Value of wind power A perspective towards Denmark as case story

Transcription

1 Value of wind power A perspective towards Denmark as case story IEA report launch June 15, Danish Wind Industry Association Hans Henrik Lindboe Ea Energianalyse a/s 1

2 Ea Energy Analyses Systems Analysis-Strategies-Markets -R&D Private Research and Consulting company based in Copenhagen. 35 employees. Market analysis & linear modeling of electricity, gas and district heating systems. Our projects are often financed by Energy Companies, Utilities, Authorities and R&D funds. We also cooperate with universities as visiting lecturers and as mentors for thesis writers in our fields.

3 Deviation from average %) Vwind share of consumption Market value of wind power Danish statistics : 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Vindkraftproduktion Wind production (% af of bruttoforbrug) consumption, højre right akse axis Årlig % Deviation afvigelse DK-Vest from average (% af tidsvægtet price (left pris) axis)

4 Elproduktion (TWh) Wind towards 2035 Based on NREAP FINLAND NORWAY DENMARK SWEDEN HOLLAND GERMANY % % % +87%

5 DKK/MWh Price forecasting Spot price and wind price Wind of total production Denmark 34% 45% 59% Model Area 10% 18% 35% Statistics Avg. Price Statistics Wind price Base scenario Avg. Price Base scenario Wind price Low price scenario Avg. Price Low price scenario Wind price

6 Short and medium term integration initiatives Selected from recent study for Danish Wind Association Selected initiative Socio economic benefit (PV) 700 MW cable to Holland (COBRA) 120 mio 500 MW electric heaters in large CHP 70 mio 500 MW heat pumps in Western Denmark (present taxes and levies) -430 mio 500 MW heat pumps in DH (Smart tariffs and levies) 190 mio 6

7 Conclusions Windpower (on land) is the cost effective RE choice Market value of wind will decrease. Good business for society to apply integration measures. Two measures seem especially cost-effective: Better integration between DH-markets and the electricity markets Reduction of congestion in the electricity markets Denmark and Germany have the challenges and the solutions to become a global showcase for efficient wind integration. 7 Thank you for your attention

8 IEA Wind Task 26: Cost of Wind Energy WP1 Report Launch Wind Technology, Cost, and Performance Trends in Denmark, Germany, Ireland, Norway, the European Union and United States: Importance of Future Power Prices Aisma Vitina, Ea Energy Analyses Copenhagen, Denmark June 15, 2015

9 Denmark: project features Unit size MW Number of turbines N 3 4 Rotor Diameter / Hub height m / m 93 / / 90 Annual Average Wind Speed at hub height m/s 7 7 Production (full load hours) 2,700 3,000 Economic life (years) Investment costs /kw ($/kw) 1,475 (1,895$) 1,273 (1,635$) O&M costs fixed /kw ($/kw) - - O&M costs variable ct/kwh ($ct/kwh) 1.35 (1.73$) 1.28 (1.64$) Decommission costs ct/kwh ($ct/kwh) - - WACC (nominal / real) % 5.2 % / 3.3. % 5.2 % / 3.3. % Corporate Tax Rate % 25% 25% Expressed in 2012 EUR (USD) 2012 compared to 2008: Increase in turbine size Improved capacity factor Lower investment costs and O&M costs 9

10 Denmark: policy and revenue incentives Market price electricity /kwh ($/kwh) (0.06$) (0.04$) FIP revenue /kwh ($/kwh) (0.051$) (0.047$) FIP policy period Full-load hours 22,000 22,000 FIP policy period (years) Depreciation period (years) Max 25% annually Max 25% annually Expressed in 2012 EUR (USD) 2012 compared to 2008: Substantially lower market power price Different power price projections in the 2008 and 2012 cash flows current approach leaves 2008 projections unchanged The same FIP scheme yet revenue different in real prices since it is not being inflation indexed (ECB inflation rate applied in the cash flow for future years) 10

11 2012 EUR / MWH Denmark: LCOE 2012 & 2008 (real after-tax WACC) LCOE Policy Impact Required Revenue 16,7 13,8 54,9 38,2 38,2 44,9 31,1 31, Levelised cost of energy ( /MWh) 55 (71$) 45 (58$) Policy impact ( /MWh) 17 (22$) 14 (18$) Required revenue ( /MWh) 38 (49$) 31 (40$) Financial Gap ( /MWh) -6.7 *Schwabe et al. (2011)? 11

12 Financial Gap as a function of power price 12

13 2012 EUR / MWh Different possibilities for power price development Dansk Energi, "Power price scenarios ", Analysis No 16: Futures Dansk Energi, Futures + reduced transmission expansion with the UK Dansk Energi, Futures + capacity market 70 Dansk Energi, EU GHG Dansk Energi, EU GHG40 + Energy efficiency target + Renewable energy target ENS, "Danish Energy and Climate projections 2014", Basis projections: High CO2-quota price ENS, Basis projections, Low CO2-quota price * ENS, "Preconditions for socio-economic analyses in the energy industry" * Energinet.dk "Analysis preconditions , September 2014 update" Project budgeting approach (2012 average price for 5 years, thereafter 1.5% increase p.a.) Ea Energianalyse, "Wind integration in Denmark", Reference: Average market price Ea Energianalyse, "Wind integration in Denmark", Reference: Wind power realized price 13

14 Price gap and price gap ( prispres ) 14

15 Financial Gap depending on the power price projection pathway applied Market power price projection Dansk Energi, EU GHG40 Financial Gap (2012 EUR/MWh) (-27.4 $) Dansk Energi, "Power price scenarios ", Analysis No 16: Futures -5.6 (-7.2 $) Dansk Energi, Futures + reduced transmission expansion with the UK -4.4 (-5.7 $) Dansk Energi, Futures + capacity market -3.8 (-4.9 $) Project budgeting approach (2012 average price for 5 years, thereafter 1.5% increase p.a.) -2.7 (-3.5 $) Dansk Energi, EU GHG40 + Energy efficiency target + Renewable energy target (-13.6 $) Ea Energianalyse, "Wind integration in Denmark", Reference: Average market price (-13.1 $) Ea Energianalyse, "Wind integration in Denmark", Reference: Wind power realized price -0.2 (-0.3 $) Levelised cost of energy ( /MWh) 55 (71$) 45 (58$) Policy impact ( /MWh) 17 (22$) 14 (18$) Required revenue ( /MWh) 38 (49$) 31 (40$) Financial Gap ( /MWh) -6.7 *Schwabe et al. (2011) -0.2 to

16 Thank you Aisma Vitina Ea Energy Analyses Mobile: (+45) Frederiksholms Kanal Copenhagen Denmark