European Commission publishes the much awaited ‘EU Strategy for Energy System Integration’

The European Commission has today (July 8th, 2020) launched its Strategy for Energy System Integration. Originally signalled with the publication of the European ‘Green Deal’ in December 2019, it was to be one of the Green Deal’s key component strategies. In the interim, however, much has changed with a global pandemic affecting plans and distorting timelines. The European Commission has responded by re-framing the ‘Green Deal’, placing it, and its associated strategies, at the heart of its Recovery Plan, as published on May 27th.

In its commitment, the Strategy for Energy System Integration is one of the most ambitious and all-encompassing elements of the ‘Green Deal’. This strategy sets out to establish the basis for “the coordinated planning and operation of the energy system as a whole, across multiple energy carriers, infrastructures, and consumption sectors”. It envisages an integrated energy system which delivers decarbonisation “at the least cost across sectors while promoting growth and technological innovation”.

It comprises a comprehensive action plan across six pillars, which aim to deliver an integrated and optimised carbon neutral energy system. These pillars are as follows;

1. A more circular energy system, with “energy-efficiency-first” at its core
   As well as the energy efficiency first principle this pillar will focus on the use of waste heat and the energy potential of waste residues. This extends to recognition that “biogas can be exploited on-site to reduce fossil fuel consumption, or upgraded to biomethane to allow injection into the natural gas grid”.  The EC will seek to use the new Common Agriculture Policy and to drive developments here.
    
2. Accelerating the electrification of energy demand, building on a largely renewables-based power system
   According to the EC the share of renewable energy in the electricity mix should double by 2030. However there is recognition that without energy system integration, “electrification can present challenges for the management of the electricity system”.  The EC intends to develop “more specific measures for the use of renewable electricity in transport, as well as for heating and cooling in buildings and industry”, by 2021.
    
3. Promote renewable and low-carbon fuels, including hydrogen, for hard-to-decarbonise sectors
   There are a number of end-use applications where electrification will not be feasible, or cost effective. In such cases, renewable fuels such as renewable and low carbon hydrogen, biogas, biomethane and other advanced biofuels can provide a solution. The EC also recognises that “carbon capture and storage (CCS) is likely to play a role in a climate-neutral energy system”.  The EC intends to develop a “comprehensive terminology” for renewable and decarbonised gases by 2021. This classification system will allow enable appropriate regulatory treatment of these technologies based on verifiable sustainability criteria. The EC also intends to “promote the financing of flagship projects” leveraging key technologies such as CCUS and hydrogen.
    
4. Making energy markets fit for decarbonisation and distributed resources
   According to the EC “gaseous fuels are expected to continue to play an important role in our energy mix”. The share of natural gas use is predicted to decline and the bulk of the gaseous fuels will be of renewable origin e.g. biomethane or hydrogen. Further analysis is needed to establish the gas market regulatory framework to facilitate the uptake of renewable gases. This will include a review of “the legislative framework to design a competitive decarbonised gas market, fit for renewable gases”, by 2021.
    
5. A more integrated energy infrastructure
   The EC recognises that gas networks provide “ample capacities across the EU to integrate renewable and low-carbon gases”. However, Network Development Plans at EU level are currently developed in parallel for gas and electricity by Transmission System Operators. The EC now recognises that “network planning will require a more integrated and cross-sectoral approach, notably of the electricity and gas sectors”, and full alignment with National Energy and Climate Plans.
    
6. A digitalised energy system and a supportive innovation framework
   Digitalisation of the energy system will enable “dynamic and interlinked flows of energy carriers”, providing the necessary data to match demand and supply and optimise energy flows in real time. The EC will develop a “Digitalisation of Energy Action plan by 2021 to develop a competitive market for digital energy services”.

The Energy Sector Integration strategy is key to developing an optimised energy system which maximises the use of existing assets allowing the energy transition to be delivered at least cost, laying the foundation for the transition to a climate neutral economy. This announcement represents a first step to developing a truly integrated energy system. The European Commission intends to launch public consultations and impact assessments later in the year to inform the preparation of the follow-up proposals foreseen in 2021.

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Author: Stephen O’Riordan, European Affairs Manager, Gas Networks Ireland