Transcript Document

The Internal Energy Market: Remaining challenges and
the role of wind power
Paul Wilczek
Senior Regulatory Affairs Advisor – Grids and Internal Market
The European Wind Energy Association
5 February 2013
EWEA 2013, Vienna
More than 700 members
from almost 60 countries
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Manufacturers with a leading share of the global wind
power market
Component suppliers
Research institutes
National wind and renewable associations
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Developers
Electricity providers
Finance and insurance companies
Consultants
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Contractors
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www.ewea.org/membership
This combined strength makes EWEA the world’s
largest and powerful wind energy network
EWEA Lead Sponsors
Background
The European Council agreed on completing IEM by
2014 – realistic or illusionary?
Identified shortcomings in recent EC Communication:
– Tendencies of nationally inspired policies, MS slow in
adjusting national legislation
– Consumers dissatisfaction, even in more liberalised
markets low switching rates
– In many member states incumbents control >80% of
generation
– Structural market distortions prevail, e.g. regulated prices
and support schmes to conventional generation
– Markets too intransparent for newcomers, e.g. demandside providers
– Too little investment in energy efficiency
Main challenges ahead
The enforcement challenge: The IEM architecture is laid out
in the Third Energy package. EC emphasis to implement and
enforce it as a matter of priority.
Actions in the short term:
- Infringement procedures
- Active enforcement of IEM rules by energy regulators and
competition authorities
- Ensuring non-discriminatory and well-balanced Network
Codes
- Activating regional initiatives that will help set up
additional power exchanges
- Careful approach with capacity remuneration
mechanisms
Envisaged way forward on power market integration
The EU Target Model does not effectively enable optimal
wind energy integration
– No emphasis on wind integration to the extent of NREAPs
– Lack of emphasis on intraday and balancing markets
liquidity, harmonisation and interactions. These are wind
energy integration cornerstones!
To be done:
– Implementing the EU-wide Target Model with large share of
wind power
– Target Model as a minimum (i.e. not as target)
– Provide integrated intraday and balancing markets
– Make the best use of available transmission capacity
Why are we talking about capacity markets ?
• Motivation: Ensure investment/development of sufficient
capacity
• Variable RES tend to have low contribution to planning
reserves
• Variable RES tend to induce lower capacity factors from
conventional units.
• Business case for slow-ramping, inflexible power
generation assets (typically mid-merit) seems to slip
High share of variable RES tend to increase
the need for flexible capacity
Why are we talking about capacity mechanisms - EU public
consultation on generation adequacy and capacity mechanisms
The most basic
capacity mechanism
is a strategic reserve.
To be clarified first:
Capacity
markets
Reliability
options
Strategic
reserves
Capacity
auctions
Capacity
payments
• Is there a capacity problem
in the EU at all?
• How much firm capacity
do you get from variable RES in a Pan-european perspective?
• How do you eliminate free riders and other externalities?
Conclusions I
• Increased price variability and lower average spot market
prices might dampen investors appetite
• No market value for increased plant flexibility under
current market conditions
• Little incentive for storage and demand-side response
investments under current market conditions
• Uncertainty disproportionally renders RES investments
less attractive
Overarching question remains: How can energy-only
markets be made suitable for supporting the long term
RES policy goals?
Conclusions II
Market transparency and cross-border integration
must be ensured
Short
Provide for more market liquidity and a bigger
market place in general
New market forms (e.g. ancillary services)
might provide additional revenue stream
for generators without creating additional
market distortions -> Target Model 2.0 ?
term
<2014
Long
term
>2014
Ireland DS3 Programme:
Some move in the right direction
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DS3: Delivering a Secure Sustainable
Electricity System
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Target: 40% electrical energy from
renewables
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System Services Consultation in summer
2012
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Considered / proposed new service
– Inertial Response
– Fast Frequency Response
– Fast Active Power Recovery
– Ramping Margin
– Reactive Power capability
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Work in progress…. but progress!
Thank you
www.ewea.org
EWEA
80 RUE D’ARLON
B-1040 BRUSSELS
T: +32 2 213 1811
F: +32 2 213 1890
E: [email protected]
Backup slides
How could the energy market of the future look like?
A closer look at the grid support services part