1. Innovative Electricity Markets: The key role of Transmission System Operators Pierre BORNARD, Chairman of the Board

2. About ENTSO-E, an EU institution with legal mandates 41 TSOs from 34 countries 525 million citizens served 1000 GW generation capacity 310 thousands km of transmission lines Ten-Year Network Development Plans Adequacy forecasts R&D plans Tools for Market Integration Network Codes

3. Let us start with a Quiz In 2000, what was the prediction for global solar capacity in 2010? 4 GW 8 GW 24 GW 41 GW What was the actual capacity for global solar in 2010? 4 GW 8 GW 24 GW 41 GW In 2010, what was the prediction for global solar capacity in 2020? 87 GW 113 GW 247 GW 324 GW What was the actual capacity for global solar in 2013? 53 GW 87 GW 113 GW 136 GW IEA predicted solar capacity to reach 4 GW by 2010 10x what was predicted in 2000 IEA predicted solar capacity to reach 113- 127 GW by 2020 7 years before it was predicted only 3 years before ✓ ✓ ✓ ✓ 3

4. Solar energy: a decentralization roller-coaster? 4

5. Same errors again?  Will storage develop quicker than expected ?  Will Dynamic Demand Response develop slower than expected ? Nobody knows… 5 We have to be prepared to a wider range of scenarios We have to explore every new opportunity

6. The known challenges of the European power system Variable, non dispatchable generation Thousands of small units Huge flows all over Europe Challenges: New scarcities, system stability, resource variability, uncertainty ENTSO-E answers: Ten-Year Network Development Plan (“Hardware”), network codes (“software”), operational coordination, market design, R&D 6 and millions of prosumers

7. R&D needed in every industry segment 7 Grid components System operation Market design Stakeholders (soft sciences)

8. R&D: What ENTSO-E does 8 Project implementation DisseminationApplicationEvaluationR&D Planning

9. 9 Many European Union funded R&D projects Active participation of ENTSO-E members MERGEWINGRID Current TSOs involvement within EU funded projects

10. The key role of Transmission System Operators  They have a thorough knowledge of the Power 10 System  The ‘market design’ is a virtual model of the physics in order to reach an optimum by trading: always bridge the gap when the physical system is changing  TSOs anticipate… because they have the final real time responsibility  They are monopolies regulated to work in the general public interest

11. An example of recent success story May 21st 2015 “Flow based market coupling” between France, Germany, Belgium, the Netherlands  mixing selective grid modeling and zonal pricing Developed by TSOs, in cooperation with Power Exchanges 11

12. o highly efficient use of grid infrastructure o high liquidity pools providing price resilience and convergence 12 An example of recent success story Mean spot prices (€/MWh) Thursday, 21st May 2015

13. The Regulatory framework  Bad stories in the late 90s and early 2000s  For R&D, EU TSOs currently spend from 0 to 0.8% of their turnover (average ~ 0.4 %)  In most national transmission tariff regulation, no special recognition of R&D OPEX 13 A disconnection between the ambition of EU for Europe’s electricity power system and national regulatory frameworks for R&D Lack of adequate framework in Europe remains a significant obstacle

14. Thank you for your attention