Posted: 20 March 2014
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European investment

Nick Winser, National Grid’s Executive Director UK, offers his perspective on the role of the internal energy market and network codes in achieving the EU’s low-carbon ambitions as we look towards the horizon of 2030.

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European investment

European investment

Nick Winser, standing right, addresses the European Energy Forum’s debate on the internal energy market. Standing, centre, is Jerzy Buzek MEP.

“The benefits from full market integration would be in the tens of billions per year by 2030.”

Nick Winser, National Grid’s Executive Director – UK and President of ENTSO-E

Insight:

EU customers could save up to €13bn a year if they could take advantage of cheaper offers from a wider range of electricity and gas suppliers

Source: European Commission

In his capacity as President of the European Network of Transmission System Operators for Electricity (ENTSO-E), Nick Winser offered his perspective recently on the role of the Internal Energy Market (IEM) and network codes to a group of MEPs. They were attending a European Energy Forum at the European Parliament in Strasbourg entitled ‘Completing the Internal Energy Market (IEM) and paving the way towards 2030 through network codes’. The meeting, which was chaired by Jerzy Buzek MEP, former President of the European Parliament and former Prime Minister of Poland, was attended by about 15 high-profile MEPs and industry stakeholders. Here’s a summary of Nick’s main points…

 

In January, the European Commission released its communication on the 2030 Framework for Climate and Energy Policies, kicking off what will be a pivotal year for energy in the EU as we look towards the completion of the IEM.

Nick Winser, National Grid’s Executive Director – UK and President of ENTSO-E.

Nick Winser, National Grid’s Executive Director – UK and President of ENTSO-E.

The objective of the IEM is to create a competitive energy market in Europe – and an interconnected Europe will, in the longer term, lead to an opening up of the market and a reduction in energy prices.

Having an interconnected European market will help the EU to meet its low-carbon targets, while increasing security of supply by giving people access to a more diverse energy mix. It will also play an important role in integrating a variety of new sources of energy onto the system, such as renewables.

A single electricity market is therefore vital if Europe is to create that competitive environment – and according to various studies conducted for the European Commission, the benefits from full market integration would be in the tens of billions per year by 2030.

A standardised Europe

We can think of the challenges faced in developing the IEM in the context of three themes:

  • Infrastructure – We need the right infrastructure in place if we are to ensure security of supply, optimum generation capacity and increased competition across Europe.
  • Markets – We need well-designed market rules that will allow new businesses to emerge, without discrimination against market players or technologies, and to ensure that the best solution for European consumers is always put first.
  • System operation – We need coordinated rules for operating the electricity network. The IEM should minimise the occurrence of events such as the 2003 Italian blackout, which affected 56 million people,

An interconnected electricity system must be based on standard technical requirements for all participants, be they generators or consumers. These requirements ensure that the network is capable of delivering the services needed for an efficient completion of the IEM, at the cheapest cost for European consumers.

The central role of ENTSO-E and network codes

Network codes are therefore central to the implementation of the IEM.

These codes are sets of technical rules and requirements that apply to one aspect of the electricity sector but which, when put together, will make the IEM possible. They are drafted by ENTSO-E, the European Network of Transmission System Operators for Electricity, with guidance from the Agency for the Cooperation of Energy Regulators (ACER).

Establishing the codes is significant and important work, supporting the development of networks that connect over 800GW of generation through more than 300,000 km of transmission lines in order to serve 530 million customers.

In effect, network codes will gradually allow us to create a seamless energy market in Europe, while underpinning the success of broader projects, such as market coupling between European countries.

ENTSO-E was set up in 2009 to promote cross-border collaboration and investment in the energy networks. Made up of 41 transmission system operators, the organisation is working with others to develop these common commercial and technical network codes, as well as broader pan-European network development plans.

For its part, National Grid is one of the major contributors to the working groups that are drafting the network codes and developing the long-term plans for transmission of electricity within Europe.

Investment for the future

The Ten-Year Network Development Plan 2012, published by ENTSO-E, identified more than €100bn worth of projects identified as delivering benefits across Europe. These are investments on a major scale, so it’s essential that policy makers consider these challenges in the broader context of energy policy.

To make the IEM a reality, we have to understand where the generation and demand will be located, what capacity will be required and where there is a need to upgrade the existing system and construct new infrastructure. We also need to increase our level of interconnections across Europe, while getting the right regulatory regimes and permitting processes in place to facilitate these investments.

Great progress has already been made towards the European internal energy market, with network codes playing an important role. But no one should underestimate the challenges still to come in 2014 and beyond if we are to meet our future targets.

Click here to view and download Nick’s presentation via the European Energy Forum web site.

Read more

Following his appointment as President of ENTSO-E, Nick Winser, National Grid’s Executive Director UK, talks about the organisation’s goals and challenges and some of the work National Grid is doing to help build an interconnected, low-carbon European energy network. Click here to view.

Sources

1. Bruegel Blueprint Series, (2013).

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