luděk Niedermayer | Photo credit: European Parliament audiovisual
It has been a year since the European Commission presented its proposal for a regulation on risk preparedness in the electricity sector, for which I am the EPP group shadow rapporteur. The file is the shortest part of the ‘Clean energy for all Europeans’ package, yet it is vitally important.
Electricity systems are constantly exposed to threats such as extreme weather conditions (heatwaves or cold spells), physical or cyberattacks on energy infrastructure, or fuel shortages. Given
Europe’s increasingly interconnected electricity network, a crisis affecting one country can quickly spread to its neighbours. By ‘quickly’, I mean incredibly fast, as rules of physics apply. A reaction must be immediate in order to prevent any harsh consequences of black-outs.
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Currently, when a crisis occurs, member states tend to focus on the national context only, disregarding what is happening across borders.
For example, during last winter’s cold spell, several European countries resorted to electricity export bans in an attempt to protect their own populations and economies. Such measures, however, may not be very effective and tend to result in higher electricity bills and aggravate the security of supply in neighbouring countries. The current legislation no longer reflects the reality of today’s integrated European electricity market.
Therefore, I very much welcome the new regulation on risk-preparedness that seeks to improve the security of the system through better cooperation and coordination between the member states.
It brings greater transparency in the whole process of crisis prevention and management.
Put simply, one of the important messages of this proposal is that beyond ‘importing problems’ from their neighbours, countries can also ‘import solutions’ for crises, regardless of their origin. In order to ensure the stability and security of supply, common solutions - and not just a focus on national situations - provide the cheapest, most efficient way forward.
To achieve this, the proposed regulation will establish a common methodology for identifying potential crisis scenarios, the preparation and harmonisation of national crisis-management plans containing both national and regional measures and regional cooperation in handling actual crisis situations.
This new dimension of enhanced regional cooperation will help optimise how resources and how burdens are shared at regional level, thus reducing the risk of black-outs.
This will also bring significant cost savings, leading to lower prices for consumers and businesses across Europe. Recent studies show that failure to supply electricity during a blackout significantly decreases when regional cooperation takes place, leading to €3bn-€7.5bn in cost savings.
Another aspect I strongly support in the proposal is that it ensures that, even in crisis, priority for market-based measures, so that markets can function for as long as possible.
Too often, and not only in times of crisis, member states tend to use inappropriate state intervention, such as limiting cross-border flows and capacities. I believe that such non-market measures should only be used as a last resort and only where objectively justified.
The proposed regulation also aims to improve information exchange, transparency and accountability in managing electricity crises. This is a very positive approach, as these steps improve legal certainty for industry and consumers contributing to a better investment climate. This would allow us to learn from each crisis, share best practices and constantly improve our electricity systems.
My colleagues and I are currently working on compromise amendments and cooperation between the different political groups has been smooth and without major disputes. That is why I believe we will be able to preserve the report’s ambition, and that it will result in better risk-preparedness and security of electricity supply in Europe, at a lesser cost.
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