12 March 2008 1New Tasks, New Tools

European Grid Development, Market Development and Renewable Energy

International Energy Conference

Copenhagen, 12 March 2008

Peter Jørgensen

Vice President, Planning

12 March 2008 2New Tasks, New Tools

Agenda

Third Package - Infrastructure Development

Unique Role of TSO’s

From National to Regional and European Planning

From Planning to Investment Decisions – Incentives and Criteria’s

Public Authorization Procedures

12 March 2008 3New Tasks, New Tools

Third Liberalization Package - infrastructure development

Unbundling

Avoid distorted investment incentives within integrated companies

Strong national regulators

Review investment plans of TSOs

Monitor network security and reliability

ACER – Agency for the Cooperation of Energy Regulators

Perform regulatory oversight of ENTSO – 10-year investment plans

Decide on regulatory regime applicable to infrastructure

ENTSO – European Network of Transmission System Operators

Identify, manage and finance research and innovation

Coordinate grid operation according to agreed codes

Perform investment planning – coordinated long term planning

Prepare system adequacy forecasts for summer, winter and long term

12 March 2008 4New Tasks, New Tools

Responsibility of TSO’s- from long term planning to real-time operation and settlement

Market operation and settlement

System operation

Building and maintenance of infrastructure

Planning and R&D

-25 year -1 year -1 month -1 week -1 day Real-time

Operation

Unique strength of TSOs to embrace the full responsibility!

12 March 2008 5New Tasks, New Tools

From National to Regional Planning- the Nordel example

3 Nordic Grid Master Plans in last 10 years

Reinforcements in 5 prioritized cross sections proposed in 2004

Comprehensive analysis based on common data and models

4 projects decided – 1 pending

Sweden

Finland

Denmark

NetherlandsGermany

Poland

Norway

Balticum

Great Britain

Sweden

Finland

Denmark

NetherlandsGermany

Poland

Norway

Balticum

Great Britain

23

7

8

2625

20

221921

12

17

17

18

17

9

10

15

2

3

13

14

27

6

5

16

14

1128

3031

2423

7

8

2625

20

221921

12

17

17

18

17

9

10

15

2

3

13

14

27

6

5

16

14

1128

3031

24

Nordic Grid Master Plan 2008

Nordel Scenarios for 2015 and 2025

Proposals for internal and external reinforcements

12 March 2008 6New Tasks, New Tools

Nordic Grid Master Plan

Market functioning

Price formation in the integrated NordPool spot market – statistics and modeling

Security of supply

power and energy balances – statistics and modeling

margins to market failure and system failure – statistics and modeling

12 March 2008 7New Tasks, New Tools

Nordic Grid Master Plan

Reinforcements

Internal and external reinforcements analyzed

Reinforcement of external Nordic interconnections in general shows a positive cost-benefit

Investments

Level for infrastructure investments will be tripled

12 March 2008 8New Tasks, New Tools

Danish Grid Development

Major reinforcements will be triggered by international power market and off-shore wind

Urgent need for:

New guidelines on the use of overhead lines/underground cables

Efficient and faster public authorisation procedures

Gørløsegård

Bjæverskov

Hovegård

Fraugde

Kassø

Endrup

Idomlund

Askær

Ferslev

Tjele

Trige

Vester Hassing

LanderupgårdHerslev

Konti-SkanKS 1&2

NorgeSweden

Germany

Sweden

Germany

Kontek

Kingstrup

Tjele

Rødsand

Ishøj

Glentegård

København

OVerloaded connectionsOverload > 150 %Overload > 125 <= 150 %Overload <= 125 %

Alternative 1

StorebæltSB 1&2

SkagerrakSK 1&2SK 3&4

12 March 2008 9New Tasks, New Tools

Detected Bottlenecks during n-1 conditions of UCTE Detected Bottlenecks during n-1 conditions of UCTE “Scenario North”“Scenario North”

DPL

P. E

F

DK2

H

SKCZ

ACH.

NL.

B.

SI

...

.

..

HR

BiH

FYROM

. FRY.

AL.

GR.

BG

.

RO

(UA)..

DE

PL

PTES

FR

DK

HU

SK

CZ

ATCH

NL

BE

SI HR

BA CS

.GR

BG

RO

(UA)

IT

MKAL

DPL

P. E

F

DK2

H

SKCZ

ACH.

NL.

B.

SI

...

.

..

HR

BiH

FYROM

. FRY.

AL.

GR.

BG

.

RO

(UA)..

DE

PL

PTES

FR

DK

HU

SK

CZ

ATCH

NL

BE

SI HR

BA CS

.GR

BG

RO

(UA)

IT

MKAL

(NORDEL)

TIE-LINES

INTERNAL ELEMENTS

source: EWIS study

Obvious need for planning and investment decisions on European level!

12 March 2008 10New Tasks, New Tools

From planning to investment decisions - incentives and criteria’s for investment decisions

New interconnector capacity may cause considerable redistribution of wealth compared to the net socio-economic benefit - distributed in several countries!

Gen Con Cap Net

Regulation, allocation of congestion rents & compensation mechanisms must support socio-economic optimal investments on regional/European level!

Optimal interconnector capacity differs significantly between private and socio-economic welfare criteria’s

12 March 2008 11New Tasks, New Tools

SummarySome basic prerequisites for the timely development of infrastructure to support a well-functioning European electricity market, security of supply and massive integration of RES are:

Efficient TSO-cooperation on European and regional level

coordinated and qualified planning procedures and investment decisions

Strong national and European regulation

investment criteria’s based on socio-economic welfare

incentives for investments supporting goals on regional and European level

Politically supported guidelines for new infrastructure

Efficient public authorization procedures