RES and energy efficiency
Filip Černoch
cernoch@mail.muni.cz
Energy policy of the EU
Climate and environmental policies of the EU
Multiple overlapping activities relevant to the EU energy policy:
• International regime of climate change mitigation (EU plays a
significant role).
• Environmental dimension of the European energy policy:
• Climate aims and tools to reduce GHG emissions – EU ETS,
GHGs outside of the EU ETS.
• Energy related environmental aims - RES, energy efficiency.
• Environmental policy of the EU – local environmental
protection.
• Air, land and water pollution, noice, light pollution.
• Industrial (energy) waste.
• Protection of biodiversity.
• Extraction of non-conventional sources of energy.
EU energy/environmental targets
• 2020 aims (Energy and climate package, 2009)
• reduce greenhouse gases by at least 20%
• increase the share of renewable energy in the EU's energy
mix to at least 20% of consumption
• improve energy efficiency by at least 20%
• 2030 aims (Climate and energy framework, 2014)
• At least 40% cuts in greenhouse gas emissions (from 1990
levels). EU ETS to cut emissions by 43% (compared to
2005); Non EU ETS sector to cut emissions by 30
(compared to 2005). National targets range from 0% - 40%.
• At least 27% share for renewable energy
• At least 27% improvement in energy efficiency
Non-EU ETS emissions
Non-EU ETS emissions
• 20% target is divided between a) a 21% target compared to
2005 for EU ETS emissions and b) a 10% target compared to
2005 for the non-ETS emissions.
• The later goal is split into national sub-targets.
• Traffic management, low-GHG transport, biofuels, urban
planning, improved energy performance standards for public
building, labeling system, eco design…
• To support it some measures at the EU level – emission
standards for vehicles, fuel quality directive…
Climate and environmental policies of the EU
Multiple overlapping activities relevant to the EU energy policy:
• International regime of climate change mitigation (EU plays a
significant role).
• Environmental dimension of the European energy policy:
• Climate aims and tools to reduce GHG emissions – EU ETS,
GHGs outside of the EU ETS.
• Energy related environmental aims - RES, energy efficiency.
• Environmental policy of the EU – local environmental
protection.
• Air, land and water pollution, noice, light pollution.
• Industrial (energy) waste.
• Protection of biodiversity.
• Extraction of non-conventional sources of energy.
What are RES?
• Renewable energy is energy derived from natural processes that
is replenished at a higher rate than it is consumed.
• Solar, wind, geothermal, hydropower, bioenergy, ocean power.
• Variable/non-dispatchable (wind, solar) vs. dispatchable (hydro,
biomass/biogas) RES.
Drivers for deployment
• Energy security – RES are spread globally, in contrast to the
conventional (fossil) fuels that are more geographically
concentrated. (Import savings €16bn in 2015, expected to be
€58bn in 2030).
• Environmental concerns - low environmental impact (vary
according technology) – GHG emissions, local pollutants.
• Strategic economic development (rural development,
agriculture sector, high-tech manufacturing – 30% of RES
patents in the EU).
• Energy access through distributed or off-grid sollutions → decentralized
energy system.
• Diversification of energy sources.
Deployment of RES – governmental
perspective
1) Inception phase – creates a climate allowing investment in
early projects.
2) Take off phase - managing support policy costs.
3) Consolidation phase – to integrate RES to the system (RES
can no longer be considered in isolation due to their impacts
across the whole electricity system that needs to acomodate
them).
RES deployment curve
Inception phase
1997 – indicative target of 12% RES in gross domestic
consumption of the EU by 2010.
2001 – Directive 2001/77/ES – indicative targets for individual
states to 2010.
2009 – Directive 2009/28/ES – aim of 20% final energy
consumption from RES by 2020, 10% in transport sector
(Energy and climate package). With indicative targets for 2013
and national targets ranging from 10% in Malta to 49% in
Sweden.
2014-2016 – A policy framework for climate and energy in the
period from 2020 to 2030 - 27% target by 2030. (this target reopened
now, discussion about 35%).
Inception
phase
14
Source: thinkcarbon.wordpres.com
Take off phase – Feed in Tariffs
• 21 EU states, provides a fixed rate of subsidy for fixed period.
Cover all producer’s costs and profit, essentially replacing the
market.
• Instrument of choice for big RES players (Germany, Spain).
Governmen sets the price, market (investor response) sets the
quantity.
• Very successful in triggering large deployment of RES, but
at a high cost.
• Greater security around income to investors, therefore
reducing financial costs.
Take off phase
• FiT could be tailored to different technologies.
• But:
• difficulty of setting the right price – too high and money is
wasted, too low and no deployment. Once the price is set, it
is hard to make radical changes without breaking contracts.
• they insulate the RES producer from the market (a limited
compatibility with Internal energy market).
• Grid priority - the grid must take RES electricity first.
Take off phase: Quota obligations
• Power plant operators receive certificates for their green energy
to sell to the actors (distributors) obliged to fulfil the quota
obligations.
• Selling the certificate provides an additional income on top of
the market price of electricity.
• Quota obligations with tradeable certificates. Here government
sets the quantity, the market the price.
• Compatibility with market principles, competitive price
determination.
Take off phase: Quota obligations
• High risk premium – increases policy costs.
• Technology neutral way – only the most cost-effective
technologies supported.
= Quota systems with tradable certificates tend to be
cheaper, but favour mature technologies like onshore
wind and biomass.
Take off phase: Feed-in Premium
• Plant operators have to sell the elektricity at the market.
• To receive a fixed payment for each unit of elektricity
generated independent of the market price of elektricity.
• More market oriented, higher risk for producer (compensated
by the level of the premium).
• Used sporadically, as a second option to suplement FiTs.
Subsidy schemes
Take off phase
„A solar RES case“ – Spain, Italy, the Czech Republic…
• Generous FiT tariffs in place, volumes of deployment not
controlled or capped and support mechanisms not sufficiently
responsive to rapidly falling costs.
• PV developers earn high rates of return on their capital –
overheated markets and rapid rises in support costs.
• Policy makers react by dramatically reducing tariffs and
introducing retrospective measures to recouple some of the
costs – detrimental impact on investor confidence in the
government.
• Also impact on the other RES in given country.
Czech Republic – Installed PV capacity
Source: ERÚ
Year Installed capacity (in MWe)
2006 0,2
2007 3,4
2008 39,5
2009 464,6
2010 1959,1
2011 1971
2012 2086
Estimated costs in Czech Republic – 1,76 bn. euro in 2013
Final Energy Consumption in the EU28 (2015)
RES in the EU vs. RED and National
Renewable Energy Action Plans trajectories
EU-28 renewable heating and cooling by
source
RES electricity grew by 1.4 percentage points per year between 2014 – 2014,
RES heating and cooling by 0.8 percentage points and transport 0.5
percentage points.
Renewable electricity by source
Renewable transportation by source
RES electricity grew by 1.4 percentage points per year between 2014 – 2014,
RES heating and cooling by 0.8 percentage points and transport 0.5
percentage points.
MS progress towards their indicative RED
targets
Consolidation phase - costs
• RES gradually considered ´mature technology´ with significant
level of penetration.
• Direct financial support decreasing, auctions replace FiTs.
Germany:
• PV from 9.2 to 5.7cts/kWh between 2015-2017. Bid bonds
(deposit, €25-50/kW – 50 000 for 1 MW project); prequalification
(local municipality´s consent etc.); flexibility. →
100% of bids realized.
• 900 MW wind farm ´He Dreiht´ in the Nord Sea without
subsidies (EnBW).
Consolidation phase - costs
Consolidation phase – other issues
• Necessary regulatory, legal, trading mechanisms.
• Related infrastructure – grids, back-up capacities.
• Capacity mechanisms for sources providing stability and
reliability (back-up).
• Priority dispatch (according to the Winter Package only
installations up to 500 kW (250 kW after 2026), existing
generators, and innovative technologies.
Climate and environmental policies of the EU
Multiple overlapping activities relevant to the EU energy policy:
• International regime of climate change mitigation (EU plays a
significant role).
• Environmental dimension of the European energy policy:
• Climate aims and tools to reduce GHG emissions – EU ETS,
GHGs outside of the EU ETS.
• Energy related environmental aims - RES, energy efficiency.
• Environmental policy of the EU – local environmental
protection.
• Air, land and water pollution, noice, light pollution.
• Industrial (energy) waste.
• Protection of biodiversity.
• Extraction of non-conventional sources of energy.
Energy efficiency
Energy and climate package 2009: an energy consumption is to
be cut by 20% by 2020 relative to the BAU scenario, non-binding
target (cap of 1483 Mtoe in 2020).
• Limited consumption of energy + increased energy
efficiency.
• The only one that the EU is not on track to meet. (18-19%
by 2020).
• Energy supply per capita: 3,2 toe vs. 4,5 toe of the IEA average
(-8,2% since 2002).
• Energy intensity: 0,12 toe/USD 1000 vs. 0,14 toe/USD 1000
of the IEA average.
Energy intensity in the EU and in selected IEA
MS
Energy efficiency instruments
• EU instruments.
• Products (energy labeling, eco-design).
• Transport (measures to cut vehicle emissions).
• Buildings (40% of all energy in the EU is consumed in
building. Energy performance standards on new building).
• Public procurement (energy efficiency a criteria when govts
buy goods and services).
• National instruments.
• National plans with national measures.
Energy efficiency in the EU
•Limited achievements only due to:
• Relatively cheap energy (IEM).
• Limited impact of (sometimes expensive) measures.
• Rebound effect.
Energy Efficiency Directive 2012/27/EC
(updated in 2016 with 30% goal)
• Developed to reach 20% target savings.
• Binding measures, not bindig targets.
• MS are required to:
• Evaluate the situation in national heating and coolings
systems, suggest some cost-effective measures to improve
them.
• The same for gas and elektricity infrastructure.
• Oblige energy providers to achieve cumulative end-use
energy savings by 2020 equivalent to 1,5% of annual energy
sales over the period of 2014-2020.
Energy Efficiency Directive 2012/27/EC
(updated in 2016 with 30% goal)
• Introduce the metering and billing of actual energy
consumption in all sectors.
• Prepare public procurement rules ensuring that central
governments purchase only high-efficiency producs.
• Large industry enterprises to carry out an energy audits at least
every four years.
• Buildings – new buildings and buildings under renovation to be
„nearly zero energy“ by the end of 2020. To improve the energy
performance of 3% of the total floor area of heated and/or
cooled buildings owned and occupied by the central
government every year.
Latest development in emission targets
• 2020 aims (Energy and climate package, 2009)
• reduce greenhouse gases by at least 20%
• increase the share of renewable energy in the EU's energy
mix to at least 20% of consumption
• improve energy efficiency by at least 20%
• 2030 aims (Climate and energy framework, 2014)
• At least 40% cuts in greenhouse gas emissions (from 1990
levels). EU ETS to cut emissions by 43% (compared to
2005); Non EU ETS sector to cut emissions by 30
(compared to 2005). National targets range from 0% - 40%.
• At least 27% share for renewable energy
• At least 27% improvement in energy efficiency
Sources
• IEA (2014): Energy Policies of IEA Countries – The European
Union.
• Yeo, S.(2017): EU energy package: What it means for coal,
renewables and efficiency.
• EC (2017): EU Energy in Figures.