SPANISH EXPERIENCE IN RENEWABLE ENERGY AND ENERGY EFFICIENCY. Anton Garcia Diaz Economic Bureau of the Prime Minister

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1 SPANISH EXPERIENCE IN RENEWABLE ENERGY AND ENERGY EFFICIENCY Anton Garcia Diaz Economic Bureau of the Prime Minister «Symposium on Strengthening Sino-Spain cooperation in multiple Fields» New Energy Cooperation between China and Spain Thursday, July 21 st, 2011

2 SPANISH EXPERIENCE IN RENEWABLE ENERGY AND ENERGY EFFICIENCY CONTEXT SPANISH EXPERIENCE IN RENEWABLE ENERGY SPANISH EXPERIENCE IN ENERGY EFFICIENCY CHINA AND SPAIN COOPERATION 2

3 Context Global Trends: rising emissions Source: Mauna Loa Observatory 5,4% rise of CO 2 concentration in the atmosphere in last 10 years. Energy related CO 2 emissions have reached the maximum (30.6Gt) in 2010 (a 5% increase compared to previous record year in 2008) Negative consequences for climate According to the Stern Review: Climate change will adversely affect access to water, food production, health, and the environment. Hundreds of millions of people could suffer hunger, water shortages and coastal flooding as the world warms. 3

4 Context Global Trends: growing energy demand notably from emerging and developing Demand growth 200% 160% 120% OECD Non OECD BRIC Total 117% 159% 80% 70% 53% 61% 40% 34% 31% 0% 3% Source: IEA According to the IEA non OECD countries will account for 93% of the projected increase in world primary energy demand. Growth in energy demand is needed to address energy poverty: more than 1,400 million people (over 20% of world population) still have no access to electricity. 4

5 Context Global Trends: rising cost and increasing volatility in oil prices 160 Oil Prices Evolution (current prices) Brent ($/Bbl) Lineal (Brent ($/Bbl)) Source: Bloomberg Global oil prices showed an almost steady rise between 2002 and Since 2007 they have exhibited unprecedented volatility. The price maximum ($ per barrel) was reached on July 11,

6 Context Objectives for Spanish/EU energy Policy: a sustainable energy model Key technologies to achieve this goal: renewable energies and energy efficiency OBJECTIVES Environmentally sustainable Energy security Competitive / access to affordable energy ENERGY EFFICIENCY RENEWABLE ENERGY Medium term/long term Most studies suggest that by 2020 many renewable technologies will be cheaper than fossil fuel alternatives. 6

8 Renewables Spanish experience in renewables World leaders in renewable energy High growth in recent years, specially in wind, solar and biofuels. Renewable share in gross final energy consumption 20% 16% 12% 8% 4% 0% 8,2% 8,8% 9,3% 10,3% 12,3% 13,2% With more than 21,000MW, Spain is fourth worldwide in total existing wind power capacity behind China, US, and Germany Second country in total solar PV installed capacity behind Germany (more than 4,000MW). First position in solar thermal installed capacity (more than 500MW) % 8% 6% 4% 2% 0% Renewable electricity production* (GWh) Wind Small hydro Waste and biomass Solar * Excluding large hydro Renewable share in final consumption of energy in transport 0,8% 0,8% 1,3% 2,1% 3,7% 5,0%

9 Renewables Spanish experience in renewables: policy instruments I NATIONAL RENEWABLE PLANS Sets up objectives in renewable energy production by technology Feed in Tariff Legal and economic scheme for Renewables and CHP A fixed payment for the life of the plant set to allow for a reasonable rate of return. Mandatory quotas for biofuels Act 12/2007: Established mandatory use of biofuels in transport since ,83% 6,2% 6,2% 6,5% Support for R&D 25% of support to large industrial R&D projects was for renewbles Electric Vehicles Comprehensive Strategy to Promote Electric Vehicles: adopted in March 2010 with the goal of having 250,000 electric cars by

10 Renewables Spanish experience in renewables: policy instruments II Overall policy has been succesfull in achieving objectives: REP Target achievement in 2010: Overall RES share in primary energy consumption (11,3%) in line with objective (12%) Wind and small hydro where in line with their objectives and PV greatly exceeded them. Renewable Energy Plan : Objectives and achievments Electricity Heating Transport Obj GWh ktoe ktoe Wind Biomass Smallhydro Biogas Solar thermal Urban waste Solar PV Biomass Solar thermal Biofuels 10

11 Renewables Spanish experience in renewables: achievements I CO 2 Emissions Since 2005 the emissions per MWh have been reduced near 40%. Energy dependence The production of renewable energies has contributed in the last 5 years to reduce the energy dependence by almost 5 p.p. Electricity emissions (tonco 2 /GWh) % 79% 76% 73% Energy dependence (%) Source: MITyC 70% Source: MITyC 11

12 Renewables Spanish experience in renewables: achievements II Development of a competitive industrial sector 1st and 5th renewable energy producers Top 5 wind energy turbine producer Third producer of biofuels in the world Top thermoelectric developers in the world Green jobs Doubled in the last 5 years Technological development (patents) Spain is a leader in R&D in renewables: it has internationally renowned scientific infrastructure and a highly competitive industry, ranking 7 th in the word in patents (PCT) on renewables technologies. Spain evolution in PCT patents in renewable energy Source: OECD PCT patents in renewable energy, % 23,9% 24% 17,8% 18% 13,0% 12% 4,9% 6% 4,3% 3,5% 3,0% 2,9% 2,8% 0% 12 Source: OECD

13 Renewables Spain s 2020 Objectives: Renewables Renewables National Targets for 2020: The goals for Spain in 2020, in line with the EU climate and energy package, are: Renewable share in gross final energy consumption 25% 20% 20% 20% of renewable share in Gross Final Energy Consumption (the same as EU average) 10% of renewables in transport. 15% 10% 5% 8,2% 13,2% In order to achieve those targets the Renewable Energy Plan , which will be approved soon, establishes the following objectives: Renewable Electricity: 40% Additional renewable capacity for 2020: Onshore wind: +14,000MW Offshore wind: +750MW Solar:+8,000MW Biomass, urban waste: +1,000MW 0% 15% 12% 9% 6% 3% 0% Renewable share in transport 10% 5% 0,8%

14 Context Spain s 2020 Objectives: competitive and affordable energy supply Renewable technologies generation cost forecast (c 2010 / kwh) Strong technological change and growing cost of fossil fuels will allow us to achieve 2020 objectives at a reasonable cost LEC (c /kwh) Installation year Source: BCG Roof-top PV Ground mounted PV Pool Price (Gas) Offshore wind Onshore wind Solar thermal Onshore Wind 2.900hs/year Available studies show that conventional wind power could achieve grip parity by 2015 with offshore and PV to follow by 2020 This process will be helped by improvements to the FiT system to accelerate the adjustment in tariffs to cost and increase predictability of FiT cost to rate payers. As a result we estimate that additional cost for the system from renewables in 2020 will not increase substantially from its current level (from 5,400M in 2010 to 6,250M in 2020). 14

16 ENERGY EFFICIENCY Spanish experience in energy efficiency: evolution Energy intensity of the economy (Gross inland consumption of energy divided by GDP (at constant prices, 1995=100) - kgoe (kilogram of oil equivalent) per 1000 euro 220 0% Spain European Union (27 countries) Change in energy intensity by sector, Industry Transport Services Residential 200 5% 5,8% % 8,7% % 20% 15,3% 16,5% Source: Eurostat Source: IDAE Between 2004 and 2009, the energy intensity of Spain improved significantly, falling by an average of close to 3.2% per year (-15.1% in total). 16

17 ENERGY EFFICIENCY Spanish experience in energy efficiency: main instruments Efficiency and Energy Saving Strategy : Developed through action plans. Main sectoral measures: Buildings Stricter technical Building Code Mandatory solar thermal installations for new buildings Energy certification for new buildings Legal reforms to facilitate refurbishment for energy efficiency reasons Fiscal incentives for refurbishments Subsidies for efficient boilers Efficient Lighting Appliances Subsidies for the purchase of new energy efficient appliances and scrapping an old one Transport and Mobility Vehicle sales tax modified to reflect CO2 emissions (>120g/km have zero tax) Subsidies to the purchase of new energy efficient cars and scrapping of an old one (2008 and 2009 stimulus programme) Increase in fiscal benefits to encourage firms to provide workers with public transport. Improvement of energy efficiency in trains Optimising air transport routes Industry Subsidies and loans for energy efficient projects Public Support by sector Appliances 23,9% Transport 12,5% Industry 24,9% 17 Buildings 38,7%

18 ENERGY EFFICIENCY Spanish experience in energy efficiency: main instruments II Horizontal cross-cutting measures: Public Sector leading by example: 20% energy saving target in for public administration Especial effort in terms of ESCOs (Energy Services Companies) Plan for refurbishment by ESCOs of 2,000 buildings (1,000 owned by Central Government and 1,000 by the Autonomous Communities) to improve energy efficiency Municipal programmes for improving efficiency of public lighting Awareness campaigns Citizen Awareness campaign on the importance of savings. Important effort in terms of efficient driving, reasonable use of Heating and Cooling, efficient appliancies 18

19 ENERGY EFFICIENCY Spain s 2020 Objectives: Energy Efficiency Efficiency and Energy Saving Plan : A reduction of two percentage points in energy intensity in terms of final energy. This represents a 20% decline by 2020 with respect to Energy intensity of the Spanish economy Public support by sector (%) Past Evolution Objective Builidings and appliances 54,9% Industry 23,5% Transport 21,5% 19

21 XXXX Chinese-Spanish cooperation in renewable energy and energy efficiency : Both countries have made very important progress in the development of renewables and energy efficiency, and both countries aim to increase their efforts in the coming years A fruitful institutional cooperation has already began: MoU on Renewable Energies (January 2011) Between Spanish Ministry of Industry and Chinese National Energy Administration of China (NEA). Main Cooperation Areas: Wind, solar and hydraulic in power generation Biofuels in transport. Long distance energy transmission. Monitor and forecast wind energy production A Joint Working Commission has been established to review the progress. General Cooperation Agreement (March 2011) Between Red Eléctrica de España (REE) and State Grid Corporation of China (national grid operators). Main Cooperation Areas: Connecting renewable into power grid and dispatching technology. Transmission technology, equipment and engineering. Training services for operation and maintenance. Smart grid technologies 21 This should lead to a strengthening of cooperation between firms: Spanish energy companies have a growing presence in the Chinese renewables market, specially in wind power (with and industrial presence and also in installation and operation) Chinese companies are leading providers of PV equipment in Spain The cooperation between energy companies of our respective countries through joint projects could be very fruitful.

22 SPANISH EXPERIENCE IN RENEWABLE ENERGY AND ENERGY EFFICIENCY Thank you for your attention «Symposium on Strengthening Sino-Spain cooperation in multiple Fields» New Energy Cooperation between China and Spain Thursday, July 21 st, 2011