Support mechanisms for renewable energy
Current initiatives on RES •
Ongoing evaluation of support mechanism for RES in Flanders • Done by VEA/VREG, decretal obligation • Elia involved as stakeholder.
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Launch of “Etats Généraux de l’Energie” by 4 Be Energy Ministers in June 2011
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Draft BE Federal Electricity Law amendment in framework of 3rd package implementation
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Ongoing modification of Regulation in Walloon Region
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Initiative “Pax Ventis” by FEB.
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Study of the European Commission on the grid integration of RES • Policies & existing barriers for integration of RES into national electricity grids & markets (for all 27 EU member states)
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Role of support mechanism Role of support mechanism = • Create sufficient investment incentive ~ reach 2020 targets: • Renewable production • Reduce emissions of CO2
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Provide support that is also socially justifiable • Economic efficiency • Fairness of cost sharing • Transparency
Important to have a clear understanding of interaction/influence support scheme for RES and: • System services, balancing • Grid access • Grid connection • Grid development
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RES Integration in electricity market Grid connection
RES Integration
Market design & Support mechanism Grid access / System services 4
Grid development
Multidisciplinary approach
Example of interaction between support scheme and electricity market/system operation Current GSC (Support ~ produced energy (MWh)) Creates interference with energy and balancing markets •
Possible distortion on merit order curve => Impact on price signals => Impact on investment decisions => Exacerbation of negative price signal » Social welfare loss » Wrong incentive ~ Rational use of energy policy
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Compensation in case of decremental bid for system operation reasons – Compensate support for unproduced MWh?
PS: low/zero marginal cost scheme of renewable production combined with DA, ID
and balancing market mechanisms provides already “natural” priority dispatch
=> design support scheme may impact functioning energy market and (cost) system operation and/or may provide adverse incentives. => Necessity to adapt support scheme design?
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Example support schemes Based on produced energy • Green Certificate scheme – Certificate price on top of E-market price • Feed in schemes • Feed-In Tariff – Fixed price; irrespective of E-market price • Feed-in Premium – Fixed or variable premium on top of E-market price • Contract for difference – =Variable FIP but premium can be negative Based on installed (and available) capacity • (Available) Capacity payments – Investment support for available capacity besides of E-market price – Fixed vs tendered capacity payments
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Important to carefully study and consider pro/cons of different mechanisms in the current evaluation process (re-)designing support schemes
Conclusion • • •
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Elia fully supports the RES objectives and will, in its role as market facilitator and network operator continue to contribute to reach the objectives The opportunity for and the level of support needed to reach the RES objectives is a political decision; Support scheme design and implementation may have a (pos/neg) impact on the functioning of electricity markets, system operations (security of supply) or network development. Interactions should be carefully studied/assessed as to find best global approach. For these reasons, TSOs are ready to actively contribute to the debate and consultations regarding RES support scheme design.