Current status and ongoing activities in the Energy Community - - PowerPoint PPT Presentation

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Current status and ongoing activities in the Energy Community - - PowerPoint PPT Presentation

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Current status and ongoing activities in the Energy Community Jasmina Trhulj, Energy Community Secretariat Energy Trading Seminar: Understanding SEE Power Market Tirana, 21 April 2016 Energy Community Secretariat Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

Jasmina Trhulj, Energy Community Secretariat Energy Trading Seminar: “Understanding SEE Power Market” Tirana, 21 April 2016

Current status and ongoing activities in the Energy Community

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

European Union Contracting Parties Candidate Parties Observers

Energy Trading Seminar

Energy Community

Contracting Parties:

  • Albania
  • Bosnia and Herzegovina
  • Kosovo*
  • FYR of Macedonia
  • Moldova
  • Montenegro
  • Serbia
  • Ukraine

The Energy Community

Extending the EU internal energy market to South East Europe and beyond

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Energy Community Secretariat Energy Community Secretariat

The Energy Community objectives

Creating single market framework within a single regulatory space to:

  • increase energy trade,
  • attract investments,
  • enhance security of supply,
  • improve environmental situation and
  • increase competition in the energy market,

based on the legally binding framework.

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

− Rule of Law

− Based on Energy Community Treaty − Difference to other voluntary regional cooperation

− Common legal framework

− Aligned with EU acquis

− Covering EnC and EU members

EnC - what makes the difference?

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

EnC Legal Framework

Energy Trading Seminar

Environment Gas Electricity Competition Renewable Energy Energy Efficiency Oil Statistics

Energy Community Acquis

  • Acquis communautaire adapted and adopted in the Energy Community

Infrastructure

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

3rd Energy Package implementation - electricity

The Energy Community Contracting Parties committed to implement the 3rd Energy Package:

 as of 1 January 2015

 Compliant laws adopted in Serbia, Albania and Montenegro

  • Transposition of the 3rd Energy Package into national

legislation is still ongoing in:

 Bosnia and Herzegovina – drafting phase finalised  Kosovo* – first reading in the Parliament (10th March)  FYR Macedonia – still in drafting phase (no tentative roadmap for adoption)  Moldova – approved by the Government  Ukraine – approved by the Council of Ministers

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Energy Community Secretariat Energy Community Secretariat

Network Codes - Keeping Up the Pace With EU

Energy Trading Seminar

  • EnC Ministerial Council decision on the 3rd Energy

Package implementation includes provision on:  Guidelines/Network Codes application in EnC

  • Guidelines/Network Codes are to be adopted by

PHLG Decision  upon proposal of the European Commission

  • Regulation (EU) 2015/1222 (CACM) implementation

in the EnC as a priority

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Generation capacities installed in EnC (2014)

Thermal- coal; 46% Hydro; 19% Nuclear; 19% Thermal- gas; 14% Other RES; 1.5% Thermal-

  • il; 0,5%

Thermal- coal; 46,6% Hydro; 48% Thermal- gas; 3,2% Thermal-

  • il; 1,8%

Other RES; 0,4%

  • MD-UA

17 GW 72 GW

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Generation capacities – main characteristics

Main characteristics:

  • Dominant coal thermal power

plants (lignite)

  • Aged and obsolete power

plants – last commissioned in 1991

  • Non-compliant with

environment protection requirements – environmental upgrade needed

  • New power plant Stanari (BiH)

in the commissioning phase – 300 MW

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Generation capacities – large hydro power plants

Installed capacities in large hydro power plants:

  • 13 GW (excl. UA 7,7 GW)
  • 17% (excl. UA 44%)

Out of which hydro pump storage power plants:

  • 1,9 GW (2,6%)

 Bosnia and Herzegovina – 420 MW  Serbia – 614 MW  Ukraine – 861,5 MW

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Generation capacities – Renewable Energy Sources

Total installed capacity in RES - end 2014 (excluding large hydro)

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Cross-border transmission network in the EnC

  • EnC CPs which are part of ENTSO-E

synchronous area Continental Europe (CE):

 Albania (not a member of ENTSO-E)  Bosnia and Herzegovina  Kosovo* (not a member of ENTSO-E)  FYR of Macedonia  Montenegro  Serbia

  • EnC CPs which are not part of

synchronous area CE and not members

  • f ENTSO-E:

 Moldova  Ukraine (except UA-W, so called Burstyn island)

ENTSO-E member Part of ENTSO-E CE synchronous area; not ENTSO-E member Not part of ENTSO-E synchronous area CE; not ENTSO-E member

Interconnection capacities exceed 10% target (EU)

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Energy Community Secretariat Energy Community Secretariat

Non- residential 42% Residential 38% DSO losses; 15% TSO losses; 3% Energy sector; 2%

Energy Trading Seminar

Production and consumption in EnC (2014)

Production: Consumption:

Production decreased 15% Consumption decreased 2.2%

231.5 TWh 233 TWh 65 TWh 71 TWh

Non- residential; 55% Residential; 30% DSO losses; 11% TSO losses; 3% Energy sector; 1%

  • MD-UA

In comparison to 2013:

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Energy balance in EnC in 2014

In 2014 in the Energy Community:  Energy Community net importer!

Net exporters: 8.5 TWh Net importers: 14.5 TWh

17,6 14 14,5 8 24 8,5 5 10 15 20 25 30 2012 2013 2014 Net import Net export

TWh

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Energy Community – an emerging electricity market

Regional Capacity Allocation Day-ahead market development Balancing market

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Regional Capacity Allocation

TSO shareholder in SEE CAO TSO not participating in any auction office TSO allocates capacities through JAO TSO allocates capacities through JAO & SEE CAO

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Spot Market Development

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Regional Balancing Market – Under construction

SHB Block SMM Block OST/KOSTT cooperation

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Reality check – balancing reserve requirements

Most of the Western Balkans’ power systems designed to be part of larger power system The biggest generation unit is often disproportionally big in comparison to the total generation capacity installed (%) Required level of tertiary reserve sometimes difficult for transmission system operator to procure within national borders However, Nationally-oriented approach is still dominant

7% 8% 14% 23% 28% 9%

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Reality check – procurement of balancing capacity

Procurement of balancing capacity is characterized by:

Non-market based procurement procedure (except in BiH where market-based mechanism is applied)

  • ne single dominant balancing service provider

(incumbent production company) with the obligation to provide all needed reserve Annual procurement Regulated prices, fixed by NRA (in some cases based

  • n the lump sum for all ancillary services)

Regulatory framework for pricing of balancing capacity is missing transparency

 market price signal is missing  no incentive for new BSPs (DSR)

Market based procurement Non-market based procurement

3 BSP 1 BSP 1 BSP 1 BSP 1 BSP 1 BSP

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Energy Community Secretariat Energy Community Secretariat

market price FRR RR Closer to real time regulated primary secondary tertiary annual contract

Balance responsible parties

Energy Trading Seminar

Procurement of balancing capacity – changes needed

TSO Network users 1 Balancing service provider TSO procures and provides balancing capacity at fully regulated market: regulated Tariff system no separate tariffs for balancing services PSO TSO shall gradually move to closer to real time, market-based procurement: Market makers Separate tariff for capacity Balancing service providers

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Reality check – procurement and activation of balancing energy

Procurement of balancing energy is characterized by:

Legislation defines market-based procurement of FRR and RR, but the implementation is lagging behind Different level of development Nationally-oriented Market based procurement – common merit order list with pay-as-bid pricing method Regulated market –

  • regulated ancillary services contract between TSO and BSP
  • No separate tariff for balancing energy activated
  • No settlement of activated volumes
  • Remuneration usually through regulated generation price

CMO list with pay-as-bid pricing Regulated market

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Energy Community Secretariat Energy Community Secretariat

regulated

Activated volume? Price?

Annual contract bidding

Volume calculated Marginal or pay-as-bid

Balancing market 1 Balancing service provider Balancing service provider(s)

European Electricity Ancillary Services and Balancing Forum

Procurement of balancing energy – changes needed

TSO Tariff customers TSO procures balancing energy at fully regulated market:

Balance responsible parties

regulated

Imbalance settlement

TSO procures balancing energy at balancing market:

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Reality check – imbalance settlement

Imbalance settlement is characterized by:

Legislation defines cost reflective and non-discriminatory imbalances settlement, but it is not fully implemented in all countries 1h Imbalance Settlement Period applied Imbalance settlement fully applied (BA, ME, RS):

  • TSO settles imbalances with each BRP and for each ISP
  • Imbalance price reflects costs of FRR+RR activated
  • Pricing - both single and dual pricing applied

Imbalance settlement in transitional phase (AL, KS*, MK):

  • Incumbent companies exempted from BRP obligations
  • Imbalance price determined based on the price from the

neighbouring day-ahead markets (HUPX) or import price

Imbalance settlement fully applied Imbalance settlement under development

Dual price Single price Dual price

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Energy Community Secretariat Energy Community Secretariat European Electricity Ancillary Services and Balancing Forum

Moving to cost-reflective imbalance settlement

TSO Balancing service provider(s) TSO procures balancing energy at balancing market and settles with all BRPs:

Balance responsible parties

Balancing Market Imbalance settlement

Balancing costs Imbalance settlement price

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Western Balkans 6 (WB6) Initiative – political support to the process of regional electricity market development

The Vienna Summit of the Western Balkans 6

http://www.bmeia.gv.at/fileadmin/user_upload/Zentrale/Aus senpolitik/Chairman_s_Conclusions_Western_Balkans _Summit.pdf

The heads of government, foreign and economic ministers of both EU Member States and the WB6 in cooperation with the European Commission decided to take steps to improve energy connectivity in the region and for that: agreed to a short list of four investment projects in the area of energy decided to establish a regional energy market agreed on the priority list of ‘energy soft measures’ invited the Energy Community Secretariat to take the lead

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Western Balkans Summit Vienna 2015 – Addendum (I) Co-financing investment projects in Western Balkans

Western Balkans Summit Addendum

http://www.bmeia.gv.at/fileadmin/user_upload/Zentrale/Aussenpolitik/Addendum_Western_Balkans_S ummit.pdf

The Summit endorsed four “Projects of Energy Community Interest” to be co-financed through the EU’s IPA 2015 multi-country programme:

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Energy Community Secretariat Energy Community Secretariat

Western Balkans Summit Vienna 2015 – Addendum (II) Establishing regional electricity market

National electricity market Regional electricity market

Energy Trading Seminar

Vienna 2015

Regional capacity allocation Spot market development Cross-border balancing

Paris 2016

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Western Balkans Summit Vienna 2015 – Addendum (III) Energy Soft Measures

The Energy Soft Measures

Regional – strengthening regional cooperation and institutions National – removing obstacles at national level  Cross-cutting measures – eliminating price regulation, granting eligibility to all customers, TSO and DSO unbundling, ensuring independence of NRA and applying for observer status in ACER, increase effectiveness of national administrative authorities, timely implementation of Trans-European Network Regulation

 Implementation of the energy soft measures within set deadlines to be a condition for co-financing of the infrastructural projects

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Energy Community Secretariat Energy Community Secretariat

Western Balkans 6 – National measures

Removal of legal and regulatory obstacles

Regional Capacity Allocation Spot Market Development Cross-border Balancing

TSO

Production Consumption 50 Hz

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

The Energy Community Secretariat as a facilitator of the WB6 Initiative

The Energy Community Secretariat to:

Facilitate the process Monitor the implementation Report on bi-monthly basis

The first two monitoring reports are published on the ECS website:

https://www.energy- community.org/portal/page/portal/ENC_HOME/AREAS_OF_WORK/WB6/Monitoring

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

WB6 Monitoring report – Overview

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS MK ME RS

Spot Market Development

Energy Trading Seminar

Spot market development – WB6 Implementation Indicators

Heterogenous developments will postpone market coupling in the Western Balkans In most of the countries the legal & institutional fundamentals are missing for the development of spot markets

RS has made a significant step forward by launching the power exchange SEEPEX

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS MK ME RS

Regional Capacity Allocation

Energy Trading Seminar

Regional Capacity Allocation – WB6 Implementation Indicators

Both countries’ TSOs have not implemented the signed agreements KS, MK, and RS are on a critical implementation path

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS MK ME RS

Transmission System Operator Unbundling

Energy Trading Seminar

TSO Unbundling – WB6 Implementation Indicators

AL and RS Implementation depends on the amendments to the laws governing the control over public enterprises Requirements and deadlines for the TSO unbundling are missing in the Energy Law!

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS MK ME RS

Distribution System Operator Unbundling

Energy Trading Seminar

DSO Unbundling – WB6 Implementation Indicators

In most of the countries legal requirements are in place, but the implementation is missing!

In KS DSO unbundling process completed; the first compliance report is to be published

AL, BA, MK, ME and RS Regulators shall use their authorities to enforce legal and functional unbundling

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS MK ME RS

Price Deregulation

Energy Trading Seminar

Price Deregulation – WB6 Implementation Indicators

Cross-subsidization among different categories

  • f customers impedes price deregulation

AL, BA, KS, MK Regulation of electricity price from (state-owned) generation companies shall be abolished

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Balancing Market – WB6 Implementation Indicators

Balancing markets are still mainly regulated and nationally-oriented BA, ME and RS Progress made towards market-based balancing is good starting point for the cross-border balancing cooperation

20 40 60 80 100 AL BA KS MK ME RS

Balancing Market

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Energy Community Secretariat Energy Community Secretariat

25 50 75 100 AL BA KS ME MK RS

Independence of National Regulators – WB6 Implementation Indicators

* Legislation not adapted to 3rd package yet * * *

Progress in improving regulatory independence is

  • n track in all countries

except BA AL, ME, RS made legal reforms already; drafts exist in KS, MK

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

WB6 regional measures – implementation through the Memorandum of Understanding

Memorandum of Understanding on regional electricity market development: Topics covered

− Day-ahead Market Integration

  • 1 July 2017 – MC with at least one neighbouring country

− Cross-border Balancing Cooperation

  • 1 July 2016 – integration roadmap
  • 1 July 2018 – cross-border balancing cooperation

Signatories (WB6)

− TSOs, NRAs, PXs and Ministries

Envisaged to be signed on the 27th April 2016

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

Challenges ahead – regulatory gap on EU MS and EnC CPs interface

− Further alignment of the EnC with EU acquis is needed

− Network Codes − Designing a common implementation path − Pilot projects

− Reciprocity is needed

− Legal certainty − Non-discrimination

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

A new CACMEL initiative

+ EU neghbouring MS „soft measures“ Art 20 CACM Regulation

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat

A new CACMEL initiative - Scope

− New CACM initiative by EC & ECS to add neighboring EU markets − Target: market coupling area SEE (EU & EnC) −

  • Ref. CACM Regulation Article 20

− 1st TSO meeting: 12.4.2016, Brussels − 1st NRA meeting: 14.4.2016, Vienna

Energy Trading Seminar

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Energy Community Secretariat Energy Community Secretariat Energy Trading Seminar

Key steps to reaching the regional balancing market…

1

  • Creation of an adequate legal and institutional framework compliant

with the 3rd Energy Package

2

  • Commitments by all key stakeholders in the energy sector (TSOs,

NRAs, PXs, Ministries)

3

  • Establishment of the common legal framework on the EU/EnC borders

(support by EC, ENTSO-E, ACER and ECS)

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Energy Community Secretariat Energy Community Secretariat

www.energy-community.org

Thank you for your attention!

Energy Trading Seminar