May 2014

GEODE held this year's Spring Seminar on 13 May in Brussels - running under the title "The role of the DSOs in the Retail Energy Market ", bringing forward the views of European decision-makers such as the Commission and regulators as well as stakeholder from the industry on the role and new challenges for DSOs. The presentations showed how DSOs contribute to the discussion which is currently ongoing on the challenges and expectations when it comes to the engagement of consumers and how DSOs are making the retail market work.  We thank you all for your participation in our  event which brought up fruitful and interesting discussions!

ACER Green Paper on European Energy Regulation "A bridge to 2025"

ACER/CEER has opened a public consultation on the work done on “European Energy regulation: A bridge to 2025” which is ending 16 June 2014.

The consultation paper tries to identify the challenges Europe’s energy markets will face in the coming decade and regulatory responses for the period 2014-2025 and seeks stakeholders’ reactions on expected developments in the gas and electricity sectors, on the increasing importance of infrastructure, on trends in retail markets and on a series of proposed regulatory actions to ensure that energy markets operate to the benefit on European consumers.

Regarding the role of DSOs we would like to outline the following key paragraphs are dealing with 

• the exemption of DSOs from unbundling provisions contained in existing electricity and gas Directives
• proposal for further consolidation of distribution energy systems

3.33 The most effective long-term model to deliver such an outcome is ownership unbundling. However, as many respondents to our pre-consultation suggested, a thorough assessment is necessary before introducing any new unbundling requirements into legislation. The full implementation of the Third Package - applied and enforced - remains the important first step, since our present regulatory framework already ensures neutrality and non‐ discrimination as long as DSOs only have a marginal role in dispatching. However, should the DSO role grow further, stronger unbundling would seem necessary, having regard to the market models chosen for the services provided and the existing differences in distribution activity across Europe.

3.34 Further analysis will focus on whether the services currently provided by DSOs could be better provided within competitive markets and whether additional safeguards (or boundaries) are required to ensure that any such competitive market could develop alongside the monopoly operations of DSOs. Regulators will further consider the future role of DSOs, including analysis of the appropriate degree of unbundling, taking into account the views of stakeholders.

3.35 The size of DSOs is of relevance given that many DSOs are at present exempted (in the Third Package) from unbundling (required only when integrated electricity or natural gas undertakings serve more than 100,000 connected customers). Thus, customers connected to small distribution networks may not benefit to the same extent as those connected to larger systems. Indeed, small DSOs often have limited (or zero) interactions with TSOs as they may only be connected to a larger DSO. Regulators will, therefore, consider whether to recommend to the European Commission the possible revision of the current de minimis limit (of 100,000 customers) and whether (and how) to encourage further consolidation of distribution systems.

For more information on the Public Consulation and ACER's Paper - please see here.

Here is the list of the key issues that have been highlighted:

• Recognized the need for significant long-term investments in distribution networks if Europe is to meet its energy and climate objectives. Network regulation should be revised to incentivise DSOs to make the necessary efficient long-term investments.
• DSOs need to be explicitly granted access to the flexibility in their networks in order to actively manage and operate a smart grid than just “burying copper in the ground”
• Highlighted the crucial role of DSO in improving consumer awareness via targeted communication to customers on network-related issues.
• Urgent call for the revision of Network regulation that should be consistent with EU policy and provide for long-term predictability, an efficient remuneration scheme and a significant room for innovation.
• More capacity-based network tariffs should be introduced to enable DSOs to better cope with the changing operational challenges.

Here you will find the full declaration.

ECORYS / ECN Study on the Role of DSOs in a Smart Grid environment

The final report of the study "The role of DSOs in a Smart Grid environment", conducted by the Dutch consultants Ecorys and ECN and initially mandated by the European Commission is now available. The purpose of the study is to analyse the role and responsibilities of Distribution System Operators in the future retail market, given the developments towards smart grids.

Smartening of the grid offers opportunities for changing the current energy markets into more efficient and flexible retail markets. This provides possibilities to develop new services and rearrange optimal network management – thereby introducing new actors to the energy system. New tasks and responsibilities will emerge for existing and new actors and existing ones will change. As a consequence, Distribution System Operators (DSOs) are facing several challenges. The main research question to be answered by this study is: What are the roles and responsibilities of DSOs in the future energy retail market given the developments towards smart grids?

Read the study

EC Gas Regulatory Forum, Madrid, 6&7 May 2014

The Forum was chaired by Mr Dieter-Klaus Bochardt, Director Internal Energy Market for Electricity and Gas, DG-ENER, EC. Regulators, Member States and stakeholders from the industry as well as large energy consumers were attending the Forum.

The impact of the Ukrainian crisis on the security of gas supply in the EU was on top on the agenda. The Commission and the Gas Coordination Group is closely following the situation to ensure uninterrupted gas supplies to European consumers in forthcoming summer and winter seasons. Better interconnection and integration of Central-eastern, South-eastern and Baltics regions with the rest of the energy market is needed as well as the development of the North-South priority corridor. A CBA to strengthen interconnections enabling more flows from the Iberian Peninsula to the rest of the EU is necessary. The strategic role of storage and LNG for the EU's security of supply was alos outlined.

ACER/CEER presented its work on “Energy regulation: A bridge to 2025” which is currently under Public Consultation  - until 16 June 2014. The presentation focused in particular on issues related to the gas wholesale market and the recent developments to review the Gas Target Model. Stakeholders called for implementing existing legislation before developing new ones.

The role of gas in transport was highlighted and the recently adopted Directive on the deployment of alternative fuels infrastructure welcomed by Forum participants. The Commission and stakeholders will work together for the implementation of plans for the most viable concepts. CEN/CENELEC announced that there are two standards almost ready on biomethane injection in the gas grid and on biomethane gas specifications. They are now under public consultation until September 2014. The essential role of flexible gas-fired power generation in the EU backing up renewable electricity generation was recognised by the Forum.

Forum participants discussed the gas Network Codes on Tariffs and on Incremental Capacity that are currently under development. The Forum welcomed the ACER Guidelines on Harmonised Transmission Tariffs Structures for gas as well as ACER’s Guidance on harmonised approaches to market-based procedures to develop incremental and new capacity.

Regarding the implementation of the Commission guidelines on Congestion Management Procedures, the Forum welcomed the Commission interpretative note for the implementation of the CMP guidelines that is still outstanding and asked TSOs, NRAs to cooperate with ENTSOE and ACER to ensure full compliance.

The Forum welcomes the adoption of the Gas Balancing NC and considers it implementation as an important step towards completing the internal energy market as this will foster the development of short term gas markets, provide price signals and contribute to the development of competitive and efficient gas wholesale market. 

The Network Code on interoperability is now ready for adoption and the first comitology meeting will take place in July 2014. Further topics discussed were incentives for investments in gas transmission infrastructure projects and the CBA and cross-border cost allocation.

Please go here for the Official Conclusions and further information to the Forum such as presentations given etc.

EC Electricity Regulatory Forum, Florence, 20&21 May 2014

The Forum was chaired by Mr Dieter-Klaus Borchardt, Director Internal Energy Market for Electricity and Gas, DG-ENER, EC. Regulators, Member States and stakeholders from the industry as well as large energy consumers were attending the Forum.

European Commission 2030 framework on energy and climate: It is expected that the European Council will adopt the framework by October 2014 at the latest; significant progress will be made at the next European Council in June. The Forum invites Member States and the Commission to develop a European governance framework that ensures that Member States' plans regarding the promotion of renewable electricity generation are compatible with the Union's climate and energy targets, the March Council’s request to improve the EU’s competitiveness and make full use of the potential of the internal energy market.

ACER-CEER presented the work done on “Energy regulation: A bridge to 2025” which is currently under Public Consultation - until 16 June 2014. The presentation focused in particular on issues related to the electricity wholesale market. Stakeholders called for a European market-based approach and urged policy makers to remove existing obstacles still impeding the development of an integrated electricity market.

The Balancing Network Code which is currently being reviewed by ENTSOE after ACER's reasoned - negative - opinion was presented on 24 March calling for amendments.The Forum reiterates its call for more ambition in the proposed balancing network code.

CEER presented preliminary conclusions on the publication on Demand Side Flexibility, DSF. The Forum stressed out the key importance of close-to real time markets for market compatible integration of RES and asked the Commission, ACER and ENTSO-E to ensure that solutions in the balancing network code keep strict neutrality with respect to demand side solutions and the participation of aggregators and consumers and the role of DSOs in balancing markets.

System Operation Network Codes: the Forum invited ENTSO-E, ACER and Commission to verify if NCs proposed by ENTSOE could be modified in a manner that allows an adoption as Network Codes.

Intraday Market Coupling: The Forum welcomed the recent collaboration agreement between the involved power exchanges on a detailed implementation plan for the Intraday Pilot Project. It urged the project parties to maximse their efforts towards a timely implementation of the complex Intraday Pilot Project.

Congestion-based bidding zones: the Forum acknowledged the importance to allow prices to reveal the value of generation, based on demand and supply. For these reasons, the correct design of bidding zones is important to provide investment signals, both for generation and networks.

Regulatory Incentives: The Forum welcomes the ongoing work on risk-related incentives for projects of common interest (PCI) currently carried out by the Commission, ACER and ENTSO-E. It underlines the importance to come up with an ambitious approach sustaining the necessary investments in electricity infrastructure.

Finally Director Borchardt announced that the next Florence Forum will include a discussion on the role of DSOs as they are key for the new energy market design.

Please go here for the Official Conclusions and further information to the Forum such as presentations given etc.

European Parliament adopts EC Directive on the Deployment of Alternative Fuels Infrastructures

On 15 April 2014, the European Parliament adopted the EC Directive on the Deployment of Alternative Fuels Infrastructure in its last plenary session in Strasbourg held during this term. The development of alternative fuels for transport is essential for reducing the EU’s dependence on crude oil and to reduce greenhouse gas emissions. In January 2013, the European Commission proposed a directive which requires Member States to foster the deployment of infrastructure for the supply of these alternative energies for road and waterway transport. Its key objective is to facilitate the build-up of alternative fuel infrastructure and the implementation of common technical specifications for this infrastructure in the Union. The main alternative fuels considering all options available are electricity, hydrogen, biofuels, natural gas (in the forms of Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG), or Gas-To-Liquid (GTL) and Liquefied Petroleum Gas (LPG). Alternative fuels in transport still face a number of challenges. A major obstacle is the lack of adequate infrastructure for recharging or re-fuelling with energy sources which cannot be supplied through the technological channels in place for liquid conventional fuels. The adopted Directive represents a crucial step forward for the development of alternative fuels and constitutes an appropriate tool to create market prospects and give operators and manufacturers certainty.

To read the Directive, please go here.

2nd EU-wide Network Code on Gas Balancing

On 26 March 2014, the Commission adopted the second EU-wide gas Network Code on Gas Balancing (BAL). The Network Code BAL aims at fostering the short term gas markets and providing price signals as well as contributing to the development of a competitive and efficient gas wholesale market in the EU.

The Network Code BAL requires the establishment and development of balancing regimes which are based on the short term gas markets and thereby creating an economically efficient system by which gas transmission networks are balanced as well as increases the financial responsibility of market players.

The overall principle is the so-called daily balancing allowing flexibility for market players to come to an end-of-day balance with possibilities for transmission system operators to implement within-day obligations only according to certain criteria based on specific system requirements. The Network Code will come into force from 1 October 2015 in all European Member States.

Here you will find the full Network Codes.

Directive to reduce costs of deploying high-speed communication networks adopted

On 8 May, the Council adopted directive which will make it easier and cheaper to roll out high-speed electronic communications networks, among other things by promoting the joint use of infrastructure, such as electricity, gas and sewage pipes. Member states must adopt national provisions to comply with the new directive by 1 January 2016, and they must apply the new measures from 1 July 2016. As the directive only contains minimum requirements, member states may adopt additional measures to facilitate rollout and coordination.

The following provisions included in the Directive are related to network operators:

Access to existing infrastructure

Every network operator - that is, telecoms operators or undertakings active in other sectors, such as electricity distribution or waste water treatment - will have the right to offer telecoms operators access to its infrastructure for the purpose of broadband installation. Network operators will have the obligation to meet all reasonable requests for access to their infrastructure as provided for in the directive. Possible grounds for refusal include technical unsuitability, safety, public health or network security.

Access to infrastructure information

In order to be able to effectively plan the deployment of high-speed broadband, telecoms operators will have the right to access, via a single information point, the following minimum information concerning an infrastructure: location, route, type and current use, and a contact point. Similar information would be available about planned infrastructure work. Where this information is not available via the single information point, the telecoms operators may request it directly from the network operator. If the question of access to information gives rise to a dispute, any party may refer the case to a national dispute settlement body, which will issue a binding decision. This does not affect the possibility of any party to refer the case to a court.

Coordination of civil works

Network operators will have the right to negotiate agreements on the coordination of civil works with telecoms operators for the purpose of broadband deployment. If no agreement on such civil work coordination is reached within one month, any party can refer the issue to the competent national dispute settlement body. While the parties must cooperate fully with the dispute settlement body, any party also has the possibility to refer the case to a court.

Here you can read the Directive.

GEODE Member Electra Caldense inaugurates new substation

In January this year GEODE Member Electra Caldense officially inaugurated a new substation 220/25 kV named “Can Vinyals” which is located close to the city of Sentmenat and about 80 Km in the North of Barcelona.

This new installation in which Electra Caldense has invested about 5 Million EUR will ensure the company's distribution grid (25 KV) to be connected to the transmission grid of the Spanish TSO Red Eléctrica (220 KV). The objective is to guarantee the quality of electricity supply to the12300 customers living in the neighboring municipalities.

During the months the new substation has been in use, the quality of the network has remarkably improved as outages have decreased and system stability and electricity flow has increased. Electra Caldense is now provided with sufficient capacity to distribute more electricity and thereby meets the needs of tomorrow's developments.

NEW GEODE Members in 2014!

The GEODE General Assembly that came togther on 13 May in Brussels welcomed the new GEODE Members that joined the association in 2014 - please find short descriptions below!

EDITORIAL

EUROPE

• ACER/ CEER Green Paper “European Energy Regulation: A Bridge to 2025”
• DSO Declaration "Power Distribution - Contribunting to the European Energy Transition"
• ECORYS Study on the ROle of DSOs in a Smart Grid Environment - Final Paper
• EC Gas Regulatory Forum. Madrid, 6 & 7 May - Conclusions
• EC Electricity Regultory Forum, Florence, 20 & 21 May - Conclusions
• 2nd EU-wide gas Network Code on Gas Balancing
• Adoption of Directive on Alternate Fuels Infrastructure
• Directive to reduce costs of deploying high-speed communication networks adopted

GEODE PUBLICATION

• Report "Flexibility in tomorrow's energy system - DSOs' approach"

GEODE MEMBERS - UPDATE

• Electra Caldense - New Substation inaugurated
• New GEODE Members in 2014 approved by General Assembly

GEODE EVENTS

• Save-the-Date: GEODE Autumn Seminar, Barcelona, 27 November 2014

ACER Annual Conference 2014. 'REMITage: the age of REMIT'
Ljubljana, 10 June 2014

CEER Customers Conference"Retail Energy Markets: From Advocacy to Action"
Brussels, 18 June 2014

Board Meeting
Costa Brava, 27 June 2014

EU Sustainable Energy Week
Brussels, 23-27 September 2014

GEODE WG Smart Grids
Barcelona, 8 September 2014

GEODE 2nd Workshop on Electicity Network Codes
Brussels, 1 October 2014

GEODE Autumn Seminar
Barcelona, 27 November 2014

ECORYS / ECN Study on the Role of DSOs in a Smart Grid environment
23 April 2014

ACER / CEER Green Paper on European Energy Regulation "A bridge to 2025"
29 April 2014

CEER Response to EC Public Consultation on Retail Markets
29 April 2014

EC The European Files. Energy and Climate - What Strategies for Europe?
March - April 2014

EC Regulation - Network Code on Gas Balancing
31 March 2014

Directive on measures to reduce the cost of deploying high-speed electronic communications networks
8 May 2014

GEODE Report "Flexibility in tomorrow's energy system - DSOs' approach"
12 May 2014

EC Regulation on Small, Medium and Large Power Transformers
21 May 2014

GEODE, EURELECTRIC, CEDEC, EDSO4SG: DSO Declaration - Power Distribution: Contributing to the European Energy Transition
22 May 2014