Highlights of the 2009 EURELECTRIC Annual Convention & Conference

OPENING AND KEYNOTE

“This year’s conference is being held at a time of extremely challenging circumstances, when the world is reeling from the impact of the financial and economic crisis,” said EURELECTRIC President Lars G. Josefsson as he welcomed some 420 delegates to the Annual Convention and Conference, entitled Electricity Markets 2050: Smart, Integrated, Carbon-Neutral, taking place in Bucharest on 15-16 June. Nevertheless, “the power sector has recently publicly committed to reducing its CO₂ emissions, improving the efficiency of electricity production and enhancing the transport infrastructure – both transmission and distribution,” he pointed out, referring to a declaration handed over to EU Energy Commissioner Andris Piebalgs in March by some 60 CEOs from companies accounting for over 70% of European electricity production.

In his two speeches during the morning – his welcome address and a speech setting out key requirements for the immediate future and his vision for the medium-term, Mr Josefsson set the scene for the various themes to be debated during the two-day event.

The first element for the intermediate future, he said, is reaching a comprehensive agreement at the climate talk in Copenhagen in December to create “a workable framework for reducing greenhouse gas emission worldwide”. This was the theme of the first session, encompassing both the policies and measures on reducing emissions of greenhouse gases adopted in the European Union and also those under way in the United States.

The theme of the second conference session was the issue of smart grids and the impact of their development on power generation, transmission, distribution and consumption of electricity. “We need a smarter system,” he told the audience, which will also require “smarter regulation that properly reflects the external benefits of smart grids to a range of stakeholders and does not leave electricity distribution companies to bear all the costs.”

“Renewable energy should work with, not against, the grain of the market we are striving to build and it is essential that RES-power be integrated into the market as soon as possible,” he urged, setting the scene for the third session. At a time when the EU legislators have just finalised a third package of measures designed to drive forward development of an EU electricity market, Mr Josefsson warned of potential distortions of that market arising from the continuation under the new Renewable Energy Directive of 27 separate national RES support schemes and urged member states to make full use of the flexible cooperation mechanisms provided by the Directive so as to promote regional market integration. He also underlined the need to develop intra-day and day-ahead markets at a cross-border, regional level so as to better integrate new RES-power.

During the Executive Forum, a panel of CEOs was scheduled to discuss the conditions needed to guarantee investment in the industry and thus help to ensure energy supply security in Europe. The session would focus on the investment challenges and existing barriers and debate how to successfully address them, he told the audience.

Mr Josefsson also drew the audience’s attention to an exhibition on carbon capture and storage technologies, with specific presentations by those companies leading the technology drive, which was running parallel to the two-day conference. In keeping with the CCS theme, the EURELECTRIC 2009 Award would this year go to a company or person who has made a pioneering contribution to developing CCS, he revealed.

Mr Josefsson reminded the delegates of the vision he had shared with them a year ago on taking up the office of EURELECTRIC President – “a secure, carbon-neutral power supply, delivered through a functioning Europe-wide market, underpinning smart, innovative solutions to the energy needs of citizens, industry and commerce,” and assured them that this vision remains intact even in these challenging times. “I ask all of you to join me in making this vision a reality,” he urged them.

With this vision in mind, Mr Josefsson unveiled a new logo design and visual identity system for EURELECTRIC. He explained that the new logo - replacing the previous one conceived just over ten years ago to represent the merger of two sister associations into the Union of the Electricity Industry-EURELECTRIC - plus the accompanying visual elements were designed to “better reflect outwardly the values and aspirations of the industry that our association represents - security, forward-motion, and environmental care.”

“Today our concerns focus on the great energy-climate nexus, on providing secure energy for Europe, going forward: stability and reliability with innovation,” Mr Josefsson underlined. He also highlighted the importance, for the attainment of his vision, of help and cooperation from industry players, customers, legislators, regulators and other stakeholders, not forgetting communication multipliers in the press and other media. Their various contributions will help to ensure that EURELECTRIC’s actions and results “live up to the image and aspirations which the new visual identity seeks to embody”, he concluded.

Tudor Şerban, Romania’s State Secretary for Energy, told the audience: “We are now at a historic moment in energy in Romania with the organisation of this EURELECTRIC conference,” underlining that the subjects to be discussed at the conference were of great importance to his country. Relating to the conference exhibition on carbon capture and storage, Mr Şerban described the crucial nature of this technology to Romania, given the country’s reliance on coal for 40% of electricity production. Romania would be the “ideal candidate” for CCS given the possibilities for storage in depleted oil and gas fields and advantageous geology, he told delegates.

Referring to Renewables, to be covered in Session 3 of the conference, Mr Şerban explained how they are promoted in Romania through a green certificate scheme based on a quota obligation for electricity suppliers and underlined that Romania has a huge future potential for Renewables. Wind power has a particularly exciting future, with a theoretical potential of 23 TWh/year. A massive 18,000MW of wind capacity has been proposed in Romania of which 1000MW are already under construction. Romania is also progressing on projects for geothermal, wood-based biomass and solar power. But Romania also has significant potential in the most reliable source of Renewables, hydroelectric power, which already provides 30% of power generation, but crucially, only 50% of the potential has been realised.

Romania has a fully liberalised market, administered by OPCOM, the Romanian Power Market operator, a full member of EUROPEX, he told the audience. Looking forward to the discussion on smart networks in session 2 of the conference, the Energy Secretary referred to the extensive development plans of the Romanian transmission system operator, Transelectrica and its eight distribution system operators. He described the large scale integration of renewable energy and distributed generation as a “key direction in the development of the Romanian electricity system”. The highly topical themes chosen for the conference “are not only of major interest to electricity specialists but to the whole community,” concluded Mr Şerban.

Didier Houssin, Director for Energy Markets and Security at the International Energy Agency (IEA) spoke of the dual challenges of climate change and energy security. “With the key role that the decarbonisation of the power sector would play in meeting climate change objectives, there are huge investment needs in the power sector in the coming years,” warning of the danger that the current financial crisis will defer investment, leading to a “supply crunch” once the economy recovers. “We must not lose our focus on the key challenges of climate change and security of supply,” he underlined. Projections had already suggested that in 2009, global investments in Renewables would be a remarkable 38% lower than in 2008.

“A proper stable CO₂ price signal is key to bringing about the right investment in the next years” stated Mr Houssin. Under a reference, business-as-usual scenario world primary energy demand would rise by 45% between now and 2030. Under this scenario, investment needs in the power sector of around $13.6trillion would account for more than half of all investments in the entire energy sector. But business-as-usual was “clearly not sustainable” and investment needs would in reality be much more. Mr Houssin described detailed scenarios for stabilizing the atmospheric concentration of CO₂ at 450ppm and 550ppm in 2030.

Under the 450ppm scenario “40% of electricity would come from renewables by 2030”, although over 50% of carbon reduction would actually be delivered by energy efficiency, with CCS and Nuclear delivering 14% and 9% respectively. But the supply variability of renewables would need additional investment in back-up generation, storage, network and demand side management. Nuclear would play a key role, whilst the need for large scale deployment of CCS means demonstration projects must be established. Mr Houssin expressed disappointment that only four CCS projects were currently in operation, none of them including integrated capture, transport and storage from coal-fired power generation.

Mr Houssin told the audience that the difference in investment needs between the 450ppm and 550ppm scenarios was “shocking”. For power generation alone, the 450 ppm scenario increases investment needs six-fold over the 550ppm scenario in the period 2021-2030 – the latter already consuming half a trillion dollars over the baseline. “An energy revolution is needed” concluded Mr Houssin, if deep emission cuts are to be made. Nuclear power, CCS, Renewables and energy efficiency must all be embraced but the financial crisis is heavily impacting low-carbon investments. The message to national governments is clear “energy measures must be at the heart of every stimulus package,” he urged.