Indirect Costs of the Renewable Energy Sources Act

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1 Indirect Costs of the Renewable Energy Sources Act Presentation : Anastasios Moutoupas Supervisor : Prof. Dr. Georg Erdmann 1

2 Agenda 1. Introduction 2. Development of R.E.S. 3. Indirect Costs as a consequence of investments in the electricity network 4. Indirect Costs for energy reserves 5. Merit Order Effect 6. Literature 2

3 Introduction Direct Costs: amount of money that the nonprivileged electricity customers have to pay 2007, Year ahead future: 61 Euro/MWh 2008, 117 Euro/MWh Direct costs : 9,40 Euro/MWh or 1 Cent/kWh 3

4 Introduction Indirect Costs of the Renewable Energy Sources Act the connection costs of offshore wind parks to the main transmition and distribution network, the additional costs for the development of the network, the line losses, the need of additional balancing energy, the non cost efficient extent of utilization of existing power plants, the transaction costs which occur from varying R.E.S. electricity feeds the costs of the Federal Network Agency (Bundesnetzagentur) 4

5 Development of R.E.S. R.E.S. prognosis of the BDEW, Development of the electricity produced from R.E.S. (in GWh) Total Hydroelectrical Biomass Geothermical Wind onshore Wind offshore PV Source : BDEW

6 Development of R.E.S. Wind power plants : goal until 2020, an installed capacity of onshore 45,000 MW offshore 10,000 MW Today : 24,000 MW installed capacity Prognosis for installed capacity and electricity feed onshore MW GWh offshore MW GWh 6

7 Development of R.E.S. Solar energy/photovoltaics: around 25 Cent/kWh According to the development scenario installed capacity : 15,000 20,000 MW 7

8 Electricity Network Costs for the connection of offshore wind power plants to the transmission network, investment 2,7 Mil. Euro/MW Reduction of costs equal to 0,54 Mil. Euro/MW of installed Offshore capacity for the investors Target: 10,000 MW, investment of 6 billion euro needed until 2020 Indirect costs, 540 Mil. Euro until

9 Electricity Network Costs for the development of the network Important Measures Network reinforcement, 400 km length, construction of new network, 850 km length 9

10 Electricity Network Dena : Investment around 3,8 billion euro until year 2020 network development, 1.1 billion euro partial wiring of high tension lines, 1.2 billion euro at least 1.5 billion euro, development of electricity production through R.E.S. Indirect costs, around 270 Mil. Euro at year

11 Electricity Network Costs for line losses Extra operating costs for line losses and other operational expenditures of the transmission network, approximately 160 million euro in year 2020 Investions (Euro) Operating Costs (%) Operating Costs (Euro/year) Offshore Network 6,0 Bil. 1,7 102 Mil. Onshore Lines 2,6 Bil. 1,5 39 Mil. Onshore Wiring 1,2 Bil 1,7 20 Mil. 161 Mil. Source: Indirekte Kosten der EEG Förderung, Erdmann,

12 Electricity Network The effect of network s reliability N 1 Criterion, Union for the Co ordination of Transmission of electricity (U.C.T.E.) Bottleneck Effect 12

13 Energy Reserves Institutional treatment of the electricity produced from R.E.S. Power suppliers : Month ahead electricity tariffs increase the operational risk of the electricity suppliers Distribution System Operators : indirect EEG costs arise during the production prognosis, the measurement and the management of energy data, as well as the completion of horizontal electricity equation Transmission network operators 13

14 Energy Reserves Indirect costs arise as consequence of varying renewable electricity feeds onshore GWh 868 million euro in the year 2020 offshore GWh 476 million euro in the year

15 Merit Order Effect Merit Order Effect 15

16 2006: Merit order effect between 3,17 and 7,83 Euro/MWh, GWh, advantage of 490 Mil. Euro the prices for the fuel and the CO2 emission (2006, 25 Mil. Euro/ advantage of 90 Mil. Euro) reserve capacity (590 Mil. Euro in year) 2006 reserve capacity as stored energy (1.180 Mil. Euro on year 2020) 16

17 Conclusion 2006: 445 Mio. Euro 2020: 3,3 Bil. Euro (Erdmann, 2008) Indirect Costs should always be quantified and should always be taken into consideration 17

18 Literature Bundesverband der Energie und Wasserwirtschaft (BDEW), Federal Ministry for the Environment, Indirekte Kosten der EEG Förderung, Erdmann, 2008 The Merit Order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany, Frank Sensfuss, Mario Ragwitz, Massimo Genoese VDN (2005) EEG Verfahrensbeschreibung. Fassung vom Berlin: Verband der Netzbetreiber ( berlin.de/global/downloads/netz Themen/eeg/ EEG VB pdf) 18

19 Thank you for your attention 19

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