Central Europe Energy Partners’ (CEEP) Position Paper on the Regulation and the Directive on the internal market in electricity and the revision of the RES Directive

Central Europe Energy Partners’ (CEEP) Position Paper on the Regulation and the Directive on the internal market in electricity and the revision of the RES Directive

Since the publication of the Clean Energy for All Europeans package on the 30th of November 2016, a vivid public debate can be witnessed with stakeholders giving a lot of input on these important legislative proposals, which would deeply transform the electricity market in Europe. Central Europe Energy Partners, representing energy and energy intensive sectors across Central Europe, would like to take an active part in this discussion, as we consider that the transition into low-emission economy requires profound decisions that will take into account the specific positions and starting point of all EU Member States, notably the from Central Europe region. CEEP welcomes the publication of the Clean Energy package and would like to emphasize its gratitude to the European Commission for the tremendous work it has been doing in the recent years. We agree with the general goals of the package, which promotes market approach with focus on empowering customers, prioritizing energy efficiency and making the national markets more integrated. Furthermore, we consider the Commission’s focus on importance of regional cooperation as a positive factor. We highlight however that the rapid economic growth necessary to catch up with the EU’s average GDP remains the priority for the most of Central European countries. Having said that, we have to regrettably admit that not all provisions included in the package fit our needs. In this paper, we would like to present our position on the Energy Market Regulation proposal (EMR), Energy Market Directive proposal (EMD) and the new Renewables Directive proposal (RED II). Member states' rights to shape their own energy mix According to Article 194 (2) of the [...]
Eryk Kłossowski: “Locational marginal pricing supports the integration of RES in the energy market”

Eryk Kłossowski: “Locational marginal pricing supports the integration of RES in the energy market”

How do you evaluate the functioning of the electricity markets in Europe? The outcome of a number of market processes does not reflect the laws of physics prevailing within the electricity grids. We cannot call the market functional, if its mechanisms do not allow the rejection of trades, which do not respect physical constraints inherited in the very design of the power grids. Every good textbook on the economics of power systems, states that certain combinations of bids placed on both sides, supply and demand, cannot be accepted if they result in the overloading of the lines. A lot of arguments have arisen, in the case of loop-flows, from the trading within the German-Austrian price zone. The fact that the border between the two countries has not been drawn, is often indicated as the culprit. ACER (the Agency for the Co-operation of Energy Regulators) is concerned with the fact that TSOs reserve an unreasonably high margin between the capacity of interconnectors offered and their theoretical thermal capacity. However, only a few experts realise the actual root cause of those problems. [Tweet "The price development process on the markets is the main cause for loop flows"]The price development process on the markets is the main cause for loop flows, and we have struggled with costly remedial actions for some time. Have a look at Platts’ quotations for fuels and other commodities. In terms of their pricing, what is the main difference between electricity and other commodities? In fact, the prices of other commodities are localised. They are also shown separately for different ports of destination. In contradiction, electricity is traded [...]
Henryk Baranowski: “Security of supply should be based predominantly on indigenous fuels”

Henryk Baranowski: “Security of supply should be based predominantly on indigenous fuels”

Cristina Dascalu (CD): From your professional experience, to what extent is energy policy shaping our future energy system in the perspective till 2020, and then 2030? Henryk Baranowski (HB): It is clear that the climate and energy regulatory framework is shaped by various interests within the EU Council. Therefore, the EU’s climate and energy policy is not the only tool to shape our energy market(s). I see it, also, as a tool in the hands of the EU’s leading economies, to push the EU’s energy system development in their preferred direction. Until 2020, the EU-fuel mix will be shaped predominantly by the RES Directive, which imposes obligatory (at the national level) targets for the RES share in final energy consumption. In Poland, it has resulted in a rapid RES development. It means that RES electricity generation in Poland has increased in the last seven years by 175%. The impact of the EU’s legislation is also revealed by the fact that the RES share in electricity generation, grew four times between 2008 and 2014. Delivering the RES 2020 target in Poland is not at risk.  However, we are not certain how the regulatory RES framework will be shaped in the post-2020 period. It depends on the implementation of the European Council’s conclusions regarding the binding legislation. [Tweet "RES electricity generation in Poland has increased in the last seven years by 175%."]The EU ETS has not been a key driver in the power sector’s emissions reductions, but will most likely become one in the future, due to the foreseen scarcity of free EUA and their price growth. Therefore, in the long-term [...]

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