Exclusive interview with Walter Boltz, Executive Director E-Control and Vice Chair Regulatory Board ACER. Mr Boltz is a speaker at the upcoming EMART Energy in Berlin and a panelist in the opening session.
1) What do you believe are the main challenges in energy markets?
The current key challenges are multifaceted: how can back-up thermal plants be economically viable; how can we ensure intermittent power supplies complement security of supply; how can we foster competition in retail markets to reflect the improvements we have seen in wholesale markets? Some solutions to these challenges will undoubtedly increase risks for traders and producers. For example, we are likely to see more regulatory intervention in the form of capacity mechanisms. This will inevitably impact producers and traders due to the influence of capacity markets on both near and long-term price signals. It is also important to mention that many of the emerging problems require cross-sector solutions. So far we have seen gas and electricity players acting as if in separate, largely isolated boxes – for example TSOs. This mindset will have to change. Market participants will also have to bear in mind that there is no guarantee for CO2 prices to continue at the low levels we currently observe; several member states are not satisfied and consider carbon floor taxes to be ineffective.
2) What would you like to see happen in the market in terms of renewable energy?
The various support systems have taken competition-free bites out of the market, and the traded part of the market is shrinking. This is endangering our achievement of the original goals, i.e. market liberalisation and an integrated European electricity market. The market framework has to be designed to ensure a level playing field for conventional and renewable energy. In doing so, not only negative externalities like CO2 output but also negative effects such as the non-availability of capacities must be borne in mind.
3) What surprises you about the energy trading market?
It is surprising and disappointing to me that, while we have seen more market entrants, increasing liquidity and short-term trading in wholesale energy markets, there is still no real competition at the retail level. For this to happen, we need further harmonisation of market structures and regulatory frameworks to underpin competition. Competition remains the best way to reduce end-user prices, even though several member states find regulated price regimes attractive.
4) What will be your message at EMART Energy in Berlin in November? (topics: wholesale market, gas market)
My main message will be that regulators will continue to engage closely with market participants as we fully implement and move beyond the third energy package to address evolving shortfalls.
5) How important is it for the industry to get together for an event such as EMART?
For many industries the energy prices are a key competitiveness factor. Knowing which challenges are ahead and how the energy markets are developing is decisive for these companies. All these topics will be discussed at EMART and I am sure that this will be interesting and helpful for the industry.
6) Anything you would like to add?
Energy prices are crucial for a region’s or country’s competitiveness. In the United States the gas price is just a third of the European gas price. If Europe wants to avoid de-industrialisation something needs to be done against this price difference. Otherwise we will increasingly see how energy intensive industries prefer to invest in the US rather than in Europe.