Security of supply, Sustainability, Competitiveness: a European approach Dimitrios Chaniotis Manager System Development ENTSO-E

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1 Security of supply, Sustainability, Competitiveness: a European approach Dimitrios Chaniotis Manager System Development ENTSO-E Workshop - Swiss Chapter of IEEE PES SECURING THE FUTURE OF ENERGY SYSTEMS - 23 GENERATION October 2012 VS. NETWORK INVESTMENTS Bern, 23 October 2012

2 Context: TSOs and ENTSO-E s significant role for European energy and climate change objectives Key activities set out in Regulation 714/2009 (on cross-border electricity trade, part of the 3 rd IEM Package) Deliver network codes binding to all network users (through Comitology ) Deliver network plans European / regional view of system needs ( TYNDP ) Deliver crucial aspects of market integration ( market coupling ) R&D Plan (including the just approved E-Highways 2050 study) Recent important work products: 1 st Network Code on Requirements for Generators delivered for ACER Opinion 14 July prerequisite for the future system with much more RES TYNDP 2012 incl. major improvements in methods, data 41 TSOs from 34 countries; 530 million people; 910 GW gen.; km transm.

3 Context: The system is changing fast: More fluctuating RES, more distributed gen., more pan- European markets, planning + operational coordination Change is at the core of transmission planning Share of total RES in net gen. capac. 1/2020, scen. EU2020 However scale and speed of change in recent years is unprecedented GW RES 538 GW peak load 3300 TWh demand >50% 2030 visions 2014 TYNDP % reduction in greenhouse gases; higher reduction for electricity <45% 2020 TYNDP GW RES 567 GW peak load 3600 TWh demand

4 Context: 2030 visions identified in ENTSO-E s 2012 Scenario Outlook & Adequacy Forecast (part of TYNDP 2012)

5 Context: An early example of ENTSO-E s 2030 horizon work: North Seas offshore grid (work ongoing) Innovation, field testing: e.g. DC Grids imply DC switchgear

6 Context: ehighways2050 study: The definitive study on the Future electricity highways system ( supergrid ; voltage lvl) Consortium formation summer 2011; funding 6/2012 CONSORTIUM: RTE Amprion CEPS Elia PSE O REN Swissgrid Terna ENTSO-E SINTEF Technofi RSE dena U Brunel U Comillas U IST U Leuven U ENSIEL TU Berlin ECN IPE Eurelectric Europacable EWEA T&D Europe Poyry E3G 3 years

7 Many TSO and ENTSO-E efforts necessary for a European system fit for the future incl. joint planning, network codes Build and maintain transmission network for bulk power flows today s focus Reinforce upstream transmission network for connection of new generation National grid codes Design market mechanisms for facilitating trading at all time horizons Continuous evolution of operational and coordination measures EU-wide Network Code Requirements for Generators Generators should be able to provide ancillary services NC RfG National grid codes Comitology should make NC RfG binding ASAP so the system is prepared in time for much more RES

8 Why a Ten-Year Network Development Plan? Regulation (EC) 714/2009 In order to ensure greater transparency regarding the entire electricity transmission network in the [Union], the ENTSO for Electricity should draw up, publish and regularly update a non-binding [Union]-wide ten-year network development plan Irina Minciuna 03/10/2012 Page 8 of 21

9 The 3rd Package defines the TYNDP EU-TYNDP Generation adequacy outlook 5 yr up to 15yr ( 2025!) modelling integrated networks Scenario development Assessment of resilience Based on reasonable needs of system users Identify investments gaps Review barriers to increase cross border capacities arising from approval procedures Regulators check consistency Build on nat. gen. adequacy Outlooks and invest. plans Take into account Regional Investment Plans Nat. TYNDPs Existing and forecast supply demand Efficient measures to guarantee adequacy & SoS Indicate main transmission infrastructure to be built Based on reasonable assumptions about evolution of generation Supply consumption and exchanges

10 The TYNDP 2012 package a vision for the European extra high voltage grid non-binding updated every 2 years based on common market and network studies generation adequacy outlook a comprehensive document suite that includes Ten-Year Network Development Plan Scenario Outlook and Adequacy Report 6 Regional Investment Plans Consultation: 1 Mar - 26 Apr. Final release: 5 July Irina Minciuna 03/10/2012 Page 10 of 21

11 A dense 2-year long study process Scenario elaboration & validation Market studies Network studies Project identification & valuation Reports compilation Annual generation CSW Region (TWh) - EU Grid 2012 Miscellaneous; 95 Total Hydro; 116 Wind; 157 Peak Generation; 0 COAL; 0 CCGT; 70 Hydro ROR; 60 Hydro STOR; 57 Solar; 36 LIGNITE; 4 at stake timely delivery consistent results limited resources [MW] NUCLEAR; 501 DE - Correlation between wind and spillage time-series spillage wind solar May 2020 Presently being investigated Subject to adaptations &/o changes Duration curve of market flows in 2020 DE-AT Export DE GWh % of the time at maximum Import DE GWh % of the time at maximum Hours MW Irina Minciuna 03/10/2012 Page 11 of 21

12 Main deliverables TYNDP 2012 Market studies NTCs 2010 G/L dev. areas + technical needs in 2020 (+) Expected bulk flow patterns Network studies Transmission adequacy Proposed projects Grid transfer capability increases

13 Renewable energies boom by 2020 provides 38% of the electricity demand 1/3 of present generation capacity to be replaced to meet demand in the coming decade Peak load growth Grid length development

14 Around 100 bottlenecks in the transmission system by 2020 RES is triggering 80% of assets growth

15 2020 Europe 17% increase in infrastructure By end and beyond

16 2020 Europe additional km lines

17 About 100 billion in the coming 10 years 100 billion investment on grids /MWh in Europe over the 10- year period, 2% of the bulk power prices, less than 1% of the total end-users electricity bill billion billion Austria 1.1 Ireland 3.9 Belgium 1.9 Latvia 0.4 Bosnia-Herzegovina 0.0 Lithuania 0.7 Bulgaria 0.2 Luxembourg 0.3 Croatia 0.2 Montenegro 0.4 Czech Republic 1.7 Netherlands 3.3 Cyprus 0.0 Norway 6.5 Denmark 1.4 Poland 2.9 Estonia 0.3 Portugal 1.5 Finland 0.8 Romania 0.7 France 8.8 Serbia 0.2 FYROM 0.1 Slovakia 0.3 Germany 30.1 Slovenia 0.3 Greece 0.3 Spain 4.8 Hungary 0.1 Sweden 2.0 Iceland 0.0 Switzerland 1.7 Italy 7.1 United Kingdom 19.0 Total ENTSOE perimeter 104

18 TYNDP - Multi-criteria projects assessment

19 A direct support to the European Energy policy goals

20 Projects with high technical performances Additional investment reduces overall losses

21 Status in 2020 and further issues Three major issues after 2020: - Integration of offshore wind generation in the North Seas - Connection of solar generation in Northern Africa to the European continent - Interconnection with Eastern countries

22 Building the necessary infrastructure 3 main problems 1. Permitting and public acceptance Slow and cumbersome permitting procedures the main obstacle for delivering investments Public acceptance cannot be improved by TSOs alone One third of the transmission infrastructure is currently delayed. 2. Legislative implementation Some compatibility among the 27 MS energy policies Some stability in EU legislation - avoid new concepts becoming part of official documents 3. Attractive financing framework real return in line with businesses of similar risk profiles incentives for activities really managed by TSOs legislation and regulation in line with 20 to 50 years assets

23 EC actions and its new Regulation on Priority Infrastructure Regulation on guidelines for the implementation of European energy infrastructure priorities Permitting streamline Identification of Projects of common interest(pcis) Cost benefit analysis Regulatory framework Incentives and financing Connecting Europe Facility Regulation = 9 bl. for transmission gas and electricity projects

24 Permitting process a big step forward for building the necessary grid 1. Applied to all PCIs -> what about the national projects? 2. All PCI are of overriding public interest 3. 1 national competent authority = one stop shop - with sole legally binding decision 4. Time limit of 3 (1/2) years

25 Financial and regulatory framework 1. Base principle users pay 2. EU wide cost benefit analysis developed by the ENTSO-Es which shall be applied to the subsequent TYNDPs. 3. Cross- border projects-> cost allocation joint NRAs decision 4. Incentives NRAs shall ensure the incentive - considering the CBA results and the level & type of risk 5. Financial assistance -> the PCIs which fulfill the following conditions: positive CBA and NRAs decision on cross-border allocation or for the exempted projects ACERs and NRAs opinion on the commercial viability of the project and the project is not commercially viable (including the incentives) according to the business plan

26 Energy Priorities Regulation positive for grid development A timely legislative initiative addressing the most urgent issues Huge step forward to streamline permitting procedures Positive but unfocused effort to facilitate investments on the transmission grid Cost-allocation is just part of the overall picture cost-benefit analysis not a panacea Incentivizing TSOs to deliver on time should be the priority Regional approach for decision making with TYNDP as the main starting point Projects of Common Interest

27 Conclusions 1. TYNDP % increase in grid needed by km 104 billion investment in the coming 10 years 2. Social acceptance and permitting issues result in one third of TYNDP 2010 investment items to be delayed Infrastructure Priorities Regulation a potential huge step forward to streamline permitting procedures especially Germany should pls support the Regulation 3. Incentivizing TSOs to deliver on time must be key priority in the Regulation 4. Europe-wide grid planning for the urgent 10-year needs, and for 2030 and 2050, is important but only one part: Network codes are needed urgently for the Energiewende, and so is the market integration (described in NCs) especially Germany should please support fast enactment of NCs