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Hans ten BERGE Secretary General, EURELECTRIC

Will 20/20/20 be turned into 30/30/30?. Hans ten BERGE Secretary General, EURELECTRIC. The voice of the European Electricity Industry, standing for ...a secure and reliable, low-carbon generation mix ...a well-functioning, integrated European market ...a smarter use of electricity

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Hans ten BERGE Secretary General, EURELECTRIC

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  1. Will 20/20/20 be turned into 30/30/30? Hans ten BERGE Secretary General, EURELECTRIC

  2. The voice of the European Electricity Industry, standing for ...a secure and reliable, low-carbon generation mix ...a well-functioning, integrated European market ...a smarter use of electricity ...a sustainable business environment EURELECTRIC is a pan-European and internationally oriented association

  3. Our vision • Decarbonisation with a diversity of technologies (including RES) • Cost-efficiency for customers and competitiveness for our industry • Well-functioning and integrated markets • Which instruments do we use to implement this vision?

  4. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  5. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  6. Key short-term and medium-term challenges to make RES development a success How to ensure the move to a more dynamic and cost-efficient support which uses the forces of a European market ? How to deal with volume growth in RES support design and system integration? How to reconcile RES support with the ETS in the medium term? MARKET INTEGRATION CAPACTIY GROWTH

  7. RES are part of the mix, but the way they are supported should be revisited • RES are part of the European energy mix and their share is set to grow to meet the 2020 RES targets. • As RES installed capacity grows massively and technologies mature, MS should come up with “RES 2.0” policies, i.e. a market-compatible methodology for their support • European approach: foster learning effects among MS and enhance use of cooperation-mechanisms. • RES support should be phased out long term investments should be driven by price signals including by the EU ETS

  8. We believe that robust RES development can go hand in hand with market integration and demand/supply dynamics But where is the market approach ? Where are defenders of the European single market generally? What is the follow-up to the 2010 Monti Report that had outlined the following? “Two mutually reinforcing trends are at work: an ‘integration fatigue’, eroding the appetite for more Europe and for a single market; and more recently, a ‘market fatigue’, with a reduced confidence in the role of the market”.

  9. Examples NO YES YES NO YES YES

  10. Snapshot on Germany – variable RES boom in 10 years time Peak load set to decrease by 2020 at 74 GW There will be times when demand is low and vRES generation is high…. What is going to happen? Source: EURELECTRIC, Power Statistics 2012

  11. Storage Smart Grids and demand side participation Flexible and back-up generation capacity ~ 34% of RES-Electricity by 2020 will require profound changes in the power system to manage variability Integrated wholesale markets Extensive new infrastructure at T&D level Policy makers must switch to a system wide market approach, in their commitment to decarbonisation

  12. Looking beyond 2020, what do we want for Europe? • Re-run of 2020? • EU RES Quota Obligation? • Nothing? • EURELECTRIC stands for: • Reformed ETS as a key driver + R&DD support for • immature RES technologies/CCS + indicative EU target for • RES 2030

  13. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  14. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  15. EURELECTRIC Investment Action Plan • Objectives: • Assess today’s investment needs and capability • Inject realisms into the figures usually quoted (i.e. €1 trillion up to 2020) • Undertake a risk-mapping exercise • Formulate policy recommendations to move ahead • How: • High-level Task Force to steer the work • CEO interviews • Brainstorming workshop • Involvement of broader structure of expertise • Deliverables: • Final report structured in Findings & Recommendations • Full report

  16. Utilities challenged: underperforming the European Blue-chip index… Source: Eurostoxx.com, retrieved 5 November

  17. … and losing attractiveness vis-à-vis US and Asian peers Source: Eurostoxx.com, retrieved 5 November

  18. Regulatory risk is on the rise Which risk do you rank highest when making your investment decisions? Source: EURELECTRIC, own survey Companies do not want to be shielded from all risks. But how could they hedge regulatory risks?

  19. Taxes and levies are piling up…! Source: EURELECTRIC

  20. Taxes and levies can also act as a barrier for further demand side participation as it weakens the price signal for flexibility Source: BDEW

  21. Electricity on the roller coaster: The economic recession has hit companies’ balance sheets and ability to invest Source: EURELECTRIC, Power Statistics 2012 W-shaped electricity demand W-shaped GDP

  22. From the vicious to the virtuous circle Companies need an empowering political /regulatory framework to build the confidence necessary to underpin the investments needed to the energy transition

  23. The empowering framework for investments should be built on the above principles to de-risk the industry

  24. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  25. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  26. Europe is set in a global context. Is it on top of things or lagging behind? • US: shale gas has brought down energy prices and is attracting energy-intensive industries. • China: going for nuclear + RES on top of coal; cheap labour cost for technology manufacturing. • Commodities markets: • high gas prices • low coal prices • low CO2 prices • Are we close to squaring the circle of decarbonisation • and competitiveness in Europe?

  27. Technology Demonstration and Full-Scale Integration Business Case Political and General Public Support Low-carbon, competitive electricity mix + Decarbonised industry Keep the door open for CCS. The technology needs to be demonstrated NOW. European Policymakers and industry must renew their commitment to demonstrate CCS and make it happen

  28. EURELECTRIC is committed to • “Energy Access for All” • 1,3 billion people in the world have no access to electricity. • According to UN & EC, there is a need • of 36 bn euros/year to provide energy • access to all in the world • Governments can provide 1/6 of this • The rest will have to come from the • private sector • EURELECTRIC acts as a facilitator in this • process, together with policy-makers

  29. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  30. Content The 2020 & 2030 horizons: which support for RES going forward? Powering Investment in Europe’s energy sector Europe in a global context Recommendations: Action is needed now!

  31. Recommendations: • Action is needed now! • Do not micro-manage the energy sector with multiple, conflicting policies, instruments and targets. • Integrate wholesale electricity markets by 2014 • Price CO2 correctly and make out of ETS the key driver for Europe’s decarbonisation • Ensure competitive retail markets that put customers at the center • Ensure that economic regulation schemes drive investments and innovation in regulated electricity networks, alongside cost-efficiency

  32. EURELECTRIC takes its responsibility seriously. We are committed to innovation. • Our Innovation Action Plan relies on two work-streams: • Technologies driving change in the power sector • The methodology needed for a consistent EU innovation strategy Results of our Innovation Action Plan (which includes a Mc Kinsey Study) will be presented at a high level conference May 14th 2013, in Brussels

  33. Thank you for your attention! htenberge@eurelectric.org www.eurelectric.org

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