Innovative Electricity Markets:

The key role of Transmission System Operators

Pierre BORNARD, Chairman of the Board

About ENTSO-E, an EU institution with legal mandates

41 TSOs from 34 countries

525 millioncitizens served

1000 GW generationcapacity

310 thousands kmof transmission lines

Ten-Year Network

Development Plans

Adequacy forecasts R&D plans

Tools for Market

Integration

Network Codes

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Let us start with a Quiz

In 2000, what was the prediction for global solar capacity in 2010?

4 GW8 GW24 GW41 GW

What was the actual capacity for global solar in 2010?

4 GW8 GW24 GW41 GW

In 2010, what was the prediction for global solar capacity in 2020?

87 GW113 GW247 GW324 GW

What was the actual capacity for global solar in 2013?

53 GW87 GW113 GW136 GW

IEA predicted solar capacity to reach 4 GW by 2010

10x what was predicted in 2000

IEA predicted solar capacity to reach 113- 127 GW by 2020

7 years before it was predicted only 3 years before

✓

✓

✓✓

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Solar energy: a decentralization roller-coaster?

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Same errors again?

Will storage develop quicker than expected ? Will Dynamic Demand Response develop

slower than expected ?

Nobody knows…

We have to be prepared to a wider range of scenarios

We have to explore every new opportunity

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The known challenges of the European power system

Variable, non dispatchablegeneration Thousands of small units Huge flows all over Europe

Challenges: New scarcities, system stability, resource variability, uncertainty

ENTSO-E answers: Ten-Year Network Development Plan (“Hardware”), network codes (“software”), operational coordination, market design, R&D

and millions of prosumers

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R&D needed in every industry segment

Grid components System operation

Market designStakeholders (soft sciences)

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R&D: What ENTSO-E does

Project

implementation

Dissemination

ApplicationEvaluation

R&D Planning

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Many European Union funded R&D projects

Active participation of ENTSO-E members

MERGE WINGRID

Current TSOs involvement within EU funded projects

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The key role of Transmission System Operators

They have a thorough knowledge of the Power System

The ‘market design’ is a virtual model of the physics in order to reach an optimum by trading: always bridge the gap when the physical system is changing

TSOs anticipate… because they have the final real time responsibility

They are monopolies regulated to work in the general public interest

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An example of recent success story

May 21st 2015

“Flow based market coupling” between France, Germany, Belgium, the Netherlands

mixing selective grid modeling and zonal pricing

Developed by TSOs,

in cooperation with Power Exchanges

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o highly efficient use of grid infrastructure

o high liquidity pools providing price resilience and convergence

An example of recent success storyMean spot prices (€/MWh)Thursday, 21st May 2015

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The Regulatory framework

Bad stories in the late 90s and early 2000s

For R&D, EU TSOs currently spend from 0 to 0.8% of their turnover (average ~ 0.4 %)

In most national transmission tariff regulation, no special recognition of R&D OPEX

A disconnection between the ambition of EU for Europe’s electricity power system and national regulatory frameworks for R&D

Lack of adequate framework in Europe remains a significant obstacle

Thank you for your attention