Regional Transmission Network Development: Implications for Trade and Investment

1. Regional Transmission Network Development: Implications for Trade and Investment Matti SupponenAdministrator, DG-TREN, European Commission Keynote Address: Energy Community of Southeast Europe and Regional Electricity Market Development November 11-12, 2009

2.  Energy Community of Southeast Europe and Regional Electricity Market Development USAID/USEA workshop “REGIONAL TRANSMISSION NETWORK DEVELOPMENT: IMPLICATIONS FOR TRADE AND INVESTMENT” Istanbul 11-12 November 2009 Matti Supponen Electricity and Gas Unit EUROPEANCOMMISSION

3. Outline of the presentation • How the legal framework for electricity markets is developing? • How the market design is developing? • Future of European transmission planning • Conclusions

4. 3rd market liberalisation package • EU Regulatory Agency • Site: Bratislava, Bucharest or Ljubljana • Stronger powers for national regulators • Cooperation of network operators (ENTSO-E) • ENTSO-E is already established, three committees: • system operation • market • system development • Effective unbundling of transmission networks • Three possibilities: • ownership unbundling • independent system operator • independent transmission operator

5. TSO co-operation in the third package, tasks • Annual work programme and annual report • Network codes • Monitoring of implementation of codes • 10-year network development plan • Generation adequacy outlooks • Common network operational tools • Co-ordination of research

6. Network codes

8.  Regional market approach Nordic UK/IE IPS/UPS Baltic CEE CWE SEE SWE CSE

9. Market Integration Design project (MIDP) • Works under the Florence forum • Target model features: • Implicit day ahead auctions for the whole Europe, based on Central Matching • Capacity calculation “Flow based” • OTC perhaps in all timeframes, in particular intra-day • Cross border price difference hedging either by physical or financial rights sold by TSOs • EU balancing market

10.  Congestion management 2000 Implicit auctions Only explicit auctions Other methods Nord Pool Arnhem auction office

11.  Congestion management 2015 Implicit auctions Only explicit auctions Other methods Euro Pool

12. The 20-20-20 EU policy by 2020 100% -20% -20% +20% 8,5% Greenhousegas levels Energyconsumption Renewablesinenergy mix

13. 13% 16% 13% 30% 18% 25% 16% 18% 20% 23% 17% 13% 40% 23% 11% 13% 10% 14% 34% 15% 31% 24% 25% 14% 38% 49% 15% Member States’ targets EU-27 efforts in Renewables 2.2% BE BG CZ DK DE EE IE EL ES FR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK RES share in 2005 9.4% 6.1% RES share in 2020 17.0% 5.8% 18.0% 3.1% 6.9% 8.7% 10.3% 5.2% 2.9% 32.6% 15% 0.9% 4.3% 0% 2.4% 23.3% 7.2% 20.5% 17.8% 16% 6.7% 28.5% 39.8% 1.3% Based on 2005 starting point, recent progress and a balanced sharing of the effort, weighted by GDP/capita

14. A Commission view on how we get there… GWh T H E Heat pumps Wind Biomass electricity Hydro

15. 10-year network development plan • Until now, no European network plans have been made, only compilation of national plans • Two regional plans forerunners: • Nordel • SECI • ENTSO-E will deliver the first (pilot) 10-year network development plan in June 2009 • Important issues under discussion: • Scenarios, which one to use • Criteria for selection of projects

16. European funding for Electricity infrastructure • Recovery plan projects • 925 M€ of EU money • 7 interconnector projects • of which 5 Direct Current lines • 4 internal line projects • Transeuropean Networks funds • 25 M€/year for electricity and gas

17. Summarised • Third package is big step towards a European Electricity market • Expectations for the Agency and ENTSO-E are high • Market Integration Design project should make a market design for Europe • Energy invetments are driven by climate change targets • New transmission infrastructure urgently needed