Luncheon debate in Brussels, 13 October 2015

1. “Future(s) of EU TSOs”: a conceptual
framework… from Florence School
Florence School in Brussels 13 October 2015
Luncheon debate “Future(s) of EU TSOs”
Jorge, Vincent & JM > > > (Vasconcelos), (Rious) & (Glachant)
@Newes, @Microeconomics & @Florence School

2. Europeanisation of
power market
Low carbon
economy
Wave of
technological
innovation
Building a conceptual framework..

3. NEWES, New Energy Solutions May 22, 2015
CENTRALIZE
DEMAND
CONTROL
CENTRALIZ .
FIRM GEN.
PASSIVE
DISTRIB.
GRID
VARIABLE
DEMAND
DECENTRALIZE
DEMAND
CONTROL
DECENTRALIZ.
VARIABLE GEN.
ACTIVE
DISTRIB.
GRID
FIRM
DEMAND
Ad-hoc
transition
solutions
New
Electricity
Market
System transition
is a complex
multivariable
process

4. and many interactions are at play ...
NEWES, New Energy Solutions May 22, 2015
• TSO
• DSO
• regulators
• EC
• regulators
• academics
• market agents
• governement
• regulators
• new comers
(ICT)
• government
• market agents
energy
mix
market
system
operation
regulation

5. 1st conceptual scenario: EU, EU
Scenario
Decarb
Integra°
Market
structure
System
operation
Governance (who in
charge of?)
Regulation
FullyEuropeanised
Problematic
Morethantoday
EU-wide
integration
of
centralised
resources
European
computa°
& actions
European tools and
markets with EU wide (or
Reg.) ISO(s) & TO(s)
Adapted to an
investment wave
for transmission
+ cross-border
cost allocation
+ Eu supervision
of Mkt & System
operation
+Eu Reg. <>NRAs

6. Function Entity in
charge
today
In scenario
Function scope Entity in charge
Connection
Operation TSO Adapted to EU centralised
(but "flexibilised" RES
resources popping?)
ISO(s)
Rules Mostly TSO
Mostly ISO(s)
?DSOs?
TRSM Network investment TSO
Higher (CrossBorder)
investment &use of
innovative grid technology
Conception: ISOs
Implementation: TOs
1st scenario (EU): system changes…

7. Scena
rio
Decar
b
Integr
a°
Market
structure
System
operation
Governance (who in
charge of?)
Regulation
Fully
Europeanis
ed
Problemati
c
Morethan
today
EU-wide
ingtegration of
centralised
resources
European
computa° and
actions
European tools and markets with EU
wide ISO or TSO
Adapted to an
investment wave for
transmission + cross-
border cost allocation
Nationaldecarbonisation
Achieved
Astoday
Competing
centralised &
decentralised
resources
National &
local
TSO managing their grids
DSO managing their grids
+ T-D coordination
needed for cross-network
externality
Adapted to an
investment wave
for MS
transmission
+T-D interface &
smart grids
+ local market
design issue
> Coordination
system & market
2nd conceptual scenario: MS, MS

8. Function Entity in
charge
today
In scenario
Function scope Entity in charge
Connection
Operation TSO Expanding toward
Distribution & adapting
to new decentralised
resources
DSOs
Rules
Mostly TSO
+ DSOs
Mostly TSO + DSOs
TRSM Network investment TSO
Higher investment &
more use of innovative
grid technology
TSO
2nd scenario (MS): System changes

9. Scenario
Decarb
Integra° Market
structure
System
operation
Governance (who in
charge of?)
Regulation
Fully
Europeanis
ed
Problemati
c
Morethan
today
EU-wide
ingtegration of
centralised
resources
European
computa° and
actions
European tools and markets with EU
wide ISO or TSO
Adapted to an
investment wave for
transmission + cross-
border cost allocation
National
decarbonisati
on
Achieved
Astoday
Competing
centralised &
decentralised
resources
National and
local
TSO managing their grid
DSO managing their grid
+ T-D coordination needed for cross-
network externality
Adapted to an
investment wave for
transmission +
generation as main
investment driver
Localdecarb
Achieved
Lessthantoday
Mostly or
only local
resources
Mostly
local
DSOs reign? Or Smart
Apps??
TSO only for last resort
actions (balancing or
blackstart) in its national
scope
*Invest.wave for
smart grids,
storage-like &
smart apps?
*Frag. Reg.
Frame for local
system&market
*Mostly T maybe
D massive
stranded assets
3d conceptual scenario: Local, Local

10. Function Entity in charge
today
In scenario
Function scope Entity in charge
Connection
Operation TSO
Shifting from T to D
DSO
Rules Mostly TSO + DSOs Sharing DSOs / TSO ??
TRSM Network
investment
TSO
Shrinking with only
partial renewal
TSO? SoS service?
3d scenario (Local): System changes

11. • I did look only at hardware functions
“investment” & “connection”
BUT SOFTWARE IS AS KEY (if not more):
• Balancing generation & demand
• Managing congestion
• Facilitating market trade & exchanges
• + Coordinating with all neighbouring TSOs &
DSOs
TSOs other functions: software

12. Coming: Inconsistency & black holes

13. • 1- None of 3 scenarii can easily meet Low-
Carbon & Low-Cost > ?
• 2- Critical system operations for SECURITY
(today MS TSOs) starting to involve
somebody’else > ?
• 3- Exis. Legal & regulatory framework has to
move to rebuild system & market
arrangements incl. coordination & safeguard
tools
Concl: (Slow)food for (fast)thought

14. • 4- Any hybrid path “mixing 3 scenarii” will
require many “new” decisions to be taken>
“Energy Union” new path ?
• 5- If Exist. 3d Package & Grid Codes keep
dominating the scene >> we have serious
“governance issues” to be addressed: how to
handle interface (MS/EU) & (MS/Local)?
(Slow) food for (fast) thought/ Cted

15. (6) We face four big governance challenges
• How to Regio. & EU. Grid planning; system,
security & market operation? Incl. NRAs?
• How to restrain MS SoS, Capacity Mec. &
Energy Mix from breaking any EU frame?
• How to bridge MS “2030 NAPs” with grid
planning, system & market operation?
• How to host local systems&new local players
in Exist. Multilayer MS/EU framework
(Slow) food for (fast) thought/ Cted

16. • (7) Today enormous part of Exist. EU
framework comes from voluntary & informal
cooperation between MS & EU players (from
Companies & Stakeholders to NRAs &
Commission; + ACER, ENTSO-E, etc)
>> Will this “club of the willing” move fast
enough to deliver the tomorrow’s “missing
blocks”?
(Slow) food for (fast) thought/ End.

17. We wonder about the future(s)…
Yes we
do…

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Thank you for your attention
Email contact: jean-michel.glachant@eui.eu
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