ICF International Proposes Consideration of a New Regional Transmission Organisation to Help Prevent Future European Blackouts
Norwegian Pearl Incident Highlights the Need to Assess Concerted European Action
December 6, 2006 -
ICF International (Nasdaq: ICFI) has analysed the causes and effects of the Norwegian Pearl incident on 4 November 2006 that resulted in more than 10 million people from Germany to Spain experiencing a disruption in their electricity supply. In France, five million people were affected in the country's biggest blackout in nearly 30 years.
Since the Italian blackout in September 2003, this marks the second time in just over three years that a local fault has cascaded across European borders. The European Commissioner for Energy and Transport, Andris Pielbags, has launched an inquiry that is due to report back in early 2007 amid calls to review the manner in which the supply of power is managed.
"The underlying causes of the Norwegian Pearl incident may include a lack of investment in transmission infrastructure both within and between countries, the failure of regulatory oversight, an uncoordinated generation supply response, a failure to provide sufficient backup reserves, and the lack of transparency and pricing," says Kim Keats Martinez, director of power and fuels in ICF’s London office.
"All these are symptoms of an industry structure in which the services required for the safe and secure delivery of power are managed by a patchwork of national system operators that may not account for competitive market principles. We believe that the European Commission should conduct an assessment, including a review of the costs and benefits, of setting up a European Regional Transmission Organisation (RTO). Under such an RTO, the owners of Europe’s transmission grids could retain ownership of their grids while transferring management and responsibility for operations, markets, and supply security to a new supranational entity."
"If it made sense to do so, this European RTO could set harmonised tariffs for the use of the whole network, create market mechanisms to manage transmission congestion, and promote the efficient use and expansion of generation and transmission," says Chris McCarthy, a transmission expert at ICF. "ICF’s experience with the best practices in U.S. transmission markets suggests that the benefits of RTOs can be considerable, and must be balanced carefully against the costs. We have carried out such studies for a number of the RTOs in North America. Today more than 60 percent of U.S. demand is served by seven active RTOs, indicating that economies of scale are key in considering how to most reliably serve regional load through combinations of generation and transmission. A Europe-wide RTO would be larger than any of the U.S. RTOs, and a detailed analysis would indicate whether the economics of such an RTO would make sense, and whether the reliability benefits would help prevent future European blackouts."
About ICF International
ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 1,800 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.