EU Energy Policy Blog

Imagine a future where intermittent renewables make up 30+% of the generation mix on a large interconnected grid. Also imagine a significant penetration of electric and/or hybrid vehicles, say 1+ million each capable of charging – and discharging – 100 kW into/out of their batteries. Would it not make perfect sense in such a case to use the large storage capacity of the batteries to store electricity when renewable resources are generating at full blast and the demand on the grid is low, and discharge some of the energy stored in the batteries when the reverse is true?
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Power exchanges are key market institutions. In the EU, the physical transactions they operate account for about 30% of annual consumption (more than 1000 TWh traded in 2009). They are also playing a growing role in coordinating access to interconnections.
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As the Copenhagen Accord makes emphatically clear, developing countries are not accepting emission caps. This will make passing a strong national cap more difficult. Economically cap and trade is a carbon tax with the tax rate set by the permit market to make sure the cap is met. This results in a highly volatile tax rate, which slows investment, makes it more costly, and will likely create political problems as the price of carbon increases over the years.
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The volatility of the price of crude oil, as demonstrated in 2008-2009, raises a number of questions over how the price of oil is determined and the complex game of interdependencies between the physical and financial markets. It has also forced governments to recently take initiatives.
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EU energy policy is a basket of a number of policies that are concerned with energy markets and energy issues. Since the 2007 Spring Council, the basket is based on three pillars: climate change, competitiveness and supply security. Let’s look separately and then jointly at the Kyoto, Lisbon and Moscow summits of this magic EU triangle.
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Financial markets may be depressed and unemployment high but investment keeps pouring into GreenTech field – loosely defined to include renewable energy technologies, energy efficiency including in-home automaton and energy management systems, smart meters/smart grid, electric cars, storage, batteries, biofuels and a host of supporting technologies.
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In July 2009 the European commission published a proposal for a Regulation on the security of gas supply, due to replace the Directive 2004/67 on the same topic. The proposal has been discussed at the Council under the Swedish Presidency and the negotiation continues under the Spanish Presidency; a political agreement is expected in May 2010.

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The Nabucco consortium strongly supported by the European Commission in the name of EU energy security interests is going ahead. It decided on February 2010 to order the steel to forge the 3000 km future pipe. Such a strong determination is striking because there is only room for one transit pipe-line and the rival project lead by Gazprom, namely South Stream, has much better chances to win the competitive battle because there will be gas to fill it and money to finance it, which is not the case of Nabucco.
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