Electricity generation prospects for 2010

The Union for the Coordination and Transmission of Electricity (UCTE) has, for the first time, released medium term forecasts for electricity output and consumption for the whole of Europe. These make it possible to estimate each country’s potential export capacities or import requirements for the period 2004-2010. Where electricity generation is concerned, European countries have undertaken to develop renewable sources of energy for the production of electricity; as regards the CEEC, this undertaking is registered in the Accession Treaties. In addition, a EU Directive dating from 2003, introduces minimal taxation for the various sources of energy used, with the dual objective of reducing competition distortions (between sources of energy and member states) and increasing the incentive to use energy more efficiently*. Taking into account the existing capacities for electricity generation and the investments planned in this field, by 2010 the CEEC should be potential exporters, whereas a number of current Member States, including France and Germany, could find themselves as potential importers unless new investment projects are undertaken.

The UCTE calculates the balance between “guaranteed production” and a “load level in reference period”; from this potential “surplus capacity” a “necessary margin” is subtracted, on the one hand to cover peak consumption periods and on the other hand to ensure reliability and continuity of supply (5% of total output for the latter). If the balance is positive, the country has export capabilites and when the balance is negative the opposite is the case.

According to this criterion, in 2010 Belgium, Germany, France and Greece would be the main potential importing countries in the current Union, both in summer and in winter; Austria and Italy being potential exporters. As for the Central European and Eastern countries, Poland and Bulgaria should have significant exporting capacities, there would be a slight supply surplus in the Czech Republic, Hungary would show a slight deficit, and Slovakia and Romania would be more clearly in a demand situation, the latter especially in winter.

However, the current physical export capacities of Poland and the Czech Republic, to Germany in particular, are fully committed. It has not yet been decided whether to increase them**.

Although the CEEC’s commitments to a broader use of renewable energy can be seen as additional constraints, two recent studies published by the EBRD and WWF*** highlight a positive impact as regards:

• the diversification and progressive restructuration of the electricity generating sector, in a context of global demand on a European scale;
• the attraction of foreign investments, between € 20 to 40 bn being necessary for the technical installation of the necessary production facilities by 2020; “green energy” could thus create between 30,000 and 40,000 jobs in Poland (which would eventually “replace” the jobs lost in the coal mines, 95% of Poland’s electricity being produced from coal), the estimates for the Czech Republic are in the region of 60,000 jobs;
• the strengthening of the cohesion and development of rural areas, in particular by opting for the biomass solution, which, together with wind energy, has the greatest potential in the region, in relation to geothermal and hydrothermal energy sources.

European Funds, taxation of non-renewable energies and feed-in tariffs will contribute to this voluntarist policy of Europe.

* Each acceding country benefits from transition periods. An English summary of the transition periods in relation to the EU Energy Tax Directive is available on the Elargissement website.

** It will also depend on the new mix between traditional and renewable sources of energy used for electricity generation, the choice of which restricts location.

*** Available on EBRD and WWF websites as well as on

www.dree.org/elargissement

For more analyses of the EU’s enlargement process, see the

enlargement website of DREE.