Directorate General for Energy and Transport

Security of Supply SeminarMelnik castle 31.5.2005

“Keeping balance between electricity supply and demand in the European

Union ”

European CommissionDG Energy and Transport

Matti SupponenElectricity and Gas UnitMatti.Supponen@cec.eu.int

Directorate General for Energy and Transport

Summary

EU legislation Electricity market context Short, medium and long-term

security of supply Conclusions

Directorate General for Energy and Transport

• security of supply• competitiveness• environmental protection

EU energy policy seeks to find a balance between:

Increasing environmental concerns and the establishment of the internal market for energy have been a source of fresh impetus in recent years.

The two oil crises (1973 and 1979) prompted concerns to secure the energy supply and led to EU energy policy being considerably extended.

An Energy Policy for the EU

Directorate General for Energy and Transport

Internal marketSecurity of electricity supplyRenewable energiesEnergy efficiencyOil prices, oil and gas stocksNuclear energyEnergy networks

Emissions trading (DG ENV)

DG Energy and Transport key dossiers

Directorate General for Energy and Transport

Further legislative mesures

Unbundling: ownership? ERGEG+ ETSO+ Powers of national regulators/single

regulators Binding rules for technical and

commercial operation of the grid Investment in the grid Transparency

Directorate General for Energy and Transport

Security of electricity supply in EU legislation

• Electricity directive 2003/54/EC

• Obligation to have a tendering procedure (Article 7)

• Security of electricity supply directive 2005/89/EC :

• Create stable conditions for generation and network investments (Article 3)

• Obligation to publish regulatory approach to wholesale market (Article 3)

• Maintenance of reserve by TSOs (Article 5)

• Regulatory role in providing incentives for new network infrastructure (Article 6)

Directorate General for Energy and Transport

Regional energy markets in the EU

Moderately concentrated

Highly concentrated

Very highly concentratedcongestion

Directorate General for Energy and Transport

EU legislation on Internal marketUK and IrelandCons. 400 TWhExch.int. 2 TWh = 0,5%Exch.ext.12 TWh=3,0%

Central Western EuropeCons. 1310 TWhExch.int 97 TWh = 7,4%Exc.ext. 111 TWh=8,6%

Iberian peninsulaCons. 303 TWhExch.int. 12 TWh = 4,0%Exch.ext. 9 TWh=3,0%

ItalyCons. 328 TWhExch.int. 0 TWh = 0,0%Exch.ext. 51 TWh=15,2%

South East EuropeCons. 207 TWhExch.int. 25 TWh = 12,1%Exch.ext. 20 TWh=9,7%

Central Eastern EuropeCons. 335 TWhExch.int 39 TWh = 11,6%Exch.ext. 70 TWh = 20,9%

Baltic countriesCons. 23 TWhExch.int 2TWh = 10,0%Exch.ext 3TWh = 13,0%

Northern EuropeCons. 388 TWhExch.int 36 TWh = 9,3%Exch.ext. 28 TWh=7,2%

11 TWh

8 TWh

18TWh

1 TWh

9 TWh

41 TWh

8 TWh

12 TWh

15 TWh

2 TWh

35 TWh

3 TWh

1TWh

1 TWh

Cons. = ConsumptionExch.int. = Cross-border electricity inside regionExch.ext. = Cross-border electricity between regions

Electricity consumptionand exchanges in regionsin Europe in 2005

Directorate General for Energy and Transport

Cross-border flows

Cross-border Electricity Exchange in EU

10,3%9,2%9,7%9,6%9,0%9,1%

8,4%7,7%

0%

2%

4%

6%

8%

10%

12%

20052004200320022001200019991998

Year

Exch

an

ge/C

on

su

mp

tio

n

Directorate General for Energy and Transport

Congestion management methods in 2007

Use of implicit auction

Explicit auction only

Special features

No congestionin the region

PX

PXPX

PX

PX

PX Power exchangewith implicitauctioning

PX

PXPX PX

Pool

PXPXPX

PX

PX

AO Auction office

AO

AOAO?

AO?

PoolPool

Directorate General for Energy and Transport

Avoiding blackouts

Key objectives

Directorate General for Energy and Transport

Electricity supply shortages

Natural disasters France 1999, storm Southern-Europe summer 2003,

heat-wave Technical failures

London, August 2003 Southern-Sweden and Denmark,

September 2003 Operational failures

N-E U.S.A and Canada, August 2003 (5 G€)

Italy, September 2003 (0,5G€) Germany, November 2006 (?G€)

Market failures California 2000, 2001 (100G€)

Directorate General for Energy and Transport

ETSO Generation adequacy forecast (UCTE, Nordel, UK, Ireland)

Remaining capacity at peak load

0

20

40

60

80

100

2008 2010 2015

Year

GW

Best estimate

Conservative

Minimumvalue (ARM)

Directorate General for Energy and Transport

Trans European Electricity Networks, prioritet EL8

Directorate General for Energy and Transport

Priority Interconnection PlanPriority Interconnection Plan

*

* = In the PIP

*

*

*

*

*

*

**

*

Directorate General for Energy and Transport

Network adequacy Generation adequacy Competitive market Incentives for new investments Dependence on gas Renewables Future of nuclear

CZ Security of supply check-list

Directorate General for Energy and Transport

Conclusions

Community Policy on security of supply is developed

Directives are “light” and leave much to Member States

Objective to give transparency and a stability to market actors

Objective that necessary investments are realised in a timely and efficient way