Renewable Energy: European Legal Frameworks Advantages and Disadvantages

Transcription

1 Renewable Energy: European Legal Frameworks Advantages and Disadvantages Andrea Pomana Canberra, 27 October 2006

2 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages IV. German & UK Support Facts & Figures V. Lessons to Learn

3 I. Why Support Renewables? Heavy dependence on fossil fuels Secure energy supply is at stake Fossil fuels endanger the environment energy sector is the biggest pollutant (e.g. Germany: 43%, UK: 38% of CO2 emissions in 2004) global warming Clean and diverse portfolio protection of the environment, reduction of carbon emissions; meet the Kyoto-Protocol targets (EU: 8% until 2012) secure, diverse and therefore sustainable energy supply

4 I. Why Support Renewables? Generation of electricity from RES: high priority in the energy & environmental policy of the EU EU Directive 2001/77/EC for the promotion of RES indicative targets: 22.1% of RE of electricity consumption and 12% of energy consumption until 2010 in Europe Germany: 12.5 % of RE in the electricity mix until 2010 (20% until 2020) UK: 10% of RE in the electricity mix until 2010 (20% until 2020)

5 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms IV. 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages German & UK Support Facts & Figures V. Lessons to Learn

6 II. Renewable Energy Sources Definition: Renewable energies are replaced by a natural process at a rate that is equal to or faster than the rate at which that resource is being consumed Wind Biomass Solar (photovoltaic, collectors) Geothermal Wave & Tidal Hydropower Landfill gas Sewage gas Biogas

7 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms IV. 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages German & UK Support Facts & Figures V. Lessons to Learn

8 III. Support Mechanisms - Germany - Legislation: Renewable Energies Act 2004 Cardinal obligations: 1. Connect generating stations to the grid 2. Accept and transmit the output 3. Remunerate at a pre-determined rate Key players: Network Operators (all voltage levels) and Distribution Network Operators (high voltage networks)

9 III. Support Mechanisms - Germany - 1. Connection to the grid Priority over non-re stations Immediate connection Closest connection to the grid where technically feasible and economically reasonable If necessary: obligation to reinforce the grid But: the station shall be equipped with device to reduce the feed-in upon temporary overload

10 III. Support Mechanisms - Germany - 2. Acceptance and transmission of RE Priority over electricity from fossil fuels Immediate performance Feed-in at all times of day Voluntary but not mandatory: contract between NO and generator deviating from priority acceptance (serves better integration)

11 III. Support Mechanisms - Germany - 3. Remuneration Guaranteed for 20 years, in principle Exclusive production of electricity from RE (no co-firing!) Minimum prices: between 3.5 c/kwh (big hydropower) and 62.5 c/kwh (photovoltaic) high differentiation (technology/capacity/location) yearly decrease of 1% (hydropower, geothermal) to 6.5% (solar) increase efficiency!

12 III. Support Mechanisms - Germany - 4. Nation-wide balancing measures DNOs have to accept, transmit and remunerate the electricity towards NOs DNOs in the north are mostly affected Excessive electricity is passed to electricity suppliers and other DNOs in the country All DNOs and suppliers bear an equal share of electricity and costs

13 III. Support Mechanisms - Germany - Advantages & Disadvantages: This slide has been removed for copyright reasons

14 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms IV. 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages German & UK Support Facts & Figures V. Lessons to Learn

15 III. Support Mechanisms - United Kingdom - Until 2002: Non-fossil fuel obligation (NFFO), bidding system Current legislation: Renewables Obligation Order (ROO) 2006 Quota & Certificate System Introduced in 2002 in England & Wales and Scotland 3 ROO in the 3 UK countries (but: very similar)

16 III. Support Mechanisms - United Kingdom - 1. Quota Key player: Public Electricity Supplier Obligation to supply a certain percentage of total electricity supplies from RES in the specified obligation period Current quota in England & Wales: 6.7% (in 2002/3: 3%; in 2026/7: 15.4%)

17 III. Support Mechanisms - United Kingdom - 2. Renewable Obligation Certificates (ROCs) Relate to electricity generated from RE sources and supplied to costumers in Great Britain Issued by OFGEM; 1 ROC = 1 MWh Obtain ROCs by: - generating eligible electricity - trade with ROCs (brokers, other suppliers) - buy ROCs, Scottish ROCs or NI ROCs (with or without the actual electricity) UK-wide trade!

18 III. Support Mechanisms - United Kingdom - Revenues for producer of eligible electricity: Market electricity price: 3-4 p/kwh Sale of certificates: p/kwh Total: 7-9 p/kwh (but: market fluctuations!)

19 III. Support Mechanisms - United Kingdom - 3. Buy-out fund Alternative to fulfil the quota (where no certificates available or too expensive) Buy-out price: currently /MWh (changes with the RPI) = minimum price per certificate Fund is being paid out to suppliers that met their RO by producing certificates (in 2004/5: /ROC) ROO contains s speculative element: buy certificates or pay into the fund potentially the highest price per ROC = buy-out price + portion recycled from buy-out fund

20 III. Support Mechanisms - United Kingdom - 4. Mechanisms to secure the buy-out fund Late payment fund (incl. accruing interests): recycled like the buy-out fund (2004/5: 4.17 /ROC) Mutualisation: all suppliers have to make up for the shortfall, if any triggered at 1 million per 1% of RO (i.e. currently 6.7 million ) Non-compliance with RO: financial penalties, revocation of licenses

21 III. Support Mechanisms - United Kingdom - Advantages & Disadvantages: This slide has been removed for copyright reasons

22 III. Support Mechanisms - United Kingdom - Connection to the grid & feed-in No specifications in the ROO Grid connection delayed, generators bear costs for reinforcement (!) Feed-in: via British Electricity Trading & Transmission Arrangements (BETTA) Contracts with exact output have to be submitted 1 hour prior to gate closure (problem: intermittent RES e.g. wind) Deviations from expected levels lead to imbalance of network; generator bears the costs thereof

23 III. Support Mechanisms in Comparison Feed-in tariffs (Germany) Quota/Certificates (UK) This slide has been removed for copyright reasons

24 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms IV. 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages German & UK Support Facts & Figures V. Lessons to Learn

25 IV. Facts & Figures RE in the electricity mix in %: Year Germany UK Source: BMU/AGEE-Stat 2006; DTI, DUKES 2006

26 IV. Facts & Figures Production of RE in the energy market in %: Year Germany UK Source: BMU/AGEE-Stat 2006; DTI, DUKES 2006

27 IV. Facts and Figures Renewable Energies in the German electricity mix (2005) Hydro 0.6% 1.0% Wind 1.8% 13.4% 15.9% Bio fuels (heat&electricity) Solar heating 67.3% Geothermal Source: BMU/AGEE-Stat 2006 Photovoltaic

28 IV. Facts & Figures Renewable energy in the UK energy mix (2005) 0.7% 10.1% 5.9% Hydro Wind Biofuels 83.3% Geothermal & solar heating Source: DTI, DUKES 2006

29 Outline: I. Why Support Renewables? II. Renewable Energy Sources: Definitions III. Support Mechanisms 1. Germany Advantages & Disadvantages 2. UK Advantages & Disadvantages IV. German & UK Support Facts&Figures V. Lessons to Learn

30 V. Lessons to Learn Crucial for an effective and efficient system: Within & outside the scheme: This slide has been removed for copyright reasons

31 Thank you for your attention! Andrea Pomana