Setting the price tag at one trillion euros ($1.3 trillion), European Union Energy Commissioner Guenther Oettinger called investment in the bloc's power grids essential for Europe's future.

"The energy challenge is one of the greatest tests Europe has to face," Oettinger said on Wednesday at the presentation of the bloc's energy strategy for the next 10 years.

"Putting our energy system onto a new, more sustainable and secure path may take time but ambitious decisions need to be taken now."

The energy chief said individual governments' priorities in the 27-member bloc had limited European energy policy in the past, and that this must change.

"To have an efficient, competitive and low-carbon economy we have to Europeanize our energy policy and focus on a few, but pressing, priorities," Oettinger said.

Energy connections between member states tend to be scattered and inefficient, a hangover from pre-EU times when most national grids were the property of state-run monopolies.

"Failing to achieve a well-functioning European energy market will only increase the costs for consumers and put Europe's competitiveness at risk," he added.

Ending energy isolation

In the context of Russia's gas disputes with its neighbours in recent years – and their knock-on consequences for Europe – Oettinger indicated that security was another reason for integrating networks, so as to prevent states from becoming overly dependent upon a single energy provider.

"By 2015, no member state should be isolated," a European Commission statement said on Wednesday.

Oettinger said the EU's executive would propose legislation in five key areas in the coming 18 months, including energy efficiency measures for businesses and private housholds.

It will also push EU member states to accept a deadline of 2015 to link up all 27 national energy markets.

The EU as well as European countries will have to update the energy grid to allow for decentralized power generation and distribution, according to Stefan Gsaenger, secretary general of the World Wind Energy Association.

"Up to 10 or 20 years ago in Germany we had dozens of huge power stations," he told Deutsche Welle. "Today there are hundreds of thousands of power generation units in solar systems and wind farms that are all over Germany. That completely changes the grid."

Gsaenger said he expects generation of local, small-scale renewable energy generation to continue increasing as the EU member states strive reach their announced goal of collectively sourcing 20 percent of their energy from renewable sources by 2020, which implies about 35 percent of electricity.

Funding for electricity grid improvements will come from taxpayers and power companies.

German Chancellor Angela Merkel had said earlier that European members should ensure new energy projects are commercially viable.

"I see the main responsibility for the realization and financing of energy infrastructure as resting with business," she was quoted by the EUobserver as saying.

Author: Sean Sinico (dpa, AFP, Reuters)

Editor: Nathan Witkop