THE EU ENERGY UNION“A view from stakeholders”

Carmen VindelDirector of European Institutions Regulation

Madrid 25th November 2016

2

Index

1. The new European Commission 2014/2019

2. The Energy Union Communication

3. EU Challenges for energy utilities

4. Conclusions

The New European Commission 2014/20191

President Junker’s five priorities:

1.- Growth & Jobs

2.- Energy

3.- Trade agreement with the USA

4.- Reform of the monetary union

5.- Answer the British question

Energy is one of the top five priorities in the agenda of the European Commission

The Energy Union is the political project of the EC that wills to transform in depth the

European Energy Sector. 13 out of 27 Directorates are involved

1

4

1 The new European Commission 2014/2019

The Energy Union Communication (Feb 2015)12

5

In the Communication, the Commission states its will to achieve:

The completion of a real European Internal Market

The EU Climate and Energy goals for 2020-2030

The Commission set 26 policy iniciatives to be developped in 2015-2016

INTEGRATED &

INTER-CONNECTED

RESILIENT AND

SECURE

SUSTAINABLE

Energy &

Climate

2020 - 2030

Roadmap

2050

Energy Union Main Policy Iniciatives2

AREAS

Renewables

Infrastructure targets / PCIs

Electricity

Infraestructure

SoS Elec / Market Design

New Deal Energy Consumers

Action

GasSoS Gas / GNL & Storage

Strategy

Retail

New Renewable Directive

Decarbonizing Transport

SectorTransport

Climate Action ETS/ Non-ETS

Energy Efficiency Energy Efficency Package

Regulatory Framework

Heating & Cooling Strategy

IGA´s/ External DiplomacyExternal Policy

Heating & Cooling

ACER Role

AREAS Action

The European Commission has already tabled many legislative proposals

ETS/

NON ETS

ENERGY EFFICIENCY

RENEWABLESCONSUMERS

Security of Supply

2 Energy Union Consistency

Logic policy decision making to choose measures to achieve our targets in a cost

efficient manner. Clear and predictable rules are crucial

EU

RULES

EU Challenges for energy utilities3

THE ROLE OF NATURAL GAS

MARKET

DESIGN & RES

CLIMATE CHANGE

Energy Union should integrate all efforts related with the climate and energy EU

objectives

Short term

Long term

Medium term

1. Market Design & RES3

The upcoming legislative package will cover the whole chain of the electricity sector, as well as

other major topics such as Energy efficiency and Renewables

The upcoming package “Clean Energy for All” will cover:

Directive of Electricity Internal Market

Regulation for Electricity Market

Risk Preparedness Regulation of Security of Supply

Revision of Energy Efficiency Directive & Energy Performance of

Buildings

Revision of Renewable Energy Sources Directive

Directive for an Energy Union Governance

Final report of the DG Competition’s Sector Inquiry on CRMs

Regulation for an Agency for Cooperation of Energy Regulators

Report on Energy Prices and Costs

Communication on Innovation

…

Fall of European wholesale electricity prices

1. Market Design & RES3

European electricity prices halved in the last 8 years, endangering the reliability of these prices

The increasing penetration of RES displaces marginal units and prices fall

64,28

37,84

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

2008 2009 2010 2011 2012 2013 2014 2015 2016

€/M

Wh

Wholesale Electricity Markets (Average price) OMIE (ES & PT)

IPEX (IT)

POWERNEXT (FR)

NORDPOOL (Nordic)

APX NL

EEX PHELIX (DE)

APX UK

41%

2. The Role of Natural Gas in the EU3

Natural gas should play an importat role in the EU Energy Transition

-500.000

500.000

1.500.000

2.500.000

3.500.000

4.500.000

5.500.000

6.500.000

2010 2011 2012 2013 2014 2015

tCO

2

Total emissions Coal CCGT Cogeneration/Others

+150

+20%

CO2 emissions in the Spanish´s power sector

Energy

Efficiency

Renewables

Primary Energy Reduction vs. consumption path

estimated in 2007

Final Energy demand from RES

27% Europe: indicative target

27% Europe: binding target

2030

TargetGoal Objective Scope

Global

emissions

Global Emission Reduction

vs. 199040%

European: binding target

(National subtarget for non-ETS

sectors)

non-ETS

sector

emissions

ETS

emissions

Reduction of non-ETS sector emissions

vs. 2005

Reduction of ETS sector emissions

vs. 2005

30%

43%

Energy and climate targets are the long term challenge

3. Climate Change Targets3

13

4 Conclusions

Conclusions4

THE ROLE OF GASNEW MARKET DESIGN

GOVERNANCETO ACHIVE TARGETS

STREGTHEN THE ETS FOR ENERGY TRANSITION

CONSISTENCY OF OBJECTIVES

Thank you very much.

cvindel@gasnaturalfenosa.com

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