Abstract
Cross-border cooperation on energy policies is crucial for achieving the ambitious goals of the low-carbon transformation in Europe and the energiewende in Germany. Because the European electricity system is so densely interconnected, reform processes in one country affect the broader European market, whether through price effects, cross-border flows, or the sharing of backup capacity. Countries engaged in cross-border cooperation face the transaction costs of implementing new regulatory regimes and sometimes significant distributional effects. Spillover effects of investments in one country can be either positive or negative for neighboring countries. At the beginning of the low-carbon transformation process, Europe-wide coordination was the main driver of development, whereas today, regional cooperation among several neighboring countries plays an important role, and there are also cases of bilateral cooperation between countries over national energy policies. In this chapter, we analyze different forms of cooperation in the context of the European low-carbon transformation process and provide empirical evidence on some concrete cooperation schemes. The chapter focuses on regional cooperation schemes, as these provide plentiful evidence of developments and progress to date. Section 12.2 discusses potential fields of cooperation and specifies our classification of cooperation types. Section 12.3 focuses on the potential scope of regional cooperation in the electricity sector, and describes existing examples of cooperation, such as the Pentalateral Energy Forum (PLEF) and the North and Baltic Sea Grid Initiatives. Sections 12.4 and 12.5 provide model-based analysis of the concrete effects of regional cooperation: joint balancing markets in the Alpine region, and transmission expansion in the North and Baltic Sea Region. Section 12.6 draws lessons from the analysis and concludes.
“We are convinced that an intensified regional cooperation is an important step towards further EU market integration, that it will increase energy security, reduce energy prices and costs and promote further integration of renewable energy.”
Joint Declaration for Regional Cooperation on Security of Electricity Supply in the Framework of the Internal Energy Market, Signed in Luxembourg on June 8, 2015, by Germany and its 12 “electrical neighbors” (p. 1).
This chapter is based on previous research by the authors on cross-border cooperation, amongst them Gerbaulet and Weber (2018), Egerer et al. (2013, 2015, 2016), and Lorenz and Gerbaulet (2014); the usual disclaimer applies.
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Notes
- 1.
European Commission. 2009. Directive 2009/72/EC. Brussels, and European Commission. 2009. EC Regulation No 714/2009. Brussels.
- 2.
ENTSO-E. 2015. “Member States to Coordinate Energy Policies Starting at Regional Level with ENTSO-E Commitment to Contribute.” Press Release. Brussels, Belgium: European Network of Transmission System Operators for Electricity.
- 3.
NordPoolSpot. 2014. Europe’s leading power markets. Presentation. http://www.nordpoolspot.com/Global/Download%20Center/Annual-report/Nord-Pool-Spot_Europe's-leading-power-markets.pdf.
- 4.
Here the allocated capacity on the interconnectors is not static, but flows on adjacent markets’ interconnectors influence the transfer capacity available to the market to fully utilize available energy transfer capacity. Therefore, FBMC is likely to increase cross-border electricity transfer and reduce the price spread between markets while maintaining the same level of security of supply.
- 5.
For details on the coupling see APX Group (2014). North-Western European Power Markets Successfully Coupled – A landmark in the integration of the European power market. Press release, Amsterdam, The Netherlands, last accessed September 14, 2016 at http://www.apxgroup.com/press-releases/north-western-european-power-markets-successfully-coupled/.
- 6.
Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Italy, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland, and The Netherlands.
- 7.
See also Pickles, Mark (2016): XBID: Cross-Border Intraday Market Project—Third User Group Meeting; Brussels.
- 8.
Epex Spot SE 2018. Exchange council supports migration of products from local trading systems to xbid; https://www.epexspot.com/de/presse/pressarchive/details/press/Exchange_Council_supports_migration_of_products_from_Local_Trading_Systems_to_XBID.
- 9.
ENTSO-E 2017: Update on imbalance netting. Presentation at the Balancing Stakeholder Group on the 28.09.2017, Brussels. https://www.entsoe.eu/Documents/MC%20documents/balancing_ancillary/2017-09-28/170928_BSG_Imbalance_netting.pdf.
- 10.
By publishing in the Official Journal of the European Union the Network Codes became the EU regulation: Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing.
- 11.
ENTSO-E. 2014. “ENTSO-E Network Code on Electricity Balancing – Version 3.0.” Brussels, Belgium: European Network of Transmission System Operators for Electricity.
- 12.
In addition to Germany: Poland, the Czech Republic, Austria, Switzerland, France, Luxemburg, Belgium, the Netherlands, Denmark, Norway, Sweden.
- 13.
European Court of Justice. 2014. “Ålands Vindkraft AB v Energimyndigheten.” Judgment of the Court (Grand Chamber) of 1 July 2014 Case C-573/12. Luxemburg.
- 14.
PLEF. 2015b. “Second Political Declaration of the Pentalateral Energy Forum of 8 June 2015.” Luxembourg.
- 15.
CASC. 2014. “CWE Flow Based Market-Coupling Project: Parallel Run Performance Report.” Luxembourg.
- 16.
PLEF 2018: Generation Adequacy Assessment. Support Group 2. Brussels, Belgium. http://www.benelux.int/files/1615/1749/6861/2018-01-31_-_2nd_PLEF_GAA_report.pdf.
- 17.
See EC (2014). Baltic Energy Market Interconnection Plan – 6th Progress Report. last accessed September 14, 2016 at https://ec.europa.eu/energy/sites/ener/files/documents/20142711_6th_bemip_progress_report.pdf.
- 18.
UVEK, BMWFJ, and BMWi. 2012. “Erklärung von Deutschland, Österreich und der Schweiz zu gemeinsamen Initiativen für den Ausbau von Pumpspeicherkraftwerken.” Berlin, Germany; Bern, Switzerland; Vienna, Austria.
- 19.
See Hildmann, M. et al. (2014). Pumpspeicher im trilateralen Umfeld Deutschland, Österreich und Schweiz. Report. Zurich, Switzerland, last accessed September 15, 2016 at http://www.bmwi.de/BMWi/Redaktion/PDF/Publikationen/Studien/trilaterale-studie-zu-pumpspeicherkraftwerken-deutschland-oesterreich-schweiz-zusammenfassung,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf.
- 20.
Dena. 2014. “dena-Studie Systemdienstleistungen 2030 – Sicherheit und Zuverlässigkeit einer Stromversorgung mit hohem Anteil erneuerbarer Energien.” Endbericht. Berlin, Germany.
- 21.
ENTSO-E. 2014. “ENTSO-E Network Code on Electricity Balancing – Version 3.0.” Brussels, Belgium: European Network of Transmission System Operators for Electricity.
- 22.
The NC LFCR will be merged into the Singe System Operation Guideline. A first draft of the merged guideline was published on May 4, 2016. ENTSO-E. 2013. “Network Code on Load-Frequency Control and Reserves.” Brussels, Belgium: European Network of Transmission System Operators for Electricity.
- 23.
Mott MacDonald. 2013. “Impact Assessment on European Electricity Balancing Market.” Contract EC DG ENER/B2/524/2011. Brighton, UK: European Commission, Directorate General for Energy.
- 24.
Imbalance netting describes the process of netting positive and negative imbalances in different control areas and thereby reducing the total imbalance of both control areas.
- 25.
Joint activation describes the usage of a common merit order list for the activation of reserves across two or more control areas.
- 26.
Joint reservation describes the joint determination of reserve capacities across two or more control areas.
- 27.
Secondary control reserves (Sekundärregelleistungen) are short-term reserves activated in case of imbalances within 5–10 min by the TSOs.
- 28.
IGCC (2017): Regular report on social welfare Q3/2017. Brussels, Belgium.
- 29.
Fattler, Steffen, and Christoph Pellinger. 2015. “Auswertungen und Analysen zur International Grid Control Cooperation.” In. Vienna, Austria.
- 30.
50 Hz, Amprion, TransnetBW, APG & Elia. 2015. EXPLORE Status Update. Presented at Balancing Stakeholder Group on November 27, 2015. ENTSO-E. 2014. ENTSO-E Network Code on Electricity Balancing – Version 3.0. Brussels, Belgium.
- 31.
The model and the results described in this section are based on the DIW Discussion Paper 1400 (Lorenz and Gerbaulet 2014).
- 32.
The electricity system in Austria is based mainly on renewable energy sources: in 2016, hydro power contributed about 50.3% to the total net generating capacity of 21.9 GW, followed by fossil fuel based power plants (25%), wind (10.5%), solar (about 3,7%) and other renewables, see APG. 2016. “Installierte Kraftwerksleistung 2016.” Austrian Power Grid. Swiss electricity generation relies mostly on hydro; more than two thirds of its installed capacity consists of hydro plants with 9.8 GW of storage, and pumped storage plants and run of river plants with 3.7 GW. Nuclear power plants with an installed capacity of 3.2 GW are the second-largest source of generation. Ongoing development of the Swiss electricity system is affected by the nuclear phase-out planned for 2034, which will be compensated by further expansion of hydro capacities, combined-cycle gas turbine plants and other renewable sources (see BFE. 2012. “Erläuternder Bericht zur Energiestrategie 2050.” Bern, Switzerland).
- 33.
Germany’s renewable energy sources provided 27% of electricity generation in 2012. Lignite represents 25.7%, hard coal 19.1% and nuclear 16.1% of the total power generation. The goals of the energiewende include phasing out nuclear by 2022, increasing of the share of renewables beyond 80% by 2050 (about 37% in 2017), and reducing greenhouse gas emissions (−40% by 2020, −80 to 95% by 2050). Germany remains a large net exporter of electricity (50 TWh in 2015), but overall consumption is supposed to be reduced by 50% by 2050 (compared to 2008).
- 34.
This section is based on Egerer et al. (2013).
- 35.
In the case study by Egerer et al. (2013), there is only slightly more expansion (5500 GW/km), but the structure of the network is more interconnected than in the “regional” scenario.
- 36.
Solid areas indicate an improvement of national welfare, whereas areas with horizontal line shading indicate a deterioration of national welfare.
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Lorenz, C., Egerer, J., Gerbaulet, C. (2018). Cross-Border Cooperation in the European Context: Evidence from Regional Cooperation Initiatives. In: von Hirschhausen, C., Gerbaulet, C., Kemfert, C., Lorenz, C., Oei, PY. (eds) Energiewende "Made in Germany". Springer, Cham. https://doi.org/10.1007/978-3-319-95126-3_12
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