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A rigourous policy framework

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owadays the development of renewable energies has become a necessity: indeed the increase in electricity demands combined with international agreements to reduce greenhouse gas emissions to limit fossil energy use and ensure security of supply by reducing the dependence on the importation of fossil fuels are now, more than ever, strong arguments for the development of renewable energies.

This trend has been enhanced by the EU Commission’s publication of the White Paper, “Energy for the future: Renewable Sources of Energy” and the Directive for “Promotion of Electricity produced from Renewable Energy Sources” (RES-E Directive), which gives clear signals about the need to increase the use of renewable energies in order to reduce environmental impacts and create a sustainable energy system.

This European policy framework has been shaped following the objectives of climate change mitigation, security of supply and the improvement of European industrial competitiveness. Due to all these reasons the promotion of electricity from renewable sources of energy is a high Community priority. Among the renewables, Small hydropower has a key role to play as a mature technology, on the one hand whlist still berefitting from untapped potential.

Supported by

Security of supply

Environmental benefits

Policy Framework For Renewables Economic Regional Development

Social cohesion and employment

At a National Level the policy frameworks have evolved with special emphasis on environmental integration: the installation, refurbishing and operation of small hydropower plants have to follow various regulations in terms of energy generation, impact on water quality, flora and fauna of the river, construction requirements, connection to the grid, and landed properties.

This leads to a rigorous licence process at a National level that ensures the good integration of environmental criteria of any SHP plant.

SMALL HYDROPOWER

HYDROPOWER THE POLICY FRAMEWORK

The European White Paper on Renewables Energies

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n 1997 the European Commission’s White Paper on renewable energy sources set the goal of doubling the share of renewable energy sources in the EU energy sector from 6 to 12 % by 2010. Projections for each renewable energy technology were made.

Installed Capacity in 2010

14 GW

Installed capacity in 2005

11.6 GW

Targets represent an important step in policy making. The rapid market development, and the technological advancement of the renewable energy sector in recent years has ensured that progress on the White Paper targets is being made. With continued policy support the targets can be achieved.

9.000

6.000

Current trend

3.000

White paper

0

10

55 TWh

20

Electricity generation

11.535

11.644

05

2010 Scenario

12.855

12.000

20

Feature

14.000

04

White Paper Small hydropower scenario for 2010

15.000

20

For SHP this means the ambitious target of reaching by 2010 14 GW of installed capacity, generating 55 TWh of electricity production.

The RES-e Directive

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he European Directive for the Promotion of RES electricity in the Internal Market Directive 2001/77/EC follows up the White Paper, which confirmed a target of 12% of gross inland energy consumption from renewables for the Community as a whole by 2010, of which electricity would represent 22.1%.

The RES-e Directive gives Member States a reason to look at SHP because it is the best proven of all renewable energy technologies.

Of special interest for Europe, from both the economic and environmental point of view, is the exploitation of the high potential for upgrading and refurbishing existing plants.

Promotion of the RES electricity in the Internal Market Directive 2001/77/EC Proposed measures Quantified national targets for consumption of electricity from renewable sources of energy National support schemes plus, if necessary, a harmonised support system Simplification of national administrative procedures for authorisation Guaranteed access to transmission and distribution of electricity from renewable energy sources

The Renewable Energy Roadmap

RES support policy instruments

T

he most recent EU policy document promoting RES, The Communication for the European Commission, An Energy Policy for Europe, from January 2007, includes a Renewable Energy Roadmap, with a binding 20% target for RES contribution to the European overall energy mix by 2020*.

Despite this legislative framework, there are three aspects which concern the small hydropower sector in particular:

Generation based (kWh)

Supply side

targets settled in the legislation and the difficulty to achieve them, tariff structures and support schemes currently in force and their effectiveness and barriers still standing despite the new favourable legislative framework. * The heads of State, at the EU Council (March 2007), have backed up the Commision strategy to set up a binding target.

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Feed-in tariffs Fiscal measures Bidding systems

Quota obligations Green certificates Fiscal measures

Subsidies Investment subsidies Fiscal measures

Quota obligations

Demand side

Capacity based (kW)

Some Examples of Policy Instruments Country

Support Policy Instrument

Description

Spain

Feed-in tariff

Fixed price and premium payment adjusted annually by government.

Italy

Quota + tradable green certificates

The quota should increase by 0.35% each year starting from 2004 to 2006. The grid authority fixes a cap (upper) price for green certificates every year. Certificates are issued only for the first 12 years of operation.

Germany

Feed-in tariff

Germany’s revised Renewable Energy Sources Act (RESA) ties the hydropower feed-in rates to prove that the use of hydropower either achieves good ecological surface water status or substantially improves it

Austria

Feed- in Tariff

Different feed in tariffs depending on the installed capacity and age of the plant.

France

Feed- in Tariff

Feed-in tariffs applicable only to renewable plants up to 12 MW. Price paid to SHP plants depends on their construction date. Winter tariff for SHP plants commissioned after 2001 is guaranteed for 20 years.

Poland

Quota + Green certificates

The system started in 2005. Final consumer energy supplier is obliged to prove that certain percentage of his supply is of RES origin by cancelling the ownership rights to green certificates issued by the State Energy Regulation Office. The quota is increased every year up to the value fixed as the indicative target of RES contribution to the electrical energy consumption in 2010.

Slovenia

Feed-in tariff composed of fixed market price and premium

The government states the value of the feed-in tariff and the premium. Feed-in = fixed market price + premium. The scheme is valid for SHP up to 10 MW, but SHP <1 MW have better conditions. The SHP producer is allowed to sell independently, and as such can negotiate his market price whilst still getting the premium. However, both values decline with the age of the SHP plant: -5% for SHP>5 years and -10 % for SHP>10 years.

The scheme is valid for 10 years.

Lithuania

Feed-in tariff combine with purchase obligation

Fixed price and premium payment

The Water Framewok Directrive (WFD) n 23 October 2000, the «Directive 2000/60/EC of the European Parliament and of the Council establishing a framework for the Community action in the field of water policy» was adopted. The European Water Framework Directive and the progressive implementation of the network-protected areas Natura 2000 have recently completed national legislation on nature protection, water use and fishing activities.

The Directive sets a framework for the protection of all waters with the one main goal of reaching a “good status” of all Community waters by 2015.This rigorous environmental framework guarantees the adequate integration of SHP with the natural environment.

As requested by ESHA, the European Commission set up at the beginning of 2006 a working group on Hydromorphology and WFD under the activities of the Strategy Coordination group (SCG) for the Common Implementation of the Water Framework Directive (WFD).This group is composed of Member States representatives as well as stakeholders. The objective of the activity is to identify and share good practice approaches to managing the adverse impacts of water uses on the hydromorphological characteristics of surface water bodies. The group has initially focused its work on three sectors: Hydropower, Navigation, and flood management.

SMALL HYDROPOWER

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In order to reach the targets of the RES-e directive, hydropower is needed: the targets will never be reached if WFD and the RES-e implementation are not consistent. Indeed, there is room for significant progress in policy integration by enhancing the recognition of the different interests, fostering the co-operation between the different competent authorities and stakeholders, and promoting more integrated development strategies. Integration between water and energy policies is beneficial since it will create synergies and avoid potential inconsistencies as well as mitigating possible conflicts between water users and environmentalists.

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For implementing a SHP scheme different licences and permit are needed in various issues: Energy generation (water rights) Impact on water quality, flora, and fauna of the river, and all environmental aspects (environmental Impact assessment and reserved flow calculations) Construction requirements (building licences) Connection to the grid licences Landed properties Regulations have to take into account these various aspects, which are under the responsibility of different authorities. These authorities and responsibilities are different in each Member State depending on the political and administrative organization and on its involvement in the development of renewable energy sources. In this context, the procedures vary from one country to another, but also within a country from one region to the other and even often, in the same region, from one project to the other. In all countries the project has to be made public and people can react. The co-ordination between the different administrative levels to handle and speed up the authorization requests is essential.

Good reasons to improve the European and National legislative frameworks for SHP SHP contributes to sustainable development by being economically feasible, respecting the environment (avoiding green house gase emissions) and allowing decentralized production for the development of dispersed populations.

SHP is a clean energy source (it does not produce waste in the rivers, nor air pollution) and renewable (the fuel for hydropower is water, which is not consumed in the electricity generation process) SHP plants, if well equipped with fish ladders and environmentally friendly runner blades, are not an obstacle for migratory fish.

Small hydropower plants ensure a minimum flow downstream, reserve flow that guarantees fish life.

Grid stability: Building SHP plants helps create a more diversified electricity system, providing production of electricity in smaller distribution systems when the main grid is disrupted. Furthermore, since SHP is located close to the consumers, transmission losses can be reduced.

SHP mobilises financial resources and contributes to the economic development of small disperse populations, ensuring autonomous and reliable energy for the long term SHP plants create local jobs for the monitoring of the running phase of the plant.

SHP schemes assist in the maintenance of river basins by allowing the recovery of waste that flows in the river stream, the monitoring of hydrological indicators and the refurbishment of old SHP plants.

High energy payback ratio, for each power generation system, the “energy payback” is the ratio of energy produced during its normal life span, divided by the energy required to build, maintain and fuel the generation equipment.

If a system has a low payback ratio, it means that much energy is required to maintain it and this energy is likely to produce major environmental impacts.

SHP in figures 22.1%: EU-25 renewable electricity target set up in by European Directive RES-e by 2010, for SHP this target means reaching by 2010 14 GW of installed capacity, generating 55 TWh of electricity 23 600 GWW year: EU-25 potential for new plants.

4.5-9 Eurocents/kWh: European average SHP electricity production costs 1 200 -3 500 /kW: European average SHP investment costs 11.6 GW installed capacity in EU-25 in 2005 20 000: SHP jobs (direct and indirect)

EUROPEAN SMALL HYDROPOWER ASSOCIATION Renewable Energy House 63-67 Rue d’Arlon - B-1040 Brussels • Belgium T: +32 2 546 1945 • F: +32 2 546 1947 E: info@esha.be • I: www.esha.be ESHA is founding member of EREC, the European Renewable Energy Council

Illustration sources: Agener, Universidad de Jaen, Kö, IED, BOKU, MHyLab, VATECH, Elmotech, Ingegneri Maggia SA, Commune de Savièse (CH), ISET, Studio Frosio, SERO, EPFL-LCH, Walcher, Sasso s.r.l.

Design : ACG Brussels The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.

Administrative procedures needed to develop a SHP scheme