DOES THE KYOTO CLIMATE CHANGE TREATY POSE A SEVERE threat to the U.S. economy or is that claim simply a "Chicken Little" prediction of detractors?
- accelerate completion of projects or to issue a "call for tender" for certain projects in the event that the transmission system operator is unable or unwilling to complete the projects.
According to the European Commission's Palacio, this latter requirement could help break the long impasse that has prevented infrastructure improvements in the past. "The current situation, whereby the necessary investment is held up in interminable disputes on planning issues, cannot be allowed to continue," she says.
Not everyone agrees with the emphasis on an integrated grid, however. The World Wildlife Federation, a vocal critic of European Commission energy policies, has called the energy package "a real mess" for giving energy efficiency and decentralized power sources a back seat to centralized supply-side solutions. "A centralized pan-European grid system is very costly and may lead to higher vulnerability, to future blackouts and brown-outs," the organization complains.
Fragmentation and Domination
The legacy of localized markets and government control has been that of severe limitations on the electric interchange ability between nations and the continued domination of markets by a few or even a single incumbent utility (see Figure 2). The mass exodus of American energy companies from the European market-most recently signified by Reliant's fire sale of its Dutch utility holdings-has only exacerbated the trend toward oligopoly control (see "Competition Lost," Public Utilities Fortnightly, Feb. 1, 2003).
A study of electric flow patterns for 2000 by the European Commission showed that cross-border trades accounted for only 7 percent of total electricity consumption, with the import ability of many states limited to just 2 or 3 percent of their total demand. Severe bottlenecks were identified in many areas, and as a result, seven "priority axis" upgrade projects were endorsed under the Trans-European Energy Networks (TEN-E) initiative. They are:
- System reinforcements at the connections among France, Belgium, the Netherlands, and Germany to resolve frequent congestion throughout the Benelux;
- Increasing capacity at interconnections among Italy and France, Austria, and Switzerland;
- Adding new capacity between France and Spain, and Spain and Portugal;
- Development of new connections between Greece and the Continent;
- Increasing connections between the United Kingdom and the Continent;
- Upgrading systems that link Ireland and Northern Ireland (United Kingdom); and
- Increasing interconnection capacity between Denmark and Germany.
A secondary goal was adopted during meetings in Barcelona in 2002 to increase the interchange capacity of each member to 10 percent of its domestic installed capacity.
Despite these goals and priorities, investment has not flowed readily into the transmission sector, and European energy companies encounter the same kind of resistance to new power lines that U.S. utilities and ISOs face. "It is almost impossible to construct new interconnections in Europe today," says Phillipe Boulanger, director of Endesa - Bureau France.
Lessons From Summer 2003
The record heat wave experienced by Europe last summer and several subsequent system failures reveal both the strengths and weaknesses of the European grid. On one hand, several countries reported record levels of imports and exports to meet load as the combination of air-conditioning demand and limitations on nuclear plant output in France and Germany put