The Renewable Energy Policy of the EU

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The Renewable Energy Policy of the EU
Overview of Relevant Strategies and Directives
Early Implementation Experience in the New EU
MSs Special Focus on the Generation of Electricity

• Presentation by Jozsef Szlezak, Szlezák József
• The Regional Environmental Center for CEE
• Energy Community Treaty (ECT) Seminar
• Pristina, Kosovo (UNMIK),
• 23-24 March 2006

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Presentation Outline

• ? Drivers of change in Electricity Supply
• ? Renewable Energy Sources (RES) what and why?
• ? The EUs RES Policy Strategies and Directives
• ? The RES-E Directive (2001/77/EC) - objectives,
  provisions, internal market and trade aspects
• ? Early experiences - main barriers, support
  systems

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Electricity Supply Drivers of Change
Liberalisation
Environmental policy
Aging generation facility
Social aspects
Electricity Supply Systems
High level of competitiveness
Growing demand
Security of (fuel) supply,diminishing sources
New stakeholders
New Technologies,Renewable Energy Sources (RES)
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What are Renewable Energy Sources (RES)?

• ? wind energy
• ? solar energy
• ? biomass energy (including agricultural
  residues)
• ? hydropower wave tidal energy
• ? landfill and sewage treatment gas energy
• ? biogas energy
• ? geothermal energy
• ? pre-selected Municipal Solid Waste (MSW)

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What are Renewable Energy Sources (RES)?

• A new fad?
• A new obligation? A green bla-bla?
• Immature?
• Opportunity!
• Difficult to integrate?
• The luxury of developed / rich countries
  (expensive)?
• High-tech?
• Unrealistic?

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Why Renewable Energy Sources (RES)?

• ? Improved security of energy supply.
• in the next 20-30 years, 70 of energy demand
  would be met by imports.
• ? Enhanced competitive edge for the EU in the
  renewable energies technology industries.
• EU RES market annual turnover EUR 15 mill.
  (half of world market), employs some 300.000
  people, major export sector
• ? Improved economic and social prospects
  especially for rural and isolated regions.

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Why Renewable Energy Sources (RES)?

• ? Mitigation of greenhouse gas emissions by the
  power sector.
• EU is a key actor in the implementation of the
  Kyoto Protocol
• ? Mitigation of regional and local pollutant
  emissions
• SO2, NOx and dust..
• ? More efficient resource use
• Utilisation of agricultural municipal waste
  and sewage

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RES Technology Expected trends in costs
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RES Some Important Considerations

• RES and /or Energy Efficiency (EE)?
• Investment decisions in some conditions the
  specific yield of EE investments is considerably
  better than of RES investments.
• Energy supply from RES up to 100 in the short
  or medium term is that possible?
• Even if the current economic barriers (negative
  externalities, environmentally harmful subsidies
  related to conventional energy systems) are
  tackled, still much research is necessary into
  the overall (life-cycle) impacts of RES-based
  systems (especially biomass, biofuel and
  photovoltaic) and into the development of
  Sustainable Energy Supply Systems, where the
  overall economic-, environmental- and social
  impacts are considered.
• What is the best mix of RES, the best way of
  their evolution and the optimum level of their
  harvest then?
• It can be answered on the regional- and local
  level only, based on the particular conditions,
  taking into account global variables, i.e.
  available technology and its characteristics in
  the same time.

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The RES Policy of the EU Strategic Papers

• ? White Paper for a Community strategy and
  action plan
• Energy for the future renewable sources of
  energy, COM(97), 599 final. Currently under
  revision!
• It a strategic paper setting goals in each
  relevant RES field, with justification, also
  assesses some of the costs and benefits. Fair
  access for RES to the grid and the RES-E
  Directive is already envisaged.
• Most important targets (with RES-E relevance)
  and their current state
• Wind Energy 40 GW installed generation
  capacity ?
• Biomass, including biogas utilisation of
  additional 90 Mtoe ?
• Hydropower additional 8,500 MW (large) and
  4,500 (small) cap. ? - ?
• On overall 12 share of renewable energy in
  primary energy consumption was targeted by 2010.
• It had to be revised and 9 is anticipated

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The RES Policy of the EU Share of RES in 2004
Share of RES in primary energy consumption in
the EU , 2004
Original target (by 2010) 12
New (anticipated) target 9
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The RES Policy of the EU Strategic Papers cont.

• ? Green Paper A European Strategy for
  Sustainable, Competitive and Secure Energy

Sustainable Development
Security of Supply
Competitiveness

• Energy Policy is the joint competence of EU and
  MSs
• Sovereignty of MSs to choose their Energy mix,
  but common driving principles
• Coherent external policy (?)

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The RES Policy of the EU Strategic Papers cont.

• ? Green Paper Towards a European strategy for
  the security of energy supply, COM(2000), 769
  final
• ? Biomass Action Plan, COM (2005), 628 final
• ? Relevant Green Paper on energy efficiency or
  doing more with less, COM(2005) 265 final

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The RES Policy of the EU Directives

• ? Directive 2003/30/EC on the promotion of the
  use of biofuels or other renewable fuels for
  transport
• Share of biofuels by 2010 5,75 (EU
  average, in terms of total energy content)
• ? Directive 2001/77/EC on the promotion of
  electricity produced from renewable energy
  sources in the internal electricity market
  (The RES-E Directive)
• Share of renewables in electricity production
  by 2010 21 (EU average)

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The RES-E Directive Overview of Objectives

• Provisions for
• ? Quantified (but indicative) national targets
• ? MSs are to provide support to RES
• ? Ensured guarantee of origin
• ? Simplification of national administrative
  procedures
• ? Regulation of grid issues
• ? Monitoring of progress, setting of mandatory
  targets if necessary

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The RES-E Directive National Targets by 2010
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The RES-E Directive Share of RES-E in 2004
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The RES-E Directive National Support Schemes

• Guiding rules
• ? Subsidiarity Principle
• MSs are free to choose their preferred support
  mechanisms (direct or indirect support) but, if
  necessary, a harmonised support system on the EU
  level will be established later.
• ? Support criteria
• - Community guidelines on State Aid for Env.
  Prot. (2001/C 37/03).
• - Principles of the internal electricity market.
• - The characteristics of different sources,
  together with different technologies and
  geographical differences are to be taken into
  account.
• - Systems are to be effective, simple, and, at
  the same time as efficient as possible.

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The RES-E Directive National Support Schemes

• Main types of financial support mechanisms
• ? Feed-in Tariff (FiT) (most of the countries)
• Sub-type Premium System
• ? Tradable Green Certificates (TGCs) (SE, UK, IT,
  BE and PL)
• ? Tendering (pure systems existed in FR and IE)
• ? Tax incentives (ML, FL CY, UK, CZ)

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The RES-E Directive Guarantee of Origin

• ? MSs are to ensure that a Guarantee of Origin
  (GoO) of RES-E is issued in response to a
  request
• (Directive 2003/54/EC establishes a mandatory
  disclosure system under which consumers have to
  be informed of the contribution of each energy
  source to the overall fuel mix!)
• ? GoOs are to be mutually recognised among MSs
• ? Authority in charge usually the TSO, but can
  be another independent entity (e.g. energy
  regulator).
• GoO ? Tradable Green Certificate!

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The RES-E Directive Administrative Procedures

• Objectives
• ? reduce the obstacles to increase production
• ? rationalise and speed up administrative
  procedures (one-stop authorisation)
• ? ensure objective, transparent and
  non- discriminatory rules
• ? take into account the characteristics of
  specific renewable technologies

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The RES-E Directive Regulation of Grid Issues

• Grid issues addressed by the Directive
• ? Guaranteed access to transmission- and
  distribution
• ? Potential priority access to the grid
• ? Priority in dispatching (up to the capabilities
  of system)
• ? Bearing of extra costs transparency and
  non- discriminating

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RES-E Internal Market Trade Aspects

• ? Liberalisation from RES-E point of view
• opportunity internal market aspects, like free
  trade, transparency, unbundling, disclosure can
  accelerate the deployment of RES-E
• challenge competition drives costs down
• ? Trade of electricity
• Physical trade vs. green value of electricity

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RES-E EU 25 Historical Development
Historical development of electricity generation
from new RES-E in the European Union (EU-25)
from 1990 to 2003 (excl. Hydropower)
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Main Barriers to RES Development Overview

• ? Administrative barriers (number of
  authorities involved, long lead times to obtain
  permits, small projects face with the same
  procedures)
• ? Grid issues (need for balancing capacity in
  case of intermittent sources, grid connection,
  bearing of costs)
• ? Financial barriers (subsidies to conventional
  technologies, costs of grid connection, lack of
  differentiation between technologies)
• ? Barriers of social/human nature (low awareness
  of benefits, lack of cooperation)
• ? Lack of strategic approach (of coherent and
  consistent objectives and assessment in an
  integrated approach)

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RES-E Support Schemes Aspects of Establishment

• Current issue (particularly in the NMS)
• To find the optimum mix of support.
• It is, of course, depends on what we want to
  achieve.
• Criteria
• Effectiveness refers to the ability of a support
  scheme to deliver green electricity
• Efficiency refers to the cost/benefit ratio
  achieved by the different systems

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RES-E Support Schemes PROs and CONs
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Conclusions

• ? RES can have a substantial role, even in
  Kosovo, the country of coal, in attaining an
  optimum level of benefits in both social-economic
  and environmental terms
• Therefore RES and particularly the spirit /
  stipulations of the RES-E Directive are to be
  taken into account already now!
• ? Remember, however, that EE investments are to
  be given top priority (based on cost / benefit
  analysis)
• ? The mix of RES and its utilisation is to be
  optimised (RES-E biofuels) as well
• ? Try to learn from the EU experiences as much as
  possible

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• Thank you for your attention!
• Contact
• József Szlezák
• The Regional Environmental Center for CEE
• Tel. [phone] / 325
• E-mail j.szlezak_at_rec.org
• Web http//www.rec.org