1. Electricity Security of Supply European System Adequacy Forecast XV Florence Forum, 24-25. November 2008

2. 2 Electricity Security of Supply Highlights Background, objectives, necessary improvements 10 years network development statement Outlook

3. 3 Electricity Security of Supply Background & History The XIV Florence Forum (24-26 September 2007) has invited Regulators to continue work on security of supply together with ETSO and other stakeholders The results of those discussions and work are presented here Workshops already in 2007 with Nordel and UCTE Two workshops and several meetings with ETSO in 2008 A list of current practices’ drawbacks and possible improvements has been established Identified necessary actions  Agree on objectives  Complete the list of possible improvements  Identify barriers to implementation – cost/benefit analysis  Identify possible common actions and establish an action plan

4. 4 Electricity Security of Supply Objectives for further SAF Development … to provide market participants with information on demand, generation and grid developments and enhance thus market opportunities … to highlight the possibility of synergies between countries … to provide authorities an assessment of system adequacy Timeframes: 3-5/10 years, seasonal (summer/winter), annual Perimeter: a pplicable for the whole EU, but possibly starting with some geographical areas (regions) if that is more feasible Comply with the existing (Dir. 2003/54/EC, 2005/89/EC) and anticipated new (Third Package) legal framework

5. 5 Electricity Security of Supply Key Necessary Improvements Identified Harmonization of data & information that must be made available to each TSO, in order to get the knowledge of system status and prospects Enhanced methodology and system modelling Scenarios and probabilistic approach

6. 6 Electricity Security of Supply Key Necessary Improvements Identified (details) ETSO to identify the differences between present forecasting and the approach which is anticipated to emerge from the 3rd Legislative Package. Different timescales, seasonal statements, accuracy of data Test and ensure compatibility of data & information acquisition methods used in MS Interregional issues to be addressed Consider increased reliance on interconnections

7. 7 Electricity Security of Supply Key Necessary Improvements Identified (details) (cont’d) Consider scenarios and be transparent on data / assumptions behind them Take into account the effect of environmental impact assessment in the new projects Consider impact of renewables Consider socio-economic impacts in scenarios Use a bottom-up approach with increased cooperation between TSOs Start a debate, meetings and consultation of stakeholders, with an expectation to produce the 1st report in June 2010

8. 8 Electricity Security of Supply The Future Framework to fit in: 3rd Legislative Package Requirements Art. 12g of the “new” Electricity Directive (10-year MSs plan) 1.TSO  NRA 10-year plan, annually, measures for adequacy & security 2.Indication of transmission projects, list of investments, timeframe 3.Generation, supply, consumption, exchanges assumptions  other EU-networks 4.Regulators: to consult all network users 5.Regulators: check consistency with EU 10-year plan 6.Regulators: monitor and evaluate implementation 7.Regulators’ obligation for measures (8.) if TSO does not execute investment 8.Measures … Art. 2c.1.b of the “new” Electricity Regulation (10-year EU plan) b)10-year plan, including a generation adequacy outlook, every two years e)Annual summer / winter generation adequacy outlook Art. 2c.1.c of the “new” Electricity Regulation Generation adequacy outlook: current and projected adequacy, 5y & 5-15y

9. 10 Year Network Development Statement Draft Florence Forum Draft 13 November 2008

10. 10 Objectives of the Report Previously long-term system adequacy assessment focused on generation adequacy The EU economy needs a comprehensive picture of power system development as a whole Consequently the 3 rd Package requires a 10-Year Statement to cover the following aspects load development scenarios of generation development and generation additions important transmission extensions of European interest The report can provide an expert assessment of: future power system development transmission and generation adequacy impact of transmission extensions for interconnections between regions/countries impact of internal reinforcements affecting transmission capacity

11. 11 Approach to Dealing with Uncertainties Future electricity market development is uncertain: Actions of EU/national legislators Regulatory environment Actions of market participants External factors (e.g. global economic climate)  Different scenarios will be used to deal with these uncertainties The scenarios themselves contain significant variables: Amount, location, timescales of generation projects Differing timescales to complete generation/transmission projects  Grid development must be robust, yet flexible

12. 12 Scenarios The report will focus on at least the following scenarios: -Scenario “Best Estimate”: -Considers additional new generation considered certain or likely -Load development “business as usual” -Scenario “EU 2020”: -Considers the targets for renewables set by the EU -20 % renewable, +20 % energy efficiency, 20 % CO 2 -reduction -Load development will include efficiency gains The report will provide scenarios with an expert assessment based on the information available to TSOs Investors have to make their decisions based on their own analysis of market development

13. 13 Overview “End Product” The Ten Year Network Development Statement will be a considerable step beyond existing System Adequacy reporting It will be easy to comprehend – especially for people who are not grid experts The assumptions, developments, deductions and results will be easy to follow The report will give an overview of the situation in Europe “In depth” approach for countries and regions where more detailed information is required

14. 14 Example: Overview System Adequacy Dependent upon imports over the whole summer under normal conditions Some imports may be required under normal conditions No specific issues identified under severe conditions Imports will be required under severe conditions Potential requirement for imports under certain conditions HU B PL DE CH NL E PT SLO Cro Ser FYROM AL BG ROM GB IRL LT EST LV N SE GR BA SK A FIN CY DK F I CZ Mon CY Example

15. 15 Example: Network Extensions Excerpt from UCTE Transmission Plan 2008 Example

16. 16 Cooperation ETSO-CEER How can the regulators help to ensure the quality of the report? TSOs should be in the position to get high quality data from market participants In some countries the regulators already started consultation processes with market participants to develop a view of the future load and generation scenarios. The results should be made available to the TSOs. Clarifying likely policy developments within energy ministries of Member States will be an important issue Data quality for a long term prognosis depends on two factors Today's best available input data Taking as many views into consideration while developing scenarios to ensure a broad view on the future development

17. 17 Conclusions and Next Steps The 10-Year Network Development Statement is a very ambitious project – a significant step beyond current System Adequacy reporting The statement will be based on different supply and demand scenarios and planned transmission grid extensions Regulators can play an important role: ensuring availability of high quality input data giving input on scenario development via consultation with stakeholders. CEER and ETSO will continue their information exchange and identify the next steps to ensure high data quality ENTSO-E will publish a first report in 2010 with a working draft in 2009

18. 18 Electricity Security of Supply Outlook To clarify, involving the EC  Impact of and relation to the 3rd Legislative Package  Expectations at the EU level vs. regional focus To clarify and define involving stakeholders  Goal / information to be available for the stakeholders  Role of regulators in the process  Role of other stakeholders (e.g. generators) in the process Action plan  Resolve outstanding issues and start work on definition and implementation of enhanced pan-EU SAF by Q1/2009  Adjust methodology and produce the first “real” SAF according to the new methodology by 06/2010