International energy projects face a number of challenges thanks to tough economic times and the tense geopolitical situation. 2025 could be a testing time for cross-border infrastructure.
The capacity to import and export energy electrons and molecules is a powerful and entirely necessary asset for most countries. The lights have to be kept on somehow and domestic power generation is often not enough to achieve that 24 hours a day, 365 days a year.
Thick undersea cables and cross-border pipes have created a transcontinental network of energy infrastructure in Europe that connects Portugal’s Atlantic coast to the forests of Finland.
But it is incomplete. Not every country has met its EU export and import capacity target, meaning that the bloc is tackling the energy transition with one hand tied behind its back.
Much of that shortfall is down to simple economics. Cross-border projects are expensive and require significant construction works. Laying cables or pipes along the seabed or over mountains are big undertakings.
In some cases, the money is available but there are too many disputes about which country should pay for the project or how the costs should be split. Again, these problems are not insurmountable but they do slow down permitting and planning to a snail’s pace.
Now, another problem is rearing its head and as is so often the case, Russia’s invasion of Ukraine is proving to be the trigger.
It started with the sabotage of the Nord Stream gas pipelines in the Baltic Sea in 2022. An ongoing investigation has still not definitively named a culprit but whoever did it, the simple fact is that it made the prospect of resuming Russian gas flows in full to Europe very unlikely.
The Baltic has played host to other instances of suspected sabotage. Over the last two years, telecomms and electricity cables have all been damaged. Most recently, on Christmas Day, when a power link between Estonia and Finland was broken.
NATO has stepped up its operations in the basin and even launched a special mission to patrol areas where there is undersea infrastructure. More skulduggery is expected but maybe it can now be prevented.
It is not just the Baltic either, Russia accused Ukraine earlier this week of attempting to damage part of the TurkStream pipeline, which ships gas from Russia under the Black Sea to Turkey. Ukraine has not commented on the allegations so far.
No matter who the culprit is in any of these instances or even in the extremely unlikely event that they were all unfortunate accidents, the fact remains that this expensive infrastructure has been damaged, some of it totally beyond feasible repair.
When you consider that these projects have needed billions of euros to come online, the question must be asked: will anyone build anymore of it, given that it could become a target for a brand of hybrid warfare?
2025 could well hold the answer to that question. Whether appetite for more energy connections and the potential for increased access to cheaper power prices survives or the shock and scare tactics do their job, could be revealed.
Early indications though are positive. Earlier this week, Albania and Italy signed an agreement to build a cable across the Adriatic Sea so the latter country can access more of the Balkan peninsula’s green clean power.
The project is due to cost €1 billion and take at least three years to complete. The United Arab Emirates is involved with the project and will fund the construction of 3 gigawatts of renewable energy in Albania. Clearly there is a good business case there.
Whether other countries manage to make the economics work will be the big question.
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