Matti SupponenElectricity and Gas unit

3rd Internal Market package

EUROPEANCOMMISSION

EEF 17.02.2009

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Structure of the presentation

.Status and content of the third package.Consequences of the third package to the market.Market challenges.Conclusions

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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

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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

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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

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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 periodStakeholder involvement

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Network codesENTSO Work programme

Legally binding codes

Preparation of codes

Voluntary codes

Agency:Preparation of

framework guidelines

Framework guidelines

Comitology

Agency

Commission

ENTSO

Commission

Commission

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Network codes1.network security and reliability rules including rules for technical transmission reserve capacity for operational network security;2.grid connection rules;3.third party access rules;4.data exchange and settlement rules;5.interoperability rules;6.operational procedures in an emergency;7.capacity allocation and congestion management rules; 8.rules for trading related to technical and operational provision of network access services and system balancing;9.transparency rules; 10.balancing rules including network related reserve power rules;11.rules regarding harmonised transmission tariff structures including locational signals and inter-TSO compensation rules;12.energy efficiency regarding electricity networks

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ENTSO-E network planning

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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

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Kriegers Flak

Separate Solution

Rødsand

Storebælt

Güstrow

Rostock

Kiel

LübeckSiedenbrünzowHerrenwyk

Audorf

Siems

Kontek

Gørløsegård

Bjæverskov

Hovegård

FraugdeKingstrup

Herslev

Rislev

Radsted

Kriegers Flak

Baltic LineLüdershagen

LubminBentwisch

Kruseberg

Barsebäck Hurva

Sege

Söderåsen

Baltic I

Combined Solution

Kriegers flak

Which solution is better?

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Regulated pricesRegulated prices

No investmentPressure to prices

No marketGovernment acts

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How is the market doing?

.Herfindahl-Hirschman index

» Belgium 8390» Latvia 8110» Slovenia 7208» France 6960Dominant positions

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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

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The end

Thank you for your attention

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Regional market approach

IPS/UPS

CWE

Nordic

UK/IE

CEE

SWECSE

SEE

Baltic

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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

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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!