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Renewables and Energy Security in Liberalised
Electricity Markets
Knud Pedersen Deputy Director General Danish
Energy Authority Ministry of Transport and Energy
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How can renewables contribute to energy security?

• Potential for diversification of sources of
  energy supply.
• But there challenges to overcome to enable
  renewables to deliver in a market framework.

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(No Transcript)
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Development of the power production structure
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Integrating wind power into the system(Western
Denmark as an example)
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Conditions for an efficient market

• Competition.
• Open and equal acces to transmission net for all
  producers
• System flexibility.
• Fast and efficient response to prices from
  different kinds of producers and consumers
• Credibility.
• Stable and credible long term market framework

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Legacy of monopoly

• High reserve margins
• High system adequacy
• Unflexible system with centralised production
  structure
• Unflexible demand side
• Overlapping ownership between SO and producers
• SO oppose changes

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System Flexibility

• Create conditions for short term price signal to
  reach producers and consumers
• Enable market participants to react to prices
• Secure adequate net infrastructure
• Integration of markets (better use of
  interconnectors)
• Ensure independence of SO from markets players.

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Efficient Market

• Mitigates use of market power
• Enables system to absorb fluctuations from wind
  power
• May reduce price fluctuations

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Conditions for Investments

• SO has a central role in designing market
  framework
• promote efficient and flexible markets with fast
  price response
• unbundle ownership of SO
• Create stable, long term and credible market
  framework
• long term goals for energy and environmental
  policies
• no intervention in pricing mechanism
• define clearly role of Govt. and SO
• harmonise role of SO in interconnected markets

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Investments in Renewables?Costs of electricity
from on shore wind generators
Costs pr. kWh reduced to ¼ (by 75 ) from 1973
to 2003