PolyGrid 2050: Cross-sectoral coordination of energy infrastructures in a climate-neutral economy

The need to coordinate infrastructure from different sectors, i.e. to establish a system-wide energy polygrid, becomes increasingly pronounced by the European policy makers due to the expected role of hydrogen in a climate-neutral economy. This project evaluates the ability of governance-, regulation- and market-based cross-sectoral coordination mechanisms, that are presented in the proposals of European institutions, to optimize energy infrastructure from different sectors as a whole. We review the literature on incentive problems of independent network operators that optimize a common network in a single sector and evaluate its applicability on the cross-sectoral setting. The ability of studied coordination mechanisms to address the identified problems and herewith to align incentives of the infrastructure operators from different sectors towards the social optimum is examined. Strengths and weaknesses of the current cross-sectoral coordination proposals are derived in order to provide a decision help to policy makers and practitioners on their efficient use.

By: Martin Palovic