The regulation of German energy markets and its European dimension - Bruegel - Brussels, June 28th 2012 Dr. Annegret Groebel Head of Department ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
www.bundesnetzagentur.de The regulation of German energy markets and its European dimension Bruegel – Brussels, June 28th 2012 Dr. Annegret Groebel Head of Department International Relations / Postal Regulation
Agenda 1. German energy policy – the „Energiewende“ 2. New competencies for BNetzA 3. European 2020 energy and climate targets 4. Loop flows – a European-wide issue 5. Market coupling and internal market completion by 2014 6. European Network Codes 7. Conclusions Kapazitäten und Netze – Herausforderungen für die Versorgungssicherheit
Regulatory tasks – Many responsabilities
Competition
TRANSPORT
PRODUCTION Trading
DISTRIBUTION
MONITORING MONITORING
REGULATION
Surveillance Surveillance
Bundesnetzagentur
Competition authority
Ministries
Economy
Environnement
Kapazitäten und Netze – Herausforderungen für die
Versorgungssicherheit
Energy Industry Act - Independence of the Regulator
BNetzA : seperate higher federal authority within the scope of business of the Federal
Ministry of Economics and Technology
Staff and Management act independently (art. 35, art. 37(4) and (5) Electricity / Gas
Directives)
from any market interest
do not seek or take direct instructions from any government or other public or
private entity when carrying out the regulatory tasks
Takes autonomous decisions: independence from any political body!
Collaborate with EU regulators (CEER)
Collaborate with the Agency for the Cooperation of Energy Regulators (ACER)
Effective regulation requires an independent NRA
Effective regulation on the European level requires a close cooperation among NRAs
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 4
Versorgungssicherheit
Nuclear Phase-Out in Germany
shut down
On 15 March 2011, the German
government announced to shut
operating
down 8 of its 17 reactors
immediately, i.e. all reactors that
went online before 1981
On 30 May 2011, the government
plan to progressively shut down
all nuclear reactors by 2022 and
massively foster the development
of renewable energy production
By 2050 80% of the production
renewable
Consequences on the grid stability
analyzed by BNetzA - Report on
our website
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 5
Versorgungssicherheit
Report on the consequences of the nuclear phase-out
Outcomes of the Bundesnetzagentur’s Report on energy supplies 7 May 2012
1. Situation in electricity grids in winter 2011/2012 was severely strained
2. Additional measures from TSOs necessary to maintain system security
3. Unexpected gas shortfall of Feb. 2012 put added strain on electricity grids
4. German and Austrian reserve power plants were called upon more than
one time – for next winter reserve power plants needed also
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 6
Versorgungssicherheit
Main outcomes for the Power System Security
The historically singular simultaneous shutdown brings the transmission grids to
the edge of their resilience
But, the main extreme situations for the transmission networks are manageable
thanks to the operator‘s intervention instruments, but interventions increased
BNetzA‘s studies also show that transmission networks will remain controllable
without the use of a reserve nuclear plant.
Kapazitäten und Netze – Herausforderungen für die © Matthias Kurth 7
Versorgungssicherheit
The German Energy Package 2011
Legislative measures – 8 new laws or amendments to existing laws adopted in July 2011
Atomic Energy Act – phase-out of German NPPs
Act to Accelerate the Expansion of the Grid – including acceleration of spatial
planning (NABEG)
Energy Industry Act – transposition of 3rd Internal Market Directives
Renewable Energies Act – cost-efficient expansion of renewables
Energy and Climate Fund Act – from 2013 all revenues from auctioning emission
allowances will be a contribution to this fund
Energy efficiency – i.e. tax concessions for renovation of buildings; climate-
friendly development of cities and municipalities; public procurement
Range of new provisions to implement the Energiewende! A long process…
with impact on its neighbors
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 8
Versorgungssicherheit
Renewable Energy Targets Electricity Production
Government Energy Electricity Mix Germany 2011
Policy: Renewables: 19.9 %
Share of electricity
produced by
renewables to rise to
35 % by 2020 Natural gas
13.7% Oil1.1%
80 % by 2050
Hard coal
Renewable Energy 18.6% Other 4.2%
Act (EEG) designed
to foster this process Renewable energy
sources: 19.9%
NABEG to speed up Nuclear
17.6%
grid expansion and
ensure integration Lignite
24.9%
of renewables
Kapazitäten und Netze – Herausforderungen für die
Source: AG
Versorgungssicherheit
Energiebilanzen
Changes in Generation Require New Grids (1)
Renewable energy
production develops
mainly in Northern
Germany
Traditionally, fossil and
nuclear production
plants have been built
close to where the
energy was actually
needed.
Kapazitäten und Netze – Herausforderungen für die Renewables and Grid 10
Versorgungssicherheit ExpansionChanges in Generation Require New Grids (2)
wind offshore
Main generation
wind onshore
2021
Increase by 2022:
12.900 MW 2022
Scenario B 2021 Increase by 2022:
20.400 MW
Scenario B
solar
2015
Increase by 2022:
36.000 MW
Nuclear power plants 2019 Scenario B
planned shut down 2022
2022 2017 Main load
shut down 2021
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitChanges in Electricity Generation Require New Grids (3)
wind offshore wind onshore Expansion and
reinforcement of the
2021 networks urgently needed
Increase by 2022: Increase by 2022: Transmission system
12.900 MW 2022 20.400 MW
Scenario B
2021 Scenario B
Offshore wind farm
solar connection
gas-fired plants
Modernisation of the
distribution system
Increase by 2022:
Increase by 2022:
7.300 MW 2015
36.000 MW
Scenario B
Investments needed of
Scenario B
approx. € 30 to 50 billion
2019 until 2020
Nuclear power plants
2022
planned shut down 2022 2017 New competences for
2021 BNetzA a new role
shut down
beyond regulation !
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 12
VersorgungssicherheitReasons for Network Development
The German Energy Package 2011
Rapid expansion of renewables: 80% wind, sun and biomass by 2050
Nuclear phase-out by 2022
Reduced electricity consumption as a result of increased efficiency
Increased cross-border electricity trading
Consequences for the network
Volatility of consumption and production in terms of both time and
location reduces predictability
The average distance between production and consumption increases
Volatility of the network situation increases
NETWORK DEVELOPMENT IS A PRIORITY
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 13
VersorgungssicherheitHow will BNetza work on this?
Implementation of EnWG 2011 and NABEG:
BNetzA is building up competence in −
network modelling and network planning
specialist planning and plan approval
environmental issues and
procedures of participation
Around 240 new colleagues being recruited
Connection between the new tasks and
energy regulation issues synergies and
bundling of competence
Cooperation with Laender level:
consistent decisions
Bundesfachplanungsbeirat
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 14
VersorgungssicherheitEnhancement of Network Development
Planning
of cross-
Option for
border and
Permitting
10-year network development interstate
Procedure
plan transmissi
s for
on system
BNetzA
corridors
by BNetzA
Network development as a transparent concept under federal supervision of BNetzA
Faster permit procedures are on the way in Germany – legislation passed in June
2011
Network expansion is clearly decided: “of highest public interest”
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitProcess leading to the Network Development Plan
Draft Scenario Framework by
TSOs
Consultation
Scenario Framework reflects Approval of the TSOs‘ „Scenario
the development of the energy Framework“ by BNetzA
policy framework (e.g.
production capacities,
consumption, etc.). It is the Approved „Scenario Framework“
starting point to define the need
for network development.
Establishment of the Draft German
Network Development Plan
involving all TSOs by 3th June 2012
Federal Requirements Plan Consultation of German Network
reflects the need to develop the Development Plan and of the
network in a concrete way
Environment Report by BNetzA
Draft Federal Requirements Plan
by BNetzA
Federal Requirements
Kapazitäten und Netze – Herausforderungen für die Plan (Bundesbedarfsplan)
VersorgungssicherheitFrom the Scenario Framework to the NEP
1. Provision of a Scenario Framework
Determination of a generation mix
Determination of annual peak load and consumption
2. Regionalisation
Allocation of feed-in and withdrawal to the different nodes
3. Market modelling
Determination of real power plant feed-in according to fuel prices, CO2 certificate prices,
and establishment of the relevant cases of network use
4. Network calculation
In the established cases of network use, possible weak spots of the network are
identified by modelling the German transmission network.
5. Determination of network development
requirements
Within network modelling, measures are identified to overcome the weak spots found.
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitNetwork Development Plan: Involve the public
Objective of the National Network Development Plan:
Increasing local acceptance
Prerequisite is improved transparency
Consultation of network development plan
on several stages:
Include the public (especially the actual and
potential user)
Acceptance of public: overcome NIMBY
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitHurdles that need to be overcome
Planning and permitting procedures to be shortened:
Implementation of a “One Stop Shop”
BNetzA in charge of
Approval of investment financing
Federal sectoral planning
Plan Approval
(if determined by ordinance requiring the consent of the “Bundesrat”)
Ownership unbundling requirements
Investors are not interested in controlling rights, shareholder agreements are a
common approach
Traditional financial regulation which considers investments in energy
infrastructure as “risky” (eg Solvency II)
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitHow can all of this be financed?
Basic principle: All Projects should be privately financed
Network is refinanced by the customer
In case a network operator is unable to organize the
financing of the needed measures involvement of
financial Investors possible
No scarcity of capital, investment budgets/measures
approved by BNetzA for all but one project
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitBNetzA sees to attractive returns for the long term
BNetzA's philosophy on returns
More important than the nominal rate of return is the
sustained profitability of the investment, generating
steady, stable cash flow.
Providing certainty to investors: regulation is predictable
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitReturn on equity : BNetzA decision on 2 November 2011
1.66% corporation tax
3.59% risk premium Rate of return
before corporation
tax: 9.05%
Interest rate after
taxes: 7.39%
Rate of return
Risk-free rate: before corporation
3.80% historic 10 year current and trade tax:
yield average 10.48 %
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitInvestments in grid: almost no investment risk (1)
No planning and approval costs, ie the costs incurred before a line is taken
into service are borne by the consumer
Cost increases are recognised fully where there is proof of good reason for
the increase
There is no risk for German network operators as a result of the incentive
regulation account and individual consideration of the cost of debt
"Stranded investment" costs are borne entirely by the consumer (for
instance, if the line is built but the wind farm doesn't materialise)
No risks from fluctuating capacity
• as a result, for instance, of weather-reflective feed-in, or
• cyclical consumption, or
• technical faults in the generating facilities (eg wind farms)
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitInvestments in grid: almost no investment risk (2)
Proposal of BNetzA: Strong limitation of liability. Regarding construction and
operation of offshore connection lines TSOs are liable for claims of offshore-
operators only with respect to intention and gross negligence. Liability for
damages due to gross negligence is limited. Any additional liability of TSOs is
excluded.
Real time refinancing; investors earn money from the very first day
Actual cost of debt are remunerated, if the cost of debt correspond to market
condition
Strict continuation of the calculation methodology ensures risk-adequate rates
of return that are predictable and that can be planned for in the long term
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitNational measures and European targets
National legislation directly linked to the European targets and provisions :
1. 2009 Renewables Energy Directive: 20/20/20 targets
2. 2009 Internal Energy Market Package: integration of national markets into a
European energy market
3. and implementation of IEM: European Network Codes and Market Coupling
4. 2011: Energy Infrastructure Package: connecting European energy
infrastructure and integration of renewables
National energy policy has an effect on the European level: both are interlinked!
BNetzA cooperates closely with NRAs on EU level, both within CEER and ACER,
e.g. informing both organizations early on about measures and impacts for
cross-border trade
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 25
VersorgungssicherheitSustainability EU 2020 energy/climate targets
Increase renewables’ share in final energy consumption to 20%,
including a 10% biofuels in transport target in each MS
Commissions communication on renewables: need for convergence of the
national renewable schemes
Move towards a 20% increase in energy efficiency
compared to projections for 2020
Reduce greenhouse gas emissions by 20% compared to 1990
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 26
VersorgungssicherheitCreating a low carbon economy
Combating climate change is a global effort
European 2020 and 2050 targets will lead to massive increase in renewables
In 2012, German consumers will spend 13bn € in RES support, leading to a substantive
consumer surplus in neighbouring MS
German generation mix 2011 Installed wind and PV capacity 2010
Other
4%
Lignite
Renewables 25%
20%
Oil
1%
Gas
14% Nuclear
17%
Hard coal
19%
Kapazitäten und Netze – Herausforderungen für die
Lignite Versorgungssicherheit
Nuclear Hard coal Gas Oil Renewables OtherThe loop flows (“unplanned” flows) phenomenon
Transits and loop flows are an EU-wide issue:
All Member States emit them and are affected by them
Depending on the situation, loop flows may have negative (burden) and positive
(relief of lines, higher Net Transfer Capacities in reverse direction) effects on
power flows
With the increase in renewable generation,
power flows will become increasingly volatile:
Loop flows will increase;
The situation will become more difficult to handle
if no action is taken;
Grid expansion therefore needs to keep up with the rising share of
renewables.
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitNO Solutions
An arbitrary creation of smaller bidding zones:
Reduction of liquidity and competition;
Increase in market concentration;
Negative impact on progress in network expansion;
Power flows will become more and more volatile;
frequent adjustment of bidding zones would be needed.
Regulatory uncertainty for TSOs and generators.
Regional ad hoc remedies:
2014 IEM goal put in question;
Loop flows must instead be considered at EU level.
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitSolutions (I)
Short term
TSO action: Coordinated national and multilateral measures to maintain grid security;
Phase-shifters, if operated in accordance with
security requirements and internal market rules;
Flow-based capacity allocation.
Mid term
Investment in generation capacity;
Coordinated grid expansion, including HVDC interconnectors:
ENTSO-E’s draft TYNDP 2012 foresees 30 bn €
of investments in Germany alone,
74 bn € for all other ENTSO-E countries;
German grid expansion acceleration act (NABEG);
Energy Infrastructure Package.
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitSolutions (II)
Mid term (continued)
Adequate size of the ITC fund;
ITC redesign in order to take full account of loop flows
Long term
Stronger European grid;
Large and well-balanced bidding zones;
Proper process: Implementation of ENTSO-E’s
Network Code CACM
A combination of these measures will help us reap
optimal European welfare gains!
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitCurrent Initiatives
NRA Workshop by ACER in June
Stakeholder-Workshop by BNetzA in July (as endorsed by the CEEE Forum)
NRAs, Ministries, TSOs, ACER, EC will be invited
EC study on loop flows / bidding zones
Proposals by 50Hertz towards PSE-O and CEPS:
Management of feed-in of RES in Northern Germany
Cost-sharing between TSOs
Compensation for economic disadvantages suffered by affected electricity
generators
Locations and operational concepts for PST
Possible early implementation of the NC CACM in CEE/CWE
BNetzA supports these initiatives
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitLoop flow Conclusions
The electricity landscape is changing fast
Germany is ready and willing to live up to its responsibilities
Solutions must be well balanced, harmonised, and sustainable
Market design is an EU-issue and should not be limited to certain regions
Let’s maximise European welfare gains by finding the best combination of remedies
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitIntegration of European Markets: Market Coupling
Market Coupling between
Germany and Scandinavia
Market Coupling between
Germany, France and Benelux
North-West European Market
Coupling
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 34
VersorgungssicherheitWhat have we reached and where are we heading?
Results of the Market Coupling
Running smoothly since 2010
Price convergence between participating markets can be observed
Before market coupling started prices in Germany, France and Benelux were equal in
only 0.3% of all hours
After start of Market Coupling: Equal prices in more than 65% of all hours between these
countries
Equal prices at all times cannot be reached unless there are no congestions between the
markets
On February 4th, 2011 the European Council concluded that
“The internal market should be completed by 2014 so as to allow gas and electricity to flow
freely.”
Within the framework of an integrated European electricity market the target model for the
day-ahead timeframe is a single European Price Coupling (EPC).
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitEuropeqn Regulatory rules - Network Codes (1) Grids rules are no more national rules: Grid connection (requirements for generation) Capacitiy allocation Congestion management Tariffs harmonisation Balancing Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 36 Versorgungssicherheit
Europeqn Regulatory rules - Network Codes (2)
Grids rules are no more national rules
1. Regulators within ACER to develop Framework Guidelines
1. Grid operators to develop Network Code
2. Commission to send Network Codes to Comitology process
3. Adoption of Network Code as regulation no need to implement in
national law
2. Status review on blackout and restoration planning (ENTSOE)
Regulatory provisions discussed and agreed at EU level, regulation more
aligned, but NRAs remain responsible for e.g. tariff regulation.
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 37
VersorgungssicherheitEnergy Infrastructure Package: Ongoing discussions
CEER/ACER is actively following the ongoing discussions on the Energy Infrastructure Package
National Regulatory Authorities have the core expertise in ensuring that investments in
infrastructure are made, and are made efficiently.
The critical issue is whether the framework within which regulators operate helps them to work
effectively – or hinders them.
The criteria for the selection of PCI projects should be clear and quantifiable. Otherwise we will
have long discussions which will just delay investments – which is not the intention;
Investors need to be clear that only efficiently incurred costs will be allowed by national regulators
for cost recovery from network tariffs in order to ensure the effective use of capital;
We do not want to delay commercially sound projects by suggesting that they may be eligible for
incentive that they don’t actually need. Nor do we want to allow the costs of investments to spiral
inefficiently. It is essential that national regulators retain the power to decide on the nature of
incentives, on a case-by-case basis, and that such incentives should be proportionate to the risk
incurred by investors;
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitOne year after…
a lot of pessimism
But: it is a „Generation project“
BNetzA to support the policy goals on the regulatory side and by
using its new competences to shorten planning procedures („OSS“)
Grid expansion is a key issue
Reduce congestion on transmission grids
Integrate offshore wind production in the transmission grids
Have smart distribution grids
Tight time table can only be met if all parties involved cooperate as
closely as possible each one playing its role
Early involvement of public in every stage of consultation to overcome
NIMBY effect as there is a general acceptance of nuclear shut down
Close cooperation with all NRAs + ACER to reach European targets
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 39
39
VersorgungssicherheitConclusions incentive regulation (1)
Incentive regulation works as it can provide incentives both for efficiency as well as
investments
Strict continuation of the calculation methodology ensures risk-adequate rates of
return that are predictable and that can be planned for in the long term providing
certainty for operators and giving investors confidence
There is no risk for German network operators as a result of the incentive regulation
account and individual consideration of the cost of debt
Higher rates of return do not deliver more
rapid expansion but mean higher use of
system charges !
Kapazitäten und Netze – Herausforderungen für die
VersorgungssicherheitConclusions incentive regulation (2)
4 reasons why it is worth investing in German energy infrastructure:
1. Germany is the biggest electricity and gas market in Europe.
2. Germany has the most secure electricity network in Europe and an
excellent natural gas infrastructure.
3. Germany has the most ambitious energy and climate change targets.
Infrastructure expansion is a growth market.
4. Bundesnetzagentur has done a lot to clear up cases of doubt regarding
the framework conditions
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 41
VersorgungssicherheitThank you for your attention
Kapazitäten und Netze – Herausforderungen für die © Bundesnetzagentur 42
42
VersorgungssicherheitYou can also read
