Harmonized market rules and true competition


Harmonized market rules and fair competition between the individual energy sources and technologies - according to VERBUND, Austria’s leading electricity company, these are the cornerstones that are absolutely necessary to guarantee fair competition between the energy systems in Europe.

It is important to consider and value the opportunities and potentials of the individual energy sources and power generation technologies objectively to be able to guarantee secure and environmentally acceptable and affordable power supply in the future, too.

“Today, a massive distortion of competition between the different energy sources and technologies can be observed both in Austria and all across Europe. Just think of the sharp increase in the development of wind power last year. The costs arising from additional lines for the required grid entry are not charged to wind power, nor the additional investments into power stations that have to compensate weather-induced fluctuations“, Dr. Herbert Schröfelbauer, Chairman of the Management Board of VERBUND-Austrian Hydro Power AG, Austria’s biggest electricity producer, which produces electricity 100 % from hydropower, explained at a press conference in Vienna today, Thursday.

According to Mr. Schröfelbauer the goal must be to allocate such additional costs to the individual energy sources according to the causation principle. For example, if you look at the current measures of bottleneck management in Austria’s electricity supply. The problem is aggravated by the concentration of wind power in the north of Austria and require far-reaching changes in the use of the hydroelectric power plants and the thermal units in the south. This involves high costs and market restrictions.

“Additionally, there is the problem of massive subsidies. These subsidies do not take the total efficiency of such an additive energy plant into account at all“, says Mr. Schröfelbauer and adds: “The positive aspect of wind power, namely the prevention of CO2 emission, is of course undisputed.“

Fair competition in a free market has to be geared towards economic efficiency! Developing the renewable energy sources is absolutely acceptable, but such development must focus on the aspect that the most efficient technology has to come out on top and become marketable in the medium term. Plus the development must include all renewable energy sources. In addition to efficiency, the so-called CO2-prevention costs and plant availability are obvious criteria.

However, the current development models ignore the cost-benefit aspect. One example is hydropower, which is still the most cost-effective and efficient method (90 % efficiency) of all renewable energy sources.

Due to the current electricity rates and the high capital-labor ratio the efficiency of new hydroelectric power plant projects is hardly conceivable without subsidies. “If you look beyond Austria’s borders, however, you will see that, for example in Germany, the amendment to the Renewable Energy Act also provides for the promotion of big hydropower projects“, says Mr. Schröfelbauer.

At the same time, EU directives like the so-called Water Frame Directive especially aggravate the situation of hydropower: Austria’s hydroelectric power production has to expect an average 5 to 15 % loss in production per year! In some plants the loss can be considerably higher.

At a predicted annual 2 to 3 % increase in consumption a gap between the increasing consumption and the decreasing production will open up soon. The real electricity consumption in the public grid in Austria increased 4.2 % in the year 2003 compared to 2002.

Moreover, the Water Framework Directive is clearly inconsistent with the EU Directive on Renewable Energy: under the latter, Austria undertook to increase the proportion of renewable energy in its electricity production from 70 % (basis 1997) to 78.1 % in the year 2010. “Under the present circumstances it will be very hard to reach this goal“, says Mr. Schröfelbauer.

The integration of renewable and decentralized production plants into the existing and the future unified electricity system in the European Union is a tremendous technological challenge. Today, Thursday, 40 top experts from 15 European countries will present results from relevant Europe-wide research projects for the first time, at the 22nd VERBUND research forum, the first one this year (at Vienna, Museumsquartier, Oval Hall, 5 p.m.). The projects include projects from the cluster “Integration of renewable and decentralized production“. Additional events are planned throughout Europe.

Within the scope of VERBUND research, a total of 68 research projects are under way at present. The total volume of the projects, which stretch over several years, is EURO 45.5 million; the share of VERBUND is EURO 16 million. The VERBUND own funding in the year 2003 amounted to EURO 5.4 million.

The EU strategy, confirmed by the Council of Europe in Göteborg in June 2001, aims at sustainable development by integration of social, economic and environmental objectives, explained Manuel Sanchez-Jimenez from the European Commission as the event was approaching. Energy has an important connection with the three pillars of this strategy. Energy is the prerequisite for economic development and social welfare and essential for the improvement of the environment. Meeting the energy demand in the European Union is substantially linked to security of supply and the obligations with regard to greenhouse gas emission control. The development of decentralized production and renewable energy technologies is absolutely necessary to reach these goals.

According to Mr. Sanchez-Jimenez problems in individual countries that have a high proportion of wind energy, addressed by VERBUND, are taken seriously by the European Commission. New additional line capacities will be required, and the involvement of control energy will increase. It is conceivable that one future measure will be to give the grid operators influence on the electricity production from wind power and “intelligent multi-service control systems“.

The European vision of sustainable energy systems provides for electricity and hydrogen as the two fundamental energy sources, with the fuel cell as link. These exchangeable energy sources offer a unique opportunity for reducing our dependence on fossil energy sources and for greenhouse gas control.

With its high proportion of hydroelectric power - around 70 % -, Austria is holding a special position within the EU. Due to the developments in the European environmental policy, especially in water policy, this valuable resource is potentially endangered, hence there is an inconsistency of EU goals. In the future, more attention will have to be turned to this problem. However, as with most of the instructions of the European Commission, the individual member states of the EU have a certain scope in the implementation of the directives due to the different realities.

Within the cluster “Integration of renewable and decentralized production“ seven projects - supported by the European Commission - are under way. They demonstrate the current strategic approach and scenarios for the future; they include research institutes, universities, energy producers, grid operators, industrial enterprises, regulators and pressure groups. A total of 100 partners are involved; the project volume is EURO 34 million, with EURO 19 million being provided by the EU Commission. The projects help to meet the challenge of supplying Europe with a sustainable electric energy system.

In the network (DGnet) for the first time all important partners cooperate on the topics. Detailed technical solutions for the connection of decentralized producers are being worked out in DISPOWER. Important suggestions for a harmonized starting support result from the project SUSTELNET. The MICROGRIDS project investigates an option for the creation of self-sufficient cells. In order to increase the voltage quality the possible potentials are looked into by special investigations of the power electronics circuitry of inverter power units (DGFACTS). Decentralized intelligence (CRISP) of the decentralized producers and equipment is to enhance the security of electricity supply. Energy storage systems are a prerequisite for balancing energy supply and demand; the different systems are studied in INVESTIRE. The projects present findings from case studies, develop possible solutions for future structures, and edit aggregate information and proposals for policy-makers.

In order to reach the ambitious goals as soon and as fully as possible competent ministries and renowned research institutes in the USA were contacted to focus energies and take concerted action.