MED-EMIP Euro - Mediterranean Energy Market Integration Project    State of Play of the Electricity Market Integration: “Export of Solar electricity into the EU as an Option” Dr. Albrecht Kaupp MED-EMIP Team Leader “The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Union”. 1

Support for the enhanced integration and the improved security of the Euro-Mediterranean energy market 2

EC-Second Strategic Energy Review 13.Nov.2008 “A Mediterranean energy ring now needs to be completed, linking Europe with the Southern Mediterranean through electricity and gas interconnections. In particular the Ring is essential to develop the region's vast solar and wind energy potential.” “No later than 2010 the Commission will put forward a communication on the Mediterranean Ring outlining a plan for completing the missing links, including key projects important for diversifying the EU’s external energy supplies in further away regions, such as the future links from Iraq, the Middle East and Sub-Saharan Africa” 3

MED-EMIP reports available at http://ec.europa.eu/energy/international/euromed_en.htm Overview of the power systems of the Mediterranean basin 4. Visualizing the Mediterranean sea basin for interconnectors 2. Analysis of the solutions and proposals to close the ring 3. Market potential and financial impact of solar power generation 5. Legal and administrative issues to export solar electricity 4 4

Lessons learned This is a truly regional affair and we need a regional solution. All power utilities participated: Algeria, Morocco, Tunisia, Libya, Egypt, Jordan, Palestinian Territories, Israel, Lebanon, Syria, Turkey. Excellent cooperation ! No power utility likes to be isolated or should be isolated. Energy independence is mistaken as energy security 5

Do we see the light (at the end of the tunnel)? If you see the light at the end of the tunnel. Don’t extend the tunnel ! 6

Legislative provisions are in place Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources (RES) Article 9 of this RES Directive of the EU allows for import and export by third parties with member States of the EU France, Germany and Italy are preparing for testing the RES and its articles for long term import strategies. However Italy may be the only EU member State needing to import solar electricity to meet its 20-20-2020 obligations 7

The transmission system and solar electricity power plant market of MSP under the UfM, DII, Medgrid ( US$ 300- 400 Billion investment towards 2040) 5% YES NO 9% The AC transmission system in the South is not capable to exchange larger power capacities. Synchronous closing of the MED Ring is doubtful. 8 8

State of Play The EU-27 power grid (50 Hz) has connected Turkey and reached Syria (Aleppo) in August 2010 but not entire Syria The 50 Hz synchronization of Libya with Egypt and the EU-27 has failed for a second time and 10 years of trying. Different other solutions are discussed (HVDC) Syria should be asynchronously connected by Back-To- Back HVDC to proceed further to connect all other countries and close the ring of 24 countries. The first HVDC submarine interconnector (Tunisia-Italy) has been pre-tendered and may be completed 2016 ?? 9

Henry Hub natural gas spot price 2004 -2010 Max US$ 15 US$ 10 Deciding the future of solar RE on gas prices has no future ! US$ 5 10 10

Spot Market Prices Natural Gas cif US$ /Million BTU Year EU USA OECD (Oil) 2005 5.9 8.8 2009 8.5 3.9 10.4 Ref: Henry Hub(USA), Heren, Zeebrugge Index, (EU ), BP_2010 There is no GAPEC like an OPEC Gas consumption in the region for power plants will double in 12 years and gas remains the mayor fossil fuel for power generation at a share of 70% and increasing 11 11

35-23 23-14 7 3.8 – 2.5 IS, LB, TN, MA,PT DZ, LY, SY, EG Gas based kWh IS =Israel LB=Lebanon TN= Tunisia MA= Morocco PT= Palestine Ter. JO= Jordan DZ= Algeria LY=Libya SY=Syria EG =Egypt Generation cost, €C/kWh Solar electricity PV, CSP (best to worst finance condition) 23-14 Gas based kWh 7 IS, LB, TN, MA,PT Av consumer tariff €C/kWh, JO 3.8 – 2.5 DZ, LY, SY, EG 12 12

65% 67% Independent Power Producer (IPP with PPA), or Government Utility as owner but not necessarily operator ? Financing the wrong business model increases price by ~ 65% independent of the technology WACC Wind(€ 1300, 0.35) Solar(€ 3000,0.20) 5% 3.4 €C/kWh 13.7 €C/kWh 12 % 5.6 €C/kWh 22.9 €C/kWh 65% 67% O&M not included 13 13

Revenues from RE electricity export (limited scenarios for some “South” countries ) 20 Offer (from the North) 23 16 Offer (from the South) 2 Transfer Local cross-subsidy paid by the North - 4 (30%) Schengen Visa free export 14 Feed Solar 13.7 €¢/kWh 22.9 €¢/kWh - 4 = 9.7 €¢/kWh 14 14

THE END 3x8h shifts per day, one person x 4,000 kCal =12,000 kCal x 14% eff/860 = 2 kWh/day electrical output . Food input 24 Big Mac (EUR 50) or 1.3 liter good Olive oil(EUR 5). Resulting energy costs range of EUR 25 to EUR 2.5 per kWh excluding runners minimum daily wage , depreciation of legs over 20 years plus repair and maintenance ! 15