1. Information and communicationDirectorate-General for Energy and Transport European Commission Security of Electricity Supply in the EU Stefan Gewaltig European Commission Directorate General for Energy and Transport IEA/NEA Workshop on Security of Energy Supply for Electricity Generation, Paris 24 May 2005

2. Information and communicationDirectorate-General for Energy and Transport2 The concept of SoS Three issues are important: Access to primary energy sources Investment in generation and networks Safe operation of networks

3. Information and communicationDirectorate-General for Energy and Transport3 Context Demand for energy is growing …. Demand for energy will grow in the EU by 0,9% per year over the next 25 years; electricity by 1,5% Demand will grow much stronger in the rest of the world The Union currently imports some 50% of its energy requirements, a figure that will rise to 70% if nothing is done

4. Information and communicationDirectorate-General for Energy and Transport4 Context The market is opening …. All consumers will have the right to choose supplier by July 2007 Incumbent companies need to be challenged, especially through cross-border competition Cross-border flows will be increasing and becoming more complex to manage The balance between electricity supply and demand will now be determined by market mechanisms

5. Information and communicationDirectorate-General for Energy and Transport5 Context Supply-demand is becoming tighter…. Existing overcapacities have been reduced Other production is reaching the end of its economic lifetime. Reinforced emission standards will require substantial investment in future >> Wholesale electricity prices are beginning to increase.

6. Information and communicationDirectorate-General for Energy and Transport6 Context Future investment needs EURELECTRIC estimate the need for new investment until 2030 in EU-15 at around 520 GW, of which around one half will be replacement investment 520 GW is the capacity of around 650 gas-fired power plants IEA estimates are even higher (607 GW or 760 plants)

7. Information and communicationDirectorate-General for Energy and Transport7 But new investment is occurring Objectives Italy, various CCGT projects (8300MW) Spain\Portugal, various CCGT projects (11 400MW) France Gonfreville (260MW) Dunkerke (788MW) Germany Duisburg-Hamborn (255MW) Goldisthal (1065MW) Duisburg-Wannheim (240MW) Munich (417MW) Niehl (400MW) Sandreuth (180MW) Ludwigshaven (400MW) Nordic Market Horns rev wind (160MW) Nysted wind (165MW) Olkiluoto (1600MW) UK\Ireland Huntstown (343) Ballylumford (600MW) Baglan Bay (525MW) Immingham (760MW) Spalding (860MW) Coolkeeragh (400MW) Various wind projects (up to 120MW) Belgium\Netherlands Rijnmond (795MW) Zandvliet (385MW) Antwerp (120MW)

8. Information and communicationDirectorate-General for Energy and Transport8 Objectives Reduce import dependency Reduce electricity consumption, demand side management Develop indigenous fuels – renewable energy sources Maintain all technology options Secure access to existing and new external energy sources

9. Information and communicationDirectorate-General for Energy and Transport9 Objectives An efficient continuous electricity supply Avoiding blackouts and other interruptions Make competition really work Delivering a market that responds to price signals and delivers supply- demand balance

10. Information and communicationDirectorate-General for Energy and Transport10 Avoiding blackouts Objectives

11. Information and communicationDirectorate-General for Energy and Transport11 Avoiding blackouts – secure network operation Respect technical limits on congested lines Adequate and professional exchange of information between network operators Rapid response to unexpected incidents Extension and reinforcement of the existing network Objectives

12. Information and communicationDirectorate-General for Energy and Transport12 Maintain supply and demand balance Market signals should produce a sufficient response Despite the work undertaken since the start of the market opening, Member States do not have set out overall policy with defined standards on the issue The risk is that the market will be distorted as a result of crisis measures Objectives

13. Information and communicationDirectorate-General for Energy and Transport13 Solutions Reduce import dependency (1) Demand side management >Draft directive on energy services >Energy labelling >Green paper on energy efficiency Develop renewables >Directive on electricity from renewable energy sources > Report on support schemes for renewable electricity

14. Information and communicationDirectorate-General for Energy and Transport14 Solutions Reduce import dependency (2) Secure and further develop access to primary energy sources Dialogue with external suppliers Promotion of new infrastructure (TEN-Energy programme) Development of LNG

15. Information and communicationDirectorate-General for Energy and Transport15 TEN-Energy gas projects

16. Information and communicationDirectorate-General for Energy and Transport16 TEN-Energy electricity projects

17. Information and communicationDirectorate-General for Energy and Transport17 Solutions Security of Supply in existing EU legislation Electricity Directive: Member States to monitor supply/demand balance on a regular basis; possibility for state to tender new capacity Possibility of public service obligations related to security of supply The nature of primary energy source as a condition for authorisation of new generation

18. Information and communicationDirectorate-General for Energy and Transport18 Solutions Security of Supply in existing EU legislation Gas directive and electricity regulation: Exemptions from third party access for new gas and electricity infrastructure, including LNG terminals. Directive on Security of Gas supply: -Member States to define policies for securing gas supply -Co-ordination of policies at EU level, including with respect to emergency measures

19. Information and communicationDirectorate-General for Energy and Transport19 Solutions Draft Directive on security of electricity supply Objective Establish a framework within which Member States shall define transparent and non-discriminatory policies on security of electricity supply, compatible with the requirements of a competitive internal market for electricity.

20. Information and communicationDirectorate-General for Energy and Transport20 Directive on SoS: Secure network operation TSOs to set rules on network security Member States to ensure compliance with rules (legally binding) TSOs and DSOs to set and meet quality of supply and network security performance standards Solutions

21. Information and communicationDirectorate-General for Energy and Transport21 Directive on SoS: Market Design Member States to take measures to maintain demand/supply balance MS to ensure wholesale market which provides appropriate price signals MS to publish market design >> reliable regulatory framework Solutions

22. Information and communicationDirectorate-General for Energy and Transport22 Directive on SoS: Regulated network investment Member States to provide regulatory framework providing investment signals for the development of networks Co-ordination between TSOs and regulators about financing of projects Potential “step in” rights for regulators Solutions

23. Information and communicationDirectorate-General for Energy and Transport23 Conclusions Security of supply in electricity requires special attention, in view of growing demand and the new liberalised environment Demand side management, development of indigenous resources and extended supply sources are necessary to secure availability of primary energy sources Continued investment in generation and networks requires a stable regulatory framework, conducive to new investment