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PreussenElectra Decision C-379/98 of the European Court of Justice

RES Electricity and the Single EU Electricity Market Prof. Dr. Georg Erdmann TU Berlin; Chair Energy Systems AXPO European Energy Workshop Berlin, 15 May 2013.

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PreussenElectra Decision C-379/98 of the European Court of Justice

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  1. RES Electricity and theSingle EU Electricity MarketProf. Dr. Georg ErdmannTU Berlin; Chair Energy SystemsAXPO European Energy WorkshopBerlin, 15 May 2013

  2. Why is there not yet an Integrated European REN Market?The German Case as an Example of “Successful Unilateralism” Ambiguous EU Initiatives Towards a REN Single MarketRES Integration into National Markets as a Blueprint for an European RES Market

  3. PreussenElectra Decision C-379/98 of the European Court of Justice • Article 87 of the Consolidated EC Treaty prohibits “direct” or “indirect” state aid that generates competitive advantages to certain sectors • Minimum-pricing schemes like Stromeinspeisungsgesetz deliver such advantages without any doubt • But the benefit is not financed by state resources • Therefore the Stromeinspeisegesetz is, according to the European Court, no direct or indirect state aid

  4. PreussenElectra Decision C-379/98 (Cont.) • Article 30 of the Consolidated EC Treaty allows “restrictions on imports justified on grounds of […] the protection of health and life of humans, animals or plants” • Art 8(3) of EU-Electricity Directive 96/92 allows member states to give priority to generating installations using renewable energy sources • According to the Court of Justice, Directive 96/92 „lässt Hemmnisse für den Elektrizitätshandel zwischen den Mitgliedstaaten fortbestehen“ • Therefore the Stromeinspeisungsgsetz doesn‘t violate Art. 30 „beim gegenwärtigen Stand des Gemeinschafts-rechts auf dem Gebiet des Elektrizitätsmarkts“

  5. REN Electricity share in the EU27[Source: EUROSTAT] Percent of electricity consumption 20 15 10 5 0 1990 1995 2000 2005 2010

  6. REN Electricity in the EU in 2010

  7. REN Electricity 2010 in the EU27 [Source: EUROSTAT] PV Biomass Wind Hydro

  8. Why is there not yet an Integrated European REN Market?The German Case as an Example of “Successful Unilateralism” Ambiguous EU Initiatives Towards a REN Single MarketRES Integration into National Markets as a Blueprint for an European RES Market

  9. German Energiewende of 2010 and 2011

  10. REN Power Generation in Germany [Source AGEB] TWh 120 100 80 60 40 20 0 1990 1995 2000 2005 2010 Hydro Wind Biomass PV

  11. Regional Transfers from FITs within Germany [Source BDEW 2013] Mio EUR 1000 0 -1000 -2000

  12. Why is there not yet an Integrated European REN Market?The German Case as an Example of “Successful Unilateralism” Ambiguous EU Initiatives Towards a REN Single MarketRES Integration into National Markets as a Blueprint for an European RES Market

  13. EU Initiatives towards REN Integration 2001: Directive 2001/77 on the promotion of electricity from renewable energy sources • Member states take measures to ensure that transmission and distribution system operators “guarantee the transport and distribution of electricity produced from renewable energy sources” 2009: Directive 2009/28 on the promotion of renewable energies • 20%-goal of renewable energy share defined for 2020 • member states must provide either priority or guaranteed access to the grid for REN electricity • Open trading in renewable electricity certificates was rejected in favor of a system of “statistical transfers” of REN credits

  14. There is also Strong Opposition • February 2011: EU leaders acknowledged that REN electricity growth will require a 'smart' power grid – estimated to generate €200 billion investment costs • But no initiatives towards an integrated single REN electricity market or the REN electricity integration into the single EU electricity market • Comment by MEuPClaude Turmes ahead of an EU energy summit in February 2011: "National support schemes for renewable energy have proved overwhelmingly successful in promoting the uptake of renewables. We welcome that the Commission has acknowledged this and resisted the lobby by big energy utilities to undermine these national schemes"

  15. EU Communication of 15 November 2012: REN Support Schemes • National REN support schemes introduced on the grounds of • incomplete market opening • incomplete internalization of the external costs of conventional generation • early development stage of most REN technologies Markets and technologies have evolved since then • The Commission will issue guidance on • best practice in renewable energy support schemes • REN support scheme reforms • The aim is to avoid fragmentation of the internal market

  16. EU Communication of 15 November 2012:Capacity Mechanisms • Some Member States are concerned that the 'energy only' market will not deliver sufficient investment in generation to ensure security of supply in the longer term • Regulated capacity mechanisms may provide a stream of revenue to (selected) generators on behalf of electricity customers • Regulated capacity mechanism may have impacts on onthe internal energy market: • If capacity mechanisms are introduced without proper coordination at EU level, they 'risk being counterproductive' • Regulated capacity mechanisms must follow EU internal market rules, including state aid control • Fragmentation of the internal energy market must be avoided

  17. Why is there not yet an Integrated European REN Market?The German Case as an Example of “Successful Unilateralism” Ambiguous EU Initiatives Towards a REN Single MarketRES Integration into National Markets as a Blueprint for an European RES Market

  18. REN Support Schemes

  19. Increase of the REN Electricity Share2001-2011 25% 20% 15% • Denmark • Ireland • Germany • Estonia • Portugal • Spain • Belgium • Greece • Netherlands • Italy • UK • Lithuania • Czech Rep. • Poland • Hungary • Bulgaria • Sweden • Finland 10% 5% EU-Average 0%

  20. EU-Integration of REN Support Schemes

  21. Hot to get there • Starting point: System of feed-in-payments (because most market players are used to it) • Remove obligation of grid operators to purchase REN (because it violates unbundling rules and is an obstacle for REN market integration) • Fixed feed-in payments (FIT) to REN operators for REN sales to traders, retailers, BGMs, …(FIT compensates for lacking REN competitiveness) • REN sales to foreign partiess qualify for FIT payments • Market integration payments (MIP) to retailers or balancing group managers with rates depending on the REN share in the electricity portfolio (compensate for developing a delivery schedule with Intermittent REN) • REN purchases from other counties qualified for MIP Challenge!

  22. Concept for the Market Integration Premium Market integration premium [EUR/MWh] 0 20 40 60 80 100 BGM sales share of intermittent electricity [%]

  23. Tel: +49 (030) 314 246 56 Fax: +49 (030) 314 269 08 georg.erdmann@tu-berlin.de georg.erdmann@prognoseforum.de Thank You

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