Politics To Complement Market, System Operations and Infrastructure Regional Coordination

Regional Cooperation among Member States

The regional level is an efficient one for political leaders to meet and discuss the coordination of their respective energy policies. The Pentalateral Energy Forum has set direction in this sense. Such coordination helps preventing market distortions or systemic difficulties due to diverging political choices and therefore allows Member States to develop policies that best serve their consumers. For instance, if some Member States decide that their security of supply concerns legitimate the development of capacity mechanisms, they should do so as far as possible in close collaboration with their neighbouring countries to mitigate the risks of market distortions and define effective cross-border participation. Likewise, Member States that consider that they do not need to implement dedicated market solutions to secure their security of supply should discuss it with their neighbours to prevent disruptions from affecting the whole region. Renewables support mechanisms should also be discussed by Member States at regional levels to avoid market distortions.

Regional coordination groups can be used as a platform for Member States to discuss in an informed manner and to coordinate further their decisions related to the crossborder effects of their energy mix. The ENTSO-E adequacy assessment and methodology as well as the common definitions and indicators will provide a consistent basis for these discussions and a level playing field.

POLITICAL COOPERATION IN CASE OF WIDE SCARCITY AND OF EMERGENCY SITUATIONS

The network codes, especially the Emergency & Restoration Code, define emergencies and the tools that can be applied to manage them to prevent blackouts. However, there can be widespread scarcity situations that do not meet the conditions for declaring an emergency and that therefore need to be handled by the electricity markets. The more flexible the power system becomes, e. g., with smart grids and demand response, the more the relative national price levels intraday and for imbalances will determine where the scarce electricity is delivered. In its position paper “Where Markets Meet Security of Supply”, ENTSO-E suggests Member State discussions on regional and Europe-wide scale of the results of ENTSO-E’s adequacy analyses based on future common definitions of reliability indicators. With ENTSO-E’s new, improved adequacy methodology, these discussions will for the first time have a firm quantitative basis.

Recommendations

  1. Member States should use regional coordination groups to discuss and coordinate their energy policy with potential trans-national effects, including crossborder consequences of their energy mix decisions, market design and RES support mechanisms.