What future for EU utilities (if any)?

Prague– Energy Regulatory Forum(17 March 2016)Jean-Michel Glachant Director “Florence School of Regulation”@ European University Institute – Florence (Italy)

What future?

If any…

What?

1/ Simple: future is just a (?)What was it about?

• More RES? • Less fossil fuel? Or less utilities? Half utilities half dead? E.ON

-10bn (EDF weights 18bn); Vattenfall & lignite• Less nuclear? Or no nuclear? E.ON, RWE, Vattenfall 19bn;

Areva – 10bn; EDF weights 18bn Hinkley alone 24bn• No wealthy “Major” utilities left: who will drive “energy

transition” innovation and investment? Smaller utilities? As Iberdrola? New comers & Investment funds? Nobody needed? Nobody knows?

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2/ Less Simple: future is not the pastWhat was it about?

• More RES? • More grid investment… but not more energy What is a right

incentive regulation to “invest more” but not “deliver more”?• At what point more “grid cost past through” becomes

“incentive regulation” for consumers to bypass the grid? • Inevitable to define new services, new KPIs? To go to “A la

Carte” tariffs & to stop “Universal Postal Stamp”?

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3/ Less Simple: future not at all the pastWhat was it about?

• More RES: more distributed gen. & local system operation? • TSOs did become “internal market facilitators” via Unbundling

+ “Target Model” + Grid Codes• Where are DSOs “Unbundling +“Target Model” +Grid Codes? • Inevitable to define “Demand Response” as service, as

products, in a market (pocket market? Local? Coupled to internal market?) To go to “A la Carte” tariffs & to stop “Universal Postal Stamp”?

• Inevitable to kill “Yearly average commodity contract” as base of “normal contract practice” (see French Winter peak)

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4/ More Simple: Airbnb + Uber > interactive plaforms of local operationwas it about?• Two waves of innovation

• 1/ Massive “digitalisation” (ITC for each individual > Qualitative / collection of more accurate data

+ Quantitative / High number of decision making units) Data / Algorithms / Signals

• 2/ Tgy lowering costs of assets for local generation, local storage, and internet of things

• (1/ + 2/) facilitate local coordination of system investment and of system operation >> more local investment & op.

• End of retail utilities EXCEPT for “public service obligation” (Red Cross for unwilling & unequipped + Stranded Assets)

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To conclude? Nobody should try concluding an introduction…

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Thank you for your attention

Email contact: jean-michel.glachant@eui.eu

on Twitter: @JMGlachant already >15 000 tweets

My web site: http://www.florence-school.eu