Ena
- 1. Energy Networks Association – ENA Comments on EU Green Paper “A European Strategy for Sustainable, Competitive and Secure Energy” 30 August 2006 The Energy Networks Association is funded by the UK’s electricity and gas transmission and distribution companies.
- 2. 2 Overall, the ENA supports the stated aim of establishing a coherent energy policy for Europe. We believe there is a need for a strategic approach to energy issues across the EU which enshrines a market framework and allows the necessary flow of information and cooperation without unnecessary interference in the proper functions of businesses. On this basis, we would question certain Green Paper proposals, specifically those relating to: a European Centre for Energy Networks; a European Regulator; a European Grid Code; and a Priority Interconnection Plan. Our comments are set out below: • Completion of the Internal Market From our members’ perspective, the key priority is the completion of fully competitive internal gas and electricity markets. We would like to see the full implementation of the 2003 Electricity and Gas Directives before any further legislation is considered. We note the measures taken by the Commission in recent months against those Member States who have not yet fulfilled their obligations under the Directives, and acknowledge that this increased level of activity is necessary to achieve the aims of the Internal Energy Market. • European Centre for Energy Networks and European Regulator The Green Paper suggests that a number of new institutions be established, which include a European Centre for Energy Networks, and a European Energy Regulator. In principle, we see little value in creating an additional layer of European bureaucracy. We accept there is a need for improved co-operation between regulators, between network operators, and between regulators and network operators. The Commission’s focus should be on facilitating more effective and productive ways of working between Member States, regulators, and network operators, at a regional and a Pan European level. In the case of the network operators, there are already industry bodies in existence, such as ETSO, the European Transmission System Operators Group, which advise the Commission on network transmission issues, and this relationship should be further developed and enhanced. On the regulation side, we see ERGEG’s collaborative work on the regional markets as a pragmatic way forward. There is a recognised regulatory ‘gap’ on certain cross border issues, with differing national approaches to investment, and different regulatory regimes, which does need to be addressed. It is accepted that the powers of some of the “weaker” European regulatory regimes may need strengthening. • European Grid Code The Commission has not spelt out what might be contained in a European Grid Code. Full harmonisation of the technical rules set out in the national grid codes should not be pursued in its own right, compatibility is all that is neccessary, and the initial focus of this work should be on the arrangements at cross-border points.
- 3. 3 • Security of Supply The 2005 security of supply directives for both gas and electricity, as new legislation, should be allowed a reasonable amount of time to operate, before the Commission initiates any sort of review or revision. • Priority Interconnection Plan The Green Paper refers to a Priority Interconnection Plan. We would urge caution with regard to the adoption of arbitrary targets for interconnection; transmission investment should be led by the market, not by the Commission. We welcome the recognition that there is an urgent need for investment to replace ageing infrastructure. It is estimated that European investments of around one trillion euros will be needed over the next 20 years. However, for this level of investment to be achieved, there is a need for a stable, and predictable, regulatory framework. UK Energy Review Running in parallel with the European energy debate, the UK has had its own Energy Review. We believe that UK and EU energy policy, as far as possible, should be harmonised, in order to facilitate a liberalised free market in energy across the EU. Investment is the key. The UK Government has come to the conclusion that its preferred mix of generation will require a massive investment in both generation, and in the networks. It sees the market within a regulatory framework as the method by which this can be delivered. We believe the EU approach should be the same. As far as electricity is concerned, new nuclear power stations, even if built on the site of existing installations, are going to require upgrades to the lines and connections, as the output from the new generation of power stations will be vastly different from that of the older ones. Likewise, renewable sources, distributed about the networks, are going to require new connections and lines to be built, which will require considerable new investment and have significant impacts in considering adequacy of reserves and operating margins. As far as gas is concerned, there is a need for investment in the existing networks, to replace and upgrade ageing assets; in new gas pipelines, to meet demand growth and maintain operating pressures; and in new gas storage, to meet demand growth. The ENA has called on the UK Regulator to look again at its latest Transmission Price Control Review, which we believe fails to address the need for large long-term investment in infrastructure to meet the Government’s targets as set out in its Energy Review. For more information please contact me. David Smith Deputy Chief Executive Energy Networks Association 18 Stanhope Place, London W2 2HH UK Tel: +44 (0)20 7706 5106 Fax: +44 (0)20 7706 5101 www.energynetworks.org