Energy Supply Business Model enabled by the Clean Energy Package Pantelis Capros Professor of Energy Economics at the National Technical University of Athens March, 28, 2019 3/28/2019

Aims of the Clean Energy Package Efficiency Active participation of consumption – demand response Dynamic pricing – smart metering Renewables Based on dramatic drop of costs, move RES in the core market business RES attractive to demand for certificates of origin Removal of indirect or direct subsidies to power resources and priorities in the organized markets Promotion of flexibility resources Distributed energy resources (DER) Cost-effectiveness for consumers via bundling of RES, DR and storage at the DSO level Facilitation of flexibility and balancing enabled by the DER Aggregators Facilitation of RES balancing and Power Purchasing Agreements Facilitation of extracting system services and their value from bundled DER Market competition Enhancement of participation in the organized markets Increase of interconnections’ capacities available to markets Regional TSOs Removal of subsidies via capacity mechanisms (unless justified by security of supply) Demand response Removal of price caps and floors 3/28/2019

Factors supporting transition Enablers Economic fundamentals Regulatory framework allowing participation of new and diverse players System Infrastructure (smart meters, communication systems, storage, system controls) Market Infrastructure (transactive platforms, risk hedging instruments, liquidity and transparency, check and balance security) Accurate data (market data and prices, weather, load and system forecasts) Avoidance of supply market dominance Low cost renewables Access to diverse and low cost balancing resources, including cross-border Support of clean technology (directly and indirectly) Socialized funding of system infrastructure Rewards or standards for efficiency and the exploitation of distributed energy resources 3/28/2019

What is the implied business model for energy suppliers? Incumbent suppliers can no longer block aggregators Dynamic pricing and smart meters enables active consumer response The threshold for participation in day-ahead and intraday markets is now less than half a MW Removal of priorities increase liquidity of wholesale markets Balancing energy can be found cross-border and competition increases Limiting subsidies via capacity markets reduce market concentration Facilitation of supplier switching also reduce market concentration Transactive platforms without a central clearing house can emerge Co-existence of conventional suppliers-producers and independent aggregators? Separated small-scale large-scale business? Dominance of an Uber-Airbnb business model? Integrated supply business with a highly diverse portfolio of assets (by resource, origin and scale)? 3/28/2019

Enhanced business model of suppliers Consumer preferences Supplier’s value Low cost of energy Hedging technical and information risks Monetization of distributed resources (demand response, storage, RES) Access to transactive market places including aggregation opportunities Demand for options in the energy supply mix Low cost energy supply mix with balancing responsibility Customer engagement and retention Efficiency and optimization services offered to customers Non-wires alternatives with community sharing System services collected from distributed energy resources 3/28/2019

Integrated Supply Business Model Mixed-Assets Portfolio Aggregation of Demand Response Aggregation of Community Shared Renewables Aggregation of Distributed Resources Cross-border and Power Exchange Trading Virtual Power Plants (bundled RES and balancing) Large-scale RES Aggregation Conventional Flexible Power Plants 3/28/2019