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Energy Dr. Oliver Koch Deputy Head of Unit DG Energy Unit B.2 – Internal Market II Wholesale markets; electricity & gas 28. April 2014 This presentation.

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Presentation on theme: "Energy Dr. Oliver Koch Deputy Head of Unit DG Energy Unit B.2 – Internal Market II Wholesale markets; electricity & gas 28. April 2014 This presentation."— Presentation transcript:

1 Energy Dr. Oliver Koch Deputy Head of Unit DG Energy Unit B.2 – Internal Market II Wholesale 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?

2 Energy IEM is at a tipping point

3 Energy Scheerer (2012) Markets are integrated: EU-Power Grid

4 Energy Markets are integrated: Market Coupling Optimised capacity calculation EU-wide aggregation of bids and offers

5 Energy Renewables need aggregation

6 Energy System costs Wholesale price RES Support Market (EU) Government (national) Government (monopolies) (national) Shrinking role for energy markets

7 Energy System costs Wholesale price RES Support Market (EU) Government (national) Government / monopolies (national) Shrinking role for energy markets System costs Wholesale price RES Support Market (EU)

8 Energy Issue: Coordination of RES and CO 2 policies => “2030“ Process COM consultation – report to EU Council Decision 2014/2015 ?

9 Energy Future EU Market Design More cross-border More market-based Competition between technologies "State Interventions" Package: Key messages

10 Energy Market integration: support schemes Feed-in tariff Premium Quota Phase in market exposure:  Competitive allocation mechanisms  Mechanism to reflect degree of maturity of technology  Competition among RES – technology development  Minimise impact on production decision Phase in market exposure:  Competitive allocation mechanisms  Mechanism to reflect degree of maturity of technology  Competition among RES – technology development  Minimise impact on production decision

11 Energy 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

12 Energy

13 Security of supply

14 Energy Source ENTSO-E Uncoordinated national interventions are a threat to the Internal Energy Market

15 Cooperation in parallel supply crisis? ?

16 Energy Wholesale Market Design Issues Issue: Will merit curve survive?

17 Energy Future EU Market Design - Issues Future EU Market Design

18 Energy 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

19 Energy 2014 Target Model: Outdated? Future EU Market Design 2014 Target Model: MODERN!

20 Energy Need for new Market Design? 1.Preserve market path – give ongoing harmonisation a chance !

21 Energy 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

22 Energy 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? -3 rd package "bottom up" approach – suffient?

23 Energy 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 June 2014

24 Energy Thank you very much for your attention Dr. Oliver Koch Deputy Head of Unit European Commission DG Energy Unit B-2 (Internal Market II: Wholesale; gas & electricity) DM 24 – 6/117 Brussels/Belgium

25 Energy TFEU Art 28? Procurement? … TFEU Art 28? Procurement? … 3 rd Package "PSO? Art 3 E-Reg … 3 rd Package "PSO? Art 3 E-Reg … COMP Law GBER EEAG Art 102/106? COMP Law GBER EEAG Art 102/106? Advocacy (e.g. communication on state interventions) Advocacy (e.g. communication on state interventions) Commission Toolbox: Long-term: new legislation? "2030" discussion – revised targets ? Long-term: new legislation? "2030" discussion – revised targets ?

26 Energy Outlook …but: decisions need to be taken at one stage! Next years = decisive - Will “consensus approach” work? - More COM intervention / harmonisation needed?

27 Energy 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 Design Issues Perceived security of supply concerns Issue: who decides about the “gap”?

28 Energy Technical dimension Political dimension Wholesale Market Design Issues (Key) issue in EU: How to avoid fragmented solutions? How to organise cross-border co-operation on security of supply? How to organise cross-border co-operation on security of supply?

29 Energy 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 Design Issues How to organise cross-border co-operation in security of supply matters ? How to organise cross-border co-operation in security of supply matters ?

30 Energy Political dimension Parallel supply crisis: what happens? Upfront agreement on load shedding rules? => Can Member States rely on neighbours? Wholesale Market Design Issues How to organise cross-border co-operation in security of supply matters ? How to organise cross-border co-operation in security of supply matters ?

31 Energy Fair balancing responsibility for RES ? How? Additional "backup" responsibility needed? Wholesale Market Design Issues Issue: Allocation of "flexibility risk"

32 Energy Is model neutral to supply and demand solutions? Does it maximise potential flexibility, storage, DSR, energy efficiency ? Fair balance between DSOs/TSOs Wholesale Market Design Issues Issue: Fair demand side participation


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