- view from NIB as an international finance institution

Transcription

1 BEMIP for Baltic Sea Region - view from NIB as an international finance institution Electricity Gas Yngve Söderlund, Senior Manager NIB, Energy Lending yngve.soderlund@nib.int

2 NIB Energy Lending Baltic Sea Region Project type According to project type (million EUR) Total 4,632 Energy Efficiency 488 R&D 109 Transm&Distrib. 1,176 Transm. 627 Distrib. 548 Production 2,859 Integrated utilities 633 Hydro 753 Wind 777 Combined heat/power, Biofuel 1,208 Nuclear safety 120

3 Substantial Grid development in Baltic Sea Region/North Sea Region until 2022 Based on TYNDP 2012 New Capacity 2,800 MW between Nordic countries 1,350 MW between Baltics/Nordic 1,000 MW between Baltics/Poland 2,500 MW between Norway/Denmark to Germany 800 MW (Fennoscan 2) 2011/12 in operation 700 MW Finland/Sweden 2020? 1,400 MW between Norway/England? 200 MW between Norway/Russia? 1,350 MW from Finland to Russia (dual connection) Inter country strenghtening is vital, in particular Poland North-South Germany North-South TYNDP 2012 will increase crossborder capacity to/from Norway from 5,400 to 10,300 MW?!

4 Import Capacity to Net Generating Capacity After implementation of TYNDP <5% 5% to 10 % 10 % to 15 % >15 %

5 Market Areas in TYNDP model Will they be removed or anchor bottlenecks??

6 Main generation investments in BSR

7 Wind Power in BSR/North Sea 2010/2020 Country Capacity 2010 Target 2020 Denmark 3,752 MW 6,752 MW Estonia 78 MW (08) 500 MW Finland 197 MW 2,500 MW Latvia 27 MW (08) 250 MW Lithuania 54 MW (08) 1,000 MW Norway 441 MW 1,0 % 13.2 TWh TWh Poland 472 MW (08) 10,000 MW Sweden 2,163 MW 3,2 % 30 TWh Germany 27,214 MW 45,750 MW UK 3,241 MW (08) 30,000 MW Ireland 1,000 MW (08) 7,000 MW Assumption: Norway target 2020 estimate based on assumption that 50 % of total S/N green certificate target of TWh will be wind (System includes wind, new hydro, biomass and other RES) There is a risk for excess capacity of electricity in NSR and BSR by Balancing of wind production will be challenging.

8 BSR TYNDP 2012 production scenario assumptions EU 2020 BSR Net Importer. Hugh surplus in N and S. (All 20/20/20 targets are met, High CO2 price making Coal power more expensive than gas power. Optimistic RES investments according to NREAP. Scenario B2020 BSR Net Exporter. TSO estimates as base. Coal power more favourable than gas power. RES lower than national targets in NREAP. Less deficit in Poland Nuclear Phase Out NPO BSR Net Importer. German nuclear phased out by 2022.

9 NSR TYNDP 2012 Fuel mix scenarios Major difference in fuel mix scenarios between EU2020 and B2020 are that coal power will replace gas power in B2020 due to lower CO2 price.

10 Is this a real problem thanks to new cross-border connections and surplus expectations in neighbouring regions?

11 Security of Energy Supply Connection of Gas Networks in BSR and NSR Security of gas supply vital for RES integration and balancing of renewable production due to fast start up compared to, in particular, coal. Gas vital for industry and households. Baltic Energy Market Integration (Pipeline connections, gas storages and LNG terminals) Finland and the three Baltic countries still open? Poland LNG terminal in Szczecin solves partly national problem. Still isolation. Denmark and Sweden. Import from Germany/Nordstream improves situation. Interconnector Poland Lithuania? Integration with Norwegian gas fields? Regional versus National approach In conflict? Important to assess viability of national projects for regional supply and not only national aspects Risk than regional BEMIP plan will not be realised but split into national projects. Unpredictability of CO2 price problem for merit order for gas and coal related to CO2 price.

12 Gas Price EU 2011 Source: Gazeta Wyborcza

13 Conclusions BEMIP /EUSBSR vital to anchor long term strategy alternative is national conflicting strategies increase risk less interest investments / less interest in long term lending higher costs including higher lending margins Predictability Key for long term investments/lending lacking predictability hesitant investors, higher requirements on returns/higher costs (investors/banks/customers) Electricity Regional Development of electricity infrastructure seem to be successful Long Term Regional Approach agreed upon and under implementation lower cost, lower reserves more environmental friendly production Still risk for mismatch in timing of production /grid. Especially Germany wind/grid! Leadership: ENTSO-E (TYNDP), ACER, NREAP, EU (BEMIP, EEPR) Gas Regional/national focus still unclear Risk for non-viable solutions? We need to know future? Need for strong leadership. Who? EU Commission, National Governments, Regional Strategies, Knowledge (lacking information = feasibility studies) IFIs no project sponsors