EU Supercharges Grid Reform: Lightning-Fast Approvals for Solar & Storage

The European Energy Storage Industry Association welcomed the EU's proposed reforms to the grid connection and permitting process.

The European Commission published the "European Grid Package" last Friday (December 12th), one of measures to transform the power grid to accommodate a more decentralized, digital, and flexible power system.

The European Commission noted that in recent years, due to "unprecedented global geopolitical changes and trade volatility, the EU is at a critical crossroads," with the Russia-Ukraine conflict further highlighting the importance of energy security and competitiveness.

In 2022, 70% of the energy consumed by the EU came from fossil fuels, 98% of which were imported oil and gas. Last year, member states spent approximately €375 billion (approximately US$440.21 billion) on these imported energy sources. In contrast, European countries invested only US$117 billion in Renewable Energy and grid infrastructure, while China invested US$327 billion. Meanwhile, the average price of industrial electricity in Europe is twice that of the United States.

The plan proposed last week aims to strengthen cross-border energy sharing among EU member states and alleviate grid connection and permitting bottlenecks hindering the construction of large-scale infrastructure projects such as energy storage system.

The package includes guidelines on efficient grid connection and contracts for difference (CFDs), a proposal to amend the EU infrastructure project licensing directive, and a proposal to amend the trans-European Energy Network (TEN-E) planning regulations.

The new grid connection guidelines, for the first time, include energy storage assets in specific considerations, including integrated wind-solar-storage projects. According to PV Tech, Walburga Hemetsberger, CEO of the solar industry organization SolarPower Europe, stated that the guidelines are "the highlight of this package."

For some time, the European Energy Storage Association (EESA) has been advocating for grid connection reforms in line with the direction proposed by the European Commission.

Last November, EESA and its research partner LCP Delta stated that the cumulative energy storage capacity of various technologies in Europe was approaching the first 100GW milestone, with deployment expected to grow by 115% by 2030. Despite this rapid growth, EESA and LCP Delta are calling for stronger policies to maintain the participation of developers and investors.

The European Commission has proposed changing the grid connection "first-come, first-served" model to a "readiness-first" model, similar to recent reforms implemented by the UK regulator Ofgem. Daniel Vig, senior policy officer at the European Energy Storage Association, stated that this move "will accelerate the deployment of mature assets and improve grid efficiency."

Vig noted that proposals regarding queuing mechanism reform, flexible grid connection agreements (considered as grid connection only when resources interact with the grid), and recognition of the benefits of Energy Storage Systems are highly consistent with the industry association's recent grid connection position paper.

"Grid connection priority must be given to projects that address critical system needs, such as those alleviating congestion or minimizing power curtailment. Energy storage technology has a unique advantage in this regard, providing these benefits to the grid," Vig emphasized.

The European Energy Storage Association also welcomed the new, shorter licensing periods in the directive: a maximum licensing period of six months for stand-alone energy storage projects (excluding hydrogen storage) of 100kW or more, and a maximum licensing period of two years for pumped hydro storage projects.

Vig stated that this measure "is crucial for shortening the current approval process, which can take up to seven years." The European Commission has proposed prioritizing energy storage resources (both stand-alone and integrated with power generation) as projects that meet the public interest. According to policy experts at the European Energy Storage Association, this "further underscores the crucial role of energy storage in providing system flexibility and security."

Meanwhile, the EU plans to support eight so-called "energy highways," specific programs designed to enhance cross-border energy transmission and storage.

Reforms to the Trans-European Energy Network include a "gap-filling process" to identify and address gaps in cross-border transmission planning that national regulators lack the authority to handle.

The European Commission stated that the Trans-European Energy Network, launched in 2013, has contributed to achieving core policy objectives and remains "fundamentally effective." However, several shortcomings must be addressed "to ensure that the framework supports a decarbonized, competitive, and resilient Energy System by 2050, in line with the Clean Industry Agreement targets and the requirements of European Climate Law."

The Trans-European Energy Network's role includes identifying projects of common interest. While the European Energy Storage Association welcomed the revised proposal's call for greater flexibility in grid development planning and cost-benefit analysis, Vig pointed out that energy storage projects still struggle to achieve common-interest status.

Vig explained that although there is no explicit minimum size threshold for energy storage project eligibility, the cost-benefit analysis methodology for the previous ten-year grid development plan developed by the European Transmission System Operators Association indicated that projects would need to reach approximately 225MW to be considered.

The new proposal made no adjustments to the size threshold for energy storage common-interest projects, which Vig considers "too high to be daunting." Furthermore, Vig stated that "there is still a lack of a dedicated methodology for assessing the cross-border system benefits of energy storage."