1
Developing a ‘flagship’ to decarbonize the energy sector Key elements for the flagship analysis What is a flagship? Key transformative investment opportunities that are priorities for climate action in sector Flagship analysis is accompanied by a set of recommendations for financing and reforms to implement then Example: “add XX thousand solar rooftops by 2025” or “help XX cities decarbonize their district heating & cooling networks by XX”
• Assessment of the progress that can be achieved by the Recovery and Resilience Plan (RRP) against the respective investment needs baseline, discussion of the gaps and how they can be closed through modifications in the RRP and/or the National Energy and Climate Plans, provision of a critical review considering the 2030 and 2050 targets/ relevant strategies • Assessment of contribution for GHG emission reduction
• Review of cost-effectiveness and investment needs (in order to achieve 2030 climate targets) • Reforms: Identify the existing regulatory and non-regulatory barriers to investment in flagship technologies and identify key enabling reforms • Finance: Identifying the role of public and private sector finance to enable implementation of flagships. Opportunities from RRP and EU Green Deal: what's missing and what can be covered by national government or promotional banks
3
4
Overview: Renewables in CZ By 2026, reach 100,000 PV installations on rooftops and 1,500 agrivoltaics installations. By 2030, 200,000 PV installations (1.8 GW) on rooftops of residential and non-residential buildings supplemented by 4,250 agrivoltaics installations (0.45 GW). Rationale behind the flagship target • Installations of renewables must be scaled up rapidly to reach 2030 energy targets • Photovoltaics are the most important renewable technology for Czechia, which is why this flagship targets PV on rooftops and on agricultural land.
Investment need • Total investment needs of this flagship - €3.4 bn (CZK 89.3 bn) • Total support needed from public funds - €1.61 bn (CZK 42.4 bn)
CO2 emission savings • Total emissions reductions potential is 976,000 t CO2
Speed is key. To reach emission reduction and installed capacity targets, installations must start immediately. 5
Overview: Investment needs By 2026, reach 100,000 PV installations on rooftops and 1,500 agrivoltaics installations. By 2030, 200,000 PV installations (1.8 GW) on rooftops of residential and non-residential buildings supplemented by 4,250 agrivoltaics installations (0.45 GW). Total investment needs to transform the renewable energy sector • NECP in period 2021-2030 estimates a total of €20 bn (CZK 511.2 bn) of public support needed (all sectors, including operational support), but only (€1.4 bn (CZK 35.1 bn) support for new RES • Investment needs for solar PV in the Czechia are between €300-400 million per year until 2030 (which is 64% of all RES investment needs
Role of public vs. private sources in the renewable energy sector • Role of private sector differs per proposed RES technology. In the New Green Savings Programme, about half of investment support for RES needs to come from private sources (e.g. as households or businesses investing in PV on rooftops).
What is currently committed? • RRP – €200 mln (CZK 5 bn) for the installation of 270 MW of PV • National New Green Savings programme – covers up to 50% of eligible expenses for new PV on household rooftops, up to €13,450 per household • Modernisation Fund (RES+) - €2.1 bn (CZK 54 bn) to PV projects over 1 MW in size
Investment needs for flagship • About €3.4 bn (CZK 89.3 bn) is needed to complete the flagship but €1.61 bn (CZK 42.4 bn) should come from public funds 6
Flagship implementation - Renewables
What is needed to implement the flagship ? • Reform 1: Legislation – Updated Act on RES, Amendment of Law 165/2012 Sb to reduce fixed feed-in tariffs, set a guaranteed maximum electricity price, and most importantly, include auctions of RES for PV or agrivoltaics • Reform 2: Information Campaign – funds for communicating the benefits of RES and agrivoltaics, and
streamlining installation of PV on roofs • Reform 3: Financing – increase of funding for the already established New Green Savings Programme for more stable support and provision of operational support for the installation of agrivoltaics
7
Photovoltaics - Overview
Solar PV only provided up to 2.6% of Czechia’s total energy generation in 2019 and its capacity has been largely static since 2010.
• Czechia was an early adopter of solar PV in the late 2000’s: leading to installations of 2 GW solar capacity by 2010, but adoption has stagnated since and current capacities amount to only about 2.3 GW spread over almost 42,000 installations.2 • Static photovoltaic uptake since 2010.1
• 22% of the installed capacity until 2016 will no longer be operational in 2030, further decreasing to 40-100% by 2035, signaling an urgent need for replacement and expansion of current PV capacity.4,5 • There is a potential for as much as 39 GW of solar in Czechia according to EGU Brno3, this could mean up to 2.2 million PV systems (<10 kW) on rooftops and thousands of larger installations
• There is a 10% tax on solar installations if larger than 30 KW if they draw on state support, but smaller and rooftop solar projects enjoy installation support through the New Green Savings Program (between EUR 1,372 – 5,880 or up to 50% of installation costs).
8
Photovoltaics – 2030 Targets → NECP (November 2019) → 1.8 GW in PV will be installed through 2030
→ Almost 75 % of new RES in CZ, according to Czech NECP shall be in photovoltaics
→ RRP → the target share of RES in electricity production shall increase from 16.92 % in NECP1 to 17.28 % in 2030 in RRP
→ “Fit for 55” (as proposed by COM in July 2021) → The overall binding target from the current 32% is increased to a new level of 40% of renewables in the EU energy mix, meaning each Member State needs to adopt higher targets
→ McKinsey & Company2 → estimated a need of an extra installed capacity of 2.5 GW of solar energy systems by 2030 in a cost-optimal decarbonization scenario (2020) to reach 40% GHG reductions compared to the 1990 baseline, in McKinsey & Company report, but according to transmission system limitations and actual installed power in the end of 2021, quite high target
→ IEA Country Report (2021) 3 → Accelerate faster phase out of coal, prepare additional deployments of renewables, develop concrete roadmaps for scaling up renewable energy
9
Photovoltaics – 2030 Targets Estimation of RES Share by 2030 by individual sectors1 RRP target
• Yellow line shows new target according to RRP target increase
• Graph shows stagnation in RES development in few past years
NECP target Current situation
Percentage of share
• Comparison of targets according to actual situation and RRP, NECP targets
• Highest is increase of RES share in electricity sector
Years Image source: Czech Government, 2019
10
Photovoltaics – the Solar Boom → 2005 – first “full” RES support legislation as a reaction to the EU directive 2001/77/ES on the promotion of electricity produced from RES in the internal electricity market → Basic logic was to create a stable business environment to motivate private investors to invest in RES → For each RES type, an individual reference trajectory has been created, simulating cash flow with the following main assumptions (study by CTU Prague)1: →
Lifetime period was set to 20 years
→
Maximum limit for year-to-year reduction on feed-in tariff for new power plants was 5%
→
Discount rate of investor represented as weighted average cost of capital (WACC) with the meaning of minimum return from the project to investor was set to 7%
→ CZ RES support legislation did not set maximum value for installed (and supported) capacity which resulted in the solar boom 11
FLAGSHIP TARGET for context:
Photovoltaics – the Solar Boom • Literal “PV boom” in 2009 led to overcompensation of the support • Stagnation from 2014 due to the PV boom
More than 200,000 rooftop installations (1.8 GW) and 4,250 agrivoltaic installations (0.45 GW)
• To meet target in 2030, nearly 10 times speed up building new installations needed
Number of PV installations in CZ1
Source: author’s own
12
Photovoltaics – Installed capacity
FLAGSHIP TARGET for context:
Similar “stagnation” can be seen in terms of installed capacity
More than 200,000 rooftop installations (1.8 GW) and 4,250 agrivoltaic installations (0.45 GW)
Installed power of PV installations in CZ [MW]1
Source: author’s own
13
Policy context – National Energy and Climate Plans (NECP) NECP (November 2019) •
The NECP sets out targets to increase RES share in electricity by 3.3% in the coming decade, which the European Commission deems unambitious
•
Planned in NECP: 3.98GW of PV systems by 2030.1
•
About €250 mln (CZK 625 mln) for solar plants in ‘areas’ and €500 mln for solar plants on buildings between 2020-2030 from state aid
•
NECP focuses on rooftop solar & small sites, roughly 986MW on rooftop PV by 2030, amounting to about
EU Commission evaluation3: • 22% is an unambitious target (compared to 23% in formula from Annex II in Regulation 2018/1999) • Significant slowdown in new RES powerplants compared to 2010-2018 due to cost reduction in solar PV, 16.9% is also an unambitious target for 2030
197,500 rooftop installations.
→ Czech National Energy and Climate Plan from November 2019, is now outdated.2 Czechia needs new more ambitious targets to reach increased EU targets for 2030 and 2050. 14
Policy context – Recovery and Resilience Plan (RRP) RRP – July 2021
RRP – Commission Assessment
• Component 2.3 of draft RRP (May 2021) focuses on energy transition • €200 mln (CZK 5,000 mln) for solar PV • Build 0.27GW of new PV power plants between 2021-2026 • Eligibility focuses on new solar PV support for direct local consumption by businesses • RES share target in electricity increases to 17.28% by 2030, total RES estimated to increase from 22% to 22.09% by proposed RRP investments2
• NECP not addressing the planning of measures for the integration of large amounts of renewable electricity, even though the latter could partly replace coal and gas in a cost-effective way • RRP and NECP includes support for bioenergy, which is support of bioenergy, which implies increased use of biomass, which is problematic in Czechia • No definition and support programmes for agrivoltaics mentioned in RRP
15
Policy context – Measures in the Recovery and Resilience Facility Pillar (from RRP) 2.3 Industrial transformation and the transition to cleaner energy sources Estimated cost €266.4 mln (CZK 6,660 mln)
Reforms
Investment (from RRP)
-
2.3.1 Construction of new photovoltaic energy sources €200 mln (CZK 5,000 mln)
Targets (from RRP) 2.3.1 new installed capacity of 270 MWp by Q2 2026
Corresponding CSRs (from 2019 & 2020 country report)
Climate Tagging (in RRP)
CSR 3 (2019): Focus -100% investment-related economic eligible policy on low carbon & energy transition, including energy efficiency, taking into account regional disparities.
Evaluation Green Recovery Tracker: very positive BankWatch: 100% green agenda
CSR 3 (2020): Focus investment on the green transition, in particular on […] clean and efficient production and use of energy. COM assessment: high relevance
16
Photovoltaics - Technical framework
Czech Coal Commission supporting documents
Czech Coal Commission1 → Recommended a coal phase out in CZ by 2038
Every closed coal powerpl ants must be replaced with new sources and highest capacity increase must be in PV sources.
→ Goal to ensure energy security → Next update of the report due in 5 years → Underlying scenarios prepared by ČEPS → Right picture describes 3 scenarios (reference, conceptual, progressive) for the coal phase out for year 2033, 2038 and 2043
→ In all scenarios, closed coal powerplants must be replaced with new sources and highest increase must be in PV sources Source: Czech Coal Commission17
Photovoltaics - Technical framework → The capacity of Czech transmission system to connect new PV / RES is limited → Most important factor limiting even higher targets in RES sources
→ Problem with connecting larger PV installations
The new production capacity of the Czech transmission system is limited.
→ Regional differences across Czechia →
Very limited capacity in Southern parts
→
Better conditions in Northern parts
→
Many closed coal powerplants
→
The grids remain in place
→ Ten-year plan for the development of the transmission system of the Czechia 2019–20281 → Actual transmission capacity in 2021 – 2,500 MW → Situation in 2025 and later – 3,500 MW →
optimized scenario + 1,000 MW total in new PV sources during next 5 years
→
critical scenario + 2,500 MW total in new PV sources during next 10 years
→ See grids flagship for deeper analysis
18
Photovoltaics - Technical framework Ten-year development plan of Czech transmission system for connecting PV sources
Source: CEPS, 2018
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Photovoltaics – Introduction to Agrivoltaics → The main idea of this concept is dual land use → Vertical or horizontal use possible (see pictures) → Turning technology for better sunshine management → Solar panels in vineyards, meadows with farm animals, etc.
Source: pv-magazine.com, 2020
Source: solaron.am
Source: solaredition.com
20
Photovoltaics – Multiple benefits of Agrivoltaics → Agrivoltaics can improve agricultural land usage and earn farmers additional income: → The solar panels protect plants by modifying the climate over the crops by providing shade throughout the day
Agrivoltaics example in landscape2
→ Agrivoltaics produce clean, renewable and competitive energy → Panels absorb sunlight and they are cooling the plants and soil underneath them1 → In cooperation with plants and root systems, it can help stop water erosion → Protects plants from hail, heavy rain, and there is potentially possibility to safe plants from frost, but it must be approved in new pilot projects → Provides a steady source of income for farmers → Reduces electricity costs for farmers
Source: Metsolar, 2018
21
Photovoltaics – Multiple benefits of rooftop PV
→ Benefits do not just reduce carbon intensity of electricity mix, but also1: → Employment increase → Improved air quality → green electricity source → Improved, local, & decentralized energy delivery → Improved energy security → GDP increase
Source: Makešová & Valentová, 2021
22
Photovoltaics – General barriers
In order to achieve national energy and climate targets (16.9% RES in electricity), the investment needs for solar PV in the Czechia are between €300-400 million per year until 2030 (which is 64% of all RES investment needs4.
→ Negative experiences (fraud) with feed-in tariffs in the late 2000’s have led to a negative public discourse on solar PV and ‘solar barons’1. Furthermore, over 40% of respondents to a recent survey claim that RES cannot replace traditional energy in CZ2. → Exclusion from support through renewables auctions by the Czech Industry and Trade Ministry
→ No support is currently provided for new RES installations above 10 kW → Lengthy building permit requirements for small-scale rooftop solar PV (covered in NECP) → Limited amount of calls for large PV electricity project with stringent requirements for use and location → Shortage of technical PV installation skills on Czech labour market
→ Focus on nuclear power: announcement of new nuclear power plants creates pathdependency against solar PV, and nuclear also enjoys high rates of public approval3
23
Photovoltaics – Flagship details → 200,000 rooftops PV installations should be installed by 2030 → approx. 1,822 MW → Single Family (5 kW)→ approx. 853 MW → Multi Family (15 kW)→ approx. 130 MW → Rooftop commercial (30 kW) → approx. 430 MW
Flagship allocation in each category in MW
→ Investment costs per kW - €1.615
→ 4,250 agrivoltaics installations → approx. 425 MW → For agrivoltaics, we calculate an average of 100kW/project
Agrivoltaics, 425
→ Investement costs per kW - €1.153
→ Investment needs (private & public) → Rooftop installations - total €2.9 bn (CZK 76.5 bn) 2021-2030 → Agrivoltaics installations - total €0.5 bn (CZK 12.7 bn) 2021-2030
Single Family, 853
→ Total - €3.4 bn (CZK 89.3 bn) 2021-2030
Commercial Rooftops, 430
→ Reduction emission potential: → Rooftop installations - 784,000 t CO2 → Agrivoltaic installations - 192,000 t CO2 → Total – 976,000 t CO2
Multi Family, 130 Source: author’s own
24
Photovoltaics – Investment needs → Photovoltaic capacity in Czechia increasing very slowly
More than 75 % of new RES will be in photovoltaics in CZ.3
→
6 times less investment than what is needed to meet 2030 targets
→
€198 mn (CZK 4.95 bn) tracked
→
€1,054 mn (CZK 26.35 bn) needed to meet 2030 targets
→ main strategy of Czech Green transition according to NECP
Source: Czech Government, 2019
25
Photovoltaics – Investment needs Investment need for 2030 targets
Investments must be six times higher to reach 2030 targets.
→ Comparison of investment needs and investment tracked in renewable sector and district heating → The left side of the graphs shows that the yearly investment in renewables needs to be six times higher in order to reach the 2030 RES targets as defined in the NECP
EUR million 1252
Investment tracked* 412 198
139 61
Renewables
District heating * 2017 for renewables, 2014 – 2019 for district heating Source: Valentova et al., 2019
26
Photovoltaics – Current levels of support → NECP1 in period 2021-2030 a total of €20 bn (CZK 511.2 bn) of public support needed ( all sectors, including operational support), but only →
€1.4 bn (CZK 35.1 bn) support for new RES in NECP
→ Czech National Recovery plan expects additional 270 MW of PV installed instead of NECP targets
Investment needs from Czech NECP can be mostly covered by EU funding
→
€200 mln (CZK 5 bn)
→ Modernisation Fund3 (RES+) → 38.7% devoted to RES, PV projects over 1 MW will be supported →
~ €2.1bn (~CZK 54 bn)
→
In Pre-registration call: 9,067 projects submitted which total over €20 billion in CZ
→ New Green Savings programme2 – small rooftop installations →
For new PV on rooftops households can received an investment support of €1,345 – 5,750 → Detail description in additional slides
→
Up to 50% of the total eligible expenses, maximum €13,450
→
About 6,300 new installation in 2020
27
Agrivoltaics – Comparison of support options for farmers Current payments for farmers in Czech agriculture2 → Unitary payment for agricultural land (SAPS) →
on average €140 per ha
→ Unitary payment for farmers following agricultural practices that are favorable to the climate and the environment
Comparison of direct agricultural payments and RES support in CZ
→
€76 per ha
→ Other direct subsidies for sensitive commodities (examples) →
Potatoes – €570 per ha
→
Fruits – from €300 to €460 per ha
→
Goats, cows, etc. - €150 per ha
Renewable energy support scheme in CZ1 → Purchase price or feed-in-tariff – when the electricity is bought at a set price → Green bonus or feed-in-premium – producers must find the customer or
Green bonus Purchase price
Power electricity
the electricity trader themselves → Up to €120/MWh
Image Source: author’s own
28
Implementation: Financing instruments and reforms → Reform 1: Legislation →
Would serve to stabilize the regulatory environment for RES
→
The following laws on RES need improvement:
→
Reforms for PV are organized in three categories: I. Legislation II. Information Campaign III. Financing
→
Amendment to Law 165/2012 Sb. →
This law should allow possibility for auctions for different RES
→
Operational support for already installed as well as new sources
→
Internal Rate of Return from 8.4% to 10.6%
Legislative barriers for agrivoltaics →
No definition in Czech law, land ownership problems, removal from the agricultural land fund
→ Reform II. Information Campaign (€6 mln per year) → Communicate the multiple benefits of RES, especially those of agrivoltaics → Streamlining installation and support procedure for PV on roofs
→ Reform III. Financing → Stable financing (continue the New Green Savings support) → Operational support for agrivoltaics 29
Implementation: Reform 1: General Legislation → Option 1: Improve legislation regulating Rooftop PV
Current legislative reforms aim to enact the Updated Act on RES Amendment of Law 165/2012 Sb
→
Important legislation: Updated Act on RES – Amendment of Law 165/2012 Sb1
→
Learn from mistakes in the Feed-in Tariff and Feed-in Premium programs of previous decade (Solar Boom relating from overcompensation in 2010)
→
Underwhelming yearly PV targets in the NECP could hurt public acceptance of feed-in tariffs and subsidies. Some academics have argued that reaching a low solar PV target in 2013 has been a main cause of the dismantlement of renewable energy support policies in the Czechia ever since2
→
Reskilling to increase installation capacities
→
Include PV in auctions of RES capacities
→
Reintroducing fixed feed-in tariffs for micro-solar projects to incentivize more Czech citizens to become prosumers
→
Set guaranteed maximum electricity prices
→ Option 2: Improve legislation regulating agrivoltaics →
Including an agrivoltaic definition & support in the Czech RES law is critical to the success of such technology going forward
→
Include definition of agrivoltaics, point out good practises in agrivoltaics, allow for dual use of land to maximize land usage 30
Reform 1: Legislation – Auctions for PV → Option 2: Enable auctions for PV → In Novel of Law 165/2012 Sb. there are no provisions for PV auctions in general →
Czechia is the last country in the Visegrád Group who does not have auctions for PV1
→ Czechia should follow best practices from Germany, Slovakia, Poland or Hungary → Czechia must prepare for the situation after 2030 Czechia is the last country in the Visegrád Group who does not have auctions for PV.1
→
Czechia must plan and prepare for a coal phase out
→ Implementing agrivoltaics auctions: →
According to – location, orientation of panels, planted crops, and potential to prevent erosion
→
In Germany → 1,700 GW potentially installed in agrivoltaics
→
South Korea also plans to build 100,000 agrivoltaic solutions
→ Agrivoltaics must be better embedded in the regulatory framework → Amendment of 165/2012 Sb. of Czech support power generations must be revised to include auctions for agrivoltaics → Potential operating support for agrivoltaics2 →
Czechia needs a universally agreed upon definition of agrivoltaics anchored in legislation3, examples of good practices, & advertise the co-benefits of such a dual use of land
31
Reform 1: Legislation – Agrivoltaics Option 3: Enable and incentivize installation of agrivoltaics
→ Currently, farmers lose agricultural subsidies if they choose to receive support for RES on the same land
Czech legislation has no functional definition of agrivoltaics, which is a key problem.
→ Reform should facilitate that farmers can still plant crops on their fields, but receive additional benefits from agrivoltaics (subsidy for crops not lost) → Fields with agrivoltaics must stay in agricultural land fund
→ Solutions: → Amend Law 165/2012 Sb to include provisions for an auction bonus → One option could be to differentiate financial support by planted crops → Each crop grows under special conditions: → Percentage of shading – Some plants grow better without 100 % of sunshine → Watering need
→ Demand for use of heavy agricultural machinery → Impact of growing crops should be linked to subsidy received from agrivoltaics (e.g. higher support for agrivoltaics if crops are particularly suited to retain water) → Implement a special green bonus for agrivoltaics 32
Reform 2: Information Campaign → Clearly show Czech citizens advantages of photovoltaics (counteract bad reputation of solar PV resulting from solar boom) →
Target whole country rather than only bigger cities, develop strategies to reach investors in rural areas
→ Public support for information campaign approx. €6 mln (CZK 150 mln) per year → Explain the multiple benefits of photovoltaics → Show the East-West oriented panels & explain their advantages
→ Showcase different cost calculation and support scenarios to investors →
Show investors that photovoltaic technology can save them money in the long-run
→
New Green Savings programme →
→
make it clear and available for everyone in CZ (see buildings flagship)
Technology costs for solar PVs are falling every year →
€ 4,100 per kW in 2000
→
€170 per kW in 2020
→ Promote best practice examples to investors and consumers (e.g. via pilot projects in agrivoltaics)
33
Reform 3: Financing sources and instruments → Modernisation Fund →
Programme RES+
→ New RES sources in energetics → 38.7% of all amount money in MF → €2.1 bn (CZK 52.5 bn) – depends on emission allowance price
→ RRP - National Recovery plan →
€200 mln (CZK 5 bn) for 2021 – 2026 (commercial and industry buildings)
→ New Green Savings programme →
Solar thermal and photovoltaics systems
→
€ 0.7 bn (CZK 17.5 bn) from RRP (2021 – 2026)
→
+€153 mln (CZK 4 bn) per year from Emissions trading system (according to Act No. 383/2012 on greenhouse gas emission allowance trading conditions)
→ Auctions based on Act on RES → Financing agrivoltaics →
Bank looks positively on agrivoltaics
→
Requirement of PPA contract – in ideal case for the whole lifetime period of technology
→
No problem with agrivoltaics technology, banks want to support agriculture 34
Reform 3: Financing sources and instruments → Total investment needs of this flagship (2021 – 2030) → Rooftop installations - €2.9 bn (CZK 76.5 bn) → Agrivoltaics installations - €0.5 bn (CZK 12.7 bn) → Total - €3.4 bn (CZK 89.3 bn)
→ Total public support needs of this flagship (2021 – 2030) → Rooftop installations - €1.45 bn (CZK 38.2 bn) → In New Green Savings Programme – up to 50% of total costs can be supported
→ Agrivoltaics installations - €0.16 bn (CZK 4.2 bn) → In Modernisation fund, maximum support you can request 35% of total projects costs → Total - €1.61 bn (CZK 42.4 bn)
→ If there will be auctions for agrivoltaics, public support can decrease up to zero
35
Photovoltaics – Conclusions → The flagship target exceeds the NECP and RRP targets, therefore additional action is necessary
→ What are the investment needs (total costs) until 2030?
→ Modernisation fund – now active
→ Rooftop installations - €2.9 bn (CZK 76.5 bn)
→ New Green savings programme - now active
→ Agrivoltaics installations - €0.5 bn (CZK 12.7 bn)
→ Auctions – passed in the Czech Parliament on 15.9.2021 within the new/updated Act on support to RES
→ Total - €3.4 bn (CZK 89.3 bn)
→ How does the flagship investment contribute to fixing existing issues? → Learn from “solar boom” lessons → Restart of gradual increase in new PV sources → Price of PV technology is 10 times cheaper in last 10 years
→ Emission reduction potential: → Rooftop installations - 784,000 t CO2 → Agrivoltaic installations - 192,000 t CO2 → Total 976,000 t CO2
→ What are the public support needs until 2030? → Rooftop installations - €1.45 bn (CZK 38.2 bn) → Agrivoltaics installations - €0.16 bn (CZK 4.2 bn) → Total - €1.61 bn (CZK 42.4 bn)
→ How do we approach it in terms of financing and regulation? → Investment support – New Green Savings programme, Modernisation fund – new and old RES → Operational support – Green bonus, purchase price → PV auctions 36
37
Additional Slides Renewable Energy Sources Flagship
38
Photovoltaics in CZ Draft amendment to the law on agrivoltaics1 → Amendment submitted in 2021 to the Act on POZE in the Chamber of Deputies
→ The proposal corrects the current confusing situation, where the system of investment subsidies for agrivoltaics should work, but the current legislation imposes the same requirements on it as on ordinary terrestrial photovoltaics, which makes it practically impossible/unfeasible. → The bigger advantage of this amendment is that the proposal therefore allows the placement of agrivoltaic installations on agricultural land without the need to withdraw them from the agricultural land fund. → It’s a reaction on 700 requests in pre-registration call in Modernisation Fund → This amendment also discusses the multiple benefits of agrivoltaics as on the previous slide → Definition of good agrivoltaics →
The placement of photovoltaic panels on horizontal or vertical structures is not considered as use for non-agricultural purposes, provided agricultural production is carried out on the land at the same time, the panel structure uses a non-invasive anchoring method and in the case of high structures the structure is equipped with anti-erosion measures.
→ Agrivoltaics is not a classic building; can by definition only operate on agricultural land, similar to a greenhouse.
39
Photovoltaics in CZ Comparison of EU country support schemes → Czechia is the only country without PV auctions → Austria, Poland, and Slovakia must install most new sources to reach 2030 targets → Austria has the most ambitious target
Image Source: IEA, 2021
Czech Rep.
Germany
Poland
Slovakia
Austria
Auctions
-
2,5GW(4 GW) > 750 kW
1,2 GW > 1 MW 1 GW < 1 MW
30 MW From 30kW to 2 MW
2,5 GW > 1 MW 0,5 GW < 1 MW
Solar target 2030
3975 MW
98 GWp
7,3 GW
1200 MW
9,7 GW
Actual PV capacity (2019)
2,07 GW
55,3 GW
1,3 GW
0,472 GW
1,57 GW Adapted from: Energy Transition, 2019
40
Background info - Photovoltaics in CZ Country specifics → Overcompensation of photovoltaics installations in the years 2009-2010 → Opinion on photovoltaics by the public: →
There is a need to explain to all citizens the advantages of PV installations
→
Show them the functional cases – win-win situations
→ The policy framework in place does not clearly favor RES over other (fossil fuel) energy sources yet.
→ Thus, there is a lack of a systematic search for opportunities for the use of RES; in the case of the installation of technologies for the use of RES, there is usually no systematic evaluation and monitoring. → Administrative complexity is one of the other obstacles to the development of RES. →
Both in terms of larger, primarily business projects, and in terms of small decentralized projects.
41
Annex – Footnotes, Abbreviations & Glossary Accelerate installation of rooftop PV Slide 1 2 3 4 5
6
7 8
9
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Sources and Footnotes -
1 Chance for Buildings, Long Term Renovation Strategy for Czech Republic, Update May 2020. https://sanceprobudovy.cz/wp-content/uploads/2020/06/strategie-renovace-a-adaptace-budovkveten-2021.pdf 2 Ministry of Industry and Trade, Long-term renovation strategy to support the renovation of the national stock of both public and private residential and non-residential buildings, 2020, https://ec.europa.eu/energy/sites/default/files/documents/cz_2020_ltrs_official_translation_en.pdf 1 Chance for Buildings, Long Term Renovation Strategy for Czech Republic, Update May 2020. https://sanceprobudovy.cz/wp-content/uploads/2020/06/strategie-renovace-a-adaptace-budovkveten-2021.pdf 2 Ministry of Industry and Trade, Long-term renovation strategy to support the renovation of the national stock of both public and private residential and non-residential buildings, 2020, https://ec.europa.eu/energy/sites/default/files/documents/cz_2020_ltrs_official_translation_en.pdf 1 Energy Transiton the Global Energiewende, The age of Czech solar power: after years of stagnation, is a rebirth imminent?, 2019, https://energytransition.org/2019/03/czech-solar-power-afteryears-of-stagnation/ 2 IEA, Czech Republic, 2019, https://www.iea.org/countries/czech-republic 3 Egu Brno, Projekty výzkumu a vývoje, https://www.egubrno.cz/profil-spolecnosti/dotacni-program/ 4 Czech Government, National Energy and Climate Plan of the Czech Republic, 2019, https://ec.europa.eu/energy/sites/default/files/documents/cs_final_necp_main_en.pdf 5 European Commission, COMMISSION STAFF WORKING DOCUMENT Assessment of the final national energy and climate plan of Czechia, 2020, https://ec.europa.eu/energy/sites/default/files/documents/staff_working_document_assessment_necp_czechia_en.pdf 1 Czech Government, National Energy and Climate Plan of the Czech Republic, 2019, https://ec.europa.eu/energy/sites/default/files/documents/cs_final_necp_main_en.pdf 2 McKinsey & Company, Pathways to decarbonize the Czech Republic, 2020, https://www.mckinsey.com/cz/our-work/pathways-to-decarbonize-the-czech-republic 3 European Commission, COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 'Fit for 55': delivering the EU's 2030 Climate Target on the way to climate neutrality, 2021, https://ec.europa.eu/info/sites/default/files/chapeau_communication.pdf 4 IEA, Czech Republic, 2021, https://www.iea.org/reports/czech-republic-2021 1 Czech Government, National Energy and Climate Plan of the Czech Republic, 2019, https://ec.europa.eu/energy/sites/default/files/documents/cs_final_necp_main_en.pdf 2 McKinsey & Company, Pathways to decarbonize the Czech Republic, 2020, https://www.mckinsey.com/cz/our-work/pathways-to-decarbonize-the-czech-republic 3 European Commission, COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 'Fit for 55': delivering the EU's 2030 Climate Target on the way to climate neutrality, 2021, https://ec.europa.eu/info/sites/default/files/chapeau_communication.pdf
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1 KRÁLÍK, T., Story of the Czech RES Support from the beginning to the present process of over-compensation, 2018, In: ENERGY ECOLOGY ECONOMY 2018. Energetika - Ekológia - Ekonomika 2018, Vysoké Tatry - Tatranské Matliare, 2018-06-05/2018-06-07. Bratislava: Slovak University of Technology in Bratislava, 2018. p. 62-65. 1 ERU, 2021, https://www.eru.cz/cs/ 1 ERU, 2021, https://www.eru.cz/cs/ 1 European Commission, COMMISSION STAFF WORKING DOCUMENT Assessment of the final national energy and climate plan of Czechia, 2020, https://ec.europa.eu/energy/sites/default/files/documents/staff_working_document_assessment_necp_czechia_en.pdf 2 https://climandcomorg.sharepoint.com/sites/CZCountryAssessment/Freigegebene%20Dokumente/General/Literature%20-general/RRP/narodni-planobnovy%20(1)/Components%20in%20Eng/2.3%20Transition%20to%20cleaner%20sources%20of%20energy.pdf 3 https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=SWD:2021:211:FIN 1 European Commission, COMMISSION STAFF WORKING DOCUMENT Assessment of the final national energy and climate plan of Czechia, 2020, https://ec.europa.eu/energy/sites/default/files/documents/staff_working_document_assessment_necp_czechia_en.pdf 2 https://climandcomorg.sharepoint.com/sites/CZCountryAssessment/Freigegebene%20Dokumente/General/Literature%20-general/RRP/narodni-planobnovy%20(1)/Components%20in%20Eng/2.3%20Transition%20to%20cleaner%20sources%20of%20energy.pdf 1 Budovy21, Evropská unie pošle dalších přes 25 miliard na renovace budov [European Union will add further 25 billion to buildings renovation], 2021, https://www.budovy21.cz/evropska-unieposle-dalsich-pres-25-miliard-na-renovace-budov/ 2 Green Recovery Tracker, Czech Republic, 2021, https://www.greenrecoverytracker.org/country-reports/czech-republic 3 Narodní plan obnovy, CZ Recovery and Resilience Plan, 2021, https://www.planobnovycr.cz/ 1Coal Commission supporting documents. https://www.mpo.cz/cz/energetika/uhelna-komise/uhelna-komise--248771/ 1 CEPS, Desetiletýplán rozvoje přenosové soustavy České republic, 2018, https://www.eru.cz/documents/10540/5367437/%C4%8CEPS_Desetilet%C3%BD%20pl%C3%A1n.pdf/a8c6090b-7bdc44af-9fb7-6774f79a8e0a 2 Coal Commission supporting documents. 1 CEPS, Desetiletýplán rozvoje přenosové soustavy České republic, 2018, https://www.eru.cz/documents/10540/5367437/%C4%8CEPS_Desetilet%C3%BD%20pl%C3%A1n.pdf/a8c6090b-7bdc44af-9fb7-6774f79a8e0a 2 Coal Commission supporting documents. 1 Solar Cell Central, Solar efficiency limits, http://solarcellcentral.com/limits_page.html 2 Metsolar, What is agrivoltaics? How can solar energy and agriculture work together?, 2018, https://metsolar.eu/blog/what-is-agrivoltaics-how-can-solar-energy-and-agriculture-work-together/ 3 Picture 1 https://www.pv-magazine.com/2020/03/31/a-good-year-for-solar-agrivoltaics-in-vineyards/ 4 Picture 2 https://solaron.am/en/east-west-vertical-placement-and-orientation-two-sided-solar-modules/ 5 Picture 3 https://solaredition.com/an-introduction-to-agrophotovoltaics-or-agrivoltaics-the-land-occupancy-challenge/ Social benefits? For farmers? 1 Solar Cell Central, Solar efficiency limits, http://solarcellcentral.com/limits_page.html 2 Metsolar, What is agrivoltaics? How can solar energy and agriculture work together?, 2018, https://metsolar.eu/blog/what-is-agrivoltaics-how-can-solar-energy-and-agriculture-work-together/ 1 Makesova, M., Valentova, M., The Concept of Multiple Impacts of Renewable Energy Sources: A Critical Review, 2021, https://www.mdpi.com/1996-1073/14/11/3183
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1 Gürtler et al., 2019; Osička et al., 2019) 2 Cabelkova et al., 2020 3 Osička J. & Černoch F., 2017 4 Valentova et al., Investment needs for 2030 energy and climate targets in Czechia Buildings and renewable energy supply sectors Executive Summary, 2020, https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/reports/valentova-et-al-investment-need-analysis-in-czechia-final-executive-summary-v2.pdf Energy Transition the Global Energiewende, The age of Czech solar power: after years of stagnation, is a rebirth imminent?, 2019, https://energytransition.org/2019/03/czech-solar-power-afteryears-of-stagnation/ 1 European Commission, COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 'Fit for 55': delivering the EU's 2030 Climate Target on the way to climate neutrality, 2021, https://ec.europa.eu/info/sites/default/files/chapeau_communication.pdf 1 Valentova et al., Climate and energy investment map – Czechia Status report 2017: Buildings and renewable energy supply and infrastructure, 2019, https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/reports/cvut-mvalentova-et-al-2019-climate-energy-investment-map-czechia-2017-full-report.pdf 2 Valentova et al., Capital Raising Strategy for Czechia Buildings and renewable energy supply, 2021, https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/reports/czechia-capitalraising-strategy-2021-02-19.pdf 3 https://ec.europa.eu/energy/sites/ener/files/documents/cs_final_necp_main_en.pdf 1 Valentova et al., Climate and energy investment map – Czechia Status report 2017: Buildings and renewable energy supply and infrastructure, 2019, https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/reports/cvut-mvalentova-et-al-2019-climate-energy-investment-map-czechia-2017-full-report.pdf 2 Valentova et al., Capital Raising Strategy for Czechia Buildings and renewable energy supply, 2021, https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/reports/czechia-capitalraising-strategy-2021-02-19.pdf Image: https://ekonom.feld.cvut.cz/cs/katedra/lide/valenmi7/cic2030/index 1 Czech Government, National Energy and Climate Plan of the Czech Republic, 2019, https://ec.europa.eu/energy/sites/ener/files/documents/cs_final_necp_main_en.pdf 2 Nova Zelena Usporam, https://www.novazelenausporam.cz/ 3 SFZP.cz, Modernizační fond, https://www.sfzp.cz/dotace-a-pujcky/modernizacni-fond/ 1 ERU, https://www.eru.cz/poze/casto-kladene-dotazy 2 VÝROČNÍ ZPRÁVA PRO PŘÍMÉ PLATBY ZA ROK 2020, 2020, http://eagri.cz/public/web/file/674470/Vyrocni_zprava_prime_platby_2020.pdf 1 Transport & Environment, Company cars: how European governments are subsidizing pollution & climate change, October 2020 2 UK Electric Fleets Coalition, 2021 Policy Paper, 2021 3 Climate Group, Fleets first: How accelerating fleet electrification can unlock the shift to clean road transport, July 2021 1 PSP CZ, Tisky Navržené změny 165/2012 Sb., https://www.psp.cz/sqw/text/tisky.sqw?idsb=20607&all=1 2 Gurtler, Postpischil and Quitzow, 2019 1 Renews.BIZ, Boralex forms agrivoltaics team in Europe, 2021, https://renews.biz/70291/boralex-forms-agrivoltaics-team-in-europe/ 2 Taiyang News, Fraunhofer ISE’s Agrivoltaics Guidelines For Germany Estimate Country’s Technical Potential To Install 1,700 GW Capacity; Global Agrivoltaics Capacity Now Exceeds 2.8 GW, Led By China, 2021, http://taiyangnews.info/markets/fraunhofer-ise-issues-guidelines-for-agrivoltaics/ 3 TZB Info, Zásadní impuls pro moderní energetiku. Poslanci budou řešit obnovitelné zdroje a podporu baterií, 2021, https://oze.tzb-info.cz/21807-zasadni-impuls-pro-moderni-energetikuposlanci-budou-resit-obnovitelne-zdroje-a-podporu-baterii 1 Renews.BIZ, Boralex forms agrivoltaics team in Europe, 2021, https://renews.biz/70291/boralex-forms-agrivoltaics-team-in-europe/
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2 Taiyang News, Fraunhofer ISE’s Agrivoltaics Guidelines For Germany Estimate Country’s Technical Potential To Install 1,700 GW Capacity; Global Agrivoltaics Capacity Now Exceeds 2.8 GW, Led By China, 2021, http://taiyangnews.info/markets/fraunhofer-ise-issues-guidelines-for-agrivoltaics/ 3 TZB Info, Zásadní impuls pro moderní energetiku. Poslanci budou řešit obnovitelné zdroje a podporu baterií, 2021, https://oze.tzb-info.cz/21807-zasadni-impuls-pro-moderni-energetikuposlanci-budou-resit-obnovitelne-zdroje-a-podporu-baterii Sources: 1 Renews.BIZ, Boralex forms agrivoltaics team in Europe, 2021, https://renews.biz/70291/boralex-forms-agrivoltaics-team-in-europe/ 2 Taiyang News, Fraunhofer ISE’s Agrivoltaics Guidelines For Germany Estimate Country’s Technical Potential To Install 1,700 GW Capacity; Global Agrivoltaics Capacity Now Exceeds 2.8 GW, Led By China, 2021, http://taiyangnews.info/markets/fraunhofer-ise-issues-guidelines-for-agrivoltaics/ 3 TZB Info, Zásadní impuls pro moderní energetiku. Poslanci budou řešit obnovitelné zdroje a podporu baterií, 2021, https://oze.tzb-info.cz/21807-zasadni-impuls-pro-moderni-energetiku-poslancibudou-resit-obnovitelne-zdroje-a-podporu-baterii Aukce Sources: 1 Renews.BIZ, Boralex forms agrivoltaics team in Europe, 2021, https://renews.biz/70291/boralex-forms-agrivoltaics-team-in-europe/ 2 Taiyang News, Fraunhofer ISE’s Agrivoltaics Guidelines For Germany Estimate Country’s Technical Potential To Install 1,700 GW Capacity; Global Agrivoltaics Capacity Now Exceeds 2.8 GW, Led By China, 2021, http://taiyangnews.info/markets/fraunhofer-ise-issues-guidelines-for-agrivoltaics/ 3 TZB Info, Zásadní impuls pro moderní energetiku. Poslanci budou řešit obnovitelné zdroje a podporu baterií, 2021, https://oze.tzb-info.cz/21807-zasadni-impuls-pro-moderni-energetiku-poslancibudou-resit-obnovitelne-zdroje-a-podporu-baterii Aukce 1 PSP.cz, Tisky Navržené změny 165/2012 Sb., https://www.psp.cz/sqw/text/tisky.sqw?idsb=20607&all=1 Energy Transition The Global Energiewende, The age of Czech solar power: after years of stagnation, is a rebirth imminent?, 2019, https://energytransition.org/2019/03/czech-solar-power-afteryears-of-stagnation/ Limit, jak v okolních zemích? - fotovoltaika ber registrace Limit v ČR 10 kW Štěpán chalupa Federal Minstry for Economic Affairs and Energy, National Auctions, https://www.bmwi.de/Redaktion/EN/Artikel/Energy/national-auctions.html PV Magazine, Poland allocates 2.2 GW of solar in renewables auctions, 2021, https://www.pv-magazine.com/2021/06/28/poland-allocates-2-2-gw-of-solar-in-renewables-auctions/ PV Magazine, Slovakia launches first renewables auction, 2020, https://www.pv-magazine.com/2020/02/26/slovakia-launches-first-renewables-auction/ Schoenherr, Auction-based Subsidies in the Renewable Energy Sector: Time to Forget the Safe Space of Guaranteed Tariffs, 2020, https://www.schoenherr.eu/content/auction-based-subsidiesin-the-renewable-energy-sector-time-to-forget-the-safe-space-of-guaranteed-tariffs/ -
Acronyms BAU
Business as Usual
BEV
Battery electric vehicle
BIK
Benefit in kind
CAPEX
Capital Expenditures
CC
Carbon Capture
CCU
Carbon Capture and Use
CCUS
Carbon Capture, Use and Storage
CCS
Carbon Capture and Storage
CCfD
Carbon Contract for Difference
CDA
Carbon Direct Avoidance
CEE
Central and Eastern European region
CEF
Connecting Europe Facility
CF
Cohesion Fund
COM
European Commission
CSP
Clean Steel Partnership
CZ
Czechia / Czech Republic
DNSH
Do no significant harm principle
EA
Emission Allowances
ECSC
European Coal and Steel Community
EED
Energy Efficiency Directive
EIB
European Investment Bank
EPBD
Energy Performance of Buildings Directive
ESF+
European Social Fund
ESIF
European Structural and Investment Funds
ERDF
European Regional Development Fund
EU ETS
EU Emissions Trading System
GBS
Green Bond Standard
H2
Hydrogen gas-powered vehicles
ICE
Internal combustion engine
IEA
International Energy Agency
JTF
Just Transition Fund
LTRS
Long-term Renovation Strategy
MFF
Multiannual Financial Framework
MoIT / MPO
Ministry of Industry and Trade
MWt
Megawatt thermal
NACE
Nomenclature of Economic Activities
NECP
National Energy and Climate Plans
NG
Natural Gas (fossil gas)
NGEU
Next Generation EU
OPEX
Operating Expenditures
PHEV
Plug-in hybrid electric vehicles
R&D
Research and development
RRF
Recovery and Resilience Facility
RRP
Recovery and Resilience Plan
SMEs
Small and medium-sized enterprises
TA
Technical Assistance
TCP
Technology Collaboration Programme
TEN-E
Trans-European Networks for Energy
TEN-T
Trans-European Transport Network
TJTP
Territorial Just Transition Plan
TWh
Terawatt hours
VAT
Value added tax
ZEV
Zero-emission vehicle
Definitions Agrivoltaics
Blast Furnace
Blended Finance Instruments
This technology generates renewable electricity through large ground-mounted photovoltaic systems installed on farmland that is simultaneously used for food production. It has the potential to reduce land competition through a dual use of the land. With a suitable technical design, agrivoltaics can increase resilience of crops and agricultural yields beyond just improving land use efficiency. BF
Integrated blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally pig iron, but also lead or copper. The strategic use of finance to attract or mobilize additional funds through other EU financial instruments, member state co-financing, or private sector investment to achieve policy objectives. Instruments are often designed to provide financial safety nets or hedge certain risks through e.g. credit insurance facilities.
Building-integrated photovoltaics
BIPV
Building components which fulfil classic functions such as thermal insulation, protection against wind and weather or also architectural functions, in addition to generating electricity.
Basic Oxygen Furnace
BOF
A vessel used to convert pig iron into steel
Building Performance Institute Europe
BPIE
A thinktank on the sustainability and decarbonization of the building sector, founded by the European Climate Foundation and partly funded by Horizon.
Battery Electric Vehicle
BEV
Also called, all-electric vehicle, only electric vehicle, pure electric vehicle, or zero-emission vehicle (ZEV). BEVs use chemical energy stored in rechargeable batteries without secondary sources of propulsion. They do not use internal combustion engines (ICEs) but electric motors or motor controllers. Often BEV refers to light-weight automobiles, but can also include bikes, vans, trucks, etc.
Business-As-Usual Scenario
BAU
A baseline scenario that examines the consequences of continuing development of current trends in e.g. the economy, demographics, technological innovation, climate change and human behaviour. Often refers to an outcome of a scenario analysis, e.g. as a contrast to the outcomes of EUCO scenarios.
Carbon contracts for difference
CCfDs
CCfDs are policy instruments for supporting the deployment of new ultra-low carbon projects by ensuring a guaranteed carbon price to make up the cost-difference relative to a reference technology. They can be designed to reduce the up-front investment cost for developers, give creditors a higher security for their loans and minimize the downstream costs for consumers. CCfDs work to accelerate R&D and ensure new innovative low carbon/deep decarbonization technologies become commercially viable sooner relative to conventional technologies and have a shorter time period required for commissioning.
Carbon pricing Carbon capture, utilization and storage Circular economy
Putting a price on carbon that captures the external costs caused by their emissions. Carbon prices can be set via taxation or cap-and-trade schemes. CCUS
Carbon capture and storage (CCS) and carbon capture and utilization (CCU) technologies that aim to capture CO2 emissions from point sources, such as industrial sources, to prevent emissions from entering the atmosphere. The purpose of a circular economy is to decouple economic growth from the consumption of non-renewable resources. It is a method of economic development that benefits enterprises, society and environment because of its restorative and regenerative characteristics. The circular economy can be achieved via new resource management systems, nutrient flow systems and reverse logistics systems, which makes it possible to return, classify and reuse products. A circular economy follows the 3R principle of Reducing, Reusing and Recycling materials.
Cleaner Transport Facility
CTF
Initiative of the EIB to support the funding of the development and deployment of cleaner vehicles and their needed infrastructure. It is a one-stop shop that provides technical assistance and access to transport-related loans of the EIB itself and grants, loans, debt guarantees of CEF, TEN-T, Horizon and through JASPERS (technical assistance) and ELENA (technical assistance).
Combined heat and power
CHP
Also known as cogeneration, this implies that heat and electricity are produced simultaneously in one process. Use of combined heat and power helps to improve the overall efficiency of electricity and heat production as these plants combine electricity production technologies with heat recovery equipment.
Component (RRF context)
Recovery and Resilience Plans should be composed of reforms and investments grouped into components. A component is a constituent element or a part of the RRP. Each component should reflect related reform and investment priorities in a policy area or related policy areas, sectors, activities or themes, aiming at tackling specific challenges, forming a coherent package with mutually reinforcing and complementary measures.
Concessional loans
Also known as “patient debt”, these are loans that allow more flexibility on the part of the borrower, often in terms of longer maturities, longer grace periods, lower collateral requirements, subordinated debt or technical assistance. Concessional loans are often issued by financial non-governmental organizations or development banks as opposed to commercial banks.
Deep renovation
Achieve a 60% reduction of energy demand in a given building, as compared to 30% for shallow renovations and 40% for medium renovations.
Digital target (RRF context)
Each Recovery and Resilience Plan should allocate at least 20% of the total plan allocation to digital measures.
District heating system
DH
A system where heat is distributed from a central point through a network of insulated pipes fed by various heat sources, such as heat from heat and power plants, excess heat from industry, and heat from fossil combustion. In the future, district heating may be fed by heat and power plants fuelled by (sustainably produced) biomass, surplus heat from industry, and a combination of other renewables such as solar, geothermal, or heat pumps.
Do it yourself (building renovation context)
DIY
The DIY market aims to help customers improve their home without the need for any extra professional help. Oftentimes, these renovations are shallow, low-quality, step-by-step renovations that do not make a substantial difference in lowering energy use of a home.
Do no significant harm principle
DNSH
Principle under the EU Sustainable Finance Taxonomy: there are six environmental objectives to which no significant harm should be done: (i) climate change mitigation, (ii) climate change adaptation, (iii) water and marine resources, (iv) the circular economy, (v) pollution prevention and control, and (vi) biodiversity and ecosystems. For the RRF, technical guidance has been published on the application of the principle.
Direct Reduced Iron
DRI-C/H
Iron ore in the form of lumps, fines or pellets that has the oxygen removed by using hydrogen (H) or carbon monoxide (C)
Electric Arc Furnace
EAF
A furnace that heats material by means of an electric arc, especially for steel-making
Energy Service Company
ESCO
Companies that supply and install equipment that incur energy savings. ESCOs can also arrange the financing of their operation, sometimes tying their level of success to their renumeration.
EURO 7
European emissions standards for petrol and diesel cars. Rounds of proposals and feedback have been completed for a revision and Commission adoption is planned for Q4 of 2021.
European Fund for Strategic Investment
EFSI
Also known as the Juncker Plan. Initiative launched in 2015 by the EIB Group and the COM to boost the economy by mobilizing private financing for strategic investments.
European Investment Bank
EIB
The long-term lending institution of the EU; a public bank owned by the 27 member states, shared based on economic weight at the time of member state accession. Its activities are funded via bond issuance in international capital markets.
EU Climate Law
Aims to write into law the goal set out in the European Green Deal – namely, for Europe’s economy and society to become climate-neutral by 2050.
European Semester
ES
An annual cycle of coordination and monitoring of the EU’s economic policies and national budgets.
EU Emissions Trading System
EU ETS
A cap-and-trade system administered by the EU. Consists of carbon emissions ceilings (caps) that are lowered over time. Companies can buy or sell emission allowances, trading them when needed.
Electric Vehicle
EV
An electric vehicle uses one or more electric motors for propulsion. Can include only electric motors or battery electric vehicles (see BEV) or combustion motors or plug-in hybrid electric vehicles (PHEV).
Flagship
As used in this assessment context, taken as country-specific recommendations for future key transformative investments and policy reforms that can be used to accelerate climate action
(New) Green Savings Programme
(N)GS
The Czech Ministry of the Environment administers this energy savings program in family houses and apartment buildings funded by the State Environmental Fund of the Czech Republic. It supports the reduction of the energy intensity of residential buildings (complex or partial thermal insulation), construction of houses with very low energy intensity, environmentally friendly and efficient use of energy sources and renewable sources of energy (RES).
Greenhouse gases
GHG
Gaseous constituents of the atmosphere, both natural and anthropogenic, that absorb and emit radiation, which together causes the greenhouse effect. Water vapour, carbon dioxide, nitrous oxide, methane, and ozone are the primary GHGs in the Earth’s atmosphere.
Grant
Grants are non-repayable funds that are given from a government, foundation, corporation to a recipient, for specific projects for reimbursement of necessary costs. Grants often require some level of conditions and mandatory reporting of activities and results.
Green hydrogen
Hydrogen that is produced with sustainable energy, most often through electrolysis where water is split into hydrogen and oxygen.
Green Public Procurement
A voluntary instrument streamlining and promoting the sustainable production and consumption of goods and services by the EU’s public institutions with comprehensive and verifiable environmental criteria.
Green Bonds
A fixed-income instrument to finance climate-related or other environmental projects, often linked to specific assets like hydropower projects. The first green bonds were issued by the World Bank in 2009. They are often combined with tax incentives to make them a relatively attractive investment. The sustainability of green bonds is verified by third parties.
Financial Guarantee
A financial commitment of third-party (guarantor) to repay a percentage of losses in case a borrower cannot honour his repayments to a credit provider, both interest and principal components. Guarantees are insurance policies that often allow investors some financial breathing space to invest a larger share of their funds.
Heat pump
HP
Investment
Device used to heat or cool building by transferring thermal energy from a warmer to a cooler place or vice versa. The RRF uses a broad concept of investment as capital formation in areas such as fixed capital, human capital and natural capital. This would also cover for instance intangible assets such as R&D, data, intellectual property and skills.
Internal Combustion Engine
ICE
Heat engine in which the ignition and combustion of and fuel occurs within the engine itself, i.e. with an oxidant (usually air) to convert the energy from combustion chamber that is an integral part of the working fluid circuit. ICE can be powered with fossil fuels, biofuels or efuels.
Important Projects of Common European Interest
IPCEI
Special projects that can promote the innovation of a specific technology up to industrial scale on the basis of a common European interest. This allowance is rather new as innovations are generally only regionally allowed as R&D projects to avoid unfair competition between MS. IPCEI’s are currently limited to microelectronics and batteries but an IPCEI for hydrogen technology is being implemented.
Lead market
In innovation theory, a first sub-market where a specific innovation can be early adopted to spur adoption also by other “lag” markets, e.g. by internationalization. Policies to create lead markets are focussed on creating demand for a specific technology or concept.
Lock-in effects
Lock-in effects come into play when there are substantial costs or other barriers for consumers to get a similar product or service from another vendor. Consequently, consumers or businesses become dependent on one provider. Furthermore, lock-in effects may create serious barriers to market entry, therefore undermining fair competition.
Long-term renovation strategy
LTRS
Strategy enacted by the EU (Directive 2010/31) to support the renovation of Member States’ national stocks of residential and nonresidential buildings, both public and private, into a highly energy efficient and decarbonised building stock by 2050, facilitating the costeffective transformation of existing buildings into nearly zero-energy buildings.
Minimum Energy Performance Regulations
MEPR
Performance requirements for any energy-using technology, effectively limiting the amount of energy that may be used for a particular task.
Minimum Energy Performance Standards
MEPS
Regulations that require buildings to meet a minimum performance standard, specified in terms of a carbon or energy rating or minimum renovation measures, by a certain deadline or at a certain point in the natural life of the building, e.g. at the time of sale or when other construction work is undertaken.
Mobility as a Service
MaaS
Denotes a shift away from personally owned modes for transportation towards shared vehicles that can be booked, planned through joint digital channels. Examples for urban mobility include the business models of companies like Uber and Lyft.
Multiannual Financial Framework
MFF
Also called the financial perspective, the MFF is a 7-year framework regulating the EU’s annual budget by setting ceilings of spending for broad policy themes.
National Energy and Climate Plans NECP
EU countries needed to establish a 10-year integrated national energy and climate plan (NECP) for the period from 2021 to 2030 to show how they meet the 2030 energy and climate targets (within the Energy Union governance).
Next Generation EU
The temporary instrument designed to boost the recovery from the COVID-19 pandemic, includes the recovery and Resilience Facility
NGEU
One-stop shop
A facility or location where a “customer” can get all the help they need in one go to reach a certain goal, delivered by one provider at a clear central location with low administrative barriers.
Plug-in Electric Vehicle
PEV
Includes battery electric vehicles and plug-in hybrid electric vehicles. Road vehicles that be charged with external sources of electricity, stored in battery packages.
Plug-in Hybrid Electric Vehicle
PHEV
Hybrid electric vehicle that uses batteries to power an electric motor and another fuel, such as gasoline, to power an internal combustion engine (ICE).
Power Purchasing Agreement
PPA
PPAs are long-term contract where a business or public entity agrees to purchase electricity directly from an energy generator, with agreed price terms for the sake of financial stability often for a period of 15 to 25 years.
Quasi-equity Recovery and Resilience Facility
Quasi equity instruments are long-term financial instruments, with multiple variants that fall between debt and equity, including subordinated loans, convertible bonds and preferred stocks. Can be more complicated and costly to administer. RRF
Makes €672.5 billion in loans and grants available to support reforms and investments undertaken by EU countries with the aim to mitigate the economic and social impact of the coronavirus pandemic and declared objective to make economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the twin transition
Recovery and Resilience Plan
RRP
Every Member States wishing to access recovery funding under the RRF has to prepare a Recovery and Resilience Plan.
Reform (RRF context)
An action or process of making changes and improvements with significant impact and long-lasting effects on the functioning of a market or policy, the functioning or structures of an institution or administration, or on progress to relevant policy objectives, such as growth and jobs, resilience and the twin transitions.
Renovation Wave
Comprehensive EU strategy put forward by the EC in 2020 to support climate neutrality, economic recovery through actions in building sector with detailed list of policies, measures and tools that must be put in place to overcome existing barriers to renovation and mobilize all actors, including citizens, local authorities, investors and the construction industry. The strategy has a dual ambition of energy gains and economic growth and aims to double annual energy renovation rates in the next 10 years.
Repayment grant
Grant repayment, i.e. if the project achieves a certain energy performance level.
Retrofitting
Process of adding something new to the original building or structure, aiming to improve the functionality of the building by adding new technology, building systems or equipment, such as heating systems, but it might also refer to the fabric of a building, for example, retrofitting insulation or double glazing.
Scenario
Explain use of scenarios?
SECAP
Sustainable Energy and Climate Action Plan; local authorities which join the Covenant of Mayors for Climate and Energy – Europe initiative commit to submitting an action plan within 2 years of sign-up. This action plan is a key implementation tool. It defines mitigation and adaptation goals and is based on a Baseline Emission Inventory and a Risk & Vulnerability Assessment, which provide an analysis of the current situation.
Shallow renovation
A building renovation that is performed quite often (rate of 3%) with an average energy efficiency ambition level reduction of 32% (in energy use for space heating by 2050 compared to 2010), may fail to treat the building envelope as a whole, and includes a low use of renewable energy. This type of renovation misses both environmental targets (CO2-emission and final energy savings) while not providing substantial economic advantage compared to a deep renovation.
Soft Loan
Loans with no interest or below-market rate of interest. May also have lenient terms, such as extended grace periods or interest holidays. OFten used to encourage investment supporting energy policies and are often complementary to subsidies of fiscal incentives.
Small and medium-sized enterprises Structural reforms
SMEs
SME status depends on both the size and resources of a private enterprise. SMEs have a workforce of under 250 people and have either an annual turnover lower than €50 million or a balance sheet total lower than €43 million. Structural reforms generally refer to liberalizing economic structures in the national context, including making labour markets more adaptable, liberalizing services, altering taxation systems and restructuring the welfare state.
EU Taxonomy for sustainable activities
The EU Taxomony regulates a sustainability-related classification system of financial products. Providers of financial products and services need to use the taxonomy to report the sustainability of their portfolios. To comply with the EU Taxonomy, companies need to prove that their activities make or enable a “substantial contribution” to climate mitigation or adaptation and fulfil the do-no-significant-harm principle for biodiversity, water, the circular economy and pollution targets.
Territorial Just Transition Plans
TJTP
Central element of the EU Just Transition Mechanism, which defines territories in which the Just Transition Fund will be used and outlines challenges in each territory, development needs and 2030 targets.
Total cost of ownership
TCO
The total cost of ownership of a vehicle is typically calculated for financial purposes by companies to determine the direct and indirect costs of owning the vehicle. In this case, it includes the purchase price of the vehicle plus the costs of operating it over an expected period of time.
Twin transition
The green transition and digital transformation
Trigger points (for renovation)
Key moments in the life of a building (I.e. rental, sale, change of use, extension, repair or maintenance work) when carrying out energy renovations would be less disruptive and more economically advantageous than in other moments. Taking advantage of these moments would facilitate investment decisions to undertake energy renovation works.
Trans-European Transport Network
TEN-T
A planned network of roads, railways water infrastructure and airports across Europe, with ten core networks to be completed in 2030 and a larger comprehensive network to be completed in 2050. The ultimate purpose of the network is to ensure the cohesion, interconnection and interoperability of the trans-European transport network, as well as access to it.