1. Berlin, 4 December 2012

2. 2 Source: ENTSO-E Ten-Year Network Developemnt Plan 2012

3. Loop flows / unplanned power flows / unannounced power flows - physical phenomena that occurs when generation and load centers diverge thus resulting in differences between commercial schedules and physical flows. Unplanned power flows result from: 1. internal transactions between Northern (supply of wind generation) and Southern Germany (demand) but also 2. exchanges within a common market area of Germany and Austria There are no explicit limits to these flows even if they are heavily using the networks of the neighbors. 3

4. Sweden Germany Ukraine Slovakia Czech Republic Export: 7233.6 GWh Import: 1983.5 GWh Export: 2609.9 GWh Import: 195.3 GWh Out: 432.1 GWh In: 5135.6 GWh Export: 3035.9 GWh Import: 224.4 GWh Out: 8261.5 GWh In: 44.0 GWh Export: 1284.5 GWh Import: 37.2 GWh Out: 3051.6 GWh In: 26.6 GWh Export: 0.0 GWh Import: 59.6 GWh Out: 0.0 GWh In: 59.6 GWh Export: 303.3 GWh Import: 1467.0 GWh Out: 277.5 GWh In: 1513.6 GWh 4 Source: Polish Energy Regulatory Office

5. 5 The system security in Poland, Czech Republic, Hungary and Slovakia is seriously distorted (threat of regional blackouts) Operational security Continuous decrease of capacity used for cross-border trade Market integration and efficiency Can hamper cross-border investment (as such investment might not be beneficial for investing country) Infrastructure

6. 6 Problems associated with loop flows increased both in numbers and scale  massive renewable energy sources development not corresponding with grid development  Energiewende Source: Position of ČEPS, MAVIR, PSE Operator and SEPS regarding the issue of Bidding Zones Definition

7. Why Poland and Germany will cooperate 7 7 Regulation No 714/2009 and and Congestion Management Guidelines Point 3.1. capacity allocation at an interconnection shall be coordinated by involved TSOs. If commercial exchanges between two countries affect physical flow in third country – coordination between all affected TSOs. Point 3.2. coordinated congestion management method shall be applied by not later than 1 January 2007 in regions: Central Eastern Europe (Germany, Poland, Czech Republic, Slovakia, Hungary, Austria and Slovenia) -

8. Many initiatives aiming to address the problem: 1. The European Commission - study 2. ACER 3. ENTSO-E 4. BNetzA and Federal Ministry (internal) Many possible solutions: - short-term – better coordination and cooperation between TSOs related to operational security (re-dispatching) - mid-term – correct market design (adequate bidding zones) - long-term – infrastructure enhancement (interconnectors and internal grids) Phase Shifters  is it a real solution  Problem Shifters ??? 8

9. 9 Source: Polish Energy Regulatory Office

10. 10 400kV 750kV 220kV 400kV temporary at220kV DC cable450kV Legend: Ger-Pol Power Bridge Wind Integration Power Evacuation_OST Power Evacuation_KOZ Power Evacuation_DBN Ger-Pol Improvements Power Evacuation_NORTH Source: PSE Operator SA

11. 1. Phase shifting transformers: better management of unplanned transits DE-PL-CZ enhancement of transfer capacity on Polish synchronous profile. Expected NTC increase: 500 MW for import and 1500 MW for export greater security and reliability of the regional transmission network in Poland and in other countries of the CEE region increased capability to accommodate more renewable energy resources in a safe and reliable manner 1. Third DE-PL interconnector: ◦ strengthening market integration between member states ◦ increasing NTC by 1500 MW for import and 500 MW for export on PL-DE/SK/CZ synchronous profile ◦ improving network security - project contributes to increase of security of supply and flexibility of the transmission network 11