Expert insight: Challenges and opportunities in the Central European power sector


    Central Europe Energy Partners (CEEP) is a partner of European Utility Week (EUW) 2018 and its Executive Director, Maciej Jakubik, shares with us how their members position themselves in the energy transition and what their key challenges are.

    Who is CEEP and with what goal in mind, was CEEP formed?
    Central Europe Energy Partners (CEEP) is an international industry association with its headquarters in Brussels which represents the interests of the energy and energy-intensive companies from Central Europe in order to promote balanced energy transition in accordance with technological neutrality principle and strengthen the region’s energy security within the framework of an EU energy and climate policy. CEEP identifies and advocates common problems and their solutions, whilst facilitating successful implementation of the EU’s energy and climate policy. Furthermore, we take an active role in the process of the creation of EU legislation and policy framework for the energy sector.

    Eight years since our establishment, CEEP is still the only association in Brussels to represent the Central and Eastern European region as a whole, with its specificities. We believe that EU Member States could only be successful in transforming the energy sector if they act together and take into consideration the specificities of all regions, including Central Europe. The over-riding goal of the organisation is to influence over the EU decision making bodies to shape the EU energy and climate policy which consider the interests and views of Central European companies. It also supports the integration and understanding among the member companies thus increasing the cooperation and energy security of the region.

    Which developments currently define the energy transition in the CEE region?
    We are for sure at a turning point between the old and the new energy system with the consequent switch from a centralised power system to a more decentralised one, with a rapid expansion and penetration of renewables and greater role for consumers. When it comes to the electricity, the adequacy of traditional generation capacities and the stability of power grids in Central and Eastern Europe are under severe pressure due to ageing, low wholesale prices, the expansion of renewables, uncontrolled loop flows and the EU’s climate policy, including ETS.

    Moreover, gas markets move from rigid, monopolistic, and rather isolated structures, to more dynamic, competitive and integrated with neighbors. The main achievement is higher interconnectivity allowing to secure supplies in emergency situations. In turn, Nord Stream 2 project rises the risks of gas supply distortions to the CE region and represents a challenge for use of current gas infrastructure. Diversifying the gas supplies, not only by its routes, but by the sources will allow the creation of a real gas market, with free competition between suppliers and freedom of choice for customers.

    What is according to you the main challenge to connect the energy sector to energy-intensive industries?
    I would say that these two sectors are closely connected by the nature of things. As described above, the changes that occur and will continue to occur in the energy sector, don’t have just a limited impact on the energy sector alone. Everybody must adapt, the energy sector in the way it produces and distributes energy, and the energy-intensive industries in the way they use, consume it. Both sides consider currently how to adapt to the new situation and challenges and how to further develop its business to make it more modern, innovative and profitable.

    What developments are going to be key for your members in the upcoming 3 years?
    Key developments will be related to the implementation of the Clean Energy for All Europeans package, which will underpin a new electricity market design. Its implementation can be challenging, particularly the provisions concerning capacity markets, Emission Performance Standards or biomass. Uncertainty over the final shape of legislative files halt the companies to take the investment decisions which are crucial for the generation adequacy in the region. Also, upcoming IV phase of EU ETS will bring additional costs for power generation and energy-intensive industry as well as the implementation of recent BAT conclusions for LCP.

    As we are building upon Commercial and Industrial Energy Users Days (CIED), during EUW 2017, what topics would be most important to be discussed at EUW 2018?
    The European power sector and the energy-intensive industry are both facing paramount challenges. The European energy system is in the process of an unprecedented transformation. New technologies, digitalisation, decentralisation, changing patterns of energy consumption are challenging established business models. Therefore, we believe that during CIED, participants should discuss changing market conditions and the strategies of specific sectors to adapt to the new scenarios.

    Stay tuned to see how we develop the Summit track “Energy Markets”, and the special programme for Commercial and Industrial Energy Users Days (CIED) and let me know what your thoughts are on this interview –

    Contributor: Rogier Kuttschreuter, Utility & Partner Liaison, EUW