completing the internal energy market
TRANSCRIPT
Energy
Dr. Oliver Koch Deputy Head of Unit
DG Energy Internal Market – Wholesale, electricity & gas
Completing the
Internal Energy Market
Vienna Forum
8.3.2013
Energy
Outline
- Energy Policy and IEM
- Two trends:
- Europeanisation
- Intermittent Energy
- Spotlight: capacity markets
Energy
EU-Energy Policy
- Global Trend: Shale-Gas-Revolution, BRIC, etc. => increasing price differentials => relevance for industry & EU Energy Policy
- Energy Policy "post 2020"
- Targets? If so, which targets?
- Future of ETS & relation to support schemes
- Calibration Sustainability/Competitiveness/Security of supply
- …
Energy
EU-Energy Policy
Recent Initiatives:
- Internal Market Initiative (Council, 2011)
- Energy Roadmap 2050
- Energy Efficiency Directive
- Communication on Internal Market
- Infrastructure Package / Connecting Europe
Energie
EU-Energy Policy: Outlook
Main Communications 2013, i.a.
- Commission strategy "2030"
- Guidance on renewables support schemes
- Guidance on capacity mechanisms
Energy
Internal Energy Market
Achievements &
Challenges
Energy
• Implementing Third energy package
• Harmonising market and network rules
• Enforcing competition and State aid rules
• Enhancing investments in infrastructure
• Empowering consumers
• Promoting regional initiatives
Internal Energy Market
Energy
High concentration in retail electricity markets
•
• VERY HIGH (ABOVE 5000 HHI)
• HIGH (1800 – 5500 HHI)
• MODERATE (750 – 1800 HHI)
Energy
Energy
Independent national energy regulators are central
to ensure truly competitive markets
ENERGY REGULATORS ARE INDEPENDENT
CONCERNS ABOUT INDEPENDENCE
Energy
Energy
Interconnections / Reverse Flows in Gas
• No Flows
• Flows only in one direction
•
• Flows in two directions
GAS FLOWS
Energy
Energy
Price regulation fails to activate
consumers and suppliers
• REGULATED PRICES FOR HOUSEHOLD
CONSUMERS AND INDUSTRIAL CONSUMERS,
IN GAS AND/OR OF ELECTRICITY
• REGULATED PRICES FOR
HOUSEHOLD CONSUMERS
• NO REGULATED PRICES
Member States currently phasing out price regulations: By 2013: Greece, Portugal & Lithuania By 2017: Romania Energy
Energy
Infringement procedures for non-transposition
of the 3rd package directives
• Full transposition notified and
• no non-transposition case pending
• Full or partial transposition notified
• and non-transposition case pending
•
Energy
Energy
Internal Energy Market: Infrastructure
Energy
Distrigaz: => no long-term contracts
E. O N power
E N I => network sale
R W E: =>network sale E.ON gas:
=> capacity release
G d F Gas: => capacity release
Swedish Interconnectors: => opening interconnectors
E d F electricty => no long-term contracts
=>network sale => generation sale
GAZPROM case => terr. restrictions, price abuse
CEZ => access to generation
Recent EU Energy Antitrust
Cases
OPCOM => Foreclosure of foreign companies
Internal Energy Market: Competition Enforcement
Energy
Internal Energy Market: Competition Enforcement
Energy
Two major developments:
• Europeanisation • Intermittent energy
Energy
1. Europeanisation
EU Electricity Markets are already integrated
Energy
Energy grids are not national
Energy
Scheerer (2012)
Energy grids are not national
Energy
EU
Energy Community
Energy Community
Observers
EU neighborhood
policy
Quelle: Europäischen Kommission
Internal Energy Market - not only the EU !
Energy
Internal Energy Market - not only the EU !
Energy
Energy
Market Coupling
2014
Energy
2. Intermittent energy => new challenges
Energy
Increasing production from intermittent energy: new challenges
•National regulation of european markets: • More complex grid operation
=> Security of Supply?
=> Fair cost sharing of transmission costs
• National RES support schemes in integrated markets => market distortions to detriment of neighbours; risk of excessive subsidies?
• Necessity of reserve capacities => Investment standstill, but: cascade of state interventions?
Energy
•Uncoordinated renewables policies:
•=> Market distortions
Energy
Energy
Example:
Loop Flows
Energy
Energy
• Electricity loop flows caused by internal imbalances
• Effects in neighbouring countries
• Reduction of cross-border capacity
• Risk for grid stability
=> Fragmentation of the single market
=> fair cost allocation
30
Energy
•Capacity Mechanisms
Undeniable need for security of supply, but risk:
Vicious circle: badly designed support schemes and capacity mechanisms may destroy internal market
=> which is needed to solve the problem!
Sub-optimal support schemes => distorted investment signals => result in another subsidy (capacity payments)
Energy
CO2 Policy
/ ETS RES Support
Schemes
Capacity
Mechanisms
Market
Design
(Flexibility)
Generation
Adequacy
Energy
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Germany France Great Britain Netherlands Belgium Denmark Norway N. Ireland Rep. of Ireland
Rem
aini
ng C
apac
ity
-Ade
quac
y R
efer
ence
Mar
gin
(GW
)
Generation adequacy 2020 – NW Europe
Energy
6%
4%
6%
72%
12%
Member States
Other Public Authorities
Academia
Energy Industry
Consuming Industry
Consultation on Capacity Mechanisms
Energy
Barriers to market functioning…
0 20 40 60 80 100
RES - Support schemes
RES - Priority dispatch
Price Caps
Other state interventions
Lacking Demand Side Repsonse
Lacking Interconnecion Capacity
…But nearly all respondents emphasised need to complete IEM
Consultation on Capacity Mechanisms
Energy
Assessing generation adequacy
0 10 20 30 40 50 60 70 80
ENTSO-E Sufficient?
More Regional needed?
More European needed?
Common methodology
Common standards
Is a revision of the SoS directive
needed?
Need for adaptation recognised – but how to implement?
Consultation on Capacity Mechanisms
Energy
Split views on need for CMs
Wide support for EU criteria
Limited support for EU mechanism
0 20 40 60 80 100
Can energy only market work
Blueprint for an EU-wide capacity
mechanism
Criteria at EU level for compatibility of
CRM with IEM
Are criteria set out above appropriate?
Consultation on Capacity Mechanisms
Energy
• Flexible capacity or sufficient capacity
• Many argue energy market should deliver flexibility – CM only for sufficient capacity
• Strategic reserves
• View split – slippery slope or limited and targeted intervention
• Very limited support for capacity payments
• Support for criteria
• MS to demonstrate proportionality Especially on cross border effects
• Market based
• Transitional
•
Energy
Capacity Mecanisms - Next steps
8 March
Stakeholder forum
14 March Electricity coordination group discussion
Internal preparation in Commission
24 April Informal energy council
Further reflections plus internal procedure
July Commission to set out framework for CRMs
Energy
Open issues Electricity:
The "target model"
- already outdated?
Energy
Energy
Energy
Open issues GAS
• Future role of gas? • Hub vs long-term • etc.
Energy
SovoSvoboda, 31.312013
Energy
Energie
Integrated Energy Markets
• Indispensible for any national energy policy
• Autarchy is no option => need for co-operation
• Not too late to catch the train
Energy
David Cameron,
Maastricht
23 January 2013:
"These should be the tasks that get European officials up in the morning – and keep them
working late into the night:"
Energy
"The first (task): competitiveness.
At the core of the European Union must be, as it is now, the single market.
But when the single market remains incomplete in services, energy and digital –
the very sectors that are the engines of a modern economy – it is only half the success
it could be."
David Cameron, Maastricht
23 January 2013
Energy
Pursuing EU-market integration
is without alternative
• allows aggregation of generation
• allows cross-border use of capacities
• Indispensible for security of supply
• Allows reasonable infrastructure planning
• Results in lower energy prices through markets and competition
Energy
Thank you very much for your attention
Dr. Oliver Koch
Deputy Head of Unit
European Commission
DG Energy
Unit B-2 (Internal Market II: Wholesale; gas & electricity)
DM 24 – 6/117
Brussels/Belgium
++32 229 87302