1 / 9

Policy-based definition

Security of electricity supply Dutch approach Investors and European perspective Safety net mechanism IEA/NEA-workshop 24 may 2005 Pieter Boot Deputy Director-General for Energy, Dutch Ministry of Economic Affairs. Policy-based definition. SECURITY OF ELECTRICITY SUPPLY. Reliable networks.

candie
Download Presentation

Policy-based definition

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Security of electricity supply Dutch approachInvestors and European perspectiveSafety net mechanismIEA/NEA-workshop 24 may 2005 Pieter Boot Deputy Director-General for Energy, Dutch Ministry of Economic Affairs

  2. Policy-based definition SECURITY OF ELECTRICITY SUPPLY Reliable networks Sufficient production capacity Emergency supplier Sufficient production capacity Short-term balance Long-term balance of supply and demand Crises and calamities short and long-term Central question: How can the balance between production and consumption be guaranteed in the long-term in the most efficient manner possible?

  3. Spearheads Dutch policy • Enhancing the investment climate • Maintaining strong position NL • Minimalise regulations uncertainty • Promote realisation EU electricity market • Effective competition • Level playing field • Improving market structure in Netherlands • Removing market imperfections • Improving demand response • Safety net against market failure

  4. Investors perspective • Large investments needed in EU (IEA) • Investment climate in NL is relatively positive • Clear and consistent regulation needed • Main points Economic Affairs: • No intervention in price setting wholesale market • New interconnection must be economically sound • CO2-emissions trading efficient instrument but must not disrupt level playing field • European perspective on security of electricity supply

  5. European perspective • Importance of Security of Supply Directive • More coordination between TSO’s regarding interconnection investments and network management • No discrimation between national and “cross-border” contracts • Memoranda of Understanding’s • Optimisation of scope and use of interconnective capacity • Information exchange between TSO’s and congestion management

  6. How to promote investment and use of production capacity? • Extensive international research and studies (experts, Brattle group, US-workshop, IEA, TenneT, DTe, CPB) • Different policy options: central capacity reserve, capacity payments, capacity markets, reserve contracts, reliability contracts, etc. • Main criteria: cost-effectiveness, market conformity, international applicability

  7. How to promote investment and use of generation capacity? • General conclusions: • mechanisms are complex • require extensive regulation and verification systems • more effective for “central pooling and planning” • major adjustment current Dutch electricity market • Cost-benefit analysis CPB (Neth. Bureau for Econ. Policy Analysis): • Reserve contracts, capacity market, capacity payments • “benefits do not justify social costs” • “a 24 hour-blackout Randstad every 5 years is cheaper”

  8. Safety-net against market failure • Alternative mechanism: • Small adjustment Dutch balancing market at lower costs • Indirect long-term investment effect • Prevent blackout’s (short term solution) • Tennet contracts extra reserve capacity: • calamity-capacity: mainly interruptible load • long term contracts (3-6 years) • extra last-resort capacity- in cases of emergencies (wind Germany) • substantial to meet n-1 criteria (450-600MW) (3% of Dutch market) • at Tennet’s exclusive disposal

  9. Future steps • Positive monitoring TenneT 2005-2012 • Capacity (excl. imports): 1.21 (2005) and 1.15 in (2012) of consumption • Capacity (incl. imports): 1.42 (2005) and 1.44 (2012) of consumption • Since 2004: new investments en demothballing of 2600 MW (13 % Dutch market) • Conclusion: • Long term contracts calamity-capacity not neccesary • Only short term-contracts (2005 and 2006), yearly basis decision • Yearly monitoring TenneT; use 4 year-term perspective to introduce long-term contracts • Details to be examined; terms of contracts, call-of period (15 minutes-1hour), auction terms • More info? • Erik Sieders (h.sieders@minez.nl)

More Related