Session IV: Executive Forum
Luca Cesari, Global Managing Director, Utilities Industry Group at Accenture opened the Executive Forum, focussing on the costs related to the promotion of low-carbon technologies and measures to reduce them on the consumer bill. For carbon costs, renewable subsidies and all investments across the value chain, “about 900 billion Euro investment above normal replacement expenditure is estimated for infrastructure oriented towards the 20-20-20 targets”, he said. Mr. Cesari expressed the view that “only supply side storage and demand response programmes have the potential to reduce costs by 2020”. Together, these technologies could reduce the additional cost per household from 120€/ year down to 89€/ year. Nevertheless, actions from policymakers, utilities, consumers and associations would be all needed to drive changes in behaviours in electricity use, he concluded.
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A panel debate chaired by Hans ten Berge, Secretary General of EURELECTRIC then took place with Lars G. Josefsson, EURELECTRIC President and Former CEO of Vattenfall, Fulvio Conti, EURELECTRIC Vice-President and CEO and General Manager of Enel, Padraig McManus, CEO of ESB, Charles E. Bayless, Retired Chief Executive of Illinois Power and Tucson Electric Power, Bradley Page, CEO of Energy Supply Association Australia Limited (ESAA), and Ian Marchant, CEO of SSE.
Panel Debate
The panel first turned its attention to market integration.
Bradley Page presented the Australian situation, in which seven states try to coordinate the regulatory framework for an integrated operation of systems and single dispatch, but differences across borders remain.
Asked about his opinion for market integration in Europe, Charles E. Bayless considered that “one regulator and one single set of rules would help tremendously” as is the case in the US for wholesale markets (regulated at federal level).
Fulvio Conti stated that “a common market needs to guarantee free flows of electricity, investments and cash: this is not happening at the moment”. He stressed “the lack of political will and the dramatic lack of grid interconnection capacities” and also expressed the hope that the current financial situation of Europe would not bring governments to step back from the objective of integration.
Padraig McManus echoed Mr Conti’s doubts, stressing that “Governments focus on sorting their own problems first, before looking at the global picture”. He said he could not imagine for example that the UK government would decide to invest in onshore wind capacity in Ireland and build the necessary interconnection to Britain, although this option could turn out to be cheaper than offshore wind capacity along the UK coast.
Ian Marchant was however more optimistic, considering that in 10 years time we should see closer cooperation among regional markets. Nevertheless he emphasised the need for market rules to converge: “Rules don’t need to be the same tomorrow, but need to go in the same direction in which investors expect them to go”.
The discussion then moved on to climate.
Ian Marchant said that our industry should take the lead in reducing emissions and took the view that “we need to halve carbon intensity every ten years”. “We as industry need to show leadership in that direction, rather than worrying about changes in short-term politics” he added.
Looking at the Australian situation, Bradley Page stated that this idea would not work for them as their government had stepped back from promoting an emission trading scheme and there is thus currently no guidance on how to match the need for reducing carbon emissions with the need to dispatch electricity at the lowest cost. Lars G Josefsson also expressed doubts about the possibility to halve emissions every ten years across Europe, particularly in countries heavily dependent on coal-fired electricity production.
Lars G Josefsson also said that our sector should reassure policy-makers of its intention to undertake early actions for carbon reduction – committing to a carbon-neutral electricity generation by 2050 was a first step. “We should work in finding a commonly understood trajectory in emission reductions”.
Ian Marchant and Fulvio Conti agreed with Lars G. Josefsson on the importance of identifying realistic intermediate steps. These “would deliver a more consistent message for politicians”.
Hans ten Berge stressed that “the trajectory must be a curve that matches expectations over time”.
The discussion then went on Smart Grids
Padraig McManus reported how in Ireland policy makers are willing to promote electric vehicles and that electricity companies are willing to play their part in their deployment, but that the regulator had not yet put in place the proper framework to secure a viable business model.
Ian Marchant said that in the UK the regulator was also still analysing the precise design for smart meters rollout. For Smart Grids he stated that the timeframe would be much longer, with deployment for 2020-2030.
Charles E. Bayless acknowledged that there is a general misconception over the role of Smart Grids. “We need an outreach communication to educate politicians on what Smart Grids really are all about and what they could really deliver”.
Finally, the debate focused on technology choices
Padraig McManus stated that we need all low-carbon technologies, each of them playing a specific role in each country. “The big challenge is to drive funds in R&D to develop or improve these technologies, but the budget is just not there”.
Fulvio Conti stressed that R&D is important not only in developing new technologies but also in improving current ones. “The factor of cost is definitely important, but shouldn’t impede us from continuing to work to improve the next generation of technology”.
Ian Marchant considered that “we don’t really need R&D. What we need is D&D: Development and Deployment”.