Energy and Climate ChangeAn EU Perspective:

The Power Industry’s View

NHO/IOE, Oslo, 18 September, 2008

Bengt MagnussonEditor in Chief and

European Correspondent

Swedenergy – ERA Magazine

Industry’s Face/Voice in EU

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Representing the European Electricity Industry

at Expert, Strategic and Policy-making Level

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EURELECTRIC members

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Piebalgs-Barroso-Dimas, 10/1/07

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Neelie Kroes, 10/1/07

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Useful Background 1

• A Green Paper for a Common Energy Policy presented in March 2006.

• ”Action Plan Energy Efficiency” launched 19 Oct 06. “The Rest”: 10 Jan 07.

• Big Day: EU Climate Action and Renewable Energy Package, 23 Jan 08.

• Proactive Energy Commissioner, Andris Piebalgs:

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Useful Background 2

• Common Energy Market.• Energy Supply - solidarity

between Member Countries.• Diversified energy mix – up to

every country (subsidiarity).• Proactive Climate Action –

energy efficiency…• Strategic plan - EU world

leader in energy technology.• A Common external energy

policy.

Competitiveness

Env/Climate

Secure energy supply

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Useful Background 3

• High(er) electricity prices, heated discussions in the electricity intensive industry all over Europe. Ukraine, Georgia: Sec of Supply.

• Climate issues and emissions rights trading (ETS): hot, hot!

• Climate/energy: Currently has the Very Highest Priority within the EU!

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EC: Basic Proposals 1 (”20-20-20”)”23 January 2008”

• 20 % reduction of GHG:s within EU by 2020 (compared to 1990).

• Binding targets of 20 % renewable energy by 2020.

• Energy Efficiency: 20 % according to Action Plan of 19 October 2006.

• ”Ownership unbundling” is the objective for the electricity supply side (“not possible” in the gas business).

• Co-operation between regulators.

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EC: Basic Proposals 2

• Yr 2015: at least 12 demonstration plants testing CCS (“Schwarze Pumpe” pilot in Germany open now).

• Yr 2020: all new coal-fuelled plants have got CCS.

• Liberalisation of electricity and gas markets continues.

• Treaty/deal with Russia (Energy Charter)… When??

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EC: Basic Proposals 3

• Common technical standards for cross country power trading, more effective and better co-operation among TSO:s:

• ETSO >>> ENTSO-E: encourage more transmission links, 5 yrs planning and approval - at most – 10 acc to EC.

• Focus on and better financing of RDD; cf. SmartGrids, highlighted in a current IEA-project (Enard).

Market integration must accelerate, we say…

• The first packages brought progress, focusing on the national level. Regional markets must now be promoted: a necessary step to one EU market.

• The most efficient way to deliver market integration is via system operation & grid investment at regional level.

• The 3rd package should facilitate regional integration of network operators. Regulators & TSO:s should have a duty to promote market integration.

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UK – fairly competitive market

SPAIN - duopoly

FRANCE - single dominance

GERMANY - oligopoly

EC: Concentration in European electricity markets

Norway, Finland, Denmark, Sweden: NORDEL folds…

France, Germany, Benelux:Northwest Europe Cooperation established

Power exchanges (Bourses) plentiful! NordPool ASA, et al.

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Pan-E

uropean market

The road towards an integrated electricity EU-market

Integration at European level

2007-12

Coordination between regions 2005-10

Development within regions 2005-09

Continued liberalisation of national markets2005-07

Source: “Integrating Electricity Markets through Wholesale Markets: EURELECTRIC Road Map to a Pan-European Market” (June 2005)

How to deliver?

The best way for the EU to deliver on climate while offering competitive power supply is through

A COMPETITIVE, INTEGRATED POWER MARKET ACROSS EUROPE

Third package and climate/energy package must both facilitate trade & drive integration!

Key to cost-effectiveness:

Synergies between supply and demand

Efficient use of electricity and new electrotechnologies

Low-carbon supply of electricity

Fossil Fuels Renewables Nuclear

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Age span in electricity generation, ”old EU15”

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0

20

40

60

80

100

120

140G

W

< 10 years 10 - 20 years 20 – 30 years > 30 years

Europe’s generation fleet ages: half of today’s capacity – most of it coal fired – is probably terminated by 2030.

Oil

Gas

Coal

Nuclear

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Prognosis – EU 2020: Renewable electricity

0

200

400

600

800

1000

1200

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

RE

S-E

- en

ergy

out

put [

TWh

/yea

r]

Wind offshore

Wind onshore

Tide & wave

Solar thermal electricity

Photovoltaics

Hydro large-scale

Hydro small-scale

Geothermal electricity

Biowaste

Solid biomass

Biogas

Historical development Future development

Source: EC

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Role-play, co-habitation/operation according to EC proposal

EU COM

ACER

National Regulatory Bodies

ENTSO

National System Operators

Monitor and examine

Source: Svenska Kraftnät

The Future

Erik, 5 months old, your future energy customer – or boss…

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Energy: now a climate issue!

Sir Nicholas Stern.

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Climate: now an energy issue!Conti, Enel, Josefsson, Vattenfall, Barroso, EC.

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Extra curriculum: Who is this?

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Right, the Energy Minister of India!

• His name is Sushilkumar Shinde.• At the WEC congress in Rome last

November he pointed to the fact that his country has got 600 million people with no or very small access to electricity. In the EU we are 450+ million…

• ”Clean energy must be supported, but market solutions will hardly make the trick”, says Shinde.

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India – one billion+ people

• - Our priority is to supply our people with electricity, and the RES are not sufficient here. It’s simply necessary to go for fossil fuels, too, says Shinde.

• And China has almost as many inhabitants as India…

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Q:s & A:s

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Thank you for your attention!

• bengt.magnusson@era.se• 0708 672 771• Svensk Energi-Swedenergy-

AB /Tidskriften ERA SE-101 53 Stockholm, and• Rue du Luxembourg 3,

B-1000 Brussels• www.era.se