EUROPEAN POWER & ENERGY Market Coupling
A decisive step towards a single European Electricity Market The partners of Central West European (CWE) and the Nordic
countries took a decisive step towards the integration of the European electricity market in November. This innovation entails the simultaneous launch of two new initiatives: the CWE price market coupling and the CWE-Nordic region Interim Tight Volume Coupling (ITVC). European consumers are expected to benefit from economic optimisation resulting in a more efficient use of the power system in the region, convergence or equalization of prices, improving social welfare and security of supply. The market coupling method, developed jointly by the power
exchanges and the transmission system operators (TSOs), aims at a more efficient use of available cross-border capacities and further price harmonization across the regions. It creates a single platform for day-ahead electricity trading, allowing power exchange members to find a counterpart in any of these countries without taking care of cross border capacity reservation. The CWE price coupling covers Belgium, France, Germany,
Luxembourg and the Netherlands. It is based on a coordinated capacity calculation performed by the transmission system operators and a coordinated price calculation performed by the power exchanges. The Interim Tight Volume Coupling solution is based on the
existing EMCC (European Market Coupling Company) tight volume coupling model connecting the German borders, and thus as of now the entire CWE region, with the Nordic market via the interconnectors between Germany and respectively Denmark and Sweden. The two initiatives integrate a day-ahead market of 1,816 TWhs of power production, being the largest of its kind in the world and covering approximately 60% of electricity consumption in Europe – achieved thanks to the close cooperation between the 17 partners involved. •
The Commission’s plan got a
mixed response from policymakers and industry alike. While the focus on energy efficiency was hailed by many, some pointed out that it lacked credibility without concrete measures. Energy efficiency and savings must be a central plank of EU energy policy if the EU is to achieve its energy security and climate goals. Yet the Commission only vaguely dealt with this core issue and would seem to prefer delaying win-win measures that could be implemented now,” said Green MEP Claude Turmes (Luxembourg). The Socialists & Democrats group
in the European Parliament pointed out the failure to address binding targets for energy savings. “EU member states are not on track to meet the 20% savings target that is crucial for reaching our goals of economic recovery and
36 December 2010
environmental sustainability,” said Swedish MEP Marita Ulvskog (S&D). “There is no real commitment on the core issues
of reducing energy use, increasing the supply of renewable energy and upgrading energy grids. Instead of addressing the needs of energy consumers, such as rising energy prices, the Commission mainly prioritises the interests of energy companies,” said Poul Nyrup Rasmussen, president of the Party of European Socialists (PES). He labelled the strategy a “charter for traditional energy use”. However, European business cautioned that energy
saving measures should remain voluntary. Small businesses “must be incentivised to take them up rather than burdened with additional administrative requirements,” said Eurochambres, which represents EU Chambers of Commerce. The European Renewable Energy Council criticised
the Commission for “low-carbon rhetoric” rather than establishing a stable framework for renewable energy leading up to 2030. “A well-functioning, undistorted, internal energy market would give us the level playing field we have always argued for,” said Arthouros Zervos, EREC President.
Going Forward A growing world population, particularly in Asia and
fast growing world economies are now becoming huge energy importers ... to compete wit the OECD. And that brings bad news to the EU which, in the foreseeable future, will remain highly dependent on energy, especially gas, imports. A weakness of the EU has been the lack of a common
European energy infrastructure framework. The importance of an effectively interconnected European market has been lauded for many years, but undermined within the Trans-European framework which has been under-financed and allowed for very little EU coordination. As the economies of the Member States come out of recession such under-investment may lead to a shortage in energy supplies which could eventually increase bills, slowdown economic recovery, and jeopardize the credibility of the EU in implementing its 2020, let alone 2050 strategy goals. The EU’s future energy market remains unclear. On the one
hand, the EU is taking steps to diminish its energy dependency by mobilizing funding to build necessary energy infrastructure and through various policy initiatives, such as reducing CO2 emissions, increasing energy efficiency and promoting renewable sources of energy to reduce energy dependence. But the reality remains that, for example, gas at the German border is about one-third cheaper than in the Baltic States. The single internal energy market will remain a vision and the
overall competitiveness of the EU will be put at stake as long as it fails to ensure that it speaks with one voice in external energy matters. To overcome these, and other drawbacks, Europe needs an ambitious and comprehensive long-term European Energy Strategy. Hopefully, we can count on the Commission to deliver it in the coming months. •
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