Transcript Supporting RES and DG in a competitive market Socio

Supporting RES and DG
in a competitive market
Socio-economic and
infrastructure issues
Prof. Michael P. Papadopoulos
RAE-GREECE
 Objective:
–
Promotion of electricity production from
RES within the context of the regulatory
framework of the competitive electricity
market
 Issues
(a) How RES energy enters in the electricity
market
(b) Adapting third party access to the grid to
accommodate RES
(c) Incentives for grid infrastructure expansion
to support RES
RES Energy in the Market (1)
 Old promotion practices seem to be incompatible
with the competitive market structures
 If we seek for large-scale RES penetrations, then:
 Direct subsidisation of RES investment may violate stateaid rules
 Mandatory absorption of any RES energy production and
fixed price payment may distort market competition
 Consideration of RES payment as public service
obligation may generate excessive charges on consumers
RES Energy in the Market (2)
 Public policy about RES penetration targets has to
be imposed as global constraint on the market, so
as to let the electricity market to find the costefficient market equilibrium
 Methods after imposing a global RES penetration
target:
 Impose a quota obligation to all electricity suppliers and let
them acquire RES energy after free negotiations
 Impose a quota obligation to the pool or TSO and let the
power exchange market to determine the origin of RES
energy
RES Energy in the Market (3)
 Public policy incentives, apart the imposition of a
global constraint, may also include:
 Tax rebates
 Lending rate subsidisation
 Minimum and/or maximum regulated bounds on prices for
RES energy purchases by supplier or by the TSO
RES Energy in the Market (4)
 Regimes with extreme competitions among the
RES producers are suitable for countries that
already have developed RES plants at a sufficient
scale, because otherwise they may lead to nonbancability of RES projects
Intermediate solution: the pool or the TSO define
a global Power Purchase Agreement for RES and
create a second-order competition among RES
RES Energy in the Market (5)
 Regimes based on quota obligations of electricity
suppliers need ex-post supervision of competitions
to avoid the case of suppliers eventually abusing
their dominant position. In such cases the
weakening of RES economics may lead to a future
reduction of their potential development
RES Energy in the Market (6)
 Whatever competitive market regime for RES is
selected, the internal or regional electricity market
needs harmonisation on:
 The level and timing of global constraint for RES energy
by country or region (optimum allocation among countries
leads to equality of marginal costs of RES potential)
 The method and procedures for RES energy entering in
the electricity market
 The additional incentives to promote RES projects
 The legislation to grant production licenses to RES
projects
ACCESS TO THE GRID:
The main principles:
 Open non-discriminatory access to the network for
RES producers as for all generators
 Development of cost and service reflective tariffs
for RES power injected to the network according to
the methodology used for embedded generation
 Standardisation of technical connection terms for
different types of DG and loads
GRID INFRASTRUCTURE:
Planning and design principles:
 Development of planning methods, taking into
account the location specific and varying in time
behavior of RES and normal loads
 Development of cost allocation methods and tariffs,
taking into account real conditions
 Economical design for networks dedicated for RES
(e.g. with reduced reliability)
 Support initiatives for the development of networks
in isolated regions, taking into account their
contribution to the environment
PROCEDURE FOR TAKE-OFF:
The main steps:
 The state fixes targets of RES development taking into
account:
– Existing RES potential by region of a country
– Classification of the RES according to their total cost
(investments, connection to the grid etc.)
 Decision concerning the policy of RES entry in the market
 Planning of the required grid infrastructure and estimation
of the cost for different RES penetration levels, taking into
account the local environmental impact
 Tariff development, taking into account the total real cost
(RES investments, use of transmission, and distribution
network etc. )