Analysis of the EU Renewable Directive by a TIMES-Norway NorRen Summer School Arne Lind Institute for Energy Technology 07.08.2012
Outline The EU Renewable Directive (RES) Definition Targets Implications of the Green certificate market on the RES target Modelling framework: TIMES-Norway Model structure Technologies for electricity production and transfer Energy demand forecast and load profiles Analysis of the EU renewable energy directive by TIMES-Norway Scenario assumptions Results Discussion Concluding remarks 07.08.2012
The EU Renewable Energy Directive Background Agreed by the European Parliament and Council in December 2008 Adopted in April 2009 and came into force in June 2009 Implemented into the EEA Agreement at the end of 2011 Motivation Reduce greenhouse gas emissions Promoting the security of energy supply Promoting technological development and innovation Providing opportunities for employment and regional development Targets Every Member State has to reach individual targets for the overall share of renewable energy All Member States have to reach a target of 10% share of renewable energy for transport
07.08.2012 The 2020 target for selected countries
Calculation of the renewable share Renewable electricity production Renewable heat production Direct use of bio energy Energy end use 07.08.2012
Green certificate market The governments of Sweden and Norway have agreed on a common market for green certificates (GCM) The purpose is to promote new renewable energy projects until 2020 The market mechanism Expected to generate 26.4 TWh electricity annually Each country is financing 13.2 TWh Neutral regarding renewable technologies The power producers receive certificates from the authorities The certificates can be sold to electricity suppliers and certain electricity users The electricity customers cover the costs of the system (costs of certificates are added to the electricity bill) The contribution from the GCM on the RES share in 2020 is 13.2 TWh regardless of the actual production in Norway
Modelling framework: TIMES-Norway
TIMES-Norway: Introduction TIMES-Norway is a model recently developed by IFE and NVE The model is developed with a high time resolution and a model horizon from 2006 to 2050 TIMES is a bottom-up techno-economic model generator for local, national or multi-regional energy systems Comprises a technology-rich basis for estimating energy dynamics over a long-term, multi-period time horizon TIMES gives a detailed description of the entire energy system Includes all resources, energy production technologies, energy carriers, demand technologies and demand sectors The model assumes perfect competition and perfect foresight and is demand driven The TIMES model aims to supply energy services at minimum global cost by making equipment investments, as well as operating, primary energy supply and energy trade decisions
Exogenous input Demand 7 regions 70-80 end-use groups 2-3 energy services (heating, cooling, non-sub. electricity, feed stock, vehiclekm, tonne-km) Energy prices Import price oil products etc. Export/import price electricity Taxes Bio energy prices Resources Renewable resources (w/potentials) Import of bio energy (w/ constrains) Electricity export /import Conversion / Processes Electricity production Heat production CHP Bio mass processing Hydrogen production TIMES-Norway Transmission / Distribution Electricity grid high voltage Electricity grid low voltage District heating grid Demand technologies Industry sectors Boilers CHP Feed stock Energy efficiency measures Transport sector Cars Buses Trucks Trains etc. Residential & service sectors Boilers Stoves Electric heating District heating Energy efficiency measures Model Output Energy production Technology Region Time Shadow prices Electricity District heat Other energy carriers Energy use Use of energy carriers as a function of: Time Region Demand sub-sector End-use technologies Type of cars Type of heating equipment Implementing of energy efficiency.etc. Other Total system costs Emissions
Time resolution in TIMES-Norway A high time resolution was needed in order to have a very detailed description of the Norwegian hydropower system Also needed in order to be used in connection with the Multi-area Power-market Simulator Therefore, each week is divided into five time slices, giving 260 times slices annually:
Geographic regions TIMES-Norway covers seven Norwegian regions Exchange of electricity between regions Exchange of electricity between neighbouring countries The regions were defined in order to be used with Multi-area Powermarket Simulator TIMES-Norway can be used for identifying bottlenecks in the grid, and the need for new generation capacity and/or new grid lines between regions
Power production technologies in TIMES-Norway Electricity can be produced in a variety of different processes Reservoir hydro (existing, expansion/upgrade and new) Run-of-river hydro (existing and new) Onshore and offshore wind Gas power with CCS CHP (municipal waste, natural gas and biomass) Waste heat recovery in industry Future technologies like power production from tidal, wave and salt gradient are currently not included, because data on a regional level is not available Due to political reasons, it is not possible to invest in natural gas based power plants without CCS, as well as nuclear or coal plants 07.08.2012
Hydro power in TIMES-Norway Hydro power is divided into reservoir hydro and run-of-river Reservoir hydro is modelled by weekly inflow series: The water can either be stored to the next period or be used directly to generate electricity within the period Electricity generation is divided between existing plants, new large scale plants and plants for increased capacity (balancing power) Run of river hydro is divided into existing and two groups of new small scale hydropower plants Region 3 (west) Region 4 (east) 07.08.2012
Wind power in TIMES-Norway Wind power is divided into 12 technologies (2 offshore) Wind profiles have been constructed for each of the seven regions, both for onshore and offshore locations The capacity factors for different technologies and regions vary from 0.19 (region 6, onshore) to 0.6 (region 7, offshore) Total annual wind power potential for 2020 is 6.5 TWh Offshore wind facilities fixed to the bottom seabed are available from 2025 and floating offshore facilities are available from 2030 07.08.2012
07.08.2012 Electricity transmission
Energy end use demand: Structure The energy demand is given exogenously to the model Available elastic demand functions in TIMES are not used in order to investigate the substitution effect with technology shifts The model may choose to invest in energy efficiency measures (which reduce the energy consumption) There are between 75 to 78 end use demand categories in each region Each demand sector is divided into sub sectors and demand types (e.g. electricity, heat, cooling, raw material) The industry is especially modelled in great detail mainly due to its high electricity demand In total, TIMES-Norway consists of 534 annual demand data
Demand sectors in TIMES-Norway Identical structure for all the regions Sector # subsectors Demand type # demand data per region Sum # demand data Industry 11-14 Electricity, heat, raw material 33-42 231-240 Households 5 Electricity, heat 10 70 Tertiary 8 Electricity, heating, cooling 21 147 Primary - Electricity, heat, raw material 3 21 Transport 8 Vehicle-km, tonne-km, useful energy demand 8 56 Total 33-36 75-78 534 17
Load profiles in TIMES-Norway Load profiles are developed for all the 534 demand data Varying profiles for household and service sector Load profiles for industry are assumed to be flat (constant load over the year) The load profile for personal short distance cars are developed on the assumption that electric cars will be charged during the night only Week in February Household in southern Norway
Energy demand forecast The forecast of energy demand in industry, households and services is based on: Analysis of historical drivers and indicators Knowledge and assumptions of the future of each sector Future transport demand is based on national trends Population growth per region is used to distribute the national future demand of vehicle-km by cars on each region The forecast of energy demand also depends on how future energy efficiency is taken into account Legislative measures are included in the forecast (e.g. new building regulations and phase-out of light bulbs) In TIMES-Norway, it is possible to invest in energy efficiency measures in buildings (e.g. better insulation, tightening, energy management) 12% of the energy consumption in 2020 in households may be reduced 6% of the energy consumption in 2020 in the service sector may be reduced
Projection of future energy use in households 20
Service sector Projections per subsector 21
Energy demand projection for different industries Increase Decrease 07.08.2012
07.08.2012 Energy demand projection stationary sector
07.08.2012 Future Demand for Transport
Analysis of the EU renewable energy directive by TIMES-Norway
Modelling of the RES directive The RES directive is modelled as two constraints in TIMES-Norway Overall RES target at 67.5% on a national level by 2020 10% share of renewable energy for transport on a national level by 2020 The TIMES model will choose the optimal investments portfolio for each of the seven regions to achieve the national target Possible ways of reaching the RES target Increasing the numerator (renewable production or direct use of bio energy) Additional investments in electricity generation can be used to substitute non-renewable energy carriers or to increase the electricity export Replace the use of fossil fuels with bio energy products Decreasing the denominator (energy end use) Energy end use is the gross sum of delivered energy in all sectors + electricity and heat used in electricity and heat production + losses related to distribution and transmission Combination of both
Scenario assumptions Energy prices Export/import prices of electricity is given exogenously to the model The trading prices are calculated based on forward prices from selected European electricity exchanges The various price profiles for each time slice are calculated based on historical prices Fossil fuel prices are set constant through the model period The price of imported bio energy products are set slightly higher than the price of the corresponding fossil fuel Renewable energy resources A domestic biomass potential of approximately 30 TWh/year Bio fuels can be imported at a given price without limitations There are no restrictions regarding replacing the use of fossil oil with bio oil Biodiesel is mixed with fossil diesel for use in road traffic with a minimum of 5 % and maximum of 20%
Scenarios Scenario Description Sensitivity analyses Base (1a) No RES constraint High Hyd (1b): Increased investment costs for reservoir and run-of-river hydro RES + CER (2a) Active RES constraint Transport restriction Green certificates (140 knok/mwh) CER (3a) Green certificates (140 knok/mwh) High Bio (2b): 50% higher import prices for biodiesel and bioethanol Low Exp/Imp (2c): 25% lower electricity export and import prices to neighbouring countries High CER (3b): Green certificates (240 knok/mwh)
Results: Base scenario Fraction: 66.6% Renewable transport: ~5%
Results: RES + CER scenario Fraction: 67.5% Renewable transport: ~10%
Base vs RES + CER Increased use of Stationary end use Biomass from forestry Pellets Wood Heat pumps Transport sector Electricity Biodiesel Gasoline Renewable heat production Biomass from forestry Pellets Wood Heat pumps Decreased use of Electricity District heating Natural gas Liquefied petroleum gas Light distillate, industrial use Diesel
Fuel use in the transport sector (2020)
Discussion All scenarios show an increase in hydro and wind power production Low investment costs and high electricity export prices However, TIMES-Norway does not take into account some of the barriers that need to be addressed Including issues like license, local resistance and grid development Consequently, the model may be too optimistic regarding the volume of new renewable capacity The uncertainty of future energy prices and demand for electricity may reduce the investment level of new renewable power In the model, the demand for energy services and energy prices are known for the entire model horizon (perfect foresight) The cost effective solution for the entire country does not necessary imply that individual actors in the market consider the investment profitable
Summary of national energy policy The Norwegian government has implemented several measures and policy instruments to promote new renewable energy projects Common market for green certificates with Sweden More efficient license management Increased funding for research and development The government has also implemented measures for increased energy efficiency and energy shift Increased funding for Enova and Energifondet New legislation (e.g. new building regulations) Improvements and expansion of the power grid Actions within the transport sector Target regarding increased use of biodiesel and other alternative fuels Reduced tax, free parking, etc for zero emission cars
National 2020 target and estimated trajectory from renewable sources Share of renewable energy in electricity Overall RES share Share of renewable energy in heating and cooling Share of renewable energy transport
Conclusion The Norwegian goal for the share of renewable energy in 2020 is 67.5% Today, the Norwegian power production is almost solely based on renewable resources Analyses with TIMES-Norway show that it is possible to achieve both the overall RES target and the RES transport constraint for 2020 This can be achieved with a diversity of measures Investments in hydro power, wind power, high-voltage power lines, various heat pump technologies, energy efficiency measures and more use of biodiesel and electricity in the transport sector As demonstrated in some scenarios, the green certificate market contributes to increased investments in wind power technologies