Slides presentate in occasione del Seminario "The Energy transition in Europe: different pathways, same destination? organizzato da Edison in collaborazione con WEC Italia il 29 maggio 2013 a Roma - TWITTER #NRGstrategy

1. 1
The external impact of key EU energy
strategies (echo of loud voices)
Edison + WEC conference
Rome, 29 May 2013
Janez Kopač, Director of the Energy Community Secretariat

2. 2
THE COMMUNITY – A LOOK AT THE MAP
Status: February 2013

3. 3
Main upcoming legislative work
• Energy Statistics – implementation by 31st December 2013
• Directive 2009/28 on Renewables – implementation by 1st January 2014
• Third Package on electricity / gas – implementation by 1st January 2015
– + missing rules from “Second Package” !
• Large Combustion Plants Directive – implementation by 31st Dec. 2017
• Sulphur in Fuels Directive was due for 31st Dec 2011 !!
• Energy Efficiency was due for 31st Dec 2012
• Oil stocks – implementation by 1st January 2023
http://www.energy-
community.org/portal/page/portal/ENC_HOME/ENERGY_COMMUNITY/Legal/EU_Legi
slation

4. 4
20-20-20 BY 2020
EU
Greenhouse
gas levels
Energy
consumption
Renewables in
the energy mix
-20% -20%
100%
+20%
Source: EU DG ENER
EU EU EC
%6-
EU + EC

5. 5
Main EU energy ideas in Energy Community Contracting Parties
• Area EU Energy
Community
• Renewable energy sources 20% in 2020 20% in 2020
• Energy efficiency 20% in 2020 9% in 2018
• CO2 emissions 20% in 2020 not applicable
• Infrastructure PCI PECI
• Integrated energy market 2014 2015

6. 6
CONTRACTING PARTIES 2020 RES TARGETS
0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% 35,0% 40,0% 45,0%
KOSOVO*
UKRAINE
SERBIA
MONTENEGRO
MOLDOVA
FYR OF MACEDONIA
CROATIA
BOSNIA AND HERZEGOVINA
ALBANIA
18,9%
5,5%
21,2%
26,3%
11,9%
21,9%
12,6%
34,0%
31,2% 38%
40%
28%
17%
33%
27%
11%
25%
20%

7. 7
SETTING THE 2020 RES TARGETS:
“EQUIVALENCE” TO EU TARGET
• Premise of equivalent level of ambition as EU 20% target
• Three Components:
2009 Baseline RES Share
+ Flat Rate Increase - 5,5%
+ Additional Residual Effort based on relative GDP per capita (approx
1-2 %)
- Adjusted based on the trajectory approach to reflect shorter time
remaining for implementation – 15,85%
• Calculated against 2009 baseline year with latest forecasts
–Different from EU baseline of 2005 in order to use most accurate
data available

8. 8
ENERGY EFFICIENCY - A STRATEGIC PRIORITY
Source: IEA 2012 (2010 data)
ENERGY INTENSITY IS MUCH HIGHER THAN IN EU!
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
toe/thousand2005USD
TPES/GDP
TFEC/GDP
EU 27 PEI
EU 27 FEI

9. 9
ENERGY EFFICIENCY - A STRATEGIC PRIORITY
Source: IEA 2012 (2010 data)
ENERGY CONSUMPTION PER CAPITA LOWER THAN IN EU, BUT EXPECTED
TO RISE!
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
ALB BIH CRO KOS* MKD MNE SER MOL UKR WB EnC
toe/capita
TPES/population
TFEC/population
EU 27 TPES/population
EU 27 TFEC/population

10. 10
ACQUIS ON ENERGY EFFICIENCY
MINISTERIAL COUNCIL DECISIONS ADOPTED THE
FOLLOWING ENERGY EFFICIENCY ACQUIS
(Dec. 2009/Sep. 2010/Oct. 2011)
1. DIRECTIVE 2006/32/EC (ESD)
- by 31 December 2011
2. DIRECTIVE 2010/31/EU ON THE ENERGY PERFORMANCE
OF BUILDINGS (EPBD) – RECAST DIRECTIVE 2002/91/EC
- by 30 September 2012
3. DIRECTIVE 2010/30/EU ON LABELING (RECAST DIRECTIVE
92/75/EEC) AND IMPLEMENTING DIRECTIVES/DELEGATED
ACTS (ELD)
– by 31 December 2011 / 31 December 2012
New : ENERGY EFFICIENCY DIRECTIVE 2012/27/EU
– Recommendation of the Ministerial Council for transposition -
October 2013
10

11. 11
Infrastructure package
• EU Energy Community
• PCIs PECIs
• Connecting Europe Facility WBIF, neighbourhood
• Streamlining of spatial planning and building permiting
procedurec (3,5 years)

12. 12
Energy Community Strategy
In two phases:
Phase 1: A Strategy paper, endorsed by the MC in October 2012
Phase 2: Identification of Projects of Energy Community Interest (PECIs),
and associated policy measures to promote these, October 2012 – October
2013
The strategy paper has set three important objectives:
 Objective 1: Creating a Competitive Integrated Regional Energy Market
 Objective 2: Attracting investments in the energy sector
 Objective 3: Providing secure and sustainable energy supply to customers
…. and a large number of actions to support these,

13. 13
Current energy situation and national trends
Brief overview of the energy sectors in the Western Balkans/Energy
Community, common features:
 Small and fragmented markets, with the exception of Ukraine
 Dependent on domestic fossil fuel (coal/lignite) or imported gas and oil
 Single source of gas imports
 High potential for renewable energy, especially hydro, biomass, wind,
solar
 High potential for energy efficiency
 Power generation based on technologies from 60‟ and 70‟ – exceeding
their life span, high reliability and environmental concerns
 Urgent need for major retrofit, and new power plants

14. 14
Energy demand scenarios and investment costs
Three scenarios were selected:
– „Current trends‟ – if current trends in development of the energy sector
continue, what are the implications?
– „Minimal investment cost’ – what are the minimal costs required to ensure
that there is adequate supply of electricity to meet demand? this will be
meeting the energy efficiency and RE energy targets only partially, and will
not meet the Large Combustion Plants Directive
– „Low Emissions Development/Sustainability‟ - if more aggressive
promotion of EE and RE was pursued, what might be the implications?;
under this scenario all targets will be met as well as the requirements of the
Large Combustion Plants Directive

15. 15
Scenario analysis implications
A few highlights:
The scenario analysis demonstrates the potential for severe electricity
shortages if current trends continue unabated.
It also demonstrated a very large investment gap, with Contracting Parties
reported plans already at approx. 27.9 billion Euros through 2020 Western
Balkans and 44 billion Euros for the Energy Community – it is even
higher when considering the view point of other regional energy experts or
when the analysis extends to include plant in the 2021 to 2030 timeframe.
The scenarios indicate the potentially large investment needs of required
for the region to meet supply adequacy. Between 2012-2020, an estimated
14.7 billion Euros only for WBs or 39.1 Billion Euros for the entire
Energy Community of investments are needed under the scenario that
focuses on minimum supply adequacy.
It is evident that there are projects of regional significance that can benefit
from a coherent EnC energy strategy.
An EnC strategy supported by a framework for project support should help
mobilize financing.

16. 16
Indentification of Projects of Energy Community
Interest (PECIs)
Categories eligible for PECI “label”
Power generation
 New generation capacities
 Modernization, retrofitting of existing power plants, allowing for more efficient and
environmentally safe production
Electricity transmission
Gas transmission
 Gas transmission pipelines (bi-directional capacity)
 Underground storage facilities
 LNG and CNG terminals
Oil
 Refinery improvements for facilitating improved fuel quality
 Storage facilities to contribute to the security stockholding obligations
 Pipelines used to transport crude oil

17. 17
Overview of Submitted Project Proposals
Contracting Party/Project
Promoter Country
Electricity
transmission
Electricity
generation
Gas infrastructure Oil infrastructure TOTAL
ALBANIA 2 2 2 - 6
BOSNIA AND HERZEGOVINA 3 15 4 - 22
CROATIA 4 2 4 1 11
FYR of MACEDONIA 2 3 - - 5
KOSOVO* 6 4 - - 10
MOLDOVA 2 - 1 - 3
MONTENEGRO 3 2 - - 5
SERBIA 6 13 9 2 30
UKRAINE 2 2 2 1 7
TAP (Company) - - 1 - 1
TOTAL 30 43 23 4 100

18. 18
Policy/regulatory tools to facilitate PECIs
Harmonized permit granting regime for PECIs
 Most preferential treatment in Contracting Parties
 Streamlining procedures
 Competent Authority with powers to manage permit granting process
 Time limit for the permit granting decision
 Increased transparency and public participation
Energy system wide cost benefit analysis
Cross-border actions and benefits
 Cross-border cost-allocation
 National Regulatory Authorities joint decision on investments and cost-allocation
 ECRB arbitration/decision if no agreement
Long-term investment incentives
 Obligation on National Regulatory Authorities to grant appropriate risk-related
incentives

19. 19
GEOGRAPHIC TARGET
Energy Community vs 8th Region
19
8TH REGION

20. 20
Energy market
• EU - internal energy market by the end of
2014
• Energy Community wholesale market
opening by 2012, regional market coupling by
2014, adoption of 3rd Energy Package by Jan
2015, Network Codes ???

21. 21
REALITY CHECK
Electricty Wholesale Market Opening in the 8th Region
21
SEE WMO RAP Deadline &
responsibility
Done? Developments
1. Capacity calculation
- Harmonized methodologies/
procedures for capacity calculation
(yearly / monthly / day ahead)
Q1 2011
ENTSO-E SEE RG
NO
2. Long-term allocation
- Coordinated bilateral explicit
auctions implemented on all borders
within the SEE region
- Multilateral coordinated auctions on
several borders (NTC-based)
- Centralized auctions via SEE CAO
(NTC based in a first step)
- Multilateral coordinated auctions on
all borders (regional one stop shop)
Q1 2012
TSOs, Ministries,
NRAs
Q3 2012
TSOs, Ministries,
NRAs
Q4 2012
TSOs, Ministries,
NRAs
Q4 2014
ENTSO-E SEE RG
NO
PARTLY
NO
Yearly 2014 capacities expected to be
auctioned by SEE CAO end 2013
But: Serbia, Bulgaria missing

22. 22
THE KEY BARRIERS
Electricty Wholesale Market Opening in the 8th Region
22
SEE WMO RAP Deadline &
responsibility
Done? Developments
3. Day ahead allocation
- Establishment of power exchanges
in several SEE countries or
contracting services from the existing
PX
- Bilateral/ trilateral market coupling in
SEE region
- Price based market coupling (EU
target model) in entire SEE region
- Pan-European market coupling
including the SEE region
31.12.2011 the
latest
National
Q2 2012
Q4 2014
ECRB, PHLG, ENTSO-E RG
SEE
Q2 2015
NO
NO
Developemnts in Croatia
& Serbia towards
establishment of a PX
4. Intraday allocation
-on several borders
-harmonised regional solution
Q2 2014 TSO‟s
Q2 2015 ENTSO-E RG
NO
5. Balancing 2013 NRA‟s, ECRB NO SEE balancing target
model

23. 23
REAL CHALENGES
• Price liberalization
• Definition of socially vulnerable customers A socially vulnerable customer is
an electricity consumer: using energy for supplying her/his permanent housing
through single-phase meter with a connection not exceeding maximum power,
not exceeding maximum energy consumption per person and belonging to a
category of citizens with lowest income. The definition shall not include more
than a minority of population. When defining power of a mono phase meter
and energy consumption level per person, Contracting Parties shall consider
power of up to 16 Ampere and total consumption of up to 100 kWh/month for a
family with up to 4 members as maximum including the need to reflect
seasonality. For the definition of low income, beside the income all available
assets shall be taken into account.
• Large combustion plants directive - 2017

24. 24
IN CONCLUSION...