]
www.platts.com
EU Energy
EU split on need for new climate
negotiating strategy
The EU is split over whether it needs a
new strategy for negotiating at
international climate talks after the
December UN climate conference in
Copenhagen failed to produce the
binding global post-2012 emissions
reduction agreement the EU wanted.
“The time for discussion of a new
strategy will be at the informal EU heads
of state and government meeting in
Brussels on February 11,” an EU
diplomatic source said January 25.
A row has broken out over who
should be the “official” EU climate
change negotiator in future global
talks after criticisms that the many
EU representatives at Copenhagen
weakened the EU’s negotiating
power.
European Commission President
Jose Manuel Barroso told the European
Parliament on January 20 that the EU’s
new governing Lisbon Treaty makes the
EU’s climate action commissioner the
official EU climate negotiator.
But EU national governments,
represented by the EU Council, disagree,
said the source. In part this is because
of national concerns that giving the EC a
bigger role could change voting rules
that require any EU Council decisions on
climate to be unanimous.
“The legal implications are not clear
at this stage, but if it’s an EU
competence and the commissioner
speaks it could change the voting rules,
making only a qualified majority
necessary,” the source said.
In a qualified majority vote individual
countries can be overruled, though in
practice this rarely happens, as the EU
Council usually seeks full consensus on
all issues.
The leader of the European
Parliament’s center party, Guy
Verhofstadt, advocated “a different
strategy, post-Copenhagen,” during the
January 20 parliamentary debate, saying
that the EU’s approach there had failed.
Issue 225 / January 29, 2010
Highlights
E.ON’s pledge to free up German gas
capacity starts market test
3
New EU energy, climate bosses pass
first test, formal vote Feb 9
3
Oettinger talks tough on energy
efficiency, gas supply solidarity
3
Hedegaard wants global CO2 price in
global system
4
Tajani to push green economy to
protect climate
5
Spain calls for more EU funding for
gas, power links
5
French draft power market reform law
details emerge
5
French renewables output to increase
120% by 2020
6
European offshore wind market adds
577 MW in 2009
7
EU, Iraq sign strategic energy accord,
focus on gas, renewables
7
Germany to present national energy
plan details by October
7
Long-term contracts threaten EU-Swiss
energy agreement
7
EU should do more to curb emissions
now: BP chief
8
continued on page 2
Features
Germany slashes solar support
The German government has again
slashed solar subsidies, by 15% for new
rooftop-based solar modules from April,
and by 25% for open field and farmland
sites from July, German environment
minister Nortbert Roettgen said on
January 20.
Solar subsidies were already cut by
10% from January with another 10% cut
agreed for 2011.
“We are reducing our support for
solar, because this energy source is
becoming more and more efficient and
thus cheaper,” Roettgen said at an
energy conference in Berlin.
“We will still have an expansion of
the solar industry, but with better
costs.”
The McGraw Hill Companies
Newly-installed solar capacity in
Germany totaled between 3 GW and 4
GW in 2009, according to industry
research, exceeding the government’s
projection of 1.3 GW.
Germany’s solar industry was
expecting more cuts, but warned that
extra double-digit cuts would endanger
up to 50,000 jobs.
“Such a radical and sudden cut
would rob Germany’s solar companies of
their business foundation,” said the
head of the German solar lobby BSW,
Carsten Koernig.
Roettgen said that the government’s
energy plan promised for October has
two main goals: to keep Germany
continued on page 2
EU’s combined heat and power
uptake mired in national red tape
EU struggles with confidential
transparency
9
12
News
Competition
14
Electricity
15
Emissions
18
Gas
20
Renewables
22
Implementation
Electricity directive
24
Gas directive
25
Agenda
Brussels watch, Events
28
EU-China, US accord mooted
German renewables need nuclear
continued from page 1
continued from page 1
“We must have a plan based on three elements: A
‘Mr or Mrs Climate Change’ [ie, an EU supremo for
climate change], a trilateral agreement with the US and
China, and a shared common interest with the US such
as the emissions trading scheme,” said Verhofstadt.
Spain’s Prime Minster Jose Luis Zapatero,
representing the current Spanish EU presidency, replied
during the debate that he agreed with everything
Verhofstadt had said.
And the Spanish EU presidency has not ruled out
further talks on an international level. “The EU thinks
that it is the UN that has to address the global
problems. Smaller contexts could help the discussions
but not substitute them,” Spain’s secretary of state for
climate change, Teresa Ribera, said in a January 21
statement to Platts.
“However we may need to help the process by taking
action or debates in other fora and keep full consistency
with climate change principles in other contexts – trade,
international finance institutions, regional or sectoral
dialogues,” Ribera said.
Meanwhile, as EUE went to press, Italy and Poland
had still to confirm to the EU Council that they are
happy with the emissions targets agreed by EU
diplomats on January 20 to send to the UN to be
attached to the non-binding Copenhagen Accord
agreed at the December UN conference. The deadline
for this is January 31.
The EU has set itself a unilateral binding target to
cut its emissions by 20% below 1990 levels by 2020,
and has offered to go to 30% if developed countries
commit to comparable cuts and developing countries
commit to limiting their emissions growth.
attractive as a location for industrial production and to
push ahead the transition from conventional to
renewable energy resources.
“There won’t be any move towards renewables
without securing an affordable energy supply for our
industry,” said Roettgen, who is a member of Chancellor
Angela Merkel’s CDU party (see page 7).
“My counterpart from the Ministry of Economic
Affairs [Rainer Bruederle] and I agree that it doesn’t
make sense to work on separate programs. Then we
would extend the chaos from the last government,” he
said, underlining his government’s intention to extend
the lifespan of Germany’s nuclear power stations.
The last German government’s environment minister,
Sigmar Gabriel, from the Social Democratic Party (SPD),
supported the nuclear phase-out law as agreed between
the previous government coalition between SPD and the
Green Party, while the last economy minister, Michael
Glos from the CDU’s sister party CSU, tried to promote
nuclear energy.
Roettgen told the conference that the transition to
renewable energy sources needs the support of the
cheaper nuclear power. But he added that nuclear power,
like other conventional sources, will eventually be
replaced when renewables can take over a secure and
affordable energy supply, although he would not
speculate when that would happen.
Roettgen also backed support for carbon capture and
storage technology. “Carbon capture and storage is a
globally needed technology with which our companies
can earn a lot of money, because we have already got
the necessary technology,” he said. “We should also
execute it in our country.”
]
EU Energy
Editor
Gala Colover
gala_colover@platts.com
+44 (0)20 7176 6267
Managing Editor
Paul Whitehead
EU news editor
Siobhan Hall
Editorial Director, European Power
Vera Blei
Editorial Director, Global Power
Larry Foster
Vice President, Editorial
Dan Tanz
Issue 225 / January 29, 2010
(ISSN: 1473–7450)
EU Energy is published twice monthly by Platts, a division of The McGraw-Hill
Companies, registered office: 20 Canada Square, Canary Wharf, London E14 5LH
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EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
Buzek said the parliament plans to hold this extra
hearing on February 3, if the European Commission
agrees.
The team of EU commissioners has to be approved
as a whole by the parliament before it can start work.
HIGHLIGHTS
E.ON’s pledge to free up German
gas capacity starts market test
German utility E.ON’s commitments to free up German
gas capacity for competitors appeared in the EU’s
Official Journal on January 22, marking the start of their
formal market test.
E.ON offered the commitments in December to settle
an antitrust case brought by the European Commission.
The EC was concerned that competitors may have been
prevented from getting the access needed to supply
customers within E.ON’s grids. If true, E.ON would have
broken EU law on abuse of a dominant market position.
E.ON has offered to free up 17.8 GWh/h of entry
capacity by October 2010, of which 10 GWh/h is high
calorie gas capacity and 7.8 GWh/h is low calorie gas
capacity.
It has also offered to cut its overall share of firm
entry capacity to 50% for the relevant high calorie gas
grid area NetConnect Germany, and to 64% for the low
calorie gas grid, both by October 2015.
“E.ON may reach these thresholds by returning
capacities to the [grid operator], by measures to increase
the capacity in the grid or by entering into market area cooperations which increase the total volume of capacities
into E.ON’s grid,” said the notice in the Official Journal.
“E.ON commits not to exceed these thresholds until 2025.”
An independent trustee is to be asked to check that
E.ON fulfills these commitments.
The EC said on January 22 that interested parties
had a month to comment on the commitments. If the
overall view is positive, the EC will make the
commitments legally binding and close the antitrust case
without a formal judgment on whether E.ON broke EU law.
New EU energy, climate bosses pass
first test, formal vote Feb 9
The EU’s proposed new energy and climate action
commissioners, Gunther Oettinger and Connie
Hedegaard (see below), have passed grillings by
European Parliament committees on their competence
for their new roles, it emerged on January 21.
The parliament’s president, Jerzy Buzek, said that he
had received assessment letters from the committees
for 25 of the 26 proposed EU commissioners and that
“all are positive.”
But the planned January 26 vote for confirming the
team of 26 EU commissioners as a whole has been put
back to February 9.
This is because Bulgaria’s proposed EU
commissioner withdrew on January 19 after negative
feedback on her parliament hearing, forcing the
parliament to hold an extra hearing for her replacement.
3
Oettinger talks tough on energy
efficiency, gas supply solidarity
Proposed new EU energy commissioner Gunther
Oettinger is ready to consider binding measures to
ensure EU solidarity on gas supplies and energy
efficiency, he told a confirmation hearing in the European
Parliament on January 14.
“I’m prepared to work on binding measures on
solidarity [support between the 27 EU countries] and to
ensure we all speak with one voice on energy,” he said.
“This does need to be shored up with binding legislation.”
Oettinger said that Nord Stream, a project to bring
Russia gas across the Baltic Sea direct to Germany, was
“rightly seen as lacking solidarity” by Poland and the
Baltic states.
There was a public outcry in these countries as Nord
Stream bypassed them and over Germany securing a
bilateral gas supply agreement with Russia.
“We need to move away from bilateral [energy
supply] agreements to a European approach,” said
Oettinger, who spoke in his native German throughout
the three-hour hearing.
“It should be the EU in charge of negotiations [with
external suppliers] and not EU countries working against
each other,” he said. “We should expect suppliers not to
play us off each other.”
Oettinger said the EU would honor existing external
supplier contracts, but that it should ensure there was
no exclusivity in future ones.
“The objective is to have supplies provided at fair
conditions with secure transport and then available to
each national market,” he said. “It should be an open,
accessible and transparent market – in that sense we
have some work to do,” he said.
Oettinger said the EU’s new Lisbon Treaty, which took
effect on December 1, includes an energy solidarity
article.
“Everyone has to be guided by this, so nations won’t
be able to garner an advantage for themselves
anymore,” he said.
Support for Nabucco
Oettinger said he wanted to avoid the mistakes made
with Nord Stream in other projects such as Nabucco in
southeast Europe which is intended to access gas from
the Caspian and the Middle East.
“The [Nabucco] project will be very costly and only
makes sense if we can guarantee demand for its full
life,” he said.
It was difficult to draw up reliable treaties with
supplier countries that did not share the EU’s values,
said Oettinger.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
“But Azerbaijan [the country most likely to provide
supplies for Nabucco first] has a connection with the EU
so a viable treaty on supply volumes can be drawn up,”
he said.
Oettinger added that it was important to build up
links between EU countries so that “no-one is left
out.”
Binding energy efficiency target in 2012?
Oettinger said he is ready to consider making the EU’s
non-binding 20% by 2020 improved energy efficiency
target binding in 2012.
“In 2012 I’m willing to discuss if we’re on the right
course with a voluntary target,” he said. “I’m prepared to
look at a legally binding approach...if we risk missing the
voluntary target,” he said.
Oettinger said that if confirmed by the parliament he
would present a review of the EU’s 2006 energy
efficiency action plan this spring and a new “focused”
plan at the beginning of 2011.
The EC had originally planned to publish the new
plan by the end of 2009, but decided to leave it to the
incoming team of EU commissioners, a move which
has frustrated the energy efficiency industry (see page
10).
A draft of the new plan obtained by Platts last
October revealed that it included a proposal to make the
EU efficiency target binding by setting binding national
targets for each of the 27 EU countries. But the EC had
still to decide how to set, monitor and verify such
targets.
European Commission president Jose Manuel
Barroso picked the 56-year-old German Oettinger in
November to replace the current EU energy
commissioner, Latvian Andris Piebalgs.
But Oettinger and the 25 other proposed EU
commissioners all have to be confirmed together by a
parliament vote before they can start work.
EU, France defend non-binding
energy efficiency target
EU and French officials on January 19 defended the
absence of a binding energy efficiency target in the EU’s
2020 climate action and renewable energy package but
did not rule out a binding commitment in the future.
“Energy efficiency is an absolute priority,” Dominique
Ristori, deputy director general of the European
Commission’s energy and transport directorate, told
delegates at the French Companies and European
Energy conference in Paris.
“We will have to see how things evolve in the current
context – we will reexamine [the target] in 2012,” Ristori
said (see story above).
“Why isn’t the 20% energy efficiency target binding?”
asked Jean-Louis Bal of French environment and energy
management agency ADEME. “We won’t reach the
overall 20% [CO2] cut objective if we don’t reduce use,”
he said.
4
Pierre-Franck Chevet, director of the French Energy
and Climate department, said the EU and its member
states had “thought about” a binding commitment when
drafting the climate package but added: “It’s not the
easiest criteria to monitor.”
Bal said that France was making good progress in
raising the energy efficiency of new buildings but added
that much remained to be done in the more challenging
existing building segment. “We need incentivizing
regulation,” he said.
Hedegaard wants global CO2 price
in global system
The proposed new EU climate action commissioner,
Connie Hedegaard, aims to link the EU’s emissions
trading system to the US and other developed countries
“if possible by 2015,” she told a confirmation hearing in
the European Parliament on January 15.
“The vision must be that we have a global system
with a global price for CO2,” Hedegaard said during a
hearing to assess her competence.
The EU’s opportunity to set the standard for other
emission trading schemes was also a good reason for it
not to have 27 auction platforms when it came to
auctioning the post-2013 ETS allowances, she said. “It
would be stronger to have a single EU approach.”
Hedegaard was “very doubtful” about the benefits of
setting a floor price for CO2. “We would all like
predictability, but I fear we could end up with a fixed
price,” she said. “If prices go down in a crisis, that’s not
a mystical thing, that’s how markets work.”
Hedegaard said the fluctuations in the CO2 price
were “not huge” compared with oil prices. “It’s more
important that we’re good at not giving out too many
allowances,” she said.
She was similarly doubtful about the benefits of
imposing emission performance standards for power
plants. “We should wait and see if carbon capture and
storage technology works [first],” she said, adding that
power plants are already covered by the ETS.
But Hedegaard was very clear that in the very long
term the EU should try to get rid of “even clean coal” for
being too polluting.
“I would like to see a society where we could get rid
of fossil fuels,” she said. “I do not want subsidies for
fossil fuels, not in Europe, not anywhere.”
Hedergaard was more cautious on making the EU’s
voluntary 2020 energy efficiency target binding.
She argued that the EU’s binding 2020 targets to
increase renewables use and cut emissions would force
governments to improve energy efficiency to be able to
achieve them, so a separate binding EU efficiency target
wasn’t needed.
Hedegaard, herself a former Danish energy and
climate minister, added that EU ministers had considered
and rejected binding efficiency targets when they
negotiated the renewables and emissions targets, and
that a new debate would probably end the same way.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
On January 14 the proposed EU energy commissioner,
Gunther Oettinger, told MEPs that he was prepared to look
again at binding EU efficiency targets in 2012 if the EU
risked missing the voluntary target (see above).
Hedegaard, Oettinger and the 24 other proposed EU
commissioners all have to be confirmed together in a
parliament before they can start work (see page 3).
Tajani to push green economy to
protect climate
The proposed EU industry and entrepreneurship
commissioner Antonio Tajani plans to promote the green
economy to fight climate change and increase the EU’s
competitive advantages, he told a confirmation hearing
in the European Parliament in Strasbourg on January 19.
“I am convinced that we have to marry industrial
policy and the fight against climate change,” said Tajani.
“The green economy is at the heart of the EU
industrial policy and this is an opportunity to be seized,”
he said. “Europe has to become a world leader in the
area of eco-efficiency, eco-design, technology,
manufacturing procedures and environmentally friendly
products and services.”
But he added that he “would fully shoulder my
responsibilities in order to prevent the relocation of our
industries” to countries with less strict environmental laws.
Tajani, who is currently EU transport commissioner,
said the automotive sector would evolve with new
standards on carbon dioxide emissions. It would also
have to adapt to new ways to make electric, hybrid and
hydrogen vehicles. There was also a possibility of
developing standard batteries and infrastructure for
electric cars, he said.
European Commission President Jose Manuel
Barroso picked Tajani to be the EU industry commissioner
on November 27. But he and the 25 other proposed EU
commissioners all have to be confirmed together by a
parliament vote before they can start work (see page 3).
Spain calls for more EU funding
for gas, power links
The EU’s gas and power interconnectors need more EU
and national public funding, Spain’s industry minister
and current president of the EU energy ministers’ council
Miguel Sebastian said on January 15.
“We have asked whether the private sector can
finance these infrastructures and have reached the
conclusion that the market is not sufficient, meaning
that the support of the EU and its member countries
would be needed,” he said after an informal meeting of
EU energy ministers in Seville, Spain.
Sebastian said such links were important because
they reinforced the EU’s internal market and increased
competition, security of supply and renewable energy
use.
5
He argued that if gas from the Algeria-Spain gas
connection reached the centre of Europe, for example, it
would bring down the price of gas from Russia.
Outgoing EU energy commissioner Andris Piebalgs,
speaking after Sebastian, said that the €2 billion ($2.9
billion) earmarked for interconnectors in the EU’s €4
billion energy infrastructure fund for 2009 and 2010 was
“peanuts.”
“We need much more money for interconnection
financing,” said Piebalgs.
Sebastian said ministers also discussed a 2010-14
EU energy action plan, which EU leaders expect to adopt
at their quarterly meeting in Brussels in March.
The Spanish EU presidency is also working on an EU
strategy vision for the next 30 years, he said, focused
on clean, safe and intelligently-priced energy.
Ministers discussed technological developments
such as smart grids, smart meters and electric vehicles,
which were “crucial to the future of the EU economy,”
Sebastian said.
French draft power market reform
law details emerge
The French government is recommending that Electricite
de France sells up to 30% or 120 TWh/year of its
nuclear output to competitors for the next 15 years,
French press reports said January 20, citing a draft
amended electricity law.
The recommendation is part of the government’s
delayed reform of the electricity sector to encourage
competition by giving alternative suppliers access at a
fixed price to EDF’s nuclear production, which accounts
for about 80% of French generation.
No price for the output has been proposed publicly,
but a government official on January 19 echoed earlier
proposals that the rate should incorporate future costs
such as maintenance and the need to prolong the lives
of existing reactors. “The idea that [the alternative
operators] can just pay EDF’s supply costs won’t work,”
energy and climate director Pierre-Franck Chevet told a
Paris conference. The outcome must be “fair for the
whole spectrum of actors,” he said.
In addition to covering costs related to its existing
58-reactor fleet, EDF is widely expected to push for the
access tariff to include the cost of generation from new
nuclear capacity such as the €4 billion, 1,650 MW nextgeneration EPR reactor being built – and potentially
facing costly delays – at Flamanville. French union the
CGT now claims the EPR is two years behind schedule
and will not enter service until 2014 (see page 15).
The draft law specifies that electricity consumers on
regulated rates should pay more for the power they use
during peak hours to encourage demand management,
according to AFP. “The structure and the level of
regulated electricity sales tariffs excluding taxes are set
in a way that incites customers to limit their usage
during periods when overall consumption is at its
highest,” AFP quotes the preliminary draft law as saying.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
French Prime Minister Francois Fillon said in
September that the government intended to pass
legislation as soon as possible for implementation by
July 2010, but delays of several months mean that this
timeframe is unrealistic given the reform’s complexity
and the length of the parliamentary process. Industry
sources say the reform is unlikely to take effect before
the beginning of 2011. Citi Bank analysts were even
more cautious in a January 21 note. “We attach little
probability that the law will be implemented by year-end
and indeed see increased probability that the law will not
be implemented in its full and final form before the
2012 national elections,” the bank said.
The latest draft of the market reform law enhances
the regulator’s role in tariff setting, according to reports.
The document states that regulated tariffs will be based
on a “motivated proposition” from energy regulator CRE
to either the energy or environment ministers who will
only be able to accept or reject, rather than modify, the
CRE’s recommendations. Rejection would be followed by
a further proposal from the regulator. Failure to comment
would be taken as tacit approval.
At the moment CRE reviews regulated tariffs but only
provides a consultative opinion, with the rates set by the
energy and environment ministers.
Ninety-five percent of French households pay for their
electricity on a regulated tariff and, although the reform
seeks to increase market opening, the draft allows
domestic end-users to continue to opt for, or to return
to, a regulated rate. For small and midsize enterprises,
however, regulated tariffs will be abolished beginning
December 31, 2015.
French renewables output to
increase 120% by 2020
The French environment ministry announced on January
13 renewable energy growth targets that will see
renewable energy production more than double from
current levels by 2020.
According to a new “roadmap” France’s renewable
energy production needs to increase 50% by 2012
and 120% by 2020 if it is to meet its EU target to
source 23% of its final energy from renewables by
2020.
The ministry said it is maintaining existing
investment commitments to develop solar energy,
biomass cogeneration, marine energy, onshore and
offshore wind, as well as a target to generate an
additional 900 MW from hydro power.
Renewables will have a key role to play in France’s
heating networks, the ministry said, adding that the
number of apartments connected to central heating
networks will double by 2020, with two million homes
equipped with heating pumps and four million with solarpowered water heaters.
France’s thermal production will be “largely reviewed
and modernized,” with the closure or conversion to gas
of more than half the country’s coal-fired plants by 2015.
6
The statement said that new coal build will only be
possible if accompanied by carbon capture and storage
technology.
“Greenhouse gas emissions from the French thermal
fleet should therefore be reduced by two thirds by
2020,” the ministry said.
Energy efficiency is also part of the roadmap. “Final
energy consumption should...decrease to represent,
according to estimations, 167 million [metric tons of oil
equivalent] in 2020, against 177 million mtoe today,”
the statement said. It added that the decrease would be
“sustainable for the first time” and “without precedent
in the industrial age.”
New solar feed-in tariffs
The environment ministry also announced new solar
feed-in tariffs. Rooftop solar installations which are “fully
integrated” into buildings are to receive a tariff of
€0.58/kWh, which the ministry said is the highest in the
world. The type of buildings able to qualify from the tariff
has been restricted to those used for housing, teaching
and health purposes.
A €0.50/kWh tariff will apply to fully integrated
rooftop solar installations for commercial, industrial and
agricultural buildings. The above tariffs are restricted to
existing buildings, with the exception of those used for
housing.
Solar installations which have been partially
integrated into buildings can sell power to the grid at a
new tariff of €0.42/kWh. The tariff is aimed at
agricultural, industrial and commercial buildings.
The tariff for floor-based installations is
€0.328/kWh, except for those producing more than 250
kWh, for which the price will vary between €0.314/kWh
for regions most exposed to the sun, increasing to
€0.377/kWh in areas with least exposure. The
geographical modification will allow a better
redistribution of solar plants, said the ministry.
The new solar tariffs are slightly lower than those
published in a draft tariff plan announced in September
2009. Valid for 20 years from the time of subscription,
the tariffs will remain unchanged until the end of 2012.
They will progressively decrease from 2013 as
improvements in technology reduce the level of
subsidies needed to support the industry.
Feed-in tariffs have also been revised for other areas
of renewable electricity production, the ministry said.
The tariffs for biomass installations with a capacity of
5-12 MW has risen from €0.064/kWh to €0.125/kWh.
The installations can benefit from an additional “energy
efficiency” bonus of up to €0.05/kWh.
For electricity produced using geothermal energy, the
tariff for mainland France will rise to €0.20/kWh from
€0.12/kWh.
“The aim is to continue... the development of very
deep (5,000 meters) geothermal [energy], especially in
Alsace [in eastern France],” the ministry said.
The new biomass tariffs were made law on December
31. The geothermal tariff law is still subject to review by
French energy regulator CRE but the ministry expects
publication in the official journal by the end of January.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
European offshore wind market
adds 577 MW in 2009
European offshore wind power developers in 2009
added a total of eight new wind farms with a combined
capacity of 577 MW to bring the region’s total installed
offshore capacity to 2,056 MW, the European Wind
Energy Association said on January 18.
This represents an increase of 54% compared with
the 373 MW installed during 2008, EWEA said.
For 2010, the industry expects the growth rate to
continue to accelerate with the completion of 10
additional wind farms adding 1,000 MW of capacity.
“This is an incredibly good result considering the
continued difficulties of obtaining project finance for
large projects”, EWEA chief executive Christian Kjaer
said. “Independent project developers, in particular, are
still struggling. For the offshore wind power industry to
continue its development it is vital that governments and
the European Commission provide policy frameworks
that stimulate investor interest and allow project
developers to move their plans forward.”
EWEA said there are 17 offshore wind farms being
built in Europe, totaling more than 3.5 GW, with just
under half being built in UK waters.
A further 52 offshore wind farms have won full
consent in European waters, totaling more than 16
GW, with just over half of this capacity planned in
Germany.
About 100 GW of projects are at various stages of
planning and could provide enough power to meet 10%
of European electricity demand, said EWEA.
It expects industry turnover to double from €1.5
billion in 2009 to €3 billion in 2010.
EU, Iraq sign strategic energy
accord, focus on gas, renewables
EU energy commissioner Andris Piebalgs and Iraqi oil
minister Hussain Al-Shahristani signed a memorandum
of understanding on a strategic EU-Iraq energy
partnership on January 18 in Baghdad.
The MOU covers cooperation on developing Iraq’s
gas sector, assessing and improving the safety and
reliability of its oil and gas transit and supply network
and identifying gas sources and supply routes from Iraq
to the EU.
It also covers cooperation on ensuring sustainable
energy policies such as energy efficiency and demand
management in Iraq, backed by the necessary legal and
regulatory frameworks, as well as preparing an action
plan to develop renewables.
“Iraq represents a vital link for EU’s security of
supply,” Piebalgs said in a statement. “It is already an
important supplier of oil and can become a key gas
supplier for the Southern corridor. The EU can help Iraq
to develop its electricity system and tap its vast
renewable resources.”
7
Developing a “Southern corridor” to access gas from
the Caspian region and Middle East – for example
through the planned Nabucco pipeline – is a key part of
the EU’s efforts to diversify its gas imports.
The MOU provides for cooperation on developing a
“comprehensive and integrated energy policy” for Iraq
and an energy action program for 2010 to 2015.
Germany to present national
energy plan details by October
The German government is determined to present its
national energy plan in detail by the end of October, the
country’s economics minister said on January 19.
“We have already agreed on a row of issues amongst
the cabinet and expect to be able to present the most
central ones in June,” said Rainer Bruederle from the
pro-business Free Democrats (FDP) in Berlin.
Bruederle said the German government was focusing
on conventional energies, such as coal, just as much as
it was supporting renewable energy sources.
“Lignite [coal] is one of our most important
resources, we have still got plenty of it and so we should
use it, even if it is not very popular,” he said.
The minister also underlined the need for the
continued use of nuclear energy, even though under
Germany’s phase-out law nuclear power plants must be
closed when each site’s finite lifespan is reached.
After the general elections of September 2009 the
new government comprised of the Christian Democrats
(CDU), the Christian Social Union (CSU) and the FDP
under the leadership of Chancellor Angela Merkel (CDU)
clearly stated its intention to drop the law.
Bruederle hinted in his speech at the possibility of
avoiding the first shut-down due in April this year, but did
not elaborate on the matter.
“If we want to maintain Germany as a powerful
economy, we can’t do without affordable energy,” he
said. “Therefore we have got to use all possible
resources.”
The minister also said current subsidies for
renewable energy sources would soon have to be cut,
even though in the long run there was no alternative to
the extended usage of renewables (see page 1).
“We want the renewables and we need them. But not
any cost. Renewable sources soon will have to be able
to compete with the conventional sources without
subsidies,” Bruederle said.
Long-term contracts threaten EUSwiss energy agreement
Long-term power contracts and environmental standards
are two of the sticking points holding up an agreement
for Switzerland to join the EU’s internal energy market, it
emerged at the Swiss electricity congress in Berne on
January 10.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
HIGHLIGHTS
The Swiss are keen to maintain long-term contracts for
3 GW with French power giant EDF. But these lock in FrancoSwiss cross-border power trade for up to ten years, barring
access to third parties and breaking EU competition rules.
The European Commission’s deputy director general
for energy, Fabrizio Barbaso, said such contracts “can no
longer be justified” and it “might be difficult to reach an
agreement without solving this crucial problem.”
But Barbaso said the EC might be prepared to give
some leeway to Switzerland on implementing EU energy
and environmental laws as part of an effort to “build a
genuine European market for energy.”
The EU’s demand that the Swiss adopt EU
environmental standards is also a sensitive issue.
Switzerland’s huge exports of hydro power to the EC are
largely dependent on the “green” credentials of that
power as certified by Switzerland.
Swiss federal energy minister Moritz Leuenberger is
confident that a deal can be hammered out in the “near
term,” but the government faces political challenges.
Following power market opening in 2009, there is not
much public appetite for further reform and the centerright SVP party wants a national referendum on any
power treaty with the EU.
Swiss power industry association president Kurt
Rohrbach has urged politicians to stay committed to
liberalization and make it work, otherwise he fears that
the public will not back full market opening in a
referendum expected in 2013.
EU should do more to curb
emissions now: BP chief
The EU should move on from its Copenhagen
disappointment and act now on emissions, BP Refining
and Marketing division head Iain Conn said in Brussels
on January 22.
“We now need to move forward with material action
on a pragmatic basis – not to give in to despondency
about what was not achieved but to focus instead on
what can be done over the next two decades,” he said.
Conn signaled BP’s potential support for the EU to
press ahead with ambitious near-term emissions
reductions, even in the absence of comparable
reductions elsewhere, because of the environmental and
economic advantages this would bring.
“[As] Europe we can act now and if necessary
unilaterally…the EU is sufficiently large for unilateral
action to be credible,” he said.
“If this is done right, it could also yield real
advantage in terms of learning to drive new energy
practices into our economy before other developed
regions and in so doing improve security, cost efficiency
and competitiveness,” he said.
Conn said a pragmatic response to the threat of
climate change requires three key steps: working out
what practical action means, considering policies to
support those actions and deciding which partnerships
are key to success.
8
Conn said the EU emissions trading scheme needs
to be strengthened to ensure that it remains a robust
and credible instrument when its phase three begins in
2013, which will see a significant move away from free
allocation of carbon allowances towards widespread
government auctioning.
“The guiding principal…should be the integrity and
credibility of the trading system,” he said.
Conn also spoke out strongly against the idea of
using border measures to address fears of carbon
leakage – a scenario where companies move emitting
facilities outside of regulated areas to avoid paying for
the emissions – saying such moves would be a
“considerable mistake.”
Electrabel denies regulator’s
accusations of gas price fixing
Belgian energy company Electrabel has denied
accusations of gas price fixing, made by regulator CREG
in the Belgian press on January 23.
In interviews with La Libre Belgique and De
Morgen newspapers, CREG president Francois
Possemiers said Belgium’s gas prices were being held
artificially high.
CREG has the power to monitor the power and gas
markets, but no authorization to set prices itself. It
sends its analysis to Belgium’s energy ministry and the
competition commission.
Electrabel denied the accusations in a statement
January 23 but said it had not been able to digest the
detail on the matter since it first heard the information
through the press.
Gas prices fell by 30% between December 2008 and
December 2009, after the drop in oil prices, Electrabel
said.
“The last comparison of European gas prices made
by Eurostat confirms that gas prices in Belgium are
average compared with the gas price of neighboring
countries,” it said. Eurostat is the statistical office of the
EU.
Electrabel is 100% owned by GDF Suez.
Italy gas use down 8% in 2009
Italy’s total 2009 gas demand fell by 8% year on year
from 84.88 billion cubic meters to 78.13 Bcm, latest
data from the Ministry of Economic Development showed
on January 25.
Indigenous gas output fell by 12.3% in 2009, from
9.26 Bcm to 8.12 Bcm, while imports were also down,
by 9.9% from 76.87 Bcm to 69.25 Bcm.
Imports of liquefied natural gas through the Snamoperated Panigaglia terminal, near La Spezia, Liguria, fell
during 2009 by 13.5% from 1.56 Bcm to 1.34 Bcm.
Italy was still exporting gas during 2009, but
volumes plummeted by 40.4% from 210 million cu m in
2008 to 130 million cu m.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
FEATURES
EU’s combined heat and power uptake mired
in national red tape and misunderstandings
A new study due to be released this month shows that most EU countries have the
potential to increase their capacity for cogenerating heat and power significantly, but
progress is hampered by red tape and misunderstandings. Cogen Europe’s managing
director Fiona Riddoch gave Jane Morecroft a preview.
EU countries have the economic potential to deploy
up to 122 GW of cogenerated power (GWe) up to
2020, effectively doubling existing capacity in most of
them, according to a study to be published as part of
the 30-month CODE project looking at how EU
countries are implementing the EU’s 2004
cogeneration directive.
Overall the submitted national reports cover about 80%
of the EU’s total installed capacity, but they all use
different methods – including bottom-up and top-down
approaches – to identify national potential, making it
difficult to compare different countries.
This is the crucial feedback that Riddoch, as head of the
cogeneration industry’s umbrella organization Cogen
Europe, has been waiting for. “It is the first time that
[EU] member states have been asked to assess [their]
cogeneration potential, barriers to its deployment and
the necessary support mechanisms,” she said.
Cogen Europe led the CODE – cogeneration observatory
and dissemination Europe – project, which was partly
funded by the European Commission.
The project study looks at EU countries’ views on their
national potential for cogeneration in 2010, 2015 and
2020, which the directive requires them to submit to the
EC.
Starting from an assessment of heat demand to 2020,
EU countries are asked to investigate how much heat
and power could be supplied through cogeneration in
the absence of any other constraints, known as
“technical” potential. From this an economic potential
is deduced using assumptions about the energy
market, availability of support, and the required rate of
return for projects.
Cogeneration currently provides around 11% of the EU’s
power and heat requirements, Riddoch said, and “many
member states foresee this doubling by 2020.”
In 2000, Cogen Europe estimated the EU’s cogeneration
potential at 150 GWe – higher than the project study’s
figure – but there was with no fixed timeframe, said
Riddoch.
“122 GWe by 2020 is quite impressive because it
indicates a timescale and this is without all the member
states giving a figure yet,” said Riddoch.
France, Hungary, Latvia and Portugal have not yet
reported their potential, while others, for example the
Netherlands, have made such a poor job of their
reporting as to render it ineffectual, she said.
9
According to the study 122 GWe of installed
cogenerating capacity by 2020 represents a total
contribution of 455 TWh of power to Europe’s energy
flows and at least 1,000 TWh of useful heat supply. This
represents a minimum primary energy saving of 46 TWh
and a value of CO2 avoided of €0.8 billion at a CO2 price
of €39 per metric ton (based on 20.5 million mtCO2).
Germany, Slovakia, and Spain have made particularly
good reports, said Riddoch, with Germany in particular
leading the way. It already has 21 GWe of installed
cogeneration plant, the study found, and an economic
potential of about four times that by 2020.
The Czech Republic, Poland, Slovakia and Spain have
also identified significant technical and economic
potential for cogeneration by 2020, said Riddoch. The
UK, however, only has about 5 GW of installed
cogeneration plant, and even if it exploits its estimated
economic potential to triple this by 2020, it would still
be below what Germany has now.
Barriers block progress
Energy market opening, the 2009 financial crisis and the
EU’s emissions trading system have all been identified
by EU countries in their reports as barriers to rolling out
cogeneration on a larger scale.
In the feedback, the Czech Republic, Latvia, Lithuania,
Slovenia and Spain also all have concerns about gas
supply security and the risks associated with single gas
suppliers.
All these countries, plus Belgium, bemoan the impact of
energy market opening which has tended to suppress the
power price. This coupled with the relatively high gas price
has stymied cogeneration uptake, because gas
cogeneration plant have a high marginal cost of fuel
compared with either mature baseload coal and nuclear
plant. The result is that while cogenerators can compete
in peak periods, they cannot compete in off-peak. Nor are
cogenerators free to operate to optimize the value of their
power sales on the market as their primary customers –
the heat customers – must be also be served.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
FEATURES
Meanwhile, the ETS is increasing the cost of
cogenerated heat and power from high carbon sources
and eroding profitability. This is key issue for Poland,
because its power generators mainly use coal, and state
regulated prices mean they cannot pass the high extra
cost of CO2 on to their customers.
The ETS also increases the cost of carbon in heat from
district heating – where district heating is in competition
with heat sources not covered by the ETS – and this will
also have a negative impact on profitability.
The lack of a clear direction on cutting emissions at
December’s global climate talks in Copenhagen has also
increased uncertainty about long term EU ETS CO2
prices and thus the value of cogeneration investments,
said Riddoch.
Gas prices too volatile, liberalizing market
uncertainties too great for gas-fired
cogeneration investors
Germany and Spain have identified overall uncertainty
in the forward price of fuel and power as a drawback as
this makes investment in cogeneration a relatively high
risk in comparison with other discretionary
investments.
“Gas prices have been too volatile and the uncertainty of
a liberalizing [EU] market too great to encourage
reinvestment in gas-fired cogeneration,” said Riddoch.
The financial crisis has also led to investment cutbacks.
“Since the economic crisis investments are now more
difficult and banks are very reluctant to lend...even if the
rates of return are really good,” she said.
For example there is a high potential to increase
cogeneration by public sector companies in the EU’s
former communist countries upgrading their district
heating systems. But these public companies make
“poor commercial models” and represent “a risk for
banks,” owing to their struggles with debt, said
Riddoch.
they set the rate for economic potential, so if they
want to make cogeneration succeed, [they can],” said
Riddoch.
For example, in the UK, projects have to provide an
internal rate of return of at least 15% for a commercial
enterprise and at least 9% for a public sector investment
for the government to consider them economic, said
Riddoch.
“This eliminates district heating potential which requires
heavy investment and on this basis are judged to be
uneconomic,” she said.
In contrast Germany has set a “very low rate of return
for public sector investment at around 6%,” said
Riddoch. This would make it a lot easier for Germany’s
projects to be considered economic and reflects
Germany’s longer-term view on cogeneration investment.
Governments could also help overcome market
uncertainties by providing a clearer policy structure and
encouraging a greater mix of both public and private
sector investment in cogeneration, she said.
“The UK is not looking at using cogeneration for district
heating while Denmark is not looking at cogeneration for
industry – they haven’t taken a broad look at this and
tried to move outside existing paradigms,” said Riddoch.
Under the EU’s cogeneration directive power plants must
save a minimum of 10% in primary energy savings to be
called cogeneration.
“However a cogeneration installed in the last 5-10 years
will certainly save more than that. In Denmark’s report
they state that they are saving on average 25% [roughly
115 TWh],” said Riddoch.
One of the study’s conclusions is that without clearer
and more binding guidelines set by the EC, with agreed
targets set at a national level, EU countries are unlikely
to fully embrace cogeneration.
But Riddoch forecast delays to the long-awaited EU
energy efficiency action plan, and a possible repackaging
of the EU cogeneration directive. These are two areas of
EU governance which would have significant impact on
the uptake of cogeneration.
Governments ultimately decide
Different approaches and assumptions regarding the
economic and the perceived market effectiveness of
cogeneration plants have been used by EU countries
when it comes to identifying economic potential.
According to the study the chosen internal rate of return
on investment is “a popular hurdle” to deployment of
cogeneration.
An EU energy efficiency action plan, which would have
outlined measures for cogeneration and given industry a
clearer direction, was expected to have been approved at
the end of December 2009 but will now be caught in
more consultation as the new EU commissioners start
work, delaying real progress until the end of 2010 (see
page 4).
“This typifies Europe’s approach to energy efficiency –
the plan will now be put back until the end of 2010
which is unacceptable when so much work has been
“Governments have to report on what the economic
potential for cogeneration is in their countries, but
10
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
FEATURES
EU actual, 2020 potential cogen capacity
go” on this, said Riddoch. “There is a lot of difficulty in
getting adequate grid connections for cogeneration.
Grids are not good at accepting localized, decentralized
generation.”
Germany
United Kingdom
Existing installed
Poland
The study shows that some countries’ grid rules
hamper companies’ ability to exploit highly efficient
cogeneration’s potential. Greece, for example, adopted
a cogeneration law in 2009. But despite provisions for
a grid and market code to allow highly efficient
cogenerated power to be distributed, Greece’s grid
operator appears to make no distinction between
highly efficient cogeneration and other cogenerated
power.
cogen capacity
Italy
Additional economic
Spain
potential 2020
Sweden
Bulgaria
Austria
Czech Republic
Romania
Finland
Belgium
“The member states who have reported on barriers to
the wider use of cogeneration have identified that
significant barriers exist. Economic, administrative and
procedural issues including connection to the grid have
been specifically highlighted,” said study. But “major
technical barriers do not appear to exist,” it said.
Greece
Ireland
Slovak Republic
Lithuania
Slovenia
Denmark
Overall the CODE project team “considers the
implementation of the [cogeneration] directive to have
been slow,” said Riddoch.
Latvia
Cyprus
Estonia
The directive requires EU countries to submit four
different reports between 2006 and 2007, on progress,
analysis of national potential, barriers and guarantees of
origin. That makes 108 reports in total, of which 21 are
still outstanding.
Portugal
France
Hungary
Malta
Netherlands
0
10
20
30
40
50
60
70
80
90 100
Cogeneration capacity (GW)
Source: CODE project 2010
“Due to the lack of progress in several member states
it is quite possible that full implementation at national
level will not be concluded in all member states until
late in 2010: six years after the acceptance of the
legislation by the European Parliament,” the study
says.
done on it. Such a delay means further delays in the
legislative process of three to four years – which means
it would have no real impact for 2020 [climate change]
deadlines,” she said.
The main obstacle to monitoring the best way to
implement cogeneration seems to be the system of
monitoring itself.
According to industry sources, the energy efficiency
action plan stalled over fears it would have a negative
impact on the ETS. It was also criticized by an EC
economic impact study which said the plan was not ‘well
thought through.’
The study concludes that EU countries should “clarify
explicitly what assumptions are being used” and
adds that the EC “should from now on be firm on
member states and firmly impose reporting
deadlines.”
Grid operators ‘bound to baseload’
But with five EU countries yet to successfully transpose
the 2004 cogeneration directive into national law, it
would seem that the EU still has some way to go.
Another barrier to cogeneration uptake is the structure
and management of the EU power grid, said Riddoch.
EU countries needed to move toward a more “dynamic
grid,” where the power price would be set by a mix of
variable renewables instead of baseload coal or nuclear,
before a significant step toward low carbon power such
as cogeneration could be achieved, Riddoch said.
Making it easier to hook up cogeneration projects to the
grid would help, but governments still had a “long way to
11
“The cogeneration directive has created the perfect
backdrop for expansion of cogeneration in Europe. A
clear standard for cogeneration now exists and the
energy savings we can expect are quantified. Member
states frequently ask for measures which will deliver
guaranteed energy savings. This is one of them. Member
states now need to move swiftly to eliminate the barriers
cogeneration still faces,” said Riddoch.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
FEATURES
EU struggles with confidential transparency
The EU’s third package of energy market reforms gives national energy regulators more
powers to access market information from companies and share it with other relevant
authorities. But are the rules on how to keep sensitive information confidential clear
enough? Leigh Hancher* reports in the third of a series looking at the practical
implications of the third package.
Transparency is not just about publishing information, as
Platts’ work on tracking grid operators’ compliance with
EU transparency rules shows (EUE 216/14). It’s about
being able to exchange information with the right people
in an understandable way.
Efficient but routine information exchange between
national energy regulatory authorities, the EU Agency for
the Cooperation of Energy Regulators, the European
Commission and national competition authorities is a
key objective of the third package. But the extended
powers now granted to energy regulators are not without
their problems.
The third package gives national regulators:
■
the power to carry out investigations into gas and
electricity markets;
■
the power to require information;
■
the power to inspect premises of vertically integrated
undertakings, as well as the independent
transmission system operators and independent
system operators to be allowed under the third
package.
These powers are to be backed up with the power to
impose remedies and deterrent fines, and at the same
time the obligations on companies to keep and provide
information have been strengthened.
The EC is even proposing to extend the scope of the
regulators’ investigative powers further. Its recent draft
‘interpretative note’ on ‘structural unbundling’ suggests
that regulators would have investigative powers as well
as ‘mere’ inspection powers.
Information exchange
Having obliged companies to produce this information
the third package requires national regulatory authorities
to closely consult and cooperate with each other and
with ACER, and they shall provide each other with “any
information necessary for the fulfilment of their tasks”
under the new rules.
While it is true that the ‘free movement of information’
is subject to a confidentiality obligation, the exact scope
of this obligation is not easy to pin down. The receiving
authority is only obliged to ensure the same level of
confidentiality as that required by the original authority –
12
whatever that might be. In other words, there is no
common confidentiality standard.
This contrasts with the current strict rules for information
sharing between national competition authorities under
the relevant regulation governing cooperation on antitrust
enforcement. Here an obligation of professional secrecy
is explicitly imposed on all regulators at all levels.
While it is true that the information exchanged must be
necessary to fulfil the tasks set out in the directives, the
regulators are in effect judge and jury and need only
determine that the information to be exchanged is
necessary and proportional to these tasks. They are
also obliged not to use the information for purposes
outside the directives.
All and all, the regulators are likely to have a wide
discretion in deciding what information is to be exchanged
between them, and companies may have an uphill
struggle in persuading them not to send information out
to other national regulatory authorities or to the EC.
Information use
The third package does not appear to regulate the actual
use of the information to be exchanged. It is evident
from the duties imposed on the regulators that
information can be exchanged for a variety of purposes –
including developing market rules, network codes, tenyear investment plans, market monitoring, as well as for
the ex ante regulation of individual operators and for ex
post enforcement action against companies.
Given the breadth of these tasks the information
exchanged can be used for multiple purposes. Again this
can be contrasted with the much more tightly drafted
controls of the use of information exchanged between
national competition authorities for antitrust purposes. In
particular, national competition authorities are only allowed
to use information exchanged between them for the
purpose of applying Articles 101 and 102 of the Lisbon
Treaty (the old Articles 81 and 82 EC) and may only use it
for the same subject matter for which it was collected.
While it may be argued that the penalties for antitrust
infringement are more severe and it therefore follows
that the rules on how evidence is collected and used
against potential culprits should be more tightly
controlled, it must also be stressed that the third
package will also expose companies to fines and
penalties.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
FEATURES
National regulators also have the power to refuse or
withdraw the certification of independence that any new
independent transmission system operators and
independent system operators will need to carry out
their business.
Further transparency plans
At the last Florence electricity regulatory forum in
December 2009 the EC presented a paper on
“transparency and integrity of traded electricity and gas
markets” (EUE 224/6).
The paper asserts that the integrity of traded energy
markets can be best ensured if wholesale transactions
are subject to an effective and comprehensive regulatory
surveillance, and if data which influence market
fundamentals are made transparent to a sufficient
extent taking into account legitimate competition
concerns (eg collusive behavior) in the highly
concentrated energy sector.
These ambitions could ultimately lead to the setting up
of a regulatory framework in which regulators have a
responsibility and capability to understand price
formation on those markets, and to identify and penalize
malpractices such as insider dealing and market
manipulation.
The EC considers that the third package addresses
traded markets to a limited extent only. The third
package codifies a record keeping obligation for supply
undertaking on all trading transactions for five years to
be accessed by competent authorities.
Beyond that, the EC considers the wholesale market
monitoring duty for national regulatory authorities too
weak, and the obligation in the EU regulation creating
ACER to monitor the internal market for electricity and
gas too general.
However the EC goes on to suggest that the broad range
of already applicable disclosure obligations for
fundamental data codified in the package could be
expanded through the famous ‘comitology’ procedures.
in an easily accessible form. In this way, extensive pre
and post-trading information will become available to the
market – with the goal of enhancing trust and improving
market functioning.
However the EC thinks that the third package still does
not go far enough to improve the efficiency, fairness and
reliability of open and competitive energy trading
wholesale markets.
Improvements in transparency are needed to guarantee
a well functioning price formation process and to ensure
that all market participants have the relevant information
about when to buy, when to sell, at what price and in
what volume.
This means that it will be necessary to consider how to
make sure information is provided closer to real time –
consistent with the timeframe for commercial and
operational decisions – as well as providing more
detailed information on individual infrastructure.
But there is also a downside. Europe’s electricity and
gas markets are concentrated and there is a clear risk
that greater transparency of disaggregated market data
could have adverse effects. Indeed access to sensitive
information can facilitate collusion between companies
and/or strengthen market power.
Europe’s power exchanges have already expressed their
concerns at the Florence forum. Obviously, the need for
coordination with the relevant market participants
regarding the substantiation of statutory publication
requirements is both comprehensive and timeconsuming and should not be underestimated.
The trick will be how to achieve the desired levels of
transparency while ensuring that business secrets are
kept and preventing collusive behavior.
The debate on how much transparency is really needed,
for whom and at what stage – pre or post-trading – is
likely to enter a new phase as the EC considers the pros
and cons of a new legislative initiative on traded
markets.
More pitfalls?
The third package already places great store on the
benefits of market transparency. TSOs are obliged to
publish relevant data on aggregated forecasts and actual
demand, on availability and actual use of generation and
load assets, on availability and use of their networks
and on balancing and reserve capacity.
A January 2009 report by Europe’s financial and energy
regulators, CESR and Ergeg (EUE 199/12), recommends
an EU-wide harmonized transparency regime and
adopting a basic, tailor-made market abuse framework
into EU energy sector legislation.
But it should also be noted that that under the EU
congestion management guidelines, the TSO is obliged
to publish data of other market participants (eg
generators), including data it does not own originally.
It would be useful if this debate could be conducted in
the context of clearer guidance for companies and
national and EU energy, competition and financial
regulators on requesting, providing and exchanging
information.
Further, these guidelines oblige the market participants
to provide the TSOs with the relevant data. In turn all
information shall be made freely available to the market
*Leigh Hancher is Professor of European Law, Tilburg
University, The Netherlands; and Of Counsel, Allen &
Overy, Amsterdam.
13
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
COMPETITION
Italy
AEEG 2010-12 plan targets more
energy competition
COMPETITION
URE has so far refused to approve 2010 sales tariffs
for the 10 sales companies belonging to the country’s
two largest power groups, PGE and Tauron, because it
has deemed the proposed rises as being too high (EUE
224/21).
Portugal
Italian energy authority AEEG’s 2010-2012 strategic work
plan focuses on greater market competition and
consumer protection, AEEG said on January 13.
Although Italy’s energy market opening began more
than 10 years ago, AEEG says, “substantial issues”
remain, particularly in competitiveness and
harmonization.
For the gas sector, AEEG calls for a gas
exchange, a balancing market and new regulations
governing gas dispatch and storage injection,
together with redefining allocations processes and
demand profiling.
The ideas of the gas exchange and the balancing
market are not new – the government last year tasked
MSE, the operator of the IPEX power exchange with
operating the gas exchange also – but have yet to come
to fruition.
AEEG sets itself a target of 2010 for completing the
gas dispatch services regulation and the reforms for the
day-ahead gas and power markets, and 2012 for
“realizing an organized market for gas.”
On competition, AEEG sees controlling the market
power of dominant players as an important element,
together with guaranteeing transparent and nondiscriminatory access to regulated infrastructure.
It wants to promote the adequacy, efficiency and
security of the country’s energy infrastructure, and
specifically targets cheap network services and efficient
measuring operations.
AEEG also wants to develop and harmonize Italy’s
gas and power markets and promote transnational gas
and power markets.
Poland
URE approves PGE’s 5.6%
household power price hike
Poland’s energy regulator URE has approved a 5.6% hike
in individual end-user power prices in 2010 for the
Warsaw area sales of the country’s largest power group,
Polska Grupa Energetyczna, its spokesperson, Agnieszka
Glosniewska, said on January 22.
URE has already approved a 4.5% increase for Enea,
the country’s third largest power company, and a 5.9%
hike for Energa, the country’s fourth largest.
Household energy bills in Poland are regulated and
comprise an electricity distribution fee and a sales
fee.
14
Power competition picks up
The liberalized segment of Portugal’s power market in
November accounted for a record 41.9% of total
demand, according to its energy regulator ERSE.
At the end of the month more than 269,000
customers, with average demand of 19,538 GWh, were
sourcing power on the free market, said ERSE.
There was an increase of 8,722 users on October,
with 6,412 of those coming from the regulated market
and 2,310 new customers. ERSE noted the “significant”
influx of industrial clients.
EDP Comercial, a unit of privatized former monopoly
Energias de Portugal remained the main operator in the
liberalized market at the end of November, with almost
95% of all clients and 63% of supply. The local unit of
Spain’s Endesa moved into second place, with 16.2% of
total supply against 16% for Spanish rival Iberdrola.
Portugal started the liberalizing its energy market in
September 2006.
UK
Ofgem opens latest consultation
into network regulation
British energy regulator Ofgem on January 20 opened its
latest consultation into the future of energy network
regulation by setting out a potential new regulatory
framework that is says is more “streamlined, accessible
and transparent.”
Ofgem launched an initial consultation paper in February
2009 on the principles and process of the model used to
control network prices. The latest paper, which represents
its thinking on a new regulatory framework for electricity and
gas transmission and distribution, suggests that the current
price control mechanism needs to be changed to ensure
innovation is stimulated and that network companies deliver
appropriate levels of investment.
For the last 20 years, the model used to control
prices has been RPI-X, where the total revenue
companies can charge was capped at a figure adjusted
by retail price inflation adjusted plus or minus by a figure
X. However, in that time network costs have been halved
while networks have increased investment and quality of
service, Ofgem say.
Other models of regulation are possible, such as
those used in the airport sector, where customers and
operators contest prices in a debate with each other,
with a regulator acting as referee.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
“Ofgem is consulting on proposals to change the
emphasis of regulation from focusing on companies’
costs to looking at what more companies can deliver in
terms of reliable networks, safety, and investment to
support low carbon generation and meet the needs of
consumers,” Ofgem said.
The next phase of the consultation will see best
options selected to produce a set of conclusions to be
consulted on in spring 2010, before being delivered to
the Authority – the board that governs Ofgem – in
summer 2010.
Any new framework would first be applied in the
next transmission price control reviews in 2013,
Ofgem said.
ELECTRICITY
Finland
Power demand down 7% in 2009
Finnish power demand fell 7% or 6.1 TWh to 81.1 TWh
in 2009 compared with the previous year, trade
association Finnish Energy Industries said on January
20.
When adjusted for the difference in temperature,
2009 power demand was down by 8.5%. Industrial power
demand fell 16%.
Demand was rebounding by the end of 2009,
however, with industrial power demand growing in
December 2009 compared with December 2008, “an
indication that the worst of the recession is over,” the
association said.
On the production side, hydropower output fell by
25% in 2009 while imports from Russia reached an alltime high (at just under 12 TWh). Records were also
broken in nuclear and wind power production.
Combined heat and power generation fell, along with
industrial cogeneration. In total, CHP covered almost
30% of electricity consumption, nuclear 28%, hydro 15%,
and coal and other fossil fuel-fired power more than
11%.
The share of wind power was less than 1%. Net
electricity imports accounted for 15%.
Price spikes have been a feature of the winter
season, the association said. On December 17, one
hour traded at €1,400/MWh when peak power output
was at 14,077 MW. On January 8, prices again spiked to
€1,000/MWh.
Juha Naukkarinen, managing director of Finnish
Energy Industries, said the spikes were “proof of the
need to increase power generation capacity in Finland
and Sweden.”
Carbon dioxide emissions from power generation
reached 12.7 million metric tons in 2009, up about 5%
compared with 2008.
The increase was because of lower CHP output,
problems in biofuel supply and switching from coal to
gas, the report said.
15
COMPETITION / ELECTRICITY
France
Key nuclear project delayed 2 years
Construction on EDF’s 1,600 MW EPR nuclear power
plant at Flamanville-3 in Normandy is two years behind
schedule and will be completed in 2014, union CGT
representative Marie-Claire Cailletaud was quoted as
saying by AFP January 20, in contradiction to EDF’s
official position that the project remains on schedule for
a 2012 completion. The report said the plant could now
cost up to €5 billion (original estimate: €3.3 billion,
upped to €4 billion in December 2008 by EDF).
EDF’s original schedule for the Flamanville-3 unit
was 54 months from first nuclear island concrete
pour to commercial operation. The first concrete on
the reactor basemat was poured on December 3,
2007, with the target of commercial operation in June
2012.
Former EDF Chairman/CEO Pierre Gadonneix told the
company’s shareholders in November 2009 that the
plant would produce first electricity in 2012 and that
that power would be “marketed in 2013,” an EDF
spokeswoman recalled on January 19, saying the
company was sticking to that schedule.
Last month, EDF nuclear engineering chief Bernard
Salha said the plant would not be connected to the grid
until 2013.
In a note to investors on January 19, Patrice Lambert
de Diesbach of CM CIC Securities said it was “not
unreasonable” to estimate a cost overrun on
Flamanville-3 equivalent to at least 50% of the extra cost
of Olkiluoto-3, or “over €1 billion [over $1.4 billion] in
potential provisions for EDF.”
Germany
Energy mix still dominated by
coal, nuclear: BDEW
Germany’s energy mix remained little changed in 2009
with coal and nuclear power still contributing 65% to
total electricity generation, the German Energy and Water
Association (BDEW) said on January 15.
Lignite was the biggest single contributor with a
share of 24%, followed by nuclear with 23% and hard
coal with 18%, according to BDEW.
Renewable energy increased its share by one
percentage point to 16% mainly driven by an increase in
biomass, while gas contributed only 13% to total energy
generation in 2009, the statement said.
In total, electricity generation dropped by 6% in 2009
compared with the previous year, the BDEW said.
“The energy industry has come one step closer to
the government’s declared target of increasing the share
of renewables to 30% by 2020,” BDEW chief Hildegard
Mueller said, adding that conventional power stations
still contribute the lion’s share of Germany’s electricity
generation.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
“Unfortunately, there is no open discussion in this
country at the moment about how coal, gas and nuclear
can complement renewable power in the coming
decades,” he said.
The BDEW is the German energy industry’s federal
lobby group. With around 1,800 member companies it
represents about 90% of Germany’s power and gas
market.
Belgian Elia in talks with Vattenfall
about German grid
Belgian grid operator Elia has entered exclusive talks with
Vattenfall about acquiring a controlling stake in 50Hertz
Transmission, Vattenfall’s grid company running 380/200kV lines in seven German northern and eastern Laender,
including Berlin and the surrounding area.
It serves 18 million customers and handles the
power from 41% of Germany’s wind capacity. 50Hertz
Transmission also includes 50Hertz Offshore. A
spokesperson for Elia told Platts that its interest is in
the total business.
WWF files EU complaint against
licensing of German coal plant
Environmental group WWF has sent a formal complaint
to the European Commission attacking “the faulty
licensing” of a coal-fired power station in Mannheim in
the southwest German state of Baden-Wurttemberg,
WWF’s Mark Johnston said on January 12.
The 900 MW plant, known as Mannheim Block 9, is
being developed by Grosskraftwerk Mannheim (GKM),
which is 40% owned by RWE, 32% by EnBW and 28% by
MVV. The facility is in the early stages of construction
having been granted a license in late July 2009.
WWF says that under the EU’s amended Large
Combustion Plant Directive, which came into force in late
June last year, EU countries have to ensure that, before
approval, companies planning to build power plants of
over 300 MW comply with certain conditions for the
capture, transport and storage of carbon dioxide.
Developers must have assessed whether suitable
CO2 storage sites are available; whether CO2 transport
facilities are technically and economically feasible; and
whether it is technically and economically feasible to
retrofit for CO2 capture.
“On the basis of all available evidence and after
conducting reasonable inquiries, WWF believes that this
requirement has not been fulfilled for the new Mannheim
facility,” said Johnston, WWF’s coordinator for power
plant CO2 standards.
WWF has asked the EC to investigate further and if
necessary start infringement proceedings.
“While the current law is too weak, it must still be
fully applied,” Johnston said. “This case will be
important not just for this project but for the dozens of
16
ELECTRICITY
other new unabated coal-fired power plants still being
planned across Europe. Without a clear requirement to
prepare for and then use carbon capture and storage,
new unabated coal-fired power plants are totally
unacceptable.”
Mannheim Block 9 is one of 25 new coal-fired power
stations being built or planned in Germany.
WWF is campaigning for existing EU rules to be
tightened by introducing CO2 performance standards on
all new fossil power plants. The remaining legislative
stages of the new EU Industrial Emissions Directive are
due to completed later this year.
Norway
Energy minister mulls grid
regulation report advice
Norway’s Department of Petroleum and Energy said on
January 21 it had received a report from the Norwegian
Water Resources and Energy Directorate (NVE) on the
overall regulation of the electricity grid.
The report recommends that Norway’s main grid is
expanded to include regional grids and that the
arrangement with investment contributions by the end
users to grid expansion is retained. It also advises
against introducing national tariffs.
Norwegian oil and energy minister Terje Riis-Johansen
said he would now study the report in detail.
The government had asked the NVE to assess the
network levels and whether common national tariffs
should be implemented.
Power demand falls 5 TWh
Norwegian power consumption, production and exports
were all down in 2009, system operator Statnett said
January 13.
Consumption was 124 TWh, against 129 TWh in
2008, and production totaled 133 TWh (142.4 TWh). Net
exports reached 9 TWh (13.8 TWh).
“At the end of 2009 consumption by industry was
still 18% below the stable level of 2008,” Statnett said.
Of last year’s net exports, 55% went to Sweden, 26% to
Denmark and 19% to the Netherlands.
Poland
2009 demand down 4%
Polish power demand in 2009 fell 4% to 149 TWh from
155 TWh in 2008, state-owned transmission system
operator PSE Operator said on January 18.
Power output fell 3% to 151 TWh from 156 TWh. Of
that, 135 TWh, equivalent to around 90% of the total, was
produced in coal-fired power plants – 84 TWh from hard
coal-fired plants and 51 TWh from lignite-fired plants.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
The remaining 16 TWh were produced in plants
producing power solely for industrial purposes (8 TWh),
gas-fired plants (4 TWh), hydro (up 9% to 3 TWh), wind
power (up 22% to 821 GWh) and other renewable
sources (up 76% to 14 GWh), PSE Operator said.
In 2009, Poland imported 2 TWh of power, up sharply
from 684 GWh in 2008.
PSE Operator expects power consumption to
increase slightly in 2010, by around 1%, as the financial
crisis eases (EUE 224/12).
Portugal
REN ups grid investment, seeks
new chairman
Portuguese state-controlled energy infrastructure
company Redes Energeticas Nacionais this month
concluded the latest in a string of investments in
Portugal’s electricity grid.
The €45 million ($64 million) substation in Freixo de
Espada à Cinta, in the Tras-os-Montes region, is to boost
the capacity for power trading with Spain, and meet
challenges posed by increased hydro capacity in the region.
French investment bank Societe Generale described
2009 as “a good year” for REN, estimating profit as having
risen 9%, and predicted that new gas regulations from next
July should support the shares further by providing
incentives for investment in the transmission network on a
scale approaching those seen on the electricity side.
The Portuguese energy sector is now mulling who will
replace the suspended Jose Penedos as chairman of
REN. Penedos was also barred from contact with REN
employees by the judge overseeing a corruption
investigation in which both Penedos and his son Paulo
are official suspects. Penedos pledged to appeal against
the suspension but shareholders plan to appoint a
replacement in March.
The Portuguese state controls REN through a 46%
stake held by a state investment vehicle Capitalpor,
created in December to hold shares in privatized
companies, including Energias de Portugal.
Switzerland
Parliament committee wants costbased power prices
The federal parliament’s energy and environment
committee Urek-NR wants to further regulate the Swiss
power tariffs and force industry, including retail power
distributors, to supply Swiss customers at cost-based
prices, it said January 12.
The move is a reaction to the hefty price increases at
the start of 2009 which angered the public and prompted
a lobbying campaign by large industrial power consumers
who want to retain the pre-open market power tariffs.
17
ELECTRICITY
Urek-N sees the cantonal and communal owners of
the Swiss utilities cashing in on surplus dividends as
part of the problem. But Kurt Rohrbach, CEO of the BKWutility and president of the Swiss electricity association
VSE, urged the lawmakers “not to bend” to the old
monopolistic power legislation framework.
Rohrbach said the benefits of a power market would
“serve us all” eventually but this could be derailed by
“political anxiety.”
Further price regulation would lead to “chaos” in
the power supply and endanger “much needed”
investments in power generation to meet national
demand, he said.
Politicians want power industry to
limit new nuclear to two reactors.
There is a mounting political momentum in Switzerland
to oblige the power industry to limit itself to two new
nuclear power reactors, it emerged at the Swiss
electricity industry congress in Berne on January 10.
The reactors are needed to replace Switzerland’s
oldest nuclear power reactors Muehleberg and Beznau I
and II.
Two state-owned utilities-groups, the Axpo with the
BKW and the Alpiq (former Atel and EOS), are competing
for nuclear licenses for up to three new nuclear power
reactors projects.
Alpiq CEO Hans Schweickardt told the congress that
fair procedures are required to bring forward the best
project economically and nationally.
The president of the Swiss national industry
association Economiesuisse, Gerold Buehrer, warned the
power industry that the outcome of the mandatory
referendum on nuclear new build will be ominous, if
industry and politicians can’t agree on how much new
nuclear power capacity is needed.
UK
Nuclear newbuild timings, funding
remain uncertain
It is too early to say whether the government’s disposal
of its 36% stake in British Energy will mean a planned
fleet of new nuclear reactors will be built on time and
without public subsidies, the UK’s National Audit Office
said January 22.
An analysis of energy prices after the January 2009
sale of BE to Electricite de France showed that the
government received a “good deal,” the NAO said in a
report. BE was sold to EDF for £12.5 billion (€14.3
billion, €20.3 billion).
Although EDF’s purchase has “improved” the
prospect of investment in new reactors, the NAO said
the government did not receive any “binding
commitment” from EDF to build as a condition of the
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
sale. “The Department of Energy and Climate Change
now needs to make real progress on its contingency
plans should EDF be unwilling to build new nuclear
power stations,” said NAO head Amyas Morse.
The UK is trying to push through a major new nuclear
power plant program to replace old nuclear plants that
are being shut down at the end of their lives and coal
plants that will be forced to shut after 2015 because of
pollution controls set out in the EU’s Large Combustion
Plant Directive.
Both the ruling Labor government and the
Conservative opposition have repeatedly said there will
be no government or public subsidy for new nuclear
reactors in the UK, although the introduction of a new
carbon subsidy, levy or tax hasn’t officially been ruled
out.
“EDF’s purchase of British Energy will not necessarily
lead to new nuclear power stations being built in the UK
with no public subsidy,” the NAO said. “This will depend
on a number of factors, many outside EDF’s control,
including wider economic and market considerations
such as the price of carbon; the achievement of all
necessary consents, including the design of new power
stations; and EDF’s overall strategic priorities and
financial position.”
EDF has announced plans to build four new nuclear
reactors on BE land at Sizewell and Hinkley Point. It has
also on several occasions called for a carbon floor price
to bring the investment forward.
Bearing in mind that the government remains
responsible for funding any shortfall in the future cost of
decommissioning BE’s existing reactors, the NAO said it
was “surprising” that the Shareholder Executive, the
agency that managed the sale, did not assess the risks
of EDF seeking an earlier decommissioning of the plants.
“Despite the government no longer having a direct
financial interest in British Energy, it will still have to pick
up the bill if there is any shortfall when the time comes
to decommission existing power stations at the end of
their lives,” said chairman of the committee of public
accounts Edward Leigh. “It is therefore surprising that it
hasn’t carried out any formal assessment of what might
go wrong. The truth is, although the government is no
longer a shareholder in British Energy, this is not the end
of the story as far as the taxpayer is concerned.”
Ofgem confirms potential £1
billion network investment
UK energy regulator Ofgem published on January 19 final
proposals for funding the first tranche of projects from a
potential £1 billion (€1.15 billion, $1.64 billion) package
of extra investment in Britain’s high-voltage networks.
The first £319 million of investment for network
upgrades from April 2010, which form part of the
transmission companies’ current price control, will aid
the connection of new renewable generation as part of
the country’s drive to cut carbon emissions, Ofgem
said.
18
ELECTRICITY / EMISSIONS
Ofgem said it will make a decision on the
transmission companies’ requests for funding for the
remaining £764 million of the £1 billion package once
the companies have completed the requisite
paperwork.
“The funding proposals will enable vital new
generation, much of it renewable, to be connected to the
grid,” said Stuart Cook, Ofgem acting senior partner for
transmission and governance.
Ofgem said it intended to allow £241 million of
construction funding on six specific projects planned to
start building work before the end of 2010/11, nearly
half of which is to be directed at transmission
reinforcement projects in Scotland.
It also intends to allow £78 million of preconstruction funding from April 2010 to end March 2012
to develop plans for a further 12 projects.
The package is in addition to the £3.8 billion
investment Ofgem approved for the three electricity
transmission companies to spend on network upgrades
in their current price control.
The three electricity transmission companies –
National Grid Electricity Transmission, SP Transmission
and Scottish Hydro-Electric Transmission – are subject to
controls on their revenue that are reviewed every five
years.
EMISSIONS
EU
Renewable groups slam EC’s plans
for EU ETS new entrant reserve
Renewable energy groups have slammed the European
Commission’s draft plans for how to decide which
renewable and carbon capture and storage projects are
eligible for a share of the EU emissions trading system’s
300 million allowances in its post-2013 new entrant
reserve.
EU government officials are due to discuss the EC’s
latest draft, circulated late December, at a meeting on
February 2. But renewables groups are unhappy with
how the rules are developing, Remi Gruet, regulatory
affairs advisor for the European Wind Energy
Association, said on January 14.
“The process is becoming less transparent and more
complicated for project developers – there is more
opportunity to tamper with the selection [of projects] at
one stage or another,” he said.
Renewable umbrella organization Erec, of which
EWEA is a member, called in December for a “simple
and transparent project selection,” and urged the EC to
drop the two projects per country limit in the draft.
It also urged the EC to drop the obligation on
national governments to match any funding granted
through the ETS reserve to projects, arguing this would
reduce the reserve’s ability to fund projects.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
Gruet said that EWEA found it “worrying” that the
EC’s plan to have two calls for eligible projects could
mean more funding for CCS.
Erec said in December that the renewable industry
was ready to submit high-quality, “shovel-ready” projects
for the first call, “and that our expectation is to receive
funding for them.”
Erec also called for upfront financing with a claw-back
clause and clearer requirements on environmental
integrity and knowledge-sharing for carbon dioxide
storage.
The 300 million ETS allowances would be worth
about €6 billion ($8.69 billion) in total at a price of
€20/mtCO2.
France
Carbon tax takes shape
The French government has agreed the shape of new
legislation on a carbon tax which will have much wider
coverage than a version adopted late last year and
struck down in late-December by the Constitutional
Court.
The tax, which was structured as an excise tax on
fuel use, was to have taken effect on January 1 this
year, but will now not apply to industry until July 1. The
average rate of tax will be unchanged at €17 ($24) per
metric ton of CO2.
New legislation will not be published until a
stakeholder consultation is completed. That is likely to
take around two months.
The court said there were so many exemptions to the
law that it could not be said to meet the objective of
combating climate change. Only 7% of industrial
installations would have had to pay the tax. The
exemptions included anyone subject to the EU emissions
regime. A key element of the new tax will be to extend
coverage to businesses covered by the emissions
scheme.
Road, sea and river goods carriers will only pay 65%
of the rate paid by industry. However, these businesses
were also exempt under the original scheme.
Special measures will protect certain “sensitive”
sectors, but the French government has not yet
announced what it intends, and implied in the official
announcement that it is waiting for feedback from the
stakeholder.
Norway
Norway launches three-year hunt
for CO2 storage sites
Norway is to identify suitable storage sites for carbon
dioxide on the Norwegian Continental Shelf over the next
three years, government agency the Norwegian
Petroleum Directorate said on January 15.
19
EMISSIONS
The government and industry have assumed that there
are a number of potential sites for storing CO2 on the NCS.
The problem for the Norwegians is that potential
repositories have different qualities in relation to depth,
capacity, containment and processes inside the reservoirs.
The project manager for the Norwegian Petroleum
Directorate, Eva Halland, said it was particularly
important to identify and evaluate capacity and leakage
prevention.
“Our objective is to find safe storage sites for
emissions from sources in Norway and from other parts
of Europe,” she said.
The NPD said it had established a forum for carbon
storage, after a request to do so from the Norwegian
Ministry of Petroleum and Energy. The forum’s first
meeting was at the NPD’s premises on January 6.
The NPD says that by June 2011 a directive for
carbon capture and storage must be adopted in the EU
countries’ respective regulations.
Regulations are already being drafted in Norway, and
will be submitted for review this spring, the NPD said.
Spain
Spain shies away from putting coal
aid on EU agenda
The Spanish government is deferring plans for new
policies on domestic coal as it focuses on the priorities
of its six-month EU presidency, Antonio Hernandez,
director general for energy said at a ministerial meeting
to mark the start of Spain’s presidency in early January.
“It is better not to mix the domestic issues with the
European issues”, he said, adding that developing
renewables and electric cars would be the key focus for
the next six months.
This prompted concerns in the northern coal-mining
regions of Astruias and Cantabria as Prime Minister Jose
Luis Zapatero promised last year in Asturias that he
would use the platform of the EU presidency to raise the
profile of coal and push for new rules on state aid – the
current EU rules call for an end to state aid by end-2010.
“One day the government gives hope with these
subventions and promises to fight for us in the EU, and
the next day he doesn’t even want to talk about the
matter”, an energy spokesman from the Asturian
regional government told Platts.
Labor unions SOMA, UGT and Comisiones Obreras
have also called on the government to forge new
strategic alliances with countries like the Czech
Republic, Hungary or Poland to push for an extension to
state aid.
At the end of last year, industry minister Miguel
Sebastian said that Spain’s current aid program “fully
complies with EU directives” but there was no certainty
about what would happen in 2011.
Hernandez said that coal was still an important issue
for Spain and that the government would continue to
stand up for the sector, hoping to find a “receptive
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
audience in Gunther Oettinger,” EU energy commissionerdesignate, given Oettinger is from Germany, a country
with a long history of coal-mining.
In 2009 power generation from coal fell 27% to
33.844 TWh, according to figures from grid operator
REE.
Switzerland
Lawmakers call for steeper CO2
cuts in post-Kyoto legislation
Members of the Swiss federal parliament’s energy and
environment committee, Urek-N, are calling for postKyoto emissions reduction targets to exceed current
federal government policy.
The committee backed a proposal for a target to cut
emissions by 20% on 1990 levels by 2020 and further
still if there is an international agreement – proposing to
increase the target to 40% if the EU adopted a similar
target. They also want the emissions reductions to come
from efforts within Switzerland, not through offsets or
trade in international certificates.
The committee’s proposals are part of a wider
debate on amendments to the current climate law,
adapting it to a post-Kyoto framework. A draft CO2 law
has been drawn up by environment and energy
organizations as an alternative to a national climate
initiative. They plan to put the draft, which calls for a
30% cut in emissions by 2020 and binding targets for
renewable energy, to the vote in a referendum.
GAS
EU
Gazprom plays up CO2 benefits
The EU is underestimating the advantages of gas,
according to Alexander Medvedev, deputy chairman of
Russian gas giant Gazprom.
“The heavy CO2 polluters are coal and oil, while
natural gas is the cleanest of all fossil fuels,” he told
the Handelsblatt energy conference in Berlin on January
21.
Gas has practical attributes that entitle it to play a
key role in combating climate change in an economical
way, said Medvedev.
He cited the coalition agreement of the new German
government, which calls for a dynamic energy mix, but
“which fails to mention the importance of gas as a
cleaner alternative to other conventional fuels.”
Medvedev added that he heard surprisingly little from
the European Commission on this issue.
“It is high time to put the record straight and make
the value of gas for combating climate change in a
timely and cost efficient way plain,” he said.
20
EMISSIONS / GAS
If Germany wanted to implement carbon capture and
storage for its lignite-fired power plants, it could just as
well use it for gas-fired plants.
According to Gazprom calculations, “increasing the gas
share in the EU energy mix by just 1% would reduce CO2
emissions by more than 3%. And by replacing every second
coal-based power plant with modern gas-turbine units,
Europe could achieve practically half of its 2020 emission
reduction targets in a short period,” said Medvedev.
Some European governments have been increasingly
keen in recent months to turn to nuclear power to cut
their carbon emissions, which could impact on the
demand for Russian gas in the future.
France, a longstanding nuclear generator, is building
more nuclear power plants and the UK also wants to
kickstart a major new nuclear program. And Germany is
thinking about extending the lifespans of nuclear plants
it had previously agreed to shut down.
Italy
Trans-Adriatic gas line project
opens transit country offices
The Trans Adriatic Pipeline project to transport Caspian
and Middle East gas across Greece and Albania and
across the Adriatic Sea to Puglia, in Italy, via a 520-km
long pipeline, took a step forward on January 20.
The project has completed registration of three
permanent country offices in Greece, Albania and Italy,
the company said. The offices are to support TAP in
liaising with the authorities in the transit countries, in
preparing and submitting all necessary applications as
well as in providing information about the project to the
local public and media.
The project, the partners in which are Swiss power
company EGL and Norway’s oil and gas major Statoil, is
aimed at enhancing security of supply as well as
diversify gas supplies for the European markets.
It would open a new route to Europe known as the
Southern Gas Corridor. The gas would be sourced from
the Caspian Sea and Middle East regions. Annual
transportation capacity is planned as 10 billion cubic
meters, with the possibility of later being doubled,
depending on demand.
Norway
Minister expects to keep customers
despite export woes
Norwegian energy minister Terje Riis-Johansen
apologized on January 15 for the collapse of the
country’s gas exports earlier that week because of
technical breakdowns caused by the cold snap and
pledged his government would spend whatever money it
takes to prevent it happening again.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
“Our government will use however much money is
necessary,” Riis-Johansen said. “If we need to do
something about the [Karsto] plant that will help us to
avoid this happening again we will do so,” he said.
Riis-Johansen said the market must decide, but he
believed that Norway would not lose customers over the
supply debacle and that its reputation as a safe and
reliable supplier of gas to the UK and Europe had not
suffered an irreversible setback. Norway is the world’s
second-largest supplier of gas.
Earlier in the day, the Norwegian Petroleum Safety
Authority said it wanted to investigate what caused the
breakdowns.
The PSA told Norwegian broadcaster NRK that it
wanted urgently to find out the precise cause of the
troubles with Shell’s Ormen Lange field, which shut
entirely for days; the Karsto gas processing plant, where
production was sharply cut back; and the scaleback in
activities at the Mongstad refinery.
PSA spokesperson Inger Anda told Norwegian
broadcaster NRK in an interview on January 15 that
most of the production setbacks had a common theme
which needed tackling.
“All the problems were associated with icing and ice
plugs in the systems,” she said. “The three cases have
varying severity, but overall this is an issue that we will
look into it.”
Statoil, Norway’s state both claim
victory in Karsto court ruling
Norwegian major Statoil and Norway’s government both
claimed partial victories on January 15 following a court
decision over the huge cost overruns at the Karsto gas
processing terminal and other projects in the late 1990s.
Both sides said they would examine further the ruling
before deciding whether to appeal its findings.
The court case, which started in October, centered
on government claims that Statoil sold partners in the
Asgard field – Italy’s Eni, French Total and Finland’s
Fortum – stakes in the Norwegian Sea Mikkel field below
market prices as compensation for the cost overruns at
Karsto.
The government, as a financial investor on the
Norwegian Continental Shelf, was not offered
compensation even though it had to carry the largest
share of the cost overruns.
Statoil issued a statement that it was pleased the
court agreed with Statoil’s view that the government was
not entitled to a transfer of interests in the Mikkel field
in the Norwegian Sea.
However, a government spokesman indicated the
court had found in its favor as it was awarded a financial
settlement instead.
The court awarded the government cash
compensation of NOK378 million (€46.4 million, $66.6
million) after tax, and default interest from January 24,
2002, which the government said amounted to NOK316
million.
21
GAS
“The court has accepted that the state is entitled to
a settlement and that Statoil is liable to make a
payment to the state under the guarantee,” a
government statement said.
Poland
Govt may dip into strategic reserve
if Russian gas supply slows
Poland’s economy ministry said on January 15 it had
approved the use of its strategic gas supplies to make
up for an expected shortfall in Russian imports over the
next few months.
On January 5 the country’s state-owned gas
transmission system operator, Gaz System, applied to
tap into the 413 million cubic meters of reserves as a
precautionary measure.
“The decision grants Gaz System the possibility of
taking gas from the compulsory storage but it does not
mean however that they will automatically do so,” the
ministry said.
The strategic gas reserves are held in the underground
storage of the country’s dominant gas company PGNiG.
Earlier, PGNiG said it was not planning to reduce gas
supplies to its customers for now despite failing to
achieve a breakthrough in talks on a new gas deal with
Russia’s Gazprom in Moscow on January 12.
PGNiG said talks with Gazprom on a new deal to
increase gas imports from around 8 billion cubic
meters/year to 10.27 Bcm/year would continue.
Poland is seeking to replace 2.3 Bcm/year of
supplies – equivalent to around one quarter of the
country’s total imports – it lost in January last year
during the Russia-Ukraine gas dispute.
Poland’s economy minister Waldemar Pawlak has
said the talks have stalled over the level of transit fees
Gazprom pays for Russian gas transported through the
Polish section of the Yamal pipeline to Germany. PGNiG
has warned that it may be forced to reduce its supplies
to its clients if a deal is not clinched soon and
temperatures drop further.
PGNiG said it had around 1 Bcm of gas in its
underground storage, including the strategic reserves,
around 64% of its total capacity.
UK
160 million cu m salt cavern gas
storage facility wins approval
King Street Energy has won planning permission for a
160 million cubic meter salt cavern gas storage facility
in Cheshire, it announced on January 13.
It said its plans to develop ten underground caverns
at Northwich, Cheshire had been approved and that
Secretary of State for Energy and Climate Change Ed
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
Miliband had also given planning permission for a twin
pipeline from Cheshire to the Mersey Estuary to carry
the water being used to wash out the caverns.
“The construction of the pipeline asset could also
speed up the development of other gas storage facilities
in the Cheshire basin where many of the geologically
suitable areas for on shore gas storage facilities in the
UK are located,” King Street Energy said. “Until now, a
lack of sufficient water plus reduced demand for brine
has constrained the development of gas storage sites.”
Other gas storage developments in the same area –
one of the main salt deposit areas of the UK – take
water from local rivers and pass the brine to industrial
consumers.
But King Street Energy said without the pipes further
scope was limited. “The rivers have little remaining
abstraction capacity and there is no scope for local
companies to process more brine for some time to come.”
King Street Energy is owned by NPL Estates. The site
was formerly part of the operational Holford brinefield
and had an existing planning consent for brining and
underground waste disposal.
Ten caverns will store up to 240 million cu m, but the
working volume used for storage will be 160 million cu m.
Other companies developing storage in the area
include Storengy, part of the GDF Suez group. The UK
also has salt deposits in northeast England, location of
the Aldbrough and Hornsea gas storage facilities.
The caverns would likely come on in stages over a
number of years, based on the experience of other salt
cavern developments. The UK currently has around 4.6
billion cubic meters of gas storage capacity, or enough
for about 4 to 5% of annual demand.
That is less than Germany and France with around
20-25% storage cover, and many commentators have
argued the UK needs more gas storage as it becomes
increasingly dependent on imports.
By 2018/19 around 70% of the UK’s gas could be
imported, according to National Grid. The January cold snap
affecting the market intensified calls for more storage.
RENEWABLES
Italy
GSE reports on growth of green
power production
Some 11 TWh of Italy’s power generation in 2008
qualified for renewable energy incentives, or green
certificates, up by more than 40% compared with 2007,
Italy’s state body for promoting renewables, Gestore dei
Servizi Elettrici, said on January 13.
Of the 11 TWh, 7 TWh related to capacity built after
April 1, 1999, GSE said in a report.
As of June 30, 2009, a total of 2,857 power plants
in the country were qualified for the incentives, of which
1,963 were in operation and 894 in the project phase.
22
GAS / RENEWABLES
Among existing and newly built plants, wind power
accounts for 60% of the installed capacity.
Wind power and biofuel plants are most prevalent
among the projects waiting to begin operating. Biofuel
capacity in the past two years has grown steadily, with
550 MW in operation and nearly 1,400 MW in the
planning stage.
Poland
Wind power has potential to meet
45% of 2030 demand: report
Wind can provide almost 45% of Poland’s power needs
by 2030, according to a report by the Polish Wind Energy
Association released January 19.
The document, “Wind Power Development in Poland
by 2020 – A Vision Report,” presents a modular energy
system analysis and planning computer model-based
scenario that predicts “very dynamic growth of installed
capacity in the wind power sector, amounting to almost
13 GW-equivalent in 2020.”
Of that amount, 11 GWe would come from onshore
wind farms, 1.5 GWe from offshore wind farms and 600
MW from small wind turbines, the report said.
“In accordance with the scenario, the share of wind
power in electricity production will rapidly increase to
24% in 2020 and almost 45% in 2030.”
Currently Poland has just 570 MW of installed wind
capacity, although it has regions with very good wind
conditions. Grid connection permits have already been
granted for 12.3 GW of wind power, although it is by no
means certain that all that capacity will be built.
More than 90% of Poland’s power currently comes from
coal-fired power plants. According to PSE Operator, the
state-owned transmission system operator, Poland produced
821 GWh of wind power in 2009, up 22% from 2008.
The report said that developing the country’s wind
power sector will significantly contribute to the
implementation of the EU’s climate change directives.
The report notes that wind power will be the least
expensive renewable energy source by 2020, with
production costs similar to existing nuclear power plants.
It concludes that wind power is one of the cheapest
ways to reduce CO2 emissions. In its scenario, CO2
emissions will be reduced by 33 million metric tons by
2020 and by 65 million mt by 2030.
Spain
Wind lobby fears government will
cut feed-in tariffs
Spain’s wind energy association, AEE, is concerned that
the government is considering changes to the country’s
feed-in tariffs that would lead to lower payments to wind
and solar photovoltaic power producers.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
NEWS
Analysts at US investment bank Citi said on the
occasion of a recent industry ministry meeting that
the ministry was considering cutting feed-in tariffs in
a revised Royal Decree to replace the current law
that has been in place since 2007, but that the
revisions would likely be small; in the order of 77.5%.
Revisions to the law are needed to reflect changes
in the way that feed-in tariffs are funded, after this
passed from the utilities to the treasury as part of a
wider framework agreement with the electricity sector
last year.
Under the proposed reform, according to Citi Bank,
the first 6.4 GW of eligible capacity would qualify for the
full feed-in tariff each year, with capacity installed beyond
that eligible for cuts. Wind power producers produced
36.1 GWh in 2009, accounting for 14.3% of total
Spanish power demand, according to figures from grid
operator REE.
Switzerland
Feed-in tariffs make waste a
valuable commodity
Biodegradable waste is becoming increasingly sought
after in Switzerland as both power generators and
biogas producers compete for feedstock (EUE
224/13).
Feed-in tariffs offer an incentive for farmers and
other biowaste producers to install biogas generators to
produce power for export to the grid.
Meanwhile the Swiss gas industry is appealing to
biogas producers to pipe it into the gas grid instead as it
seeks to win more customers by offering biomethane as
an environmentally-friendly car fuel, despite the fact that
the returns available are lower than those from
generating power.
But large cities like Basel, Berne, Geneva and Zurich
are reluctant to expand their collections biodegradable
waste. Waste collection schemes are already extensive,
with collections of compostable waste now in their
twentieth year – with composters also competing for
green waste.
UK
Scottish government approves 170
MW of onshore wind
The Scottish government this month granted planning
permission to Baillie Windfarm to build a £80 million
(€90.8 million, $129 million) 52.5 MW onshore wind
farm near Thurso in the north of Scotland.
And it also approved Beinn Mhor Power and Crionaig
Power to build a 118 MW onshore wind farm at
Muaitheabhal in the Western Isles.
23
RENEWABLES
In the original Muaitheabhal proposal, planning
permission was sought for a project featuring as many
as 234 wind turbines that would have generated 702
MW, but plans were scaled back because of objections
from the local community. In the most recent plans
submitted, permission was granted for 33 of the 39
proposed wind turbines.
The Scottish government said Muaitheabhal would
generate electricity for 55,000 homes – almost four
times the number of homes on the islands.
Both the Muaitheadbhal and Baillie wind farms will
supply power to the upgraded Beauly-to-Denny power line
which the Scottish government approved in early January
(EUE 224/35).
Scottish energy minister Jim Mather also
announced this month an extension to the Rothes
wind farm near Elgin, which will boost capacity by 45
MW to 95 MW.
Energy expert doubts UK can meet
2020 renewables goal
Oxford University professor and UK energy expert Dieter
Helm has cast doubt on the country’s ability to meet its
2020 energy targets.
The UK government’s contribution to EU-wide targets
to get 20% of all EU energy from renewable sources
means the UK must get about 30% of its electricity from
renewables by 2020.
“Virtually nobody independent thinks it’s going to
happen,” Helm told the House of Commons cross-party
energy committee on January 20.
Helm said that the UK does not have a credible
energy policy, which makes it hard for National Policy
Statements on energy planning issues to be drawn up
effectively.
Helm said the idea of NPSs was “in principle a pretty
good one,” but slammed the actual documents now
being consulted upon.
They are often “incoherent” and badly written, he
said, adding that they fail to meet the standards
required of an important set of legal documents.
Helm said current UK renewable targets and plans
for massive expansion of wind power are the wrong way
to cut carbon.
If government is set upon meeting the targets
regardless, Helm said that more direct action is
needed on distribution and transmission, on the
electrification of transport and on carbon capture and
storage.
Other experts, such as Jeremy Nicholson of the
Energy Intensive Users Group, also have raised
doubts about the ability of the UK to meet the 2020
target.
Massive growth in renewables might imply much
lower gas demand in the future, but National Grid’s
transmission director Nick Winser said January 20 that
National Grid expected gas demand out to 2020 to be
stable or only slightly lower than now.
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
IMPLEMENTATION
ELECTRICITY
Ownership
unbundling
of TSO
Production:
type of
system
Electricity directive
Eligible customers &
Declared market
opening (%)
Transmission:
type of
system
Distribution:
type of
system
Austria
10/01: All (100%)
No
Authorization
Reg TPA
Reg TPA
The Energy Market Liberalization Act (12/00) provided for marked opening from 10/01 and required grid operators to source 8% of delivered
electricity from small hydro (<10MW) and to increase the percentage of energy from other renewables to 4% by 2008. The Green Energy Act (08/02)
shifted administration for this obligation to the transmission grid operators and increased the target for production from small hydro to 9% by 2008.
Legislation introduced in 2006 increased the target for other renwables to 10% by 2010.
Belgium
01/03: >10GWh
No
Authorization
Reg TPA
Reg TPA
07/04: Walloon Region,
Brussels-Capital Region:
all professional customers
connected to the distribution network
07/03: (Flanders only) all
01/07: Walloon region
all household customers
01/07: All (100%)
Regulator for gas and electricity is CREG. Regional regulator for <=70kV grid. Elia formally designated as TSO. Bottlenecks at borders, especially
northbound at French border.
Bulgaria
07/04: 40GWh (22%)
No
Authorization
Reg TPA
Reg TPA
07/07: All (100%)
Bilateral contracts; power exchange generation market design. Seven significant competitors in the generation market, including Kozlodui NPP and
Maritsa Istok III. The latter has a 15 year PPA with NEK up to 2020. Distribution tariffs are published.
Czech Rep
01/02: >40 GWh
Yes
Authorization
Reg TPA
01/03: >9 GWh
required for plants
01/05: All non residential customers
>30 MW
01/06: All (100%)
Bilateral and power exchange generation market. 66.7% state-owned CEZ dominates the Czech Republic’s power market.
Reg TPA
Denmark
01/03: All (100%)
Feed-in tarriffs have developed wind energy industry.
Reg TPA
Reg TPA
Reg TPA
Reg TPA
Yes
Authorization
Estonia
2005: 40GWh (12%)
No
Authorization
2009: 35%
2013: All (100%)
State utility Eesti Energia dominates the Estonian power market. TSO and DSO are legally separated.
Finland
All (100%)
Yes
Authorization
Reg TPA
Reg TPA
for environmental,
not market, purposes
Transmission grid is an independent company. Since 01/05 transmission and distribution companies have needed the Electricity Market Authority’s
approval for changes to their methodologies for calculating tariffs.
France
02/03: 7GWh (34.5%)
No
Authorization
Reg TPA
Reg TPA
07/04: All nonresidential customers (>66%)
07/07: All (100%)
EDF holds auctions to sell capacity (virtual power plants) but EDF still enjoys near total monopoly. Grid operator RTE is legally separated from EDF.
Germany
All (100%)
No
Authorization
Reg TPA
Reg TPA
Reg TPA provided for by the Energy Act of 13/07/05 and enforced since energy regulator (Bundesnetzagentur) was established in July 2005.
Greece
07/04: All nonNo
Authorization
Reg TPA
Reg TPA
residential customers (70%)
01/07: All
Greece has requested a derogation from EU rules for micro-systems on all non-interconnected islands (excluding Crete and Rhodes), those
customers remain captive to the incumbent supplier and generator PPC (RES, CHP and autoproducers are exempt). PPC owned 95.3% of installed
generation capacity in 2006. RES, CHP and autoproducers supported through a regulated feed-in tariff. The electricity volume traded outside PPC
was approx. 0.84% of the total electricity volume consumed in 2006, including electricity produced by autoproducers and RES and imports.
Hungary
07/04: All nonNo
Authorization
Reg TPA
Reg TPA
residential customers
07/07: All (100%)
The state-owned MVM Group plays a dominant role in the wholesale market, although former long term PPAs have been replaced by 5-8 year-long
agreements. There are three significant players in the Hungarian retail market.
Ireland
2002: >1GWh
Yes
Authorization
Reg TPA
Reg TPA
02/04: >0.1GWh/yr (56%)
02/05: All (100%)
All Ireland single electricity market from 11/07. This is hoped to assist in resolving any problems which may have existed with market entrants
securing finance. New build process speeded up through Strategic Infrastructure Bill.
Italy
2001: 20GWh/yr
Yes
Authorization
Reg TPA
Reg TPA
2002: 9GWh/yr
05/03: 0.1GWh/yr
07/04: All non residential (80%)
All consumers have been free to switch supplier since 07/07. AEEG continues to set prices for residential consumers and small businesses who
have not yet switched supplier. No single entitity allowed more than 50% of generation and imports. Problems persist with limited import capacity.
Wholesale power pool IPEX introduced 03/04.
24
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
IMPLEMENTATION
ELECTRICITY
Ownership
unbundling
of TSO
Production:
type of
system
Electricity directive (continued)
Eligible customers &
Declared market
opening (%)
Transmission:
type of
system
Distribution:
type of
system
Latvia
07/04: All non residential
No
Authorization
Reg TPA
Reg TPA
customers (76%)
07/07: All (100%)
No customers have exercised their rights to switch energy supplier yet due to the small size of the generation market (5.6TWh in 2004) and the
vertically integrated state monopoly Latvenergo holding a 95% share in domestic production. TSO “Augstsprieguma tikls” started operating as a
legally separate company from 09/05. Latvenergo holds 99% of the electricity distribution market.
Lithuania
07/04: All non residential
No
Authorization
Reg TPA
Reg TPA
customers
07/07: All (100%)
Closure of Ignalina NPP with 1300 MW installed capacity from 2010. No direct transmission lines with the Central/Western Europe and
Scandinavian countries. Plan to abolish the end-user prices gradually by 2015. One TSO, two main DSOs/Public Suppliers and 24 licensed
Independent Suppliers in the Lithuanian electricity market.
Luxembourg
07/04: All non residential
customers
07/07: All (100%)
No
Authorization
Reg TPA
Reg TPA
Netherlands
2000: >2MW
Yes
Authorization
Reg TPA
Reg TPA
2002:>3*80A
07/04: All (100%)
Independent regulator for gas and electricity (DTe). Reciprocity clause invoked. All consumers free to buy green power since 1/1/01. Import capacity
bottlenecks. Full ownership unbundling of distribution networks mooted July 2009. Introduction of trilateral market coupling with Be, Fr (11/06).
Poland
07/04: All non
Yes
Authorization
Reg TPA
Reg TPA
residential customers
07/07: All (100%)
Generation market design: long-term PPAs still exist (60%), however an Act discharging them was passed on 29/07/07 and came into force
04/08/07. Long term PPAs will be gradually discharged through a compensation scheme. Bilateral contracts; limited significance of power
exchange (1%). Poland has nine significant competitors in the power sector.
Portugal
01/04: All businesses
07/04: All (100%)
Yes
Authorization
Reg TPA
Reg TPA
A government Decree (240/2004) on 07/12/04 scrapped long term power purchase agreements and created compensation measures to replace
them. TSO REN is 31% state owned; 20% Caixa Geral de Depósitos; 5% Gestmin; 5% Logoenergia; 5% OLIREN, 5% Red Electrica de España; 5%
EDP; and 24% freefloat.
Romania
07/07: All (100%)
Yes
Authorization
Reg TPA
Reg TPA
Bilateral and power exchange generation market design. There are eight significant competitors in the power generation sector. Five distribution
companies had been privatized by 08/07. By end 2007 some 50% of consumers had changed their supplier. In 04/07 the electricity and gas
regulators merged to become the independent Romanian Energy Regulatory Authority (ANRE).
Slovakia
01/04: 20GWh (40%)
01/05: All nonresidential customers (79%)
07/07: All (100%)
Yes
Authorization
Reg TPA
Reg TPA
Bilateral generation market without power exchange. Slovenské Electrárne (SE) dominates the Slovakian power market. The New Energy Acts came
into force on 01/01/05, bringing market opening fully into compliance with the EU Directives. The reformed Electricity Market Rules came into
force on 15/07/07. Legal unbundling of distribution system operator from other activities from 07/07.
Slovenia
07/04: All nonYes
Authorization
Reg TPA
Reg TPA
residential customers
2005: 77%
07/07: All (100%)
Bilateral and power exchange generation market design. There are two main wholesale competitors and 12 suppliers in the Slovenian power sector.
Spain
2003: All (100%)
Yes
Authorization
Reg TPA
Reg TPA
New entrants frustrated by lack of electricity export capacity with France. Customers were able to choose to stay on regulated tariffs until July
2008. Regulated tariffs abolished July 2009, but sub 10kW consumers can opt for capped tariff of last resort.
Sweden
01/96: All (100%)
Yes
Authorization
for environmental, not
market, purposes.
Regulator sets guidelines for access prices. Consumers file complaints to the regulator.
Reg TPA
Reg TPA
Turkey
01/07: 3 GWh (38.6%)
No
Authorization
Reg TPA
Reg TPA
01/08: 1.2 GWh (41%)
Market opening extended in January 2008 by decision of the Board of the Turkish Energy Market Regulatory Authority. Bilateral contracts market
design with residual balancing pool. Electricity market activities are unbundled along the path envisaged by the EC Second Directive, except for
legal unbundling of DSOs. The TSO has a separate corporate identity. Turkey’s wholly stae-owned Electricity Trading and Contracting company
(TETAS) and Electricity Generation Company (EUAS) are the dominant market players.
UK
All (100%)
Yes
Authorization
Reg TPA
Reg TPA
Ofgem is the regulator for England Wales and Scotland, while the Northern Irelarnd Authority for Utility Regulation is responsible for energy regulation in
Northern Ireland. .
Source: EU Energy
25
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
IMPLEMENTATION
GAS
Gas directive
Eligible customers &
Declared market
opening (%)
Ownership
unbundling
of TSO
Grid/Storage
access
Publication
of access
conditions
Austria
Regulator
2001: 49%
No
Reg TPA (Grid)
Yes
10/02: All (100%)
Neg TPA (Storage)
OMV remains the principal importer of gas and a major player in supply through its jv with Energie Allianz, Econgas.
E-Control (gas
and electrcity)
Belgium
CREG (gas
and electricity)
2001: 59%
No
07/03: Flanders: all
customers connected
to the distribution network
01/04: Wallonia >1m cu m
07/04: federal level: all
final customers connected
to the transmission network
07/04: Walloon Region and
Brussels-Capital Region:
all professional customers
connected to the distribution network (91.5%)
01/07: Brussels: all; Walloon
Region: all household customers (100%)
Regulators both regional and national. Legal unbundling for TSO and DSO.
Reg TPA
Code of
good conduct
and principal
conditions
Bulgaria
Reg TPA
Accounts published.
Tariffs approved ex-ante
20 million cu m (83%)
07/07: All (100%)
No
Energy and wa
-ter regulatory
Commission
Part of the definition of eligibility is that customers must pay their bills on time – many large customers do not. Another requirement is that they
should buy gas to satisfy their own demand, so GDSs are not defined as eligible. Legal, dunctional and account unbundling of TSOs. No unbundling
for DSO (the number of customers of gas distribution companies is well below 100,000). The dominant gas company is Bulgargaz.
Czech Rep
2005: >15 million cu m (28%)
No
Reg TPA (Grid)
Yes
ERO
2007: All (100%)
Neg TPA (Storage)
Unbundling for TSO and DSO by account. Legal unbundling for TSO (2006) and DSO (2007). Gas market dominated by RWE Transgas A.S. An
amendment to the Energy Act adopting the EU Second Gas Directive came into force from 30/12/04.
Denmark
2000: 30%
Yes
Reg TPA (Grid)
Yes
DERA
2004: All (100%)
Neg TPA (Storage)
Gas incumbent Dong Naturgas unbundled its grid in 2003, Dong Transmission, onrenamed Gastra, which in 01/05 became part of state-owned
system operator Energinet.dk. Neg TPA for storage. DERA regulates for gas, electricity and district heating.
Estonia
200,000 cu m (95%)
01/07: All (100%)
No
Reg TPA
No publication of accounts Estonian
Tariffs approved ex-ante Competition
Authority
Legal unbundling for transmission system operator and distribution system operator. Eesti Gas is the dominant player in the Estonian gas market.
Finland
2000 >5 million cu m (90%)
No
Reg TPA
Yes
EMA
On paper, the market is open for energy consumers, but in reality only about 1% of the market is open. Due to single supply source (Russia), no
competition at wholesale level envisaged. Competition exists for the “after market”, but there is no legal unbundling between the distribution
system operator and supply in the wholesale market. Energy Markets Authority regulates for electricity, gas and emissions trading.
France
2000 >22 million cu m
No
Reg TPA (Grid)
2001: 20%
Neg TPA (Storage)
2003 >7.5 million cu m
2004: All non residential customers
7/07: All (100%)
Over 66% of the market open from July, 2004 (for industrial energy consumers). The transmission network
Total Infrastructure Gaz France (TIGF) and GRTgaz, unbundled from January 2005.
Germany
1998: All (100%)
Publication of
standard conditions
and tariffs
CRE (gas and
electricity)
is managed by two independent TSOs,
No
Reg TPA (Grid)
Yes
BundesnetzNeg TPA (Storage)
agentur
Market fully open since 1998. Reg TPA for grids provided for by the Energy Act of 13/07/05 and enforced since the energy regulator
(Bundesnetzagentur) was established in July 2005. Storage facility operators are obliged to publish the location of storage facilities and
information on available capacity, terms and conditions for access to storage including: procedures for requests to access storage; characteristics
of the gas to be stored; nominal working gas capacity and feed-in and output storage periods; and minimal volumes for feed-in and output.
Greece
07/05: Generators &
No
Reg TPA
Yes
RAE (gas and
Cogenerators >25 million cu m
electricity)
Derogation awarded until 2009 (0%)
New Gas Law in place since 12/05 implementing Directive 2003/55/EC. 03/07 legally unbundled TSO (DESFA SA) established. DESFA owns and
operates the transmission network and is responsible for its developments. Terms and conditions for TPA access to the network established through a
Standard Transportation Agreement and the corresponding Tariff Decree. Three regional gas distribution companies operate in the urban areas of Attiki,
Thessaloniki and Thessaly (Larissa/Volos). Each has a 30-year license to exclusively develop and operate the gas distribution system and supply all
consumers with demand <10 million cu m/yr. The Law on deregulating the Greek gas market also renders gas exempt from the country’s special
consumer tax until October 31, 2013 and until December 31, 2020 for gas used in cogeneration, agriculture, vehicles and the home.
Hungary
01/04: all non-residential (67%)
07/07: All (100%)
No
Reg TPA, Neg TPA
(for free market)
Yes: Tariffs, terms
& conditions
HEO (district
heating, gas
& electricity)
Legal unbundling of TSO and DSOs with more than 100,000 customers, accounting unbundling for smaller DSOs. A few players dominate the
market. Effective market opening threshold reached 34 % in 2008. Act XLII of 2003 on Natural Gas Supply was fully replaced by Act XL of 2008
from 1/7/09, which abolished the former public utility supply and introduced the universal supply on the Hungarian natural gas market.
Ireland
04/02>2 million cu m (80%)
Yes
Reg TPA for
Yes
CER (gas and
20/07/04: All non residential (85%)
transmission &
electricity)
07/07: All (100%)
distribution
Significant investment in gas network infrastructure in recent years and to 2012. Arrangements and access conditions for storage published in
2006. Transmission and distribution system access conditions, price methodology and levels published.
26
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
IMPLEMENTATION
GAS
Gas directive (continued)
Eligible customers &
Declared market
opening (%)
Ownership
unbundling
of TSO
Grid/Storage
access
Publication
of access
conditions
Italy
01/03: all consumers (100%)
No
Reg TPA
Yes
Latvia
0%
No
Neg TPA
Regulator
AEEG (gas &
electricity)
From 2002 suppliers restricted to selling <75% of national consumption into the grid, reducing 2%/year to reach a 2009 target of 61%. Since
2003 no entity has been permitted to sell to final clients >50% of national consumption. Exploitation of gas reservoirs is licensed by the Ministry
for Economic Development. Neg TPA for upstream gas slots. Reg TPA to pipeline network for imports and national production.
No publication of
Public Utilities
accounts. Tariffs
Commission
approved ex-ante
Latvia has a derogation until 2010 to implement the EU’s Second gas Directive. Unbundling for transmission system operator and distribution
system operator by account. Publicly available accounts required from 01/06. The dominant player in the gas market is Latvijas Gaze.
Lithuania
> 1m cu m (90%)
No
Reg TPA
Accounts published.
NCC (gas &
07/07: All (100%)
Tariffs approved ex-ante
electricity)
Unbundling for transmission system operator and distribution system operator by account. The dominant player in transmission and distribution is
Lietuvos Dujos. Lietuvos Dujos and Dujotekana UAGas supply Lithuanian consumers. All gas imported to Lithuania is sourced from Gazprom.
Luxembourg
07/04: All non
No
Reg TPA
Published for
ILR (electricity,
residential customers
high pressure grid
gas, telecoms
2005 > 80%
and postal
07/07: All (100%)
services)
Full market opening preceded legal transposition of the second EU gas liberalization directive on 01/08/07. One 350 MW gas-fired power station.
Netherlands
2002 > 1 million cu m
Yes
Reg TPA (Grid)
Publication of terms
2000: 45%
Neg TPA (Storage)
for tariffs, transport
2002: 51%
& services
07/04: All (100%)
Reciprocity clause in place. Access to gas storage controversial. Flexibility services offered by GTS with help of GasTerra (2006).
Poland
07/00: 25 million cu m
01/06: 71.2%
07/07: All (100%)
Yes
Reg TPA
DTe (gas &
electricity)
Tariffs
approved ex-ante
Energy
Regulatory
Office (gas &
electricity)
Legal and ownership unbundling for TSO (Gaz-System). Legal unbundling for DSO (six distribution companies within the frame of the PGNiG Capital
Group). The dominant gas market player is PGNiG.
Portugal
01/07: All power generators
Yes
Reg TPA
Conditions published
(45%)
by regulator
Granted derogation to 2010. Supplier choice for all commercial users from June 1 2009, residential from January 2010.
ERSE
Romania
01/02: 25%
Yes
Reg TPA
Accounts published.
ANRE
01/05: 50%
Tariffs approved
01/06: 75%
ex-ante
01/07: all nonresidential
07/07: All (100%)
Legal unbundling between TSO and DSO. 04/07 the electricity and gas regulators merged to become the independent Romanian Energy Regulatory
Authority (ANRE).
Slovakia
01/04: >5 million cu m (33%)
No
Neg TPA
No publication of
Regulatory
01/05: All non residential
Reg TPA
accounts. Tariffs
office for
customers. (72%)
for transit
approved ex-ante
network
07/07: All (100%)
industries
TSO and DSO unbundling by account. Gas market operator SPP dominates the market. The Energy Act allows SPP to refuse TPA to other gas
suppliers on the basis of ‘take-or-pay’ contracts in line with Directive 2003/55/EC. Slovakia fully transposed the EU’s second gas directive 09/07.
Slovenia
07/04: All non
No
Reg TPA
Indicative terms for
Energy Agency
residential customers
tariffs, transport &
(gas &
07/07: 100% (All)
services are published
electricity)
Legal unbundling for transmission system operator and account unbundling for distribution system operator. Incumbent Geoplin dominates the gas
market. From July 1, 2004, Slovenia opened its gas market to all non-household customers in compliance with the EU’s Second Gas Directive.
Spain
01/03: All (100%)
Reg TPA/ Neg TPA
Yes ( conditions:TPA
CNE (gas, oil
(non-basic storage)
tariffs & contract models) & electricity)
Main Security of supply rules: to keep dependency on one gas source to below 50%, 20 days of firm consumption as strategic reserves and N-1
criterion (preparedness of the system to supply firm demand in case of failure of the biggest entry point). All market participants have import cap
of 70%. Six LNG terminals in operation. Regulated tariffs abolished end-2007 but customers can opt for supplier of last resort tariffs.
Sweden
Yes
2000: 47%
07/05: All non
residential users (95%)
07/07: All (100%)
Svenska Kraftnat is the system operating authority (ISO).
No
Reg TPA
Turkey
No
Reg TPA
1 million cu m (80%)
Tariffs approved
ex-post
Tarif fmethod
ex-ante
Energy market
Inspectorate
(gas &
electricity)
No publication
EMRA (gas,
of accounts. Tariffs
electricity, LPG
approved ex-ante
& petroleum)
Unbundling for transmission system operator and distribution system operator by account. Botas is the dominant company in the gas market.
UK
1998: All except N. Ireland (100%) Yes
Reg TPA
Published tariffs
Ofgem/NIAUR
Ofgem is the regulator for England Wales and Scotland, while the Northern Irelarnd Authority for Utility Regulation is responsible for energy regulation in
Northern Ireland.
Source: EU Energy
27
EU ENERGY / ISSUE 225 / JANUARY 29, 2010
AGENDA
BRUSSELS WATCH / EVENTS
BRUSSELS WATCH
18 Ecofin Council
25-26 Competitivenes
30 Informal Agriculture Council (Merida)
31 TTE (Energy and Telecom Council)
Spanish presidency of the EU
Draft agenda (selected dates; meetings in Brussels
unless otherwise stated)
January 1 – June 30, 2010
June
February
7-9 Informal Competitiveness Council (San Sebastian)
16 Ecofin Council
22 Agriculture & Fisheries Council
March
1-2 Competitiveness Council (San Sebastian)
12 TTE (Energy Council); (El Escorial)
15 Eurogroup; Environment
16 Ecofin; Conciliation EP
23 Agriculture Council (Luxembourg)
25-26 European Council
7 Eurogroup
8 Ecofin (Luxembourg)
17-18 European Council
21 Environment Council (Luxembourg)
24 TTE (Energy Council)
28 Agriculture Council
European Parliament meetings:
Plenary sessions
February 8-11 (Strasbourg)
February 24-25 (Strasbourg)
March 8-11 (Strasbourg)
March 24-25 mini plenary (Brussels)
April 19-22 (Strasbourg)
May 5-6 mini plenary (Brussels)
May 17-20 (Strasbourg)
June 17 (Strasbourg)
April
17-18 Informal Ecofin (Madrid)
May
17 Agriculture & Fisheries Council
EVENTS
The European gas conference
European Gas Storage
Power in West Europe
3rd Annual Meeting
January 26 – 28, 2010
Vienna, Austria
www.theenergyexchange.co.uk/3/13
/articles/65.php
February 9-10
Budapest, Hungary
www.platts.com
March 11-12
Brussels, Belgium
www.platts.com
European Carbon Capture
and Storage
European Wind Energy 2010
EU Energy Law and Policy
February 23-24, 2010
London, UK
www.platts.com
January 27-28, 2010
Brussels, Belgium
www.euenergyconference.com
4th Annual Central and Eastern
European Power
February 2-3, 2010
Prague, Czech Republic
www.platts.com
International Oil, Gas and
Energy Conference 2010
February 24-25, 2010
Berlin, Germany
www.inoge-expo.com
April 20-23, 2010
Warsaw, Poland
www.ewea.org
9th Novel Gas Conversion
Symposium
May 30-June 03, 2010
Lyon, France
www.ngcb.org
11th IAEE European Conference
Russia Offshore 2010
Ergeg: Stakeholder Workshop on
Customer Complaint Handling
February 2-4, 2010
Moscow, Russia
www.theenergyexchange.co.uk
February 25, 2010
Brussels, Belgium
www.energy-regulators.eu
28
August 25-28, 2010
Vilnius, Lithuania
www.iaee2010.org
EU ENERGY / ISSUE 225 / JANUARY 29, 2010