Improving Network Access in Europe’s Periphery Panos Coroyannakis CPMR Energy Working Group “Energy for the Periphery” Pamplona 5-6 October 2006

Some of our partners

Access to the network The European Dimension – Trans European Networks The National/regional Dimension – EU legislation – National framework – The role of TSO – The role of the regulator

Trans European Networks -TEN Serving European Energy Markets Connecting Renewable Energy Sources – EU needs renewables to meet its Kyoto obligations. But RES are found in remote areas and need to be connected to the grid not only at national, but at EU level. Reinforcing Security of Supply Integrating the new member states

TEN conditions (1) Transnational (2) Strengthen European grid(s) – Improve available transfer capacity – Improve network stability – Improve competition (3) Best value for money – Finite amount of € available – Priority list

TEN Transmission priorities in NW

TEN Transmission priorities in SW

TEN Transmission priorities in SE

Financing TEN ~ €28 billion needed for gas & electricity infrastructure projects ~ 2/3 of it within EU EU support from TEN budget: small : 123 million € for 53 projects ~25 million € annual TEN-energy budget ~2 million € average TEN support, mostly for feasibility studies

Other sources of financing TEN Structural funds: : 2 billion € for GR, P, Es, Ir EIB: billion € in loans The rest has to come from transmission tariffs

Networks & Access: EU legislation EXISTING Electricity Directive 96/92/EC Electricity Directive 2003/54/EC The Florence Process PROPOSED Directive on Security of Electricity Supply and Infrastructure Investment

Directive 2003/54/EC Preamble para(22) ……… Member States should have the possibility, in the interests of environmental protection and the promotion of infant new technologies, of tendering for new capacity on the basis of published criteria. New capacity includes renewables and combined heat and power (CHP).

Directive 2003/54/EC Art. 3 (7). Member States shall implement appropriate measures to achieve the objectives of social and economic cohesion, environmental protection, ………. Such measures may include, in particular, the provision of adequate economic incentives, using, where appropriate, all existing national and Community tools, for the maintenance and construction of the necessary network infrastructure, including interconnection capacity.

EU priorities in RES & RUE From 6% to 12% of total energy mix by % of RES in electricity generation by % annual improvement in EE to 2015 Kyoto Protocol commitments Buildings directive Biofuels directive etc.

National framework Generation investment (investors) Infrastructure investment (TSO) Transmission tariff (regulator) Siting permit(s) – EIAs – for generation – for transmission

The transmission issue EC advocates a stronger “interventionist” approach in dealing with transmission infrastructure investments Sea route or land route, major challenges: – Environmental – Financial/investment – Tariff/regulatory

The role of TSO Transmission system planning Investments in transmission infrastructure as part of their Regulated Asset Base (RAB) approved by the regulator Transmission system operation Transmission tariffs approved by the regulator

The role of the regulator Approves and encourages transmission investments as part of RAB Influences transmission tariffs philosophy and approves methodology & T-tariffs Approves feed-in tariffs for RES Plays a major role in bringing RES to major electricity markets

Environmental considerations Short term – Habitat Directive – Natura & other designations – Birds Directive – preservation of species Long term – Global warming/climate change – Permanent damage?

Conflicts - Balances European vs National priority Global vs local impact Habitat vs climate change Dominant position of TSO The role of regulator is instrumental

In Summary TEN support limited EU framework favourable (a necessary but not a sufficient condition) National/regional TSO dominant Role of regulator instrumental Conflicting environmental objectives (short versus long term) a serious obstacle