3rd Internal Market package

1.  3rd Internal Market package EEF 17.02.2009 Matti Supponen Electricity and Gas unit EUROPEANCOMMISSION

2. Structure of the presentation • Status and content of the third package • Consequences of the third package to the market • Market challenges • Conclusions

3. 3rd package: main measures • Effective unbundling of transmission networks • EU Regulatory Agency • Cooperation of network operators (ENTSO) • Stronger powers for national regulators • Also • Transparency • Retail market & consumer protection • Third country clause • Level playing field

4. Third Package : main remaining issues • TSO Unbundling: will Council prevail ? • Fuel poverty: will EP get what they want? • Comitology on European guidelines : needed for making the rules legally binding • First priority… climate and renewables package

5. Third Package : timing • Informal conciliation through trialogues has started • Second reading of the Parliament has to agree on a compromise latest in April 2009 • Formal adoption by the Council can be in September 2009 => If not, important delay

6. Third Package : implementation • Agency setup: 18 months • ENTSO setup by summer 2009 • Starting to prepare codes and guidelines in practise Make best use of transition period • Stakeholder involvement

7. Network codes

8. Network codes • network security and reliability rules including rules for technical transmission reserve capacity for operational network security; • grid connection rules; • third party access rules; • data exchange and settlement rules; • interoperability rules; • operational procedures in an emergency; • capacity allocation and congestion management rules; • rules for trading related to technical and operational provision of network access services and system balancing; • transparency rules; • balancing rules including network related reserve power rules; • rules regarding harmonised transmission tariff structures including locational signals and inter-TSO compensation rules; • energy efficiency regarding electricity networks

9. ENTSO-E network planning

10. Market challenges • Three major challenges: Wind, wind and wind • There will be huge investments in renewable energies • How will the necessary network infrastructure be built? • How will the renewable energy be introduced into the market? • Renewables alone will not be enough • Only difficult choices available: • Gas • Coal • Nuclear

11. Söderåsen Barsebäck Hurva Gørløsegård Sege Hovegård Kruseberg Herslev Storebælt Bjæverskov Kingstrup Fraugde Rislev Kriegers Flak Kriegers Flak Combined Solution Radsted Kontek Baltic I Rødsand Kiel Audorf Lüdershagen Baltic Line Rostock Lubmin Bentwisch Siedenbrünzow Herrenwyk Güstrow Lübeck Siems Kriegers flak Separate Solution Which solution is better?

12. Regulated prices

13. How is the market doing? • Herfindahl-Hirschman index • Belgium 8390 • Latvia 8110 • Slovenia 7208 • France 6960 • Dominant positions

14. Conclusions • Third package will give a push for further development of the market : quick adoption needed • No-compromise climate change policy is the underlying assumption : 20-20-20 objectives! • Pressure towards higher prices, Governments scared about price increases, regulated prices seriously hamper investments • Investments urgently needed both in production capacity and in networks

15. The end Thank you for your attention

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

17. Regional markets: results of the regional forums • +++ • Market coupling is spreading • Capacity allocation moving to flow based methods • Stakeholder involvement • - - - • Progress slower than wanted • Unanimous approach showing its limits • Old unsolved problems block the progress • No full power exchange coverage yet

18. Strategic energy review • Vision for 2050 • Decarbonisation of electricity • Away from oil in transport • Low energy and positive power buildings • Smart interconnected power grid • Rest of the world to follow!