Webinar - Support Schemes for Renewable Energy Development and Grid Development

System integration of DG / RES in different European countries Summary of Final Results January, 2009, update March 2010 ECI - Brussels

Content page Deliverables – short overview Aims and results Concluding remarks Important sources of information

Deliverables – short overview EU goals Overview of different types of DG/Renewables Different schemes for promotion of DG/Renewables Lessons learned up to now Incentives on grid development

Aims and Results - 1. EU goals -

EU-goals Aim: provide overview of RE-targets and what this means to each member state (MS) Results – overview of: Kyoto targets of EU-27 Targets for the share of energy from RES in final energy consumption in 2020 The 2010 RES-E targets of EU-27

EU-goals: Kyoto targets of EU-27 source: http://www.energy.eu/#renewable

EU-goals: RES-targets in final energy consumption in 2020 MSs are preparing plans how to achieve the proposed targets (due 30 June 2010)

EU-goals: the 2010 RES-E targets of EU-27 Status: progress made in the different MSs varies

Aims and Results - 2. Overview of different types of DG/Renewables -

Overview of different types of DG/Renewables Aim: provide overview of individual sources of DG/RES that will be put into action. Results: Fact sheets were composed for all EU-27 on the European set Kyoto, RES and RES-E targets Their progress so far Their planning to fulfil these targets nationally

Fact Sheet – example Germany

RES main focus of each EU‑27 MS and their expected goals (if available)

RES main focus of each EU‑27 MS and their expected goals (if available) (contd.)

Overview of different types of DG/Renewables The following sheets provide an overview of: The realisable potential for RES-E in the EU-27 countries Renewable energy in final energy consumption (2020 target)

Overview of different types of DG/Renewables The realisable potential for RES-E in the EU-27 countries source: FORRES 2020

Overview of different types of DG/Renewables RE in final energy consumption (2020 target) source: http://www.energy.eu/#renewable

Aims and Results - 3. Different schemes for promotion of DG/Renewables -

Different schemes for promotion of DG / Renewables Aim: description of several schemes for promotion of DG/renewables Results The following schemes for promotion were discussed (concept, (dis)advantages and conclusions ) : Feed-in-Tariff and premiums Quotas Tradable Green Certificates Tendering / bidding systems Fiscal and Financial Incentives

Different schemes for promotion of DG / Renewables Feed-in-Tariff: take the form of a total price per unit of electricity paid to the producers and premiums (bonuses) are paid to the producer on top of the electricity market price. Quotas: where minimum shares of RES are imposed on consumers, suppliers or producers Tradable Green Certificates: can be sold in the market allowing RES-E generators to obtain revenue. Tendering / bidding systems: competition either for a certain financial budget or a certain RES-E capacity Fiscal and Financial Incentives: rebates, tax refunds, lower VAT, etc.

Different schemes for promotion of DG / Renewables Overview of primary renewable electricity support systems in place in the EU-27 MSs source: OPTRES

Summary of some important features of the different incentive schemes ( green : suitable; red : not suitable and grey : neutral or depends on how policy is set)

Summary of some important features of the different incentive schemes (contd.) ( green : suitable; red : not suitable and grey : neutral or depends on how policy is set)

Different schemes for promotion of DG / Renewables Results and conclusions The majority of the MSs have opted for FIT-regimes as the main support mechanism. MSs are setting up their own system. MSs are continuously fine-tuning existing policy measures with the aim of improving the performance of these measures. The majority of MSs are not using a single one system, but a combination.

Different schemes for promotion of DG / Renewables Results and conclusions (contd.) Research has shown that there is not a system which is better than others but key success factors can be identified which are a requirement for any support mechanism to be successful: A support mechanism is successful if it is able to attract investors and financial institutions by providing sufficient confidence and financial incentives over a longer period. In order to be successful in the long run not only the low hanging fruits should be supported, but a wider range of technologies should be eligible.

Aims and Results - 4. Lessons learned up to now -

Lessons learned up to now Aim: four countries are being analysed and lessons learned from their experiences with their incentive scheme(s) Results The following countries have been investigated: Germany: front runner in Europe in the development of RES, using feed-in tariffs Spain: also using feed-in tariffs, but also feed-in premiums and is a front runner this area as well but with an expected additional value for solar energy

Lessons learned up to now The following countries have been investigated (contd.) : UK: even though this country has a large wind potential the development of this energy source lags behind in the UK the Netherlands: has had different schemes and is using a mixed system at the moment The following issues are being discussed per country: system used, (dis)advantages of the system, results and conclusions.

Lessons learned up to now - Germany An early feed‑in law for wind electricity has existed in Germany since 1991. They are using a tariff degression system , as well as a stepped tariff design Germany is the front runner on developing RE, not only in Europe, but world-wide The stable support system and parallel political framework conditions are the main r easons for this result Germany has made great progress towards achieving its European targets It remains to be seen if the FIT-system in their matured RE market will remain sufficient or will ask for a more market-based system in the future

Lessons learned up to now – Spain Spain is using a FIT system with an overall remuneration (a fixed tariff ) or alternatively a premium on top of the electricity market price (a premium tariff ) Spain achieved good results as well and is obtained by their clear national incentive framework for RE, as well as strong regional targets Regarding PV; a lot administrative barriers exist to obtain the necessary permits from the autonomous regions and the energy utility companies Another drawback of the Spanish system is that the very attractive FIT system was the reason to create bad practices (PV in Spain)

Lessons learned up to now - UK The RO-system (Renewables Obligation) in the UK is a quota system A new law is expected to come into force in Q1 2010, where electricity produced from solar will receive a guaranteed price per unit, a feed-in tariff. Although the RO has been successful in supporting more renewable generation this has come at a very high cost to customers Reasons are manifold: regional differences hinder project development ; no sufficient interconnection capacity but also planning problems are an important obstacle A recent success strategy is the site leasing arrangement for offshore wind farms in the UK

Lessons learned up to now – the Netherlands Is using a feed-in tariff system and the system has just recently been adapted (Oct 2007: SDE) Premiums will vary with the wholesale electricity price and the level of the premium and the duration of support will vary with each technology as well. This makes it a more market-based system Also in the Netherlands too many departments are involved and very long procedures exist . It is getting attention now to improve the procedures

Aims and Results - 5. Incentives on grid development -

Incentives on grid development Aim: provide a short description on the four countries on grid development and grid integration of RES Results For each country a description is provided on: Grid Development The main players Grid development/structure Grid Integration of RES Which system is being used and how is the grid integration developed? Legislation

Incentives on grid development – Germany Three of the four TSOs agreed to work more closely together regarding grid balancing. In this way the grid in the different areas should become more reliable, faster and less bureaucratic. For the further integration of RES into the interconnected power system, an extension of the extra high voltage transmission network will be necessary. Currently a study on further development of the power grid and the best way of integrating wind energy by increasing the flexibility of the electricity system is carried out (results to be expected in 2010 ) .

Incentives on grid development – Germany In Germany RE is defined as priority production. There is no specific legislation in Germany on grid development. The Renewable Energy Act (Erneuerbare-Energien-Gesetz/EEG) is the most important law . Relevant legislation regarding connection is: the Energiewirtschafts-gesetz (EnWG: describes the long-term aims of the energy supply) and the Kraftwerks-Netzanschluss-verordnung (KraftNAV: connection policy for conventional production units of 100 MW on 110 kV and up) .

Incentives on grid development – Spain In Spain RE is defined as priority production. Spain attains high penetration of wind energy despite the limited grid interconnection with the neighboring grids Spain is one of the countries with a forecast obligation : operators of RES‑E plants are obliged to predict the amount of electricity they plan to feed into the grid. In the past years a strong co-operation between the system operator and the whole wind power sector has struggled to find the best possible way to ensure grid security and develop technological solutions for new challenges presented. This has resulted in some new legislation (e.g. O.P. 12.3) .

Incentives on grid development – Spain Red Eléctrica introduced a Control Centre for the Special Regime (CECRE) in June 2006, a worldwide pioneering initiative to monitor and control energy resources. Needed to achieve a greater supervision and control of special regime generation which would then help to reach a higher level of integration of the RES. CECRE is an operation unit integrated into the Power Control Centre (CECOEL). This CECRE is able to control every aspect of the assets and this Centro de Operación de Energía Renevables (CORE) monitors around 300 variables of each single wind turbine.

Incentives on grid development – UK The UK introduced two DG incentive schemes IFI and RPZ. The primary aim of these two new incentives is to encourage the DNOs to apply technical innovation in the way they pursue investment in and the operation of their networks The Government has a range of policies which support the take up of DG. Additionally, Ofgem is working to remove barriers to DG more widely. RE is not being prioritized in the UK; it is only being fed into the grid if sufficient transport capacity exists. If this is not the case a first-come/first-served approach is being applied.

Incentives on grid development – UK There exist some barriers in the UK which hinder especially the wind energy development. A fair treatment of connecting all interested parties is under constant debate between project developers and the TSO. It is being expected that the next two years major changes regarding the connection procedure will be carried out. Despite of these barriers the UK is also busy preparing its grid for DG.

Incentives on grid development – the Netherlands A Working Group Decentralised Infrastructure was introduced recently; a very Dutch approach as its participants are from a large number and a variety of organizations (public and private). Additionally, TenneT is currently fine-tuning the congestion management system in collaboration with the Ministry of Economic Affairs and the Office of Energy Regulation as there have occurred severe problems regarding insufficient capacity to transmit the supply of electricity at all times.

Incentives on grid development – the Netherlands The situation on RE being prioritized is somewhat uncertain in the Netherlands because of the recent fall of the government. Earlier the Lower Chamber agreed on the new law, but it still needs to be evaluated by the Senate. It is not sure if this will happen before or after the new elections (June 2010). So far RE is only being fed into the grid if sufficient transport capacity exists. If this is not the case a first-come/first-served approach is being applied. There is no specific legislation in the Netherlands on grid development; the most important Energy law is the 1998 Electricity Law.

Concluding remarks It was stated that a move from a national approach to a more harmonized European approach regarding incentives is needed. It is concluded that such an incentive scheme will not be operational in the near future. Every country found its own solution for increased RES feeding into the grid system. So countries have found different mechanisms to evolve from a centralized generation system to a DG-system.

Concluding remarks (contd.) Setting up research programs trying to provide answers for questions on DG and smart grids have only recently been set up. Therefore, the systems introduced in the analyzed countries are too new to draw conclusions from. However, it can be concluded that a continuous dialogue between several stakeholders, national, but also at European or even at global level, is very important as this results in flexibility and openness to changes which are required in the future. Also a stable incentive scheme is very important as well.

Sources of information European websites on RE: http://ec.europa.eu/energy/climate_actions/doc/2008_res_directive_en.pdf http://ec.europa.eu/energy/energy_policy/doc/factsheets/renewables/renewables_ro_en.pdf (available for all MSs) http://ec.europa.eu/environment/climat/climate_action.htm (currently under construction) http:// www.energy.eu /#renewable

Sources of information Important players in four analyzed countries: www.bundesnetzagentur.de www.ree.es www.nationalgrid.com/uk www.tennet.org Interesting studies: http://www.eu.fraunhofer.de/forres www.green-x.at http:// www.iea.org/textbase/pm/index_clim.html http:// www.iea.org/textbase/pm/grindex.aspx . http://www.optres.fhg.de

Thank you for your attention. For more information: Jitske Burgers Consultant jitske.burgers@kema.com + 31 26 356 24 81 www.kema.com

Find full report http://www.leonardo-energy.org/report-renewables-support-schemes-and-grid-integration-policies

Webinar - Support Schemes for Renewable Energy Development and Grid Development

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