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Regional Market Integration in the CEE Region. Tahir Kapetanovic Director Electricity, E-Control. Highlights. Priorities for the integration of the CEE electricity market(s): Why.What.When Congestion management Market entry barriers and remedies Regulatory gap and how to bridge it - PowerPoint PPT Presentation
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1 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Regional Market Integration in the CEE Region
Tahir KapetanovicDirector Electricity, E-Control
2 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Congestion management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
3 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Cogestion management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
4 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
ERGEG Electricity Regional Initiative and CEE
An intermediate step towards really integrated, common European market
CEE Region: the „electrical heart of Europe“
Diversity of the CEE markets‘ characteristics: Maturity Size Liquidity History, etc.
5 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Facts & Figures
GermanyGermanyPolandPoland
CzechCzechRepublicRepublic
AustriaAustria
SlovakiaSlovakia
HungaryHungary
SloveniaSlovenia
6 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Generation shares
(EC SI 2006)
CEE Facts & Figures
7 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Facts & Figures (cont‘d)
GermanyGermanyPolandPoland
CzechCzechRepublicRepublic
AustriaAustria
SlovakiaSlovakia
HungaryHungary
SloveniaSlovenia
AT DE CZ HU PL SK SI
0
100
200
300
400
500
600
[TW
h]
CEE Production 2005 (Sum = 930 TWh)
Large hydro Nuclear Conventional thermal Renewables except large hydro
AT DE CZ HU PL SI SK
0
20
40
60
80
100
120[G
W]
CEE Generation Capacity (Sum = 204 GW)
Large hydro NuclearConventional Thermal Renewable except large hydroOthers
8 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Facts & Figures (cont‘d)
GermanyGermanyPolandPoland
CzechCzechRepublicRepublic
AustriaAustria
SlovakiaSlovakia
HungaryHungary
SloveniaSlovenia
9 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Facts & Figures (cont‘d)
GermanyGermanyPolandPoland
CzechCzechRepublicRepublic
AustriaAustria
SlovakiaSlovakia
HungaryHungary
SloveniaSlovenia
0
20
40
60
80
100
120
140
160
1.1.
2005
18.1
.200
5
4.2.
2005
20.2
.200
5
8.3.
2005
24.3
.200
5
9.4.
2005
25.4
.200
5
11.5
.200
5
27.5
.200
5
12.6
.200
5
28.6
.200
5
14.7
.200
5
30.7
.200
5
15.8
.200
5
31.8
.200
5
16.9
.200
5
2.10
.200
5
18.1
0.20
05
3.11
.200
5
19.1
1.20
05
5.12
.200
5
21.1
2.20
05
Price CZ
Price EEX
Price EXAA
Correlation EEX/EXAA: 0,94 EEX/CZ: 0,544 EXAA/CZ: 0,545
10 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
ERGEG ERI CEE PrioritiesWhy.
Interconnections and efficient congestion management are a key precondition for any cross-border market „to happen“
Transparency helps to: lower market entry barriers, reduce the risk for non-incumbents, lower prices for customers in a sustainable manner
Coherent regulatory competences and framework
Remove barriers for new entry (and foster competition …)
Balancing is the key - although not the biggest - segment of electricity market to be integrated across the borders
For market integration, market design(s) must be coherent too
11 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
ERGEG ERI CEE PrioritiesWhy.What
CongestionCongestionManagementManagement
Market entry Market entry barriersbarriers
Balancing marketsBalancing marketsintegrationintegration
Market designMarket designissuesissues
Regulatorycompetences
TransparencyTransparency
short-term short-term 2008/20092008/2009
long-termlong-term2010 and 2010 and
beyondbeyond
.When
CongestionCongestionmanagementmanagement
Market entry Market entry barriersbarriers
Regulatorycompetences
TransparencyTransparency
12 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Congestion management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
13 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
EU Priority Interconnection Plan of 10. January 2007, http://ec.europa.eu/energy/energy_policy/doc/11_priority_interconnection_plan_en.pdf
14 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Interconnections in the CEE Region
Out of the 32 electricity grid Out of the 32 electricity grid
priority projects in the EUpriority projects in the EU
15 projects15 projects
are in Central Europe !!!are in Central Europe !!!
15 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Congestion Management
Objective (CM Guidelines): flow-based capacity calculation as the basis for the common and coordinated capacity allocation
„Best effort“ approach: start with explicit allocation, move towards implicit ASAP (depends on „availability“ of price)
Auction Office is an important organisational & functional step
16 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Working groups by the TSOs Flow based capacity calculation
Coordinated Auction
Operation of the system commited for January 2009
Challenge: incentives to effectively support market integration
Cooperation & coordination is crucial
Congestion Management (cont‘d)
17 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Congestion Management (cont‘d)
(actual project plan, see also CM IG reports at www.ergeg.org)
18 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
First EU-wide AO established in CEE in July 2008 (Freising, Germany)
Facts and figures Each TSO has equal shares in the new company AO has full legal rights (not subsidiary of a TSO) General Manager assigned (must not come from the country where AO is located)
Notification to the competition authorities in Germany & Poland
Framework review by regulators after the CM IG on 09. May 2008 (auction rules, governance issues, contracts & agreements, etc.)
Congestion Management – Auction Office
19 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Finalization and implementation of the capacity calculation solution (grid model, border-areas, timeframes, information exchange, etc.)
Maximum wellfare criteria „maximum flows“
Comparison of flow-based vs. NTC a tricky and somewhat awkward task Consentec: Implementation Group on 16. September 2008
Test calculations to follow, involving also market participants
IT tender for software
Congestion Management – Work in Progress
20 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Congestion management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
21 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Market Entry Barriers*
Most significant wholesale market obstacles Bureaucratic licensing procedures Lack of appropriate market places and/or their ineffective operation Insufficient coordination (of TSOs, regulators, etc.)
All stakeholders committed to remove those obstacles
Practical, solution-oriented approach with roadmap since 2007
Retail market barriers to be addressed at a later stage
* See also CEE ERI Stakeholder Group meetings at (www.ergeg.org)
22 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Market Entry Barriers – some Details
Network access administration and bureaucratic formalities(license and subsidiary requirements, language barriers, contract volume charges, bank guarantees, etc)
Market fragmentation and regulatory divergence(different levels of unbundling, different national support schemes for renewables, various national ways of implementing electricity disclosure, different CHP-support schemes, non-harmonized capacity payments, diverging white certificates approach)
Market structure and timetable for the trading day(unsynchronized timelines for day-ahead activities, nominations and biddings, no intraday cross-border market, non-harmonized cross-border capacities allocation)
Divergent IT platforms and data delivery
23 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Key Improvements to be Achieved
Abolish all licence requirements for wholesale trading
Simplify transaction procedures by harmonizing operational platforms and scheduling processes
Standard contracts to facilitate financial trading
Reduce credit risk by encouraging effective clearing solutions
Resolve problems related to scheduling
Further details on CEE countries:Further details on CEE countries:
• EFET presentation at the 2nd CEE Stakeholders Group on 22. June 2006 (http://www.ergeg.org/portal/page/portal/ERGEG_HOME/ERGEG_RI/ERI/Central- East/Meetings/SG%20Meetings/2nd_CEE_SG/CEE%20obstacles%20Vienna%20June%2006.pdf)
• PWC public domain Study (http://www.pwc.com)
24 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Congeston management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
25 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
CEE Regulatory Competences
Legal implementation of the EU Directives, regulatory models and competences differ in the CEE countries
In order to remove undesired impacts on the market functioning and evolution (e.g. in cross-border issues) better coherence and compatibility of regulatory competences is needed
Member States‘ representatives informed at the 2nd CEE Mini Forum / Stakeholders Group 06/2006
Dedicated Implementation Group with CEE Regulators and Member States‘ representatives to address this issue (initially planned for 2008 …)
Detailed benchmark of the CEE regulatory competences in the cross-border issues in 2007
26 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Highlights
Priorities for the integration of the CEE electricity market(s): Why.What.When
Congestion management
Market entry barriers and remedies
Regulatory gap and how to bridge it
Future prospects and expectations from the "3rd Package"
27 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Challenges & Opportunities
Complete the Internal Electricity Market meeting the targets of EFFICIENCY, SECURITY, SUSTAINABILIY (INFRASTRUCTURE !)
Bring together diverging national priorities through the stepwise REGIONAL INTEGRATION
CEE is the heart of electrical Europe and will remain at the FOREFRONT OF ELECTRICITY SUPPLY EVOLUTION
28 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
„3rd Package“ Expectations
Effective (ownership) unbundling of the grid operators
… for non-discrimination and
… security of supply (no grid ownership for owners of market operations)
Cooperation and coordination of the grid operators
… in operational security aspects
… in definition, implementation and supervision of standards
… in activities supporting the market
Legally binding framework for and implementation of the adequate transparency and information management to
… lower market entry barriers
… reduce the risk for non incumbents
… help lower prices for customers in a sustainable way
29 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
„3rd Package“ Expectations (cont‘d)
Legally defined and empowered EU regulators to be charged with:
… the approval of EU security standards
… the approval of EU operating standards
… the approval of investment plans at the EU-level
… the approval of cost allocation methodologies for cross-border investments
… the approval of binding guidelines for areas defined by legislation
… enforcement powers including the power to impose solutions on the EU network organisations
… providing advice to the European Commission on regulatory and market issues
30 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Information: www.ergeg.org ERI CEE
31 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
Thank you for your attention !
Tahir KapetanovicDirector Electricity
Energie-Control GmbHAustrian Energy Regulatory AuthorityRudolfsplatz 13a, A-1010 Vienna,
Austria
Tel: [email protected]
32 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
About us: Structure of Regulation in Austria
Electricity Market
Federal Ministry of Economics and Labour
Advisory Council for ElectricityEnergie-Control Commission
Energie-Control GmbH (Regulator)Energie-Control GmbH Supervisory Board
33 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
About us:Energie-Control Commission
Setup:Setup: An independent body not bound by any order and chaired by a judge of the
supreme court, with 2 further members and 3 deputy members Decisions require unanimity for validity In the own matter the first and last instance, otherwise processing appeals
that may be raised against the decisions of the Energie-Control GmbH The affairs of the Energie-Control Commission are managed by Energie-
Control GmbH
Key functions:Key functions: Approving the grid operators‘ general terms and conditions Determining tariffs for system use and other tariffs pursuant to section 25 of
the Electricity Act Ruling on the justification of refusal of grid access Settling disputes: (i) between market participants, (ii) involving settlement of
unbalances
34 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
About us:Energie-Control GmbH
Setup:Setup: A private non-profit company, established with the purpose of performing
regulatory tasks in the electricity and natural gas sector, owned by the Austrian state, with share capital 3,7 Mio. €, located in Vienna
Chairman: Mr. Walter Boltz Departments/Divisions: Administration, Electricity, Gas, International Affairs, IT,
Legal, Regulation & Competition, Renewables, Retail Customers, Tariffs
Key functions:Key functions: Creation of framework conditions Market monitoring and supervision Settlement of disputes, organisational aspects of balance payments between
the system operators Execution of provisions on stranded costs Statistical work Crisis prevention & emergency energy management
35 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008
About us:find more at www.e-control.at
36 XI Autumn Conference of the Energy Managers Association, Prague, 10. Sept. 2008