The Masterplan Report

2.1 The Climate Agenda and the Mediterranean

Climate change continues to represent a major concern in today's political agenda. The adoption of the Paris Agreement signed in 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) marked an unprecedented step in global action against climate change, establishing the objective of limiting global warming in this century to less than two degrees Celsius above pre-industrial levels.

To this aim, at the end of 2019, the European Union (EU) reset the European Commission (EC)'s commitment to tackling climate and environmental-related challenges, setting out the EU Green Deal, the new growth strategy for the European Community, aimed at reaching carbon neutrality by 2050. In July 2021, the EC also launched its Fit-for-55 package, a set of proposals designed to revise existing EU legislation and set out new initiatives with the aim of reducing EU emissions by at least 55% by 2030.

More recently, in response to the Russian invasion of Ukraine and to the energy commodity crisis, the EC further stressed the need for accelerating the decarbonization of the energy generation mix through the REPowerEU communications plan.

Effective limitation of the impacts of climate change requires a profound transformation of the global energy landscape, focusing on a fast-paced deployment of low-carbon technologies to replace conventional fossil fuel-based systems. This applies to both supply and demand.

As far as the electrical sector is concerned, delivering the energy transition at the necessary pace and scale requires a progressive decarbonization of the sector in the coming years, which implies an urgent scaling up of electricity production from renewable sources. On the demand side, this implies the deployment of more efficient end use technologies, as well as the adoption of more responsible behaviours in energy consumption. The Mediterranean region currently emits lower levels of greenhouse gases (GHGs) compared to other areas in the world. According to 2018 data from the Global Carbon Atlas, the Mediterranean countries collectively emitted around 6.2% of the world's global emissions. On the other hand, the demographic dynamics observed in the South Shore of the Mediterranean (a growing population associated with anticipated economic growth) will lead to growing consumption of energy (and specifically, of electricity).

On the generation side, the Southern and Eastern Mediterranean region possesses great solar and wind energy potential, which has been estimated to be largely higher than that of the North Shore. However, and despite the existence of government commitments, regulatory and institutional frameworks and the decreasing cost of renewable energy technologies, the deployment of renewable generation projects is still evolving at a relatively slow pace. The differences currently observed between the situations of the North Shore countries and the South and Eastern countries, coupled with the different trends expected in the consumption evolution among these countries, and compounded by a generalized expected increase in renewable integration, drive the need for a robust infrastructure development, not only at national level but also in terms of interconnections. In fact, these different realities among Mediterranean countries pose complementarities that require a capable transmission infrastructure that can be fully leveraged. Furthermore, interconnections between national markets represent the hardware for promoting properly functioning electricity markets, ensuring security of supply, and unleashing the full potential of renewable energy sources.

2.2 Med-TSO's vision

The implementation of policies that entered into force after the Paris Agreement is substantially changing the mid-term outlooks of the Mediterranean Region, with impacts at social, economic, and environmental levels. Focusing on the energy sector, the 2030 time-horizon sees security of supply, RES development and markets integration as some of the key challenges to be faced, together with a growing demand for flexibility, adequacy, and efficiency. In this context, the multi-dimensional integration of the Region should not only be seen as an opportunity, but also as an indisputable requirement to bring all shores of the Mediterranean closer, leverage complementarities and work together towards a sustainable future.

Enhancing security, stability, and prosperity at regional level is a common objective for all Mediterranean countries and in this respect, energy plays a central role in secure and fast development. The creation of infrastructures is key to a new development path, based on job creation, employment, and innovation, to ease the severe social and work-related concerns on both shores. Adequate, integrated, and efficient electricity infrastructures constitute one of the bases for the achievement of development and security goals.

Multilateral cooperation, to be promoted through a "bottom-up" approach, is fundamental to leverage complementarities and provide a global response to the ongoing changes in the Mediterranean. In this context, a group of Mediterranean TSOs and Utilities decided to establish Med-TSO - the Association of Mediterranean TSOs - on 19 April 2012 in Rome, with the objective of setting a framework for multilateral cooperation in the Mediterranean electricity sector. Current members of the Association include 22 electricity companies operating the transmission grids of 20 EU and non-EU Mediterranean countries, as shown in the figure below.


Med-TSO members share the main objective of promoting the creation of a Mediterranean energy market, ensuring its optimal functioning through the definition of common methodologies, rules, and practices for optimizing the operation of the existing infrastructures and facilitating the development of new ones. Med-TSO contributes to the achievement of this objective by promoting not only the cooperation among the Mediterranean TSOs, but also introducing coordinated approaches with other associations, in particular with the Mediterranean Energy Regulators, MEDREG, and the European Network of TSOs for electricity, ENTSO-E. Other associations include COMELEC, OME, MEDENER, and LAS.

2.3 Aim and scope of Mediterranean projects

The present Masterplan (2020-2022) is one of the results of TEASIMED (Towards an Efficient, Adequate, Sustainable and Interconnected MEDiterranean power system) project, the third project co-funded by the European Commission to sustain the development of the Mediterranean Region.

The first Mediterranean Project (MPI, 2015-2018) demonstrated the initial intention of 20 TSOs from 18 countries around the Mediterranean to build - as an added benefit - a valuable network of relations and cooperation. Starting from this successful result, the second Mediterranean Project (MPII, 2018-2020) extended the areas of cooperation among TSOs with the objective of accelerating the integration of the Mediterranean electricity systems, in line with the targets of the EU's Neighbourhood Policy on Energy and Climate Change. MPII was developed in the framework of initiatives aimed at reducing the financial and environmental cost of electricity in the Mediterranean Region and in the connected neighbouring regions.

As a natural continuation of the previous Plans, the TEASIMED project is further extending the scope of collaboration, deepening the study of consolidated issues, and expanding common activities to other initiatives, especially those in the field of coordinating operations and identifying pilot projects for market integration.

The main direct beneficiaries of these initiatives are the citizens of the Mediterranean Region, not only in terms of climate change mitigation, but also in terms of economical and societal development. Adequate, integrated, and efficient electricity infrastructures, constitute one of the bases for the achievement of development and security goals.

In line with this perspective and in continuity with the present project, the European Commission has approved the proposal for a fourth three-year project, TEASIMED 2, which started in January 2023.

The TEASIMED project is further extending the scope of collaboration established in the previous Plans, by deepening the study of consolidated issues, and expanding common activities to other initiatives especially in the field of coordination in operation and identification of pilot projects for market integration (see Figure 3 below).


2.4 Background - Why a Masterplan?

Among several deliverables, the TEASIMED project includes the Regional periodic Ten-Year Mediterranean Network Development Plan (TYMNDP) - commonly referred to as the Mediterranean Masterplan (MMP). This plan identifies the necessary investments in grid infrastructures and associated reinforcements to accommodate reliable transit flows in the Med-TSO Region and maintain adequate levels of security and quality of supply. Major infrastructure investments include cross-border interconnection projects, which are fundamental to supporting the transition to a lower-emission energy system and meet the climate goals resulting from the Paris Agreement and associated climate packages. The main benefits of such projects include the following:

• Increased energy security and reliability
• Greater RES penetration, thus reducing the environmental impact of electricity generation, by facilitating their integration in the Mediterranean Region, encouraging cost-effective renewable energy exchange on the North-South and South-South axes
• Increased overall system and market efficiency
• Support to economies of scale in investments and operations

As thoroughly described in Chapter 3 of this Masterplan, the analytical assessment of the proposed cross-border interconnection projects require the application of a dedicated process based on:

• Harmonized methodologies among TSO members and in line with ENTSO-E practices
• Agreed procedures that prescribe a revision cycle of the Masterplan, like the TYNDP for ENTSO-E
• Reference energy scenarios for 2030
• Complete market and network studies
• Monetization of benefits and costs resulting from market and network studies

To strengthen alignment with ENTSO-E practices, in 2022, Med-TSO and ENTSO-E signed an agreement aimed at enhancing collaboration among the two Associations, especially in relation to the exchange of data, methodologies and models. One of ENTSO-E's key deliverables is the Pan-European Ten-Year Network Development Plan (TYNDP), which, in synergy with Med-TSO's Masterplan, assesses network development projects proposed by its members. In line with the provision of the new TEN-E Regulation, results of ENTSO-E's TYNDP assessments also provide input to verify the eligibility of the proposed projects as Projects of Common Interest (PCI) among EU members and Projects of Mutual Interest (PMI) process between an EU member and a third country (Based on the revised Trans-European Networks for Energy (TEN-E) Regulation Masterplan 2022). Information-sharing among the two Associations is therefore fundamental to ensure consistency among their key deliverables.

However, despite the joint efforts of the members of the two Associations, differences might exist between the input data, models, tools, methodologies, and approaches used by Med-TSO and ENTSO-E to conduct their respective studies, resulting in different outputs.

The Masterplan also represents an appropriate framework to share experience and knowledge among countries and TSOs. In its Action Plan 2020-2022, Med-TSO concentrated its efforts on sustaining and enhancing methodological approaches, quality of results and cooperation among members. This involved reinforcing the bottom-up approach through more effective participation of members at regional level, new methodologies for network studies, and enhanced cooperation with ENTSO-E. The improvement of the process also applied to the quality of the studies, through a better harmonization of the National Development Plans (NDPs) with the MMP. For both sustainability and improvements, more competences and tools were adopted, in particular:

• More sophisticated network analyses were carried out in order to evaluate grid constraints (e.g., quality and security of supply, etc.).
• The Mediterranean Med-TSO Database (DBMED) used to collect TSOs' project data was renewed and extended with more sections to provide a better representation of the relevant electricity system in the prospective scenarios.
• A systematic data quality check was performed by the Secretariat to increase the accuracy of analysis and results.

2.5 The framework of previous studies

Med-TSO started its operational activities in 2013, within the framework of the EU-funded project "Paving the Way for the Mediterranean Solar Plan", by developing the Masterplan of the Mediterranean Electricity Interconnections in four deliverables based on two main objectives:

• Sharing criteria among the Mediterranean TSOs, consistent with ENTSO-E's experience, for a coordinated rolling planning of transmission infrastructures.
• Analyzing projects of interconnection and related reinforcements of internal grids planned in the short-term, with available feasibility studies and, where applicable, eligibility for European PCI (Projects of Common Interest) and ENTSO-E coordinated planning procedures.

At the beginning of 2015, Med-TSO launched Mediterranean Project 1 (MP1), a three-year action, co-funded by the EC (Grant Contract ENI/2014/347-006), aimed at supporting the assessment of infrastructural projects in the Mediterranean Region. The project was structured according to the following five main activity streams:

• Basic rules for international electricity exchanges, in cooperation with MEDREG
• Development of a planning process for setting up a Mediterranean Reference Grid
• International Electricity Exchanges: case studies and feasibility demonstration of interconnection projects
• A network for exchanging knowledge and experiences, in cooperation with Universities of the Med-TSO Area
• A Med-TSO Database for sharing information (data and market projects) favourable to the development of electricity exchanges at regional level This Plan highlighted the need for major investments in new transmission infrastructures, both for strengthening and integrating the networks on the South Shore of the Mediterranean and integrating them with the networks of the North Shore.

To follow, Med-TSO proposed to the European Commission to set up a cooperation platform for identifying and analyzing potential infrastructure projects. A trilateral Memorandum of Understanding with the European Commission and MEDREG, the Association of the Mediterranean Energy Regulators (MEDREG), was signed in Rome on 18 November 2014, at the Euro-Mediterranean Conference on Energy. With this cooperation framework, the EC recognized Med-TSO as a "long-term partner of the EC", acknowledging the proposed Med-TSO platform as an efficient instrument for cooperation.

The first edition of the Mediterranean Masterplan (MP1) assessed benefits and costs of fourteen main interconnection projects (within three corridors) between regional electric systems and the necessary internal reinforcements to guarantee appropriate security standards. The MP1 played a key role in consolidating a secure and sustainable electricity infrastructure through the development of interconnections, while facilitating the integration of RES in the Mediterranean Region. Nine of the identified interconnection projects were using HVDC technology and five of them were linking countries that had never been interconnected, including Cyprus. Globally, MP1 represented almost 18 GW of new interconnection capacity and approximately €16 bn in additional investments.

The Mediterranean Masterplan 2020 of Electricity Interconnection (MMP 2020) was the second edition of the Interconnections Development Plan involving 20 grid operators in the Region. MMP 2020 assessed 15 main interconnection projects (within three corridors) with a total of approximately 18,5 GW of interconnection capacity and €13 bn of investments, including the reinforcements of the existing grids to accommodate reliable transit flows in the Med-TSO Region and keep the security of operation standards at adequate levels.