Appa Presentation Macrostudy
- 1. Study of the macroeconomic impact of Renewable Energies in Spain Piet Holtrop, Attorney at Law at APPA member firm HOLTROP S.L.P Transaction & Business Law, Barcelona, May 21 st 2010
- 2. 01.- Introduction ¿What is APPA? Founded in 1987, we are the only association in Spain which covers all renewable technologies on a national level. APPA is comprised of 500 companies with interests in 10 different renewable technologies. The association defends an integral vision of renewable technology and is active in Spain and Europe. APPA sections: Biofuels Biomass Wind Geothermal (Low temp) Geothermal (High temp) Marine Miniwind Minihidraulic Solar Photovoltaic Concentrated Solar Pow er
- 3. 02 .- Study of the impact of renewable energies What does this study do for us? The study “Study of the macroeconomic impact of Renewable Energies in Spain”, carried out by Deloitte is the first study that evaluates the impact of clean energies in our society in a global way. Some aspects of the study are: Economy Employment Environment Supply risk Human health Price of electricity
- 4. 03.- Impact of renewable energies in the economy (1) Steepest growth rate The sector grows faster than the rest of the Spanish economy.
- 5. 03.- Impact of renewable energies in the economy (2) Contribution to the Spanish GDP (2008) Direct: 4.805.000.000 € Indirect: 2.510.000.000 € 0,67% of GDP
- 6. 03.- Impact of renewable energies in the economy (3) Contribution to the GDP per renewable technology Wind – 48,1% Photovoltaic – 25,3% Biomass – 14,5% Concentrated Solar – 11% Minihidraulic – 7,8% Biofuels – 1,9% Miniwind – 0,7% Geothermal (H. T.) – 0,2% Geothermal (L. T.) – 0,1% Marine – 0,1%
- 7. Fiscal balance The sector is a net fiscal contributor in all researched years:(2005-2008). The fiscal balance was 404.000.000 euros in 2008 03.- Impact of renewable energies in the economy (4)
- 8. 04.- Impact of renewable energies in the environment (1) The best tool to avoid greenhouse gas emisions The Sector avoided the emission of 23,6 million tonnes of CO2 in 2008, worth 499 million euros, 5,7% of all emissions in Spain. If the policy objectives had been met, this would have been twice as much.
- 9. 05.- Impact of renewable energies in energy dependence (1) 89% of Spain’s energy is imported. In 2008 this amounted to 44 billion euros, 50% of Spain’s energy cost. A supply cut would have severe consequences. The supply default of one country during one month would cause losses equivalent to 0,75% of GDP.
- 10. 05.- Impact of renewable energies in energy dependence (2) Renewable energies avoided importation: In 2008 10 million toe (tonne of oil equivalent) of fossil fuels were avoided: 1 toe is 7,4 boe (barrel of oil equivalent)
- 11. 06.- Impact of renewable energies in the electricity price (1) How is the price of electricity determined? T he price of all the electricity is paid taking the production cost of the last MWh matched in the market (this is, the highest price), the existence of Renewable Energies reduces this impact by fixing lower marginal prices. Renewable energies enter the market at zero price and thus reduce the final price.
- 12. 06.- Impact of renewable energies in the electricity price (2) Renewable energies reduce the price for generation of electricity. The result obtained from this analysis is that the savings due to a lower marginal cost in the electricity market resulting from the existence of renewable energies amounted to 4,919 million € in 2008 (this represented a saving of 19.94 € per MWh acquired in the market)
- 13. 06.- Impact of renewable energies in the electricity price (3) ¿Why pay feed in tariffs to renewables? In 2008 the surplus is of 619 million euros
- 14. 07.- Compliance with policy goals (1) Spain is still far from meeting its goals: Primary energy: Electricidad: Spain met its emission goals 2 years before planned 7,6% (2008) 12,1% (goal 2010) 20,4% (2008) 30,3% (goal 2010)
- 15. 8.- Conclusions (3) Renewable energies: the basics of production model are inverted: The tendency of fossil fuel prices is upwards, because we are running out of oil, and exploration technology is becoming more expensive. The cost of generation with renewable energy decreases every year, reaching economies of scale, and the resources used are infinite. An increasing demand of fossil fuel increases its price, an increasing demand of renewable energies reduces its price.
- 16. 8.- Conclusions (4) ¿Are renewable energies expensive? Data 2008: 2.605 M € (feed in tariff) 4.919 M € (generation price saving) 2.725 M € (Avoided import) 499 M € (avoided CO2 emisions ) 404 M € (net fiscal balance) 132 M € (savings health expenses) 120.722 employees 315 M € (R&D investment) 1.227 M € (Net commercial balance)
- 17. Thank you for your attention The study which is basis of this presentation will be available at: www.appa.es
Editor's Notes
- #10: Security of supply Peak production (or peak oil) is a phenomenon intrinsic to fossil fuels: The moment you start drilling, you start running out of it. As soon as you have used up all cheap easy to drill resources, it becomes hard to find and expensive to explore. Security of supply in absolute and volatility terms: Absolute: With modern technologies we are much better equipped to explore fossil fuel resources. We are able to find a needle in a haystack. But it remains a needle in a haystack. Volatility: We have reached peak production. The good news about this is that the opec is no longer in control of oil prices. The bad news is that nobody is. At one point in time we will have run out of fuel, ie., cheap fuel which can be used for energy production. If we start energy transition at that point, we are too late. The capital needed for the transition will then be entirely needed for expensive fuel. Security of supply is an argument for renewable energy. Strategic investment now to avoid energy at a high cost and limited availability in the future. Security of supply: We are not talking about if, but about when. The practical implication of this is: How. The answer is: Feed in tariffs for Renewables.
- #14: Externalities: Do hydroelectrical companies pay for all their construction costs? Do Spanish Nuclear power plants pay for the storage of their residues in France? Will they pay for the new central storage? How was their construction financed (state guarantees)? Who has paid to “neutralize” Chernobyl? Will the Oil companies of the users of oil pay for the consequences of climate change? Will BP pay the entire (ecological) invoice for the damages caused in the Mexican Gulf? Externalities are costs caused by economic activities which are not compensated by these activities. To compensate for these externalities you can either let the activities causing these externalities pay for them, or compensate other activities that do not cause these externalities. Externalities are a reason to pay incentives to clean energy. You compensate for the externality of pollution and subsequent climate change. Climate change: We are not talking about if, but about when. If we do not act now, but if it’s too late the costs will be multiplied. The practical implication of this is: How. The answer is: Feed in tariffs for Renewables (till grid parity)