RES penetration and its effect on Europe -Limits and risks and the need for network developments-

Transcription

1 RES penetration and its effect on Europe -Limits and risks and the need for network developments- Hans ten Berge, Secretary General Budapest, 03 September 2030 Framework for Climate and 2030 Framework for Climate and Agreed Headline Targets % Greenhouse Gas Emissions 20% Renewable 20% Efficiency 10% Interconnection 2030 at least - 40% Greenhouse Gas Emissions at least 27% * Renewable consumption at least 27% (indicative) Efficiency 15% Interconnection *implies 45% RES in power mix *to be reviewedby 2020, having in mind an EU level of 30% New Governance system + Indicators 1

2 RES Growth Trends The growth of RES, which is necessary to pursue the European decarbonisation agenda, brings a new reality to power systems! Decarbonisation targets Breakdown per sector The necessary growth of RES to decarbonise the power sector implies market adaptations that have to meet two fundamental requirements of electricity customers across Europe: To maximise customers value for their money, RES should be developed through integrated electricity markets while keeping their costs down Customers expect that their lights stay on security of supply is key and should also be guaranteed in a cost-effective way RES Growth Trends Low-carbon generation leading the way! The total electricity production in 2013 amounts to 3,101 TWh, RES and Nuclear are contributing to this total equally with 27%. 27% RES target by 2030 assessed to translate into 45% RES in the power sector. 2

3 Strengthening of the EU ETS A strong ETS as a key driver for RES investments RES policy after 2020 should be guided by the following principles: No subsidies for Support immature ETS as main driver mature RES RES Ensure a market-based and cost-effective deployment of RES through a strengthened ETS Avoid further subsidies for mature RES, while respecting existing contracts to support RES until the foreseen time horizon + + Public support in the form of research, development and demonstration funding primarily oriented towards new, highpotential immature lowcarbon technologies that have not reached market readiness Strengthening of the EU ETS Effects of a strengthened EU ETS Once strengthened, the EU ETS will drive major investment in renewables and energy efficiency in the ETS sectors - Additional, cross-cutting measures in those sectors should therefore be avoided The uncoordinated operation of hundreds of different national renewables support schemes leads to a serious risk that a non-ets approach to decarbonisation will not only further distort, but also fragment the internal energy market. A non-harmonised approach to reduce GHG emissions could even be counter-productive leading to significantly higher overall energy and decarbonisation costs. 6 3

4 RES Support Schemes Cost-efficient RES support schemes should maximise market orientation to achieve competitiveness Before 2020 Measures for effective policy reform Increase cost-efficiency by avoiding overcompensation - tendering of support Avoid market distortions - eliminate payments that distort operational/dispatch decisions Link support schemes to their stage in the maturity value chain Avoid retroactive change for existing and firmly committed projects Promote further Europeanisation of RES support schemes Operational integration of RES Operational integration of RES is necessary, both in the market and grid aspects Responsibility of generators for: - Selling in the market (directly or via aggregators) - Nominating / Scheduling (towards TSO) - Balancing (costs of imbalances) Same obligation for all generators for: - Grid connection / usage (fees) - Dispatch / Grid access (no priority) For existing plants there will have to be a transition depending on national circumstances and incentives/compensation in Member States, full market integration being the objective 8 4

5 Justified period for subsidy by type of RES CO2 ETS System Import dependency Oil price value? No emissions (Nox, Sox & PM) EU Industrial Emissions Directive (IED) Employment Questionable- 60 billion RES subsidies vs 1 million new jobs? What is justified of this? Which role for energy efficiency? Target coherence! Overlapping policy targets in the 2020 framework have undermined the effectiveness of the ETS and decreased the cost-efficiency of the chosen policy path. Market solutions! Utilities are becoming energy efficiency service providers the success of this development depends on promoting market solutions, promoting innovation and allowing for consumer engagement. Cost efficiency! Ambitiousness in energy efficiency is the way forward but we understand the implications for our other policy goals and the costs implied (see graph next slide). 5

6 Cost efficiency for energy efficiency targets: How much do we spend to save? Billion Euros Yearly Total System Costs in Billion Euros Yearly net monetised fossil fuel savings in Billion euro % efficiency target for 2030 Source: Efficiency Communication, July 2014 Unlocking the new down stream efficiency market Challenge: most of the untapped efficiency potential lies on the demand side (buildings, transport. etc.) Solution: Utilities are taking on the demand side opportunities with new services and products. Policy must ensure: Technology neutrality decarbonised electricity is the energy carrier of the future don t penalise it against fossil fuels! Smarter financing legislation must not be financed through the electricity bill. Member state flexibility Allow enough flexibility in driving national priorities and actions matching design and implement programmes to suit their own market, housing conditions and consumer preferences. 6

7 How can DSOs get enough income for operation through successful energy efficiency measures? Why is energy efficiency important? efficiency means less traffic for DSOs and thus, less variable revenue. What s the solution? efficiency directive (2012/27/EU, art. 15.4): Network tariffs shall contribute to overall efficiency by providing signals for power saving/optimal utilisation of energy infrastructure assets, including demand side How participation exactly: How can this be achieved exactly? Increase standing charges in tariffs or go for capacity-based tariffs. Current situation of Network Tariffs: Network tariffs for households and small businesses are almost entirely based on energy volume (kwh). They do not reflect the overall network capacity (for peaks) which is put at disposition by the DSO and which has a cost. About 50-70% of the allowed DSO revenue is usually recovered using such volumetric charges. Outcome: - Improve cost-reflectiveness - Avoid cross subsidization EURELECTRIC

8 Grid development necessities Top down or bottom up? Bottom up! DSO grids must be rethought from the floorboards up. Robust or weak grid in the future? Robust! DSO grids will still be needed as a backup to decentralised generation and selfgeneration. EU Climate and policies Decentralised electricity generation storage Increasing number of prosumers Smart home Electric Vehicles Flexible Demand EURELECTRIC Innovation Action Plan Due to decentralized RES based electricity generation, e-mobility, smart equipment, smart network, etc, the transformation of the system poses a number of challenges to DSOs! Integration of RES & other distributed energy sources (e-mobility) More active customers (new services, management of smart metering data..) 95% of European photovoltaic is connected in distribution! 8

9 While asset utilization may drop, network investments needs do not! Power (kw) (kwh) Distribution networks are designed for peak power, which is needed few hours per year Power flows between transmission and distribution network in Italy, Enel Distribuzione What s the solution? A strong DSO network! The DSO role will not change! They only need new tools to fulfil it! A strong DSO network is also the solution for DSM. System operator Neutral market facilitator Active system management will be important for maintaining the reliability & quality of service DSOs will need to manage increasing amounts of data Building & Connecting Connecting & Managing 9