RES BEYOND 2020 Elia ad hoc WG ‘Renewables’ Contact:
Steven Harlem
Phone:
+ 32 2 500 85 89
Mail:
steven.harlem@febeg.be
Reference:
POE 006-2012
MEMBERS
6.03.2012
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PRELIMINARY COMMENT • Presentation is based on: – First discussions within FEBEG – Eurelectric RES Action Plan (11.2011) – Eurelectric Response Paper to the EC Consultation on RES (02.2012) – FEBEG position paper on RES (29.09.2009) – FEBEG position paper on obstacles for investments (29.02.2012)
• Ideas are still being discussed within FEBEG and will evolve 6.03.2012
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MAIN CONDITIONS FOR RES POLICY • Stable investment climate
(consultation with stakeholders; no retro-activity; opt-in for existing RES units; …)
• Consistant legal and administrative framework (permitting; net codes; connection procedure; …)
• Fair return on investment
(cost-effectiveness via market based approach; taking into account all regulatory, technical and economical risks; sufficient incentive; …)
• Level playing field
(within CWE; between units of same type of technology; …)
• Full market integration
(no output related support; no specific scheduling, nomination and balancing requirements; …)
6.03.2012
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ETS AS MAIN DRIVER • Efforts to increase energy efficiency should continue – Supply side: innovative generation technologies, … – Demand side: energy savings, electrification (electric vehicules, heat pumps, …), …
• ETS should become main driver for RES investments – Avoids conflicting qualitative objectives (RES, CO2 and energy efficiency) – Need for ambitious carbon reduction for 2030-2050 to increase carbon price and to create a real incentive 6.03.2012
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TARGET AND SUPPORT, IF NEEDED • RES policy should be European and market driven: – Most competitive technologies should be used at the most appropriate location taking into account market signals and grid constraints – No national targets: sub-optimal approach with higher global cost
• Most technologies should be competitive by 2020, but if needed: – Non binding, indicative RES targets – Investment related support (MWe, not MWh) for non mature technologies via market based mechanisms, e.g. tenders: less overhead and less market distortion 6.03.2012
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INTEGRATION OF RES IN THE GRID (1) • Grid operators should employ all necessary means to timely connect all new generation capacity – Proactive investment program with long term vision – Solidarity and coordination between TSO and DSO’s
• Connection: – Complexity and uncertainty in the connection procedure and agreement should be reduced – Grid capacity for injection needs to be firm – Only ‘shallow costs’ can be charged
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INTEGRATION OF RES IN THE GRID (2) • Congestion: – Structural congestion needs to be prevented by timely investments – Occasional congestion should also be prevented by grid reinforcements or managed with a market based system: • System redispatch • Fair compensation
6.03.2012
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INTEGRATION RES IN THE MARKET (1) • Enhance functioning of wholesale markets – All interventions leading to market distortions should be removed (regulated consumer prices, limits to use of power plants, price caps, … ) – Enhances profitability of power plants
• Further integration of wholesale markets – Especially: well functioning cross border intraday markets, cross border balancing, … – Investments in additional interconnection capacity – Better use of interconnection capacity 6.03.2012
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INTEGRATION RES IN THE MARKET (2) • RES generators should be incentivized to enter into the market on a level playing field with other generators – RES generators should be incentivized to sell their production on the market – Specific exceptions for RES (scheduling, nomination, balancing, priority dispatch, …) should be removed
• Need for market based Demand Side Management – Consumers will be incentivized to change their behavior and to opt for flexible solutions (electric vehicles, heat pumps, …) – As a consequence: less price volatility and less need for back capacity
6.03.2012
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IMPACT ON TRADITIONAL PLANTS? • Impact RES on traditional plants: – Less operating hours – Higher price volatility – Lower price level on wholesale markets (due to higher share RES with low variable generation cost)
• Increasing need for back up plants, but at the same time they become less profitable (as a consequence: decommissioning, no investments, …) • Other countries introduce Capacity Remuneration Mechanisms (e.g. France) • What about Belgium? 6.03.2012
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CONCLUSION • ETS as main driver for RES investments? • If needed, indicative targets and investment related support? • Actions needed to: – integrate RES in the grid – integrate RES in the market – remunerate traditional plants?
• Long term vision: shift from MWh to MWe – RES: investment related support – Traditional plants: fair remuneration for availability 6.03.2012
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