Transcript WP1: Economic, policy and regulatory constrains for DER

Overview of Economic, policy and
regulatory constrains for DER integration
in EU
Miroslav Maly (Enviros), Michael ten Donkelaar (ECN)
SOLID-DER National Seminar Vilnius
March 6, 2007
Contents of the presentation
 Market presence of DER in NMS
 DER support in NMS
 DER regulatory issues
 Main barriers to DER increase
 Conclusions
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Market presence of RES / CHP in the new EU10+
Current status - major part of RES-E production in large hydro-power
stations (e.g. Latvia, Romania, Slovakia, Slovenia):
 Wind energy developing since 2004: Baltic States, Czech Republic, Poland
 Some wind energy projects realised, many more are planned
RES-E targets for 2010 - very ambitious
 For some countries perhaps too ambitious (e.g. Czech Republic, Slovakia)
 above expected economic potential in short-term
Main potential for RES-E up to 2010 – biomass / biogas applications,
wind energy and small hydro
CHP has major share in all new MS, 10-20% of E-production from CHP
but large part is not DER
 CHP connected to industry, district heating
 Little small-scale applications (e.g. gas engines, RES-CHP)
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Market presence of RES / CHP in the new EU10+
RES-E share (%
E-prod. in 2004)
RES-E share
(excl. large
hydro)
CHP share
(% E-prod. in
2004)
Small CHP
share
DER share
RES-E target
2010
(% cons.)
Bulgaria
7.9
1.4
11.8
2.8
4.2
11
Czech Rep.
4.1
2.4
14.0
5.3
7.7
8.0
Estonia
0.4
0.4
10.4
0.1
0.5
5.1
Hungary
2.4
2.4
20.0
7.4
9.8
3.6
Latvia
47.4
4.9
21.5
3.5
8.4
49.3
Lithuania
4.1
0.6
22.4
4.6
5.2
7
Poland
2.2
0.5
14.3
4.3
4.8
7.5
Romania
23.3
1.1
< 20
2.0
3.1
33
Slovakia
11.5
0.5
16.0
8.6
9.1
31
Slovenia
27.7
3.7
< 10
3.0
6.7
33.6
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D E R sh are in total electricity capacity (% )
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Market presence of DER in Europe
Source:DG-GRID / SOLID-DER
40
35
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25
20
15
10
5
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RES / CHP support in the new EU10+
DER support mechanisms developed during the last 5 years:
 Predominantly feed-in tariff systems for RES-E
 Green (feed-in) Premium System – bonus to market price (e.g. Czech
Republic, Hungary)
 Tradable green certificates introduced in Poland and Romania
– TGC combined with quota system and fines
 Some countries provide additional support through investment
subsidies, soft loans or tax exemptions
– Future (investment) support expected from EU Structural Funding
 Support to CHP in 6 out of 10 countries
– Bulgaria, Czech Republic, Hungary, Latvia, Poland (from 2007), Slovenia
– Feed-in tariffs or premiums, usually lower rates than for RES-E, mostly for
small- to medium-scale CHP
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RES / CHP support in the new EU10+
Support for
RES / CHP
Support
category
Support
(€ct/kWh)
% of market
price
No. of years
of support
Additional
support
Bulgaria
RES/CHP
FIT
4 – 8.5
200 - 300
12 yrs
-
Czech
Republic
RES/CHP
FIT
6 – 10
200 – 300
15 yrs
Investment
subsidies
Estonia
RES
FIT
7 – 12 yrs
-
Hungary
RES/CHP
FIT
~ 200
Until return
is yielded
Investment
subsidies
Latvia
RES/CHP
FIT
200
8 yrs
-
RES
FIT
5.8 – 6.4
Until 2020
Soft loans, tax
exemption
RES/CHP
TGC
Depending
on market
price
No limit
RES exempted
from excise tax
Romania
RES
TGC
Minimum
2.4 – 4.2
No limit
-
Slovakia
RES
FIT
6 - 20
100 - 350
Until 2010
Investment
subsidies
Slovenia
RES/CHP
FIT
5-7
140 – 200
10 yrs
Tax exemption
Lithuania
Poland
6 – 6.8
Up to 233
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Overview of RES-E
support schemes
in Europe
F eed-in tariff
T rad ab le g reen
C ertificates
T en d ers
F iscal in cen tiv e
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Is RES-E / CHP support effective?
Support existing for only a few years, no conclusion possible yet about
effectiveness of FIT or TGC
 Strong growth of RES-E not yet noticed with exception of Hungary
(growth in biomass co-firing and small CHP)
 But, many new RES-E projects are under implementation or planned
Support mechanisms can overcome economic barriers such as large
upfront investments, depending on tariff level
 Tariff level is not sufficient in every country
 Little differentiation benefits some technologies too little, other perhaps
too much (e.g. co-firing of biomass in Hungary)
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DER regulatory issues – Market Access
Sale of DER-E
Access to wholesale
market
Bulgaria
RPO
Yes
Czech Rep.
RPO
Yes
Estonia
RPO
Yes
Hungary
RPO
No
Latvia
RPO
Yes
Lithuania
RPO
Yes
Poland
RPO
No
Romania
GC
Yes
Slovakia
RPO
Yes
Slovenia
RPO
Yes
Regulated purchase
obligation most common
Also access to wholesale
market in most
new Member States
RPO = Regulated
Purchase Obligation
GC = Green Certificates
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DER regulatory issues – Balancing conditions
B u lg a ria
C ze c h R e p .
E s to n ia
H u n g a ry
L a tvia
L ith u a n ia
P o la n d
R o m a n ia
S lo va k ia
S lo ve n ia
N o tific atio n o f
DER
S a n c tio n s
A c c e s s to
b a la n c in g
m a rk e t
D G a ctive p a rt o f
g e n e ra tio n
re s e rve
No
No
Yes
No
1 day
No
1 day
Yes
No
No
Yes
No
Yes
No
No
No
No
1 w eek
2 d a ys
No
1 day
No
No
No
Yes
No
Yes
No
No
No
No
No
Yes
Yes
No
No
No
No
No
Yes
• No common balancing conditions
• Obligatory notification of DER generation amounts in some countries
• DER is not active part of generation reserve
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DER regulatory issues – Network access
B u lg a ria
C z e c h R e p u b lic
E s to n ia
H u n g a ry
L a tvia
L ith u a n ia
P o la n d
R o m a n ia
S lo va k ia
S lo ve n ia
M e te rin g
re q u ire d
C o n n e c tio n
c h a rg e s
S ys te m
c h a rg e s
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
S h a llo w
S h a llo w is h
Deep
S h a llo w
D e e p , S h a llo w is h
D e e p , S h a llo w is h
S h a llo w is h
Deep
Deep
S h a llo w
Yes
No
No
No
No
No
No
No
No
No
No uniform connection charging method
Large differences in charging approaches
Use-of-System charges for DER operators not common in NMS
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Main barriers to DER increase – short-term
Policy barriers:
 Frequently changing policies and priorities
Regulatory barriers:
 Long procedures for spatial planning, construction permissions
Network (regulatory) barriers:
 Complicated (non-standardised) connection procedures
 Prices sometimes discriminatory to small-scale generators
 Dominant position of DSOs
Financial barriers:
 Large initial investments and credit availability
 Availability of support (schemes are often unstable)
 Feed-in tariff schemes not cost-effective in the long term
Technical barriers:
 DER connected in less populated areas means higher connection costs
or network upgrades
–  Preferential
wind power locations often in remote areas
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Main barriers to DER increase – long-term
Long-term barriers
 No long-term RES-E / CHP targets and policies
– What targets to be expected after 2010?
– Are long-term policy plans in line with increased DER shares?
 Costs for network upgrades when not taking DER into account in
planning
 Threat of higher costs of electricity with more DER connected
 Fragmented and also often changing support for DER (both in EU15 as
in NMS
 Soon no overcapacity but shortage of capacity (e.g. due to nuclear
phase-out in Lithuania, Slovakia, Bulgaria)
Questions
 What countries have structural generation overcapacity (still in 2010 or
2020), perhaps Czech Republic, Poland?
 What kind of power capacity will replace nuclear power plants?
 Are most efficient technologies supported with existing support
schemes, what about CHP?
 What is the opinion of major stakeholders?
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Preliminary conclusions
DER plays an increasing role in the new MS
 In the form of CHP and recently new RES-E capacity
DER support schemes introduced (to meet RES-E targets)
 Mainly in the form of FIT combined with RPO
 Support levels in some countries comparable to that in EU15
Slow but steady uptake of RES-E capacity
Participation of DER in energy markets still limited
 But some countries provide access to wholesale and/or balancing
market
DER regulatory framework shows large differences between countries:
 System of connection charging
 Balancing conditions (obligations and access)
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Short- and medium term policy and regulatory
recommendations
 Complete the unbundling process, within the legal framework as
well as in practise
 Simplify authorisation procedures for spatial planning and
construction permits through a “one-stop shop system” for project
authorisation
 Introduce transparent and non-discriminatory grid connection, grid
use conditions as well as cost allocation between DER operators
and network operators
 Ensure market access for DER operators through simplified
procedures to wholesale, balancing and ancillary services markets
 In the development of support schemes, take into account their
cost-effectiveness in the long-term and the stability it has to create
for investors
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Thank you for your attention !
SOLID-DER project website:
http://www.solid-der.org/
[email protected]
[email protected]