Se­cu­rity of sup­ply at the fore of SEE en­ergy poli­cies

Top 100 See - - See Top Industries - By Costis Stam­bo­lis Ex­ec­u­tive Di­rec­tor of the In­sti­tute of En­ergy for South East Europe

The lat­est Rus­sian-Ukrainian cri­sis and its se­ri­ous reper­cus­sions for en­ergy trade be­tween Rus­sia and the Euro­pean Union (EU) am­ply demon­strates the im­por­tance of en­ergy se­cu­rity. Al­though part of a bloc, EU member states are far from be­ing aligned to a com­mon en­ergy pol­icy which only re­cently has be­gun to take shape, mainly through the im­po­si­tion of in­ter­nal market poli­cies and di­rec­tives and com­mon goals for CO2 emis­sion re­duc­tions and max­i­miza­tion of the use of re­new­able en­ergy sources (RES).

What is ap­par­ently lack­ing from present EU en­ergy poli­cies is a “se­cu­rity of sup­ply” di­men­sion at both na­tional and bloc-wide level. Un­til now most coun­tries in the EU had a well de­vel­oped lo­cal sup­ply ba­sis - on the strength of their ex­ten­sive coal re­serves - which cov­ered the vast ma­jor­ity of their needs for power gen­er­a­tion and re­lied on oil im­ports - to vary­ing de­grees, to mainly cover trans­porta­tion needs and in some cases power gen­er­a­tion. Di­ver­si­fi­ca­tion of en­ergy sup­ply, al­though nec­es­sary and ac­cepted by many coun­tries as a top na­tional pri­or­ity, was for the most not an eas­ily at­tain­able ob­jec­tive.

Over the last ten to fif­teen years ev­ery­thing has changed on the en­ergy sup­ply front as a re­sult of EU in­ter­nal market en­ergy rules, the grow­ing im­ports of nat­u­ral gas - mainly used for power gen­er­a­tion, the em­pha­sis on RES use and the in­tro­duc­tion of dis­in­cen­tives for coal and lig­nite use for power gen­er­a­tion. At the same time, nei­ther the EU nor indi- vid­ual states - with the ex­cep­tion of North Sea coun­tries, have pur­sued strong and con­sis­tent poli­cies for the de­vel­op­ment of indige­nous hy­dro­car­bon re­sources. As a re­sult, oil and gas im­port de­pen­dency has risen to un­ac­cept­ably high lev­els as is the case in South­east Europe (SEE).

For some coun­tries such as Bul­garia, Slo­vakia, Hun­gary and the Baltic states, the de­pen­dence on Rus­sian gas im­ports is to­tal. Greece is also highly de­pen­dent on Rus­sian gas im­ports. Turkey, too, re­lies for al­most 50% of its im­ports on Rus­sian gas. For ex-Soviet bloc coun­tries that de­pen­dence is legacy of his­tory. For oth­ers, like Greece and Turkey, it is the re­sult of failed poli­cies and wrong de­ci­sions which have pre­vented them from de­vel­op­ing a well-bal­anced and di­ver­si­fied en­ergy re­source base. On this back­drop, the need to in­tro­duce and match en­ergy se­cu­rity across the whole of the EU to the cur­rent po­lit­i­cal re­al­i­ties emerges as a top pri­or­ity in the cur­rent EU pol­icy agenda.

Sev­eral key pan Euro­pean projects will need to be im­ple­mented over the com­ing years in or­der to fa­cil­i­tate the flow of elec­tric­ity and gas across na­tional bor­ders. These range from the ex­pan­sion of the cur­rent elec­tric­ity grid through the es­tab­lish­ment of re­gional hubs and in­ter­con­nec­tions, the con­struc­tion of ma­jor in­ter-re­gional gas pipe­lines and sev­eral coun­try-to-coun­try in­ter­con­nec­tors and the in­tro­duc­tion of new LNG ter­mi­nals, both land-based and float­ing.

In the lat­est EU pol­icy pa­per en­ti­tled “Com­mis­sion Staff Work­ing Doc­u­ment: In-depth study of Euro­pean En­ergy Se­cu­rity”, there is no men­tion of the costs in­volved in im­prov­ing en­ergy se­cu­rity and the un­avoid­able im­pact on Euro­pean com­pet­i­tive­ness. Shale gas and tight oil is giv­ing the U.S. a dra­matic

com­pet­i­tive ad­van­tage, while Europe is los­ing market share and jobs in all the en­ergy in­ten­sive in­dus­tries. But as with the bloc's com­mon agri­cul­tural pol­icy, the fact that sup­plies could be im­ported more cheaply is not a key fac­tor and there­fore it is not even dis­cussed. Of course, Europe could meet all its own elec­tric­ity needs from re­new­ables but the cost – as the Ger­mans, the Greeks, the Bul­gar­i­ans and the Ital­ians are find­ing – is pun­ish­ingly high. The mes­sage of the doc­u­ment which re­flects cur­rent EU think­ing and in fact was adopted by EU's June Sum­mit Meet­ing, is that im­ports are bad, and should be re­duced. Where they can­not be re­duced, the sources of sup­ply should be di­ver­si­fied. It seems that eu­ro­crats as­sume that en­ergy is solely a mat­ter of pub­lic pol­icy and con­se­quently eco­nom­ics and the spe­cific char­ac­ter­is­tics of cer­tain coun­tries are miss­ing el­e­ments from that dis­cus­sion (i.e. Greece's and Por­tu­gal's is­land en­vi­ron­ment). Also, there is noth­ing on sci­ence or the po­ten­tial for tech­ni­cal change, which is re­gret­table, given Europe's strong, sci­en­tific base. The tech­nol­ogy of en­ergy sup­ply and con­sump­tion is mov­ing rapidly and it would be use­ful to see Europe do­ing more to match the ef­forts be­ing made by the U.S. and China.

On the key is­sue of en­ergy se­cu­rity on the one hand we have EU's al­most aca­demic ap­proach to en­ergy se­cu­rity and on the other we have the harsh daily real­ity that coun­tries in SEE face, as they count oil and gas stor­age lev­els and try to match en­ergy flows and needs through a del­i­cate balancing act. To them, projects such as TAP-TANAP, planned liq­ue­fied natu­u­ral gas (LNG) ter­mi­nals such as the Krk LNG Ter­mi­nal in Croa­tia and Greece's FSRU units in north­ern Aegean, and lo­cal vi­tal gas links like the Greece-Bul­gar­ian in­ter­con­nec­tor (IGB), the Bul­garia-Ser­bia in­ter­con­nec­tor (IBS) and the Bul­garia–Ro­ma­nia in­ter­con­nec­tors (IBR) ac­quire a spe­cial sig­nif­i­cance.

In­dica­tive of the anx­i­ety which cur­rently pre­vails in SEE over en­ergy sup­plies is the Greek gov­ern­ment's re­quest to the EU of Au­gust 21 to set up a backup plan to en­sure LNG is avail­able for Balkan coun­tries in the event of po­ten­tial dis­rup­tions to Rus­sian gas sup­plies stem­ming from the cri­sis in Ukraine. In a let­ter sent to Euro­pean en­ergy com­mis­sioner Guen­ther Oet­tinger, Greek en­ergy min­is­ter Yan­nis Ma­ni­atis pro­posed an EU emer­gency mech­a­nism to en­sure that sur­plus amounts of lower-priced LNG are re­served for EU member states with gas short­ages in­stead of be­ing sent to other des­ti­na­tions.

RES which is in abun­dance in SEE is an­other is­sue of con­tention. The wider use of RES in only one of the re­sponses to en­ergy se­cu­rity alarms, which, in fact, pre­sup­poses a solid com­mit­ment to a long-term strat­egy for their de­vel­op­ment and pen­e­tra­tion into the en­ergy mix. The most ef­fec­tive pol­icy re­sponse aims at a di­ver­si­fi­ca­tion of en­ergy in­puts, with RES only one of them and al­beit a small one at present.

En­ergy ef­fi­ciency im­prove­ments through de­mand side man­age­ment and tech­no­log­i­cal in­no­va­tion can cost-ef­fec­tively mit­i­gate the large-scale im­pact of en­ergy sup­ply dis­rup­tion in the elec­tric­ity and heat sec­tors, and to a lim­ited de­gree in the trans­port sec­tor too. A com­bi­na­tion of de­mand side man­age­ment and en­ergy ef­fi­ciency mea­sures can re­duce the de­pen­dence on fu­els for the pro­duc­tion of elec­tric­ity, heat and trans­port fuel.

Ex­pand­ing grids, es­tab­lish­ing re­gional hubs and build­ing in­ter-con­nec­tors and LNG ter­mi­nals will en­hance en­ergy se­cu­rity.

As a gen­eral ob­ser­va­tion one could say that the in­creased par­tic­i­pa­tion of RES in the en­ergy mix can play an im­por­tant role in strength­en­ing en­ergy se­cu­rity at both coun­try and re­gional level. How­ever, a high RES per­cent­age par­tic­i­pa­tion in the en­ergy mix can be mis­lead­ing be­cause of the in­ter­mit­tent na­ture of RES. In that sense there is still con­sid­er­able ground to be cov­ered for in­creas­ing RES ac­tual con­tri­bu­tion in the en­ergy mix of SEE coun­tries. Large scale ap­pli­ca­tion of en­ergy ef­fi­ciency mea­sures can also con­trib­ute greatly to­ward en­ergy se­cu­rity by cur­tail­ing en­ergy de­mand. How­ever, their con­tri­bu­tion is not eas­ily quan­tifi­able.

As far as the en­ergy se­cu­rity im­pli­ca­tions of re­new­able en­ergy tech­nolo­gies are con-

cerned one can point out that al­though RES are typ­i­cally indige­nous re­sources and can help re­duce de­pen­dence on en­ergy im­ports, they have cer­tain con­straints: RES are in­ter­mit­tent in na­ture and there­fore can­not be re­lied upon to pro­vide al­ter­na­tive power gen­er­a­tion sup­ply in case of emer­gen­cies; RES are widely, but un­evenly, dis­trib­uted and their use for elec­tric­ity gen­er­a­tion can min­i­mize both trans­mis­sion losses and costs only when they are lo­cated close to the de­mand load of end-users: so called “dis­trib­uted” gen­er­a­tion; rel­a­tively high cap­i­tal costs per unit of ca­pac­ity in­stalled re­main for many RES's – in spite of sig­nif­i­cant cost re­duc­tions as a re­sult of ad­vance­ments in tech­nol­ogy and of the learn­ing ex­pe­ri­ence (this is off­set to some ex­tent by a zero fuel cost over the life of the sys­tem).

The ex­tent to which RES can con­trib­ute in bol­ster­ing en­ergy se­cu­rity de­pends on sev­eral facts such as the in­stalled elec­tric­ity ca­pac­ity of RES and its re­la­tion to the over­all power gen­er­a­tion ca­pac­ity of the coun­try con­cerned. Se­condly the grid de­vel­op­ment and its op­er­a­tional level which al­lows for max­i­mum uti­liza­tion of the elec­tric­ity pro­duced. Thirdly the avail­abil­ity of en­ergy stor­age mech­a­nisms (both dis­persed and pumped stor­age).

To­day we wit­ness var­i­ous lev­els and speeds of RES and en­ergy ef­fi­ciency de­vel­op­ment in the dif­fer­ent coun­tries of SEE both in terms of in­stal­la­tions and par­tic­i­pa­tion in the en­ergy balance. In fact there is con­sid­er­able di­ver­gence be­tween the var­i­ous coun­tries as it is shown in the data pre­sented. The same ap­plies for the state of the elec­tric­ity grids of the var­i­ous coun­tries. Con­se­quently, the role of RES in the in­te­gra­tion of re­gional en­ergy mar­kets (i.e. elec­tric­ity and gas) is mar­ginal at this stage since the fo­cus is, and will re­main at least un­til 2020, on grid up­grad­ing and their fur­ther ex­pan­sion.

How­ever, the an­tic­i­pated ad­di­tion of size­able en­ergy stor­age ca­pac­ity in con­junc­tion with fur­ther RES de­vel­op­ment is likely to pro­pel RES in the front line of power gen­er­a­tion and par­tic­i­pa­tion in the na­tional en­ergy mix of the SEE coun­tries. The ad­di­tion of en­ergy stor­age is thus ex­pected to cor­rect and im­prove the in­ter­mit­tent na­ture of RES power gen­er­a­tion, thus im­prov­ing pre­dictabil­ity of RES avail­abil­ity in the con­text of daily elec­tric­ity market op­er­a­tion.

In ad­dress­ing the present im­passe on en­ergy sup­plies in SEE it seems that the im­ple­men­ta­tion of a wide va­ri­ety of in­ter­con­nec­tors and gas stor­age projects is the only sure way at present to in­crease ef­fec­tively and rel­a­tively quickly the se­cu­rity of sup­ply in the re­gion.

The re­gion's ex­pe­ri­ence to date shows that the only re­li­able way to meet the chal­lenges stem­ming from ma­jor geopo­lit­i­cal rifts not of the mak­ing of the coun­tries in the re­gion - such as the present Rus­sian – Ukraine cri­sis, is for each coun­try to pur­sue its own highly pri­ori­tised en­ergy agenda in close co­or­di­na­tion with its im­me­di­ate neigh­bours with whom it shares en­ergy in­ter­con­nec­tions. A com­mon en­ergy pool and a fully in­te­grated and eas­ily ac­ces­si­ble elec­tric­ity and gas flow sys­tem, which could serve the needs of var­i­ous coun­tries, whether this is elec­tric­ity or gas, is still far from be­com­ing a real­ity. We may have to face few more en­ergy sup­ply changes in or­der for such noble plans to be­come real­ity.

Newspapers in English

Newspapers from Bulgaria

© PressReader. All rights reserved.