Download Power Market Structure and Renewable Energy Deployment

MedReg
Mediterranean Energy Regulators
Mediterranean Forum on Energy Regulation
REGULATION & INVESTMENTS:
SOLUTIONS FOR THE MEDITERRANEAN REGION
26 November 2014 BARCELONA (SPAIN)
TABLE III · abstract
Power Market Structure
and Renewable Energy Deployment:
Experience from MENA Region
»Tareq Emtairah
Executive Director,
Regional Center for
Renewable Energy
and Energy Efficiency
(RCREEE)
In almost all countries in the MENA region, power sectors are still characterised by a high
degree of vertical integration and state control. However, several countries have undertaken
reforms in order to open up the power market for private sector involvement particularly in relation to RE sourced electricity generation. Such reforms relate to a number of aspects which
differentiate the individual markets and their level of liberalisation, i.e.: the unbundling of the
power sector; the establishement of independent electricity regulators; and the opening of the
market for private RE power generation for different purposes.
In relation to RE deployment in the MENA region, there is a general concern around to what extent current transmission ownership arrangements can deliver transparent and non-discriminatory access to the electricity grids. Some countries in the MENA region have taken steps towards
an unbundling of the electricity sector with different levels of ambition. Among the ones that have
come furthest in that process can be found Jordan, Algeria, Egypt and Abu Dhabi. Since 2003,
Jordan has a fully unbundled power sector characterised by ownership separation of generation, transmission and distribution. Algeria, Egypt and Abu Dhabi have taken some first steps
towards an unbundling and are now characterised by legal separation in which generation,
transmission and distribution are handled by different subsidiaries under a holding company. All
countries that have legally undertaken an unbundling of the power sector have also established
electricity regulatory agencies. However, out of these, only the Jordanian Electricity Regulatory
Commission (ERC) can be considered to operate as a fully independent regulator.
While private participation in transmission and distribution remains very restricted most MENA countries allow for some sort of private participation in power generation activities. A majority of the MENA countries authorise private power generation for utility supply i.e.
selling electricity to the single-buyer. As oppose to that, very few countries authorise RE
power generation for third party sales, auto-production or export. What characterises the
MENA region in general with regard to the possibility for private actors to produce electricity is
a lack of clear signals from the governments. Few projects have been established in practise
and the RE share of installed capacity remains low.
MEDREG is supported by the European Union
MedReg
Mediterranean Energy Regulators
Mediterranean Forum on Energy Regulation
TABLE III » Tareq Emtairah
Power Market Structure and Renewable Energy Deployment:
Experience from MENA Region
Current power market structure and support schemes require governments in the MENA
region to be very active in stimulating private sector participation. In order to reach RE targets
under current power market structures and schemes, it is crucial that governments increase
the amount of tenders for PPAs and make sure to streamline these processes to become more
certain and less lengthy. Eventually, a mix of different measures must be undertaken so that private investments steam to a larger extent from markets signals rather than from project-based
public initiative. National legislations should specifically promote IPPs that want to invest in RE
by allowing not only for utility supply and guaranteed purchase form the single-buyer but also
by allowing for auto-production and third party sales. To implement such frameworks adequate
support mechanisms must be developed in parallel.
Before recommending any further unbundling activities of the power sector, it should be investigated at a regional level how and if the MENA countries and private investors would benefit
from different levels of unbundling of the power market. There are great disagreements on the
topic of unbundling and most recommendations provided in the academic literature and by
the European Commission have not taken into account the fast development of RE and smart
grids.
MEDREG is supported by the European Union