Regulated versus functional European
energy market –
The regulator’s perspective on the Clean
Energy for All Europeans Package, the IEM
and its way forward
Dr. Annegret Groebel,
Head of Department International Relations/Postal Regulation
10th Prague European Energy Forum 2017 – 13 April 2017
www.bundesnetzagentur.de
Agenda
-
The Way towards the Integrated Internal Energy Market
Overview of the Clean Energy Package 2016
CEER/ACER Reactions to the Clean Energy Package
German Energy Legislation 2016
Comparison European proposals and Germany‘s latest
energy legislation
- Conclusions
13.04.17
The Way towards the Integrated
Internal Energy Market (IEM)
13.04.17
Way towards the Integrated IEM
1996 - 2009
13.04.17
4
Overview of the Clean Energy
Package 2016
13.04.17
Overview on the Clean Energy Package (1)
EMD one of the milestones to achieve European goals 2050

What are the EU goals for 2050? (Paris, 2015)



Creating jobs & Growth, Bringing down Greenhouse gas emissions,
Securing energy security
2030: 50% of electricity to come from renewables –
2050: Electricity completely carbon free
Steps to achieve the goals (Clean Energy Package, 2016)




Renewables (Revised Renewable Energy Directive)
Energy Union Governance (New Regulation)
Energy Efficiency (Energy Efficiency Directive, European Performance
of Building Directive)
NEW ENERGY MARKET DESIGN Recast



ACER Regulation
Electricity Reg and Dir.
Risk Preparedness Reg.
13.04.17
6
Overview on the Clean Energy Package (2)
EMD Key elements
Source: COM
+ STRENGTHENING RISK PREPAREDNESS
13.04.17
7
Overview on the Clean Energy Package (3)
Clean Energy for all Europeans: Proposal of 30 Nov. 2016
Aim of
Proposal
•
A fully integrated IEM
•
Develop low carbon energy production
•
Ensuring the security of supply
1. Integration of RES into an integrated IEM
Issues of
the
Proposal
2. Design a future role of DSOs
3. Ensure investment for future production capacity and avoid
uncoordinated Capacity Mechanisms (CM)
4. Ensure cross-border coordination to prevent crisis situations
5. Development of retail markets
6. Optimize the institutional framework and Governance
13.04.17
8
CEER/ACER Reactions to the
Clean Energy Package
13.04.17
Clean Energy Package – Reaction (1)
•
Regulators' Overview Paper of 23 January 2017,
published at ACER-CEER conference, broadly welcomed
the Clean Energy Package, highlighting issues for
consideration
10
Clean Energy Package – Reaction (2)
Core principles:

Core principles:
ACER-CEER’s initial reactions to the Clean
Energy Proposals (Jan. 2017)

A first feedback on key elements of ACER and CEER

Flexible regulation for a fast evolving market

No inconsistencies between new and old
legislations and delays: Implementation of 3rd
package should be prioritized

NRAs support to speedier and more agile switching
of suppliers to allow consumers access to a wider
variety of energy products to meet their needs.

Dynamic pricing is sensible! Ensure that the
proposals do not themselves create barriers to
entry and higher costs
ACER-CEER’s initial reactions to the Clean
Energy Proposals (Jan. 2017)
• Balancing innovation and regulation

Avoid overly detailed legislation or prescriptive
rules as they could adversely inhibit new market
developments

Provisions are needed to safeguard the separation
between Distribution System Operators (DSO) (who
need to be neutral market facilitators) and storage
operators
• Regional markets

More work/investigation has to be done in the field
of regionalisation

For the success of the approach a proper
governance and oversight shall be designed
ACER-CEER’s initial reactions to the Clean
Energy Proposals (Jan. 2017)

Making markets work

The real-time value of energy should be the basis of the price signals that
all participants face.

Securing our supplies

Coordination of the resource adequacy assessment is welcomed but greater
transparency and regulatory involvement are needed to increase trust in
the markets. more refined arrangements on cross border participation of
CRMs are needed.

Smarter system operation

Smart solutions are needed as the distinction between transmission and
distribution is becoming increasingly blurred: The proposed approach both
to TSO cooperation and TSO-DSO cooperation is welcomed.

DSO should be sufficiently unbundled to better perform the tasks assigned
to them. Creation of the EU-DSO body is welcomed.

Harmonisation transmission and distribution tariff structures is not merited.
Similar policy proposals in other areas, including the use of congestion
income, could have costs that outweigh the benefits.
ACER-CEER’s initial reactions to the Clean
Energy Proposals (Jan. 2017)

A clear and effective framework for regulatory
oversight

Proposals could alter a carefully conceived system
of checks and balances which is in place today.

Roles and responsibilities are clear enough (e.g.
ACER oversees ENTSO, NEMO, EU-DSO body)

Independence of ACER shall be ensured

Internal Regulatory Governance: Changing 2/3
majority rule is dispensable

Rethink resource situation of ACER
Clean Energy Package – Reactions (3)
Key Regulatory Messages on Clean Energy Package in
CEER/ACER Overview Paper:
Flexible Regulation
Regulators must facilitate the entry
of new suppliers into the retail
market to ensure broader choice
for consumers by removing entry
barriers.
Securing Supplies
Greater transparency and
regulatory involvement is needed
to ensure that consumers, industry
and politicians can trust that
markets are functioning well.
Making Markets Work
Smarter System Operation
Regulatory Oversight
Balancing Innovation and
Regulation
The real-time value of energy
should be the basis of the price
signals that all participants face.
Regulators need to ensure that the
roles and responsibilities at
national and EU level are clear and
proper checks and balances are in
place. Regional governance needs
robust stress testing.
We welcome a proportionate and
focused approach to TSO cooperation
and to the future cooperation
between TSO and DSOs.
Remove priority dispatch; to bring
renewables into the market; and
to ensure that all relevant market
players are responsible for
balancing.
Overview of EU energy market legislation/regulation
Flexible energy system:
Functioning retail EOM preferred – price signals,
markets, consumer
Capacity Mechn. only second
empowerment,
DSR (flex.+stability) best, i.e. no IEM distortion +
open to XB participation
Competition rules,
State Aid rules,
2015 CM Sector Inq.
Security of Supply
Risk Preparedness
Regulation
Clean Energy f. All Europeans
Recast, EMD, ACER-Regulation More market-oriented
RES support, nation.
RES + Efficiency Directive:
schemes open to
Fully integrated IEM and
XB participation
RES integration, energy effi.
Internal Energy Market
3rd IEM Package 2009,
(Proj. of Common Interest)
XB trade, Market Coupling
Infrastructure Pack. 2013
TEN-E Reg. 347/2013
German Energy Legislation 2016
13.04.17
Overview of German energy market legislation and
regulation (incl. Energy transition laws)
interplay
Renewable Energy Act
Reform 2014
Reform 2016
Conventional power
plant legislation, 2011:
decision to exit nuclear
Internal Energy Market
3rd IEM Package 2009,
2015 EC EMD consult.
2016 - Winterpackage
Transition towards a
flexible energy system
Synchronization of
RES growth and
grid expansion
Grid Expansion
Acceleration Act 2011
Reform 2015
Decrease of power
exchange prices
TSO/DSOs
new roles,
smart grids
2016 Electricity Market
Design Act – EOM 2.0,
price signals / flexibility
2016 Digitisation Act
DSR, smart meters,
“prosumers“,
energy efficiency
Energy Industry Act
2005; 2011; 2016
Incentive Regulation Or.
2011 Adjustments
2016 Reform
Comparison EU proposals and
Germany‘s energy legislation
13.04.17
Comparison 2016 EU Clean Energy Proposals and
Germany energy legislation 2016
2016 Electricity Market
Design Act – EOM 2.0,
price signals / market
based approach
flexibility
Competition a.
State Aid rules
2015 Capacity ma.
sector inquiry
RES 2017
Migration towards a
market based approach,
i.e. tendering
Aim: Integration of an increasing
share of RES in markets a. grids
with a market based approach
Integrated IEM
EMD Consultation 2015
Clean Energy Pack. 2016
EOM, CRM only second
best + IEM-compatible
RES support should be
market oriented and
IEM compatible
Conclusions
13.04.17
Conclusions

Stable and predictable regulatory framework is key to ensure
investors‘ confidence, important to implement 3rd IEM package

Renewables require a more flexible energy system, which is best
achieved by a more market-based approach with the
participation of all players who must adapt their business models
to this energy system and react to new incentives

Keep hands-off, i.e. let the market work and abstain from
interventions distorting the price signals as well as the incentives
to invest in new infrastructure

Clean Energy Package proposals push towards an Integrated
IEM to realize cross-border benefits (market coupling) and overall
security of supply as well as integrating RES in a flexible market
based system – EOM preferred over CRM, which must not distort
the IEM and be open to XB participation, DSR to stabilize system

EOM 2.0 is embarking on this approach, at the same time the RES
Act is reformed too to ensure a more synchronised expansion of
the grid and the renewables: interplay of both is key

Parallel developments on the European and German level
Thank you for your attention!
Contact details:
Dr. Annegret Groebel
Bundesnetzagentur
Head of Department International Relations/Postal Regulation
Email: [email protected]
www.bundesnetzagentur.de
Back-up
www.bundesnetzagentur.de
Overview on the Clean Energy Package
Clean Energy for all Europeans (1)
Aim of
Proposal
•
A fully integrated IEM
•
Develop low carbon energy production
•
Ensuring the security of supply
1. Integration of RES into an integrated IEM
Issues of
the
Proposal
2. Design a future role of DSOs
3. Ensure investment for future production capacity and avoid
uncoordinated Capacity Mechanisms (CM)
4. Ensure cross-border coordination to prevent crisis situations
5. Development of retail markets
6. Optimize the institutional framework and Governance
13.04.17
26
Overview on the Clean Energy Package
Clean Energy for all Europeans (2)
I) RES
Integration
•
Abolish discriminatory market-based dispatch, clear
curtailment and re-dispatch rules to replace priority access
•
Balancing responsibility (exemption possibilities for emerging
technologies and/or small installations)
•
TSOs should use regional platforms for the procurement of
balancing reserves; optimization process for allocation of
transmission capacity (energy vs. balancing markets);
reserves only a day ahead of real time.
•
Regional Operational Centers (ROCs), centralizing functions at
regional level and delineating competences between ROCs and
national TSOs
•
Demand Response (supplier/aggregator)
13.04.17
27
Overview on the Clean Energy Package
Clean Energy for all Europeans (3)
II) DSORole
•
DSOs shall be able to use flexibility (services) by “distributed”
energy resources (ensuring neutrality!)
•
Role of DSOs in specific tasks (data management, ownership
and operation storage, e-mobility)
•
DSO/TSO cooperation on specific areas; creation of European
DSO entity.
•
EU-wide principles on remuneration of DSOs (e.g. flexibility
services, efficient grid operation and planning)
•
Multi-annual development plans for DSOs (coordinate with
TSO)
•
NRAs publish common EU performance indicators (comparison
of DSOs performance, distribution tariffs)
•
Transparency and comparability of distribution tariffs
(methodologies)
•
EU-wide principles on dynamic, time-dependent distribution
tariffs (eases RES integration)
13.04.17
28
Overview on the Clean Energy Package
Clean Energy for all Europeans (4)
III) Investments/CM
•
Enable scarcity pricing (investment signals); Eliminate price
caps
•
Improving CACM Guideline (reviewing bidding zones; enhanced
COM and ACER decision-making); avoiding reduction of crosszonal capacity (resolve internal congestions)
•
Introduce more concrete principles for transmission
charges/transmission tariffs
•
Pan-European generation adequacy assessments; ENTSO-E
carry out single assessment for EU + requiring MS to
exclusively rely on it when arguing for CMs
•
Congestion income spending to increase cross-border capacity
•
Framework for cross-border participation in capacity
mechanisms (when considered necessary)
13.04.17
29
Overview on the Clean Energy Package
Clean Energy for all Europeans (5)
•
Assessment: identify cross-border crisis scenarios caused by
rare/extreme risks (regional context/ by ENTSO-E); crisis scenarios
discussed in Electricity Coordination Group (ECG);
common methodology for short-term risk assessments (ENTSO-E
Seasonal Outlooks and week-ahead assessments of the RSCs)
•
Plan: Mandatory Risk Preparedness Plans (national and regional
part); regional part address cross-border issues (agreed by MS
within region); consulted with other MS, consultation and
recommendation by ECG
•
Define 'competent authority' responsible for coordination and
cross-border cooperation in crisis situations
•
Network code/guideline addressing cybersecurity
•
Extension of planning & cooperation obligations
•
Crisis management: Cooperation and assistance between MS
(simultaneous crisis situations; agreements regarding financial
compensation; agreements on where to shed load); details
described in Risk Preparedness Plans
•
Monitoring: Monitoring of security of supply; ECG = voluntary
information exchange platform
IV)
Electricity
SoS
13.04.17
30
Overview on the Clean Energy Package
Clean Energy for all Europeans (6)
V) Retail
markets
•
EU framework to monitor energy poverty; NRAs monitor and
report disconnections
•
Phase out price regulation for households (deadline specified in
new EU legislation); price regulation only for vulnerable
customers
•
EU legislation on data handling (definitions); criteria and
principles on impartiality, non-discriminatory behavior (data
handling); timely and transparent access; standardized data
format at national level
•
Ban of switching fees (exception: fixed-term contracts or fees
associated with energy efficiency or bundled energy services or
investments); fees must be cost-reflective.
•
MS has at least one 'certified' comparison tool (pre-specified
criteria: reliability and impartiality)
•
Key information to be included in bills
13.04.17
31
Overview on the Clean Energy Package
Clean Energy for all Europeans (7)
VI)
Institutional
Framework
ACER Setup
Current ACER Reg. 713/2009
What will change in the recast?
ACER
decisionmaking
Limited, through recommendations
and opinions
ACER decisions with BoR favourable
opinion, also replacing Guideline
implementing “all NRA” decisions at EU
and regional levels
Most regulatory decisions with BoR
favourable opinion
ACER Director manages ACER and
tables proposals for BoR favourable
opinion
Framework of regional NRA decisionmaking with ACER oversight
(complementary role to safeguard EU
interest)
BoR
decisionmaking
2/3 majority for most of ACER
decisions
Simple majority for most of ACER
decisions
Board of
Appeal
Independent body for all appeal
cases
Independent body for all appeal cases
with strengthened framework and
separate budget line in the ACER budget
Some of its costs are envisaged in
the ACER budget
ACER
Financing
Community/EU-funding (separate
budget line)
Possibility for ACER to collect fees
for individual decisions
Need for increased financing (possibly
through increased EU-funding and
possibly co-financing by contributions by
market participants and/or national
public authorities)
13.04.17
32
Overview on the Clean Energy Package
Clean Energy for all Europeans (8)
VI)
Institutional
Framework
Other issues Current ACER Reg. 713/2009
What will change in the recast?
Network Code Based on ACER’s framework
development guideline ENTSO-E drafts network
process
code (strong role and influence),
ACER provides opinion and
recommendation to the Commission.
Based on ACER’s framework guideline
ENTSO-E drafts network code guided by a
standing stakeholder body and broad
general stakeholder involvement, ACER
consolidates the network code and
submits the final product to the
Commission
Oversight of
ENTSO-E
Limited ACER oversight of ENTSO-E
Strengthened ACER oversight of ENTSO-E
Oversight of
new entities
None or limited regulatory oversight
(limited rules in network codes and
guidelines)
Strengthened regulatory oversight by
NRAs and ACER
ENTSO-E’s
mission and
transparency
Lack of clear European mission and
voluntary transparency rules
Codified clear European mission and
transparency obligations on its decisionmaking
DSO
European DSOs collaborate through
the existing DSO associations but
without any legal status at EU
institutional level. There is no formal
participation in drafting or amending
of network codes and guidelines
Establishment of an EU DSO entity for
electricity with an efficient working
structure; European DSOs will provide
experts based on calls for proposals
issued by the EU-DSO.
13.04.17
33
Overview on the Clean Energy Package
Clean Energy for all Europeans (9)
VI)
Institutional
Framework
Other issues Current ACER Reg. 713/2009
What will change in the recast?
Network Code Based on ACER’s framework
development guideline ENTSO-E drafts network
process
code (strong role and influence),
ACER provides opinion and
recommendation to the Commission.
Based on ACER’s framework guideline
ENTSO-E drafts network code guided by a
standing stakeholder body and broad
general stakeholder involvement, ACER
consolidates the network code and
submits the final product to the
Commission
Oversight of
ENTSO-E
Limited ACER oversight of ENTSO-E
Strengthened ACER oversight of ENTSO-E
Oversight of
new entities
None or limited regulatory oversight
(limited rules in network codes and
guidelines)
Strengthened regulatory oversight by
NRAs and ACER
ENTSO-E’s
mission and
transparency
Lack of clear European mission and
voluntary transparency rules
Codified clear European mission and
transparency obligations on its decisionmaking
DSO
European DSOs collaborate through
the existing DSO associations but
without any legal status at EU
institutional level. There is no formal
participation in drafting or amending
of network codes and guidelines
Establishment of an EU DSO entity for
electricity with an efficient working
structure; European DSOs will provide
experts based on calls for proposals
issued by the EU-DSO.
13.04.17
Key elements (6)
ACER Set-up
Current ACER Reg. 713/2009
What will change in the recast?
ACER
decisionmaking
Limited, through recommendations and
opinions
ACER decisions with BoR favourable opinion, also
replacing Guideline implementing “all NRA” decisions at
EU and regional levels
Most regulatory decisions with BoR
favourable opinion, but only those
explicitly listed
BoR favourable opinion requirement broadened (Art. 23
and Art. 25 refer to Art. 14 containing ACER tasks)
ACER Director manages ACER and
tables proposals for BoR favourable
opinion
Framework of regional NRA decision-making with ACER
oversight (complementary role to safeguard EU interest)
BoR
decisionmaking
Board of
Appeal
2/3 majority for most of ACER
decisions
Simple majority for most of ACER decisions
Independent body for all appeal cases
Independent body for all appeal cases with strengthened
framework and separate budget line in the ACER budget
ACER
Financing
Community/EU-funding (separate
budget line)
Some of its costs are envisaged in the
ACER budget
Possibility for ACER to collect fees for
individual decisions
Need for increased financing (possibly through increased
EU-funding and possibly co-financing by contributions by
market participants and/or national public authorities)
Key elements (6a)
Other issues
Current ACER Reg. 713/2009
What will change in the recast?
Network Code
development
process
Based on ACER’s framework guideline ENTSOE drafts network code (strong role and
influence), ACER provides opinion and
recommendation to the Commission.
Based on ACER’s framework guideline ENTSO-E
drafts network code guided by a standing
stakeholder body and broad general stakeholder
involvement, ACER consolidates the network code
and submits the final product to the Commission
Oversight of
ENTSO-E
Limited ACER oversight of ENTSO-E
Strengthened ACER oversight of ENTSO-E
Oversight of
new entities
None or limited regulatory oversight (limited
rules in network codes and guidelines)
Strengthened regulatory oversight by NRAs and
ACER
ENTSO-E’s
mission and
transparency
Lack of clear European mission and voluntary
transparency rules
Codified clear European mission and transparency
obligations on its decision-making
DSOs
European DSOs collaborate through the
existing DSO associations but without any
legal status at EU institutional level. There is
no formal participation in drafting or
amending of network codes and guidelines
Establishment of an EU DSO entity for electricity
with an efficient working structure; European DSOs
will provide experts based on calls for proposals
issued by the EU-DSO.
Formal Network Development Plan process also for
DSOs
The 5 dimensions of the Energy Union (1)
Energy Security of Supply
Trust and Solidarity
Diversification of sources/pipelines,
reduced dependency, reverse flows,
EU energy and climate diplomacy
Energy Union Package
Research,
Innovation and
Competitiveness
Communication 2015(80)fin.,
Communi. „The Road to Paris“,
Energy Efficiency
(moderation of demand,
Energy Efficiency Dir.)
Communic. on 10% interconnectivity
target
Internal Energy Market
(a fully integrated European
energy market)
Decarbonising the
Economy
(RES, 40% GHG emission target)
Sustainability
Overview of EU energy market legislation/regulation
Security of Supply
Electricity Security of Supply
Directive (2016);
Gas SoS Regulation (994/2010)
Energy Union Package
REMIT 1227/2011
(Market Integrity
and Transparency)
(Communication 2015(80)fin.)
CEF (1316/2013) /
Summer package (15/07/15) EFSI (2014, 315bn €)
(Funding)
(Electricity Market Design cons.
+ Retail Market Commun.)
Internal Energy Market
3rd IEM Package 2009,
(Proj. of Common Interest)
XB trade, Market Coupling
Infrastructure Pack. 2013
TEN-E Reg. 347/2013
Overview of EU energy market legislation/regulat.
Competition rules
(Art. 101/102 TFEU)
State Aid rules
(Art. 107/108 TFEU)
EEAG 2014 /
Sector inquiry 2015
National RES support
schemes and capacity
mechanisms
(national laws)
Energy Union Package
Public Interventions (Communication 2015(80)fin.)
Summer package (15/07/15)
Package 2013
(Guidance doc.)
Electricity Market Design cons.
Internal Energy Market
Energy mix up to MS
(Art. 114 TFEU)
(Art. 194 TFEU)
3rd IEM Package 2009