Transcript Slide 1

Offshore wind and the 2020 EU target
7th Interparliamentary Meeting on Renewables
Berlin, 6 October 2007
Christian Kjaer
Chief Executive, European Wind Energy Association
We are already paying the cost of inaction
• For every $20 increase in the price of oil, the cost of
Europe’s gas imports rises by €15 bn annually, given
the unfortunate link between oil and gas prices
• The increase of oil prices over the past few years from
$20 to $80 thus adds €45 bn. to EUs annual gas
import bill
• For comparison, EU invested €9 bn. in wind energy in
2006
Offshore wind – the challenge
Both in terms of offshore infrastructure and technology
development, offshore wind energy should be seen as
a strategic resource that Europe needs to develop if we
are ever to achieve competitive electricity markets in
Europe; reach a larger degree of energy
independence; reduce risk exposure to unpredictable
fuel prices; ensure low and predictable energy costs;
while reducing the environmental impact of energy
production.
27 EU Heads of State adopted on 9 March 2007:
• 20% energy efficiency target by 2020
• 20% reduction of greenhouse gas emissions (30% if
other countries commit) by 2020
• 20% binding target for renewable energy by 2020
- Including 10% biofuels target
Proposals for EU legislative package
expected in December 2007
27 EU Heads of State agreed on 9 March 2007:
• Improved cross-border exchange “notably through
interconnection, taking into account the integration
of onshore and offshore renewable energies”
• Welcomes appointment of European coordinator,
including coordinator for connecting offshore wind
power in Northern Europe
The European Commission
“Wind could contribute 12% of EU electricity by
2020. One third of this will more than likely come
from offshore installations”
(Commission’s Energy Package 10 January 2007)
20% target:
How much renewable electricity, wind power and offshore wind power?
• 2020: app. 35% renewable electricity is needed to reach the 20% target for
renewable energy
• Today: 15% incl. 10% large hydro and 3% wind
• Excluding large hydro the share of renewable electricity must increase from
5% to app. 25%, in 14 years depending on power demand
• From 3% (50 GW) to 11-14% (180 GW) wind power in 2020 (depending on
2020 demand)
• Offshore wind power contribution to EU demand by 20201 between 1.8%
(20 GW) and 4.5% (50 GW)
• Without offshore wind power we will not reach the target
• Without infrastructure we will not meet the target
1 EC
baseline scenario EU demand (2020): 4163.7 TW/h
Offshore wind development in Europe (1991-2006)
Offshore wind market development
in Europe (in MW)
900
878
800
680
700
590
600
505
500
400
300
Cumulative
installation
259
246
198
200
160
96
Annual
installation
100
4,95
4,95
4,95
6,95
11,95
28,75
1995
1996
28,75
31,5
31,5
85
90
50
35,5
4
0
1991
1992
1993
1994
1997
1998
1999
Source: EWEA, BTM consult (2007), Emerging Energy report (2007) and Douglas Westwood (2007)
2000
2001
2002
2003
2004
2005
2006
Offshore wind status
2005
Installed
Capacity
(MW)
2006
%
Installed
Capacity
(MW)
%
Onshore
39,824
98,32
47,149
98,2
Offshore
680
1,68
878
1,8
40,500
100
48,027
100
Total
Planned New Offshore Wind Capacity (2005-2015)
EU wind power past 14 years … and next 14 years?
Offshore in 2020?:
- Avg. annual onshore growth EU 1992-2006: 33.4%
- Offshore in 2020 at 33.4% annual growth: 49.350 MW
Offshore wind development (Cumulative, GW)
Scenario 3
Low
Medium
High
50
50
35
25
20
10
0.9
3
3.5
12
15
4
0
2006
2010
2015
2020
Wind Energy in EU (2006 – 2030) and electricity
share
350
300
GW
250
120
12%
200
8%
150
100
50
3%
5%
47.2
76.5
35
12
3.5
0.878
74.5
112.5
145
164.8
180
2025
2030
0
2006
2010
2015
Onshore
2020
Offshore
EU policy needed to reach targets
• A renewable energy offshore policy for Europe, including
offshore infrastructure (wind, tidal, wave)
• Grid extensions and upgrades financed by – ownership
unbundled – TSOs (grids are natural monopolies)
• Removal of administrative barriers (one-stop-shop
approach)
• Removal of grid access barriers including excessive
technical requirements
• Increased cooperation on interconnectors
• Dramatic refocus of R&D spending, taking into account
historic levels of funding
Effect of scenario incl. 35 GW offshore wind in 2020
• 220 Mt of CO2 avoided p.a (22% of EU reduction
target)
• Avoided CO2 cost p.a. (€20 / tonne CO2): €4.4 bn
• Avoided fuel cost p.a. ($48 / brl oil): €12 bn
• Avoided fuel cost p.a. ($93 / brl oil): €18 bn
o €25 bn avoided fuel cost at €/$=1.00
1 EC
baseline scenario EU demand (2020): 4163.7 TW/h
Is there enough capital?
Investment required between 2005 and 2020 to
reach 180 GW in 2020 or 12% of EU electricity
consumption will require app: €215 billion
Combined 2005 profits of Exxon Mobil, Shell, BP
and Chevron: €78 billion
Cost of energy subsidies 1995-1998 per year*:
Fossil fuels and nuclear:
Renewables and efficiency:
*Source: UNDP
$215 billion
$9 billion
Barriers to competition according to the Commission
There is an urgent need to address inefficiencies, distortions and
historically determined institutional and legal issues related to the
overall structure, functioning and development of the broader European
electricity markets.
The Commission points out four key reasons for the lack of success in
achieving a competitive market:
• Lack of cross-border transmission links
• Existence of dominant, integrated power companies
• Biased grid operators, and
• Low liquidity in wholesale electricity markets
The four main barriers outlined above are not only barriers to creating
effective competition in European power markets, they are also the
main institutional and structural deficiencies preventing new
technologies such as wind power from entering the market.
True prices are an advantage for wind
On strictly economic terms, wind energy’s
future competitive position will to a large degree
be determined by the fuel cost of competitors;
the cost of CO2; and the degree to which
liberalising electricity markets will start
reflecting the true cost of building new capacity
EWEA calls for real competition
in the Internal Energy Market
EWEA’s position
 EWEA welcomes the effort to create an
undistorted Internal Electricity Market (IEM)
 EWEA supports to eventually adopt support
mechanisms for renewables that are compatible
with an undistorted internal market
 Due to the natural interactions between the
conventional power market and renewable power
market it is premature to force renewables
into a distorted Internal Energy Market – it
would distort both markets
 Any shift must be well prepared to maintain
investor confidence and follow after more
effective competition in the IEM has been
achieved
Reminder
“the issues relating to compatibility of support
mechanisms and the desirability of not distorting cross
border trade are concerns which are secondary to the
main objective of ensuring a certain level RES
production in each Member State on the basis of
individual national targets”..
European Commission’s Strategy Paper “Medium term vision for the
Internal Electricity Market” (1 March 2004)
IEA: same production, different market share ???
World - 2004
TWh
% electricity
Mtoe
% primary
energy
Nuclear
2.740
16%
714
6%
Hydro
2.809
16%
242
2%
Source: IEA
IEA: same production, different market share
European Union - 2004
TWh
% electricity
Mtoe
% primary
energy
Nuclear
988
31%
257
14.6%
Hydro
300
10%
26
1.48%
Source: IEA
The Root Problem of Energy Importing Nations

They are going to import an ever growing share of our energy at
unpredictable (but most likely higher) prices in competition with
the rest of the world and at unbelievable environmental cost.

Regardless of whether they are successful in energy diplomacy
or not, they have no idea about the future cost of energy they
will be paying to maintain current supply

The economic future of Europe and other importing nations can
be planned on the basis of known and predictable cost of
electricity, derived from an indigenous energy source free of the
security, political, economic and environmental disadvantages
associated with the current energy supply structure
Turn the climate and energy challenge into an
opportunity in the 21st century energy battle
Follow a strategy of developing, deploying
and exporting renewable energy
technology to a world that, few years from
now, cannot afford to live without it.
Offshore wind – 2007
www.eow2007.info
European Offshore
Wind Conference (December 2007)