When do countries cooperate in
times of electricity crisis?
‘An empirical analysis of transnational cooperation between Electricity TransmissionSystem Operators during the January 2017 cold spell’
Master Thesis
Written by: Jelmer Pijpers Student Number: s1677802 Supervised by: Dr. L.D. Cabane Leiden University
Faculty of Governance and Global Affairs MSc Crisis and Security Management Date: 09-06-2019
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Table of Content
Abstract 4 List of Abbreviations 5 Chapter 1. Introduction 6 1.1 Problem analysis 6 1.2 Research question 9 1.3 Academic relevance 9 1.4 Societal relevance 10 1.5 Outline 11Chapter 2. Theoretical Framework 12
2.1 Literature review 13
2.2 Hypothesis 18
Chapter 3. Research Design 19
3.1 Justification of the research design 19
3.2 Case selection 21
3.3 Operationalisation 26
Chapter 4. Empirical evidence regarding the dependent variable 29
4.1 Data regarding the Belgian case 29
4.2 Data regarding the Bulgarian case 34
4.3 Data regarding the Swiss case 42
Chapter 5. Empirical evidence regarding the independent variable 51
5.1 Data regarding the Belgian case 51
5.2 Data regarding the Bulgarian case 52
5.3 Data regarding the Swiss case 53
Chapter 6. Analysis 55
6.1 Testing of the hypothesis 55
6.2 Analysis of data in light of the theory 56
6.2.1 Analysis regarding the minimum interconnector capacity level of the states’ installed electricity production capacity 56 6.2.2 Analysis regarding export restrictions imposed by the affected states 57 6.2.3 Analysis regarding additional imports of energy by the affected state 58 6.2.4 Analysis regarding deliberation among the concerned TSOs and the
perceptions of the TSOs 60
6.3 Summary of the analysis regarding the causal mechanism 65
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Chapter 7. Conclusion 68
7.1 Theoretical discussion 68
7.2 Recommendations 70
References 72
Annex 1. Composition of the electricity generation capacity in 2017 in Belgium 80 Annex 2. Composition of the electricity generation capacity in 2017 in Bulgaria
81 Annex 3. Composition of the electricity generation capacity in Switzerland 82
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Abstract
This study that is part of the Capstone project “Transboundary crises in Europe:
Winter is Coming”, aims to explain the causal mechanism between European
integration of the energy market and transnational cooperation by Transmission System Operators (TSOs) during an electricity crisis caused by a severe cold spell. With special thanks to Dr. Lydie Cabane for the opportunity to engage in this Capstone project and for her support and confidence in completing this study. For this thesis, European integration theories help us to understand why electricity systems are integrated and why it is debated whether and how member states should cooperate to manage a cross-border electricity crisis. The central question to be answered is: “To
what extent does European integration of the energy market explain cooperation (or a lack thereof) between the Transmission System Operators (TSOs) in the electricity crisis during the cold spell of January 2017?” We examined the electricity crisis in
three European states; Belgium, Bulgaria, and Switzerland during the January 2017 cold spell. Specifically, this thesis considers how the degree to which TSOs integrated their power grid relates to the extent in which they cooperated with their foreign counterparts. We conducted an in-depth document analysis towards documents from the ENTSO-E, TSOs, European Commission, national governments, and other relevant organizations. Following the results of this study, it can be concluded that apart from integration of the transmission grid, a relationship and solidarity among the states and a position compatible with transnational cooperation by the concerned states are explanations for transnational cooperation to occur during the cold spell. Moreover, the factor of sensitive political developments also explains why cooperation was more challenged in Bulgaria. Based on the results, this thesis argues that transmission networks should become more resilient to electricity crisis and cooperation more advanced. Although this study explains transnational cooperation in terms of crisis management, it is recommended to conduct further research into this topic and how it relates over time.
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List of Abbreviations
CEPS Centre for European Studies
CESEC Central and South-Eastern European
Energy Connectivity group
Coreso Coordination of Electricity System
Operators
ENTSO-E European Network of Transmission
System Operators for Electricity
EAS European Awareness System
FYROM the Former Yugoslav Republic of
Macedonia
mFRR manual Frequency Restoration
Reserves
RSC Regional Security Provider
TSO Transmission System Operator
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Chapter 1. Introduction
This chapter presents an outline of the main research problem. Furthermore, it addresses the research question and both academic and societal relevance of this study. To conclude, the outline of this research is discussed.
1.1 Problem analysis
In January 2017 several European countries were confronted with a severe cold spell (ENTSO-E, 2017b: p. 3). These weather conditions resulted in increased energy demand, outages of power lines and tense electricity generation. Consequently, the security of supply e.g. electricity availability was jeopardised in among others Belgium, Bulgaria, and Switzerland, as markets in those states were tight in the sense that available capacity was low or temporarily zero. To illustrate, in Belgium energy generation by sources such as solar and wind decreased considerably upon which the energy balance was threatened (ENTSO-E, 2017b: p. 37). TSOs; the agencies that are in the European states responsible for operating the transmission systems, implemented emergency measures and exchanged energy to ensure uninterrupted supply and secure system operations. Transmission implies the transport of electricity on the extra high or high voltage network to final customers or to distributors (ENTSO-E, 2017b: p. 9).
During the cold spell, cooperation between TSOs and government administrations proved to be a challenge. Specifically, the one-month long export ban that Bulgaria imposed on January 13, 2017, to ensure the security of supply was challenging cooperation with its European partners (ENTSO-E, 2017b: p. 46). As a result, prices in neighbouring countries deviated. Price spreads in Romania and Greece increased continuously throughout January 2017 as prices in Bulgaria stabilised. Meanwhile, it is noteworthy that cooperation, in Switzerland and Belgium, was not challenged as they overcame the electricity crisis by importing extra electricity, and aligning measures with their neighbouring states.
7 The events during the cold spell raise questions regarding the security of supply and on how states should construct risk preparedness plans and cooperate with each other (European Commission, n.d.: p. 1).
Why should electricity crisis get more attention?
The electricity crises during the cold spell are interesting and call for a study because it reflects the threat to the supply of electricity. Moreover, the January 2017 electricity crises are not isolated, as European states experience nearly every winter adequacy problems regarding their energy networks. For instance, Belgium struggles every year to balance its power supply due to the aging nuclear plants. To manage this, states aim to shift away from fossil fuels and nuclear energy, and instead transition towards renewable energy. However, this transition is a formidable challenge because those renewable energy sources have proved to be unreliable as extreme weather conditions affect the generation capacity (Bloomberg NEF, 2018). As part of this bigger problem, the focus is on the cases of Belgium, Bulgaria, and Switzerland. These states are interesting because we observe different responses by their TSOs in terms of cooperation to the same problem, namely interdependence due to the European integration of energy networks. The elements of cooperation and European integration of energy networks are the main points of focus in the research question. Therefore, the main goal of this thesis is to understand the causal mechanism between the factor of European integration of energy networks and cooperation between TSOs during the electricity crisis caused by the January 2017 cold spell.
Furthermore, the electricity crises reveal challenges regarding cooperation between states to manage the energy flows through cross-border interconnections. There is a problem because states have integrated their power grid but want to manage the capacity of their grid themselves. In other words, there is a mismatch between the integration of the power grid and the subsidiary to cooperate. This implies that it is contested on what level the crisis management intervention should happen. This raises questions such as: what the TSOs should do in terms of crisis response, why, and what the exact role of the European institutions should be. Specifically, it is of
8 importance to analyse the (member) states positions in relation to cooperation and unravel why they differ from each other. Moreover, it is interesting to study how these electricity crises were managed since TSOs are considered to operate independently and impartially from government institutions (Gerardin & Jacobi, 2002: p. 113). However, national governments can affect the electricity sector by a legislative framework that the TSOs should abide by.
This research topic deserves more attention because it is about critical infrastructure. Particularly, we focus on the domain of electricity because it is an important aspect of every national security policy. The relevance also lays in the fact that crisis management regarding energy supply is considered a national task. However, the EU has put focus on risk preparedness and crisis management on a supranational level (Boin et al., 2014: p. 136; Cabane & Lodge, 2018: p. 7 ). Therefore, apart from the fact that electricity is vital for the functioning of modern society, it raises the question of how we should manage electricity crises that are becoming increasingly transboundary. This is accompanied by the question of whether it is possible to integrate crisis management responsibilities and tasks at the European level.
We argue that it is important to consider these electricity crises since they can be placed in a larger context, as an example of transboundary crisis. A central issue is that transmission networks are increasingly interconnected and cooperation in terms of crisis management is contested. Specifically, it is relevant because electricity is considered the pivotal element in critical infrastructure, as many critical infrastructure systems depend on electricity (Amin, 2002: p. 1). This thesis is about cooperation in terms of crisis management between states during an electricity crisis in light of European integration of the energy network. Moreover, the challenges regarding transnational cooperation directly relate to the problem of transboundary crisis since the crisis management response of electricity crisis involves multiple TSOs, national parliaments, electricity suppliers, etc. that have different interests and perceptions. To conclude, this particular transboundary crisis undermines society and affects the daily lives of the citizens.
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1.2 Research question
Considering the introduction above, this research aims to answer the following research question: “To what extent does European integration of the energy market
explain cooperation, or a lack thereof, between Transmission System Operators (TSOs) during the electricity crisis caused by the cold spell of January 2017?”
This study assesses the causal mechanism between European integration of the energy market and transnational cooperation between TSOs during transboundary electricity crisis in times of a cold spell. Specifically, the cases of Belgium, Switzerland, and Bulgaria are considered. The research design chapter further elaborates why these cases are considered.
1.3 Academic relevance
This study connecting to the field of crisis and security management is based upon the fact that transboundary crises create new, more significant challenges to contingency and security management. In this respect, the interconnected nature of the European power grid and the interdependence between the member states challenges transnational cooperation. Previous studies have pointed to the dynamics and significance of transboundary crisis. However, there is only a limited number of scientific articles published in terms of transboundary crises and cold spells (Boin, 2018: p. 6; van der Vleuten & Lagendijk, 2009). No research has been conducted on European integration that explains cooperation during cold spells. This implies that the causality between European integration of the energy market and transnational cooperation during cold spells is underexposed. The scientific relevance for this study lays in the efforts that are made to understand how the concept of European integration of the energy market affects and explains transnational cooperation during electricity crisis. This initiative meets Boin’s (2018: p. 6) urge to study the various guises in which the transboundary crisis manifests.
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1.4 Societal relevance
Critical infrastructure such as electricity networks are crucial in our modern society because the power grid is interconnected with almost all economic and societal activities nowadays. Considering that this critical infrastructure system is increasingly present in our society, it increases the likelihood that a transboundary crisis occurs (Boin, 2018). In this regard, the disruption of the security of supply is significant from a societal point of view. This study is relevant because extreme weather conditions do not necessarily lead to a full-blown electricity crisis. It does, however, have the potential to turn disastrous since the security of supply is under threat. This means that the disruption of the power grid by causes such as human errors, technical failures, sabotage, etc. are not considered. Another reason for the relevance is based upon the fact that challenges regarding the balance of the power grid will be a recurrent issue in coming years for many European states, such as France and Belgium, because of their transition towards renewable energy. From a societal point of view, the identified links and explanations regarding cooperation are relevant, because the TSOs, ENTSO-E, and state governments can tailor their policy design on the findings. This follows the fact that TSOs have a chief role in the integration of the European energy market by managing and operating the increasingly complex energy flows through cross-border interconnections between Europe’s national and regional grids (TenneT, 2015: p. 3). Moreover, ENTSO-E, that represents 43 TSOs from 36 countries across Europe has the mandate of drafting network codes to effectively manage the cross-border network and market integration issues (ENTSO-E, 2012: p. 12). Therefore, the aim is to safeguard cross-border capacity for cross-border exchanges and to increase the cooperation between the member TSOs (EUR-Lex, 2009; ENTSO-E, n.d a). To conclude, the findings of this study can foster a broader political and societal debate upon how the transnational cooperation between TSOs in times of an electricity crisis should be arranged.
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1.5 Outline
The thesis is structured as follows. Chapter two presents the theoretical framework that is used for conducting this research. A combination of theories regarding transboundary crisis, European integration (of energy networks), and cooperation are the base of this section. Chapter three elaborates upon the research design, the case selection, and the operationalisation. Moreover, it addresses the limitations of the research. Chapter four presents the data with about the dependent variable; transnational cooperation. Chapter five, presents data regarding the independent variable; European integration of the energy network. Chapter six, builds upon chapter four and five, in the sense that the research findings are analysed and discussed in light of the theoretical framework. Moreover, we answer the research question and test the hypothesis. The conclusion summarises the most important findings and addresses the recommendations.
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Chapter 2. Theoretical Framework
The previous chapter pointed out why electricity crises are a pressing problem, as it is about European integration of energy markets and transnational cooperation between TSOs. Moreover, considering the distinctive nature, dynamics and challenges of transboundary crises and electricity crisis, institutions of the EU are advocating to strengthen cooperation between the member states, since states are unable to manage these crises themselves (European Council of the European Union, 2018: p. 1). Therefore, it is relevant to consider how the European integration of the energy network by states relates to the cooperation between TSOs during the January 2017 cold spell.
This chapter provides the central foundation of the thesis as it aims to clarify the main concepts that allow to classify data regarding the three cases. The framework presents an overview of the various theoretical insights regarding transboundary crisis, European integration (of the energy market), and transnational cooperation regarding crisis management. These three theories are relevant because they all relate to the research question and therefore logically built upon each other. By focusing on these theories in relation to the empirical evidence of the three cases, we can specify the causal mechanism. In addition, these theories were selected because they provide a perspective to evaluate the research question. This chapter consists of two parts; the first presents the literature review, and the second presents the hypothesis.
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2.1 Literature review
Transboundary crisis
Boin & Lagadec (2000: p. 185) introduced the concept of transboundary crisis to describe crises that are becoming more complex to manage because they exceed national boundaries. For the purpose of this study, the definition of transboundary crisis by Boin (2009: p. 369) is adopted: “the transboundary crisis effortlessly exceeds geographical, policy, cultural, public-private and legal boundaries that normally enable public managers to classify, contain and manage a crisis”.
The electricity crisis during the cold spell of January 2017 can clearly be considered as a transboundary crisis since the adequacy issues of the power grid in one state lead to a crisis in neighbouring states (Boin et al., 2013: p. 101). This relates to the fact that transmission networks are increasingly cross-border integrated upon which disruptions evolve into cascading effects for a much larger, transboundary geographic area. The characteristics of transboundary crisis apply to electricity crisis since its “cascading effects surpass the local capacity to manage and resist unilateral responses, neither it is practically impossible to isolate themselves from threats and ‘decouple’ critical infrastructures” (Boin et al., 2014: p. 132). This implies that crisis management practices that work well for ‘bounded’ crisis are unlikely to be sufficient for a transboundary one such as an electricity crisis (Boin, 2018: p. 1; Boin et al., 2003: p. 99). Furthermore, the theory of transboundary crisis relates to electricity crisis. First, there is diffuse ownership, as the tasks and responsibilities of the different actors are not clear (Boin, 2017: p. 7; Boin & Lagadec, 2000: p. 185). Second, transboundary crisis demonstrates the interdependence across European societies and demands for solidarity among (member) states. Third, transboundary crisis reveals a deep-rooted problem of little consensus on how crisis and security management initiatives are effectively and legitimately coordinated at the European or regional level (Boin et al., 2013: p. 3). This relates to Cabane & Lodge’s (2018: p. 7-10) notion that the idea of the EU as the resolution to transboundary crisis challenges is more contested than ever. Summarising, this theory reveals that it is hard to manage crises because they exceed boundaries. Taking these challenges of transboundary crisis in the form of the electricity crisis into account, this study
14 considers the implications for the cases. In other words, we consider the extent to which there was policy alignment, solidarity, and cooperation in the three cases.
European integration
European integration theories are relevant for this thesis because they tell us why there is harmonisation of regulation regarding electricity by states. European integration is understood as the implementation of policies from the EU with the aim of harmonisation to address challenges that member states are unable to resolve effectively themselves (Schmidt, 2016: p. 3). Georgakakis (2018: p. 2), goes a step further by adding that integration entails the processes that are concerned with the development of institutions that are responsible for managing problems on a European scale.
According to this theory, apart from just market integration, the European Union wants to attain integration of critical infrastructure such as electricity (Genschel & Jachtenfuchs, 2018: pp. 178-179). The integration of policy fields that are originally a national matter follows as a reaction to demand factors such as interdependence, externalities, and spillover (Genschel & Jachtenfuchs, 2018: p. 180). However, the integration of policy domains such as electricity is contested, as there is little ground for consensus on the largest collective interest (Genschel & Jachtenfuchs, 2018: p. 181). This follows the fact that integration e.g. adopting European regulation demands a considerable devotion of administrative and/or financial resources, which tend to be limited for these policy domains (Genschel & Jachtenfuchs, 2018: p. 179). As a result, the integration of policy fields such as critical infrastructure raises questions regarding European statehood, financing, national identity, and democratic interdependence. Summarising, this theory tells us that member states harmonise their regulation with the aim to better address problems. Nevertheless, the integration of policy fields that used to be a national matter such as critical infrastructure is contested.
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European integration of the electricity market
European integration theories regarding the energy market are relevant for the three cases because they explain why there is electricity market regulation. Moreover, based upon the data, we can make an interpretation about the extent of European integration of the energy market, which relates to what the research question attempts to unravel.
European integration of the energy market can be traced back to 1958 with the commission of a substation in the Swiss Canton of Aargau, linking the transmission networks of France, Germany, and Switzerland (van Baal & Finger, 2019: p. 9). The idea behind the European integration of the energy market is to ensure the security of supply (European Commission, 2017a: p. 6). Security of supply refers to the uninterrupted, continuous, and sufficient availability of all forms of electricity a given entity requires (Pointvogl, 2009: p. 5706; Jun et al., 2009: p. 1896). The theory points out that member states integrate their power grid because they increasingly depend upon imports to meet their energy demand. In this context, states are sensitive to fluctuations in the electricity generation because of their transition towards renewable energy. (Spanjer, 2007: p. 2890; Remizov, 2014: p. 9). Mateus (2007: p. 36) explains that states integrate their power grids because of the requirements imposed by the European Council’s order in October, 2014, that obliged each member state to establish a minimum interconnector capacity level of at least 10% of their installed electricity production capacity for cross-border capacity by 2020 (European Commission, n.d.). The literature tells that European integration is realised by increasing cross-border capacity through the establishment of new lines, interconnectors or by installing mechanisms that enable to control the flow through a power line so that the overall flow in the network improves (European Commission, 2015; Bekaert et al., 2009: p. 1). This connection of electricity markets is pivotal to ensure the security of supply (European Commission, 2015). Following Bekaert et al.,’s (2009: p. 1) definition we conceptualise European integration of energy networks as “processes in which new lines and interconnectors are established, and
the existing cross-border transmissions are linked, all to provide interconnection between states”.
16 European integration of the energy market proved to be an issue in the 1990s (Mateus, 2007: pp. 4-5). Despite the adoption of the first Electricity Directive in 1996, there was an absence of a mechanism that arranges cross-border trade (van Baal & Finger, 2019: pp. 8-9). Maltby (2013: p. 435) points to the leading role of the European Commission in the last two decades in the process of the integration of the European energy market by among others the resolution in 2000 that laid down the regulation for cross-border trade (van Baal & Finger, 2019: p. 9). Moreover, on July 13, 2009, the European Parliament and the European Council adopted EC Regulation 714/2009, that lays out the tasks and responsibilities of the European Network of Transmission System Operators (ENTSO-E). To conclude, European integration theories explain that states integrate their transmission grid to ensure the security of supply. It is interesting to assess how integration applies to the three cases because the element of European integration of energy works is a main point of focus in the research question.
Cooperation in the field of crisis management
The theories regarding cooperation in the field of crisis management are of importance because it explains why and when states cooperate. Moreover, it allows to consider data regarding the three cases in light of the theory. Furthermore, this theory relates to the theory of transboundary crisis, that points out that cooperation is pivotal but contested. Also, this theory logically follows the theory regarding European integration of the energy network. This implies that we have seen that integration is about cross-border capacity, and cooperation is about how states collectively manage this cross-border capacity. Regarding the field of crisis management, cooperation is understood as “a process whereby countries with common interests work jointly through agreed mechanisms to reduce tensions and suspicion, resolve or mitigate disputes, build confidence, enhance economic development prospects, and maintain stability in their regions” (Moodie, 2000: p. 5).
17 For this study, we conceptualise transnational cooperation as “the process in which
actors, and particularly TSOs and national governments, voluntarily work jointly based on some source of common interests through agreed mechanisms to reduce and/or minimise the impact of the (threatening) imbalance of transmission networks”.
The literature identifies that national government administrations cooperate during security-related crises since they often rationally consider the costs and benefits of collective action (Blondin et al., 2017: p. 4). In this sense, cooperation is induced by explicit and implicit influences of norms and values (Consoli et al., 2006: p. 13). The idea is to consider preferences at two levels (Blondin, 2017: p. 5). The first implies whether sufficient mutual interests exist, e.g. whether decision-makers in multiple states agree on the need for and basic goal of a collective crisis response. Second, there is a need to agree on the specific form that the cooperation will take (the specific crisis response strategy). In summation, this theory explains that there is cooperation in the field of crisis management because of the benefits of collective action. Taking this into account, it is of importance to consider the implications, meaning how cooperation was in the three cases of Belgium, Bulgaria, and Switzerland.
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2.2 Hypothesis
Based on the theoretical framework, the following hypothesis is derived. We test this hypothesis to answer the research question.
H1: ‘The higher the level of cross-border integration of the energy grid by a state, the
higher the likelihood that the TSO within this state transnationally cooperates to manage the adequacy issues during an electricity crisis induced by a cold spell’
This thesis considers the relationship between the concept of European integration of the energy market and the concept of transnational cooperation. The independent variable; European integration of energy networks, implies that states differ in the extent to which they have integrated their energy network into the cross-border energy network to ensure the security of supply. This integration is realised by the establishment of minimum interconnector capacity, to ensure that electricity can be exported or imported. The independent variable influences the dependent variable;
transnational cooperation, since states with interconnectors and a cross-border power
grid, can transnationally cooperate, by transporting electricity in times of electricity crisis.
The expectation is that states that have integrated their electricity grid by interconnectors are able to cooperate more easily with other states in times of an electricity crisis to manage the balance of the grid, as opposed to states that have done so to no, or a lesser extent (European Commission, 2017a: p. 19). This follows the fact that the perceived causal mechanism implies that European (member) states that have integrated their energy network by dedicating their resources to the establishment of an interconnected grid, e.g. interconnectors, have the ability to transport electricity from neighbouring countries and cooperate. Following this logic, member states that have invested little in integration because of their limited resources and capacities are less likely to transnationally cooperate during an electricity crisis since they do not have the ability to transport electricity.
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Chapter 3. Research Design
This chapter outlines the research design for this study. First, there is a discussion of the justification of the research design and the case selection. Subsequently, the operationalisation of the considered concepts is presented. To conclude, the limitations of the research are addressed.
3.1 Justification of the research design
As addressed in the introduction, European states have cooperated differently to manage the electricity crisis in January 2017. Apart from that, TSOs in the various states have cross-border integrated their power networks in different extents. It is relevant to make a comparison between cases, to get a deeper understanding in the causal mechanism between the factor of European integration of the energy market and cooperation between TSOs in time of an electricity crisis. Particularly, we consider what happened in the three cases of Belgium, Bulgaria, and Switzerland in the months prior to the cold spell and in January 2017. This follows the fact that they scored diverse on the extent to which they integrated their electricity network and cooperated during the cold spell.
This study employs a qualitative, method approach, in which secondary sources are used, meaning that profound information is generated through documents that describe the events. It should be noted that it was complex to collect comprehensive data regarding the extent to which there was cooperation and European integration of the energy network. Transparency and openness for the subject matter of electricity and cooperation in terms of crisis management between states is challenged by its (political) sensitiveness and sensitiveness in terms of security, because electricity is a critical and an exceptionally refined component of the infrastructure systems of states. In response to this challenge, we examined documents of the ENTSO-E, the Regional Security Coordinators (RSCs), the TSOs, the national government administrations, and the European Commission that describe and discuss European integration of the
20 power network and cooperation during particularly the January 2017 electricity crisis. The focus is on this set of actors because they are the most relevant actors for this policy area. By this, we predominantly make conclusions about the TSOs and the national government administrations. Moreover, this study was not able to find any publicly available reports that indicated the minimum interconnector capacity level for Switzerland in 2017. Therefore, we reached out to Swissgrid to obtain this information. However, they were not able to meet this demand. Nevertheless, we found data that describes how the Swiss power grid was integrated.
In addition, it is complex to find data regarding the minimum interconnector capacity percentages. The data are predominantly based upon the written report of the European Commission from November 23, 2017, in which they communicate the progress of the integration and strengthening of Europe’s energy network towards the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions (European Commission, 2017b: p. 2). These indicated minimum interconnector capacity levels in this European Commission report are derived from the ENTSO-E Vision 2020 and the Ten-Year Network Development Plan 2016 (TYNDP). Even though the European Commission document was published nearly ten months after the actual electricity crisis, the document provides insight into the minimum interconnector capacity percentages. There are no other publicly available sources from shortly after the electricity crisis that reflect the minimum interconnector capacity levels. This approach is justified since there are no indications that there were major changes in interconnector capacity levels in the following ten-month period. The overall research design is justified because this design is the most appropriate to explain what the causal mechanism implies. Moreover, the design is justified because it addresses the questions that were raised in the introduction.
21 This study conducts a discourse analysis that specifically analyses the content of the empirical evidence. This creates an understanding of the context of the social practices. To ensure consistency, theories regarding European integration (of the energy network) and cooperation are applied to the cases. This approach is justified because it helps to explain and specify the causal mechanism between the concepts which allows to test the hypothesis.
3.2 Case selection
The selected cases had to meet several formulated criteria. The primary criterion for a case to be considered was that it concerned a European state, that faced an electricity crisis in January 2017. Second, only electricity crises caused by the cold spell were considered. The cases of seven European states (Belgium, Bulgaria, France, Greece Italy, Romania, and Switzerland), met these two criteria. Following the idea of a distribution-based case study design, from these seven cases, the cases of Belgium, Bulgaria, and Switzerland were selected. We selected these three cases since they vary in their scores of cross-border integration and had a distinct outcome in terms of transnational cooperation of the TSOs. To underline the relevance and context of the three cases, table 1 provides a timeline of the electricity crisis. Table 2 shows the specifications concerning the selecting criteria.
We select the Belgian case because Belgium faced adequacy issues of the power grid due to increased energy consumption and the mandatory blackout of a part of the nuclear fleet (Coreso, 2018: p. 7; FANC, 2017). Cooperation was relatively high in Belgium as its TSO Elia aligned the operational measures with neighbouring TSOs (Elia, 2017b: p. 1). The Belgian case is also of interest to consider since the Belgian energy market is fragmented because energy policy is divided among the federal government and the three regions; Flanders, Wallonia, and Brussels. The relevance lies in the fact that it is interesting how the response in terms of cooperation was because the federal government is responsible for guaranteeing the security of supply.
22 At the same time, the three highly autonomous regions have their own independent authority that regulates, monitors, informs and advises the parties in the energy market (Federal Ministry of Economy, Small Business and Energy, 2017: p. 9) .
The Bulgarian case is selected because it also demonstrates adequacy issues due to unplanned outages combined with an unprecedented level of electricity consumption (Egenhofer & Stroia, 2017: p. 2). Cooperation between the Bulgarian TSO, ESO, and the neighbouring TSOs proved to be a challenge since an export ban was imposed for nearly a month. Therefore, this case is interesting to consider since it structurally deviates from the Belgian and Swiss case with regards to cooperation.
We choose the Swiss case because Switzerland experienced adequacy issues due to the outages of two nuclear plants and a hydropower plant (ENTSO-E, 2017a: pp. 31-33). This case is interesting since Switzerland and the EU are highly interdependent in terms of energy due to Switzerland's geographical location. However, despite Switzerland’s membership of the ENTSO-E, they do not have to adhere to the network codes since they are not obliged to do so by an official EU-Swiss agreement (van Baal & Finger, 2019: p. 6). The logic to the selection of Switzerland is two-fold. First, the reliable operation of the European power grid necessitates the stable cooperation of all concerned actors (van Baal & Finger, 2019: pp. 6-7). This relates to the subsidiarity principle of Swiss law, where authorities in Switzerland are considering the introduction of new rules that obey applicable EU-regulations (ENTSO-E, 2012: p. 8). This makes the Swiss case interesting to analyse. Second, the Swiss energy policy is based upon the Energy Strategy 2050 (ES50), adopted in 2017, that is directed towards the transition of renewable energy. Therefore, Swiss dependence on imports is likely to increase in coming years (van Baal & Finger, 2019: p. 11). To conclude, it is interesting to compare Switzerland as a non-member of the European Union, with countries such as Belgium and Bulgaria that are a member. For this reason, we consider how the explanations for cooperation in the different cases relate to each other.
23 Table 1. Timeline of events
Date Event Source
December, 2008 Establishment of ENTSO-E, the RSCs, Coreso and TSCnet.
Coreso, 2008; TSCNET, n.d.
July 13, 2009 Adoption of EC Regulation 714/2009, that lays out the tasks and responsibilities of the European Network of Transmission System Operators (ENTSO-E).
European Commission: 2017a: p. 10
October, 2014 European Council’s order obliged each member state to establish a minimum interconnector capacity level of at least 10% of their installed electricity production capacity for cross-border capacity by 2020.
European Commission, n.d.
2015 Study by Elia reveals that for the winter of 2016-2017, Belgium was expected to largely depend on regular commercial imports to ensure the balance of its grid.
Albrecht et al., 2015: p. 8
May 21, 2015 Flow-based coupling implemented in the CWE (Central Western Europe) region.
RTE, 2017: p. 79
October, 2016 Forecast of tense security of supply conditions by Swissgrid and the neighbouring TSOs.
ENTSO-E, 2017b: p. 20
December 23, 2016 Preliminary notice by Transelectrica in which it refused to deliver emergency assistance to Bulgaria because it foresaw its own adequacy issues regarding the security of supply.
ENTSO-E, 2017b: p. 48
January, 2017 Cold spell in several European countries among which Belgium, Bulgaria, and Switzerland.
ENTSO-E, 2017b: p. 4
January, 2017 Minimum interconnector capacity level in Belgium 19% and Bulgaria 7%.
European Commission, 2017b: p. 10
January 8, 2017 The Bulgarian TSO, ESO, requested emergency support by the Romanian TSO Transelectrica However, Romania refused to provide assistance.
ENTSO-E, 2017b: p. 46
January 10, 2017 Swissgrid communicated to the German TSO, Amprion, that although reservoir levels were low, it was still capable of supporting Germany, albeit to a lesser extent.
ENTSO-E, 2017a: p. 30
January 11, 2017 The Bulgarian TSO, ESO, requested emergency assistance from the TSOs in the Former Yugoslav Republic of Macedonia (FYROM), Serbia, and Turkey.
ENTSO-E, 2017b: p. 15
January 11, 2017 The Bulgarian minister of Energy; Temenuzhka Petkova, imposed an export ban for electricity generated in Bulgaria for the period from 01:00 on January 13, 2017 until 9 February, 2017.
ATEB, 2017
24
exports, excluding long-term contract capacity, to Albania, Bulgaria, FYROM, and Turkey. January 12, 2017 Swissgrid informed the German TSOs that due to the
low water volume in the lakes, it was no longer able to grant German requests for re-dispatch.
ENTSO-E. 2017a: p. 30
January 12, 2017 Several TSOs among which Amprion (Germany), TransnetBW (Germany), Elia (Belgium), REE (Spain), RTE (France), TenneT (the Netherlands), and Terna (Italy) expressed in an official press statement that they are advancing cooperation with each other with the objective to upgrade cross-border electricity exchange capacity in all cross-border interconnections, based on the conditions and the needs of the transmission grids.
ENTSO-E, 2017b: p. 17
January 18, 2017 Swissgrid reduced the Net Transfer Capacity (NTC) to Italy from 4500 MW to 2500 MW between 16.00 hours and 22.00 hours.
ENTSO-E, 2017a: p. 30
January, 2017 Swissgrid developed the “winter re-dispatch product” as an operational measure. All measures had to be approved by the regulatory authority ELCom to secure that those measures were market-based and non-discriminatory.
ENTSO-E, 2017a: p. 36
mid-January, 2017 The Belgian TSO, Elia, concluded that no additional imports were necessary, since the available quantity of strategic reserves in Belgium alone would be sufficient to ensure the security of supply of Belgium's grid. To maintain balance, on the order of the Belgian Federal Minister of Energy, minor amounts (100 MW) of strategic reserves were activated.
ENTSO-E, 2017b: p. 39
January 25, 2017 The Belgian TSO, Elia, declared the emergency exchanges from Belgium toward France and the Netherlands unavailable from 09.30 until 15.15 hours because of considerably lower solar and wind influx and. Due to the unavailability of emergency exchanges from Belgium towards France and the Netherlands the Mutual Emergency Assistance Service (MEAS) activation was initiated on the France-Belgium borders.
25 Table 2. Selected cases and their characteristics
State
Characteristics Belgium Bulgaria Switzerland
Experienced electricity crisis induced by cold spell
Yes Yes Yes
Membership of RSC Coreso SEE-Thessaloniki TSCnet
Transnational cooperation during the electricity crisis
Relatively less challenged Relatively more challenged Relatively less challenged
TSC Elia ESO Swissgrid
Regarding the above table, Regional Security Coordinators (RSCs) are organizations created by the TSOs. RSCs provide services to the TSOs such as making advanced calculations to inform the TSOs what measures are the most cost-efficient. In this respect, they support the TSOs with maintaining the operational balance of the electricity system by facilitating coordination and cooperation (ENTSO-E, n.d. b).
26
3.3 Operationalisation
This section explains how this study measures the concepts that were discussed in the theoretical framework. Table 3 presents the operationalisation of the conceptual variables into measurable indicators.
This study measures the independent variable; European integration of energy
networks, by examining the following indicator: the minimum interconnector
capacity level of the states’ installed electricity production capacity, for each of the three states at the time of the cold spell in January 2017. This indicator is expressed in percentages of the total electricity generation. These measurements are presented in chapter 5, altogether with the number of states with which the three considered states had an interconnection. In addition, background information is presented about the states’ composition of energy generation in the annexes of this thesis. To measure these indicators specific data sources such as documents from the ENTSO-E and national TSOs are analysed.
The dependent variable; transnational cooperation, is operationalised by defining three indicators, which together measure the level of transnational cooperation for the three cases. The first indicator, the level in which trade restrictions were imposed for electricity during the electricity crisis in January 2017 considers whether for instance export bans were enforced by the states involved. To measure this indicator documents from ENTSO-E , the TSOs, the governments of the states, and reports of other organizations are examined. This indicator is expressed by saying how it relates to other cases. The second indicator is the level in which the TSO or state additionally imported energy sources from other member states during the electricity crisis in January 2017. Therefore we consider the same documents, and apply the same method of measurement. The third indicator is the level in which the TSO deliberated with the other states to ensure the security of its supply and that of the neighbouring states during the electricity crisis in January 2017. This implies that we describe and interpret the positions of the state and its neighbouring states. Moreover, the thesis analyses for how many years the concerned state has been a member of the Regional Security Coordinator (RSC). To measure this indicator, we
27 use specific data sources such as national newspapers, position papers from the national government and documents from the ENTSO-E and TSOs to analyse the motives behind the positions of the states.
Table 3. Operationalisation of the independent and dependent variable
Indicator Source category
Dependent variable
The level in which trade restrictions were imposed for electricity during the electricity crisis in January 2017
ENTSO-E reports, TSO reports, national government reports, newspaper articles, think tank reports, reports from EU institutions
The level in which the TSO or state additionally imported energy sources from other member states during the electricity crisis in January 2017
TSO reports, ENTSO-E reports, national government reports, newspaper articles, think-tank reports, reports form EU institutions
The level in which the TSO deliberated with the other states to ensure the security of its supply and that of the neighbouring states during the electricity crisis in January 2017
TSO reports, ENTSO-E reports, national government reports, newspaper articles, think-tank reports, reports from EU institutions
Independent variable
The interconnector capacity level of the states’ installed electricity production capacity
European Commission reports, TSO reports, newspaper articles, think-tank reports
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3.4 Limitations of the research
Construct validity
To ensure that the correct operational measures were used in this thesis, the formulated indicators have been extracted from the literature and previous research.
Internal validity
To ensure to the greatest extent that this research actually measures what it aims to, we formulated the correct indicators to draw conclusions as to how and to what extent the independent variable, European integration of energy networks, affects the dependent variable, transnational cooperation between TSOs. To ensure internal validity, the document analysis considers whether or not there are any other independent variables that explain the outcome.
External validity
To ensure and increase the external validity, three cases are included, because a multiple-case study is more robust and viable than a single case study. Based on the findings of this thesis, no conclusions can be made for all European (member) states. However, generalisation is not a point of focus for this study. The essence of this study is to draw conclusions for the causal mechanism between European integration and transnational cooperation in the three cases.
29
Chapter 4. Empirical evidence regarding the
dependent variable
This chapter describes the characteristics of the cases about the dependent variable: transnational cooperation. Specifically, it presents data that allows to measure the three indicators regarding cooperation. Table 7 presents the characteristics of the three cases concerning the dependent variable.
4.1 Data regarding the Belgian case
Table 4. Timeline of events in the Belgian case
Date Event Source
2015 Study by Elia reveals that for the winter of 2016-2017, Belgium was expected to largely depend on regular commercial imports to ensure the balance of its grid.
Albrecht et al., 2015: p. 8
May 21, 2015 Flow-based coupling implemented in the CWE region.
RTE, 2017: p. 79
January, 2017 Cold spell in several European countries among which Belgium, Bulgaria, and Switzerland.
ENTSO-E, 2017b: p. 4
January 12, 2017 Several TSOs among which Amprion (Germany), TransnetBW (Germany), Elia (Belgium), REE (Spain), RTE (France), TenneT (the Netherlands), and Terna (Italy) expressed in an official press statement that they are advancing cooperation with each other with the objective to upgrade cross-border electricity exchange capacity in all cross-border interconnections, based on the conditions and the needs of the transmission grids.
ENTSO-E, 2017b: p. 17
mid-January, 2017 The Belgian TSO, Elia, concluded that no additional imports were necessary, since the available quantity of strategic reserves in Belgium alone would be sufficient to ensure
30 the security of supply of Belgium's grid. To
maintain balance, on the order of the Belgian Federal Minister of Energy, minor amounts (100 MW) of strategic reserves were activated.
January 25, 2017 The Belgian TSO, Elia, declared the emergency exchanges from Belgium toward France and the Netherlands unavailable from 09.30 hours until 15.15 hours because of considerably lower solar and wind influx and. Due to the unavailability of emergency exchanges from Belgium towards France and the Netherlands the Mutual Emergency Assistance Service (MEAS) activation was initiated on the France-Belgium borders.
ENTSO-E, 2017b: p. 39
January 25, 2017 The European Awareness System (EAS) was alerted.
ENTSO-E, 2013
With respect to the first indicator, the level in which trade restrictions were imposed for electricity, the Belgian case reflects that there were adequacy issues of the power grid during the cold spell, as there was increased energy consumption (Coreso, 2018: p. 7). This coincided with the mandatory blackout of a part of the nuclear fleet in Belgium on the orders of the Belgium Federal Agency for Nuclear Control (FANC) due to technical difficulties (FANC, 2017). Until January 25, 2017, the Belgian TSO, Elia, was able to manage the situation with the use of minor amounts of strategic reserves. However, on this date, a restriction was imposed meaning that emergency exchanges from Belgium toward France and the Netherlands were declared unavailable from 09.30 hours until 15.15 hours because of considerably lower solar and wind influx (ENTSO-E, 2017b: p. 39). Due to the unavailability of emergency exchanges from Belgium towards France and the Netherlands on January 25, 2017, the Mutual Emergency Assistance Service (MEAS) activation was initiated on the France-Belgium borders. Later in the day, from 17.00 hours to 19.00 hours, by the activation of a TSO-TSO contract, Elia was able to assist France with 250MW of emergency exchanges (ENTSO-E, 2017b: p. 17-20).
31 During this same period, Elia used up to 460 MW of its manual Frequency Restoration Reserves (mFRR), to maintain the balance of the Belgian grid (ENTSO-E, 2017b: p. 39). These are emergency reserves that need to be manually activated (TenneT, 2018: p. 1). Moreover, the situation was deemed serious, as the European Awareness System (EAS) was alerted, because of the activation of at least 50 percent of the reserves (for several quarter hours). This system is an important instrument in terms of cooperation and coordination because it allows TSOs to collect immediate feedback on the various transmission systems in Europe, and to respond rapidly for the appropriate support or system measures when a state is facing adequacy issues (ENTSO-E, 2013).
Summary regarding the first indicator: the level in which trade restrictions were imposed for electricity
- Adequacy issues due to increased consumption and the forced outage of a part of the Belgian nuclear park.
- Elia activated the European Awareness System (EAS) on 25 January 2017. - On January 25, 2017, Elia, declared the emergency exchanges from Belgium
toward France and the Netherlands unavailable from 09.30 hours - until 15.15 hours.
With respect to the second indicator; the level in which the TSO or state additionally imported energy sources, a study by Elia in 2015 reveals that for the winter of 2016-2017, Belgium was expected to largely depend on regular commercial imports to ensure the balance of its grid (Albrecht et al., 2015: p. 8). In reference to the January 2017 cold spell, Elia explored the option of additional imports to bear the adequacy issues. However, France was also experiencing adequacy issues of the balance of its grid, due to the extraordinary reduced availability of the French nuclear park because of maintenance and inspections (Coreso, 2018: p. 7; Elia, 2017b: p. 1). Therefore, France also had the necessity to import power (ENTSO-E, 2017b: p. 37). The challenge was to balance sufficient imports for both Belgium and France as Belgium’s adequacy forecast on 11 January 2017 indicated that there would be a tight
32 situation in the Central European-zone in terms of electricity supply due to the increased consumption induced by the cold spell (Elia, 2017b: p. 1). In this sense, the Belgian’s TSO, Elia, deemed it necessary that the appropriate measures were taken. All maintenance operations on the grid that decreased cross-border capacity or that posed any further operational risk for the Belgium network were postponed (ENTSO, 2017b: p. 37). To maintain balance, the Belgian Federal Minister of Energy ordered the activation of minor amounts (100 MW) of strategic reserves (ENTSO-E, 2017b: p. 39). Moreover, Elia concluded in mid-January 2017 that no additional imports were necessary, since the available quantity of strategic reserves in Belgium alone would be sufficient to ensure the security of supply of Belgium's grid (Elia, 2018: p. 56).
Summary regarding the second indicator: the level in which the TSO or state additionally imported energy sources
- Adequacy issues in balancing demand and supply of the French power grid, therefore it was a challenge to balance sufficient imports for both Belgium and France.
- Elia, used minor amounts (100MW) of strategic reserves on the order of the Belgian Federal Minister of Energy, additional imports were not deemed necessary and eventually not used.
With regard to the third indicator, the level in which the TSO deliberated with the other states to ensure the security of its supply and that of the neighbouring states, data reveals that on the initiative of Elia and RTE, Coreso (Coordination of Electrical System Operators), was established in 2008 (Coreso, 2008). During the cold spell, Belgium and France, closely monitored the maximal importing capacity altogether to maintain the balance of the grid. Moreover, Elia was in constant contact with the neighbouring TSOs to align the exceptional measures that were implemented with the aim of optimising the cross-border exchange capacity (Elia, 2017b: p. 1).
33 In its 2017 annual report, Elia contended to have operated in close coordination with their foreign counterparts to preserve the security of supply (Elia, 2018: p. 56). ENTSO-E (2017a: p. 10) drew the conclusion in its report that cross-border capacities were used properly, as there was a fierce price convergence between Belgium, France, Italy, and Switzerland during the cold spell. Data reveals that the TSOs in Belgium and the surrounding states held a notion that cooperation was necessary to mitigate the adequacy issues (Coreso, 2018: p. 7). In this respect, by the support of Coreso, a weekly study was conducted to identify possible adequacy issues. Another process in which Belgium participated was the optimisation of French import capacities from Belgium and Germany on the day-ahead market.
Summary regarding the third indicator: the level in which the TSO deliberated with the other states to ensure the security of its supply and that of the neighbouring states
- Elia is a member of Coreso, since its establishment in 2008, which it initiated together with RTE.
- Elia was in constant contact with neighbouring TSOs to tune in the measures, and assistance to France with emergency exchanges.
- Elia and the TSOs in the surrounding states pronounced during the cold spell that cooperation was necessary to mitigate the adequacy issues.
- Elia concluded in its 2017 annual report, to have operated in close coordination with their foreign counterparts to preserve the security of supply during the cold spell.
34
4.2 Data regarding the Bulgarian case
Table 5. Timeline of events in the Bulgarian case
Date Event Source
December 23, 2016 Preliminary notice by Transelectrica on in which it refused to deliver emergency assistance to Bulgaria because it foresaw its own adequacy issues regarding the security of supply.
ENTSO-E, 2017b: p. 48
January, 2017 Cold spell in several European countries among which Belgium, Bulgaria, and Switzerland.
ENTSO-E, 2017b: p. 4
January 8, 2017 The Bulgarian TSO, ESO, requested emergency support by the Romanian TSO Transelectrica However, Romania refused to provide assistance.
ENTSO-E, 2017b: p. 46
January 11, 2017 The Bulgarian TSO, ESO, requested emergency assistance from the TSOs in FYROM, Serbia, and Turkey.
ENTSO-E, 2017b: p. 15
January 11, 2017 The Bulgarian minister of Energy; Temenuzhka Petkova, imposed an export ban for electricity generated in Bulgaria for the period from 01:00 on 13 January 2017 until 9 February 2017.
ATEB, 2017
January 11-12, 2017 The Greek TSO, IPTO, decided to ban electricity exports, excluding long-term contract capacity, to Albania, Bulgaria, FYROM, and Turkey.
Energypress, 2017
Data regarding the first indicator reveals that supply in Bulgaria was tight because three of the six power plants that could provide cold reserves were not operational because of unplanned outages and fuel shortages (ICIS, 2017). Moreover, the power supply was challenged because of a reduced capacity to generate wind, solar, and hydropower (Egenhofer & Stroia, 2017: p. 2). Conversely, another reason is that the electricity consumption in Bulgaria, with an unprecedented peak load of 7700 MW on January 11, 2017 was at the highest in twenty years (Egenhofer & Stroia, 2017: p. 2).
35 In response to the grid conditions, the Bulgarian minister of Energy, Temenuzhka Petkova, imposed a trade restriction, by the announcement of Order 16-64 on January 11, 2017, mandating ESO to “an additional public service obligation consisting of the termination of access to the electricity transmission network of users exporting electricity generated in the country for the period from 01:00 on January 13, 2017, until the reserves necessary for the operation of Bulgaria’s electricity system have been restored” (European Commission, 2017d: p. 1). The ban was nearly a month in force and implies that only exports from Bulgarian generation sources were affected, as cross-border flows through Bulgaria were continued (European Commission, 2017c: p. 24). The Bulgarian government argued that the export ban was justified, as a preventive measure, because of the complex weather conditions and the urgency to ensure the security of supply for the Bulgarian population (ENTSO-E, 2017b: p. 15; Egenhofer & Stroia, 2017: p. 3). This was underlined by ESO, that pointed out that the constraint was necessary because of the threatening imbalance caused by the reduced production (Sofia Globe, 2017). The export ban on electricity generated by Bulgarian sources was lifted by the new minister, Nikolay Pavlov, on 9 February 2017 (ATEB, 2017). The imposed ban has been heavily criticised by several actors among which the European Commission (ENTSO-E, 2017b: p. 10).
An analysis by the European Commission (2017d: p. 2) revealed that out of the 27-day export ban period, for 17 27-days, Bulgaria, had the ability to export up to 700 MW, based upon the actual plant capacities and/or weather conditions (European Commission, 2017d: p. 21). This is underlined by the Energy Community: (2017: p. 3) an international organization established by the EU and various third states to strengthen the EU internal energy market, that advocated that Bulgaria, at the time of the cold spell was in a much better position than neighbouring states. Specifically, the Energy Community pointed out that the export ban was predominantly distortive in the days when the average dischargement of Bulgarian plants was below the 5200 MW, which means that the Bulgarian system was oversupplied and Bulgarian plants lacked the ability to sell power to neighbouring states.
36 This lack of liquidity in the power market caused price volatility, as prices in Bulgaria stabilised, but prices in Romania and Greece continuously increased throughout January, 2017 (Egenhofer & Stroia, 2017: p. 5; European Commission, 2017d: p. 20). In reference to this, the Association of Traders of Electricity in Bulgaria (ATEB) pointed out the negative consequences for both market confidence and market actors (Egenhofer & Stroia, 2017: p. 3).
Furthermore, the Energy Community Secretariat (2017: p. 1), argued in a report that the export ban has resulted in considerable costs, as forward capacity was allocated but not actually used for exports. It is estimated that energy generators and market participants that owned export capacity rights from Bulgaria to other states and vice-versa have lost nearly 27 million euro in potential revenues (European Commission, 2017c: p. 24; Energy Community, 2017: p. 2). The European Commission (2017c: p. 3) added that from an internal market perspective the export ban was not effective and not proportional because cross-border emergency agreements were cancelled or undermined (ICIS, 2017). This was noted by the Bulgarian Free Energy Market Association (ASEP), upon which they urged ESO in a letter to initiate urgent actions to solve this problem (ICIS, 2017). This letter was also sent to the Bulgarian Ministry of Energy and the regulator EWRC. The Energy Community (2017: p. 5), pointed out that measures to assure the security of supply should be in accordance with the principle of solidarity and non-discrimination. They proposed that in contrast with the Bulgarian case, if the market mechanism is not capable to balance the supply and demand on a regional scale, then export should only be reduced at the same proportion as the domestic consumption. Apart from Bulgarian’s export ban, other states in the region took action as well. The Greek TSO, IPTO, decided to ban electricity exports, excluding long-term contract capacity, to Albania, Bulgaria, FYROM, and Turkey for two days (January 11-12) (Energypress, 2017). On the night of January 12, 2017, exports resumed due to better weather conditions (Hassel et al., 2017: p. 5). On January 12, 2017, following the export bans imposed by Bulgaria and Greece, the Romanian government announced a resolution that provided its TSO, Transelectrica with discretionary powers to administer measures such as a reduction
37 or termination of exports to guarantee the security of supply (Egenhofer & Stroia, 2017: p. 4). Nevertheless, eventually no measures were implemented.
Summary regarding the first indicator: the level in which trade restrictions were imposed for electricity
- Adequacy issues of the Bulgarian power grid due to reduced generation (unplanned outages and frozen fossils) and increased consumption.
- Trade restriction (order 16-64) imposed by the Bulgarian minister of Energy, on January 11, 2017, mandating ESO to terminate energy exports, that was in force until 9 February 2017.
- Bulgaria’s neighbouring states explored or implemented measures which included export bans for energy.
- Due to Bulgaria’s export ban, energy prices in neighbouring states increased, and market actors lost 27 million euro in revenues.
- Bulgaria’s export ban was heavily criticised by among others the European Commission, Energy Community, CEPS and the Association for Traders of Electricity in Bulgaria because of its disproportionality and ineffectiveness.
With regard to the second indicator, data reveals that at the time of the cold spell Bulgaria’s capacity mix heavily depended on lignite and nuclear energy, in which the nuclear plant Kozloduy accounted for 40 to 50 percent of the Bulgarian electricity generation. In January 2017 several lignite plants could not generate sufficient capacity due to the freezing of the coal or the fuel used for transport (European Commission, 2017d: p. 16). Therefore, Bulgarian back-up power plants were mobilised, however, the coal reserves had become frozen (Egenhofer & Stroia, 2017: p. 3). As a result, Bulgaria’s cold reserves supply was tight as they have a capacity of 550 MW, but only 350 to 400 MW could be produced (ENTSO-E, 2017b: p. 15). To meet its increased energy demands and to nullify its reduced ability to generate electricity, ESO, requested the Romanian TSO Transelectrica for emergency support on January 8, 2017, (ENTSO-E, 2017b: p. 46). However, Romania refused to help.
