1. Promoting the sustainable supply and use of energy for the greatest benefit of all © World Energy Council 2011 Interconnectivity: Benefits and Challenges Alessandro Clerici, Executive Chair, SERT World Energy Council 22 March 2011, Brussels

2. Promoting the sustainable supply and use of energy for the greatest benefit of all Industrialised nations:Transformation of the energy system  Environmental concerns - Financing Growing economies:Development of the energy system  Making energy available Poor regions:Fight against energy poverty  Instability Electricity Around the World

3. Promoting the sustainable supply and use of energy for the greatest benefit of all Electricity Around the World 1/3 of the world energy consumption 40% of the global GHG emissions Consumption growing 50% > primary energy consumption Transmission 10-15% of the final kWh cost Transmission bottlenecks 1.6 billions of people with no electricity

4. Promoting the sustainable supply and use of energy for the greatest benefit of all The Gap is Growing New York (8 million) = Sub-Saharan Africa (800 million) 6,000 kWh/per person vs 63 kWh/person Ratio 1:100 India 17% of the world population 4% of the world energy consumption 20% no access to electricity

5. Promoting the sustainable supply and use of energy for the greatest benefit of all Energy Demand is Growing Increase of energy demand from 32% to 40% by 2030. Fossil fuels will play an important role globally for decades to come. Scarcity of policy and capital is a more constraining bottleneck than reserves of crude oil, natural gas and coal. Reserves of fossil fuels substantially greater compared to previous estimates – the role of shale gas. Access to affordable energy and the role of energy as a driver of economic growth more important for many countries than climate change.

6. Promoting the sustainable supply and use of energy for the greatest benefit of all The recently published WEC report “Interconnectivity: Benefits and Challenges” (www.worldenergy.org/ pubs) examines the main issues related to the interconnected systems, draws conclusions and formulates recommendations for the future.

7. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges The main interconnections in the report include: interconnections in integrated grids, both overhead and underground/ submarine; bulk transmission of large amounts of power over long distances; feeding of isolated load areas with no local energy resources; supply to islands; integration of concentrated bulk generation from renewable energy sources and smart grids.

8. Promoting the sustainable supply and use of energy for the greatest benefit of all Bulk Power Transmission A case by case study is indispensable for different local consitions. In the present turbulent situation for raw materials costs, difficult to define even ranges valid for few years. The figure below reports, for a specific case, the cost versus distance of transferred kWh, including capitalized cost of losses. The same scale effect not valid for underground/submarine cables due to power limit per cable.

9. Promoting the sustainable supply and use of energy for the greatest benefit of all Bulk Power Transmission Some Examples The world record line now in operation in China to convey over 2000 km more than 7000 MW per circuit with HVDC at ±800 kV from areas having cheap hydro generation costs. The NorNed (Norway-Netherlands) sea crossing scheme at +/- 450 kV carrying around 700 MW is at present the longest cable connection (580 km world record). It is under final commissioning the SAPEI (Sardinia-Italian peninsula sea crossing) for 1000 MW at +/- 500 kV and 435 km long and sea depth is up to around 1600 m (world record).

10. Promoting the sustainable supply and use of energy for the greatest benefit of all Supply to Islands When the island required load is of small/medium size, the use of gas/oil pipelines becomes uneconomical and the common choice for electricity supply is the use of local generation fed by imported fuel. The electricity transport from a hub area as an alternative to local generation is of interest in very many cases even with low values for local cost of oil and gasoil. 200 – 500 MW Power Transfer

11. Promoting the sustainable supply and use of energy for the greatest benefit of all Feeding of Isolated Load Areas In many developing regions, per capita consumption of electricity and per cent of population having access to electricity are extremely low. The possible main electrical load centres in these regions may be scattered over many areas and the initial load is in the range of few MW with different growth rates. In these situations, local diesel generation for each load centre is normally implemented fed by fuel oil transported by roads over long distances. Installation of a single generation plant feeding different load centres can, on the contrary, be cost competitive and the comparison still holds if one considers, as power source, an interconnected system, far from loads. With initial small loads of 5-10 MW an energy transmission from 250-450 km is more convenient than local diesel generation; this even with the minimum oil price.

12. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges Key role of technologies OHTL Underground and undersea cables AC substations Conversion of AC to DC lines AC/DC converters Back-to-back stations Power electronics (FACTS) Energy storage Protections Controls ICT Smart Grids

13. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges “Smart Grids” to manage production, transmission and distribution of electricity, by measuring, communicating, analysing and controlling online electricity flows and providing transparent information to all stakeholders thus helping optimise the value of the assets and ensure a reliable and economically sound operation with smart sharing of costs and benefits among all involved. The “Smart Grid” concepts also include hardware and not only ICT and “smart upgrading” of existing transmission line corridors (e.g. conversion of AC to DC lines).

14. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges Possible transformation of the Italian 220kV AC lines to HVDC

15. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges The AC and DC transmission technologies available today in most cases do not pose practical or technical limits to interconnections. The main limits are political, regulatory, financial and in an increasing number of cases, especially in the West European countries, also strong local opposition.

16. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges Key issues for interconnections in Europe New interconnections between different countries, can help achieve global, regional and national energy goals. The development of interconnection capacity between countries (or areas) allows greater flexibility in the generation mix and operations. The availability of cross-border transmission capacity, may help select power from cheaper (including environmental costs) units located in another area, country or region and to “capture” the best of renewables.

17. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges Europe: a well-balanced and versatile primary energy mix, where different resources and technologies are distributed across the continent. For renewables, wind availability in the North and sun in South and also possible imports from North Africa. Today less than 10% of electricity produced in Europe is traded across borders. This is due to the EU 27 Statutes, which allow European countries to lay down their own energy policies. In addition, in all the EU countries it is becoming increasingly difficult to get approval for infrastructure projects.

18. Promoting the sustainable supply and use of energy for the greatest benefit of all WEC Study Interconnectivity: Benefits and Challenges A new UHV AC overhead transmission system overlaying the existing 400kV looks impractical in Europe. 25 years to get approval for the Spain-France interconnection that at the end was a DC and underground cable, whereas in China, it has taken less than 4 years to implement a major transmission project carrying 7,000MW over 2,000km + 800kV UHVDC, from the development of the initial concept to commissioning. In some European countries, the energy policy development has been devolved to the regions, and for different national tax systems, incentives and subsidies schemes, fair competition in the EU has become nearly impossible. Harmonisation of policies a key issue.

19. Promoting the sustainable supply and use of energy for the greatest benefit of all Current status of the interconnections in the Euro-Mediterranean region Demand : 3107 TWh Installed capacity: 839 GW Demand : 241 TWh Installed capacity: 59 GW ENTSO-E South & East Med Countries Demand : 50 TWh Installed capacity: 12 GW Israel Demand : 198 TWh Installed capacity: 42 GW Turkey

20. Promoting the sustainable supply and use of energy for the greatest benefit of all Mid-long term trends  The Mediterranean Solar Plan, launched in November 2008: developing 20 GW of new renewable energy production capacities, out of which 5 GW to Europe; achieving 20% energy savings around the Mediterranean by 2020, compared to a business-as-usual scenario.  The Transgreen initiative, launched in July 2010 South-North Med corridors for a total capacity of 5 GW  The Desertec I.I., launched in July 2009: Up to 15% of the European power demand covered by RES generated in the Middle-East & North Africa region Source: Desertec I.I. Target years 2020-2030 Target year: 2050

21. Promoting the sustainable supply and use of energy for the greatest benefit of all The North Sea Offshore Grid initiative Major political step towards a DC grid Formed in December 2009 by the Ministers of the North Seas Countries: Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Sweden and the United Kingdom. In February 2010 Norway joined the initiative: The vital importance of effective coordination and oversight in the delivery of the (inter)connection of offshore wind energy and for essential onshore grid reinforcement in a timely, efficient and secure way.

22. Promoting the sustainable supply and use of energy for the greatest benefit of all DC grid: an enabler for large scale renewables integration and global EU Interconnections An interregional HVDC grid is defined as a system that needs several protection zones for DC earth faults, has the same voltage level and very high power rating New developments needed: - HVDC breakers and fast protections - Grid Power flow control Long-term development, e.g. -High voltage DC/DC converters for connecting different regional systems -On-going Cigré WG B4.52 ”HVDC Grid Feasibility study”. Publication 2011 Regulatory issues such as how to manage such new grids need to be solved

23. Promoting the sustainable supply and use of energy for the greatest benefit of all Technology challenges  Impact on the EU transmission grid : the current structure of the EU transmission grid does not allow the injection of several GW from the South or from the North: reinforcement of transport capacity while trying to minimize the construction of new lines, e.g., converting existing internal lines from AC to DC and reconductoring of existing lines; balancing of volatilities in the power imported from RES generation needs investigation. Sufficient back-up capacity to be warranted; assessment of the reference incident: at present, the reference incident in the ENTSO-E/SCR is an instantaneous loss of 3 GW of generation capacity. What will happen in case of a blackout in some Southern or Northern countries?

24. Promoting the sustainable supply and use of energy for the greatest benefit of all European and Global Perspectives: Considering Europe’s role as consumer and emitter quickly diminishes over time:  Europe’s different energy policies should become one policy which reflects global realities.  There is not a real EU without only one transmission system. WEC Study Interconnectivity: Benefits and Challenges

25. Promoting the sustainable supply and use of energy for the greatest benefit of all Concluding remarks  The establishment of new interconnections or the reinforcement of the existing ones is a complex process that shall be examined not only through bilateral studies, but considering the implications on the whole interconnected system.  The adoption of new technologies can mitigate the environmental impact of network reinforcements and favour a better acceptance of new infrastructures (e.g.: undergrounding, conversion of existing lines from AC to DC, adoption of enhanced coordinated control schemes => concept of “smart transmission grids”. Accurate Feasibility Studies covering all the issues of the interconnection projects (power market, regulatory framework, technological solutions, environment and costs) are a key factor to pave the way for the acceptance and financing of the projects’ implementation

26. Promoting the sustainable supply and use of energy for the greatest benefit of all Attention for Europe not to lose out to many countries, especially in terms of its competitiveness on the international markets. Ideology should not be allowed to take precedence over reality. For example, when it comes to reducing GHG emissions, Europe’s current commitment of 20% reduction by 2020 will reduce the total global emissions by 2% only. The new commitment of 80% by 2050 could be detrimental to many European industries, which would be either priced out completely or would need to relocate to other regions creating the “carbon leakage” phenomenon which would increase the overall global emissions and at the same time deal a fatal blow to many European businesses. Concluding remarks

27. Promoting the sustainable supply and use of energy for the greatest benefit of all Thank you for your attention! For further information contact World Energy Council www.worldenergy.org www.worldenergy.org