Oliver Koch from the European Commission presents on the future of EU market design at the Vienna Forum on European Energy Law 2014

1. Energy
On the Way
to the Target
Model
Vienna Forum on European
Energy Law
Vienna
14.3.2014
Oliver Koch
European Commision
This presentation replects solely the personal views
of the author and does not bind the EU Commission

2. What is the
“EU Target Model”?
Future
EU Market Design

3. 2014 Target Model
Future
EU Market Design
EU-wide day
ahead market
coupling
EU-wide
intraday
markets
Forward MarketsFlow-based
market
coupling Balancing

4. Vienna Forum 2013:
2 game changers
• Europeanisation
• Intermittent energy

5. Commission 2013, e.g.
• Network Codes
• Infrastructure Package
• ”State interventions”
• EEAG & GBER

6. What prevails?

7. Security of Supply
2009 Russia – Ukraine dispute & impact on individual countries
> 75 %
50 - 75 %
25 – 50 %
< 25%
0%
Ukraine
% of gas supplies lost

9. Reduce Greenhouse Gas
Emissions levels by 20%
Increase share of
Renewables to 20%
Reductions
in 2012:
-18%
2020
Targets
2020 Projection: 24%
Share in
2011:
12.7%
2020 Projection: 21%
2020
Projection
Climate and energy: where do we stand?
Reduce energy
consumption by 20%
~ 16-20 %
2030 Projection: 32%
2030 Projection: 24% 2030 Projection: 21%

10. 2030 climate and energy Framework
20 %
GHG
40 %
GHG
20%
RES
20 %
EE
≥27%
RES
..2014
2020
2030 New Key
Indicators
New governance system

11. Target 2014
Where are we?

12. Is the idea of a market still valid?
Where they work, markets bring prices down…

13. • Traded volumes at EU gas hubs

14. Is the idea of a market still valid?
And they start to work…

15. • Liquid hubs with sufficient and
efficiently used infrastructure
• Functioning markets
in all of Europe
• Ensure that gas flows
to Europe
Hub
* Zones drawn for illustration. Size of zones will depend on CBA.
Source: CEER Vision for the GTM in a nutshell
The vision is to connect liquid hubs

16. Are isolated markets a
concept of the past?
Building the missing links

17. Target Model
2014
Where are we?

18. “Network Codes”
E.g. Market
Coupling
2014
• Optimised
capacity calculation
• EU-wide aggregation
of bids and offers

19. Florence Forum
13. November 2013
Future
EU Electricty
Market Design
Need for a new
Target Model?

20. 2014 Target Model: Outdated?
Future
EU Market Design
2014 Target Model: MODERN!

21. Target Model in a
state intervention
reality:
Possible adaptations?

22. •Value for Flexibility
•Balancing responsibility
•“Best practice” for C/B-open CRM?
•Solutions for C/B SoS
•True balancing harmonisation

23. Wholesale Market Design
Issues
Issue: Will merit curve survive?

24. Cooperation in parallel supply crisis?
?

25. •Price zones – lacking behind?
•Tariffs?
•Governance: focus too national?
• TSO fragmentation and ENTSO-E
• “ACER Ljubljana” vs “NRA-ACER”
• Scope of Regulation 714/715
• Scope od Directive 2009/ 72 & 73

26. Target Model/IEM
Don’t underestimate…
Participate!

27. Thank you for your attention
Dr. Oliver Koch
Deputy Head of Unit
European Commission
DG Energy
Unit B-2 (Internal Market II: Wholesale; gas & electricity)
DM 24 – 6/117
Brussels/Belgium
oliver.koch@ec.europa.eu
++32 229 87302