1. Regional Energy Integration Lesson from Regional Energy Integration in Europe and Challenge / Opportunity for South East Asia 25 th March 2016 Funded by the European Union and implemented by a Consortium led by GOPA Consultants

2. Agenda Funded by the European Union and implemented by a Consortium led by GOPA Consultants Geographical focus, regulatory background Lessons learnt Benefits / opportunities Future challenges Conclusions for the South East Asia power network

3. Geographical context Funded by the European Union and implemented by a Consortium led by GOPA Consultants Sources: Entso-E (2013), EWEA (2016), EPIA (2016), ASEAN (2016), German Federal Network Germany 307.503 km of lines 1.004 GW (2013) net generation3.489 MW (+7.192 MW) Europe Energy Market (EU28)ASEAN 41 TSO 3.308 TWh (2013) el consumption 11 cross borders (+10 ongoing) 821 TWh (213) el generation 90 GW (2015) photovoltaic 142 GW (2015) wind Population: 508 millionPopulation: 615 million Total area Km2: 4.422.773Total area km2: 4.435.000 45.7 GW (2013) total RES 21 GW (2013) varRES

4. EU objectives Funded by the European Union and implemented by a Consortium led by GOPA Consultants

5. It takes time to harmonise the market Funded by the European Union and implemented by a Consortium led by GOPA Consultants

6. EU market liberalisation Funded by the European Union and implemented by a Consortium led by GOPA Consultants Degree of Market Concentration in the EU Power Sector HHI is the Herfindahl- Hirschman Index which measures market concentration by capacity. It is calculated as the sum of the square market shares of individual companies

7. EU 20-20-20 targets & Climate and Energy Policy 2030 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Source: http://ec.europa.eu/eurostat/statistics-explained/index.php/Europe_2020_indicators_-_climate_change_and_energy Greenhouse Gas Emissions Renewable Energy Energy Efficiency - 20% 20% <= - 40% >= 27% 20202030 Interconnection 10%>= 15 %

8. 10% power interconnection target Funded by the European Union and implemented by a Consortium led by GOPA Consultants Source: http://europa.eu/rapid/press-release_MEMO-15-4486_en.htm Security of supply Costs savings on capacity Reduce power prices Increase RE penetration EU employed rd 1.2m people in REs in 2012 Defined on October 2014

9. Ex-course Funded by the European Union and implemented by a Consortium led by GOPA Consultants Merit Order Effect on the spot market Source: EWEA

10. Lesson 1 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Transmission capacity calculation and allocation methods Dispatch optimisation decisions Redirect el flows between congested areas either by direct trading or Splitting same priced congested areas into two or more areas Curtailing electricity flows 1 1 2 2 3 3 4 4 5 5 Improved congestion management across borders

11. Lesson 2 Funded by the European Union and implemented by a Consortium led by GOPA Consultants TSOs incure in costs for procuring reserves and/or for energy used to cover imbalances (penalties) Balancing is limited to national or close control zones Transmission losses are kept low National design Complexity of predicting such flows in the EU grid 1 1 2 2 Aggregation of control zones into larger geographical areas for trading The more variable REs in operation over a larger geographical area, the smaller the impact of variability on system operation

12. Lesson 3 Funded by the European Union and implemented by a Consortium led by GOPA Consultants The European Transmission Model (TM) foresees “continuous-trading” rather than fixed auctions with gate closures Trading closer to real-time delivery

13. Lesson 4 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Market coupling mechanisms used in the EU “ongoing initiative” Larger market place in general 2010: CWE (market coupling BE, NL, LX, FR & DE) 2010: CWE (market coupling BE, NL, LX, FR & DE)

14. Lesson 4 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Larger market place in general

15. Lesson 5 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Common European Grid Model (CGM), in which the Flow-Based transmission capacity Allocation (FBA) Common set of market rules All relationships between all interconnectors of a network Reduces balancing costs if high variable RES penetration and reduces unscheduled power flows (loop flows) FBA + CGM: open the possibility of linking dynamic grid management with the market to maximize the use of new and existing assets Costs savings Costs savings

16. Lesson 5 Funded by the European Union and implemented by a Consortium led by GOPA Consultants CORESO BE, FR, Italy, GB, North and East Germany CORESO BE, FR, Italy, GB, North and East Germany Examples of Regional Control Centers CECRE Spain CECRE Spain

17. Lesson 5 Funded by the European Union and implemented by a Consortium led by GOPA Consultants Functions of Regional Centers Source: European Commission “Options for future European Electricity System Operation”, December 2015

18. Benefits Funded by the European Union and implemented by a Consortium led by GOPA Consultants Source: http://europa.eu/rapid/press-release_MEMO-15-4486_en.htm Security of supply Costs savings on capacity Reduce power prices Increase RE penetration EU employed rd 1.2m people in REs in 2012

19. Benefit: security of supply Funded by the European Union and implemented by a Consortium led by GOPA Consultants 4 th November 2006

20. Benefit: security of supply Funded by the European Union and implemented by a Consortium led by GOPA Consultants 20th March 2015 Source: EEX-data and Agora “Some views on integrating renewable energies”, September 21st, 2015, Luxemburg

21. Benefit: cost savings on capacity Funded by the European Union and implemented by a Consortium led by GOPA Consultants Coordinating new wind and PV deployment, generates savings of 146 GW of new capacity Source: Booz&Co “Benefits of Integrated European Energy Market”; prepared for Directorate-General Energy EC, July 20, 2013

22. Benefit: reduced power prices Funded by the European Union and implemented by a Consortium led by GOPA Consultants Source: Booz&Co “Benefits of Integrated European Energy Market”; prepared for Directorate-General Energy EC, July 20, 2013 Well-connected European energy grids will translate into direct savings for the consumer. EU consumers could, each year, save €12-40 billion if energy markets are fully integrated Well-connected European energy grids will translate into direct savings for the consumer. EU consumers could, each year, save €12-40 billion if energy markets are fully integrated

23. Benefit: reduced power prices Funded by the European Union and implemented by a Consortium led by GOPA Consultants Wholese Price changes with cross-boarder trading

24. View into the future Funded by the European Union and implemented by a Consortium led by GOPA Consultants

25. View in the future Funded by the European Union and implemented by a Consortium led by GOPA Consultants Increased need to control smart grids with the proliferation of electric vehicles

26. Needs for the future… Funded by the European Union and implemented by a Consortium led by GOPA Consultants Communication moves down to the customer Decentralised energy management Distribution automation Common data models and services Plug & play Use of existing infrastructure Smart metering Efficient engineering Interoperbility Telecommunication provider WEB services Distribution line carrier

27. Conclusion for EU & South East Asia Funded by the European Union and implemented by a Consortium led by GOPA Consultants “get the grid right” “RES for balancing” “new deal for consumers” clever DSOs Six cross-border power grid interconnections are currently in operation with many more under construction (EIA; 2015); More interconnections will allow for a smoothing effect between weather patterns in differenct countries Retail market priorities: consumer empowerment, smart homes & networks and data management; Dynamic pricing linked to wholesale prices Retail market priorities: consumer empowerment, smart homes & networks and data management; Dynamic pricing linked to wholesale prices DSOs will not only hasve to make grids smarter, but actively operate and balance them Spatial planning better spatial distribution of renewables

28. Conclusion for South East Asia Funded by the European Union and implemented by a Consortium led by GOPA Consultants Six cross-border power grid interconnections are currently in operation with many more under construction (EIA; 2015); 120 million people lack access to electrity (EIA; 2015) USD36b in 2014 in fossil-fuel subsidies (EIA; 2015) It is not the EU28: manageable? It is not the EU28: manageable? DG Innovate equipment for TSO DG Innovate equipment for TSO Price distortions as in EU? Late 2015: prosed ASEAN Economic Community (AEC) Harmonisation takes time…

29. Sincere thanks for your attention Lesson from Regional Energy Integration in Europe and Challenge / Opportunity for South East Asia 25 th March 2016 Funded by the European Union and implemented by a Consortium led by GOPA Consultants