the challenges of european energy security
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THE CHALLENGES OF EUROPEAN ENERGY SECURITY. Jiří Feist, C EZ Group. EU-WIDE DISCUSSIONS INCLUDE ENERGY SECURITY , BUT WITHOUT CLEAR PRIORITISATION. Liberalisation packages. Liberalisation of electricity market. - PowerPoint PPT PresentationTRANSCRIPT
THE CHALLENGES OF EUROPEAN ENERGY SECURITY
Jiří Feist, CEZ Group
2
EU-WIDE DISCUSSIONS INCLUDE ENERGY SECURITY, BUT WITHOUT CLEAR PRIORITISATION
„CARE“ – climate action and renewable
energy package
Liberalisation packages
Diversification of Supply
Liberalisation of electricity market
Secur
ity o
f
Suppl
y
Emissions
reduction
„Sufficient and secure electricity supply
together with GHG emissions reductions“
3
Generationcapacity
Power grids
Will there be enough generation capacity to meet demand?
Will power plants have uninterrupted delivery of fuels?
Will the grids be capable of suppling enough power?
MAIN POWER SUPPLY QUESTION MARKS
Fuel supply
4
EU-27 countries
0
100
200
300
400
500
600
700
800
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
GW*
Other
Gas/Oil
Hard Coal
Lignite
Nuclear
Hydro
Additional planned capacity
Peak demand + 5% margin (CAGR 1,25%)
* maximum available capacity = net installed capacity without non-usable capacity (availibility ratio wind: 0,25; RoR hydro: 0,3; other 0,85-0,95)
Source: Platts, Eurelectric, CEZ
EUROPEAN POWER GENERATION CAPACITY IS LIKELY TO FALL SHORT
320 GW Shortfall
Extra 320 GW has to be built till 2030 outside of current planning
EU could be short of electricity as soon as in 2013 even when considering small demand growth
New additions come mostly from gas and wind, but wind´s disponibility is rather low
5
20 25
8
27
57
5
826
2751 12
30
3114
HC IGCC CCGT Nuclear
*coal 110 USD/t, oil 80 USD/bbl, CO2 40 EUR/t
Full costs of a new power plant*EUR2008/MWh
CO2
fuel and other variables
fixed costs
capex8190
78
47
FROM THE ECONOMIC POINT OF VIEW, BUILDING NEW NUCLEAR POWER PLANT LOOKS MOST ATTRACTIVE
Nuclear plant is the most commercially attractive option for electricity generation and a viable solution for large-scale CO2 reduction
The economic evaluation of other sources is driven by CO2 regulation, which is not clear in the long run
6
Generationcapacity
Power grids
Will there be enough generation capacity to meet demand?
Will power plants have uninterrupted delivery of fuels?
MAIN POWER SUPPLY QUESTION MARKS
Fuel supply
Will the grids be capable of suppling enough power?
7
WITH THE GROWING DEMAND AND FALLING INDIGENOUS SUPPLY EU BECOMES INCREASINGLY DEPENDENT ON EXTERNAL ENERGY SOURCES
Who can provide Europe stable and secure fuel deliveries?
What are the energy options?
42
44
46
48
50
52
54
56
2000 2001 2002 2003 2004 2005 2006
En
erg
y Im
po
rts
/Co
ns
um
pti
on
Ra
tio
(%
)* ...
EU´s Energy Import Dependency
Source: Eurostat
* Excluding uranium imports and nuclear power stations consumption
8
COAL REMAINS THE MOST ABUNDANT FOSSIL FUEL IN THE EU
Lignite
Hard Coal
Oil
Gas
Source: BP Statistical Review of World Energy June 2008, Euracoal
EU´s Proven Fossil Fuel Reserves*
Total: 822 TJ
Domestic coal available in many EU statesHigh security of supplyDiversification of suppliers possiblePrice: low
* Reserves that can be with reasonable certainty can be recovered in the future from known deposits under existing economic and operating conditions.
9
NON-EXISTING GAS MARKET EXPOSES THE GENERATORS TO SINGLE SUPPLY SOURCE IN MANY PARTS OF EUROPE
Import from outside the EU necessary - security of supply dependent on supplier reliability and market access
Price: high
Source: BP Statistical Review of World Energy June 2008, WoodMackenzie
10
FUEL SUPPLY FOR NUCLEAR POWER GENERATION IS WELL DIVERSIFIED
24%
17%
9%7% 7%
6% 6% 5% 4%
0
200
400
600
800
1000
1200
1400
Au
str
alia
Ka
zac
hs
tan
Ca
na
da
US
A
S. A
fric
a
Na
mib
ia
Bra
zil
Nig
eri
a
Ru
ss
ia
Th
ou
sa
nd
to
nn
es
World uranium supply
Small quantities of fuel, easy to import
Diversification of suppliersLong-term stockpiling possiblePrice: very low
Source: IEA
11
RENEWABLES ARE POPULAR CHOICE BUT COULD NOT BE DEEMED AS SECURE SOURCE
Fuel supply subject to laws of nature – potential for human intervention limited
Considerable amount of reserve capacity and new transmission infrastructure needed to balance the wind volatility
Lower heat rate of biomass creates logistical issues and potential fuel/food scarcity
Source: EWIS, ETSO
12
Generationcapacity
Power grids
Will there be enough generation capacity to meet demand?
Will power plants have uninterrupted delivery of fuels?
MAIN POWER SUPPLY QUESTION MARKS
Fuel supply
Will the grids be capable of suppling enough power?
13
Commercial cross-border flows in 2007
sum of cross-border trade vs. country’s consumption ratio
0
10
20
30
40
50
60
Germ
any
Franc
e
Nethe
rland
s
Czech
Rep
ublic
Slovak
ia
Hunga
ry
TW
h
Import Export
13% 14% 15% 37% 67%
Source: ETSO, CEZ
External trade has become significant factor in securing supply and balancing the system
Greater interconnection capacity widens the market and thus increases generation competition and efficiency
MARKET INTERCONNECTION IMPROVES GENERATION EFFICIENCY BUT ALSO CREATES GRID BOTTLENECKS
13%
68%
14Source: EWIS
Volatility of wind power requires increasing reserves in grid capacity to absorb changing power flows when wind starts/ stops blowing
Decrease in available cross border capacity reduces trading opportunities
GROWING WIND POWER GENERATION IN EUROPE IS ENDANGERING TRANSMISSION STABILITY
15
CONCLUSIONS AND RECOMMENDATIONS
The EU has created strong tools to promote emission savings, similar measures are desirable for security of supply (gereration, fuels, grids)
Sufficient capacities of generation resources and transmission grids are the keys to energy security and an efficient energy market – the necessity are fixed rules providing long-term investment environment (e.g. long-term CO2 rules).
Need for ongoing open discussion about nuclear energy as one of indispensable sources in the European energy mix
“Secure” generation capacities can´t be dependent on the will of God (the role of renewables, while important, should be complementary to the need for secure sources in the overall energy mix).
The EU needs a strong common foreign energy policy to strengthen its position in strategic fuel supply negotiations.
Energy security should be a clear priority!
THANK YOU