The 2012 EURELECTRIC Award was given to Jean-Michel Glachant, Director of the Florence School of Regulation and Holder of the Loyola de Palacio Chair at the European University Institute of Florence. Presented by Paul Bulteel, former Secretary General and current European Electricity Ambassador for EURELECTRIC, the award went to Mr Glachant in recognition of the Florence School's insights into EU energy policymaking and regulation - and the Institute's research on the policy challenges of climate change.
The award gives credit to the Florence School of Regulation for delivering advanced research on the regulation of energy, and in particular on electricity and gas markets, thereby promoting and facilitating informed discussion among EU and global stakeholders. The European University Institute, on the other hand, covers a range of European issues, including energy and climate related topics. Its Climate Policy Research Unit is currently evaluating EU climate policies, especially overlap between the EU Emissions Trading Scheme (ETS) and the promotion of renewable energy in the power sector. Mr Glachant's ideals - and those of the institutions he heads - mirror the voice of the electricity industry in that they are focused around building a common European energy policy and achieving the European internal energy market.
In addition to the Industry Award, a student prize was awarded to Italian student of Management of Energy Resources Federico G. Lioy for his essay on innovation in the energy sector. The award was presented by Dr. William Kyte, OBE, Chief Advisor on International Climate Policy for EURELECTRIC and Senior Advisor at E.ON UK.
Federico G. Lioy's essay can be found here.
In his keynote speech introducing the high-level CEO panel debate, Matias Alonso, Global Managing Director of Accenture's Utilities Industry Group, asked who should provide the missing links in creating a single market. He identified several main challenges for investing companies, including the economic downturn, limited incentives, the global competition for capital as well as political interventions that additionally increased uncertainty and thereby the cost of investments. Turning to possible solutions, he suggested that companies should strive to increase profitability within a global perspective, find new capital sources by attracting foreign investors, increase consumer participation and leverage limited public funds by providing preferred lending conditions and making use of "green bonds". Confidence in policymaking should be regained by clarifying open policy questions, increasing EU coordination and harmonising regulatory approaches.
In the following panel debate, moderated by EURELECTRIC Secretary General Hans ten Berge, CEOs from around Europe shared their views on the challenges their companies were facing and the solutions they were implementing. Participants focused in particular on issues of market integration, renewables development and energy efficiency.
Fulvio Conti, EURELECTRIC President and CEO of ENEL, hoped that the 2014 target for an internal energy market could help foster public acceptance of new transmission lines. Overall however, he saw the realisation of the single EU energy market by 2014 as a mere dream, considering that 2050 would be more realistic. He called for a complete elimination of all generation technology subsidies in order to create a well-functioning electricity market. He also asked for more political leadership in developing a clear European vision which would effectively regulate the market without artificial interference like subsidies and politically motivated technology choices.
Wolfgang Anzengruber, CEO of Verbund AG, was convinced that investments in hydropower could thrive without support regimes and called for Europe to start phasing out renewables (RES) subsidies. Insufficient infrastructure development, especially due to public acceptance problems, could be the major obstacle in reaching the 2020 RES target, he said. Turning to energy efficiency, he highlighted the importance of transparent pricing and of helping customers improve their efficiency through electrification, adding that companies would have to prove themselves amid growing competition in offering efficiency services, with competitors from the ICT sector and other retail companies also showing an interest.
Pat O'Doherty, CEO of ESB, took the view that interconnection capacity between Ireland and the UK would double by the end of 2012. The UK could benefit from Irish west coast wind resources, provided that its support regime gave sufficient certainty to investors. Calling for the harmonisation of RES support systems across Europe, he however clearly warned that the industry should not accept having its future rely primarily on subsidised generation investments. The European electricity industry needed to speak out clearly on this subject to policymakers.
Oluf Ulseth, CEO of Energy Norway, saw promising progress in market integration in north-west Europe - but emphasised that additional big steps forward were needed in 2012 to show clear success in the rest of Europe. On energy efficiency services, he noted that liberalisation in Norway had removed obligations on energy utilities but that other providers had not massively decided to enter this business. He was nonetheless optimistic about electrification and the reduction of emissions through a larger role for the EU ETS.
Tapio Kuula, President and CEO of Fortum, said he would like to see a fully integrated European energy market by 2014 but considered that it could not realistically be achieved before 2020. He saw some progress towards the goal of an integrated Nordic retail market by 2015. Further market integration in Europe would require market coupling and harmonised regulation, but interconnectors were the real crucial factor. He called on all stakeholders to support high ambition in interconnection projects.
Arthouros Zervos, CEO of Public Power Corporation S.A. (PPC), called for the EU to agree on climate targets for 2030. While acknowledging that RES subsidies had become a hot political issue - in particular due to the high level of feed-in tariffs for photovoltaic - he emphasised the need to remove older subsidies on lignite and gas as well. Discussing market integration, he saw slight progress towards interconnection in south-east Europe, for instance between Greece and Turkey or Italy. However, these interconnections were not yet sufficient in scale to enable a well-functioning internal energy market.
In his keynote speech, Tom Woodford, Chairman of the EURELECTRIC Islands Group and Generation Manager at Guernsey Electricity, invited the audience to look at the bright side of islands. "An island is a complete small-scale continental system," he stressed, pointing out that this opened up opportunities to test new technologies, from back-up to smart grids and storage - to the advantage of both the island and then the mainland. Unfortunately though, such opportunities remained unexploited, with policymakers tending to neglect islands as part of the EU. "EU islands are fantastic places. Let's not neglect them but find case-by-case solutions to put them on a sustainable energy track, taking into account local realities," he concluded, summing up a key conclusion of EURELECTRIC's new report "EU islands: towards a sustainable energy future."
Mechthild Wörsdörfer, Head of Unit for Energy Policy at the European Commission's DG Energy, welcomed EURELECTRIC's report, especially the approach of using islands as test beds for innovative solutions. Providing an overview of various EU legislation and support such as the European Economic and Recovery Package and the SET-Plan, she reassured the audience that islands were indeed part of EU energy policies - although she confirmed that there was no specific island regulation in place. The European Council on Energy in February 2011 had restated that there should be no more energy islands in the EU by 2015, but this referred to isolated parts of the EU like the Baltic states, not geographic islands.
Thierry Pons, Senior Vice President for Island Energy Systems at EDF, presented the variety of solutions that EDF was currently experimenting with to cope with intermittency on the eleven islands where it has its operations, the largest being la Réunion and Corsica. Those islands are characterised by a general absence of electric interconnection to the mainland and electricity demand that is mainly based on air conditioning. They also share the common goal, set by the French government, to achieve 50% of renewables (RES) output by 2020. Possible answers to the resulting intermittency challenge included better monitoring and forecast of power output, demand-side management and storage, he said.
In a second case study, Paulo André, Chief of Department of Power Plant Investments from Electricity of Azores (EDA), shared EDA's experience in managing and operating a small and isolated power system made up of nine islands with a large share of RES (30% in 2011). Having outlined the challenge of integrating RES into weak networks, he then presented a solution based on a 500 KW flywheel technology, which could accumulate kinetic energy very quickly and help the system to keep frequency imbalances under control.
"Distribution networks on islands, like those elsewhere in the EU, need to become smart to cope with the power decarbonisation challenge," stated Venizelos Efthymiou, Network Development Projects Manager at the Electricity Authority of Cyprus. He made the case for a regulatory framework that encourages investments in smarter technologies such as smart meters. He then sketched the key features of a 100 MW virtual power plant project on Cyprus that will help the island to move forward in its energy transition and ensure that Cyprus, like other islands, can act as a test-bed for new technologies.
Introducing the ensuing panel debate, moderator Javier Ormazabal, President and Chairman of the Board of Ormazabal, confronted the panellists with the following questions: How could we get islands onto the sustainability track; which regulatory framework was needed to achieve it; and what kind of technologies should be leading the way for island energy systems to become more sustainable?
"Judging by the presentations, islands are not that different from the mainland: they try to make the most of their endogenous resources," commented Stine Grenaa Jensen, Senior Economist at the Danish Energy Association. She saw real potential for the European islands to try new technologies, she said. "However, island energy managers should not only experiment with new generation technologies, but should also focus on demand response and new ICT tools," she added.
David Padfield, Operations Director at Jersey Electricity, emphasised that islands should tap into their strengths to lead the energy transition. He stressed the strong roots of energy companies in island communities, explaining that the feedback from island customers was dynamic and quick and that planning authorities were more responsive. This, in turn, allowed more innovative thinking on the industry side, he argued, citing recent smart meter and smart grid projects in Jersey as proof of this dynamism.
Taking the EcoGrid EU smart grid project on the Danish island of Bornholm as an example, Mechthild Wörsdörfer, Head of Unit for Energy Policy at the European Commission's DG Energy, stressed the major role for industry in setting up new technologies and testing innovative solutions. Speaking of the European Commission's post-2020 renewable energy (RES) strategy expected to be published on 6 June, she mentioned that this piece of legislation would not mention EU islands.
Thierry Pons, Senior Vice President for Island Energy Systems at EDF, underlined the need for a harmonised European approach to islands and called for collaboration between policymakers when shaping the policy environment of islands. "We should have an integrated approach to the islands' energy challenges but we also have to connect people," he stated.
Referring to his company's 110 years of operating experience on the Azores, Paulo André, Chief of Department of Power Plant Investments of the Electricity of Azores (EDA), felt that it was crucial to develop projects that provided real and tangible results to island energy managers and helped them understand how the system reacted to new technologies. Referring back to the flywheel project implemented on the Azores, he explained that it had helped to avoid the disconnection of households after a sudden generation drop of 450 KW.
Christos E. Christodoulides, Director of the Cyprus Transmission System Operator, stressed the key issue of balancing variability, which was even more challenging for an isolated system. System stability must therefore be a priority, he argued.
Pierre Jean Coulon, Member of the European Economic & Social Committee, introduced a new dimension into the debate by stressing that customers and civil society at large had to be taken into account on islands. He raised the idea of establishing a permanent forum to discuss such critical topics.
Tom Woodford, Chairman of the EURELECTRIC Islands Group and Generation Manager at Guernsey Electricity, stressed the importance of islands' size as a key geographical characteristic leading to a lack of economies of scale in power production technologies and resulting in additional costs on islands. Despite their historic dependence on oil, "islands are willing to play their part in the energy transition," he emphasised. The EURELECTRIC report "EU Islands: Towards a Sustainable Energy Future" was a contribution to addressing the challenges ahead that were part of this transition.
Closing the two-day conference, Fulvio Conti, EURELECTRIC President and CEO of Enel, highlighted that the discussions had confirmed the sector's determination to go for decarbonisation by 2050. However, it was facing a major problem of investability. "The European Commission has to act now. Market integration will continue to be a dream if we do not harmonise regulation," he urged. Highlighting the role of the ETS as a warrant of technology neutrality, he pointed to innovation as the catalyst of Europe's energy transformation. He concluded by announcing a comprehensive study on technology development, to be presented at next year's EURELECTRIC Annual Convention on 3-4 June in Bologna, Italy.