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Interviews

06.07.2017

Mr Kristian Ruby, Secretary General of EURELECTRIC

South-Eastern Europe is becoming a hot spot for the energy transition

AUTHOR: Atanas Georgiev

June’2017 issue of the UTILITIES magazine & the web-portal Publics.bg

Mr Ruby, you were elected Secretary General of EURELECTRIC in the beginning of 2017. What are your main priorities during your mandate?

During my mandate, I will try to modernise and revitalise the association in a way that makes us see the opportunities as a top-level player and partner of the European Institutions in relation to the ongoing energy transition and the Clean Energy Package. The key element that I want to focus on is to ensure that we work together to define a new long-term vision for the industry.

There will be three recurrent main themes for my work as Secretary General: decarbonisation, electrification and digitisation.

You attend in Sofia the energy liberalization conference, organized by the National Energy Chamber (NEC) and the Energy Management Institute (EMI). What is the current level of cooperation between EURELECTRIC and the Bulgarian institutions?

We have a very strong cooperation with the EMI and its members in Bulgaria. The EMI covers both generation and distribution. This is my first visit in Bulgaria, but I intend to initiate a close cooperation with the members here, because I think there is a lot going on. Many important things related to the energy transition are happening in South-Eastern Europe and it is the right place and time to keep an eye on these developing issues.

Today we visited IPS, a medium-sized Bulgarian company, which produces off-grid system solutions that combine energy storage, diesel generation and solar panels – an interesting company that is genuinely European in its DNA, but that also delivers new energy solutions around the globe.

I think SEE is becoming a hot spot for the energy transition, because, there are a lot of opportunities – a good amount of renewable energy resources, but also a lot of challenges in ensuring a socially just and economically responsible energy transition.

How hard is it for single Member States to pass from one level to the other – from state-owned energy companies to a fully digitised and decarbonised energy industry?

I do not think it is easy, but we should not do it because it is easy – we should do it, because it is the right thing to do. These companies will eventually get there. Across Europe, we have seen significant benefits of privatisation, liberalisation and ensuring a market for energy. This is something we have to pursue and I think that this can happen in Bulgaria as well. We can see the contours of it in any new types of investors in this market – developers, IPPs, etc.

The trick to ensuring a good and thriving market is to make sure that everybody gets a fair deal and their return on investment and predictability for their business.

The European Commission has proposed a Clean Energy Package in November 2016. What are the main accents of EURELECTRIC’s positions, published in April 2017?

The first accent is that we welcome this package. We think it is a serious and good attempt to find a new framework that combines market-based approach to this new transition with a sense of long-term planning.

There are a number of key issues that we need to tackle. The one I would like to highlight here is the need for complementarity between the different instruments – we have energy efficiency legislation, renewable energy legislation, as well as climate legislation and security of supply legislation. We have to make sure that these things work together in a good way: that they do not contradict each other, but reap the synergies.

For EURELECTRIC, we strongly believe in the electrification as a driver for cost-effective decarbonisation – using more electricity will mean ultimately a more cost-effective energy transition and it will also mean benefit for citizens. It will mean clean energy, but also more secure and stable supply and less dependence from energy supplies from outside the EU.

Still, there are many differences between the national regulatory approaches – in terms of renewable energy support schemes, capacity mechanisms, etc., which lead to different revenues for different generators, even if the wholesale price they receive is the same. What could be the solution to this challenge?

The challenges in this question are manifold. Regarding the first one – renewable energy support schemes – the clear view of EURELECTRIC is that if you want to have an Energy Union where renewable energy is the backbone for electricity production, you have to create a system where this is the principle and not the exception. Therefore, you need to have a market that integrates renewables rather than having underdeveloped schemes in different Member States. You need a well-functioning market that integrates renewables and that has this as its key task. This is a key issue for EURELECTRIC.

We also believe in the competition-based approach to security of supply, but it is also very clear, that if you look at the future with more renewables and shorter running times for conventional backup, that means that you have progressively a higher value of availability. We strongly believe in the principle of availability and economic value on availability and that should also be a principle that guides the market design as we move forward with the new package.

We also see that there are a lot of different national contexts, which means that we should not prescribe one right system for capacity markets. We should rather look at some principles that are important here – that they are open to different types of technologies. That security of supply could be provided by renewables, by storage, by demand-side response, by interconnections, but also by capacity. Essentially the mechanisms should be open to all these sources, so that they do not become a technology-specific support instrument.

We should ensure, as much as possible, competition here. We should avoid administrative payments – the ones that are received just because you have a power plant. We should ensure that the market is tested and that we see that there is actually the relevant and necessary amount of capacity out there. We should make sure that we only shut down unnecessary, inflexible high carbon capacity.

When we look back at the Third Energy Package and the initial idea of it versus the reality that was adopted, there were some compromises. Do you expect hard negotiations between member states and business and such compromises during the adoption of the Clean Energy Package?

It is very clear that there are some crunch issues here. One of them is going to be the regulation for security of supply. We have to make sure that we implement the Clean Energy Package in a balanced way and do not essentially shut down capacities, especially in SEE.

Another prominent issue will be regional cooperation. We are coming from a past of national energy systems. We want to ultimately move to an Energy Union, which ultimately works on a European level. The inevitable step in this way is regional cooperation. But, how do you do this in practice? How do you make it work?

Right now, we do not have sufficiently strong institutions at regional level to actually have a role as a regulator forcing companies to do things. How do we make sure, that this regional cooperation will happen in a way that there is rule of law, predictability and where you do not revert to national practices every time there is a little bit of a challenge.

You see this across Europe in different forms – when capacity becomes tight, some countries stop their exports. When there is too much electricity coming from another country, some people shut down the imports. This is not confined to one part of Europe – we see it in many places and we need to have a solution for this. So we are strongly in favour of regional cooperation ensuring that we get this equation right. And it is going to be very difficult.

The Third Energy Package promoted regulatory independence. What would be the new role of national regulatory authorities after the adoption of the Clean Energy Package?

For me, the point of departure is that we should deliver on the Third Package before we progress with the Fourth. Getting in place very strong national regulators that are independent, respected and not forced into a corner or put under unfair political pressure when they have to take difficult decision – this is a key first step. Of course, when you look at establishing ultimately an EU Energy Union, you need a strong regulatory body at EU level. I do not think that this is a zero sum game – that when you have the EU-level regulator, the national ones are per definition weaker. It is really about complementary roles – remember that the national regulators are actually part of the European regulator.

We have to focus at two different roles of the regulator. One is in relation to the government, and the other in relation to the market. It is very important that we do not forget the role in relation to the government. We should ensure that there are strong regulators. We could even support a stronger role for ACER, but we think that the Package is going in the right direction by assigning more responsibility to ACER.

What are your expectations from the panels and the discussions of the conference, organized by NEC and EMI in Sofia on 16-17 May?

I have high expectations – we had a very high attendance and I am happy with the setup of this event. For me, this is an opportunity to pass some messages directly to the government of Bulgaria. I think that the new government stands with a unique set of opportunities to make new strides towards a better functioning market in Bulgaria, but also in support of the overall project of the European Energy Union.

As you know, there is a Presidency coming up, so there is a very constructive role for Bulgaria in terms of pushing the agenda forward, but also in making new progress at national level when it comes to getting the fundamentals for the market right – rule of law, sanctity of contracts, predictability for businesses, getting markets right, establishing a well-functioning transparent wholesale market in Bulgaria with the view of creating also a very well-functioning retail market. Getting prices right, avoiding that we interfere too much in the market and let supply and demand do their job. Ultimately – also get the planning right, because this is a big transition, a long-term process – we need to provide investors with a horizon where this transition is going and where they should put their money.

Kristian Ruby has been Secretary General of EURELECTRIC since January 2017. He has been part of the Executive Management team at WindEurope, where he served as Chief Policy Officer in charge of developing and implementing the political strategy of the association. Prior to WindEurope, Mr Ruby worked as assistant to the former European Commissioner for Climate Action, Connie Hedegaard, and also, for a number of years, as a public servant in the Danish Ministries of Climate and Energy as well as Environment. In addition, Mr Ruby has considerable experience in communications and media relations.