Financing energy system integration in Europe : the state of play and future prospects

Abstract

• Energy system integration (ESI) is the process of coordinating the planning and operation of the energy system as a whole, addressing different sectors, their markets and infrastructure as interconnected and complementary pillars. • In a transition to a decarbonised and decentralised energy mix characterised by predominantly variable renewable energy sources, ESI is key to minimising cost and maximising efficiency. • The European Union (EU) has indicated its strong support for ESI through the European Energy System Integration Strategy. However, since its publication in July 2020 there has been no announcement of a dedicated ESI fund or any concrete plans to finance it. • To date, current non-specific financing mechanisms have provided relatively little support for ESI in the EU. A new approach is required to leverage the benefits of ESI and align it with the level of support in other areas of the energy transition. • A dedicated ESI fund should be created at the EU level utilising an approach similar to that of the Connecting Europe Facility (CEF) and Projects of Common Interest (PCIs).