Opportunities in the Power Sector

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1 South Asia Energy Cooperation Presentation and Title Business ( Arial, Font size 28 ) Opportunities in the Power Sector Date, Venue, etc..( Arial, Font size 18 ) Amulya Charan February 2012

Scope of Energy Cooperation The European Model Energy Cooperation & Trade brings ability to optimally manage resources In Europe, cross border trade of electricity amounts to significant proportion

2 Scope of Energy Cooperation The European Model Energy Cooperation & Trade brings ability to optimally manage resources In Europe, cross border trade of electricity amounts to significant proportion of generation It allows countries to manage availability from various resources much better resulting in optimal dispatch across the system With the advent of Renewables, generation fluctuations are better managed in a larger grid Source: Entsoe website and Nordpool website 1

manage availability from various resources much better resulting in optimal dispatch across the system With the advent

3 The European Electricity Grid An example EU27 Installed Capacity of ~ 850GW; Electricity Generation of ~ 3,300TWh 2

4 Energy Cooperation - The European model Norway, Austria, Switzerland Significant Hydro Generation Dispatch during peak hours Cheapest source in that time Germany, Spain and Denmark Significant Wind Generation Available during Off-peak hours Cheapest source in off-peak France has a significant amount of Nuclear dispatched during off-peak Poland, Czech, Turkey, Germany Solid fuel/coal based Base load Source: Eurostat website 3

Available during Off-peak hours Cheapest source in off-peak France has a significant amount of Nuclear

5 Energy Cooperation - The European model Today, Europe has adopted collective energy security & optimal utilization of resources while allowing for effective management of Renewables Energy Cooperation has enabled various countries to harness the renewable potential even if they are themselves energy surplus Source: EU Energy Policy 2050 Study by European Wind Association 4

Energy Cooperation has enabled various countries to harness the renewable potential even if

6 Energy Cooperation - The European model European Parliament and Council has come out with several directives in order to establish an Internal Market in Electricity 1996: Directive 96/92/EC based on European Commission Treaty for common rules for the internal market in electricity 2003: Directive 2003/54/EC 2009: Directive 2009/72/EC The freedoms which the Treaty guarantees European citizens free movement of goods,freedom to provide servicesandfreedom of establishment are only possible in a fullyopen market, which enables all consumersfreely to choose their suppliersand all suppliers freely to deliver to their customers A unified approach to the Internal Market in Electricity leads to efficiencygains, price reductions, higher standards of service and increased competitiveness However, when it comes to operational level - individual countries regulate physical exchanges - cross border trading is possible anywhere; Physical exchanges are private and profit driven Markets in Financial Instruments Directive (MiFID) is a European Union law provides harmonized regulation for investment services and covers Commodity Derivatives, however, regulating Power Derivatives is a unique task especially since physical side has several regulators 5

free movement of goods,freedom to provide servicesandfreedom of establishment are only possible in a fullyopen market, which enables all consumersfreely to choose their suppliersand all suppliers

7 Market places in Europe - a colorful landscape Imarex Group Energy brokers, mainly London-based OMX AB / Nord Pool ASA Intercontinental Exchange Tender to build an Power Exchange in UK Nord Pool Nord Pool Spot AS European Market Coupling Company (EMCC) GmbH APX B.V. European Energy Exchange AG ENDEX N.V. Climex Belpex SA Auction office CASC-CWE Powernext SA Mercado Operador de Mercado Ibérico de Energia (Pólo Português) S.A. Mercado APX ECX Towarowa Endex Belpex Borzen EEX THRU PWX EXAA Opcom Sa Gestore ITL Gielda Towarowa Gielda Energii SA Operátor trhu s elektrinou a.s. Energetická Burza Praha EXAA Energy Exchange Austria Operatorul Pietei de Energie Electrica OPCOM SA Borzen, organizator trga z elektricno energijo, d.o.o. Operador del Mercado Ibérico de Energía (Polo Español) S.A. Bolsas y Mercados Españoles plans CO 2 spot trading New CO 2 market place Borsa italiana Gestore del mercato elettrico S.p.a. TSO-initiative in Hungaria 6

A. Mercado APX ECX Towarowa Endex Belpex Borzen EEX THRU PWX EXAA Opcom Sa Gest

Economic Gains of Energy Cooperation Energy Cooperation & Trade brings ability to optimally manage resources Countries able to manage availability from various resources much better resulting in

is made possible as Energy surplus has an outlet Source: Entsoe website and Nordpool website ENTSOE Network 41 transmission system operators (TSOs) 34 European Countries 380TWh of electricity

8 Economic Gains of Energy Cooperation Energy Cooperation & Trade brings ability to optimally manage resources Countries able to manage availability from various resources much better resulting in optimal dispatch across the system at all times (minimal operating costs) With the advent of Renewables, generation fluctuations are better managed in a larger grid; capacity addition in Renewables is made possible as Energy surplus has an outlet Source: Entsoe website and Nordpool website ENTSOE Network 41 transmission system operators (TSOs) 34 European Countries 380TWh of electricity exchange between member TSOs 532 million customers served by the represented power systems 880GW net generation capacity 3,200TWh electricity consumption 305,000 km of transmission lines managed by the TSOs The European Network of Transmission System Operators for Electricity (ENTSO-E) represents 41 transmission system Message operators (TSOs) from 34 European countries. Box ( Arial, Font size 18 Bold) 7

9 Energy Cooperation South Asia Tremendous possibilities for Energy Cooperation Pakistan has access to one of the largest gas reserves adjoining its boundary Bangladesh and Myanmar together have some of the most prolific gas basins India has one of the largest coal reserves in the world Bhutan and Nepal have enough Hydro potential to power the northern grid Sri Lanka has potential gas, coal, tidal, hydro potential that needs to be tapped Indian subcontinent has excellent potential for Solar and peninsular India has Wind Google Maps 8

reserves in the world Bhutan and Nepal have enough Hydro potential to power the northern grid Sri Lanka has potential gas, coal,

10 Energy Cooperation South Asia a Vibrant Market Tremendous possibilities for Energy Cooperation and development of a Vibrant Market Hydro potential from Nepal and Bhutan are seasonal and dependant on snow melt India is fully capable of being the anchor base load with coal Southern peninsula excellent for wind resources Pakistan, Bangladesh and Myanmar are equipped for flexible generation fired on Gas Expanding the Power and Gas grids also gives countries a potential to develop previously undeveloped resources for common utilization Source: SARI Presentation and Report Synergies are there to be explored and developed 9

wind resources Pakistan, Bangladesh and Myanmar are equipped for flexible generation fired on Gas Expanding the Power and Gas grids also gives countries a

11 Energy Cooperation Challenges Challenges in building further There is always a challenge of managing individual countries energy security Policy Changes in one country will affect the Energy scenario in another Incoherent policies may lead rise to activities of smuggling and trafficking Development of Infrastructure is a challenge as nodal agencies for building infrastructure not clear Management of funds and cross-border sharing and settlement mechanism needed to be robust What is needed? Opening up opportunities for pursuit jointly between countries through public-private partnerships enabling tapping of opportunities with entrepreneurial drive Energy Policies in member countries need long term alignment and to encourage cross border sharing of resources and view resource sharing openly o If tomorrow, France decides that it would not export its Nuclear power, model could quickly fall therefore long term policy is needed to be in place o Germany s ban on Nuclear beyond 2020 to have consequences for all of EU Joint Government, Regulatory, TSO, Grid level understanding to promote cross border energy trade For the development of Cross-border infrastructure, clear guidelines and policy needs to be laid and the Governments need to incentivize the projects 10

of funds and cross-border sharing and settlement mechanism needed to be robust What is needed?

12 Any observations, comments? We may have an open discussion on what is needed and how to achieve the same jointly! Website: ID:

Power market integration. Geir-Arne Mo Team Lead Nordic Spot Trading Bergen Energi AS

Power market integration. Geir-Arne Mo Team Lead Nordic Spot Trading Bergen Energi AS Power market integration Geir-Arne Mo Team Lead Nordic Spot Trading Bergen Energi AS 1 Geir-Arne Mo Some background information: Working for Bergen Energi since 2015 Team Lead Nordic Spot Trading I work