March 2010

Issue: March 2010

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Feature
- Joined-up thinking on smart grids in Europe

Events
- See calendar of next workshops

EU Energy Commissioner, Mr. Oettinger who came in 2nd place (after the EU Environment Commissioner) in the E-Bike race, Brussels


Feature
- Joined-up thinking on smart grids in Europe

Publications
- Generation Adequacy
- Draft benchmarking report on medium and long-term electricity transmission capacity allocation rules

Region in the Spotlight
-   2010 Quarter 1 update of all regions

Editorial
The European Commission’ clear message in publishing its 2009 Benchmarking Report is that correct implementation of EU energy laws, and infrastructure investments are top priorities. The Commission concluded that Member States still lack behind in the implementation of the internal energy market rules, a finding shared by ERGEG.  Input to the European Commission's report came from the 2009 national reports by regulators (published in January) and the Commission’s own investigations.

At the Energy Council meeting of 12 March, Member State representatives reached political agreement on the proposed Regulation concerning investment projects in energy infrastructure, adopted conclusions on the Strategic Energy Technology Plan (SET-Plan) and heard EU Energy Commissioner Oettinger’s presentation on the Commission’s communication “Europe 2020”.  Europe 2020 identifies 3 drivers of growth (smart growth, sustainable growth and inclusive growth) designed to prepare the EU economy for the next decade.

On gas issues, on 24 March representatives from EU Member States met in Brussels (2nd meeting of the Gas Committee) to discuss the proposed minimum gas transparency guidelines, which will amend the current guidelines attached to the Gas Regulation. However, no final agreement was reached at the meeting. The proposal is based on an initiative by all stakeholders of the 15th Madrid Forum, and strongly supported by ERGEG, for making minimum transparency requirements binding in an effort to improve information flows. The same day the Cross-Border Electricity Committee (made up of representatives of Member States) agreed on Guidelines for an Inter-TSO Compensation mechanism in electricity and on Guidelines for a common regulatory approach to transmission charging. According to the ITC Guidelines adopted, ACER will be charged with making a proposal, at the latest two years after it has assumed its functions, on the Union-wide annual cross border infrastructure compensation sum. The Commission shall then determine the definitive compensation sum which until that time is capped at 100m Euro per year.

The European Parliament’s ITRE committee adopted on 18 March its 1st reading report on the draft security of gas supply regulation. The plenary vote by the European Parliament is currently scheduled for 19 May 2010, but may be further delayed.  Trilogue meetings are planned so as to reach a negotiated first reading agrrment between Council and European Parliament before the end of the Spanish Presidency. 

On 17th March, ERGEG hosted a workshop on smart grids (see Feature article below on what smart grids mean for consumers and network companies). This month, the regulators have set out their views on how generation adequacy needs to be addressed throughout the EU electricity market. Interested parties can submit their views by 27 April 2010. This newsletter contains a quarterly update of each of the 7 electricity and 3 gas regions of the Regional Initiatives.  Regulators are also consulting (deadline is 14 May) on their draft report on medium and long-term electricity transmission capacity allocation.

Joined-up thinking on smart grids in Europe

Europe’s regulators have taken up the mantle of pioneering “smart grids”. Interest is high with more than 50 responses to the recent ERGEG public consultation and a full house at the ERGEG smart grids workshop on 17th March.

What is a smart grid?
The term “Smart Grids” is about planning, building, expanding, operating and maintaining the electricity networks in such a way, so as to support the achievement of the 20/20/20 targets, secure and sustainable electricity supply, in the competitive market environment. Smart grids will not look significantly different to today’s conventional grids transporting and distributing power over copper and iron.

Joined-up thinking on smart grids in Europe
Although there is broad agreement in Europe on the definition of a smart grid (see www.smartgrids.eu) there is still need for coordination of the different market actors. ERGEG’s recent public consultation (and workshop) on Smart Grids sought views on the drivers, the regulatory challenges and priorities for electricity grids to become smarter, more efficient and customer-oriented. In late 2009 the European Commission created a Task Force on Smart Grids which has 20-months to establish a proposal for a clear framework. The Task Force has 3 expert groups, of which ERGEG chairs the one on roles and responsibilities.

What will smart grids mean for consumers and retail markets?
Smart grids will help consumers better participate in the market not only by using their energy more efficiently but will lead to more “generation-oriented consumers” as consumers themselves become producers (e.g. CHP or plug-in electricity vehicles) selling back their excess electricity to the grids.  This will cause a paradigm shift in retail markets providing new opportunities for consumers and retailers alike.

What is expected of network companies?
The shift in character of network users and the integration of the new services present a number of new challenges for electricity network operators. The new challenges include amongst others network capacity planning to ensure economic and efficient network planning and methodologies that allow network capacity to be shared effectively, particularly for intermittent generation. Furthermore, they have to providing new connections considering the increasingly diverse range of generating technologies will need to be connected in efficient ways without endangering the quality and reliability of other network users. Appropriate connection requirements will need to be developed for generators of all sizes and technologies.

Smart grids help implement European energy policy
The term „Smart Grids“ stands for the way how the future electricity networks are operated, planned, built and maintained, so as to support achieving the 20/20/20 targets which cover sustainability and security of supply objectives of European energy policy.

Energy Regulator’s role in smart grids
Regulators act as key facilitators of smart grids, encouraging an adequate level and scope of smarter solutions to meet network users’ needs. See the Smart Grids FactSheet for a simple explanation of what smart grids are (and are not); how they relate to smart metering; and how (when combined with smart regulation) they can help meet the EU’s climate change objectives (including examples).

CEER/ERGEG Events

Calendar of current and future public consultations