Kick-off Stakeholder Workshop "Post 2020 framework in a liberalised electricity market with large

share of Renewable Energy Sources" 28 April 2014, Brussels

   PANEL DISCUSSION

"Implementation of the Internal Electricity Market & Climate – Energy Targets 2030"

(How) Should the Target Model evolve post -2020?

Volker StehmannEURELECTRIC

The energy-only market was meant to deliver on the energy policy triangle, but competitiveness and security of supply are now being

challenged

The 3rd Energy Package

The Internal Energy Market should stimulate fair and competitive energy

prices as well as necessary investments

Interconnected networks and theEnergy-Only Market (EOM) delivering

investments should guarantee security of supply

The incorporation of the CO2 price inthe EOM should be the main driver

for decarbonisation

Competitiveness

Security of Supply

Sustainability

2

Current status

Customers across the EU are faced with rising energy bills;

RES support costs have escalated in some countries due to inefficient design mechanisms

Rising variable generation is displacing conventional generation which is needed

for generation adequacy but is being forcedto shut down (economic factors)

The EU is so far on track to meet its emissions reductions and RES targets

up to 2020

To address this challenge, different elements of market design have to work together

Energy Flexibility Capacity1

Efficient dispatch Short term system adequacy

Long term system adequacy

Delivers energy in the most cost-efficient way by having the market define the system’s merit order

Enables the system to respond to short-term variations in the supply/demand balance

Ensures long-term system adequacy e.g., in the case of extreme load peaks or backup intermittent renewable generation

Forward, day-ahead and intraday markets

Day ahead, intraday and balancing markets, ancillary services

Market-based capacity remuneration mechanisms

Goal

What it does

Market instruments

3

+

1. Especially relevant for some regional markets

How to ensure that markets deliver on the energy policy goals?

4

• Implementation of the target model is crucial to provide efficient energy supply and remunerate flexibility -> progress on DA, ID and balancing markets integration should be ensured

• Operation integration of RES to the market & moving towards more market based RES support are needed before 2020. Renewables deployment post 2020 should be driven by the ETS

• Long term system adequacy is at risk in many markets, giving more urgency to the CRM discussion. Main reasons:

– RES growth impact economic viability of capacity needed for system adequacy

– Definition of the needed adequacy level remains a political choice, not a customer decision. Implementation of smart grids will facilitate customers involvement, but this will be feasible only in the long term

• Proper design of CRM is crucial to ensure not hindering the completion of the IEM

• A regional approach to the implementation of market-based CRM models should be followed, cross—border participation in CRM is an important stepping stone