“Excessive regulation kills innovation. But this doesn’t mean we shouldn’t intervene on regulation to adapt it to the significant challenges involved in the current energy transition”. Yves Zumwald is the CEO of Swissgrid, Switzerland’s Terna. But he is also a member of the Board of ENTSO-E, the association of European transmission grid operators. It’s from this position that he has such a knowledgeable understanding of what is going on in Europe (and not the EU alone): all the 43 Transmission System Operators (TSOs) that are members of the association which represents 36 European countries, are under pressure with the implementation of the third Clean Energy Package. But they are also already driven towards the need to accelerate investments in order to allow grids to govern the new model of shared generation electricity production. Without jolts. Without jeopardising the security of electricity supply. Zumwald came to Rome for the States General of the Italian Energy Transition and we asked him to summarise the situation, in terms of the “weight of renewables” (which are non-programmable in nature), the closure of old thermoelectric giants, the momentum of current changes. This is what he said.
Una chiacchierata con Yves Zumwald, CEO di Swissgrid e membro del board di ENTSO-E, per
How is the implementation of the third Clean Energy Package progressing and what guidelines are being followed?
"We are focusing on three fundamental guidelines. The bottom line is that we need to increase electricity transportation infrastructure and accelerate the necessary investments. The second area of action concerns market architecture. We only have one energy market, one which is no longer a suitable tool in order to meet the energy transition’s needs. We therefore need to supplement it using other tools, such as long-term contracts, that will enable return on investments in the long term”.
Why?
“We are facing a market that does not give sufficient price signals to operators. Let me explain. In order to construct important hydroelectric plants, we face depreciation of up to 80 years. Today we have the Energy Exchange, but the advent of renewables has led to a volatile prices that can undergo sudden and significant changes over short periods of time. We need to reconcile these two different sets of needs and one market can’t cater for all of them. We need new tools: I’m talking about PPAs (Power Purchase Agreements), long-term energy purchase contracts for renewable plants, but also the capacity market, so as to promote investments in new generation thermoelectric plants able to provide flexibility and stability when renewables are out of action”.
Sure. What is the third element that you mentioned before?
“We need to make people understand that it doesn’t make sense to talk about a national energy grid, but solely and exclusively a European one. TSOs need to coordinate, define common grid codes to facilitate stability and interconnection in the grids. This process is already under way, but it will be more complex and ambitious to implement it in the future because of the challenges involved in the energy transition towards renewables. It’s essential that coordination between the various managers and the various countries be strengthened”.
"We need new tools: I’m talking about PPAs (Power Purchase Agreements), long-term energy purchase contracts for renewable plants, but also the capacity market, so as to promote investments in new generation thermoelectric plants able to provide flexibility and stability when renewables are out of action”.
You’re the CEO of Swissgrid, the manager of the Swiss grid. Your nation is outside the EU. Does this present problems at all?
“Switzerland is at the centre of Europe. We have interconnection contracts with France, Germany, Austria and actually particularly intense ones with Italy and Terna. We have a total of 41 lines connecting the Swissgrid grid to those in other countries, and this also contributes to the security of supply for our neighbours. For the moment there haven’t been problems from the technical-energetic standpoint, but there have been political ones. Europe is pushing to bring Switzerland towards the institutional model established with Norway, but this implies side effects (which involve welfare and the labour market, for example) that Switzerland does not feel it can accept, preferring to go down the road of bilateral agreements. All this creates uncertainty, but I am optimistic about the chances of finding a solution. And it is in TSOs’ interests to find common rules: we still have large grid differences within Europe. Germany, for instance, has had a big impact on electricity generation in relation to the development of renewable sources but the grid has not changed at the same rate. We need to have rules that allow infrastructure to be accelerated: in Switzerland, we had to wait 30 years to obtain a licence for a line that is now being built. It’s neither acceptable nor compatible with the acceleration imposed by the energy transition".
So “not in my backyard” is relevant in Switzerland too. What risk or damage does this “bottleneck” have on infrastructure construction?
“According to ENTSO-E, the lack of investment in infrastructure would cost Europeans € 40 billion a year by 2040. Added to that, we would waste 150 million megawatt hours of clean energy. So investment in infrastructure is crucial for Europe”.