Incentives for electricity infrastructure – ERGEG view

Background Conclusions from ERGEG document - Cross Border Framework for Electricity Transmission Network Infrastructure in 2007 e.g.: Role of regulators: EU regulators should be given some form of collective duty and competence to oversee and promote (cross border) transmission network provision and approve cost allocation of cross border elements as appropriate. Each national regulator will need appropriate competences, independence and resources. Role of TSOs: Each TSO should be given a collective role to build and operate the EU grid, under regulatory oversight. TSOs should be given a new collective institutional basis in order that they can fulfil this role. How to promote transmission network investments and apply appropriate cost allocation cross border?

Background Interconnection capacity (NTC) in relation to installed generation capacity < 10% 10 – 30 % >30%

EC study – incentive models Encouraging that proposed incentive models can be applied at the same time; only ensuring that they incentivize decisions taken by the TSOs Case-by-case implementation depending on nature of problem, national legal and regulatory framework However, effects of proposed methods have to be carefully studied to introduce incentives of equal effect across the borders Further work on practical implementation is needed Question: Is there need for incentive scheme if authorisation process is a bottleneck?

EC study – interregional cost allocation Interregional planning process: EU/MS policy & objectives Primary energy resources Investors, demand forecasts Scenarios for analysis Input to revision of investment plan Power system analysis (technical) - Balance between supply and demand - Grid Construction and building process Alternatives for grid enforcements 10-year network investment plan - European - Regional - National Evaluation of alternatives (cost-benefit analysis)

EC study – interregional cost allocation Cost/benefits of different reinforcement possibilities Socio-economic criteria applied – joint criteria has to be developed Impact of reinforcements on market functioning Regional and global EU approach Impact e.g. on congestion income Common methods for profitability analysis of reinforcements should be developed Apply e.g. net present value benefit > 0 Reference solution should be agreed Reallocation of costs is complex issue, joint approach needed, transparency is vital

Thank you for your attention ! More information at ERGEG website: www.energy-regulators.eu