EURELECTRIC Conference
RENEWABLE ENERGY 2020: Opportunities and Challenges
7-8 May 2009, Hotel
Radisson Royal SAS, Brussels
Session VI – ROUND TABLE:
RES expansion and power markets: challenges and opportunities
For the final round table discussion chaired by Gunnar
Lundberg, Vice-President responsible for Regulatory Affairs at Vattenfall
and Chairman of the EURELECTRIC Markets Committee, Mr Nicolosi and Ms
Dornick were joined by Matti Supponen, Policy Coordinator at the European
Commission’s Electricity & Gas Unit, Risto Lindroos, of Fingrid,
representing transmission operators’ body ENTSO-E and Juan Jose Alba Rios,
Director of Regulatory affairs at Endesa and Chairman of the EURELECTRIC
Working Group on Wholesale Markets and Trading..
The panel focussed on the issue of how to integrate RES into the market and
create a Europe-wide market.
Ms Dornick argued strongly for a harmonised European RES-support scheme, which
would enable the EU to reach its climate and energy goals “with less money and
more energy”. There was general agreement among the panellists on this key
issue.
Mr Supponen expressed the belief that “renewables and market do go together”,
and renewables might be “the real driver toward a fully harmonised European
market at the end of the day”. He also expects that “we will have a harmonised
EU-wide RES-support scheme” in the years to come. However, in a tight
situation, promoting renewable energy in order to “save the planet” must take
precedence over the market, he said, drawing opposition from the floor, where
audience speakers argued that while RES have a variety of benefits, the drive
to “save the planet” would depend more on pricing carbon under the emissions
trading system.
Mr Lundberg argued that enabling free trading of green electricity would
naturally lead to a harmonisation of the various support schemes.
Mr Lindroos said that integrating renewables is a huge task calling for
cooperation between all parties, cooperation between TSOs through the newly
set-up ENTSO-E being especially crucial. He was confident that the forthcoming
National Action Plans (NAPs) on RES, along with the 10-year ENTSO network
investment plan will ensure sufficient investments are made in the transmission
grid. Regarding the huge balancing costs weighing on TSOs, he stressed the
ENTSO view that “all market players should pay for their balancing costs”,
which should be made fully transparent in order to identify the most efficient
means to increase RES-power.
Marco Nicolosi agreed that increasing interconnector capacity is the “first and most obvious solution” to cope with the expected doubling of RES-power in the system, but more “overall flexibility and market adaptation”, will also be needed, he said. Compressed air storage will have a role to play and demand-side management, allowing increased demand at certain hours, for example with the integration of electric cars in the system, will also need to be developed, he argued.
Mr Lundberg raised the issue of how to reward and keep running existing large power plants in an environment where peakload capacity is becoming more dominant. And if those plants are running for very few hours, will it be economic to fit carbon capture and storage equipment, which is seen as an important solution for reducing emissions and maintaining supply security. He also pointed to market design issues – for example having smaller price areas based on structural congestion, thus crossing national borders if necessary - and the design of capacity markets. Integration of intraday and balancing markets should be speeded up, with a European model as a future goal, he argued.
“Renewables do not create fundamentally new challenges, but make existing challenges more urgent and more necessary” said
Mr Alba Rios. However, he expressed the pessimistic view that “the only way to make progress will be by failing” - ie real progress will not be made until we discover by experience the “failure of 27 different support schemes and poorly functioning intraday cross-border markets” which result in high balancing costs. Learning by experience will then “focus our minds and create the necessary political will to make progress in these areas”, he predicted.
Asked whether they thought a major blackout would occur before the problems identified during the conference were solved, a clear majority of the audience inclined to the pessimistic view.
Asked whether the necessary investment in grid infrastructure should be decided by regulatory action or signalled through the market, a large majority felt this should be a market-based process.
A small majority thought that feed-in tariffs were not entirely incompatible with a competitive market.
A clear majority said that TSOs should not have to bear the risks of balancing, but that RES-producers should take responsibility for their own balancing.
Since authorisation of new power lines is key issue in the RES-debate, Mr Lindroos
argued that this is usually done on a too low level and that raising it to governmental level could improve the process. He also recommended that the European Commission propose guidelines on good practice for authorisations. Speakers from the floor pointed out that greater priority grid use for RES will mean less capacity available for trading. Will politicians support the building of over-capacity to ensure that trading can take place, they asked.
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