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News in Brief, BB200710

Important but insufficient step towards a single electricity market for Europe

05.11.2007

On 19 September, the European Commission presented its ‘third liberalisation package’ on the internal market for electricity and gas. The Commission proposed to separate network operation from power production while continuing to allow ownership of the infrastructure by vertically integrated power companies. The European Wind Energy Association (EWEA) described the European Commission package as a good job, but half done. With the proposal, the Commission stops short of pushing its own preferred option of full ownership unbundling due to pressure from a handful of Member States.

“Allowing power generation companies to own the transmission grid makes as much sense as allowing an airline company to own the sky. Independent operation of transmission networks is certainly a step in the right direction, but competition in the European electricity markets will continue to be distorted until independent operation has been complemented by independent ownership of the grids. Fair grid access is an absolute minimum requirement if the EU is to meet its objective of 20% renewable energy by 2020,” commented Christian Kjaer, EWEA Chief Executive.

Given the political reality in the Council, the independent system operator model was probably as far as the Commission could go at this stage on the controversial issue. It is an important but insufficient step towards improved competition. EWEA continues to believe that full ownership unbundling is the most effective tool to promote grid investments and secure fair third party access to Europe’s power network.

The proposed ISO model will require extensive monitoring and very detailed regulation. For the wind energy sector, it is crucial that Independent System Operators are made responsible for operation as well as expansion of the grids. For the legislation to be effective, closer regulatory supervision is also necessary to guarantee price transparency, network access and clear investment incentives. EWEA supports the Commission’s proposals to increase the powers of national regulators while strengthening EU coordination of regulators. In the absence of full ownership unbundling, these measures become even more important.

EWEA also supports the Commission’s proposal to grant transmission system operators (TSOs) clear tasks, provided that it is awarded exclusively to properly unbundled TSOs, to avoid competition concerns. In addition, technology providers, such as the wind energy industry, should be granted a role to ensure that standards and operational rules are technology neutral.

More information on the ‘third liberalisation package'

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