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Presentation on Southeast European Power Market

CENTRAL ASIA. Presentation on Southeast European Power Market. REMAP Phase II Kick-off Meeting. 8-11 November, 2010 Almaty, Kazakhstan. SEE ENERGY MARKET. Regional Electricity Interconnections in SEE. Forecast electricity across the SEE. Existing capacity, rehabilitation, new generation.

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Presentation on Southeast European Power Market

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  1. CENTRAL ASIA Presentation on Southeast European Power Market REMAP Phase IIKick-off Meeting 8-11 November, 2010 Almaty, Kazakhstan

  2. SEE ENERGY MARKET

  3. Regional Electricity Interconnections in SEE

  4. Forecast electricity across the SEE

  5. Existing capacity, rehabilitation, new generation Source: World bank GIS Study 2005

  6. The Energy Community Treaty – What is it? • Treaty establishing the Energy Community for Southeast Europe signed October 2005 in Athens • Entered into force 1 July 2006 • Significant history, several interim agreements, and much negotiation leading to this momentous step

  7. Strategic Goals • Extend EU internal energy market to Southeast Europe and beyond • Provide stable investment environment based on rule of law • Enhance competition • Assure environmental protection and renewable energy • Promote security of supply • Exploit economies of scale

  8. Signatories and Stakeholders • European Community, plus • Seven Contracting Parties: • Albania • Bosnia & Herzegovina • Croatia • Former Yugoslav Republic of Macedonia • Montenegro • Serbia • United Nations Interim Administration Mission in Kosovo

  9. Austria Bulgaria Cyprus Czech Republic France Germany Greece Hungary Italy Netherlands Romania Slovakia Slovenia United Kingdom Signatories and Stakeholders • Participants:

  10. Signatories and Stakeholders • Observers: • Georgia • Moldova • Norway • Turkey • Ukraine

  11. Contracting Parties • Bound by legal and economic obligations of Treaty • Contracting Parties agree to adoption and implementation of EU acquis communautaire on: • Competition • Energy • Environment • Renewables • Contracting Parties take part in Energy Community process

  12. Participants • Any Member State of EU can obtain status as Participant • As Member States, Participants per se subject to obligations of acquis communautaire • Participants can take part in all institutional meetings of Energy Community • When Treaty signed, Bulgaria and Romania were Contracting Parties; following accession to EU, their status changed from Contracting Parties to Participants

  13. Observers • Treaty expressly contemplates integrated market expansion to Southeast Europe and beyond • Observer status is mechanism to introduce other interested countries to Energy Community • Observers may attend meetings of Treaty institutions • Observers may not take part in discussion and voting

  14. Treaty Institutions • Ministerial Council • Permanent High Level Group • Secretariat • ECRB (Energy Community Regulatory Board) • Electricity Forum • Gas Forum

  15. Ministerial Council • EU – two members • Energy Minister of each Contracting Party • Creates strategic direction and general policies for Energy Community • Assures objectives of Treaty met • Adopts Community Rules and Procedures • Takes legally binding measures to enforce policies • Delegates actions to other Institutions

  16. Permanent High Level Group • PHLG mission is to support Ministerial Council • 2 EU Members; plus one from each Contracting Party • Meets regularly • Ensures Ministerial Council decisions are carried out • Sub-Ministerial government officials • True working group • Supervises technical assistance requests made by international donor organizations • Monitors progress on meeting terms of acquis communautaire

  17. Energy Community Regulatory Board • First multi-lateral Energy Regulatory Board in the world • Comprised of one representative of energy regulator of each Contracting Party • European Community represented by delegate from European Regulators Group for Electricity and Gas (ERGEG)

  18. Energy Community Regulatory Board • Advises Ministerial Council and/or Permanent High Level Group on statutory, technical and regulatory rules • Issues recommendations on cross-border disputes • Harmonizes regulatory activity throughout region • Makes recommendations and reports on functioning of energy markets • Meets four times per year

  19. Fora : Electricity, Gas, Social, Oil • Treaty creates four fora to advise Energy Community • Chaired by European Commission • Stakeholder process –industry, regulators, consumers, organized groups • Consensus driven, conclusions presented to PHLG • Process grew out of previous mechanisms, Athens Electricity Forum and Southeast Europe Energy Regulation Forum

  20. Secretariat • Discharges day-to-day activities of Community • Reviews each Contracting Party’s fulfillment of obligations under the Treaty • Initiates Treaty enforcement procedures • Budget oversight and accounting • Director and staff provide assistance and support for other Institutions • Seat in Vienna

  21. Organization • Energy Community is comprehensive, well organized, and well staffed • Multiple, mutual reinforcing institutions • Frequent meetings • Requires commitment and fiscal support

  22. Structure and Implementation • Community task: create framework for network energy • Stable regulatory and market framework capable of attracting investment in gas networks, power generation, and transmission and distribution networks • All Contracting Parties to have access to stable and continuous energy supply • Single regulatory space for trade and network energy

  23. Structure and Implementation • Security of supply – mutual assistance in case of serious disturbance in energy networks or external disruptions • Principle of non-discrimination • Energy Community takes measures to establish a single mechanism for cross-border transmission and/or transportation of network energy – EU Regulation 1228

  24. Timetables • Clear and detailed Annexes to Treaty • Set forth dates for implementation of EC Directives • Under Electricity Directive, each Contracting Party must ensure eligible customers have right to choose supplier: for all non-household customers as of 1 January 2008, 1 January 2015 for all customers • Must comply with acquis on environment for large combustion plants by 31 December 2017 • Reduction in sulfur content of liquid fuels by 31 December 2011

  25. History • Energy Community Treaty did not spring out of thin air • Long, careful, deliberative process • Focus first on key principles to which countries committed internally • At early stage, goal was twofold: • Agree on minimum national requirements • Support through creation of regional organizations with representatives from each country

  26. History • Realized first through voluntary agreements with voluntary organizations • Voluntary agreements gradually changed to increasingly binding agreements • Regional market founded on multilateral, not bilateral, basis • Common understandings between all states involved provided platform for trade • Bilateral agreements insufficient to promote regional markets, only bilateral markets

  27. Entry into Force of Energy Community Treaty 1.7.2006 The Treaty Establishing the Energy Community 25.10.2005 Tirana Declaration 12.2004 MoU 2003 08.12.2003 MoU 2002 15.02.2002 MoU on SEE REM 02.06.2000 Declaration of Intents 10.09.1999 EC Process – Stages of Development Reasoned, consistent, building block process

  28. Observations • Contracting Parties already in advanced process of reform, not only in energy sector but in economy generally • Community formation benefited from substantial, regularly scheduled meetings and stakeholder input • International financial institutions and private investors already active in region • Investors supported large, borderless market with clear regulatory rules

  29. Observations • Significant SEE investment opportunities • Rehabilitation of existing plants in Community, 11.5 GW • New generation capacity required by 2010, 2.5 GW • New generation capacity of 11 GW required by 2020 • Renewable investment needs • Total generation investment cost: $15 billion U.S. • Additional infrastructure for transmission and distribution: $10 billion U.S. • Investors, private lenders seek clarity and consistency of regional market for such large sums to flow

  30. REMAP Considerations • Is the Energy Community a model? • Many signs of success and adaptability • Regional market with historic trades already • Regional thinking • Progress at national level on some institutions • Capacity and interest in sustained, multilateral efforts • Multiple investment opportunities and capital needs • Key lessons to be learned and adapted for REMAP

  31. CENTRAL ASIA Thank You

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