EnergyEnergy
Dr. Oliver KochDeputy Head of Unit
DG Energy Unit B.2 – Internal Market IIWholesale markets; electricity & gas
28. April 2014
This presentation replects solely the personal views of the author and does not bind the EU Commission
Market4RES Workshop
Post 2020 framework
-
Can markets and RES coexist?
EnergyEnergy
IEM is at a tipping point
EnergyEnergyScheerer (2012)
Markets are integrated: EU-Power Grid
EnergyEnergy
Markets are integrated:Market Coupling
• Optimised capacity calculation
• EU-wide aggregation of bids and offers
EnergyEnergy
Renewables need aggregation
EnergyEnergy
System costs
Wholesale price
RES Support
Market (EU)
Government (national)
Government (monopolies) (national)
Shrinking role for energy markets
EnergyEnergy
Systemcosts
Wholesale price
RES Support
Market (EU)
Government(national)
Government / monopolies (national)
Shrinking role for energy markets
Systemcosts
Wholesale price
RES Support
Market (EU)
EnergyEnergy
Issue: Coordination of RES and CO2 policies
=> “2030“ Process
• COM consultation – report to EU Council• Decision 2014/2015 ?
EnergyEnergy
Future EU Market Design
•More cross-border•More market-based•Competition between
technologies
"State Interventions" Package: Key messages
EnergyEnergy
Market integration: support schemes
Feed-in tariff PremiumQuota
Phase in market exposure:
Competitive allocation mechanismsMechanism to reflect degree of maturity of technologyCompetition among RES – technology developmentMinimise impact on production decision
Phase in market exposure:
Competitive allocation mechanismsMechanism to reflect degree of maturity of technologyCompetition among RES – technology developmentMinimise impact on production decision
EnergyEnergy
Market Integration: RES and power market rules
Phase in equal treatment:
Balancing obligations
Bearing of grid costs
Dispatching rules
Different degrees of harmonisation for all users
Phase in equal treatment:
Balancing obligations
Bearing of grid costs
Dispatching rules
Different degrees of harmonisation for all users
EnergyEnergy
EnergyEnergy
Security of supply
EnergyEnergy
Source ENTSO-E
Uncoordinated national interventions are a threat to the Internal Energy Market
Cooperation in parallel supply crisis?
?
EnergyEnergy
Wholesale Market DesignIssues
Issue: Will merit curve survive?
EnergyEnergy
Future EU Market Design
- Issues
Future EU Market Design
EnergyEnergy
Future EU Market Design
"Market Design" discussion
Wholesale Target Model
Technical balancing,ancillary service
Generation Adequacy
+Flexibility?
ETS CO2 price
State interventions
RES etc.
State- "designed"
trading?
Link to Gas, Transport,
Heating
EU ? Regional ? National?
Self regulation/legislation
Demand Side
participation
EnergyEnergy
2014 Target Model: Outdated?
Future EU Market Design
2014 Target Model: MODERN!
EnergyEnergy
Need for new Market Design?
1. Preserve market path – give ongoing harmonisation a chance !
EnergyEnergy
Need for new Market Design?
2. Scope for finetuning?
- Flexibility – demand response - hedging- Will flexibility markets evolve?- Will DRS kick off?- Need to finetune target model (options markets, etc.)
- Adequacy: guidance needed?- Adequacy assessment- C/B-openness - Protection levels / solidarity
EnergyEnergy
Need for new Market Design?
2. Scope for finetuning?
- System operation – IEM with fragmented TSOs?- Fragmented system operation – capacity calculation- CASC/CAO – CORESO - SSC - TSC = enough?- EU ISO needed?
- Governance: - Role of ENTSO-E – EU or national perspective?- Role of ACER : EU or national perspective? - 3rd package "bottom up" approach – suffient?
EnergyEnergy
Making the Internal Energy Market Work
The Heads of State of Government recognized the importance of having an internal energy market in place and set a clear deadline for its completion by 2014
Report "Making the Internal Energy Market work" published by the European Commission assessing the state of the internal energy market
European Commission will report on the progress reached in completing the internal energy market
2011
2012
June 2014
EnergyEnergy
Thank you very much for your attention
Dr. Oliver KochDeputy Head of Unit
European CommissionDG Energy
Unit B-2 (Internal Market II: Wholesale; gas & electricity)DM 24 – 6/117
Brussels/[email protected]
++32 229 87302
EnergyEnergy
TFEUArt 28?
Procurement?…
3rd Package"PSO?
Art 3 E-Reg…
COMP LawGBEREEAG
Art 102/106?
Advocacy(e.g. communication on state interventions)
Commission Toolbox:
Long-term: new legislation?"2030" discussion – revised targets ?
EnergyEnergy
Outlook…but: decisions need to be taken at one stage!
Next years = decisive
- Will “consensus approach” work?
- More COM intervention / harmonisation needed?
EnergyEnergy
• Central adequacy decision/estimation? (most got it wrong, even in more stable times…)
• Decentral or fully market-based decision on
what is needed possible?(e.g. BDEW approach?)
Wholesale Market DesignIssues
Perceived security of supply concerns
Issue: who decides about the “gap”?
EnergyEnergy
• Technical dimension • Political dimension
Wholesale Market DesignIssues
(Key) issue in EU: How to avoid fragmented solutions?
How to organise cross-border co-operation on security of supply?
EnergyEnergy
Technical dimension
•C/B adequacy planning - in practice?
•C/B capacity/capability/flexibility ‘markets’
• Common definitions (products)
• Common procedures (tender, auction, cap ticket,…)
• Physical long-term reservations/PTRs needed?
Wholesale Market DesignIssues
How to organise cross-border co-operation in security of supply matters ?
EnergyEnergy
Political dimension
•Parallel supply crisis: what happens?
•Upfront agreement on load shedding rules?
=> Can Member States rely on neighbours?
Wholesale Market DesignIssues
How to organise cross-border co-operation in security of supply matters ?
EnergyEnergy
• Fair balancing responsibility for RES ? How?
• Additional "backup" responsibility needed?
Wholesale Market DesignIssues
Issue: Allocation of "flexibility risk"
EnergyEnergy
•Is model neutral to supply and demand solutions?
•Does it maximise potential flexibility, storage, DSR, energy efficiency ?
•Fair balance between DSOs/TSOs
Wholesale Market DesignIssues
Issue: Fair demand side participation
