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Timely implementation of #Ukraine #ElectricityMarketReform

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The energy sector is the foundation of the Ukrainian economy. Unfortunately, energy remains a highly politicized topic in Ukraine and the current political uncertainty means there is a very real danger that the vital process of energy market liberalization will be pushed back. This will have significant consequences for the economic development and security of Ukraine, as well as its relations and standing with the international community, writes Ivan Plachkov (pictured).

Under the EU-Ukraine Association Agreement and the provisions of the EU Third Energy Package, Ukraine is obliged to liberalise its electricity sector in order to stimulate competition amongst energy suppliers and encourage new market entrants. The reform is also a precondition for Ukraine’s integration into the EU’s electricity market and, without it, Ukraine will not be able implement the measures set out in the EU’s Clean Energy Package.

Failure to implement the reform will present Ukraine as an unreliable partner in the eyes of the international community and will place in jeopardy the country’s access to the international finance needed to modernise our energy infrastructure, whether this is from the EU, World Bank or private sector. It will also frustrate the process of integration with the European energy system and maintain the countries dependence on Russia and Belarus for electricity imports during crisis periods.

With an estimated remaining operating life of 10 years, Ukraine’s Soviet-era energy infrastructure desperately needs nationwide upgrading and replacing – from production facilities to replacing the grids – in order to help meet the country’s international climate change obligations. Promoting renewable energy is also a key requirement.

Significant progress has already been made toward reforming the energy market, but to achieve this transformation, Ukraine needs a fully modern, well-functioning electricity market – one that allows for the purchase and sale of electricity in the open market and ensures that supply and demand ultimately determines the price.

While the process of replacing a Soviet-era energy grid and politically controlled electricity tariffs with a market-based system is a fundamentally challenging one, it is important to recognize the benefits that it will bring to Ukraine.

Timely implementation of the electricity market reform will deliver significant economic benefits to Ukraine.

The reform will attract investment in the power sector between 2019 and 2030. Additional investments will allow modernizing generating facilities and distribution networks, which will improve the quality of power supply, as well as the environmental situation at the electricity installations. The electricity market reform is a prerequisite for integration with the European electricity markets.

This will increase competition in the electricity generation sector of Ukraine, ensuring improved quality of power supply and preventing the possibility of abuse of the monopoly power by energy supplying companies. In other words, this will boost the development of enterprises, which is a win-win situation for both the enterprises and electricity consumers.

For consumers, both household and industrial, the reform will increase competition and allow them to choose their service provider, both of which will drive-up the quality of the services they receive. The increased investment will also significantly decrease the risk of power outages.

The political uncertainty that may result in a delay to the reform process is underpinned by concerns that household electricity tariffs in Ukraine and which have been set by the government for many years will rise dramatically.

In reality, this is not the case. The cross-subsidization of electricity, from industrial to household consumers, was supposed to be eliminated before the launch of the full-scale electricity market. However, the political situation has delayed this process. But this will not be an obstacle or a long-term barrier to the development of the market as a temporary mechanism to counteract the negative effects of cross-subsidization exists.

Ultimately, if there is a choice between an imperfect launch and having no launch at all, we prefer the first option. The alternative’s negative consequences and the threats stemming from it are far greater.

Today, Ukraine is overwhelmed with emotional rhetoric. It is extremely important that international institutions and politicians support Ukraine’s citizens, who are in favour of the direction of the energy sector’s reform, having had firsthand experience with its results. The importance and benefits of the electricity market liberalization are indisputable. There is an opportunity to make a significant contribution to the development, competitiveness, security and welfare of the country, and it is crucial to continue to support this process.

Ivan Plachkov is the head of the All-Ukrainian Energy Assembly and Ukraine’s Ex-Minister of Fuel and Energy.

Electricity interconnectivity

Commission approves prolongation of two Greek electricity measures

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The European Commission has approved, under EU state aid rules, the prolongation for a limited period of two Greek measures, a flexibility mechanism and an interruptability scheme, to support the transition to the new electricity market design. Under the flexibility mechanism, which was initially approved by the Commission on 30 July 2018 (SA 50152), flexible power capacity providers such as gas-fired power plants, flexible hydro plants and demand response operators can obtain a payment for being available to generate electricity or, in the case of demand response operators, for being ready to reduce their electricity consumption.

This flexibility in power capacity will allow the Greek transmission system operator (TSO) to cope with the variability in electricity production and consumption. Under the interruptibility scheme, which was initially approved by the Commission on 07 February 2018 (SA. 48780), Greece compensates large energy consumers for agreeing to be voluntarily disconnected from the network when security of electricity supply is at risk, as happened for example during the gas crisis in the cold winter of December 2016/January 2017.

Greece notified to the Commission its intention to prolong the flexibility mechanism until March 2021, and the interruptibility scheme until September 2021. The Commission assessed the two measures under the Guidelines on state aid for environmental protection and energy 2014-2020.

The Commission found that the prolongation of the two measures is necessary for a limited period of time, in view of the on-going reforms in the Greek electricity market. It also found that the aid is proportionate because the remuneration of beneficiaries is fixed through a competitive auction, and thus avoids overcompensation. On this basis, the Commission approved the measures under EU state aid rules. More information will be available on the Commission's competition website, in the public case register, under the case number SA.56102 and SA.56103.

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Electricity interconnectivity

EPO-IEA study: Rapid rise in battery innovation playing key role in clean energy transition

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  • Electricity storage inventions show annual growth of 14% over past decade, joint study by European Patent Office (EPO) and International Energy Agency (IEA) finds

  • Amount of batteries and other energy storage needs to grow fiftyfold by 2040 to put world on track for climate and sustainable energy goals

  • Electric vehicles now main drivers of battery innovation

  • Advances in rechargeable lithium-ion batteries focus of most new inventions

  • Asian countries have strong lead in global battery technology race

  • Accelerated innovation needed to drive forward Europe’s clean energy transition in order to meet the aim of the European Green Deal

 Improving the capacity to store electricity is playing a key role in the transition to clean energy technologies. Between 2005 and 2018, patenting activity in batteries and other electricity storage technologies grew at an average annual rate of 14% worldwide, four times faster than the average of all technology fields, according to a joint study published today by the European Patent Office (EPO) and the International Energy Agency (IEA).

The report, Innovation in batteries and electricity storage – a global analysis based on patent data, shows that batteries account for nearly 90% of all patenting activity in the area of electricity storage, and that the rise in innovation is chiefly driven by advances in rechargeable lithium-ion batteries used in consumer electronic devices and electric cars. Electric mobility in particular is fostering the development of new lithium-ion chemistries aimed at improving power output, durability, charge/discharge speed and recyclability. Technological progress is also being fuelled by the need to integrate larger quantities of renewable energy such as wind and solar power into electricity networks.

The study also shows that Japan and South Korea have established a strong lead in battery technology globally, and that technical progress and mass production in an increasingly mature industry have led to a significant drop in battery prices in recent years – by nearly 90% since 2010 in the case of Li-ion batteries for electric vehicles, and by around two-thirds over the same period for stationary applications, including electricity grid management.

Developing better and cheaper electricity storage is a major challenge for the future: According to the IEA’s Sustainable Development Scenario, for the world to meet climate and sustainable energy goals, close to 10 000 gigawatt-hours of batteries and other forms of energy storage will be required worldwide by 2040 – 50 times the size of the current market. Effective storage solutions are needed to drive forward Europe’s clean energy transition in order to meet the aim of the European Green Deal: to make the continent climate-neutral by 2050.

Electricity storage technology is critical when it comes to meeting the demand for electric mobility and achieving the shift towards renewable energy that is needed if we are to mitigate climate change,” said EPO President António Campinos. “The rapid and sustained rise in electricity storage innovation shows that inventors and businesses are tackling the challenge of the energy transition. The patent data reveals that while Asia has a strong lead in this strategic industry, the US and Europe can count on a rich innovation ecosystem, including a large number of SMEs and research institutions, to help them stay in the race for the next generation of batteries.”

IEA projections make it clear that energy storage will need to grow exponentially in the coming decades to enable the world to meet international climate and sustainable energy goals. Accelerated innovation will be essential for achieving that growth,” said IEA Executive Director Fatih Birol. “By combining the complementary strengths of the IEA and the EPO, this report sheds new light on today’s innovation trends to help governments and businesses make smart decisions for our energy future.”

Rise of electric vehicles boosting Li-ion innovation

The report, which presents the major trends in electricity storage innovation between 2000 and 2018, measured in terms of international patent families, finds that lithium-ion (Li-ion) technology, dominant in portable electronics and electric vehicles, has fuelled most of the battery innovation since 2005. In 2018, advances in Li-ion cells were responsible for 45% of patenting activity related to battery cells, compared with just 7% for cells based on other chemistries.

In 2011, electric vehicles overtook consumer electronics as the biggest growth driver for Li-ion battery-related (See graph: Number of IPFs related to applications for battery packs). This trend highlights the ongoing work of the automobile industry to decarbonize and develop alternative clean energy technologies. Ensuring batteries in electric vehicles are effective and reliable is crucial to encouraging their take-up by consumers post-2020, after which stricter EU-wide emissions targets will apply to fossil fuel vehicles.

The share of inventions from European countries is relatively modest in all fields of Li-ion technologies, but it is twice as high in emerging fields compared with more established ones, for example generating 11% of inventions in both Lithium iron phosphate (LFP) and Lithium nickel cobalt aluminium oxide (NCA), which are both seen as promising alternatives to current Li-ion chemistries.

Improvements to battery packs for electric cars have also produced positive spill-over effects on stationary applications, including electricity grid management.

The report also shows that patenting activity in the manufacturing of battery cells and cell-related engineering developments has grown threefold over the last decade. These two fields together accounted for nearly half (47%) of all patenting activity related to battery cells in 2018, a clear indication of the maturity of the industry and the strategic importance of developing efficient mass production.

In addition, other storage technologies, such as supercapacitors and redox flow batteries, are also rapidly emerging with the potential to address some of the weaknesses of Li-ion batteries.

Asian companies in the lead

The study shows that Japan has a clear lead in the global race for battery technology, with a 40.9% share of international patent families in battery technology in 2000-2018, followed by South Korea with a 17.4% share, Europe (15.4%), the US (14.5%) and China (6.9%). Asian companies account for nine of the top ten global applicants for patents related to batteries, and for two-thirds of the top 25, which also includes six firms from Europe and two from the US. The top five applicants (Samsung, Panasonic, LG, Toyota and Bosch) together generated over a quarter of all IPFs between 2000 and 2018. In Europe, innovation in electricity storage is dominated by Germany, which alone accounts for more than half of international patent families in battery technologies originating from Europe (See graph: Geographic origins of European IPFs in battery technology, 2000-2018).

While innovation in battery technology is still largely concentrated in a limited group of very large companies, in the US and Europe, smaller companies, universities and public research organizations also play a significant role. For the US, SMEs account for 34.4% and universities/research organizations for 13.8% of IPFs filed. For Europe, the figures are 15.9% and 12.7% respectively, contrasting with Japan (3.4%/3.5%) and the Republic of Korea (4.6%/9.0%).

More information

Read the executive summary

Read the full study

Notes to the editor

About international patent families

The patent analysis in this report is based on the concept of international patent families (IPFs). Each IPF represents a unique invention and includes patent applications filed and published in at least two countries or filed with and published by a regional patent office, as well as published international patent applications. IPFs represent inventions deemed important enough by the inventor to seek protection internationally, and only a relatively small percentage of applications actually meet this threshold. This concept can therefore be used as a sound basis for comparing international innovation activities, as it reduces the biases that may arise when comparing patent applications across different national patent offices.

About the EPO

With nearly 7 000 staff, the European Patent Office (EPO) is one of the largest public service institutions in Europe. Headquartered in Munich with offices in Berlin, Brussels, The Hague and Vienna, the EPO was founded with the aim of strengthening co-operation on patents in Europe. Through the EPO's centralised patent granting procedure, inventors are able to obtain high-quality patent protection in up to 44 countries, covering a market of some 700 million people. The EPO is also the world's leading authority in patent information and patent searching.

About the International Energy Agency
The International Energy Agency (IEA) is at the heart of global dialogue on energy, providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries bring about secure and sustainable energy for all. Taking an all-fuels, all-technologies approach, the IEA advocates policies that enhance the reliability, affordability and sustainability of energy. The IEA is supporting clean energy transitions all over the world in order to help achieve global sustainability goals.

Media contacts European Patent Office

Luis Berenguer Giménez

Principal Director Communication / Spokesperson

Tel.: +49 89 2399 1203
[email protected]

 

 

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Electricity interconnectivity

ElectroGasMalta has summed up its Delimar power plant project

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The Electrogas consortium recently held a press conference where it announced the results of an internal audit of its company. The company said it began an "extensive internal legal and forensic review" in 2019, following the appointment of three new Directors. The audit showed that there were no signs of corruption in the project to build a gas power plant in Delimar with the participation of Siemens Projects Ventures and SOCAR Trading.

According to Energogas, the audit did not reveal any signs of any violations at the stage of bidding, construction of the power plant and operating activities of Electrogas.

Electrogas also reported that a project worth more than 500 million euros for the construction of a new 210 MW power plant and an LNG regasification terminal was implemented by ElectroGas Malta, which includes SOCAR Trading. In partnership with Siemens and local investment company GEM, it won a public tender in Malta in 2013.

It is known that the management of Electrogas changed after the resignation of shareholder Jorgen fenek.
Fenech was part of the joint venture "jam holdings", which owns 33.34% of the power plant. SOCAR Trading and Siemens Projects Ventures hold 33.34 percent each.

In 2015, ElectroGas Malta signed a contract with SOCAR giving exclusive long-term rights to supply LNG to Malta for the power plant. The first batch of LNG was delivered to the island in January 2017, thus creating the conditions for Malta to completely abandon fuel oil as a source of electricity generation. As noted earlier by the Prime Minister of Malta, Joseph Muscat, this helped reduce electricity prices for the Maltese population by 25% and contributed to a 90% reduction in toxic emissions into the atmosphere.

ElectroGas Malta will also supply electricity and natural gas to the state-owned energy company Enemalta for 18 years. A project worth more than €500 million to build a new 210 MW power plant and an LNG regasification terminal in Malta with the participation of SOCAR Trading was launched in December 2014 and completed in January 2017.

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