TIME Media

Top Hollywood Movie Studios Smacked With Antitrust Charges

Disney, Warner Bros., Fox and more are accused of violating European law

Is the European Union about to add Hollywood’s finest to its collection of antitrust scalps?

After 18 months gathering material, the European Commission’s Competition directorate has accused six of Hollywood’s largest movie-makers of sabotaging the E.U.’s single market by signing country-specific deals with pay-TV providers.

The first so-called “statement of objections” have been sent out to the studios because of their licensing contracts with Sky U.K., the main operating asset of Sky Plc, but investigations into pay-TV providers in France, Germany, Spain and Italy are still ongoing and may yield further accusations.

The pay-TV companies in Germany and Italy are now 100%-owned owned by Sky, although they weren’t at the time the investigation was launched. Vivendi SA’s Canal Plus is the company under investigation in France.

The Commission’s beef is a variation on a theme of the charges it has laid at the door of Russian gas monopoly PAO Gazprom, in that country-specific deals forbid the free flow of goods and services, denying consumers the freedom of choice and, ultimately, their pricing power.

The accusations could be one of the first serious blows struck by the regulators in a campaign to modernize the E.U.’s digital economy, an area where Europe is badly lagging. The new Commission earlier this year identified the breaking down of nationally-defined copyright and licensing laws as one of the key elements of that campaign.

A prime example of this is the phenomenon of ‘geo-blocking': at present, a subscriber to an online pay-TV service in, for example, the U.K. can’t access that service in France or (more importantly for expatriated civil servants, lobbyists and politicians) Belgium because copyright and licensing law is still handled by national governments.

The Commission says it wants to ensure that users who buy online content such as films, music or articles at home can also access them while travelling across Europe.

The objections sent out this week by the E.U. don’t go as far as cutting that particular Gordian knot in one fell swoop. Instead, they zero in on contractual clauses which stop providers from selling outside a specific country. The regulators’ expectation is that if they pull on this loose end enough, the knot will unravel in time as the broader effort to modernize the Digital Single Market gains momentum.

In theory, if customers have the right to buy across borders, then the prices for products such as ESPN or Sky Atlantic will even themselves out across the E.U..

In practice, though, even after the contractual hurdle has been cleared away, companies will still be able to say ‘no’ on commercial grounds to customers who are trying to get a better deal than the one offered in their home countries (if, for example, the administrative cost would outweigh the benefits for the company).

The six studios to have received the so-called “Statement of Objections” are:

  • Walt Disney
  • 20th Century Fox
  • Warner Bros.
  • Paramount Pictures (a unit of Viacom Inc.)
  • Sony Pictures
  • NBCUniversal (Comcast Corp.)

Sky Thursday confirmed it had received the Commission’s objections and said: “We will consider this and respond in due course.”

Under the E.U.’s rules, it can fine companies up to 10% of their global annual revenue for antitrust violations.

This article originally appeared on Fortune.com

TIME Greece

E.U. Approves Short-Term Cash for Greece

E.U. is sending 7.16 billion euros of bridge financing to Greece by Monday

(BERLIN) — The bailout of Greece took two big strides forward Friday as German lawmakers overwhelmingly gave their backing to another financial rescue and the European Union confirmed it would get Athens enough money to avoid an imminent debt default.

The twin developments capped a week in which the proposed bailout agreed by the 19 eurozone leaders Monday has cleared a string of hurdles.

As a result, expectations have risen that Greece will secure a three-year financial bailout which will allow it to get back toward some sort of economic normality following weeks of crisis that’s seen banks shuttered and withdrawals at ATMs limited to a paltry 60 euros a day.

The first big development Friday was the news that German lawmakers, following more than three hours of debate, voted 439-119 in favor of opening detailed discussions on the bailout package, after Chancellor Angela Merkel warned that the cash-strapped country would face chaos without a deal.

That was later followed by confirmation that the EU had worked out the mechanism it would use to get Greece 7.16 billion ($7.7 billion) in short-term cash by Monday, when it has a 4.2 billion-euro payment due to the European Central Bank.

“What we’re witnessing is European solidarity in action,” said Valdis Dombrovskis, the EU Commission’s vice president for the euro, who revealed the news of the short-term bridging loan.

“Politicians across 27 countries have invested their own political capital to speed through national decisions to shoulder Greece at this difficult time for the country,” he added.

Without the so-called bridge financing, which will come from funds remaining in a long-dormant EU program called the European Financial Stabilization Mechanism, Greece would not have been able to make the payment.

Though the broad outlines of the Greek bailout were agreed Monday, specific terms will now be thrashed out between Greece and its European creditors.

The process is expected to last around four weeks and to lead to Greece getting around 85 billion euros ($93 billion) to help it pay off upcoming debts.

Germany has been the largest single contributor to Greece’s bailouts and has taken a hard line, insisting on stringent spending cuts, tax hikes and wide-ranging economic reforms in return.

“The principle … of responsibility and solidarity that has guided us since the beginning of the European debt crisis marks the entire result from Monday,” Merkel told the special session of Parliament.

The alternative to an agreement, she added, “would not be a time-out from the euro that would be orderly … but predictable chaos.”

Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.

“I know that many have doubts and concerns about whether this road will be successful, about whether Greece will have the strength to take it in the long term, and no one can brush aside these concerns,” she said. “But I am firmly convinced of one thing: we would be grossly negligent, even irresponsible, if we did not at least try this road.”

Merkel’s finance minister, Wolfgang Schaeuble, who has talked particularly tough on Greece, said Germany will do its utmost to “making this last chance a success” — provided Greece does its part.

Bailing out Greece hasn’t been popular in Merkel’s conservative bloc and 60 of its lawmakers failed to back her Friday, with another five abstaining.

In Athens, Greek Prime Minister Alexis Tsipras is widely expected to reshuffle his Cabinet Friday or over the weekend, following a rebellion within his party over a parliamentary vote to approve the measures demanded for the bailout talks to start.

A little more than a quarter of the 149 lawmakers from Tsipras’ radical-left Syriza party either voted against or abstained in Wednesday’s vote. Tsipras still won an overwhelming majority as three opposition pro-European parties backed the proposals.

The legislation, which includes consumer tax increases and pension cuts, was demanded as a precondition to the launch of negotiations on a third bailout. Elements of the bill are being implemented immediately, with changes to consumer tax coming into effect Monday, the finance ministry said.

Also this week, the ECB raised emergency liquidity assistance to Greek banks.

The first visible sign of economic healing in Greece will emerge when the banks open their doors again. On Thursday, the government said they would reopen Monday for limited transactions, for the first time in three weeks after capital controls were imposed June 29 ahead of a referendum Tsipras called on previous creditor proposals.

Tsipras has acknowledged that the package he signed up to went against his election promises to repeal austerity imposed over the last five years in return for Greece’s two international bailouts. But he has insisted he had no other choice, as the alternative would have seen Greece forced out of the euro — a development that would have further crashed the Greek economy as well as roiling financial markets.

In a party meeting Thursday, Tsipras criticized the hardliners who voted against him, arguing that their decision was “in conflict with the principles of comradeship and solidarity and at a crucial time creates an open wound,” according to a government official at the meeting. The official revealed details of the closed-door meeting on condition of anonymity.

The dissenters’ decision, Tsipras said, forced him to continue governing with a minority government until Greece’s bailout deal is concluded.

 

TIME Greece

European Union Agrees to Give Greece Short-Term Loan

It remains unknown how much Greece would receive

(ATHENS, Greece) — Greece got a triple dose of good news on Thursday, when creditors agreed to open talks on a third bailout package, to give the country an interim loan to cover its debts, and to provide more support to its shuttered banks.

Greece’s fellow states in the 19-country eurozone said they were willing to open talks on a new rescue package worth 85 billion euros ($93 billion) over three years after Athens approved a series of tax hikes and economic reforms overnight.

The austerity bill triggered a revolt in the governing party and demonstrations in central Athens, one of which briefly turned violent, but was required by creditors as a precondition for starting bailout talks.

Because completing a new rescue deal is expected to take up to four weeks, Greece’s European creditors also agreed on interim financing in the meantime. European Commission head Jean-Claude Juncker confirmed that an EU-wide bailout fund would give Greece a loan to cover it through mid-August.

Finally, the European Central Bank agreed to increase the amount of emergency credit available to Greek banks by 900 million euros ($980 million) over one week, a first step toward helping them reopen.

The banks have been closed since June 29 to stanch a bank run, with Greeks limited to cash withdrawals of 60 euros ($67) per day, and the ECB had not raised the credit it makes available since last month. The extra credit is needed to make up for the constant outflow of money from the banks.

It remained unclear how quickly Greece’s banks could reopen or when they might ease the limits on cash withdrawals.

The government must now pass a second bill through Parliament next week, which includes reforms to civil justice procedures.

The requirements are part of a deal reached between Prime Minister Alexis Tsipras and other eurozone leaders after a marathon summit in Brussels last weekend, under which Greece must implement harsh austerity measures, including tax hikes and pension cuts, in return for the start of talks on its third bailout.

Tsipras, who was elected in January on promises of repealing bailout-related austerity measures, has acknowledged the deal tramples on most of his election pledges, but insists he had no other option than to accept the harsh terms offered by lenders to ensure his country’s financial system didn’t collapse.

“We had a very specific choice: A deal we largely disagreed with, or a chaotic default,” he told parliament ahead of the post-midnight vote.

Lawmakers voted 229-64 to implement the bill, in a vote that saw dozens of lawmakers from Tsipras’ own radical left Syriza party dissent and vote against him. The bill passed with a massive majority thanks to the support of three pro-European opposition parties.

Thirty-eight party lawmakers defied Tsipras — nearly one-in-four — by voting against or abstaining. They included Tsipras’ powerful energy minister, the speaker of parliament, and Yanis Varoufakis, the former finance minister who headed Greece’s bailout strategy until his replacement 10 days ago.

The government described the vote as marking a “serious division” among its lawmakers, and indicated that dissenters in Tsipras’ Cabinet would be swiftly replaced in a reshuffle.

“Today, Parliament took the first important step for the deal, voting for the difficult measures,” government spokesman Gabriel Sakellaridis said.

“But the results of today’s vote constitute a serious division in the unity of Syriza parliamentary group,” he said. “The prime minister’s and the government’s priority is the successful conclusion of the agreement in the immediate future.”

The Moody’s credit ratings agency said the vote meant the country had dodged imminent danger, but that it still faced risks.

“The Greek parliamentary vote averts an immediate disorderly default and potential exit from the euro area, but risks remains elevated given Greece’s weak institutions and substantial political scepticism on the bailout conditions,” it said.

The vote came after more than two weeks of capital controls, with banks and the stock exchange shut and ATM cash withdrawals limited to 60 euros per day.

Dangerously low on liquidity at banks and with the state practically out of cash, Greece desperately needs funds.

The four-week loan that European Commission President Juncker revealed on Thursday would allow Greece to meet a debt repayment worth 4.2 billion euros ($4.6 billion) to the ECB on Monday and to pay arrears of 2 billion euros to the IMF.

Greeks have seen a dramatic decline in living standards since the debt-plagued country lost market access in 2010 and had to impose severe spending cuts in exchange for bailout loans from eurozone countries and the International Monetary Fund.

“Now I think that things will turn out for the best, as long as those in power can act with good intentions, without corruption,” said pensioner Giannis Filinis as he waited in a queue outside a bank to withdraw the maximum 120 euros for retirees without bank cards. “They should have controlled the situation and avoided bailouts, because we are the ones that have to pay for it now.”

Before the austerity vote, some 12,000 demonstrators had gathered outside parliament in the biggest protest against the government since Tsipras won elections in late January. The rally turned violent when several hundred youths attacked police, torched cars, and smashed office displays.

___

This story corrects the date in the first reference to the bank closures to June 29, instead of July 29.

____

David McHugh in Frankfurt, Germany, and Menelaos Hadjicostis in Nicosia, Cyprus, contributed.

MONEY privacy

This Is the Group That Most Wants to Be Forgotten by Google

right-to-be-forgotten-google
Getty Images

95% of "Right to Be Forgotten" requests are from ordinary citizens.

Nearly all of Google’s “right to be forgotten” requests have come from normal citizens trying to protect their privacy, according to a new report from the Guardian.

Last year, the European Union’s highest court affirmed the right of EU residents (and residents of some nearby countries) to ask the search company to remove certain pages from its search results “on the ground that that information may be prejudicial to him or that he wishes it to be ‘forgotten’ after a certain time.”

According to Google’s support page, the company adjudicates requests by balancing “the privacy rights of the individual with the public’s interest to know and the right to distribute information.”

Google has never publicly released data on the how it deals with these requests, which only apply to its European search results. But the Guardian discovered records of the requests in the source code in archived versions of Google’s transparency report.

The London-based paper found over 95% of more than 220,000 requests did not come from public figures, criminals, or politicians, but from regular people seeking to protect their privacy. The Guardian’s data shows roughly half of all requests have been approved, including less than 1% of those that apply to non-typical citizens.

Google acknowledged the paper’s information was authentic, but cautioned that the accounts was merely part of a “test” that was discontinued “because the data was not reliable enough for publication.”

Read more at The Guardian.

TIME mastercard

MasterCard Slapped With EU Charge Over Credit Card Fees

European watchdog says fees are harming competition

The European Union is none too pleased with U.S.-based credit card companies.

Following a two-year investigation, the EU filed formal charges against MasterCard on Thursday. They come three years after the EU opened an investigation—that’s still on-going—into Visa. The reasons for the both probes is essentially the same: the increasing the cost of credit card payments. The EU is concerned with the so-called interchange fees that are set by credit card companies and collected by banks that issue credit and debit cards every time consumers log a credit card purchase. The fees fluctuate from country to country.

In filing its charges against MasterCard—the EU’s antitrust regulator says that the company’s customers are being charged “an artificially high minimum price” for card payments in the EU, which violates antitrust laws.

“We currently suspect MasterCard is artificially raising the costs of card payments, which would harm consumers and retailers in the EU,” the bloc’s antitrust chief Margrethe Vestager told The Wall Street Journal.

In a statement confirming the receipt of a statement of objections from the European Commissions, the EU’s top antitrust regulator, MasterCard said that it will be formally responding to the charge and will work with the commission on the issues as part of an ongoing constructive dialogue. “Throughout this procedure we have kept the needs of both consumers and merchants in mind and aim to further encourage the uptake of electronic payments inside and outside the European Union,” a company spokesperson said.

Interchange fees have long been a concern of EU because it’s worried that such fees could hurt competition in its single market and because the fees trickle down to consumers as businesses fold them into the general costs of goods and services.

If the charges are confirmed, MasterCard could be forced to change its practices and fork over about 10% of its global annual turnover, which last year totaled $9.5 billion, according to the Journal.

TIME France

Chaos at French Port as Migrants Continue to Storm Trucks Headed for the U.K.

A strike has shut the port, causing long tailbacks of vehicles that migrants are trying to board, at times forcibly

In chaotic scenes over the past week, hundreds of migrants in the northern French port of Calais have been trying to jump onto trucks bound for the U.K.

The migrants, most of whom had fled war, persecution and poverty in the Middle East and Africa, took advantage of a strike by French MyFerryLink workers on Tuesday. The striking workers forced the port and the Channel Tunnel, which links France to the U.K., to close, causing long tailbacks of trucks on highways around Calais.

Footage shows migrants desperately trying to board the vehicles, sometimes jumping onto moving trucks, breaking locks or attempting to hold onto the underside of the carriages.

“Drivers were unable to open their windows or leave their vehicles for fear of either being threatened or would-be stowaways getting on board,” Don Armour, the Freight Transport Association’s international manager, told the Guardian.

There are believed to be about 3,000 migrants living in a squalid makeshift camp near Calais. They are determined to reach the U.K., where they say they’ll have the chance of a better life.

On Wednesday, British Prime Minister David Cameron called the scenes in Calais “totally unacceptable” and vowed to work more closely with French authorities. U.K. ministers are considering sending extra border-control officials, sniffer-dog teams and equipment to strengthen fences around the port and rail crossings.

But several of the city’s politicians have accused the British government of not doing enough to calm the situation. Philippe Mignonet, the deputy mayor of Calais, said the city had been “sacrificed” by the British and Europe, reports the Guardian.

The chaos in Calais comes as European Union leaders struggle to decide what to do with huge waves of migrants entering Europe via risky sea journeys across the Mediterranean.

At heated talks in Brussels on Thursday night, E.U. leaders agreed to relocate 40,000 migrants who have arrived in Italy and Greece, plus a further 20,000 currently in camps outside the E.U., to member states over the next two years, reports the BBC.

But there would not be mandatory quotas for taking in refugees, the leaders said.

 

TIME europe

European Union Comes Up With a Plan to Ease Migrant Crisis

Member states will take in 40,000 migrants currently in Italy and Greece

European Union member states will take in 40,000 migrants from the Middle East and Africa currently in Italy and Greece, according to a leaked plan that emerged Thursday.

According to a draft communiqué seen by Reuters, European leaders will enact a two-year plan for volunteer EU countries to temporarily spread a total of 40,000 migrants across multiple nations. The final statement will propose creating criteria to determine which countries will participate and how many refugees each will accept. The document stops short of creating national quotas for each country.

The agreement is intended to alleviate pressure on asylum infrastructures in Greece and Italy that are buckling under the record high volume of migration across the Mediterranean Sea. At least 153,000 people have sought refugee in Europe this year, and almost 2,000 have died making the dangerous trip.

[Reuters]

TIME Turkey

Here Are 3 Good Things That Happened in the World This Week

TURKEY-VOTE-RESULTS kurdish
Bulent Kilic—AFP/Getty Images Young supporters of pro-Kurdish Peoples' Democratic Party (HDP) celebrate in the streets the results of the legislative election, in Diyarbakir on June 7, 2015.

Turkey, Nigeria and the E.U. all saw positive stories in a week when most of the news was depressing

Follow the news these days, and it’s hard to be an optimist. Ukraine’s ceasefire is a fiction. ISIS is capturing new ground and drawing new followers. The U.S. and China seem at odds in the South China Sea. The Greeks sometimes seem determined to stumble their way out of Europe. The list goes on. But with the real exception of Ukraine, these risks are exaggerated, and there are positive stories out there that deserve more attention. Here are three:

1. Turkey

Start with last weekend’s election results in Turkey. Not so long ago, this country was considered a major emerging market success story. That’s mainly because then-prime minister Recep Tayyip Erdogan had helped unlock much more of the country’s growth potential by empowering development and entrepreneurship in the country’s Anatolian heartland. Under his leadership, per capita income tripled in a decade.

Unfortunately, Erdogan, now president, has drawn comparisons with Russia’s Putin by shifting focus from economic gain to a bid for lasting political dominance. To corner his enemies and expand his power, he has compromised the independence of Turkey’s courts, police forces, and central bank. His foreign policy has become a mix of nationalist paranoia and anti-Western resentment. He has also polarized his country.

But Turkish voters reminded us on June 7 that Turkey is not Russia, and Erdogan can’t become Putin. His Justice and Development Party, known by its Turkish initials AKP, earned another victory, but not the supermajority Erdogan needed to rewrite Turkey’s constitution to give himself more power. In fact, for the first time in 13 years, the AKP didn’t even win a simple majority and will now have to form a coalition government.

Make no mistake: Turkey will be a mess for some time to come. Expected intensified political infighting over the next couple of years, but the big news is that there are still checks on Erdogan’s ambitions, even within his own party. It’s a step back for Erdogan–and a step forward for his country.

2. Nigeria

After years of corruption and stagnation, Africa’s largest economy needed new political energy. March’s presidential election provided exactly that. After 16 years of one-party rule following the country’s shift from military control to democracy in 1999, opposition leader Muhammadu Buhari won a clear victory and a strong mandate. The incumbent accepted defeat, and power changed hands peacefully. That’s crucial in a country where stability depends on a delicate political balance between Christians in the south, Muslims in the north and various ethnic groups and provincial factions.

With majorities for his APC party in parliament and governorships, Buhari brings energy for reform. A capable economic policy team is now settling into place. A badly needed revitalization of the oil sector is underway. Government spending restraint will earn greater investor confidence in Nigeria’s enormous potential. Buhari, a Muslim and former military commander, will more aggressively target Boko Haram, Muslim militants based in the country’s northeast, than his predecessor did.

3. Europe

Even in Europe, despite intense media focus on the risks of Grexit and Brexit—Greek and British exists from the E.U., respectively—there is cause for optimism. Last week, the Pew Research Center released a report detailing evidence of a revival of public faith in the broader European project. Pew surveyed 6,028 people in France, Germany, Italy, Poland, Spain and the UK, countries that make up 70% of the EU population and provide 74% of its GDP. Though many of those questioned still say their economies are in rotten shape and won’t quickly return to pre-crisis levels, they do sense improvement—and credit the European Union for it. Despite the rise of Euro-skeptic parties like Spain’s Podemos, Britain’s UK Independence Party and Germany’s Alternative für Deutschland, public support for the EU within these member states has actually risen since 2013. In Britain, support for exit from the EU trails support for continued membership by 55 to 36 percent. Interestingly, majorities in Spain (70%), Britain (66%), Italy (58%), and Germany (50%) say the rise of “non-traditional” parties is a “good thing,” perhaps because they provide a useful check on the power of European institutions.

There’s no doubt that Ukraine’s conflict will deepen, tensions with Russia will rise further, Greece has a long way to go and the Middle East will burn hotter for longer. But add reform momentum in India, Italy, and Mexico, and there are still plenty of good news stories beyond the headlines.

Bremmer is a foreign affairs columnist and editor-at-large at TIME. He is the president of Eurasia Group, a political-risk consultancy, and a Global Research Professor at New York University. His most recent book is Superpower: Three Choices for America’s Role in the World

TIME energy

Could Iran Play a Part in E.U. Energy Security?

iranian-flag
Getty Images

As Europe looks for alternatives to Russian gas, Iran could provide Europe "new routes"

Azerbaijan’s energy minister, Natig Aliyev, says the gas pipeline originating in his country can also transport fuel to Europe through the Trans-Anatolian Pipeline (TANAP) from Iran and other neighboring nations in both the Middle East and Central Asia.

“Gas from Turkmenistan, Iran, Iraq, as well as from Israel and Cyprus, can be connected to the Southern Gas Corridor,” Aliyev told the Caspian Oil & Gas Conference in Baku on June 3. “The extensive work done by Azerbaijan stands behind all of this.”

The minister said that as Europe is looking for alternatives to Russian gas, its attention is being drawn increasingly to Azerbaijan because it could provide “a new source of energy for Europe, and it offers Europe new routes.”

Azerbaijan could become a major source of energy for the West, Aliyev said, given that it produced 42 million tons of oil and 29 billion cubic meters of gas in 2014. Looking to the future, he said, his country intends to maintain that level of oil output, or even increase it to 45 million tons per year, and that it plans to double its output of gas.

Aliyev pointed to Europe’s growing concern about its current reliance on gas deliveries from Russia via a pipeline that transits Ukraine. Because of political and pricing disputes between Kiev and Moscow, these deliveries have been briefly interrupted three times in the past nine years. “Europe imports about 90 percent of oil, 60 percent of gas and 42 percent of coal,” he said.

TANAP would run west from Baku, through Turkey, then the Balkans and connect with the Trans-Adriatic Pipeline (TAP), which finally would deliver the gas to Italy and on to the rest of Europe. Already Turkmenistan, on the other side of the Caspian Sea from Azerbaijan, has expressed interest in joining TANAP, and Aliyev said Iran, with its huge energy resources, also would be a prime candidate.

“Iran’s cooperation with the world was always good,” Zanganeh said at the time, “but they were unkind to us. However now they are returning to the cooperation.” Besides, he said, Iran has more energy reserves than it can consume domestically.

And on June 3, addressing Aliyev’s comments, Mohsen Pakaein, Iran’s ambassador to Azerbaijan, said his government was considering the invitation to join TANAP as part of Tehran’s plans to establish a strong presence on the world’s gas market.

Construction already has begun on TANAP, while a rival pipeline through Turkey, sponsored by Russia, is still in the planning stages. Whichever of these two conduits is completed would replace Russia’s South Stream pipeline to Europe, a project that was scuttled in late 2014 because of an EU rule that forbids one entity from owning both the pipeline and the gas it carries.

The 1,100-mile-long TANAP is expected to begin delivering natural gas by 2020. The initial volume of fuel will be about 16 billion cubic meters per year, increasing eventually to 31 billion cubic meters per year.

This article originally appeared on Oilprice.com.

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TIME energy

E.U. Needs to Invest 400 Billion Euros By 2020 to Keep Renewables on Track

Flags of the European Union seen in front of the headquarters of the European Commission in Brussels, Belgium on March 3, 2014.
Michael Gottschalk—Getty Images Flags of the European Union seen in front of the headquarters of the European Commission in Brussels, Belgium on March 3, 2014.

Development of the renewable projects will be come at a cost

Smart grids are back in vogue. Or at least getting some mainstream media attention thanks to European Commission Vice President Maros Sefcovic, who recently declared, “smart grids should become Europe’s shale gas.” Whether Europe’s electric market is on a path comparable to the U.S. shale revolution remains to be seen but there is no doubt that improvements in both smart grid and storage technology are set to revolutionize electric markets across the globe. More importantly, they have the potential to transform renewable energy’s role within them.

Smart grid technology is not particularly new. But policies promoting growth in renewable energy and electric vehicles, coupled with a greater consumer engagement with daily energy use is making them all the more important.

National and state level targets for renewable deployment and emissions reductions have added to the sense of urgency. Technological improvements across the power sector’s value chain will be critical to achieving those goals.

The potential gains are enormous. Smart grids promise many things, including increased reliability, efficiency and security, each of which is critical for integrating renewable energy. Not to mention that better management of peak load, reduced outages, and increased automation should lower energy costs for consumers.

The power sector is becoming increasingly complex in markets like the E.U. and U.S., with traditional generation, transmission and distribution value chains now sharing the system with two-way power flows from distributed generation, such as rooftop solar.

This is part of a long term trend. In BP’s latest Energy Outlook 2035, the company projects North American production of renewable production to increase by 200% by 2035. In the E.U., BP estimates renewable energy production will grow by close to 140%.

But as the Department of Energy notes in its Quadrennial Energy Review, released last week:

Innovative technologies and services are being introduced to the system at an unprecedented rate—often increasing efficiency, improving reliability, and empowering customers, but also injecting uncertainty into grid operations, traditional regulatory structures, and utility business models. Modernizing the grid will require that these challenges be addressed.

The other side of the equation is energy storage, which until now has been a major barrier to renewable deployment. There are a variety of storage systems out there, including batteries, pumped hydro storage, thermal storage, hydrogen storage, and flywheels, among others. The largest share of storage in the United States is pumped hydro storage with 42 plants totally 22 GW of installed capacity. An additional 37 GW are currently under review by the Federal Energy Regulatory Commission (FERC).

This works well for hydropower but the issue is a little more complicated for intermittent resources such as solar and wind, which struggle to respond to the volatility of consumer demand and the variability of the weather. Both the U.S. and E.U. have several pilot projects in place. Germany launched Europe’s largest battery plant – 5 MW – last year.

It would be foolish to conclude that the only barriers to an electric matrix powered by 100% renewable energy are improved storage and smart grids. There are several other factors at play, including transmission upgrades, resource potential, and development of the renewable projects. All of this is expensive. The European Commission stated that it would need 400 billion euros in public and private funding to upgrade the transmission and distribution infrastructure by 2020. This would not be offset by the potential 100 billion in estimated savings as a result.

And then there is politics. In the U.S., energy policy has become part of the partisan game. The Wall Street Journal recently published two op-eds (one by Republican Senate Majority leader Mitch McConnell; the other by Kenneth Hill, director of the Tennessee Regulatory Authority) calling for states to oppose the EPA’s Clean Power Plan. Unsurprisingly, this set off a fierce debate. The details are less pertinent than the fact that it underscores the highly charged atmosphere and seemingly insurmountable political hurdle when it comes to renewable energy in the U.S.

Still, there is promise at the state level. California has set a goal of 1.3GW in energy storage capacity by 2020.

Moreover, politics aside, the United States is still regarded as the leader in research and development in smart grid and storage technology, counting multiple test sites across the country.

Overall, there is much to be optimistic about.

Innovation is driving new solutions to the energy storage problem, and increased efficiency and scale is slowly driving down costs. Politically, at least in the broad sense, there is a positive trend towards cleaner energy targets and the next few years could be truly transformative.

The combination of favorable policy and advances in technology will eventually overcome the greatest hurdles to renewable deployment. It may happen sooner than we think.

This article originally appeared on Oilprice.com.

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