Sin ttulo de diapositiva

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Case Studies from the Spanish Energy Policy
Luis García Benedicto Products Development
Department IDAE
Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN

• Third Part Financing of IDAE.
• Special Regime on Electricity Market.
• Solar Thermal Supporting System.
• Photovoltaics Supporting System.
• Liquid Biofuels tax exemption.
• Solar regulations.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN THIRD PART FINANCING OF
IDAE
Consists on the identification, analysis and
installation of a facility owned by the promoter
but in which the IDAE is responsible for joint
implementation of all the stages through from the
original idea until the investment is
recouped. The investment is usually paid over
the medium to long term from the energy
generated, either by the income produced or the
savings the promoter makes from not having to buy
energy.
Lisbon, 1st and 2nd April 2004
Lisbon, 1st and 2nd April 2004
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THIRD PART FINANCING OF IDAE LESSONS LEARNED

• TFP is a tool of promoting energy efficiency and
  renewable energy projects. This fact is of
  particular importance when the degree of maturity
  does not reach sufficient levels to enable access
  to capital markets, in particular as a result of
  the guarantees required by the system.
• The first advantage is access to finance that
  matches the reality of projects of this kind,
  which are characterised by high levels of
  investment and the long amortisation times.
• The second advantage is that this mechanism is
  associated with technical consultancy from the
  IDAE. This allows much of the technological risk
  inherent in investments of this kind to be
  eliminated.
• Thirdly, the TPF is an off balance-sheet
  mechanism, allowing the promoter to access new
  technologies without increasing debt. This yields
  benefits for the promoters balance sheet from
  the moment the facility starts operating equal to
  the percentage of resources agreed in the IDAE
  contract.
• In summary, both the technological and financial
  risks are borne by the IDAE. Once the period
  defined in the contract has been reached, the
  promoter becomes the owner of the assets, without
  having made the initial investment, and from this
  point is able to receive all the income from the
  facility..

Lisbon, 1st and 2nd April 2004
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THIRD PART FINANCING OF IDAE USEFUL HINTS FOR
OTHER COUNTRIES

• The TFP should be designed according to the own
  characteristics of each sector, including the
  peculiarities of the country.
• Because of it, it is necessary to study the kind
  of contract of TFP in each project, not being
  valid the contracts with standard conditions for
  all the cases.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN SPECIAL REGIME ON
ELECTRICITY MARKET
Act 54/1997 on the electric sector established
the legal framework applicable to the electric
sector, including electric power generation
facilities using renewable power sources. The
determination of the feed-in tariffs of green
electricity was performed in Royal Decree
2818/1998. According to that system, the
producers could opt for the premium or the fixed
price, indistinctly, and change their choice
every year, according to their corporate
strategy. The Royal Decree published the
initial values for each type of renewable power,
as well as the conditions required to adopt this
system. The premiums and fixed prices have been
amended every year, adapting them to the market
circumstances.
Lisbon, 1st and 2nd April 2004
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SPECIAL REGIME ON ELECTRICITY MARKET
The Royal Decree defined a series of groups.
Group "b" was assigned to renewable power b.1.
Only used as a primary source of solar power.
b.2. Only used as a primary source of wind
power. b.3. Only used as a primary source of
geothermal power, wave power, tide power and that
of hot dry rocks. b.4. Hydroelectric power
plants. Power 10 MW. b.5. Hydroelectric power
plants. Power gt 10 MW but 50 MW. b.6. Power
stations using primary biomass as their main fuel
(vegetable matter of growth of less than one
year). Main fuel at least 90 of the primary
energy used (NHV). b.7. Power plants that use
secondary biomass as their main fuel (waste from
first use of biomass). b.8. Power plants that use
power sources included in groups b.6 and b.7
above, along with conventional fuels, as long as
these do not amount to more than 50 of the
primary power. b.9. Mixed power plants of the
preceding groups.
Lisbon, 1st and 2nd April 2004
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SPECIAL REGIME ON ELECTRICITY MARKET LESSONS
LEARNED

• RES still have clear obstacles to their
  development. However, in a not very distant
  future, there will be an adequate legal framework
  with guarantees and support.
• Exhaustive knowledge of the electric market and
  of the situation of the different types of
  renewable power operation is required, which will
  allow adequate premiums for promotion of RES.
• The premiums must be accompanied by regulatory
  measures to assure the quality of connection to
  the electric grid.
• Complementary programmes must also be developed
  to support production of raw material in the case
  of biomass.
• A stable reference framework must be established
  to allow promoters to ensure a return on their
  investment. To that end, the period of currency
  of the premiums must cover the whole useful life
  of the installations.

Lisbon, 1st and 2nd April 2004
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SPECIAL REGIME ON ELECTRICITY MARKET USEFUL
HINTS FOR OTHER COUNTRIES

• It must be avoided any kind of discrimination
  between electricity produced based on different
  sources of renewable power (solar, biomass,
  hydraulic, wind). To that end, an adequate
  premium must be established for each source of
  renewable energy.
• In-deep co-ordination is necessary between the
  different competent public authorities, above all
  in relation to the authorisation procedures for
  these installations.
• The characteristics of the premiums must be
  adapted to the state of the technologies in the
  country of application, as well as the
  circumstances of its electricity market.
• Inclusion of electricity generated with RES must
  be encouraged on the market, favouring the use of
  premiums over fixed prices. This will allow
  greater integration of renewable sources on the
  electric market and will give rise to a more
  transparent incentives system.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN SOLAR THERMAL SUPPORTING
SYSTEM

• In 2000, in accordance with to the Renewable
  Energies Promotion Plan (PFER), a classical call
  for proposals was developed consisting of
  sink-fund support based on competitive
  assignment, with a closed period of application
  and an execution period.
• A series of technical specifications was
  introduced and an approval requirement set for
  the installers who would carry out each of the
  projects included in the call for proposals.
• According to the type of project and maximum
  amount of support that they could receive
• Installations with vacuum collectors, with a
  global loss coefficient, in relation to the
  homologation curve equal to or less than 4.5
  W/(m2ºC). (heating ,underfloor or fan-coil, or
  other).
• Small compact installations.
• The rest of the installations, as long as their
  global loss coefficient, in relation to the
  homologation curve was less than 9 W/(m2ºC).
• Installations with a global loss coefficient
  exceeding 9 W/(m2ºC) did not receive subventions.
  

Lisbon, 1st and 2nd April 2004
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D I V E R S I F I C A C I Ó N Y
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NEW IDAEs SOLAR THERMAL SUPPORTING SYSTEM
Lisbon, 1st and 2nd April 2004
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SOLAR THERMAL SUPPORTING SYSTEM LESSONS LEARNED

• It is impossible to satisfy market expectations
  with a low budget for support.
• More efficient management of the support allow
  the calls to be published earlier and expedite
  the formalities.
• There is evidence of great interest on the market
  and good expectations for future programmes.
• Some lessons from the present situation of solar
  energy in Spain
• National and municipal legal framework for solar
  energy. Best methods for the housing sector.
• National regulation is the basis for later
  development of municipal by-laws.
• That measures must be accompanied by the usual
  support programmes. Promoting mandatory
  application without public support may create
  inequality.
• The costs of solar thermal plants do not have
  influence on the final price of housing.
• The participation of traditional installers in
  the sector is required.
• Introduction of a legal framework favours
  training, research and development of solar
  energy by traditional companies (equipment
  manufacturers and installers).

Lisbon, 1st and 2nd April 2004
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SOLAR THERMAL SUPPORTING SYSTEM USEFUL HINTS FOR
OTHER COUNTRIES

• The measures of the support programme must be
  developed according to the market reality. If
  maximum prices are established, these must be
  affordable for the installation companies.
• There must be good communication between the
  Authorities and the Associations of Solar Energy
  Installers and Manufacturers. One way to ensure
  fluent communication is to organise periodic
  follow up meetings on the programme.
• The support programmes must not be eliminated,
  although the installations may be mandatory, but
  rather they must be adapted to the reality of the
  market.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN PHOTOVOLTAICS SUPPORTING
SYSTEM
In 2001, as part of the Renewable Energies
Promotion Plan (PFER), a classical call for
proposals was developed, consisting of sink-fund
support based on competitive assignment, with a
closed period of application and an execution
period. A series of technical specifications
was introduced and the installers who would carry
out the projects were obligated to obtain
official approval. The beneficiaries were
companies, individuals or corporations,
institutions, etc., with projects of a minimum
power of 100 Wp and a maximum of 100 kWp, that
could be connected to the grid, free standing
(with or without accumulation) or special
installations (mixed, vehicle charging stations,
etc...).
Lisbon, 1st and 2nd April 2004
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I N S T I T U T O P A R A L A
D I V E R S I F I C A C I Ó N Y
A H O R R O D E L A E N E R
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PHOTOVOLTAICS SUPPORTING SYSTEM LESSONS LEARNED

• It is impossible to satisfy the expectations on
  the market with a low budget for support.
• More efficient management of the budget, allow
  the calls for proposals to be published earlier
  and expedite the formalities.
• There is great interest on the market and good
  expectations for future programmes.
• Lessons from the present situation of solar
  energy in Spain
• Development of national regulations, for
  electricity premiums as well as for technical
  conditions must be the basis for later
  development of the support programmes.
• - The introduction of a stable legal framework
  promotes training, research and development of
  solar energy.

Lisbon, 1st and 2nd April 2004
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PHOTOVOLTAICS SUPPORTING SYSTEM USEFUL HINTS FOR
OTHER COUNTRIES

• Photovoltaic Solar Energy must be made mandatory
  in certain cases, through a Technical Building
  Code.
• Reinforcement of information to Local
  Governments. Tax deductions in the Economic
  Activity Tax, Building, and other taxes.
• There must be good communication between the
  Authorities and the Associations of Solar Energy
  Installers and Manufacturers. One way to ensure
  fluent communication is to organise periodic
  follow up meetings on the programme.
• It is considered essential
• To establish complete technical specifications
  for mandatory fulfilment.
• To establish an inverter test procedure.
• To provide the adequate training for installers.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN LIQUID BIOFUELS TAX
EXEMPTION
Act 53/2002, of 30th December, on Tax,
Administrative and Social Order Measures, amended
the legislative framework applicable to biofuels
in relation to the tax exemption on the product.
In general terms for biofuels, zero rate special
tax on hydrocarbons was adopted until the year
2012. The measure has brought about a radical
change in the possibilities of development in the
biofuels industrial sector in Spain. This
measure, along with regulatory amendments
introduced by Royal Decree 1700/2003, of 15th
December, aims to encourage use of fuels of
agricultural or plant origin. Royal Decree
1700/2003 sets the specifications for gasoline,
diesel, fuel-oil and liquid petroleum gas, and
the use of biofuels.
Lisbon, 1st and 2nd April 2004
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I N S T I T U T O P A R A L A
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LIQUID BIOFUELS TAX EXEMPTION LESSONS LEARNED

• Biofuel production costs have been the main
  barrier to their development for many years. With
  an adequate measure, materialised in the zero tax
  established in Act 53, it has been possible to
  overcome that barrier.
• This has not only allowed biofuel development
  and market penetration, but also may lead to a
  decrease in production costs in the near future.
• The specifications for liquid biofuels use is
  another important contribution for their
  development.

LIQUID BIOFUELS TAX EXEMPTION USEFUL HINTS FOR
OTHER COUNTRIES

• Zero tax or exemption for biofuels must be
  accompanied by technical regulations
  (specifications) to avoid problems in market
  penetration for these products.

Lisbon, 1st and 2nd April 2004
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BEST PRACTICES IN SPAIN SOLAR REGULATIONS
In order to encourage development of solar
thermal energy in building construction, a model
of municipal by-laws on solar thermal energy was
designed. The objective Draft and distribute a
model of municipal solar by-laws to Local
Governments that could be adapted according to
the specific local requirements. The by-laws
made it mandatory to include solar plants in new
construction or refurbished buildings. They
established minimum limits on the amount of
energy to be supplied in buildings through the
solar thermal energy. Include technical
specifications to assure the quality.
Lisbon, 1st and 2nd April 2004
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SOLAR REGULATIONS LESSONS LEARNED

• The existence of a national and municipal legal
  framework on solar energy has provided one of the
  best methods for its promotion and penetration in
  the housing and building sector.
• Development of national regulations should be
  the basis for later development of municipal
  by-laws on solar energy.
• This measure must be accompanied by the usual
  actions of public support for investment, as
  promotion of their obligation without public
  support may create inequality situations.
• The costs related to installation of solar
  thermal systems do not have a notable effect on
  the final price of buildings.
• Development of solar thermal energy requires
  participation by traditional companies
  (installers) in the sector. The greater
  installation capacity of traditional companies
  will allow faster development of the market.
• A stable legal framework favours training,
  research and development of solar energy by
  traditional companies in the sector (equipment
  manufacturers and installers).

Lisbon, 1st and 2nd April 2004
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I N S T I T U T O P A R A L A
D I V E R S I F I C A C I Ó N Y
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SOLAR REGULATIONS USEFUL HINTS FOR OTHER
COUNTRIES

• By-laws regulating technical specifications do
  not act in the same manner in all countries.
• The regulatory capacity of municipalities in the
  different countries is not the same, but that
  applied to Local Governments Spain may be applied
  at regional or national level in other countries.
• A national statutory framework allows adequate
  development of municipal by-laws.
• The by-laws must be adapted to each region
  according to their climate and social-economic
  characteristics.

Lisbon, 1st and 2nd April 2004