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Electricity supply Increasing share of renewable electricity More distributed and variable generation, often remotely located Increased need to deploy low-CO2 emitting generation technologies, with higher
costs …
Transmission is key to renewable development
Structural changes in demand Technology deployment and customer pricing expected to foster demand responses Demand in some countries becoming “peakier” due to air-conditioning loads Residential expected to grow faster than industrial demand
Electricity networks need to cope with larger fluctuations in both supply and demand Transmission should be seen as part of the solution Smart grids seen as tool to manage increasingly more complex power systems
Establishing frameworks for competitive electricity markets Unbundling
Competitive generation/wholesale marketsTruly independent system operation Retail competition
Independent energy regulator Transparent market rules enabling fair, open and non-discriminatory
access to all market playersClarity, stability and predictability in regulatory approaches Regulator should be seen as a market facilitator Need for regulators and have adequate competencies and resources Importance of market monitoring and oversight
Cost reflective prices are:Pre-condition for successful introduction of market reformsCorner stone of efficient market responseEssential for efficient and timely operational and investment
decisions in competitive electricity markets In Russia, considerable progress has been made to make electricity
tariffs more cost reflective and to remove cross subsidies Government keeping to its plan to raise domestic natural gas pricesBut, considerable challenge remainsTariff levels remain relatively low by international standards and
compared to the returns that are needed to attract new investmentTariff levels remain relatively low to stimulate energy efficiency
Generation – Ensuring market efficiency and adequate investments
Refrain from price caps and market interventions Energy–only markets (e.g. Canada, Australia) have delivered good
investments Capacity measures should be last resorts Promote competition through
Transparent market rules enabling fair, open and non-discriminatory access to all market players
Reducing the dominant role of incumbent utilities Eliminate barriers to market entry to facilitate IPPs Mitigate risks of market power through market monitoring and oversight
Putting a price on CO2 guides investments towards cleaner generation options
Transmission has generally lagged growth of generation and demand in IEA countries
Large integration of renewable require more network investments, including smart grids, and increased flexibility of power systems
Markets need coordinated generation and transmission planning Regulatory approval process should be streamlined to avoid costly
delays while allowing for early public participation Cost recovery may be facilitated by incentive rates of return Incentive rates of return make may be necessary to enable higher risks
projects Regulatory harmonisation is essential for regional markets and cross-
Key Messages (2) Huge investment needs in the power sector for the coming years
De-carbonisation of electricity generation is essential to the transition to a sustainable energy future
Investments face challenges associated with uncertainty in demand, climate change targets and energy security
No technology has a clear overall advantage globally or even regionally
For energy security and climate change mitigation, investment in low carbon technologies is key CCS, renewables, nuclear and energy efficiency must all be embraced
The regulator plays a key role in ensuring timely, sufficient and cost effective investments in generation and transmission Better regulation requires coordinated planning, co-operation and