TOWARDS THE INTERNAL ENERGY MARKET IN 2014 – PAN-EUROPEAN VS. NORDIC LARGE PRODUCER PERSPECTIVE Steinar Bysveen, EVP Statkraft

Energidagene 2013

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Value of international trade

An efficient internal energy market in 2014… EU's stated goal is to have an

efficient internal energy market in 2014, and many initiatives have been taken - "Electricity market directive" 1,2 & 3 - Market Coupling - Network codes - Establishment of ACER/ENTSO-E - Unbundling of TSOs - Etc.

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…however some forces work in the other direction National renewable subsidy

schemes

Capacity mechanisms - High RES + flat demand + low CO2

leads to - A need to decommission existing

thermal plant, but with consequential worries over security of supply ("Missing money")

National capacity remuneration mechanisms across Europe

Etc.

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Unintended consequences

(high coal burn, no investment signal

from the wholesale market

etc) leads to further

intervention

CO2 market

Renewable subsidies

Capacity remuneration

Energy efficiency

DE: “Stillegungsverbot” to be replaced by

capacity market by end 2017

IT: Capacity market to be implemented in 2017

ES: Capacity payments.

BE: Financial support for new CCGTs

proposed

FR: Capacity obligation model

decided and now being designed

Example: Capacity mechanisms – EU vs National

NO, SE & FI: Strategic reserve (if security of

supply is at stake)

IR: Capacity payments in

place since 2005 EU calling for coordination: “If mechanisms are not well designed, set up prematurely or without proper coordination at EU level, they may be counterproductive.”

UK: Developing auction model; Detailed design proposal published June 2013, first

auction in 2014

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From Statkraft's perspective There is considerable value in having a trans-national market with predictable

framework conditions - Investor confidence gives efficient investment and competitive prices

Capacity markets are coming – and are needed in some markets - They must be market-wide, allowing for competition between all capacity providers. - Transmission interconnectors are the most cost-effective solution to safeguard

reliability of supply, hence need to ensure that they are also incentivised

The EU ETS should be strengthened as the most efficient and effective way of furthering the de-carbonisation of Europe

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