transmission and distribution
Systèmes sans frontières1 November 2009
A new organisation has replaced all the former TSO associations in Europe. The European Network of Transmission System Operators for Electricity (ENTSO-E) was brought into existence by the EU in 2008 and started up in July this year. It has a new status, giving it a greater range of duties, which are outlined here.
ENTSO-E, which was established on 19 December last year, became fully operational on 1 July. It has been brought into existence to continue and consolidate the work of the TSO associations it replaces. It therefore welcomes the EU 3rd Internal Energy Market Package, which entered into force on 3 September, and is already implementing some months ahead of schedule the new responsibilities the Package assigns to it.
Here we describe briefly the history of TSO co-operation in Europe, and the most important new, pan-European tasks that ENTSO-E members need jointly to accomplish to support Europe’s energy policy goals for the coming decades.
ENTSO-E expects to continue the history of successful TSO co-ordination of its six predecessor associations ATSOI, BALTSO, ETSO, Nordel, UCTE and UKTSOA. In continental Europe, this history reaches back to 1951 with the creation of UCPTE, which in 1999 dropped its ‘production’ responsibilities with the creation of the Internal Energy Market and became UCTE. Nordel was founded in 1963 to enhance co-operation among the TSOs of Denmark, Finland, Iceland, Norway and Sweden. UKTSOA and ATSOI represent the TSOs of the UK and Ireland respectively. In 2006, following the accession of the Baltic states to the EU, the TSOs of Estonia, Latvia and Lithuania founded BALTSO to promote closer co-operation.
On the emergence of the Internal Electricity Market in the European Union, the leaders of ATSOI, UKTSOA, Nordel and UCTE recognised the need for an EU-wide harmonisation of network access and conditions for usage, especially for cross-border electricity trade. For this, in 1999, ETSO was created and in 2001, became an International Association with direct membership of 32 independent TSO companies from the 15 countries of the European Union plus Norway and Switzerland. Before its activities were transferred to ENTSO-E, ETSO represented 40 TSO member companies across Europe.
By 1 July the six predecessor associations for TSO market-related activities (ETSO) and for Europe’s five synchronous areas (ATSOI, BALTSO, NORDEL, UCTE and UKTSOA) were wound up. The committees, working groups and task forces transferred their work into the new ENTSO-E structure where the work is to be continued, and is likely to be enhanced through the pan-European perspective of ENTSO-E.
Legal basis and raison d’être
Unlike its predecessor associations, ENTSO-E is not merely a voluntary organisation, although it remains an ASBL (‘non-profit making organisation’) according to Belgian law. Its legal raison d’être is EC Regulation 714/2009 on conditions for access to the network for cross-border electricity exchanges. The Regulation is part of the Third Legislative Package on the Internal Electricity Market, which was adopted by the Council on 25 June 2009. This regulation demands the establishment of a European Network of transmission system operators for electricity to ‘ensure optimal management of the electricity transmission network and to allow trading and supplying electricity across borders in the Community’. In the Regulation the aims of ENTSO-E are defined as enhancing integration of the European electricity market and contributing to a sustainable energy environment as well as to the secure and reliable operation of the European power transmission system.
The Package gives ENTSO-E a clear mandate to continuously improve co-operation of the European TSOs and to play an active and significant role in the European rule setting process via the developmnt of network codes and network plans. ENTSO-E’s pan-European 10-Year Network Development Plan (TYNDP), one of ENTSO-E’s key deliverables, needs to reflect Europe’s energy policy objectives such as the future development of wind and other renewable energy sources. Moreover, network codes with binding rules for TSOs and grid users will be crucial for maintaining system reliability and a well functioning electricity market.
Work on these new tasks has already started – many months ahead of the 3rd Package schedule. The schedule foresees the formal establishment of ENTSO-E only after the new regulatory agency ACER (Agency for the Co-operation of Energy Regulators) becomes operational in early 2011. It is ENTSO-E members’ intention and also a required by Regulation 714/2009 that it develops its work processes in close co-ordination with ACER and all concerned stakeholders, through extensive public consultations beginning at an early stage of each part of the work.
ENTSO-E has just published its first programme – valid for one year through to the end of 2010 – for public consultation by stakeholders. It sets out the framework and provisional timelines for various foreseen deliverables. Apart from the new task of the non-binding pan-European TYNDP, the highest priority work items concern specific network codes, a consolidated pan-European R&D plan for TSO needs, and measures to improve operational co-ordination. For some important areas of network codes, other co-operative work has to be accomplished first. For example, ENTSO-E together with regulators, the Commission and other stakeholders are pushing forward the Florence Regulatory Forum's ‘Target Model’ of the ‘Market Integration Design Project’, a blueprint for the future pan-European wholesale electricity market. This target model needs to be finalised before any congestion management network code can be. Therefore, the codes for which major progress can be achieved before the end of 2010 are in the fields of transparency, connection conditions for wind and other generators, and some cross border aspects of TSO operations.
Network codes are very important deliverables of ENTSO-E. The 3rd Package defines the code development process in great detail and lists twelve topic areas. The EU Comitology – an EU legislative process for detailed implementation of existing legislation in a committee involving the Commission and member states, and also scrutiny by the European Parliament – applies to network code development, making the codes binding not only for TSOs but also for other affected market participants. The involvement of the European Commission, the member states, ACER and extensive public consultation will ensure that the codes are well balanced. Making the codes binding for other market participants remedies a difficult-to-solve shortcoming of the European energy market before the 3rd Package, namely that TSOs could make their operational rules binding for themselves through instruments such as Operation Handbooks and Multilateral Agreements, but no rules could be imposed on other market participants even when their co-operation was crucial (as was often the case) for operational security and market integration.
Pilot network code
With the support of the Florence Forum, the Commission and the regulatory group ERGEG, one of these priority network codes will be developed as a pilot project: the pilot code for wind generation connection interfaces is to exercise and test ERGEG's framework guidelines and ENTSO-E's code drafting processes and the associated consultations. The objective is thus to find the most efficient and practical applications of the new approaches made possible by the 3rd Package, even before ACER is officially established.
Once ACER is officially in place, the resulting network code would still need to go through these formal steps again, but it could proceed much faster. The final steps of the pilot network code would then be the submission and passage through the Commission’s Comitology process, making the code binding for all market players. European rules and harmonised grid code requirements are particularly urgent for interfacing with the transmission networks the rapidly growing number of offshore and onshore wind parks foreseen in European energy policy so that they contribute to secure system operations rather than increasing operational risks.
Available results from the European Wind Integration Study (EWIS) provide a valuable starting point. Common standards will facilitate adoption of best practices across Europe and thereby facilitate the achievement of policy goals (i.e. with respect to security/quality of supply, economic efficiency and environmental objectives). Manufacturers and developers of wind turbine generators hope to be able to reduce costs by standardising the design of wind generator equipment, protection and controls. Wind generation developers and network operators would benefit from lower costs of interfacing standardised turbines (i.e. reduced costs in connection design, commissioning/ compliance testing and implementing operational requirements). A European harmonisation mechanism for grid code structures and harmonisation of technical content will also increase transparency and bring benefits to every affected party.
Despite the special attention the pilot code will receive, work in ERGEG and ENTSO-E on other priority network code issues will begin soon after and continue in parallel. The consistency of wind generation connections conditions with the connections conditions for other types of generation, including conventional power stations and micro- and renewable generation at distribution level, will be ensured twofold: through the framework guideline setting policy objectives for all connection issues and thus becoming the common frame for several network codes and through a general generation connection networks code to be addressed soon.
The Network development plan
The TYNDP provides a common and consolidated non-binding vision for the development of pan-European high voltage transmission infrastructures and will be updated every two years. It will be derived from expected needs of system users but also from the expected contribution of the transmission grids to fulfil the European objectives concerning renewable energy integration, promotion of the Internal Electricity Market and the overall umbrella challenge to maintain and improve the security of electricity supply.
The document will propose a generation adequacy outlook, the modelling of integrated networks in order to assess most probable power flow patterns as well as an identification of investment gaps and investment projects. One essential focus of the document will be the development of cross-border capacities, with an assessment of resilience of the proposed reinforcements and a review and discussion of barriers to increase cross-border capacities arising from approval procedures and practices. The Plan will therefore address a wide range of issues, from challenges for grid development and market analyses, through grid bottlenecks and weaknesses to planned transmission projects and technologies for the future.
The aim of the Plan is to provide a common reference point for all concerned stakeholders, summing up the most accurate information regarding the European high-voltage grid development concerns. The main challenge of the first manifestation of it consists in combining the bottom-up approach underpinning national or regional investment plans with the top-down policy goals laid down in scenarios such as the 20-20-20 targets of the EU. Another substantial challenge of this project is to cope with uncertainties that are primarily determined by market developments on the long-term development of EU and national energy policies, which can greatly affect generation sizing and siting and thus the very basis for all grid planning.
In this context, the ENTSO-E consultation process will be used extensively to design demand and generation scenarios, building on national plans (bottom-up) but also top-down from the European 2020 objectives. Generation adequacy based on market simulations, necessary grid extensions, regional grid investments, interconnection capacities and investments to perimeter power systems, the adequacy of inter-regional interconnections, and new technologies will all be addressed. This should lead to a longer-term (up to 15 years) vision of the European electricity network to be engineered and operated by the TSOs, and an important new basis for assessing investment decisions in generation and transmission.
The first release of the TYNDP in the first half of 2010 – also with intensive stakeholder consultations – will have “pilot” character in the sense that not all needed data from grid users such as power plant developers may be available, and that planning methodologies will still need to be improved. Nonetheless, the TYNDP will be the first plan for the continent not just assembled bottom-up from projects planned by each TSO, but also tested as an integrated plan against the 2020 energy policy goals. As such, the TYNDP will play a major role for the achievement of the energy policy goals, for example in showing what transmission infrastructure is needed for the system integration of the ambitiously targeted amounts of renewable energy.
ENTSO-E addresses the challenges for the pan-European transmission grids, the major ones being related to the European 2020 targets and the 3rd Energy Package, namely maintaining security of supply, supporting the system integration of renewable energies and supporting the development of the European Internal Electricity Market.
The pan-European transmission grid is central to meeting the EU 2020 (and beyond) targets at affordable cost. The new ENTSO-E organisation and the intense work already begun on network codes and the TYNDP should serve to successfully meet these challenges for the benefit of European energy policy goals and European electricity customers.