1. A Vision of Change for the Mediterranean Michelangelo Celozzi - Secretary General Set Plan Conference 2014 10 th December 2014, Rome 1

2. The World Energy Scenario “Prediction is very difficult, especially if it’s about the future.” (Niels Bohr)

3. The World Energy Scenario The evolution of the energy scenario extraordinary evolution, caused by the emergence of new technologies in the last decade, new technologies with the greatest impact were not renewable ones (solar, wind), but new technologies for the extraction of hydrocarbons Example the same weight of 25 years ago. Source IEA World Energy Outlook 2013 18 % 82 %

4. The Impact of Technology Extraction technologies Techniques of hydraulic fracturing and horizontal and pluri-directional drilling Transformation technologies Gas To Liquid (GTL) technologies End-use applications Liquefied natural gas (LNG) In a few years these new extraction techniques have enabled the exploitation of hydrocarbons, previously considered not accessible for technical or economic reasons. Impact drastically reduction of the production cost of at least two types of non-conventional hydrocarbons (shale and tight*). Impact diversification of energy products for end-use Impact Flexibility vs Economy * Shale: from clastic sedimentary rock; Tight: from sandy formations with low permeability

5. The Impact of new reserves 1-2 Source: IEA World Energy Outlook 2013 1.300 7.000 30 concentrated in a few Countries (mainly Middle Eastern Countries) more than 5 times the proven reserves coverage of the current global yearly demand for more than 2 centuries present in several areas, including North America Worldwide availability evolution 160 500 3,2 concentrated in a few Countries (mainly Middle Eastern and North African Countries and Russia) more than 3 times the proven reserves; coverage of the current global yearly demand for more than 160 years present in several areas NB: Potential reserves gas appraisal (methane hydrates * ): between 1.000 and 5.000 trillions m3 * Methane hydrate is a cage-like lattice of ice inside of which are trapped molecules of methane

6. The Impact of new reserves 2-2 6.8 10 15 400 280 NB: In two years (2008-2009) the gas production increased by 15% (more than 80 billion m3/year, most of the total Italian consumption) (SOURCE: BP Statistical Review of World Energy - 2014; IEA World Energy Outlook 2013) Oil production growth (million b/day) The USA case

7. Open issues Which will be the impact on the base power generation (nuclear and coal-fired)? Oil price will still be the energy reference price : it is correct? Reference gas prices currently fall: it will go up, will go down or stay the same? Reference conditions suggest that it will fall. If it is correct, when and how? If Reference gas prices will go down, which will be the role of RES (range of technologies on the grid parity)? If gas become cheaper than coal, which will be environmental advantages (and the consequent impact of this issues on the final price)? The future reference mix of generation will be gas-RES. It is true, wrong or partially true?

8. Build a framework of rational hypothesis of evolution for the electricity sector And Med-TSO? Med-TSO approach for Job and Security in the Area Flexibility Uncertainty A more Integrated Euro Mediterranean System Share the Scenario How to manage it? SecurityEfficiency Share the Criteria A regional grid planning

9. 9 Members of Med-TSO 17 Countries - 19 TSO 9 IT ES MA TN TR SI FR PT MA DZ TN LY EG JO TR GR AL ME SI IL PS 9 Albania - OST Algeria – SONELGAZ, GRTE, OS Egypt - EETC France - RTE Greece - ADMIE Israel - IEC Italy - TERNA Jordan – NEPCO Libya – GECOL Morocco - ONE Montenegro - CGES Palestine - PETL Portugal - REN Spain - REE Slovenia - ELEKTRO-SLOVENIJA Tunisia - STEG Turkey - TEIAS

10. MED-TSO MEDREG ENTSO-E EU (Commission- Parliament) LAS (Energy Dept.) PAM (Energy Panel) 10 UfM The Cooperation Framework

11. Share a common vision and objectives for a Euro Mediterranean Regional Electricity Market Role of Med TSO and Medreg, as EC long term institutional partners for Euro Mediterranean Relationships in the Energy sector The EC supports Med TSO in its mission aiming at the integration of a regional electricity market in the long term by coordinating the development plans and the operation of the grids EC- Med-TSO – Medreg A Euro Mediterranean Partnership

12. Med TSO – Medreg Cooperation Protocol Constitution of a Joint WGs: regular meetings (each semester) for information exchange and agreement cooperation actions, also with Institutional Stakeholders, like the EC DG Energy and the League of Arab States – Energy Department First bilateral actions :  Investment Mapping Report, on the basis of results of the Master Plan of the Mediterranean Interconnections (Med TSO, 2013)  Workshops on some practical selected topics, like the state of the art and priorities in harmonization of rules of connection or mechanisms for promoting network investments in international interconnections Other potential common coordinated actions:  Exchange of good practices - “Regulatory Benchmarking”  Specific “Joint Workshops” on ad-hoc basis

13. Objective Integration of Mediterranean Electricity Systems Common Vision Infrastructures development as condition for the Regional Development Integration Tool Multilateral Cooperation, in the framework of a partnership with the European Commission: a set of coordinated activities, jointly elaborated and developed by the experts of the Mediterranean TSOs EC Med TSO Cooperation: the Mediterranean Project

14. 1.Rules – Common Set of Rules for a Mediterranean Power System and Transmission Grid Code Common rules for the operation and development of interconnections 2. Infrastructures – Planning and development of a Euro Mediterranean Reference Electricity Grid Coordinated development planning of interconnections, based on specific tools (Energy Scenario, Market Study, CBA and CBCA Methodologies ) 3.International Electricity Exchanges – Promoting the development of a Mediterranean Electricity System Methodologies, procedures and mechanisms for sharing resources through cross border exchanges, based on inter-grid complementarities and efficient use of generation infrastructures, allowed by the interconnection of the grids. 4. Knowledge Network – Creation of a knowledge network Creation of a common background to support the Mediterranean Integration 5.Database – Database in the Mediterranean Electricity Sector Sharing of information to promote the cooperation and development of the Mediterranean Electricity Grid Strategy Plan 2015 - 2017

15. Knowledge Network Approach Cooperation Agreements with Engineering Departments of Universities and Research Centers from the Med-TSO countries for developing common initiatives for know- how development and exchange, aimed to create an Integrated Mediterranean Electricity System Cooperation with operators coming from the different Mediterranean contexts, for students training (i.e. a Post- graduate one year international Master on Large Grid Engineering, hereby creating a network of experts in new electrical grid technologies). Main Area of interest : Large Grids Engineering and System Integration

16. Technology vs Knowledge The evolution of the energy scenario has a strong impact on prices (still ongoing) The new technologies have led to an impact on this framework. The energy scenario evolution impacts the development of the electricity systems An incentive for the integration of the regional electricity systems New impulse for R&I in large grid engineering and system integration technologies (i.e. Hybrid Grid AC/DC) To lay the foundations of a new R&I production chain Linking TSOs and University/Research Institutes

17. 17 A vision of change for the Mediterranean