Internal (energy) market

Achieving our 2030 renewables & efficiency objectives

Thomas PELLERIN-CARLIN, Research Fellow, European Energy Policy Jacques Delors Institute 19 November 2015, Vrije Universiteit Brussel

Jacques Delors Institute An European Think-Tank Founded in 1996 by

Jacques Delors Two offices: Paris

(since 1996) and Berlin (since 2014)

Launched the Energy

Union idea in 2010 (Buzek, Delors, Padoa-Schioppa)

Setting the scene The four freedoms I – Internal goods market and

energy efficiency II – Internal capital market matters

for RES & EE III – Building a genuine EU electricity

market

Internal (goods) market and energy efficiency

Thomas PELLERIN-CARLIN, Research Fellow, Jacques Delors Institute 19 November 2015, Vrije Universiteit Brussel

Goods & energy efficiency

• Label & ban:

– Direct or – Indirect (e.g. car emissions)

– Most efficient policies on: • Oil, • Security of gas supply.

Goods & energy efficiency Energy efficiency does work !

Goods & energy efficiency

• Key Limits: – Lack of political support:

• EU level: uncertain support (Ševčovič vs. Timmermans),

• National level: narrow vision of the national interest,

• Businesses (esp. ‘old’ energy utilities and car manufacturers).

– In ETS sectors, EE does not reduce EU GHG emissions

Internal (capital) market RES & EE

Thomas PELLERIN-CARLIN, Research Fellow, Jacques Delors Institute 19 November 2015, Vrije Universiteit Brussel

Capital: ensuring low interest rates Lower interest more RES & EE

Sources: Andreas Rüdinger, IDDRI 2015

Capital: helping ‘crisis countries’

Sources: Diacore

Estimated cost of debt for wind projects

Capital: ensuring low interest rates • Trans-sector policies:

– Capital Market Union (for all EU-28), – Eurozone policies (for ‘crisis countries’), – Crowdfunding (Commission’s

communication).

• Energy-specific policies: – EFSI targeting on RES & EE, – Network of EU/National public banks: EIB,

KfW, CDC, CDP etc.

Internal (electricity) market

Thomas PELLERIN-CARLIN, Research Fellow, Jacques Delors Institute 19 November 2015, Vrije Universiteit Brussel

A single electricity market Why? • To better integrate RES, and • Deliver low electricity prices

(excluded taxes).

A single electricity market How ? ‘United in diversity’:

• Diversity

– of RES production levels – of Electricity demand patterns

• Unity – of back-up capacities – of storage capacities

Diversity of RES production

Electricity generation from wind turbines at the local, regional, national, macro-regional and european level

Sources: Fraunhofer 2015

Diversity of electricity demand patterns Diversity of cultures diversity of electricy demand peak: • Intra-day:

– Germany: ± 11h – France: ± 19-20h – Spain: ± 21-22h

• Yearly: – EU Southern countries peak in summer – EU Northern countries peak in winter

Unity of back-up/storage A back-up capacity (gas, battery, hydro) in south-east of France can produce at: • 11.00 for DE peak • 19.00 for FR peak • 22.00 for ES peak

Link our ‘natural batteries’ (i.e. mountains)

An EU-wide electricity market enhances cost-efficient security of electricity supply for all

The needed hardware Interconnections

Pan-European significance investments post 2019 Source: ENTSO-E, 2014

The needed software Electricity Market Design fit for a 2030 market w/ 50% of electricity coming from RES. It entails: • Develop demand side management:

– real-time pricing, – liberalisation of DSOs, – consumer empowerement.

• A European approach to security of electricity

supply articulating: – EU level and, – NUTS II level (< 3Million inhabitants)

Conclusion & Recommendations 1. Go further and faster on energy

efficiency of goods, esp. buildings, cars & trucks

2. Lower interest rates, esp. for RES & EE projects

3. Develop an EU-wide electricity market to better integrate RES

4. Further reduce ETS quotas to anticipate EE & RES development

Questions? pellerin-carlin@delorsinstitute.eu

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Back-up Slides

Thomas PELLERIN-CARLIN, Research Fellow, Jacques Delors Institute 19 November 2015, Vrije Universiteit Brussel

Jacques Delors Institute An European Think-Tank Founded in 1996 by Jacques Delors One Mission: produce original & independent

policy proposals Two offices: Paris (since 1996) and Berlin

(since 2014). Donors:

EU Energy Mix (in mtoe)

EU Energy Objectives

Sources: Jacques Delors Institute

Goods & energy efficiency

• Conclusion: – Regulating goods’ energy efficiency does work

• Recommendation, more regulatory action from the Commission: – Implementation of existing legislation (esp.

Buildings), – Push on car energy consumption, then trucks, – Further reduce ETS quotas to anticipate EE

gains, – Wait after Brexit to go further on the rest.

Transport

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• Juncker, EPP candidate, 16 April 2014

• Energy Union communication, 25 February 2015

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Juncker’s U-turn on EcoDesign

Capital: ensuring low interest rates • Lower interest more RES & EE

Sources: Andreas Rüdinger, IDDRI 2015

0%10%20%30%40%50%60%70%80%90%

100%

Gaz Charbon Nucléaire Eolien Solaire

Coût d'investissement Maintenance

Combustible CO2

121€ 133€ 158€

201€ 232€

-

50

100

150

200

250

2% 3% 5% 8% 15%Taux d'intérêt

Capital emprunté Cumul des intérêts

Gas Coal Nuclear Wind Solar Investment cost

Fuel cost Estimated CO2cost Maintenance Loan

Euros

Cumulated interest paiements (on 20 years)

Interest rates

Unity of storage Example of links between Europe’s ‘Big Natural Batteries’

Sources: mappsite.blogspot.fr

Interconnections

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Swedish RES cheaper than PL coal

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The needed software for electricity market reform • Implementing the existing legislation

• Electricity Market Design for a 2030 market w/ 50% of

electricity coming from RES

• Develop demand side management (real-time pricing, liberalisation of DSOs, consumer empowerement)

• Energy poverty communication

• A European approach to security of electricity supply

• Capacity mechanisms have to be thought at: – EU level and/or, – NUTS II level (< 3Million inhabitants)

DSOs concentration

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