Ensuring European

#EnergySecurity

with reliable electricity

Modern society needs power. As decarbonisation accelerates, so will the use of clean electricity. It will be present everywhere and this calls for a renewed focus on security of supply.

Why is energy security so important

Beyond keeping the lights on, electricity today powers hospitals, data centers, agriculture and much more. Tomorrow, it will also fuel your car, heat your home and enable many more industrial processes. This, clearly, requires an increasing supply of electricity.

However, international events in recent years have put our countries’ energy security in jeopardy. Global geopolitical tensions, market interventions, extreme weather, cyber sabotage and increasing power demand are putting energy security at risk. Meanwhile our national energy systems are evolving with renewable energy sources and technology developments bringing higher variability and growing decentralisation.

This necessitates a change in the way we think about the energy system. Our States will need to introduce higher flexibility into their systems and enable system operators to gain more awareness over the state of our energy infrastructure and systems’ needs. They will need to support a much more intricate coordination of responsibilities within the system and they will need to ensure that the actors in this system have predictable sustainable revenues to keep them up and running.

Yet, European Member States’ present a variety of national and regional situations. When addressing such complex issues, there won’t be a one-size-fits all solution. Each challenge has its own specificities which reflect the reality on the ground and require tailored solutions that work for unique circumstances.

Learn more about energy security issues below.

The 2 dimensions of energy security

Energy security encompasses external AND internal security of supply risks to the power sector.

External risks: an increasingly challenging international context

Europe has become “the small countries” of the world, no longer just in terms of geographical size.

Over the past decade, the global Balance of Power has been shifting, putting the tectonic plates of geopolitics in motion and challenging “the small countries’” relative place in that world.

Global energy geopolitics

The epitome of geopolitics’ role in energy security is the developments that unfolded around Russia’s invasion of Ukraine. Already before the attack, and further on when the war broke out, Russia weaponised its energy supply by threatening, and ultimately cutting off its oil and natural gas supplies to the Continent. Its oil and gas crunch not only raised fears of rolling blackouts but led to soaring energy prices as natural gas became the price setter in wholesale electricity markets.

The European Commission’sREPowerEU has been the EU’s united answer to this emergency and has done a good job. According to Eurelectric’s Power Barometer 2023, in the winter of 2022-23, energy saving measures contributed to a 19% decrease in gas consumption compared to prior years. EU member states’ united efforts and energy sobriety helped slash dependence on imported fossil fuels from Russia. But we aren’t out of the woods yet.

With international tensions flaring up in the Middle East and North Africa, much of the replaced oil and gas deliveries from Russia are now at risk as the Red Sea becomes a dangerous flash point. Already, ships bringing petroleum and liquified natural gas from Qatar are being diverted around Africa, slowing the lead time for meeting increasing global demand.

Meanwhile, green technologies are predominantly Asian, and under the influence of an increasingly mistrustful China and an increasingly protectionist United States. Delivering the electric vehicles, solar panels, wind turbines, batteries, electrolysers and other sustainable energy technologies needed for a seamless transition could be subject to aggressive Chinese and American competition, supply chain disruptions, tariffs and preferential subsidies or export bans.

While political action can hedge against geopolitical disruption, we are not yet at a point of total energy sovereignty – as shown last year at Power Summit – Balance of Power. More must be done to shore this up. 

Market interventions

Market interventions across EU countries raise red flags for their energy security as much as the game of geopolitics. When prices soared following Russia’s weaponisation of energy, the European Commission intervened, setting a price cap on “inframarginal revenues” or revenues beyond the marginal price for production. This policy failure hurt mostly clean and renewable energy generators that have low marginal costs, meaning investors in renewables took the biggest hit.

Also worth noting is that this measure did not bring the high revenues expected by policymakers: in Spain for example, the cap put in place only generated €346,000 when the announced ambition had been to  collect €9 million (i.e. only 3.8% of the intended revenue).The implementation of the cap also differed from country to country generating a patchwork that fragmented the internal energy market and added further uncertainty for investors at a time when Europe needs massive private capital investments for its clean technology development projects.

Ensuring we have ample clean and renewable capacity for the future, both variable and dispatchable, requires that investors have confidence in their investment decisions. Following the European Commission’s proposed reform of the wholesale electricity market in response to the energy crisis, Eurelectric actively called for an evolution that provided stability and certainty, rather than a revolution that bred uncertainty and warded off investment. This so-called Electricity Market Design Fit for Net Zero successfully reached the final text of the reform in a win for energy security.

Energy security starts with preparation today. The investments to get the preparation underway, though, rely on a sound united internal market, free of overreaching interventions and malpractice. This is a critical component of energy security we are committed to.

Extreme weather

A “less human”, but no less human-induced stress on energy security is extreme weather. While unavoidable natural disasters like the earthquakes in Türkiye in 2023 have and will always persist, climate change is making others more likely and more severe. Take the floods in Belgium and Germany in 2022 for example, or the forest fires in France and Greece in 2023. These events strain our energy sector, and can take our grids offline, making them a threat to energy security.

In late 2022, we launched our report on this subject, The Coming Storm, to dive into the issues of system resilience considering the impacts of climate change. The report finds that across the board, more extreme weather events – from heat waves and droughts to floods and cold spells – are expected across European countries. All assets in the value chain are going to be exposed to their devasting effects, from electricity generation and transmission to power distribution and the final customer.

Taking this into account, we are also working on a new report titled Grids for Speed due out later this year to address the critical needs of our power infrastructure in the coming decades, including economic development, investment signals, technology developments and policy initiatives.

Renewable energy, the energy we will increasingly rely on to deliver energy security in Europe thanks to its domestic production, is also threatened as extreme weather makes wind, sun and water-based generation more unpredictable. Stable, dispatchable capacity such as nuclear complemented with flexible resources and a reinforced grid will be the cornerstone of a secure energy system in the future.

Cyber sabotage

As geopolitical tensions simmer and international competition becomes more hostile, cyber sabotage is a more novel but nonetheless serious threat to energy security. Where a physical attack on energy infrastructure would naturally escalate to conflict, those staging a cyber attack can remain hidden in the fog of war. The uncertainty deters retaliation while also sending a message.

Eurelectric’s President and E.ON CEO, Leonhard Birnbaum, voiced his concerns in an article by Financial Times:

“In Germany, I clearly feel that if I really [am] subject to a successful attack, I’m on my own,”
Leonhard Birnbaum
President of Eurelectric and E.ON CEO

Such attacks are already being used by Russia in Ukraine to reach infrastructure that is physically out of reach. It is effective because it is hard to anticipate and nearly impossible to stop. Therefore, shoring up energy security in this domain means that preparedness will no longer need to take into account just how to mitigate the threat, it also has to account for what to do when it happens, and it needs to be a European united response.

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The sheer volume of the threats facing our energy system can seem daunting. Some European countries, however, are already learning by doing, providing important lessons for the rest of Europe on how to best tackle physical and cyber threats. Ukraine is a clear case in point.

Ukraine’s fight to keep the lights on – lessons learned

Ukraine has had to endure devastating attacks on its infrastructure from Russia’s missiles and beyond. But despite these attacks, the country has shown admirable resilience to these threats and even managed incredible feats, including the construction of a new onshore wind farm.

“The darkest day of Ukraine's power system – literally”

It was 10 October 2022, when Russia’s large-scale missile and drone attack began on Ukraine’s power infrastructure. On that day, 83 missiles were sent and 43 were downed.

Russia targeted mostly high-voltage and high-power transformers and power generation assets. DTEK, the Ukrainian utility, lost almost 40% of its generators in Ukraine because of this attack. Back then Ukraine did not have the air defense it has now.

But the darkest day for Ukraine’s power infrastructure was the 14-hour blackout experienced on 23 November 2022. After more than 70 cruise and ballistic missiles, Ukraine lost more than 3000 MW in less than 5 minutes. This triggered the frequency protection at the country’s nuclear power plants which were disconnected from the grid. During the blackout, hospitals continued to operate and perform surgeries under the lights of an iPhone.  

System operators managed to reassemble the Ukrainian grid within 14 hours, which is a record time considering the challenge and emergency faced.

“Our systems will no doubt face adversity and significant bumps in the road, however we cannot allow these challenges to stop our transition. Allow the system to fail but fail gracefully, in such a way that you can rebuild it very quickly.”
Vadym Utkin
Energy Storage Lead at DTEK at Power Summit 2023.

Internal risks: how can the electricity industry improve its security of supply?

The aforementioned challenges are increasingly intertwined with European energy security and our ability to deliver a reliable supply of electricity. This latter part is what we call security of supply.

Security of supply is the part of energy security having to do with our industry directly. Put in technical terms, it is the stable and uninterrupted power supply at an affordable price for customers. In particular interruptions of power supply should be maintained below a maximum of 3 hours per year – what experts called the “loss of load expectation” (LOLE).

In a context where electrification grows exponentially to reach 50% of the EU final energy consumption by 2040 – as expected by the European Commission – uninterrupted supply becomes paramount. Customers will ever more rely on secured supply of power for their transport, heating etc and our industry is committed to ensure its delivery – as pledged in our Presidency Manifesto

More importantly, we see security of supply as covering the various dimensions that the power sector has the ability to control. This includes things like:

1

Increasing demand: refers to the fact that as we electrify society, we will need a lot more electricity to power our society. Our Decarbonisation Speedways study presents three decarbonisation scenarios for our economy and society. All scenarios point to clean and renewable power is the cost-efficient solution to curb emissions and reduce energy use thanks to its superior energy efficiency. This electrification rates like never seen before and in ways not done before, leading to more complex grid management.

2

Decentralisation: refers to the trend of renewable technologies and power assets to be less centralised than traditional thermal generation, leading to more complex delivery of electrons to where they are needed. Our Power System of the Future report says that by 2030, EU countries will see around 50 to 60 million heat pumps, 65 to 70 million electric vehicles (EVs) and over 600 gigawatts of additional renewable capacity as foreseen by REPowerEU. Around 70% of that capacity is going to be directly connected to distribution grids which today face scarce capacity, cumbersome permitting, and insufficient investments.

The power sector can take steps to address from where it sources inputs to the energy system. It can take steps to develop flexibility resources – such as hydropower and nuclear. It can also adapt to a system dominated by increasingly variable generation, provided firm and dispatchable generation remains available to the system and that grids are modernised, digitalised and expanded to support higher and more decentral electrification.

“Getting our electricity networks fit for net zero should be a top priority in the coming years, both at EU and national level” – states Kristian Ruby, Secretary General at Eurelectric – “This requires a new mindset among regulators and legislators. One that anticipates EU countries’ capacity needs to integrate more renewable projects, and one that accommodates unprecedented electrification of transport, buildings and industry to match the speed and scale needed for Europe’s energy transition.”
Kristian Ruby
Secretary General of Eurelectric

This is why we are developing a workstream on Grids for Speed to get our power networks up to speed for net zero.

Eurelectric has all hands on deck to define solutions to these growing challenges and formulate solutions to the security of supply issues. So, stay tuned for more developments!

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Further reading

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