This document summarizes the four steps in the development of EU energy policy from 1986 to the present: I. From 1986-2009, the EU focused on establishing an internal energy market and ensuring open grids for electricity trade between countries. II. From 2007-2009, the EU developed its first "energy policy" centered around promoting renewable energy sources at the country level through national targets and support schemes. III. From 2013-2014, some countries began calling for a "cease-fire" on renewable energy policies due to rising costs, as the EU Commission proposed guidelines to phase out non-market support and coordinate capacity mechanisms. IV. Looking ahead to 2015-2020, the future remains unclear

1. 4 step in the short life of EU “energy
policy”
Medellin– 5th ELAEE Conference
(16 March 2015)
Jean-Michel Glachant
Director “Florence School of Regulation”
@ European University Institute – Florence (Italy)

5. 4 step in the short life of EU
“energy policy”
I. 1986-2009: an EU Internal market within open grids / ~1 EU
Internal market / ~2 open EU grids
II. 2007-2009: EU got an “energy policy”: “RES country pillar” /
~3 RES push into EU Internal market @ country level
III. 2013-14: Countries ask for “RES cease-fire”: divorce? /~1 EU
Commission / ~2 EU power industry
IV. 2015-2020: And tomorrow? /~1 Internal Market BAU? / ~2 Or
renewed EU energy policy in a brand new “Energy Union”?
5

6. 1986-2009: only an EU Internal market
and nothing elseMarket
First and foremost (Internal Market) ¤ Not because market logical or astute
to support any EU energy policy – only because EU strong & legitimate there:
Internal Market “raison d’etre” (Treaty 1957 + Single Act 1986) <Power only>
¤ 1st Package 1996: *“Free Entry in Generation” ** “B2B Consumer
eligibility” *** “Free movement of goods at all internal borders”
¤ 2nd Package 2002 : *transparent & market friendly cross-border
operation; **regulators supporting market building; cannot get EU market
design (wholesale pricing & sequence of markets(Day-Ahead to real time);
***full retail eligibility;
¤ 3d Package 2009 unable to get EU “market design” & EU “grid operation
rules” >SO> sets up process to produce that with new Bodies: *EN.TSO-s to
“EU” the TSOs; **ACER to “EU” the N.RAs
6

7. 1986-2009: an EU Internal market…
within open grids…
• Second to Internal Market (EU Grids) ¤ very logical: no power market can
work if Grids aren’t market friendly (Opening EU market > Open EU grid)
¤ 1st Package 1996: *“Third Party Access to power Grids ** “Including all
internal borders
¤ 2nd Package 2002 : Regulated access to grids; regulators duties for markets
and grids; transparent & market friendly cross-border grid operation,
congestion mechanisms, grid capacity allocation
¤ 3d Package unable to add full EU harmonization of “market design & grid
operation rules” >> but did set up a process to produce it with new Bodies:
*ENTSO-E(G): EU GridCodes &EU TYNDP GridPlanning; **ACER : “EU” NRAs
¤ NB: 3dPackage didn’t try to EU harmonize TRSM grid tariffs making; grid
investment & data methodology; did miss all Distribution grids issue as
Market Operators (wholesale exchange: PXs); Plus NO EU regulator
7

8. 2005-2009 EU goes to EU energy policy
What was it about?
Previsibility (foreseeability) very low: “EU energy policy” was not
at all foreseen in 2004; and…. already “packaged” in 2009!
• Game Changer 1 2005 Hampton Court Council Tony Blair:
long life EU internal Security of Supply
• Game Changer 2 2007 (Lisbon treaty) Berlin Council Angela
Merkel: long life EU energy sustainability 20-20-20 in 2020
• Game Changer 3 2006&2009 Russia-Ukraine: EXT emergency
plans + security reg. 2010 & infrastruc. package 2011-13
8

9. II. 2007-2009: EU got “energy policy”: a
“RES country pillar” pushed by MS
• Only third and external to Internal Market and EU grids (EU RES)
¤ external because RES are *subsidy pushed (not market pulled –energy
market or carbon price) and **country regulated (no EU wide system of RES
push rules in 2007 -except size of countries RES quotas)
¤ EU got a split: # RES split into“green part” (out of market price & trade
order, “own special circuit”) &”energy flow” (into EU Market & MS Systems)
* RES energy flows circulate through grids to directly enter the
demand (while being variable and not dispatched) >> very strong
interactions between RES, power system and grids operation
** NonRES can serve only “residual demand”; only what variable
RES cannot feed at each moment > very strong market interactions between
RES & nonRES (capacity “adequacy” given by amount of working RES)
¤ Small RES > small interactions; Massive RES>> massive interactions
9

10. 2012-14 core assumptions derail:
And so what?
(Fukushima 2011); Shale gas; Russia as supplier; Green
revolution & EU RESworld leadership; +65Eur GreenCharge MWh
> Questioning and redefinition re-opened in 2012
>> Popped up in November 2013; and has ben confirmed by EU
Councils Oct. 2014&March 2015: MS call for RES “EU cease-fire”
• 1- Commission Novelties (Barroso II: Nov. 2013 to Ap. 2014)
• 2- EU Power Industry Novelties (EURELECTRIC 2014)
10

11. III. 2013-14: Countries ask for “RES
cease-fire”; Commission reacts
June 2012: make your choice - November 2013: some guide lines – January
2014: Berlin 20-20-20 “game over”. Competitiveness & costs back to top
• June 2012 - Options RES policy post 2020 / S2: Only “Carbon Price” risky
&unfavorable to technology innovation / S3: National RES targets risk EU
fragmentation &high unit costs; favors decentralization & distributed Gen.
/S4 EU RES target&harmonized frame favor costs reduction, X-border
investments, large scale innovation ;+grid&system costs
• November 2013 - Guide lines for RES support till 2020 / Only small units
& less mature RES (as off-shore & bio-mass) keep FiT / big units and
deployed RES only FiP & Tgy neutral auction (ex: On-Shore or PV 1MW)
• January 2014 - Framework post 2020 / *“EU bindingGHGtargets +**MS
only RES target & “appropriate “ EU governance for MS action plans
11

12. III. 2013-14: Countries ask for “RES
cease-fire” Eurelectric reacts
3 differences from Commission (Eurelectric Manifesto February 2014)
• Single target being GHG emission (– 40%) as carbon market (“carbon
pricing”) is most cost-effective instrument for whole decarbonisation
• All state aid on RD&D + increase spending on technology demonstration
(means: no money for technology deployment as FiT or FiP)
• Create new market for “Long Term Capacity remuneration mechanism”
coordinated at Regional Level (implicit: carbon market won’t make it; LT
entry in power generation cannot come from Carbon Pricing)
12

13. 1- 25 February 2015: Commission COM. ‘’Towards an Energy Union’’ NB:
‘Energy Union’ has NO predefined content; is only ‘catch word’. It is NOT
a new institution (like an EU Treaty or pro-Treaty (Schengen-like Agreement)
or even an EU body (say ‘ACER’ or ‘ENTSO’). SO many alternative Energy
Union(s) are conceivable
2- Energy Union <mini> to boost Internal Market >> Eurelectric, Eurogas
(EU) put new tag on (existing institutions + BAU) = let’s call it Ener.Un: BUT
to end ‘Internal Market’ extended to RES & Capacity Mechanism being fully
‘market based’.
However such EU-BAU ends undefined: ¤ MS have strong power to take
initiatives (Germany: Off-shore + Energy Efficiency push) (UK: SoS being
Capacity mechanism + LT contrat with UK Nuclear or tidal + off-shore + ISO
Grid +?) (France: own Capacity mechanism + Off-shore too? + Will put EDF
as shareholder of Areva + to strangle ‘EPR’? and create new ‘small’ nuke
reactors 600MW’;etc ¤ At what speeed Commission could follow MS?
IV. 2015-2020: And tomorrow?
~1 / Internal Market BAU?

14. www.florence-school.eu
IV. 2015-2020: Commission’s proposals 25 Feb.?
/~1 Internal Market BAU?
1- EU 4th Big Package Internal Market
*Legislation 2016; retail & wholesale; integrating RES; phasing out non
market based support; coordinating Capacity Mechanisms .
**Legislation 2018 Electricity security of supply
***Review framework from 3d Package notably for ACER (to ++power of
Europeanizing regulation) & ENTSOs (to ++ as regional operational entities
to create)
****Propose guidance for ‘regional cooperation for market integration’
and to act at regional level wih regu. Bodies, MS and stakeholders
*****Create ‘Energy Infrastructure Forum’ with MS, Regional coop. Groups,
and EU institutions (ACER? Banks?) by late 2015
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15. www.florence-school.eu
IV. 2015-2020: Commission’s proposals 25 Feb.?
/~2 Security of Supply?
2- EU actions for Security of Supply
*Legislation: Revision Gas Regulation by 2015-2016
**Legislation: Revision Decision International Agreement for Commission to
intervene ex ante before signature of agreements with 1/3 countries
***Coordination Commission / HR-VP / MS to create international
diplomacy for energy & climate issues; for international treaties (as TTIP) or
within WTO, and launch new initiatives (as agreement with India, with
China ;etc) in field RES, Ener.eff, etc.
** **implementation of existing PCIs with adequate financing
** ***Strategy for LNG an its storage
** ** ** Council 19-20 March : explore feasibility of gas joint-buying
mechanism
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16. www.florence-school.eu
IV. 2015-2020: Commission’s proposals 25 Feb.?
/~3 Beyond Internal Market & SoS?
3- Other fields of EU actions beyond Internal market & SoS :
*Legislation to revise EnerEff directive &make proposals to meet 2030target
**RES package by 2016-17 incl.sustainable &cost-effective biomass, biofuels
*** Legislation to achieve Oct2014GHG target in ETS & non-ETS sectors
** **Legislation ‘Full Road Transport Package’ covering efficient pricing of
infrastructures; rool-out of intelligent transport; enhancing ener.eff
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** ***Strategy to facilitate Investment in efficient ‘Heating & Cooling’
** ** **Create Smart financing for smart buildings fund
** ** ***To push MS & regions to use more the funds to renovate housings
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**** **** Strategy for transport research & innovation agenda
**** **** *Revision ‘Strategic Energy Technology Plan’
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17. www.florence-school.eu
How to conclude?
Too many EU energy policy future(s): which Energy
Union(s) will EU get? ?? To be seen in 2015-17…

18. www.florence-school.eu

19. www.florence-school.eu
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Thank you for your attention
Email contact: jean-michel.glachant@eui.eu
Follow me on Twitter: @JMGlachant already 6 389 tweets
My web site: http://www.florence-school.eu