Opportuni)es for third countries' companies in the EU energy business: cross- border electricity trade in focus. Jan Sundell EURELECTRIC

Transcription

1 Opportuni)es for third countries' companies in the EU energy business: cross- border electricity trade in focus Jan Sundell EURELECTRIC

2 EURELECTRIC- CIS EPC/Market Council coopera)on Joint Task Force on cross border trade launched in December 2009 Objec)ve: Analysis of trading rules and development of new approaches Analysis of set of top- priority organiza)onal and ins)tu)onal ac)vi)es necessary to implement the agreed approaches Joint report is foreseen in 2011

3 General background Electricity is paid more asen)on in the EU- Russia Energy Dialogue: Energy security in the Bal1c region ( Russia s plans to build the Bal1c NPP in Kaliningrad, Lithuania s plans to build the Visagina NPP) Progressing Nordic- Bal1c market integra1on (BEMIP) and poten1al impact of the Russian electricity imports October establishment of the ad- hoc Group on Electricity European and Russian stakeholders - invited to make proposals for reciprocal technological and economic cross- border trade improvements to bring markets closer to each other Input from the stakeholders will feed- in to the Commission s recommenda)ons on improvements of the European external energy policy (to be issued in 2011)

4 EUR- CIS EPC TF Cross- border trade Joint EUR- CIS EPC TF cross- border trade progresses at a mild pace 3 mee1ngs since autumn 2009, next TF mee1ng - Feb/March 2011 Presidents mee1ng planned in Stockholm, June 2011 Key differences on trading rules iden)fied by the TF: balance responsibility of the TSOs and market par1cipants EU: TSOs- for the system balance, market par1es - for their own balance Russia/Belarus: System Opera1on for the system balance (physical), INTER RAO for the system balance (financially) Compe11ve TPA network access (EU) vs historically a de- facto monopoly (Russia) Energy- only market in the EU vs. capacity market in Russia Explicit/implicit (EU) vs. no market- based (Russia) capacity alloca1on

5 EUR- CIS EPC TF Cross- border trade Next steps (planned for Feb- March 2011) Reach agreement on the key obstacles to trade based on the iden1fied differences between markets Outline possible op1ons for rules changes (e.g. balancing responsibility, network access, etc)

6 Development of the cross- border electricity trade in the EU: main drivers (1) Liberalisa)on Establishment of trading market places and increasing liquidity Removal of long- term contracts and TPA regulated access to the grid Abolishment of transit and import/export fees within the EU (Inter- TSO compensa)on regime) Restructuring of electricity companies and expansion across Europe

7 Development of the cross- border electricity trade in the EU: main drivers (2) Regional integra)on Regulatory rules convergence on the regional level Regional coopera)on between TSOs on capacity calcula)on and capacity alloca)on Market coupling solu)ons and cross- border intraday pla]orms Eventually cross- border balancing mechanisms

8 Main differences in the market rules in the EU and Russia European Union CO2 legisla)on and targets Energy- only market Clear move from pure physical to short term physical trade with financial hedging Russia No binding legisla)on to reduce CO2 emissions Energy and capacity market Predominantly physical trade

9 Main differences in the access rules for interconnectors in the EU and Russia European Union Connec)on to the network gives access to the whole network, incl. interconnectors on the borders Russia Network access is subject to a complicated applica)on process (registering export/import interconnec)on on the wholesale market and an export delivery point cluster), INTERRAO is a de- facto export monopoly TSO role: system opera)on and market- based conges)on TSO role: only technical; management (explicit/implicit auc)ons) conges)on management is done in coopera)on with INTERRAO

10 EU- Russia cross border trade already exists Russia import to Finland HVDC interconnector of 1300 MW (over 85% u)lisa)on), Import of 10 TWh (10-15% of Finnish consump)on) Russia/Belarus exports/imports to the Bal)c States Bal)c system is a part of synchronous IPS UPS system, around 2800 MW cross- border capacity Many cross- border flows in the region (Lithuania is par)cularly strongly dependent on Russian imports aler Ignalina NPP closure

11 but it does not ensure a level playing field and op)mal u)lisa)on of interconnectors De- facto one player from the Russian side Non- transparent access to the network, complicated applica)on process No market- based conges)on management and capacity alloca)on No CO2 component in the prices for electricity from Russia Very lisle sensi)vity of electricity price on Russian Finnish border towards the Nordic market prices

12 Nordic- Bal)c integra)on is becoming a reality.. Present (MW) Under construction (MW) Planned (MW) Discussed (MW) BEMIP in June 2009: Market design model as in the Nordic Interconnectors (Estlink 2, NordBalt, LitPol) Price area Estlink in April 2010 Integra)on of the Bal)c market (day- ahead and intra- day) during 2011 Objec)ve: full integra)on in the Nordic and the EU market

13 .. and will require changes in electricity trading rules on the borders with Russia Market trading rules should be based on the principle of reciprocity and made compa)ble Agreement on the common principles for short term cross border trade will ensure predictability of the market and pave the way to new investments in the infrastructure in the region Opens for opportuni)es also for other companies

14 What do we mean with compa)ble market rules? Clear dis)nc)on between system services and electricity trade Clear defini)on of TSOs and market players roles Regulated 3 rd party access to the network Market- based conges)on management and capacity alloca)on (explicit/implicit auc)ons) Harmonisa)on of the CO2 emissions legisla)on, etc.

15 Price formation on the Russian side of the border Energy costs (DAH, Balancing) Capacity costs TSO Expenses (Federal Grid Company) System Operator Expense s Trading System Expense s All-in Price Energy Volume Price formation on the Baltic side of the border Energy costs (DAH, Balancing) Capacity costs ITC Perimeter Fee Additional Fees (e.g. FinGrid) Trading System Expense s All-in Price Energy Volume

16 THANK YOU FOR YOUR ATTENTION