Review 2015

Securing Europe’s electricity supply: Making the switch towards an integrated and long-term approach

On 5th May 2015 we held the 1st Symposium of our 2015 series of events dedicated to the European Energy Transition. Together with around 100 representatives from EU institutions, the economic sector, member states and other key stakeholders, we discussed the need of securing Europe’s electricity supply while making the switch towards an integrated and long-term new power system.

Most speakers agreed that great progress has been achieved over the past years. Nevertheless, the barriers threatening the completion of the internal electricity market are numerous, complex and heterogeneous. These barriers include: the slow integration of the massive deployment of decentralised and variable renewables into the grid, the insufficient development and expansion of electricity grids and interconnections within the EU, the key issue of generation adequacy, the lack of demand-side mechanisms and storage facilities to increase flexibility, the uncoordinated development of national support policies, the lack of investments in certain segments of power production, and the volatility of the regulatory frameworks at national and EU levels, combined with a complex and uncertain global and regional energy context.

The main answer to this complex equation so far has been the adoption of national capacity remuneration mechanisms and national ancillary services in order to maintain the electricity systems balanced. Consequently, the security of electricity supply is currently more driven by national policies than by an integrated and cost-effective European approach. This lack of coordination and cooperation between member states might dangerously throw energy policy back into national policies, threatening the completion of the European internal electricity market. 

The increasing share of decentralized and variable renewable generation requires new ways of operating the whole electricity system. But we are transiting from an old system to a new one without knowing yet if the “learning by doing” process will work. As rightly said by one of the speakers, it is not easy to change the wheel of a bike while it is running at full speed. However, everybody agreed on the fact that operating this new electricity system requires four main things: upgrading and building new transmission lines across borders in order to integrate this increasing share of decentralised renewable energy; harmonising the rules and regulations between the different national power systems; designing the plans of this new power system that must encompass flexibility (including on the demand-side) and reflect all system costs; deciding the governance of this new power system between the national, regional and European levels. 

All the answers to these challenges will require technology developments, political will and coordinated action by Member States, the TSOs, the regulators and all energy stakeholders. Each actor will have to accept to drop some of its individual decision-making powers in favour of a common approach, which is not only more cost-efficient but also more secure.

Please find hereby the Agenda of the Symposium. Pictures can be found at flickr.

Here you’ll find the SPEAKERS’ MATERIALS (click on the name)

Session 1: What are the main barriers to the completion of the EU internal electricity market?                      

• Michel Matheu, Head of EU Strategy in the Public Affairs Division, Electricité de France (EDF)
• Olivier FEIX, Head of Communications & Public Affairs, Elia Group and Vice-Chairman of the Board of the Renewables Grid Initiative
• Wolfram VOGEL, Director Public Affairs & Communications, European Power Exchange - EPEX SPOT SE

Session 2: What are the next steps towards an integrated and long-term electricity market?   

• Holger GASSNER, Head of Strategy & Regulatory Affairs, RWE Innogy
• Harry VERHAAR, Head of Global Public & Government Affairs, Philips Lighting
• John SINNER, Senior Energy Economist, European Investment Bank
• Stephen WOODHOUSE, Director and Head of Market Design Group, Pöyry Management Consulting

Many thanks to our event Sponsors

Silver Sponsors

Bronze Sponsor 

Securing gas supply within an integrated European market - A strategy subject to many uncertainties

On 23rd June 2015, Egmont – Royal Institute for International Relations and the Development Group held the 2nd Symposium of the 2015 series of events dedicated to the European Energy Transition. Together with around 70 representatives from the EU institutions, the economic sector, member states and other key stakeholders, we discussed the need of “securing gas supply within an integrated European market: a strategy subject to many uncertainties”.

The EU’s objective is to secure gas supply at affordable prices within an integrated European market. However, so far, there is a lack of visibility on the role of gas in the EU energy transition to many uncertainties at international and European levels. At international level, the increasing demand of emerging countries for this energy source, the oil prices volatility, and the difficult geopolitical context in the EU’s Eastern and Southern neighbourhood, particularly the tensions with Russia, have reignited the debate over the security of gas supply in the EU. At the European level, the declining European gas production, the stagnating energy demand and the increasing gas import dependency force the EU to find new gas supply sources and routes (via the construction of pipelines and the development of LNG and storage), while integrating increasingly its gas markets.

However, all speakers agreed on the fact that gas investments are currently difficult to make for several reasons: the development of non-market based renewables (that has made gas power plants unprofitable), the complex and volatile economic environment, cheap imported coal, the short-term regulatory framework and weak carbon prices. Moreover, the difficulty of completing the EU internal gas market also requires addressing many technical, commercial and political barriers to the cross-border trade of gas.  As a speaker rightly outlined “in the EU, gas will have to struggle in the future”.

All the answers to these challenges will require political commitment, technology developments, and solidarity between Member States, transit and producer countries, the EU institutions and all energy stakeholders. Each actor will have to develop innovative solutions and accept to drop some of its individual decision-making powers in favour of a common approach, which is not only more cost-efficient but also more secure.

Please find here the Report of the Symposium. Pictures can be found at flickr.

Here you’ll find the SPEAKERS’ MATERIALS (click on the name)

Keynote address:

Stefan MOSER, Head of Unit Security of Supply, DG Energy, European Commission

Session1: Why is a clear strategy for gas currently difficult to implement in Europe

Costanza JACAZIO, Senior Gas expert in the Gas, Coal and Power Market Division, International Energy Agency

Anders MARVIK, Vice-President EU Affairs, Statoil

Marco MARGHERI, Senior Vice President Public and EU affairs, Edison

Session 2: What are the next steps towards an integrated and long-term electricity market?

Margot LOUDON, Deputy Secretary General, Eurogas

Christophe POILLION, Chairman of the Security of Supply Task Force of GIE – Gas Infrastructure Europe and Vice-President European Affairs, GRTgaz

Jan KERNER, Senoir Market Develoment Leader Europe, Russia, CIS, GE Power and Water

Many thanks to the Gold Sponsor of the Symposium

Reforming the EU ETS: Striking the right balance between the EU objectives of decarbonisation and competitiveness

Session 1: Lessons learned from the previous EU ETS period(s)

First, Sarah Deblock (IETA) argued that there are two essential topics for revision: (1) the though balance to provide protection against carbon leakage and incentives to innovate and (2) the EU ETS overlap with other European climate policies that increase the structural oversupply.

Then Alessandro Bartelloni (Fuels Europe) explained that the refining industry did not benefit from an effective carbon leakage protection so far. Thus, competitiveness could be preserved by allocating free allowances based on current level of production and representative benchmarks.

Pavel Řežábek (ČEZ) pointed out that the power sector has high potential to decarbonise, but stable and robust market signals are essential. Moreover, we have to deal carefully with overlapping climate policies and the EU ETS in the future.

As a discussant Stefan P. Schleicher (Wegener Centre on Climate and Global Change) finally raised interesting points on the three constituent layers of the system, namely: market, sectors and installations.

Session 2: The Reform of the EU ETS and its impact on EU competitiveness and other climate policies

Yvon Slingenberg (ETS expert, Cabinet Cañete) pointed out that the Commissioner was concerned about the slowness of the negotiations but he’s confident that an agreement can be reached by the end of the year. She stressed also that the proposals have been made as targeted as possible according to updated industrial benchmarks and the different situation of Member States.

Anders Marvik (Statoil) explained that the EU ETS must remain the central policy tool to achieve the EU 2030 climate and energy targets, but the reform proposals so far will not be enough to raise the ETS price to a range which encouraged fuel switching from coal to gas, nor stimulate investments and innovation into low carbon technologies, current renewables nor new technological breakthroughs.

Both Mr. Marvik and Sandrine Dixson-Declève (Prince of Wales’ Corporate Leaders Group) insisted on the fact that investment leakage is not just a problem of the EU ETS. Thus, rather than discussing the avoidance of carbon leakage, the main question should address investment leakage in the EU.

Discussant Damien Morris (Sandbag) drew most of his discussion points from a report recently published by Sandbag. He also believes that the EU ETS reform introduces significant progresses but is clearly not enough.

To conclude, all speakers agreed that the EU ETS must remain the central pillar to decarbonise the European economy cost-effectively. However, it is the level of carbon price over the following years that will decide if the EU ETS is able to fill such a role. A strong agreement at the COP21 in Paris at the end of this year will be crucial in this regard.

Please find here the Report of the Symposium. Pictures can be found at flickr.

The SPEAKERS’ MATERIALS can be downloaded by clicking on their names.

Many thanks to the Sponsors of the Symposium

What are the European stakes towards COP21 and beyond?

• Andrey ROZHDESTVIN, Regional Vice-President Western Europe, Director Rosatom France
• Richard FOLLAND, Executive Director, Climate Markets & Investment Association (CMIA)
• Paul SPENCE, Member of the Executive Committee, Director Strategy and Corporate Affairs, EDF Energy

Discussant: Dr Johannes MEIER, CEO of the European Climate Foundation
Moderator: Visc. Etienne DAVIGNON, President, Egmont Institute

According to the elaborated outcomes, the 2nd Session contemplated the aftermath of COP21. The transition towards a low-carbon approach offers the opportunities for the EU economy to become more sustainable, competitive and secure as well as the potential for innovative and competitive European companies to play a key role in developing low carbon and energy efficiency technologies, which will stimulate new jobs and economic growth.

• Jean-Pierre KEMPENEERS, Head of the Royal Philips European Affairs Office Brussels
• Holger GASSNER, Head of Strategy & Regulatory Affairs, RWE Innogy
• Dr Roberto RIDOLFI, Director for Sustainable Growth and Development, DG Development and Cooperation, European Commission

Discussant: Dr Stephan SINGER, Global Energy Policy Director, WWF International
Moderator: Clémentine d’OULTREMONT, Senior Research Fellow, Egmont Institute

Here you can download the complete report. Pictures can be found at flickr.

We would like to thank all our sponsors, panellists, and guests and look forward to welcoming you again in 2016.

Many thanks to the Sponsors of the Conference

Gold Sponsor

Silver Sponsors