Creating the Internal Energy Market
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Creating the Internal Energy Market The Role of Wind Energy Paul Wilczek Senior Regulatory Affairs Advisor – Grids and Internal Market The European Wind Energy Association EWEA 2012 18 April 2012
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Creating the Internal Energy Market. The Role of Wind Energy. Paul Wilczek Senior Regulatory Affairs Advisor – Grids and Internal Market The European Wind Energy Association. EWEA 2012 18 April 2012 . - PowerPoint PPT Presentation
Transcript of Creating the Internal Energy Market
Creating the Internal Energy MarketThe Role of Wind EnergyPaul WilczekSenior Regulatory Affairs Advisor – Grids and Internal MarketThe European Wind Energy Association
EWEA 201218 April 2012
Can the envisaged EU power market design up to 2014 integrate large amounts of wind power?
Regulatory background: EU target model aims for EU market coupling and the creation of cross-border electricity markets at all timescales by 2014.
Energy-only market• Generators’ revenues
solely by selling power
• Volatility of prices• System adequacy
determined by scarcity prices– Demand response– Investments in
generation
Wind energy characteristics• Variable• Limited predictability• Geographically
dispersed• Reduced capacity
credit at large penetration
• Existence of imperfect power markets– Design– Regulatory implementation
• Unfinished liberalisation -> Existing market distortions– Market concentration– Regulated prices– Market uptake and integration historically
“voluntary”
Ongoing liberalisation and market integration efforts are promising, but…
• Market rules in place not considering RES-E uptake
Overall market liquidity vs. biltateral trading remains low
Day Ahead Market integration – encouraging results so far in central western Europe• Convergence of prices
• Reduced price volatility• Better use of interconnection capacity
FR=DE
FR=BE
BE=NL
NL=DE
FR=NL
BE=DE
FR=BE=NL
FR=BE=DE
FR=NL=DE
BE=NL=DE
FR=BE=NL=DE
0%
20%
40%
60%
80%
100%
120%
68%
98%
78%85%
78%69%
78%68% 68% 68% 68%
Average Nov-10 to Apr 2011
Day Ahead Market integration – Impacts for wind power
• Aggregation of wind power forecasts from different control zones
• Competition in different markets with a common merit order
– MOE wind energy
Source: EWEA
Source: IEA Wind, Task 25
Intraday Market integration – much slower pace• Still far from enabling RES integration
– Functioning Intraday Markets are the exception, not the rule across Europe
– National intraday markets uptake is necessary first
• Target model appraoch: continuous trading with implicit auctions– Design features “left out” from Target model such
as e.g. gate closure timing and interactions with balancing markets
– Design features need to consider • Liquidity measures • Harmonisation between countries and regions• Interactions with balancing markets
Balancing Market integration – a white page so far
• Technical differences of services and concepts across Europe is a challenge for market integration.– Current discussion focuses so far only on
manually activated reserves • Possible roadmap:
– Harmonisation of gate closures and technical characteristics
– Regional pilot projects with x-b balancing trading– Case by case balancing market development
under TSO consent• ACER FG on balancing and corresponding
ENTSO-E network code only in the making
Why are we talking about capacity markets ?
• Motivation: Ensure investment/development of sufficient capacity
• Variable RES tend to have low contribution to planning reserves
• Variable RES tend to induce lower capacity factors from conventional units.
• Business case for slow-ramping, inflexible power generation assets (typically mid-merit) seems to slip
High share of variable RES tend to increase the need for flexible capacity
Why are we talking about capacity markets ?
Issues:• In theory, CM implementation is easy, in
practise it is very complex • At your peril: further market distortion –
examples of markets gone bad abound• Disincentivise investments in infrastructure and
demand –side management
Issues to be clarified:• Is there a capacity problem in the EU at all?• How much firm capacity do you get from
variable RES in a Pan-european perspective? • How do you eliminate free riders and other
externalities?
Concluding: Market-related issues to be adressed
To be solved on energy-only markets ideally with “no regrets”:
• How can energy-only markets be made suitable for supporting the long term RES policy goals?
• Increased price variability and lower average spot market prices might dampen investors appetite Market transparency and cross-border integration
must be ensured
Provide for more market liquidity and a bigger market place in general
New market forms (e.g. ancillary services) might provide additional revenue stream for generators without creating additional market distortions -> Target Model 2.0 ?
Short term <2014
Long term>2014
Thank you
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