A four-square-mile patch of Maui in the nation's most fossil-fuel dependent state soon will be home to a new kind of power grid, one that saves energy by turning off household appliances when electricity is expensive and makes better use of wind and solar power.
General Electric Co. recently announced it would test its "smart grid" technology in the luxury resort community of Wailea, hoping to reduce peak electricity consumption there by 15 percent by 2012.
Planners envision installing a new kind of power meter in homes - a wall-based unit that can monitor how much electricity is being used by various appliances and turn them off at peak times during the day or night when demand for energy is higher, and thus costlier to consume. The project also would upgrade the utility's computer systems so that it can integrate more renewable energy.
There are about 70 smart grid pilots nationwide, including Miami, Seattle, Houston and Boulder, Colo. But Wailea is one of the only resort communities where the test is being conducted.
"There's a lot of opportunities for us to improve our knowledge of what's using power, and making it easier for us to shut off the power when we're not around," said Bob Gilligan, vice president for transmission at GE Energy. "Most consumers aren't really aware of how much energy they're using at any time of day."
For example, if customers knew what times electricity was most expensive, they could automatically adjust air conditioning and refrigerator temperatures, or they could choose to delay turning on the dishwasher until power demand drops.
That would save money for power users. It would also reduce the strain on the grid, allowing the electric utility to absorb more renewable energy from wind turbines and solar panels.
Located on the slopes of Haleakala, Wailea was chosen for the smart grid because rapid construction growth in the area and its isolation make it a fertile testing ground, said Peter Rosegg, spokesman for Hawaiian Electric Co., a shareholder-owned utility and the parent of Maui Electric Co.
"Eventually, advanced metering and the smart grid will be all across the country," Rosegg said. "They can learn a lot here on a small, easily manageable grid."
Half of the $14 million Maui project is paid for with a federal Department of Energy grant, with the rest of the resources and personnel contributed by General Electric and Hawaiian Electric. The pilot is being treated as part of the federal economic recovery package, which included $4.5 billion for smart grid development.
If Hawaiian Electric later decides to buy similar technology for use in other areas, it would have to put the project out to bid, with GE being one of the likely competitors. Other grid technology providers nationwide include ABB North America and Xcel Energy.
Hawaii remains the nation's most fossil-fuel dependent state, with imports supplying about 90 percent of its power needs.
Meanwhile, it's difficult for Hawaii power utilities to take on much more renewable electricity because of its unpredictable nature - the wind has to blow or the sun needs to shine, meaning old-fashioned, oil-fueled generators have to stay online to ensure power keeps flowing.
"The challenge of renewables is that they're not there when you want them," said Ted Peck, Hawaii's energy administrator, who organizes the state's efforts toward using more renewables. "The smart grid is able to manage when that energy gets to the load."
The smart grid would help integrate additional clean energy into the grid through computers that could quickly manage Maui's power needs, adding and subtracting alternative power sources when desired.
"It will give the utility another knob to turn when wind suddenly calms on an afternoon, or when people are coming home and turning on their air conditioning," said Devon Manz, an engineer at GE's Global Research Center.
Maui's independent power grid provides about 200 megawatts of electricity across the island during peak times, with its largest wind facility, Kaheawa wind farm, able to produce up to 30 megawatts within the current system.
Separate from GE's smart grid, another test project at Kaheawa aims to store and distribute 1 megawatt of renewable power using a large battery, said Noe Kalipi, director of government and community relations for First Wind, which runs the Kaheawa wind farm. Batteries and other electricity storage technologies will make natural energy more feasible to power utilities.
"We're all at the point of figuring out how to integrate more renewable energy," Kalipi said.
Alberta Coal Transition Support offers EI top-ups, 75% wage replacement, retraining, tuition vouchers, and on-site advice for workers leaving thermal coal mines and coal-fired power plants during the provincial phase-out.
Key Points
Alberta Coal Transition Support is a $40M program providing EI top-ups, retraining, and tuition vouchers to coal workers.
✅ 75% EI top-up; province requests federal alignment
✅ Tuition vouchers and retraining for displaced workers
✅ On-site transition services; about 2,000 workers affected
Alberta is putting aside $40 million to help workers losing their jobs as the province transitions away from thermal coal mines and coal-fired power plants, a shift connected to the future of work in the electricity sector over the next decade.
Labour Minister Christina Gray says the money will top up benefits to 75 per cent of a worker’s previous earnings during the time they collect employment insurance, amid regional shifts such as how COVID-19 reshaped Saskatchewan in recent months.
Alberta is asking the federal government to not claw back existing benefits as the province tops up those EI benefits, as utilities face pressures like Manitoba Hydro cost-cutting during the pandemic, while also extending EI benefits for retiring coal workers.
Gray says even if the federal government does not step up, the province will provide the funds to match that 75 per cent threshold, a contrast to problems such as Kentucky miners' cold checks seen elsewhere.
There will also be help for workers in the form of tuition vouchers, retraining programs like the Nova Scotia energy training program that connects youth to the sector, and on-site transitioning advice.
The province estimates there are 2,000 workers affected.
Boeing 787 More-Electric Architecture replaces pneumatics with bleedless pressurization, VFSG starter-generators, electric brakes, and heated wing anti-ice, leveraging APU, RAT, batteries, and airport ground power for efficient, redundant electrical power distribution.
Key Points
An integrated, bleedless electrical system powering start, pressurization, brakes, and anti-ice via VFSGs, APU and RAT.
✅ VFSGs start engines, then generate 235Vac variable-frequency power
✅ Bleedless pressurization, electric anti-ice improve fuel efficiency
✅ Electric brakes cut hydraulic weight and simplify maintenance
The 787 Dreamliner is different to most commercial aircraft flying the skies today. On the surface it may seem pretty similar to the likes of the 777 and A350, but get under the skin and it’s a whole different aircraft.
When Boeing designed the 787, in order to make it as fuel efficient as possible, it had to completely shake up the way some of the normal aircraft systems operated. Traditionally, systems such as the pressurization, engine start and wing anti-ice were powered by pneumatics. The wheel brakes were powered by the hydraulics. These essential systems required a lot of physical architecture and with that comes weight and maintenance. This got engineers thinking.
What if the brakes didn’t need the hydraulics? What if the engines could be started without the pneumatic system? What if the pressurisation system didn’t need bleed air from the engines? Imagine if all these systems could be powered electrically… so that’s what they did.
Power sources
The 787 uses a lot of electricity. Therefore, to keep up with the demand, it has a number of sources of power, much as grid operators track supply on the GB energy dashboard to balance loads. Depending on whether the aircraft is on the ground with its engines off or in the air with both engines running, different combinations of the power sources are used.
Engine starter/generators
The main source of power comes from four 235Vac variable frequency engine starter/generators (VFSGs). There are two of these in each engine. These function as electrically powered starter motors for the engine start, and once the engine is running, then act as engine driven generators.
The generators in the left engine are designated as L1 and L2, the two in the right engine are R1 and R2. They are connected to their respective engine gearbox to generate electrical power directly proportional to the engine speed. With the engines running, the generators provide electrical power to all the aircraft systems.
APU starter/generators
In the tail of most commercial aircraft sits a small engine, the Auxiliary Power Unit (APU). While this does not provide any power for aircraft propulsion, it does provide electrics for when the engines are not running.
The APU of the 787 has the same generators as each of the engines — two 235Vac VFSGs, designated L and R. They act as starter motors to get the APU going and once running, then act as generators. The power generated is once again directly proportional to the APU speed.
The APU not only provides power to the aircraft on the ground when the engines are switched off, but it can also provide power in flight should there be a problem with one of the engine generators.
Battery power
The aircraft has one main battery and one APU battery. The latter is quite basic, providing power to start the APU and for some of the external aircraft lighting.
The main battery is there to power the aircraft up when everything has been switched off and also in cases of extreme electrical failure in flight, and in the grid context, alternatives such as gravity power storage are being explored for long-duration resilience. It provides power to start the APU, acts as a back-up for the brakes and also feeds the captain’s flight instruments until the Ram Air Turbine deploys.
Ram air turbine (RAT) generator
When you need this, you’re really not having a great day. The RAT is a small propeller which automatically drops out of the underside of the aircraft in the event of a double engine failure (or when all three hydraulics system pressures are low). It can also be deployed manually by pressing a switch in the flight deck.
Once deployed into the airflow, the RAT spins up and turns the RAT generator. This provides enough electrical power to operate the captain’s flight instruments and other essentials items for communication, navigation and flight controls.
External power
Using the APU on the ground for electrics is fine, but they do tend to be quite noisy. Not great for airports wishing to keep their noise footprint down. To enable aircraft to be powered without the APU, most big airports will have a ground power system drawing from national grids, including output from facilities such as Barakah Unit 1 as part of the mix. Large cables from the airport power supply connect 115Vac to the aircraft and allow pilots to shut down the APU. This not only keeps the noise down but also saves on the fuel which the APU would use.
The 787 has three external power inputs — two at the front and one at the rear. The forward system is used to power systems required for ground operations such as lighting, cargo door operation and some cabin systems. If only one forward power source is connected, only very limited functions will be available.
The aft external power is only used when the ground power is required for engine start.
Circuit breakers
Most flight decks you visit will have the back wall covered in circuit breakers — CBs. If there is a problem with a system, the circuit breaker may “pop” to preserve the aircraft electrical system. If a particular system is not working, part of the engineers procedure may require them to pull and “collar” a CB — placing a small ring around the CB to stop it from being pushed back in. However, on the 787 there are no physical circuit breakers. You’ve guessed it, they’re electric.
Within the Multi Function Display screen is the Circuit Breaker Indication and Control (CBIC). From here, engineers and pilots are able to access all the “CBs” which would normally be on the back wall of the flight deck. If an operational procedure requires it, engineers are able to electrically pull and collar a CB giving the same result as a conventional CB.
Not only does this mean that the there are no physical CBs which may need replacing, it also creates space behind the flight deck which can be utilised for the galley area and cabin.
A normal flight
While it’s useful to have all these systems, they are never all used at the same time, and, as the power sector’s COVID-19 mitigation strategies showed, resilience planning matters across operations. Depending on the stage of the flight, different power sources will be used, sometimes in conjunction with others, to supply the required power.
On the ground
When we arrive at the aircraft, more often than not the aircraft is plugged into the external power with the APU off. Electricity is the blood of the 787 and it doesn’t like to be without a good supply constantly pumping through its system, and, as seen in NYC electric rhythms during COVID-19, demand patterns can shift quickly. Ground staff will connect two forward external power sources, as this enables us to operate the maximum number of systems as we prepare the aircraft for departure.
Whilst connected to the external source, there is not enough power to run the air conditioning system. As a result, whilst the APU is off, air conditioning is provided by Preconditioned Air (PCA) units on the ground. These connect to the aircraft by a pipe and pump cool air into the cabin to keep the temperature at a comfortable level.
APU start
As we near departure time, we need to start making some changes to the configuration of the electrical system. Before we can push back , the external power needs to be disconnected — the airports don’t take too kindly to us taking their cables with us — and since that supply ultimately comes from the grid, projects like the Bruce Power upgrade increase available capacity during peaks, but we need to generate our own power before we start the engines so to do this, we use the APU.
The APU, like any engine, takes a little time to start up, around 90 seconds or so. If you remember from before, the external power only supplies 115Vac whereas the two VFSGs in the APU each provide 235Vac. As a result, as soon as the APU is running, it automatically takes over the running of the electrical systems. The ground staff are then clear to disconnect the ground power.
If you read my article on how the 787 is pressurised, you’ll know that it’s powered by the electrical system. As soon as the APU is supplying the electricity, there is enough power to run the aircraft air conditioning. The PCA can then be removed.
Engine start
Once all doors and hatches are closed, external cables and pipes have been removed and the APU is running, we’re ready to push back from the gate and start our engines. Both engines are normally started at the same time, unless the outside air temperature is below 5°C.
On other aircraft types, the engines require high pressure air from the APU to turn the starter in the engine. This requires a lot of power from the APU and is also quite noisy. On the 787, the engine start is entirely electrical.
Power is drawn from the APU and feeds the VFSGs in the engines. If you remember from earlier, these fist act as starter motors. The starter motor starts the turn the turbines in the middle of the engine. These in turn start to turn the forward stages of the engine. Once there is enough airflow through the engine, and the fuel is igniting, there is enough energy to continue running itself.
After start
Once the engine is running, the VFSGs stop acting as starter motors and revert to acting as generators. As these generators are the preferred power source, they automatically take over the running of the electrical systems from the APU, which can then be switched off. The aircraft is now in the desired configuration for flight, with the 4 VFSGs in both engines providing all the power the aircraft needs.
As the aircraft moves away towards the runway, another electrically powered system is used — the brakes. On other aircraft types, the brakes are powered by the hydraulics system. This requires extra pipe work and the associated weight that goes with that. Hydraulically powered brake units can also be time consuming to replace.
By having electric brakes, the 787 is able to reduce the weight of the hydraulics system and it also makes it easier to change brake units. “Plug in and play” brakes are far quicker to change, keeping maintenance costs down and reducing flight delays.
In-flight
Another system which is powered electrically on the 787 is the anti-ice system. As aircraft fly though clouds in cold temperatures, ice can build up along the leading edge of the wing. As this reduces the efficiency of the the wing, we need to get rid of this.
Other aircraft types use hot air from the engines to melt it. On the 787, we have electrically powered pads along the leading edge which heat up to melt the ice.
Not only does this keep more power in the engines, but it also reduces the drag created as the hot air leaves the structure of the wing. A double win for fuel savings.
Once on the ground at the destination, it’s time to start thinking about the electrical configuration again. As we make our way to the gate, we start the APU in preparation for the engine shut down. However, because the engine generators have a high priority than the APU generators, the APU does not automatically take over. Instead, an indication on the EICAS shows APU RUNNING, to inform us that the APU is ready to take the electrical load.
Shutdown
With the park brake set, it’s time to shut the engines down. A final check that the APU is indeed running is made before moving the engine control switches to shut off. Plunging the cabin into darkness isn’t a smooth move. As the engines are shut down, the APU automatically takes over the power supply for the aircraft. Once the ground staff have connected the external power, we then have the option to also shut down the APU.
However, before doing this, we consider the cabin environment. If there is no PCA available and it’s hot outside, without the APU the cabin temperature will rise pretty quickly. In situations like this we’ll wait until all the passengers are off the aircraft until we shut down the APU.
Once on external power, the full flight cycle is complete. The aircraft can now be cleaned and catered, ready for the next crew to take over.
Bottom line
Electricity is a fundamental part of operating the 787. Even when there are no passengers on board, some power is required to keep the systems running, ready for the arrival of the next crew. As we prepare the aircraft for departure and start the engines, various methods of powering the aircraft are used.
The aircraft has six electrical generators, of which only four are used in normal flights. Should one fail, there are back-ups available. Should these back-ups fail, there are back-ups for the back-ups in the form of the battery. Should this back-up fail, there is yet another layer of contingency in the form of the RAT. A highly unlikely event.
The 787 was built around improving efficiency and lowering carbon emissions whilst ensuring unrivalled levels safety, and, in the wider energy landscape, perspectives like nuclear beyond electricity highlight complementary paths to decarbonization — a mission it’s able to achieve on hundreds of flights every single day.
UK Offshore Wind Expansion will make wind the main power source, driving renewable energy, offshore projects, smart grids, battery storage, and interconnectors to cut carbon emissions, boost exports, and attract global investment.
Key Points
A UK strategy to scale offshore wind, integrate smart grids and storage, cut emissions and drive investment and exports
✅ 30% energy target by 2030, backed by CfD support
✅ 250m industry investment and smart grid build-out
✅ Battery storage and interconnectors balance intermittency
Plans are afoot to make wind the UKs main power source for the first time in history amid ambitious targets to generate 30 percent of its total energy supply by 2030, up from 8 percent at present.
A recently inked deal will see the offshore wind industry invest 250 million into technology and infrastructure over the next 11 years, with the government committing up to 557 million in support, under a renewable energy auction that boosts wind and tidal projects, as part of its bid to lower carbon emissions to 80 percent of 1990 levels by 2050.
Offshore wind investment is crucial for meeting decarbonisation targets while increasing energy production, says Dominic Szanto, Director, Energy and Infrastructure at JLL. The governments approach over the last seven years has been to promise support to the industry, provided that cost reduction targets were met. This certainty has led to the development of larger, more efficient wind turbines which means the cost of offshore wind energy is a third of what it was in 2012.
Boosting the wind industry
Offshore wind power has been gathering pace in the UK and has grown despite COVID-19 disruptions in recent years. Earlier this year, the Hornsea One wind farm, the worlds largest offshore generator which is located off the Yorkshire coast, started producing electricity. When fully operational in 2020, the project will supply energy to over a million homes, and a further two phases are planned over the coming decade.
Over 10 gigawatts of offshore wind either already has government support or is eligible to apply for it in the near future, following a 10 GW contract award that underscores momentum, representing over 30 billion of likely investment opportunities.
Capital is coming from European utility firms and increasingly from Asian strategic investors looking to learn from the UKs experience. The attractive government support mechanism means banks are keen to lend into the sector, says Szanto.
New investment in the UKs offshore wind sector will also help to counter the growing influence of China. The UK is currently the worlds largest offshore wind market, but by 2021 it will be outstripped by China.
Through its new deal, the government hopes to increase wind power exports fivefold to 2.6 billion per year by 2030, with the UKs manufacturing and engineering skills driving projects in growth markets in Europe and Asia and in developing countries supported by the World Bank support through financing and advisory programs.
Over the next two decades, theres a massive opportunity for the UK to maintain its industry leading position by designing, constructing, operating and financing offshore wind projects, says Szanto. Building on projects such as the Hywind project in Scotland, it could become a major export to countries like the USA and Japan, where U.S. lessons from the U.K. are informing policy and coastal waters are much deeper.
Wind-powered smart grids
As wind power becomes a major contributor to the UKs energy supply, which will be increasingly made up of renewable sources in coming decades, there are key infrastructure challenges to overcome.
A real challenge is that the UKs power generation is becoming far more decentralised, with smaller power stations such as onshore wind farms and solar parks and more prosumers residential houses with rooftop solar coupled with a significant rise in intermittent generation, says Szanto. The grid was never designed to manage energy use like that.
One potential part of the solution is to use offshore wind farms in other sites in European waters.
By developing connections between wind projects from neighbouring countries, it will create super-grids that will help mitigate intermittency issues, says Szanto.
More advanced energy storage batteries will also be key for when less energy is generated on still days. There is a growing need for batteries that can store large amounts of energy and smart technology to discharge that energy. Were going through a revolution where new technology companies are working to enable a much smarter grid.
Future smart grids, based on developing technology such as blockchain, might enable the direct trading of energy between generators and consumers, with algorithms that can manage many localised sources and, critically, ensure a smooth power supply.
Investors seeking a higher-yield market are increasingly turning to battery technology, Szanto says. In a future smart grid, for example, batteries could store electricity bought cheaply at low-usage times then sold at peak usage prices or be used to provide backup energy services to other companies.
Majors investing in the transition
Its not just new energy technology companies driving change; established oil and gas companies are accelerating spending on renewable energy. Shell has committed to $1-2 billion per year on clean energy technologies out of a $25-30 billion budget, while Equinor plans to spend 15-20 percent of its budget on renewables by 2030.
The oil and gas majors have the global footprint to deliver offshore wind projects in every country, says Szanto. This could also create co-investment opportunities for other investors in the sector especially as nascent wind markets such as the U.S., where the U.S. offshore wind timeline is still developing, and Japan evolve.
European energy giants, for example, have bid to build New Yorks first offshore wind project.
As offshore wind becomes a globalised sector, with a trillion-dollar market outlook emerging, the major fuel companies will have increasingly large roles. They have the resources to undertake the years-long, cost-intensive developments of wind projects, driven by a need for new business models as the world looks beyond carbon-based fuels, says Szanto.
Oil and gas heavyweights are also making wind, solar and energy storage acquisitions BP acquired solar developer Lightsource and car-charging network Chargemaster, while Shell spent $400 million on solar and battery companies.
The public perception is that renewable energy is niche, but its now a mainstream form of energy generation., concludes Szanto.
Every nation in the world is aligned in wanting a decarbonised future. In terms of electricity, that means renewable energy and for offshore wind energy, the outlook is extremely positive.
Generation Impact Report reveals how Canada's electricity sector can recruit Millennials and Gen Z, highlighting workforce gaps, career pathways, innovative projects, secure pay, and renewable energy opportunities to attract young talent nationwide.
Key Points
An EHRC survey on youth views of electricity careers and recruitment strategies to build a skilled workforce.
✅ Surveyed 1,500 Canadians aged 18-36 nationwide
✅ Highlights barriers: low awareness of sector roles
Young Canadians make up far less of the electricity workforce than other sectors, says Electricity Human Resources Canada, as noted in an EHRC investment announcement that highlights sector priorities, and its latest report aims to answer the question “Why?”.
The report, “Generation Impact: Future Workforce Perspectives”, was based on a survey of 1500 respondents across Canada between the ages of 18 and 36. This cohort’s perspectives on the electricity sector were mostly Positive or Neutral, and that Millennial and Gen Z Canadians are largely open to considering careers in electricity, especially as initiatives such as a Nova Scotia energy training program expand access.
To an industry looking to develop a pipeline of young talent, “Generation Impact” reveals opportunities for recruitment; key factors that Millennial and Gen Z Canadians seek in their ideal careers include fulfilling work, secure pay and the chance to be involved in innovative projects, including specialized arc flash training in Vancouver opportunities that build expertise.
“The electricity sector is already home to the kinds of fulfilling and innovative careers that many in the Millennial and Gen Z cohorts are looking for,” said Michelle Branigan, CEO of EHRC. “Now it’s just a matter of communicating effectively about the opportunities and benefits, including leadership in worker safety initiatives, our sector can offer.”
“Engaging young workers in Canada’s electricity sector is critical for developing the resiliency and innovation needed to support the transformation of Canada’s energy future, especially as working from home drives up electricity bills and reshapes demand,” said Seamus O’Regan, Canada’s Minister of Natural Resources. “The insights of this report will help to position the sector competitively to leverage the talent and skills of young Canadians.”
“Generation Impact” was funded in part by the Government of Canada’s Student Work Placement Program and Natural Resources Canada’s Emerging Renewable Power Program, in a context of rising residential electricity use that underscores workforce needs.
Ontario Industrial Electricity Pricing Reforms aim to cut regulatory burden for industrial ratepayers through an energy concierge service, IESO billing reviews, GA estimation enhancements, clearer peak demand data, and contract cost savings.
Key Points
Measures to reduce industrial power costs via an energy concierge, IESO and GA reviews, and better peak demand data.
✅ Energy concierge eases pricing and connection inquiries
✅ IESO to simplify bills and refine GA estimation
✅ Real-time peak data and contract savings under review
Ontario's government is pursuing burden reduction measures for industrial electricity ratepayers, including legislation to lower rates to help businesses compete, and stimulate growth and investment.
Over the next year, Ontario will help industrial electricity ratepayers focus on their businesses instead of their electricity management practices by establishing an energy concierge service to provide businesses with better customer service and easier access to information about electricity pricing and changes for electricity consumers as well as connection processes.
Ontario is also tasking the Independent Electricity System Operator (IESO) to review and report back on its billing, settlement and customer service processes, building on initiatives such as electricity auctions that aim to reduce costs.
Improve and simplify industrial electricity bills, including clarifying the recovery rate that affects charges;
Review how the monthly Global Adjustment (GA) charge is estimated and identify potential enhancements related to cost allocation across classes; and,
Improve peak demand data publication processes and assess the feasibility of using real-time data to determine the factors that allocate GA costs to consumers.
Further, as part of the government's continued effort to finding efficiencies in the electricity system, Ontario is also directing IESO to review generation contracts to find opportunities for cost savings.
These measures are based on industry feedback received during extensive industrial electricity price consultations held between April and July 2019, which underscored how high electricity rates have impacted factories across the province.
"Our government is focused on finding workable electricity pricing solutions that will provide the greatest benefit to Ontario," said Greg Rickford, Minister of Energy, Northern Development and Mines. "Reducing regulatory burden on businesses can free up resources that can then be invested in areas such as training, new equipment and job creation."
The government is also in the process of developing further changes to industrial electricity pricing policy, amid planned rate increases announced by the OEB, informed by what was heard during the industrial electricity price consultations.
"It's important that we get this right the first time," said Minister Rickford. "That's why we're taking a thoughtful approach and listening carefully to what businesses in Ontario have to say."
Helping industrial ratepayers is part of the government's balanced and prudent plan to build Ontario together through ensuring our province is open for business and building a more transparent and accountable electricity system.
EU Electricity Price Limits are proposed by the European Commission to curb contagion from gas prices, bolster energy security, stabilize the power market, and manage inflation via LNG imports, gas storage, and reduced demand.
Key Points
Temporary power-price caps to curb gas contagion, shield consumers, and bolster EU energy security.
✅ Limits decouple electricity from volatile gas benchmarks
✅ Short-term LNG imports and storage to enhance supply security
✅ Market design reforms and demand reduction to tame prices
The European Union should consider emergency measures in the coming weeks that could include price cap strategies on electricity prices, European Commission President Ursula von der Leyen told leaders at an EU summit in Versailles.
The reference to the possible measures was contained in a slide deck Ms. von der Leyen used to discuss efforts to curb the EU’s reliance on Russian energy imports, which last year accounted for about 40% of its natural-gas consumption. The slides were posted to Ms. von der Leyen’s Twitter account.
Russia’s invasion of Ukraine has highlighted the vulnerability of Europe’s energy supplies to severe supply disruptions and raised fears that imports could be cut off by Moscow or because of damage to pipelines that run across Ukraine. It has also driven energy prices up sharply, contributing to worries about inflation and economic growth.
Earlier this week, the European Commission, the EU’s executive arm, published the outline of a plan that it said could cut imports of Russian natural gas by two-thirds this year and end the need for those imports entirely before 2030, aligning with calls to ditch fossil fuels in Europe. In the short-term, the plan relies largely on storing natural gas ahead of next winter’s heating season, reducing consumption and boosting imports of liquefied natural gas from other producers.
The Commission acknowledged in its report that high energy prices are rippling through the economy, even as European gas prices have fallen back toward pre-war levels, raising manufacturing costs for energy-intensive businesses and putting pressure on low-income households. It said it would consult “as a matter of urgency” and propose options for dealing with high prices.
The slide deck used by Ms. von der Leyen on Thursday said the Commission plans by the end of March to present emergency options “to limit the contagion effect of gas prices in electricity prices, including temporary price limits, even though rolling back electricity prices can be complex under current market rules.” It also intends this month to set up a task force to prepare for next winter and a proposal for a gas storage policy.
By mid-May, the Commission will set out options to revamp the electricity market and issue a proposal for phasing out EU dependency on Russian fossil fuels by 2027, according to the slides.
French President Emmanuel Macron said Thursday that Europe needs to protect its citizens and companies from the increase in energy prices, adding that some countries, including France, have already taken some national measures.
“If this lasts, we will need to have a more long-lasting European mechanism,” he said. “We will give a mandate to the Commission so that by the end of the month we can get all the necessary legislation ready.”
The problem with price limits is that they reduce the incentive for people and businesses to consume less, said Daniel Gros, distinguished fellow at the Centre for European Policy Studies, a Brussels think tank. He said low-income families and perhaps some businesses will need help dealing with high prices, but that should come as a lump-sum payment that isn’t tied to how much energy they are consuming.
“The key will be to let the price signal work,” Mr. Gros said in a paper published this week, which argued that high energy prices could result in lower demand in Europe and Asia, reducing the need for Russian natural gas. “Energy must be expensive so that people save energy,” he said.
Ms. von der Leyen’s slides suggest the EU hopes to replace 60 billion cubic meters of Russian gas with alternative suppliers, including suppliers of liquefied natural gas, by the end of this year. Another 27 billion cubic meters could be replaced through a combination of hydrogen and EU production of biomethane, according to the slide deck.
