Energy Infrastructure Package Regulation on guidelines for - - PowerPoint PPT Presentation

Energy Infrastructure Package

Regulation on guidelines for trans-European energy infrastructure & Connecting Europe Facility

European Commission DG Energy Internal Market I: Networks and Regional initiatives

Energy

• Do we need more infrastructure in Europe?
• Energy Infrastructure Guidelines
• The Connecting Europe Facility
• Project identification preparatory phase

CONTENT

2

Energy

Eliminate bottlenecks

Security of Supply: 21.900 km Internal Energy Market: 18.200 km Renewable Energy Sources Integration: 44.700 km

Energy

|

4

Gas matters

January 2009 gas crisis

Energy

The investment challenge

Source: Study by Roland Berger, 2011

Estimated investment need is EUR 200bn until 2020 (~20bn/y) About half of this investment is expected to be hindered by:

• Permit granting delays
• Regulatory obstacles
• Financing difficulties

5.8 4.2 9.1 9.8 14.0 3.3

Natural Gas Electricity

TSO Investment Average 2005 - 2009 p.a. TSO Invest- ment Forecast 2010 - 2020 p.a.

~1% of electricity bill

Energy

The legislative proposals of the package

Three sectorial infrastructure policy proposals Connecting Europe Facility: Budget EUR Energy – 9.12bn Transport – 30bn ICT – 9.1bn

Energy

Revision of the TEN-E policy

Process to identify projects of common European interest, with involvement of all stakeholders

Accelerated permit granting Improved Regulatory treatment Financial support

Benefits

3.5 years One stop shop Incentives Cost allocation Financial instru- ments Grants Participa tion

Energy

Priority corridors: electricity

Northern Seas Offshore grid North-South

interconnections

Western EU BEMIP North-South

interconnections

CEE + Electricity highways and smart grids

Energy

Priority corridors: gas, oil, CO2 transport

North-South

interconnections

Western EU BEMIP North-South

interconnections

CEE & oil Southern gas corridor + carbon dioxide transport infrastructure

Energy

ENTSOs (G/E) Project promoters NRAs (G/E) Regional Groups ACER (G/E) European Commission

• Prepare

TYNDPs for gas and electricity

• Submit

projects

• Criteria
• CBA
• Check

application

• f criteria
• Cross-

border relevance

• Evaluate

projects

• Rank
• Adopt

regional lists

• Adopt

Union-wide list of projects of common interest (no ranking)

• Opinion
• Cross-

regional consistency

Process

Energy

Criteria as proposed in the Guidelines

General criteria

• Contributes to the

implementation of the infrastructure priorities

• Economic, social and

environmental viability

• Involves at least two Member

States:

• Cross-border

infrastructures

• Infrastructure with

significant cross-border impact

• Specific criteria
• Market integration
• Security of supply

Diversification Secure system operations

• Sustainability

Integration of RES GHG avoidance

•  Cost-benefit analysis

(in TYNDP by ENTSOs)

• + urgency, number of MS,

complementarity and territorial cohesion

Energy

Permit granting – Regime of common interest

• Priority status for PCIs
• Most preferential treatment in Member

States

• Streamlining of EIA procedures
• Competent Authority to manage

permit granting process

• 3 and a half years time limit for the

permit granting decision

• Increased transparency and

enhanced public participation

Energy

Regulatory framework - measures

• Energy system-wide cost-benefit analysis
• Proposal by ENTSOs, ACER opinion, Commission approval
• Enabling investments with cross-border impact:
• Cross-border cost allocation
• NRA joint decision on investments and cost allocation
• ACER decision if no agreement
• Long-term incentives for investment:
• Obligation on NRAs to grant appropriate risk-related

incentives

• ACER guidance on best practices of NRAs and methodology

Energy

Financing – Connecting Europe Facility 2014-2020

• Eligibility criteria (in guidelines):
• Grants for studies and financial

instruments – available to all PCIs

• In exceptional cases, grants for

works for PCIs where:

– CBA shows positive externalities – Commercially not viable – Cost-allocation decision done

Energy

Other measures

• Operational coordination
• European coordinators

15

Energy

Connecting Europe Facility 2014-2020 A package for growth and jobs

• Modernizing the EU budget in support of growth and jobs

during the recession

• EU added value of CEF support to projects of common

interest

• "Small" investment of €9.12bn to leverage €200bn of large-scale

investment

• €200bn of investment in trans-European energy networks could

generate +0.42% of growth and 410,000 additional jobs in 2011- 2020

• Attracting investors to the energy infrastructure in Europe

Energy

Scope of Financial Instruments

Financial Instruments as a tool in public policy:

Delivering public goods Commercially viable avoid tax, regulate (internalise Externalities) support through grants promote business

CEF

Energy

Credit ratings

S&P Moody's Fitch AAA Aaa AAA AA+ Aa1 AA+ AA Aa2 AA AA- Aa3 AA- A+ A1 A+ A A2 A A- A3 A- BBB+ Baa1 BBB+ BBB Baa2 BBB BBB- Baa3 BBB- BB+ Ba1 BB+ BB Ba2 BB BB- Ba3 BB- B+ B1 B+ B B2 B B- B3 B- CCC+ Caa1 CCC CCC Caa2 CC CCC- Caa3 C CC Ca DDD SD C DD D D

Investment-grade. Many investors can

• nly buy such

bonds Non- investment grade or high yield bonds

Energy

Equity instruments

Providing risk capital (equity) via investment funds Why? Balance sheet constraints of companies developing projects (e.g.TSOs) Low appetite to invest in greenfield (i.e. new asset creation) investments Increasing risk aversion and Pressures on returns (subordination?) Example of the 2020 European Fund for Energy, Climate Change and Infrastructure aka Marguerite Fund

Core Sponsors: EIB, CDC (France), CDP (Italy), ICO (Spain), KfW (Germany) and PKO (Poland)) are backing this Fund; other core investors include CDG (Portugal), Bulgarian Development Bank (Bulgaria), BGK (Poland), SID Banca (Slovenia), NTMA (Ireland), and Nordic Investment Bank (NIB) Equity stakes in mostly greenfield; TEN-T, TEN-E and RES

Energy

Debt instruments

• Loan and guarantees facilitated by risk-

sharing with financial institutions

• Enhancement to Project Bonds
• Specialised/adapted loans and guarantees (e.g. longer

maturity)

Energy

Europe 2020 Project Bond Initiative A pilot phase in 2012-2013

• Project bonds to be an integral part of the CEF 2014-2020
• Past experience (especially LGTT) shows time lag for banks and

project sponsors to incorporate complex new ideas into their financing structures

• In the case of project bonds also have to allow investors (pension

funds, insurers) time to analyse and adapt asset allocation

• Propose a pilot in order to start this phase now rather than in

2014

• Funded by reallocating up to EUR 200 million from TEN-T, up to

EUR 10 million from TEN-E and up to EUR 20 million from CIP ICT budget lines

• Aim to support 5-10 projects in transport, energy and/or ICT