ANALYSIS-New EU power grids in frame due to gas dispute

Thu Jan 15, 2009 3:49pm GMT

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By Gerard Wynn

LONDON, Jan 15 (Reuters) - Grid upgrades to boost home-grown electricity will be one European security option as a result of a Russia-Ukraine gas dispute which has disrupted supplies to 18 European Union countries.

Even before the latest Kiev-Moscow crisis Europe had long fretted over its dependence on imported Russian gas, which the present crisis has reinforced.

"That's about as strong an argument as I can think of for developing indigenous resources," said Steve Sawyer, secretary general of the Global Wind Energy Council.

Gas is a growing electricity source in Europe, alongside its role to supply home heating, and the Russian dispute has added urgency to link European power grids.

A so-called supergrid in the North Sea between Britain, Germany and Scandinavia could connect new offshore wind farms, as well as aid EU security by sharing electricity generated for example from Britain's gas, Norway's lakes and Germany's coal.

The EU executive Commission raised its rhetoric this week on possible sweeping changes to EU energy policy. Last November the Commission said Russia would remain the bloc's main energy partner "far into the future".

Now it is not sure. Asked if that was still the prospect, EU energy spokesman Ferran Tarradellas said -- "In the short-term I'm afraid it will be. We will see," he added regarding the medium and long term.

In November the Commission listed options to enhance security including new pipelines to access gas from central Asia and North Africa, and new grids linking solar power from the Mediterranean and Africa's Sahara, and wind from the North Sea.

"All these are on the table certainly," said Tarradellas, regarding an EU response to the gas crisis.



COST

But a grid revamp has serious obstacles.

For one thing it challenges national security -- sharing electricity can cut prices and leave national watchdogs with less control. There is no central, coordinating EU regulator. In addition, securing planning permits has lengthened build times.

Rival electricity options may cost less in new grids, for example where new nuclear plants are built at existing sites.

New networks are essential for renewable power sources such as wind and solar which break new ground, and often in especially windy and sunny places which may be hundreds or thousands of miles from where people live.

The biggest problem is the delay to build time, which takes on average about 7 years according to the association of European transmission system operators (ETSO), because of delays in planning permits.

"This is the biggest challenge to achieve the renewables target," said Cecilia Hellner, ETSO secretary general, referring to the EU target to get a fifth of its energy from renewable sources by 2020. That undermines the case for grid upgrades to kickstart flagging economies.

The EU Commission recently asked the ETSO on the possible role of grid spending in an EU recovery plan.

"It takes very long time to build new lines, we needed to point that out. Maybe ours wasn't the best project to kickstart the economy," said Hellner.

Another problem is cost.

It will cost Britain 8-10 billion pounds to connect a possible 29 gigawatts of offshore wind power -- or several thousand turbines -- in a bid to meet its EU renewable energy targets, estimates the Carbon Trust, an advisor to UK business.

Other UK grid improvements, to accommodate nuclear as well as onshore wind, could cost 3-4 billion pounds. In sum, all these grid costs would add about 15 pounds per year to the average UK household electricity bill, according to Britain's network operator National Grid (NG.L).

Wide networks are critical to try and smooth out intermittent wind and solar power sources, to capture the wind and sun at least somewhere on still or cloudy days.

But that imposes extra costs -- building interconnectors to link offshore wind farms across the North Sea from Sweden and Denmark to Britain could add 15-20 billion euros, according to a report commissioned by Greenpeace.