1 / 25

GOVERNANCE, REGULATION AND MARKET INTEGRATION IN EUROPE

GOVERNANCE, REGULATION AND MARKET INTEGRATION IN EUROPE. SALVATORE ZECCHINI APEX Conference Sidney, October 13, 2008. Power exchanges in Europe (year 2008). Source: European Energy Exchange (EEX) and Powernext. European power markets restructuring process.

mahlah
Download Presentation

GOVERNANCE, REGULATION AND MARKET INTEGRATION IN EUROPE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. GOVERNANCE, REGULATION AND MARKET INTEGRATION IN EUROPE SALVATORE ZECCHINI APEX Conference Sidney, October 13, 2008

  2. Power exchanges in Europe (year 2008) Source: European Energy Exchange (EEX) and Powernext

  3. European power markets restructuring process

  4. Main European power exchanges ownership structure

  5. Market integration benefits • Reduced costs -) lower transaction costs for importing and exporting electricity -) lower operational costs for system operators and market participants -) lower reliability costs associated to the need to procure reserves and other ancilliary services -) more efficient use of generation resources • Lower price volatility • Increased competition • Improved price signals for investment • Larger opportunities to invest in renewable energy as a result of broader market demand

  6. Requirements for effective market integration • Horizontal integration of transmission and network operations • Vertical separation of functions • Non-discriminatory access to the grid • A well functioning and liquid wholesale market • Efficient allocation of scarse transmission capacity • Adequate investment in new capacity

  7. Competition and Liberalization Indicators

  8. Liberalization of European electricity markets Good1 Average2 Low3 Poor4 1Good: all indicators are satisfied 2Average: 3 indicators out of 4 are satisfied 3 Low: 2 indicators out of 4 are satisfied 4Poor: no more than 1 indicator out of 4 is satisfied

  9. Electricity sector: generation (year 2006)

  10. Electricity sector: transmission and distribution (year 2007)

  11. Electricity Market: Cross border capacity across Europe (year 2006) Interconnection capacity (NTC) as a ratio to installed generation capacity Source: ERGEG 2007

  12. Electricity consumption and cross-border exchanges in European regions (year 2005)

  13. Power prices correlation (2007) Source: European Market Coupling Company (EMCC)

  14. NRAs (National Regulatory Authorities) Powers • Independence from the government • Power to set grid access tariffs • Power to set reference retail prices • Power to control access to gas storage • Power to promote competition • Sanctioning powers • Definition of public service obligations and quality standards Source: GME elaboration on IERN data

  15. Market design harmonization issues • Trading arrangements • Traded products • Algorithms and matching rules • Timing • Monitoring and transparency rules • Market liquidity • Guarantee and settlement system

  16. European Power Markets: Liquidity and Volumes (2007) Source: Volumes from GME and Reuters data. Liquidity computed as a ratio on national consumption based on Nord Pool estimates for the Scandinavian market and UCTE (union for the co-ordination of transmission of electricity ) data for the other countries.

  17. Ergeg Electricity Regional Initiatives Source: ERGEG; Annual Report, 2007.

  18. Issues currently tackled across the electricity REMs • First focus on a few key issues to deliver results = work in progress = not tackled currently

  19. Day Ahead transmission capacity allocation (June 2007) Source: ERGEG Monitoring Report – Compliance with Regulation 1228/2003, July 2007.

  20. Status of existing Regional Markets The first Inter-regional Coupling

  21. Market integration models • Unified Pan-European solution • Horizontal integration • Inter-regional Dome Coupling

  22. Dome Coupling European / multiregional solution DOME COUPLING Regional solution REGION 1 REGION 2 REGION 3 REGION 4 E F G H I B D J k L M C Market areas A Market splitting Volume coupling Price coupling Source: Europex-ETSO interim report on inter-regional congestion management, April 2008.

  23. The third package for internal energy markets: key proposals • Effective unbundling • Ownerhip unbundling • ISO (Independent System Operator) • Other solutions • Improved cooperation of TSOs to develop a European Network • Creation of a European Agency for Regulatory Cooperation (ACER) • Enhancement of national regulators powers

  24. Conclusion: how to integrate national and regional markets • Pragmatic bottom-up approach -) institutions set up the general framework -) technicalities worked out by interested parties: TSOs, PXs and stakeholders • Expected result: progressive convergence of national interests • Dome coupling could represent a compromise solution granting -) enough flexibility and efficiency -) the possibility to extend integration beyond the current regional setting

  25. Conclusion: which goals the internal European energy market should pursue? • To cover the whole of the EU and possibly other contiguous areas • To promote the efficient use of the European interconnected networks • To ensure security of supply • To provide transparent and competitive price formation mechanisms • To support the development of liquid and efficient markets in all areas • To extend to markets for natural gas

More Related