Maroš Šefčovič on the Energy Union and its role for Central and Southeastern Europe

June 29, 2016 | 00:00
Maroš Šefčovič on the Energy Union and its role for Central and Southeastern Europe
Maroš Šefčovič on the Energy Union and its role for Central and Southeastern Europe
This May the Greek Energy Forum took the initiative of inviting the Vice President of the European Commission responsible for the Energy Union, Maroš Šefčovič , to Greece and hosting the event “Energy Union: Turning Vision into Reality”. The latter symbolically coincided with the launch of the Trans-Adriatic Pipeline (TAP) in the country – one of the crucial projects for the region, boosting energy security and diversification of supplies. On the occasion of these two notable events, the Greek Energy Forum conducted an exclusive interview with VP Šefčovič , discussing some key energy questions for Greece and the wider region of South-East Europe and the Mediterranean.

DN: The launch of the TAP project happening today is definitely a milestone event that sets the tone for our discussion. Greece currently has three entry points for natural gas flows: two in the North (on the borders with Turkey and Bulgaria) and the LNG Terminal Revithoussa (importing LNG primarily from Algeria). It should be noted that the Revithoussa LNG terminal is the only operational LNG terminal in the EU’s Balkan region and its strategic importance in terms of energy security – both national and regional – was very well proved in critical situations. During the 2009 crisis between Ukraine and Russia, Revithoussa LNG allowed to fully cover domestic needs in natural gas, making Greece the only EU country in the region, which did not face any problems in covering its consumption. What is more, it allowed Greece to supply natural gas volumes to Bulgaria for two days.
The implementation of the Revithoussa LNG expansion programme, the Final Investment Decision (FID) for the Interconncetor Greece-Bulgaria (IGB) project as well as the recent activation of Alexandroupolis Floating Storage and Regasification Unit (FSRU) project certainly create an unprecedented momentum for the development of the regional gas hub, placing Greece right in its epicentre. 

Considering all the above, what in your view are the key prerequisites for building a Virtual Gas Trading Hub in Southeast Europe? Bearing in mind all the above, do you think Greece could be well placed to host the Virtual Trading Point of such a hub?

MS: Greece shows good progress as regards energy security – which is one of the five dimensions of the Energy Union strategy. The planned construction of the TAP, as part of the Southern Gas Corridor, is set to significantly improve the diversification of its gas supplies, placing Greece to a strategic position in the region. In order to strengthen the security of supply in the region, it is necessary to set up the right infrastructure and, among others, to build interconnectors that are crucial for cooperation among countries in times of crisis. In building the Energy Union, we promote regional approach over a sum of national solutions. We aim to improve infrastructure and connections between Member States and to ensure that all Member States have access to liquid hubs and can benefit from LNG capacity that countries have been developing or have the potential to develop. This is precisely the objective of the High Level Group on Central and South Eastern Europe Gas Connectivity (CESEC group), established in order to better address regional priority infrastructure and to advance its implementation in order to improve security of gas supplies. Our objective is that each Member State in the region, including Greece, would have access to at least three different sources of gas.

DN: The growth of natural gas markets in the region has the potential to give a boost to the renewable energy sector, with natural gas providing base load generation and backing up the volatile renewables. What elements of the energy market design on the regional level could reinforce and support such synergies between the industries? (e.g. the combination of supplying small-scale LNG to remote locations not connected to the grid and RES technologies uptake).

MS: LNG and storage are part of the EU’s diversification efforts and aims at identifying whether EU action – internal and external – may be necessary over the medium to longer term to ensure access of all Member States to LNG and sufficient storage capacity. Such access can be realised directly or indirectly in a regional context. A well-functioning and sufficiently liquid market can attract LNG and allow Europe to compete with other regions on the global market. A tailored approach and a stronger focus on Central-Eastern and, in particular, South-East Europe is generally supported.

However, the role of regional cooperation will only grow with the Energy Union framework and the need to increase the coordination of national approaches in the implementation of the 2030 energy and climate targets. The European Commission welcomes the good progress achieved by Greece. Given the specific geographic nature of Greece, continuous building of well-connected and modern infrastructure is crucial for integration of renewables into Greek energy mix. We encourage Greece to explore the potential for investments in wind energy and maritime technologies, enabling it to contribute to the achievement of national and EU renewable energy targets for 2020 in the most cost-effective way. Natural gas might not be a renewable source, but it can be renewables' best friend. Why? Because it offsets and balances our energy supply when production from renewable varies, therefore allowing us to decarbonise our economy without risking our energy stability.

DN: Electricity Markets, Smart Grids and Prosumers: What impact on the region of South-East Europe is envisaged by the upcoming new Renewable Energy Directive and integrating RES in the markets?

MS: One of the political priorities of the European Commission is for the EU to be the number one in renewables and prepare the ground for delivery of a binding EU-level target of at least 27% renewables by 2030. Renewable energy is crucial for energy transition and addressing climate change. At the same time, we know that reducing our energy consumption by being more efficient saves us money as well as reduces emissions. We are currently working on the new renewable energy directive and the new electricity market design to integrate increasing amounts of variable renewables (50% of electricity will be produced by renewables by 2030) into the internal energy market.

However, concerning integration of renewables into the markets in Greece, the wind energy sector has been developing more dynamically with 255 MW installed during the last 2 years. A project worth noting is the St Ioannis island wind farm, privately developed by Terna Energy, which is scheduled to start operations in early 2016. This project is the first onshore wind farm with features resembling those of an offshore wind farm, as it will operate on an uninhabited rocky island, with connection to the mainland through submerged cable. Apart from purely "renewables" projects, some electricity infrastructure projects have been launched or completed, which are relevant for the further development of renewables in Greece:
  • a sub-marine interconnector between the island of Evia and the region of Attica. The construction of this interconnector has been completed in June 2015 and it will pave the way for the development of new wind parks in south and central Evia, Andros and Tinos with a combined capacity of up to 610 MW.

  • interconnection of the Cycladic islands Syros, Tinos, Mykonos and Paros with the mainland interconnected system by means of sub-marine interconnectors and which is expected to be completed in 2016. This project will also facilitate the development of new RES projects on the islands that are currently not feasible because of the technical limits of the island electricity systems as well as the export of their electricity production to the mainland interconnected system.

DN: Waste Management and Recycling: the Central and Eastern Europe (CEE) and the Balkan region is indeed behind Western Europe in implementing necessary changes in the waste management sector, as well as unlocking the opportunities offered by the circular economy principles. Although EU’s waste legislation and the Circular Economy Package in particular offer a comprehensive framework for all the member-states, how do you think EU’s Balkan countries specifically could accelerate the uptake of circular economy solutions and improve their waste management?

MS: The Circular Economy Package proposed by the Commission in December 2015 aims to boost EU competitiveness. A successful transition to the circular economy where nothing is wasted, offers huge opportunities for the countries of the western Balkans. It aims at reshaping the market economy towards more sustainable economic growth. For example in the Balkans, investments for better waste management could stem the growth in waste generation and help reduce costs of cleaning up poorly managed landfills. The ECRAN (Environment and Climate Regional Accession Network) Programme has helped the Balkan countries to transpose and implement the EU waste management acquis (Waste Framework Directive's requirements) and gradually move from dependence on landfills to separated and integrated waste management.

The EU provides financial assistance to support sustainable waste management in the region. To this end, better cross-sector cooperation is highly important. A comprehensive study assessing the waste management situation on South-East Europe is under way, and will provide further guidance on the needs of the waste sector regulation in Balkan Countries for transition to European waste and circular economy standards. The EU will also continue to encourage candidate and potential candidate countries to adopt better waste practices.

DN: Do you foresee any new EU policy and funding instruments that could facilitate the development of the necessary energy infrastructure (both software and hardware) in the Mediterranean region and boost an effective cross-border cooperation?
MS: The Energy Union fully acknowledges the energy importance of the Mediterranean region and calls for the establishment of strategic partnerships with the Mediterranean producing and transit countries. Since last year, the Euro-Mediterranean energy cooperation got a new impetus through the establishment of three thematic platforms: 1) natural gas; 2) integration of electricity markets and 3) renewable energy and energy efficiency. The Union for Mediterranean Platform on gas was launched a year ago and its primary objective is to promote dialogue and exchange of views between public and private stakeholders, such as policy makers, industrial representatives, regulators, energy stakeholders, and international financing institutions.

The range of funding instruments available depends also on the pro-active approach of the Member States. There is a pool of resources available at the European level, very often especially designed to support cross-border cooperation among Member States. A few projects had already received funding in 2014-2015 under the Projects of Common Interest, namely the project for Interconnection between Hadera (Israel) and Vasilikos (Cyprus), the Aegean LNG import terminal or hydro-pumped storage in Amfilochia, contributing to the common goal of building the European Energy Union.

Another good example is the Investment Plan for Europe that, while focusing on removing obstacles to investment and making smarter use of new and existing financial resources, aims at mobilising investments of at least € 315 billion in three years. It also creates an investment friendly environment for energy infrastructure. We would like to encourage Greek authorities and investors to explore synergies between the European Structural and Investment Funds and the European Fund for Strategic Investments (EFSI).

The EFSI is a very flexible instrument and it can be combined with other EU funding sources. The best advice for any project promoter is to contact the European Investment Bank (EIB) to find out whether they are eligible for EFSI financing; governments are not gatekeepers in the process. The projects are entirely assessed by the independent Investment Committee which works within the EIB. The Members of this Committee have a high level of market experience. This governance structure ensures that there is no political interference whatsoever in the selection of projects.

Interview with VP Šefčovič on the occasion of the Greek Energy Forum Event Energy Union: Turning Vision into Reality held in Thessaloniki, May 2016.

This article is part of the knowledge partnership between European Energy Review and the Greek Energy Forum a group of energy professionals sharing common interest in the broader energy industry in Greece and South-eastern Europe. Follow Greek Energy Forum on Twitter @GrEnergyForum.

Image: Vice President of the European Commission responsible for the Energy Union, Maroš Šefčovič. Source: Saeimā.
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