“Future(s) of EU TSOs”: a conceptual framework… from Florence School

Eurelectric Brussels 29 October 2015

Jean-Michel GlachantLoyola de Palacio Prof. & Director Florence School of Regulation

EUI – Florence (Italy)

# TSOs tasks?

# Regulation?

# Governance?

Europeanisation of power market

Low carbon economy

Wave of technological innovation

Building a conceptual framework..

NEWES, New Energy Solutions May 22, 2015

CENTRALIZEDEMAND CONTROL

CENTRALIZ . FIRM GEN.

PASSIVE DISTRIB.

GRID

VARIABLE DEMAND

DECENTRALIZEDEMAND

CONTROL

DECENTRALIZ. VARIABLE GEN.

ACTIVE DISTRIB.

GRID

FIRM DEMAND

Ad-hoc transition solutions

New Electricity

Market

System transition is a complexmultivariable process

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 operatio

n

regulation

1st conceptual scenario: EU, EU

Scenario

Decarb

Integra°

Market structure

System operation

Governance (who in charge of?)

Regulation

Fully Europeanised

Problematic

More

than toda

y

EU-wide integration of centralized 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

Function Entity in charge today

In scenarioFunction scope Entity in charge

ConnectionOperation TSO Adapted to EU centralized

(but "flexibilised" RES resources popping?)

ISO(s)

Rules Mostly TSO Mostly ISO(s) ? DSOs?

TRSM Network investment TSOHigher (CrossBorder) investment &use of innovative grid technology

Conception: ISOsImplementation: TOs

1st scenario (EU): system changes…

Scenario

Decarb

Integra°

Market structure

System operation

Governance (who in charge of?)

Regulation

Fully Europea

nised

Problema

tic

More than today

EU-wide ingtegration of centralized 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

decarbonisation

Achieved

As toda

y

Competing centralized & decentralized resources

National & local

TSO managing their gridsDSO 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

Function Entity in charge today

In scenario

Function scope Entity in charge

Connection

Operation TSO Expanding toward Distribution & adapting to new decentralized resources

DSOs

Rules Mostly TSO + DSOs Mostly TSO + DSOs

TRSM Network investment TSOHigher investment & more use of innovative grid technology

TSO

2nd scenario (MS): System changes

Scenario

Decarb

Integra°

Market structure

System operation

Governance (who in charge of?)

Regulation

Fully Europea

nised

Problema

tic

More than 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 decarbonisation

Achieved

As today

Competing centralised & decentralised resources

National and local

TSO managing their gridDSO managing their grid + T-D coordination needed for cross-network externality

Adapted to an investment wave for transmission + generation as main investment driver

Local decar

b

Achieved

Less than toda

y

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

Function Entity in charge today

In scenario

Function scope Entity in charge

ConnectionOperation TSO

Shifting from T to DDSO

Rules Mostly TSO + DSOs Sharing DSOs / TSO ??TRSM Network investment TSO Shrinking with only

partial renewal TSO? SoS service?

3d scenario (Local): System changes

• 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

Coming: Inconsistency & black holes

• 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

• 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

(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

• (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.

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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