Strategy of security of enery supply Slovak Republic

1. Ministry of Economy of the SR Strategy of security of enery supply Slovak Republic Alena Žáková, 4th October 2007 Seminar – Energy efficiency and energy security

2. The main challenges Importance of energy sector in social life and in economy It is needful do secure energy sources into the liberalized energy market within acceptable prices.

3. Strategic target of new EU energy policy NEP EU – 10 January 2007 (EC introduction) 12 February 2007 (Ministerial Council) • competitiveness – to ensure energy market opening with contribution for consumers and whole economy • security of supply – to decrease growing dependence on energy imports and to solve vulnerability of national economy • sustainability – to develop alternative production facilities and energy medium, to improve air environment quality and to slowdown climate change Action Plan – 14 March 2007 (Spring Summit)

4. Priority of NEP EU (defined in the Action Plan of EU) • competitiveness and internal market • security of supply and solidarity from MS • sustainable development - competitiveness • solution of climate changes, innovation and technologies • external policy „Liberalized package“ - September 2007

5. Strategic target Energy policy of the SR • to ensure such volume of electricity generation that will cover the demandon an economically efficient basis; • to ensure secure and reliable supply of all forms of energy in the required quantity and quality while at the same time ensuring maximum efficiency; • to reduce the share of gross domestic energy consumption in the gross domestic product (reduction of energy intensity). a.

6. Strategy of Energy Security of the SR (SoES SR) It should be approved by government by 31.12.07. It will define development of direction of the energy sector by 2030 Goal: ...to reach competitive energy… … that ensures secure, reliable, effective supply of all forms ofenergy… …for acceptable prices… …taking into consideration consumer protection, environmental protection, sustainable development, SoS and technical security

7. Strategy of Energy Security of the SR (SoES SR)(2) Analyses status and proposes solutions for: • electricity sector • heat supply sector • gas sector • crude oil production, processing and transportation • coal exploitation • RES utilization • energy efficiency

8. Characteristic of energy sector of the SR • high dependency on import of primary energy, • high energy intensity of the national economy, • relatively law portion of utilization of RES, • insufficient research, development and innovative technologies, that are influence by global trends:Increase of energy prices on whole world market • climate change and its results

9. Important facts on SR • restructuralization and privatization of energy companies • market liberalization • voluntary commitment - within accession process into the EU,decommissioning of NPP Jaslovske Bohunice not by the technical or safety reasons • SR will become import country (In the field of electricity sector) compared with recent period as a export country

10. SoES SR a) Coal Present status • the most important prime energy source • absence of black coal mining within the SR • the most important element of raw material securityand energy security • decrease tendencyof volume of mining

11. SoES SR a) Coal(2) Measures for secure of coal supply • to ensure after 2010 sale of produced (mined) coal within remaining economical effectiveness of coal production by prolongation public service obligation for exploitation from deposit in the SR by 2020 • continuously to update tendering procedure for black coal supplier

12. SoES SR b) Crude Oil Present status • dependency on crude oil import – 99% supply from RF • oil processing at the level 5.5 mil. ton/year – refinery Slovnaft a.s. Bratislava, refinery Petrochema,a.s. Dubová • covering domestic consumption of engine fuel by the Slovnaft company a.s. at cca 60 % rest is covered by oil product market from Austria and Czech company. • assumption of increase of engine fuel consumption within 15 years – 2 times higher, by 2030 – 2.5 times higher

13. SoES SR b) Crude Oil (2) Measures for secure of crude oil supply • to ensure oil supply in the SR from safe and economically the most advantageous sources. • to ensure stability of oil supply in time horizon of upcoming 20 – 25 years minimally at the double level compared with present status

14. SoES SR b) Crude Oil (3) Diversification of transport routes and sources – besides RF, Kaspian area a Middle East, Northern Africa: • crude oil pipeline Družba (Russia) • alterative crude oil pipeline - Adria from Szashalombatty (in case of insufficient direct supply from Russia to Slovnaft) • Odesa – Brody - Družba, (pipeline is politically complicated) • utilisation of interconnection IKL-Družba provided the reverse flow in crude oil pipeline Družba within simultaneous excluding of possibility of supply by crude oil pipeline Družba and Adria • Bratislava – Schwechat: interconnection is at present under discussion • in emergency situation - 90 days emergency oil and oil product stocks (needful to complete stocks for crude oil and oil products in compliance with EU and IEA regulation)

15. SoES SR c) Gas Present status • dependency on gas import – 98 % of supply from RF(SPP a.s. operator of transport lines) • SR - important player in the field of Russia gas, approximately 20% of EU consumption passes through SR • decrease of gas consumption (due to price increase), trends in future – only a slight growth oh the consumption • not completed process of electricity and gas market liberalization - since 1.7.2007 all supplier has been eligible, but in spite of legislation environment gas and electricity market is really not fully opened yet • gas market concentration, dominant position of big and strong player

16. SoES SR c) Gas (2) Measures for secure of gas supply • gas supply from safe and economically the most appropriate sources • functioning liberalised gas market – without barrier • standard of security of gas supply • last resort supplier • crisis management • mechanism of emergency stocks – building underground storages • monitoring of gas supply

17. SoES SR c) Gas (3) Diversification of transport routes (competition for Slovak transport networks): • gas pipeline Blue stream – interconnects Russia with Turkey, Hungary, government announced interest to extend this gas pipeline (it means jeopardize of Nabucco) – gas source from Russia - capacity 16 bln. m3/year • gas pipeline South Stream – from Russia through Black Sea and Bulgaria to Europe (through Greece to Italy). In Bulgaria - separation to N and S line (through Hungary to Austria) - capacity 30 bln. m3/year • gas pipeline Nord Stream – Northbaltic gaspipeline - bypassing Poland, end in Germany (negative impact to SR, decrease of transported volumes through SR). Capacity 27,5 bln. m3/year (2010), 55 bln. m3/year

18. SoES SR c) Gas (4) Diversification of sources: • in addition to Russia - North Europe (especially Norway), Caspic and Middle East, North Africa • gas pipeline Nabucco (from Turkey, through Bulgaria, Romania, Hungary, to Austria), realized in cooperation with Austria, - oil from Caspian area and Middle East, capacity 31 bln. m3/year, assumption 2012 • terminal Adria– LNG - island Krk, capacity 10 bln. m3/year, assumption 2011 • possibility to transport liquid gas by supply from Lybia, Algeria, Quatar (also from Russia) • terminal Poland LNG – building up on the bank of Baltic Sea in Poland • common gas-logistic trade centre in Austria (Baumgarten)

19. SoES SR d) Renewable energy sources (RES) Present status • RES utilisation 34 PJ biomass (17PJ), hydro-energy (17PJ), • 4,3% - portion of RES utilisationto domesticenergy consumption • 17% - portion of electricity production from RES to electricity consumption • 2,5% - portion of biofuel to consumption of engine biofuel

20. SoES SR Measures for RES • implementation of innovative technologies • applied research • RES cost effective integration into energy sector

21. SoES SR e) Heat Present status • tradition of Central Heat Supply • over-equipped primary and secondary heat distribution lines • convenient technical state of production facilities • inconvenient state of secondary distribution lines Measures for secure heat supply • legislative and institutional measures • preparation of supportive programs • high efficient combined heat and electricity production, etc.

22. SoES SR f) Electricity Present status Structure of export and import flows in 2006 (GWh) Total balance of cross-border exchanges in 2006 - 1603 GWh in favour of export.

23. SoES SR f) Electricity (2) • annual decrease of available installed capacity in SR by 2010 – 1370 MW; by 2030 – 3 855MW, e.g. 56% compared with 2006 • Reasons: international commitments, obsolescence, environmental criteria • Impacts: price increase of base-load electricity, problems with auxiliary services • decrease of installed capacities in EU • negative impacts of emissions fees on electricity prices • more risky availability of fuels, price development is influenced by global price trends

24. SoES SR f) Electricity (3) Estimated development: By 2030 it is supposed increase of electricity consumption by 13,5 TWh, e.g. almost 46 % increase compared with present Forecast of electricity consumption development in SR

25. SoES SR f) Electricity (4) Requirements for deficit cover in production in ES SR: about 6600 MW of new capacities and approx. 29 TWh in production

26. SoES SR Measures for secure electricity supply Global goal: • ensure volume of electricity, which covers demand on economically effective principle Measures: • production (balanced energy mix): • increase of capacity of the existing production facilities • build up of new production facilities • reinforce of capacity of transmission lines • upgrade of national transmission system (increase of capacity of existing lines and build up new lines) • build up new cross-border interconnections • optimalization of management system in real time • modernization of distribution system

27. SoES SRMeasures for secure electricity supply (2)

28. SoES SR Measures for secure electricity supply (3) Proposed projects (2):

29. SoES SRMeasures for secure electricity supply (4) ES SR do 2030 Proposed projects (3):

30. SoES SR g) Energy efficiency Present status • energy intensity of the SR is, in spite of some decrease, significantly higher at present compared with EU • 4,1-time higher, than is average of countries EU27 • structure of industry is historically highly energy intensive • barriers for setting up of principles of energy efficiency regard: policy, legal and regulatory framework, institutional framework, budgetary, taxes and prices barriers, barriers informing

31. SoES SR g) Energy efficiency (2) Measures in favour of energy efficiency enhance • to reach gradual decrease of energy intensity to level of average of former 15 EU member • to reach yearly savings 4 135 TJ/year => 1% of year average of total consumption in line with Directive 2006/32/ES on Energy Services • Conception of Energy Efficiency of the SR: analysis – barriers – frame measures: industry, households, services, transport, agricultural sector (approved by government in July 07)

32. SoES SR g) Energy efficiency (3) Measures in favour of energy efficiency enhance • 3-year Action Plans (2008-10, 2011-13, 2014-16): concrete measures: buildings, appliances, industry and agricultural, public sector, transport sector, horizontal measures (upgrade of political, legal and institutional framework, monitoring system, information campaign) • financing: Energy Efficiency Fund – public and private sector, structural funds - OP Competition and Growth, banks (e.g. EBRD Credit line)

33. Zakova@economy.gov.sk Thank you for your attention