Implementation of the acquis communitaire in the Energy Community

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3 Implementation of the acquis communitaire in the Energy Community I. Overview of the developments on the opening of energy markets in WBs The current EU energy acquis, started in the 1990ies, was burdensome with significant implementation deficits in various Member States (MS). In the Energy Community (EnC), only few Contracting Parties (CP) have already implemented competitive energy markets. In reality, most EnC energy markets are: still dominated by a single incumbent operator; often state-owned and shielded by monopolies; single-buyer models and the exclusion of price competition. Despite their small size, most energy markets in the EnC remain national, with very limited cross-border trade.

4 II. Advance of the widening gap between EnC and EU The ECS last Annual Implementation Report released on 09 Oct 2013, showed that the level of progress made in the implementation of the acquis is not uniform: across the EnC region; and regard all the areas. Relatively faster advancement in the implementation of the electricity sector rules are made by Croatia, Montenegro and Serbia, compared with a slowing pace of reforms in Albania and FYR of Macedonia. Instead, the progress of the gas rules was moderate overall. However, little or no progress was achieved in some Contracting Parties, notably Bosnia and Herzegovina, which has triggered enforcement action by the Secretariat. Urgent progress is required. Without meaningful reforms of the gap between the CP and the EU will continue to widen.

5 III. Need for identification of the obstacles on the opening and integration markets While the advantages may be clear to the textbook, EnC governments and regulators face difficulties in practice. The challenges are even bigger as the advantages. There is a need for a shed of some more light on the: the underlying reasons for the hesitation; the obstacles have been sufficiently analysed; the expectations in terms of implementation are realistic; the "textbook" approach of the Third Package is appropriate for all EnC; and which specific solutions might be needed or are more realistic.

6 IV. Complete of Pan-European market and the fully integration of the WBs The extending of the IEM beyond the boundaries of the EU, itself contributes to ensuring that the non-eu states: increasing efficiency and transparency; attracting investment and; securing energy supply in an environmentally sustainable way. The rendering of Energy Community s rules and institutions more effective will bring concrete benefits to all its members, within and outside the EnC. EU offer to the EnC a functioning legal framework and transparent rules. The major value has to be added with the reform undertake by the CP in the provision to the integration in the EU. With ongoing more and more the CP will realize the importance of exploiting the full potential of the common energy market.

7 Liberalization and Regulation as keys to unlocking investments in the WBs Governance: Intervention of private finance and flaking of public policies Open of Markets: Implementa - tion of the regulatory framework The Interdepend - dency between regulation and infrastructure Integration: Consequent reflection on the develop - ment of regional infrastructure

8 Ongoing development investments in the WBs I. Regional energy strategy of the Energy Community Energy infrastructure is the backbone of economic development and only through the development of a modern and efficient one the EnC will be able to create a properly functioning regional energy market. All above make necessary substantial investments. The CPs have agreed to cooperate in the process of identifying those projects, which have the highest positive impact in the largest possible number of CPs. In 2011 MC invited the CPs to prepare the Energy Community Strategy and the list of PECI. Task Force was set up to undertake these commitments. The Strategy was prepared and approved by the Ministerial Council in The project proposals collected by the ECS were submitted by 31 December 2012 and where endorsed by MC on October 2013.

9 II. Demand and investment costs sceneries in the EnC The Task Force set-up provide a brief synthesized of demand scenario analysis, from 2012 through 2020 and 2030 for the WB, and performed three analysis scenarios estimated costs of covering (or not covering). I. Firstly, it was asked regard the current trends in development? Current Trends scenario estimated costs over EUR 6,1 to 15,8 Bln, that will make to unmet an electricity demand estimated at 70 TW by II. Therefore the minimal costs to ensure that there is adequate supply of electricity to meet the demand? Minimal Investment Costs Scenario estimated costs over EUR 15,1 to 35,2 Bln. This scenery meet the energy efficiency and Res targets only partially, and do not foresee the meet the Large Combustion Plants Directive. III. Low Emissions/Sustainable Scenario estimated costs over EUR 32,3 to 59,9 Bln. This scenario see also the introduction of the gas ring into the WBs, allowing for both gas supply at the distribution level, as well as the requirements of the Large Combustion Plants Directive.

10 Current ongoing project by regional approach of Trans Adriatic Pipeline (Tap) Source: Tap

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12 III. Adaptation of the list of 35 Projects of Energy Community Interest In following, on the annual Ministerial Council of 24 Oct 2013 just two weeks after of published on 14 October 2013 of the Projects of common interest (PCIs) was adopt a list of 35 Projects of Energy Community Interest (PECIs). Fourteen electricity generation: implied over megawatts of new capacity to be installed; Nine electricity infrastructure: over km of electricity lines; Ten gas infrastructure: km of gas pipelines; And two oil infrastructure projects: over 600 km of oil pipes.

13 Projects of Energy Community Interest in the WBs Electricity lnfrastructure 01 AL - FYR of MK ET001 4OO kv OHL SS Bitola (FYR of MK) - SS Elbasan (AL) 02 HR - BIH and HR intern ET kv OHL Banja Luka (BiH)- Lika (HR) 400 kv OHL Brinje - Lika - Velebit - Konjsko including 400 kv substation Brinje 03 IT-AL ET kv HVDC SS Vlora - Bari West 04 Kosovo* - AL ET kv OHL Tirana (AL) - Pristina (Kosovo*) 05 ME-RS-BiH and ME intern ET015 4OO kv OHL SS Bajina Basta (RS) - SS Pljevlja (ME) - SS Visegrad (BiH) 400 kv OHL Pljevlja - Lastva 06 RS ET kv OHL SS Kragujevac - SS Kraljevo 07 RS ET kv OHL SS Bajina Basta - SS Kraljevo 400 kv OHL SS Obrenovac - SS Bajina Basta 08 RS-RO ET021 ET kv OHL SS Bajina Basta SS Kraljevo 400 kv OHL SS Obrenovac - SS Bajina Basta ACERC elaboration data ECS regard the Western Balkans

14 01 AL-ME-HR- BiH Projects of Energy Community Interest in the WBs G008 Gas Infrastructure Ionian Adriatic Pipeline (IAP) 02 GR-AL-IT G022 Trans Adriatic Pipeline (TAP) 03 AL G002 EAGLE LNG Terminal 04 BiH - HR G006 Interconnection Pipeline BiH - HR (Slobodnica-Bosanski Brod-Zenica) 05 BiH - HR G003 Interconnection Pipeline BiH - HR (Ploce-Mostar-Sarajevo/Zagvozd- Posušje/Travnik) 06 BiH - HR G007 Interconnection Pipeline BiH - HR (Lička Jesenica-Tržac-Bosanska Krupa) 07 HR G010 G011 LNG Terminal HR + Pipeline Zlobin-Bosiljevo-Sisak-Kozarac-Slobodnica 08 HR - RS G009 Interconnection Pipeline HR - RS (Slobodnica-Sotin-Bačko Novo Selo) 09 SR G013 Interconnection Pipeline RS (Nis) - BG (Dimitrovgrad) ACERC elaboration data ECS regard the Western Balkans

15 Projects of Energy Community Interest in the WBs Electricity Generation 01 AL EG038 Hydro Power Plant Skavica 02 AL EG001 Wind Park Dajc-Velipoje 03 BiH EG027 Combined Heat and Power Plant KTG Zenica 04 BiH EG003 Hydro Power Plant Dabar 05 BiH + HR EG003 Hydro Power Plant Dubrovnik (Phase ll) 06 BiH + RS EG002 EG006 Hydro Power Plants upper (HPP Buk Bijela, HPP Foða, HPP Paunci, HPP Sutjeska) and Middle Drina (HPP Tegare, HPP Rogacica, HPP Dubravica) 07 Kosovo* EG013 Kosova e Re Power Plant (KRPP) 08 ME EG015 Hydro Power Plants Lim River 09 RS EG035 HPCCycle Gas Turbine Plant in Pancevo, Serbia 10 RS EG022 Thermal Power Plant Kolubara B 11 RS EG024 Thermal Power Plant Nikola Tesla RS EG017 Combined Heat and Power Plant Novi Sad 13 RS EG019 Hydro Power Plants lbarske (10 HPPs) 14 RS EG018 Hydro Power Plants Velika Morava ACERC elaboration data ECS regard the Western Balkans

16 Projects of Energy Community Interest in the WBs Oil Infrastructure Contracting Party Project ID Project 01 HR OIL001 Project of Inspection, Evaluation, Rehabilitation, Upgrading and Reconstruction of the existing JANAF Oil Pipeline ACERC elaboration data ECS regard the Western Balkans

17 Geographical Location of the Projects of Energy Community Interest PECIs Electricity Infrastructure Source: ECS PECIs Gas Infrastructure Source: ECS

18 Geographical Location of the Projects of Energy Community Interest PECIs Electricity Generation Source: ECS Based on the results of the assessment, on 24 October 2013, the Ministerial Council adopted the list of 35 PECIs. Among other, nine gas infrastructure and one oil infrastructure projects selected regard the WB countries In regard, almost 40 billion EUR is required until 2020.

19 Way Forward "In today's geopolitical situation we realize better than ever before how important for prosperity and stability in entire Europe is secure, competitive and sustainable energy supply. The Energy Community is a key instrument of international energy policy and its efficient functioning is essential for achieving the goal". Jerzy Buzek: An Energy Community for the Future 11 June 2014 Key points: A Single European Energy Market Building a single market requires investment Efficiency of the Law enforcement More funding for investments and market integration More transparency on the whole process

20 Timeline and format Report, An Energy Community for the Future released on 11 June 2014, by the Chairman Jerzy Buzek of the High Level Reflection Group: Generally welcomed on 18 June, by Permanent High Level Group; Officially presentation to Ministerial Council, will take place on 23 September 2014; Preparation of a roadmap and put forward for endorsement of the Group within March 2015; The concrete reform proposals will then be submitted to the Ministerial Council for adoption in the annual meeting on Sept

21 ACERC Albanian Centre for Energy Regulation & Conservation Thank you for your attention! Contact Details: Adv. Lorenc Gordani, PhD Legal Energy Market Advisor and Project Manager at ACERC Cell: Skype: lorenc_gordani

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