Grid technology procurement needs fit-for-purpose framework in Europe

Pointing to Europe’s electricity system operators having to deliver the largest grid buildout in EU history to meet climate, security-of-supply and industrial policy objectives, the two organisations state that the current public procurement regime slows down critical infrastructure delivery instead of enabling it.

Rules designed for stable markets do not reflect today’s realities: long lead times, concentrated supplier markets, geopolitical uncertainty, rapidly evolving technologies, new sustainability obligations and tight project timelines. Inflexible tender procedures are adding to the problem, with their high administrative efforts.

“A fit-for-purpose framework is therefore essential to ensure grid operators can procure efficiently and strategically, while respecting transparency, equal treatment and competition,” state the grid operators, with revision of the EU’s public procurement directives imminent as part of the Commission’s current strategic agenda.

The DSO Entity and ENTSO-E make three specific recommendations, highlighting the need for a European preference for both manufacturing and sales.

With ‘made in Europe’ one of the planned cornerstones of the revised directives, the grid operators say this will not solve the gap between demand and manufacturing and there must also be a focus on ‘sell in Europe’.

This means not only encouraging contracting entities to purchase EU-made products but also ensuring that European manufacturers meet domestic demand. For example, in the large power transformer market, European buyers compete with global demand. 

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Thus, it is essential to ensure that, in parallel, economic incentives are created for European manufacturers to prioritise the European market, rather than placing compliance obligations solely on contracting entities.

Urging policymakers to be cautious before considering mandatory restrictions on contracting entities in the current market, they add that the European Grids Package also highlights this challenge and calls on the sector to scale up to keep pace.

The three recommendations are:

• Facilitate access to the grid technologies needed for Europe’s energy transition, e. g., by promoting flexible and voluntary non-price criteria while taking into account their impact on the feasibility of projects and enabling grid operators to swap and sell equipment among themselves. For this latter, there is precedent in the defence and security procurement directive, with savings of 6-12 months by avoiding duplicate procurement procedures.
• Boost competition and cost effectiveness in procurement through the introduction of increased threshold values, flexibility in tender processes and subsequent changes to contracts and framework agreements. This should also better attract cross-border participation.
• Make tenders more attractive across Europe by simplifying administrative procedures, including having lighter and clearer documentation, making more use of publicly available information via a central EU platform and continually updating the eCertis tool with clear information on certificates and exclusion grounds.

In conclusion, the DSO Entity and ENTSO-E say that without targeted reform, Europe risks falling short of its decarbonisation and security goals because the grid buildout is held back by excessive administrative burden and outdated procedural rigidity.

The revision of the procurement directives follows a review of the current directives, which date from 2014 and found that they had been only partially effective in reaching their intended objectives – in particular, they are not sufficiently agile, coherent, and strategically oriented to effectively respond to both current and emerging challenges.