Irish Scottish Links on Energy Study ISLES II – Towards Implementation Business Plan and Network Regulation and Market Arrangements workshop March 2015
BUSINESS PLAN: INTRODUCTION TO BARINGA PARTNERS ENERGY ADVISORY > Formed through merger with Redpoint Energy in Spring 2012 Energy > Offering unparalleled combination of energy market expertise and commercial insight Advisory > Proud to work with some of Europe’s foremost policymakers, regulators, investors, developers, lenders and energy companies operating across the energy supply chain. Strategy & Investment Versicherungen Policy & Regulation Commercial Analysis Optimisation ˃ Expertise in assisting clients design and ˃ Expertise in investment strategy, ˃ Supporting our clients on regulatory execute business strategy, focusing on valuation and Due Diligence. issues, especially in strategy realising growth opportunities development ˃ Experience with transactions ˃ Extensive experience in Performance throughout Europe both in the power ˃ Experience in the dialogue with Improvement. and in the gas market. regulators. ˃ Implementation of cost reduction and ˃ Supporting private equity firms and ˃ Our clients are international energy efficiency programmes in leading institutional investors. and water suppliers. companies. ˃ Customized solutions in various areas of the value chain..
BUSINESS PLAN: INTRODUCTION TO SOURCE LOW CARBON • Independent partnership providing advisory services to developers, investors in the low carbon sector and to government bodies responsible for renewables programmes • • Over a decade of development experience: Services: • • first hand experience of risks, process, Development services decisions involved • Policy and programme • Impact of policy and regulatory change management: • Market intelligence • Management of Walney Extension project through planning process • Sole advisors to Isle of Man Government to design and manage offshore wind leasing programme • Policy advice, seabed lease agreements, planning framework and UK market access
NETWORK REGULATION AND MARKET ALIGNMENT STUDY: PÖYRY MANAGEMENT CONSULTING Europe’s leading specialist energy practice Offering expert advice from strategy to implementation on policy, regulation, business operations, financing and valuation and sustainability Providing in-depth market intelligence across Europe… …with a growing presence in Middle East, Far East; and Central and South America Over 200 energy market experts in 12 offices across Europe: – – Oslo Düsseldorf – – Oxford Helsinki – – Stockholm London – – Paris Madrid – – Vienna Milan Pöyry offices – – Zurich Moscow (c) grafikdienst.com Pöyry Management Consulting’s energy practice offices
NETWORK REGULATION AND MARKET ALIGNMENT STUDY: ENERGY-LINK Energy-Link was formed in May 2000 and has operational experience in Europe, US and Nigeria 3 Directors have nearly 100 years experience in the electricity industry between them. Clients include Energy Market Participants, Asset owners, Industry and End user groups, Capital Investors Commercial focus for clients involved in complex energy project structures including due diligence, investment valuations and energy risk analysis Operational Risk Management and corporate governance Solutions orientated Business Applications - SaaS and Java specialist IT delivery - ETRM and Investment Due Diligence - Trading Systems - Trade capture user interfaces and Data Search and Compiler - Billing Models - UK Electricity & Gas market price forecasting models Dynamic Analysis – plant capabilities - Irish Power Market Model – real time, day ahead to multi-year - - Specific Plant (CHP. CCGT) and Contract Portfolio Optimisers - Buyer Model (Pilipovic) - Compliance with ETRM Philosophy and Risk Management Procedures
INTRODUCTION
INTRODUCTION: ISLES • ISLES: I RISH S COTTISH L INKS ON E NERGY S TUDY • There are opportunities for the coordinated development of marine renewable energy projects and offshore electricity networks in the ISLES zone • Regulatory and market barriers exist that restrict efficient development on a coordinated basis • ISLES is an initiative to facilitate this coordination - to enhance integration of marine and offshore renewable energy between the three ISLES project partner counties (Scotland, Ireland, Northern Ireland) and with the wider UK, • ISLES is not a project in itself: the vision will be realised by the combined efforts of market participants • Project of Common Interest: • Key themes: • Contribute to market integration • Offshore renewable energy • Improve security of supply • Network coordination • Reduce CO 2 emissions • Interconnection
INTRODUCTION: ISLES II • ISLES I : Vision for Delivery - April 2012 • ISLES II: ‘Towards Implementation’ – concluding summer 2015 • Aims to identify and seek to address the barriers to coordinated generation and network development • Three ISLES II Work Streams 1. Business Plan 2. Network Regulation and Market Alignment Study 3. Spatial Plan and Sustainability
INTRODUCTION: OBJECTIVES OF TODAY Objectives • Identify the regulatory, market and other barriers exist that restrict efficient development on a coordinated basis, • Discuss the context and framing of the opportunities in the ISLES zone, and key messages for the ISLES Business Plan • Review of options for NRAMAS work stream • Get input from a wide, well-informed group of stakeholders High level agenda • Workshop Part 1:Network Regulation and Market Alignment Study • Workshop Part 2: Business Plan • Workshop Part 3: Round table discussions: • 2 sessions
CONTEXT
ISLES I: VISION FOR DELIVERY • Offshore integrated network economically viable, potentially able to deliver a range of wider economic, environmental and market related benefits • 16GW maximum resource potential • No technological barriers • Sufficient onshore network capacity • No significant adverse environmental constraints that can’t be adequately mitigated • Potential benefits from an coordinated network development: Levelised cost reductions for generation - projects, improving project economics relative to non-integrated solutions Development efficiencies (e.g. - consenting)
ISLES I: VISION FOR DELIVERY • However, ISLES I also identified complexities associated with establishing a cross-jurisdictional framework in the region • Key areas identified: • Low carbon support/subsidy arrangements • Anticipatory investment issues and need for approach for coordinated offshore build • Network classification and implications for regulatory treatment • Transmission charging – equitable, affordable
ISLES II: TOWARDS IMPLEMENTATION • ISLES II: three work streams to tackle some of the barriers to coordinated development • Regulatory and market barriers exist that restrict efficient development on a coordinated basis, e.g. • jurisdictional boundaries • absence of mechanisms to ensure development decisions appropriately take into account costs and benefits external to an individual project, including optionality for future developments • The ISLES II Network Regulation and Market Alignment Study (NRAMAS) is exploring options to address these barriers: • Mix of benefits, costs and risks from coordination will depend on the circumstances of each project, jurisdiction • One size does not necessarily fit all: flexibility in regulatory and market arrangements rather than prescriptive over who should incur cost/risk
BUSINESS PLAN INTRODUCTION • ISLES II Business Plan • An information document about the ISLES opportunity, presenting and building on conclusions of the ISLES II work performed to date • A viable plan of action for key stakeholders • 2020-2030 timeframe for development • Use of worked examples • Key stakeholders for the Business Plan • Governments (host and customer) • Regulators, planning authorities • Project developers • European institutions • Supply Chain • Objective for today: to introduce key issues, principles and get feedback about the challenges and opportunities
BUSINESS PLAN CONTEXT: POLICY DRIVERS European Energy Union: Commission Communication (25 th February 2015) • Successor to the Third Energy Package of energy legislation • Continuation of policies, deepening objectives. • Energy Flows: “Fifth Freedom” • Five dimensions • energy security, solidarity; • a fully integrated European energy market; • energy efficiency • decarbonising the economy; • research, innovation and competitiveness. • Lack of interconnection highlighted as major obstacle. Need for major infrastructure projects, driven by private sector. Annual reporting on interconnection National policies/targets • more of a moving feast – elections, revisions to strategies, changing regulatory context
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