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EC Adopts Fifth PCI List: Working towards EU’s net zero climate goals [free access]

January 10, 2022

Europe is working rigorously towards achieving its 2050 net zero greenhouse gas emissions (GHG) ambitions agreed to in the European Green Deal along with an intermediate GHG reduction target of at least 55 per cent by 2030 compared to 1990 levels. It is recognised that developing a modern transmission infrastructure with adequate interconnections and reliable networks is essential for the creation of a European integrated energy market to achieve these climate and energy goals. To this end, the European Commission (EC) is extending policy support through the identification of a list of projects of common interest (every two years) and extension of funds via the Connecting Europe Facility (CEF) since 2013.

 

In November 2021, the EC adopted the fifth list of PCIs, which are critical infrastructure projects for achieving the European Union’s (EU) long-term climate-neutrality goals. The key advantages for the projects approved under the list include streamlined permit granting procedures, faster and better streamlined environmental assessment, a single national competent authority (one-stop-shop) coordinating all permit granting procedures, and eligibility for financial assistance under the CEF in the form of grants and innovative financial instruments. Notably, while PCI status is a precondition for CEF funding, it does not guarantee the award of a CEF grant. In addition to CEF funding, PCIs can apply for support under other EU programmes, such as the European Fund for Strategic Investment (EFSI), and the European Structural & Investment Funds (ESIF), in particular the European Regional Development Fund (ERDF). Further, the biennial exercise allows the integration of new projects and the removal of those that have been completed or deemed unfeasible.

 

Global Transmission Report takes a closer look at the key facts relating to PCIs and CEF funding.   

 

PCI selection methodology

The EC follows a structured process in establishing the PCI list. To begin with, the promoters submit their projects for selection as PCIs, post which the regional groups [chaired by the EC and representatives from the member countries, transmission system operators and their European networks, project promoters, national regulatory authorities, as well as the Agency for the Cooperation of Energy Regulators (ACER)] evaluate the projects' compliance with the pre-determined criteria under the trans-European energy networks (TEN-E) framework. Following this, the regional groups propose regional lists of PCI candidates and then EC adopts the list of PCIs, in the form of a delegated regulation. The EC then submits the PCI list to the European Parliament and Council, which has two months to decide on the list.

 

The TEN-E framework, which was put in place to ensure that Europe’s energy infrastructure continues to develop in a timely manner to support this energy transition, was revised by the EC in December 2020. The new rules ended the eligibility of oil and gas infrastructure projects for future PCI lists and created an obligation for all projects to meet mandatory sustainability criteria as well as to follow the ‘do no significant harm' principle as set out in the Green Deal. The revised rules created space for smart grids, which includes gas networks that make use of digital solutions to integrate low-carbon and renewable gases. The EC also put a stronger focus on electricity transmission through provisions that would allow for an ambitious scale-up of offshore grids across sea-basins in Europe.

 

The fifth PCI list

Published as a delegated act, the fifth PCI list includes 98 projects, of which 67 relate to electricity transmission and storage projects, 20 are gas projects (listed previously in the fourth PCI list), six are CO2 network projects and five are smart grid projects. The PCI list also includes two priority offshore grid interconnections – Celtic Interconnector (between France and Ireland) and North Sea Wind Power Hub (between Denmark, Germany and Netherlands); and a green hydrogen hub compressed air storage project in Denmark. The selected transmission and storage projects will contribute to increased renewable energy ambition under the European Green Deal, while the smart grid projects will improve network efficiency and cross-border data coordination as well as provide for safer grid management. Many of the projects included under the fifth PCI list were also part of the previous list.

 

The fifth PCI list also continued the declining trend in the number of projects included in the PCI list. The first PCI list, released in October 2013, included 248 projects, the second list (2015) included 195 PCIs, the third (2017) included 173 PCIs, and the one adopted in 2019 included 152 projects. The decrease can be mainly attributed to the reduction in the number of gas and oil projects.

 

In terms of electricity projects, the fifth PCI list recorded 34 per cent less projects when compared to the 67 electricity projects approved in the previous list. This decrease is explained by the completion or near completion of 14 interconnection projects and by the change in status of the UK from a member state to a third country, which led to the ineligibility of 12 projects that were part of the fourth list.

 

CEF Funding

 

The new European Climate, Infrastructure and Environment Executive Agency (CINEA), which began operations on April 1, 2021 as the successor of the Innovation and Networks Executive Agency (INEA), manages the implementation of CEF in the energy and transport areas on behalf of the EC.

 

Under the first CEF, which ran from 2014 to 2020, EUR4.7 billion was allocated to energy projects for 107 PCIs through 10 calls for proposals. Of this, electricity transmission and gas transmission assets attracted almost 63 per cent of the funding, with electricity transmission accounting for around EUR1,746 million, followed by gas transmission projects with a funding of EUR1,224.4 million; and the Baltic synchronisation projects accounting for EUR1,053.1 million in funding.

 

Broadly, for the energy segment, the CEF funded the following four priority electricity corridors through 69 actions between 2014 and 2020:

 

CEF for energy also provided grants amounting to EUR236.5 million for smart grid deployment (across five actions) and EUR143.9 million for cross-border CO2 networks (nine actions).

 

Table 1: CEF funding per priority corridor (electricity) (between 2014-2020)

Priority corridor

Number of actions

Funds (EUR million)

NSOG

23

661.8

NSI West Electricity

6

627.3

NSI East Electricity

24

257.5

BEMIP Electricity

16

1,270.0

Source: CEF

 

Further, the top three CEF-funded energy PCIs during the 2014-20 period included synchronisation of the Baltic States’ electricity system with the European networks (Phase II) (EUR720 million), interconnection between Nouvelle Aquitaine (France) and the Basque country (Spain) (Biscay Gulf) (EUR578.5 million), and the Celtic Interconnector (EUR530.7 million). The Baltic synchronisation grant is the largest CEF energy grant ever awarded and will be vital for completing the synchronisation of the Baltic States’ electricity grid with the Continental European network by 2025.

 

Making its first call for proposals for 2021, the EC, in September 2021, launched a new call for proposals for cross-border projects in the fourth PCI list to be co-financed by grants worth EUR785 million under the CEF programme. In response, Polish and Baltic transmission system operators (TSOs) submitted a joint application for EUR238 million in funding for the Baltic power systems’ synchronisation with the continental European system. Further, Finnish and Swedish TSOs also sought 50 per cent co-funding to build the EUR252 million, 400 kV Aurora cross-border line between the countries. The final award decision is expected to be adopted in early 2022 after the evaluation of the applications.

 

For the period 2021-2027, CEF for energy has a grant budget of EUR5.84 billion and has been set up to support studies and construction works in the areas of electricity, gas, smart grids and CO2 networks. Grants will be awarded through competitive calls for proposals. Additionally, under the new EU’s Multi-Annual Financial Framework for 2021-27, the CEF system introduces a new window for cross-border renewable energy projects, with an allocation of up to 15 per cent of the CEF budget. The maiden call for such projects in the form of pre-feasibility studies was launched in September 2021, to provide EUR1 million to support preparatory studies for cross-border renewable energy projects, also known as hybrid or multipurpose interconnectors. These projects will connect the upcoming offshore wind projects to the onshore gird and act as cross-border interconnectors.


The way forward

The EC is building well-connected networks across Europe to enhance security of supply through PCIs. The new CEF energy budget will continue to fund key transmission and storage projects along with providing support to new hybrid interconnectors. Net net, the recent developments and measures will help the EU achieve the goals of the European Green Deal.

 

Table 2: Fifth PCI list: Electricity projects

Project

Details

Priority Corridor Northern Seas Offshore Grid (NSOG)

France–Ireland interconnection/Celtic Interconnector

La Martyre (France) and Great Island or Knockraha

(Ireland)

North Sea wind power hub

One or more hubs in the North Sea with interconnectors to bordering North Sea countries (Denmark, Germany, Netherlands)

Priority Corridor North-South Electricity Interconnections in Western Europe (NSI

West Electricity

SACOI 3

Interconnection between Codrongianos (Italy), Lucciana (Corsica, France) and Suvereto (Italy)

Biscay Gulf

Interconnection between Aquitaine (France) and the Basque country (Spain)

Ultranet

Internal line between Osterath and Philippsburg (Germany) to increase capacity at western borders

Suedlink

Internal line between Brunsbüttel/Wilster and Grοβgartach/ Bergrheinfeld-West (DE) to

increase capacity at northern and southern borders

Greenconnector

Interconnection between Thusis/Sils (Switzerland) and VerderioInferiore (Italy)

Cluster of internal lines in Portugal

Internal line between Pedralva and Sobrado, formerly designated Pedralva and Alfena

Internal line between Vieira do Minho, Ribeira de Pena and Feira, formerly designated Frades B, Ribeira de Pena and Feira

Portugal–Spain interconnection

Interconnection between Beariz–Fontefría (Spain), Fontefria (Spain)–Ponte de Lima (Portugal) (formerly Vila Fria / Viana do Castelo) and Ponte de Lima–Vila Nova de Famalicão (Portugal) (formerly Vila do Conde), including substations in Beariz (Spain), Fontefría (Spain) and Ponte de Lima (Portugal)

BRABO II + III

Internal lines at Belgium’s northern border between Zandvliet and Lillo-Liefkenshoek (Belgium), and between Liefkenshoek and Mercator, including a substation in Lillo (Belgium)

Pyrenean crossing 2

Interconnection between Aragón (Spain) and Atlantic Pyrenees (France)

Pyrenean crossing 1

Interconnection between Navarra (Spain) and Landes (France)

Cluster of internal lines in Germany

Internal line between Emden-East to Osterath to increase capacity from northern Germany to the Rhineland

Internal lines between Heide/West to Polsum to increase capacity from northern Germany to the Ruhr-Area

Internal lines between Wilhelmshaven to Uentrop to increase capacity from northern Germany to the Ruhr-Area

Lonny–Gramme Interconnection

Interconnection between Lonny (France) and Gramme (Belgium)

ELMED

Interconnection between Sicily (Italy) and Tunisia node

Priority Corridor North-South Electricity Interconnections in Central Eastern and South Europe (NSI East Electricity)

Cluster Austria–Germany

Interconnection between St Peter and Isar

Internal line between St Peter and Tauern

Internal line between Westtirol and Zell-Ziller

EUROASIA Interconnector/ Cluster Israel–Cyprus–Greece

Interconnection between Hadera (Israel) and Kofinou (Cyprus)

 

Interconnection between Kofinou (Cyprus) and Korakia, Crete (EL)

Cluster of internal lines in Czech Republic

Internal line between Vernerov and Vitkov

Internal line between Vitkov and Prestice

Internal line between Prestice and Kocin

Internal line between Kocin and Mirovka

SuedOstLink

Internal line in Germany between Wolmirstedt and Isar to increase internal north-south transmission capacity

GerPol Power Bridge

Internal line between Krajnik and Baczyna

Internal line between Mikułowa and Świebodzice

Internal line between Baczyna and Plewiska

Mid Continental East Corridor

Interconnection between Resita and Pancevo

Internal line between Portile de Fier and Resita

Internal line between Resita and Timisoara/Sacalaz

Internal line between Arad and Timisoara/Sacalaz

Internal line within Austria between Lienz and Obersielach

Priority Corridor Baltic Energy Market Interconnection Plan (BEMIP Electricity)

Internal line between Ekhyddan and Nybro/Hemsjoo in Sweden

Internal line between Stanisławow and Ostrolęka in Poland

Integration and synchronisation of the Baltic States’ electricity system with the European

networks

Interconnection between Tartu (EE) and Valmiera (LV)

Interconnection between Lithuania and Poland [currently known as Harmony Link]

New 330 kV Musa substation

New 330 kV Darbenai substation

Further infrastructure aspects related to the implementation of the synchronisation of the Baltic States’ system with the continental European network

11 internal lines

Third interconnection between Finland and Sweden

Interconnection between northern Finland and northern Sweden

Internal line between Keminmaa and Pyhänselka

LaSGo Link

Interconnection between Latvia and Sweden via Gotland

Source: European Commission’s Fifth PCI List

 

Table 2: Fifth PCI list: Smart grid projects

Projects

Countries

Description

ACON (Again COnnected Networks)

Czech Republic, Slovakia

The main goal is to foster integration of the Czech and Slovak electricity markets.

Danube InGrid

Hungary, Slovakia

The project enhances cross-border coordination of electricity network management, with a focus on smartening data collection and exchange.

CARMEN

Hungary, Romania

The project envisages distribution network operation efficiency and service quality and enables secure electricity flows from new renewable generation.

Gabreta

Czech Republic, Denmark

The project enhances system optimisation by retrieving and exchanging information in real time, improving metering and monitoring of the grid and providing more flexibility and hosting capacity for renewable generation.

Green Switch

Austria, Slovenia, Croatia

The project optimises the utilisation of existing infrastructure and efficiently integrates new technologies to increase hosting capacity, promote efficient integration of new loads and improve quality and security of supply.

Source: European Commission’s Fifth PCI List

 

Figure 1: Map of electricity and smart grid PCIs