Views from ACER and NRAs on “problems” in the NSI West region 25/10/2016 Brussels

Problems and aspects - electricity Problem categories Aspects to be assessed when deciding a need Price spreads For the past and the present: - Actual price spreads (both directions, representative of seasonal congestions) For the assessment of future time horizons: - The curves “SEW increase over cross-border capacity increase” - In case such a curve is not available, expected “marginal cost difference (€/MWh), accounting for both directions and taking into account the size of the bidding zones and the current market conditions. RES integration - Curtailments (with effect not accounted for in the curves above)> x GWh (taking into account the generation mix across boundaries) Security of supply - System adequacy - System stability (including local network problems)

Overview of NRAs input In order to establish this presentation, views from NRAs were collected via an ACER questionnaire between 26 Sep and 18 Oct. As far as the NSI West region is concerned, the following NRAs answered to the questionnaire: E-Control (AT), CREG (BE), BNetzA (DE), CNMC (ES), CRE (FR), AEEGSI (IT), REWS (MT), ACM (NL), Utility Regulator (UK-NI). Problems reported by E-Control are presented in the NSI East Regional Group and those reported by the Utility Regulator of Northern Ireland are presented in the NSOG Regional Group. 25/10/2016 NSI West meeting, Brussels

Price Spreads: Northern Italian border Historically, a significant price spread occurs at the Northern Italian border with the neighboring countries : France, Switzerland and Austria FR-IT: 2014: 17,9 €/MWh ; 2015: 13,8 €/MWh CH-IT: 2014: 14,4 €/MWh ; 2015: 12,0 €/MWh AT-IT: 2014: 18,7 €/MWh ; 2015: 20,7 €/MWh The price spreads arise from the differences in generation mixes between the north of Italy and the neighboring countries. For the future, a more detailed analysis of the target capacity is necessary. 25/10/2016 NSI West meeting, Brussels

The size of the cross-border impact is still to be assessed. RES integration: Congestion at the network boundary Center South Italy - Center North Italy The congestion (about 2 Euro/MWh price spread in 2015) relates to RES overgeneration in Southern Italy and consequent RES spillage (about 50 GWh/year in the period from 2013 to 2015). For the future, both the EU TYNDP 2016 and the Italian plan 2016 indicate an increase of congestion from Center South to Center North, with an expected frequency around 25% of time, i.e. about 2200 hours/year (2020 and 2025) during which "Southern" RES will not reach Northern Italy and neighboring markets. The size of the cross-border impact is still to be assessed. 25/10/2016 NSI West meeting, Brussels

Security of Supply: Limited availability of resources for voltage regulation and short-circuit power in some areas of Italy, especially in Sardinia The Italian Development Plan 2016 assesses system inertia and highlights local problems in specific areas of the Italian network. In 2015, significant frequency (i.e. > 30% of time) of undervoltage (i.e. below 390 kV) was recorded in Campania (north of Naples) and in Southern Sardinia. As the cross border impact of SoS problems is not defined at this stage (and as quantification of such problems is not available in the draft TYNDP 2016), AEEGSI was not able to assess it. 25/10/2016 NSI West meeting, Brussels

Price spreads between Belgium and Germany Historically, there is a significant price spread between Germany and Belgium DE-BE: 2013 : 9,67 €/MWh; 2014: 8,03 €/MWh; 2015: 13,05 €/MWh For the future, the North Sea 2015 Regional Investment Plan mentions a marginal cost difference of 5 to 15 €/MWh between Germany and Belgium in the TYNDP 2014 Vision 4 and a price difference below 5 €/MWh in the TYNDP 2016 Vision 3. (Values for other visions are not published.) 25/10/2016 NSI West meeting, Brussels

Belgium is for the recent years a net importer of electricity SoS in Belgium Belgium is for the recent years a net importer of electricity Average net imports from FR and NL : Full nuclear phase-out by 2025 High concerns already in the mid-term (from 2023) “Étude de l’adéquation et estimation du besoin de flexibilité du système électrique belge – Période 2017-2027” - Elia (only in French or Dutch) 25/10/2016 NSI West meeting, Brussels

Price spreads at the French-Spanish border Historically, there was a significant price spread between France and Spain FR-ES: 2014: 13,3 €/MWh ; 2015: 11,9 €/MWh The price spread has been decreasing since the commissioning of a new interconnection at the end of 2015 FR-ES: H1 2016: 6,5 €/MWh 25/10/2016 NSI West meeting, Brussels

NSI West - Map of reported problems IT FR PT DE NL BE IE UK DK LX