1. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com The Energy Community of South East Europe : Challenges and Prospects for a regional energy market Dr. Yannis Kelemenis

2. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com MILESTONES TOWARDS THE ENERGY COMMUNITY TREATY 1996:The first EU Electricity Directive 1998: The first EU Gas Directive 1998:The establishment of the Regulatory Fora 2002:The First Athens Memorandum of Understanding 2003:The Second Athens Memorandum of Understanding 2004:Beginning of negotiations 2005:Treaty establishing the Energy Community 2006:Treaty Establishing the Energy Community enters into force

3. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com AIMS OF THE TREATY ESTABLISHING THE ENERGY COMMUNITY  create a stable regulatory and market framework capable of attracting investment in gas networks, power generation and transmission and distribution networks  create a single regulatory space for cross-border trade that is necessary to match the geographic extent of the energy markets  enhance the security of supply of the single regulatory space  improve the environmental situation in cross-border trade and related energy efficiency, foster the use of renewable energy, and set out the conditions for energy trade in the single regulatory space  develop competition on a broader geographic scale and exploit economies of scale

4. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com COMMITMENTS BY THE PARTIES UNDER THE TREATY  Implement core parts of the EC acquis communautaire  Create mechanisms for long-distance energy transportation and security of supply; urge the harmonization of market designs, mutual recognition of licenses and free establishment of companies, development in the areas of renewable energy sources and energy efficiency.  provide for the free movement of network energy and allow for further measures to be taken towards creating a single energy market; establish an external energy trade policy and provide for a mechanism of mutual assistance between the Parties in the event of energy disruption.

5. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com T H E I N S T I T U T I O N A L B A C K G R O U N D  The Aquis on Electricity  The Aquis on Gas  The Aquis on Environment  The Aquis on Competition  The Aquis on Renewables

6. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com KEY ISSUES TOWARDS IMPLEMENTING THE ENERGY COMMUNITY TREATY  National wholesale and retail markets  Cross border issues  Access to national networks and the role of the TSOs  Security of supply  Unbundling  Market concentration  Institutional Organisation

7. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com  Operability of market rules at national level  Tariff issues  Market opening  Technical rules  Licensing issues  Public Service Obligations KEY ISSUES TOWARDS IMPLEMENTING THE ENERGY COMMUNITY TREATY (con’t)

8. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com S T E P S T O W A R D S D E V E L O P I N G T H E R E G I O N A L M A R K E T  Increase convergence of national market designs and market rules  Increase convergence of system access rules and transmission tariffs  Make stronger co-ordination of national institutions  Regulators to elaborate proper market rules and monitor national markets  TSOs to ensure optimal use of cross-border capacity and balancing power exchange  Regulators and TSOs to make available sufficient transmission capacity to players  Give strong political support to the whole process

9. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com Standardization of bilateral contracts with physical delivery; Regional day-ahead market (implementation of flow-based market coupling); Balancing arrangements (cross-border intraday and balancing trade); Harmonisation and improvements of the long term explicit auctions of transmission capacity (improvement of auction rules and firmness of cross-border capacity allocation); Common calculation of cross-border capacities (long and short term); Maximisation of the amount and of the utilisation of cross-border capacities; Congestion management; Capacity adequacy mechanisms (regional capacity investment plan); Regional SEE Market Operation Code; Market mitigation, monitoring and transparency; Harmonisation and improvement of data exchange; Power exchanges and financial institutions. S T E P S T O W A R D S D E V E L O P I N G T H E R E G I O N A L E L E C T R I C I T Y M A R K E T D E S I G N

10. 21 Kolonaki Square, 106 73 Athens, T: +30 210 3612800, F: +30 210 3612820, E: enquiries@kelemenis.com, W: www.kelemenis.com THANK YOU