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© Prof. Dr. Georg Erdmann 1 RES Electricity and the Single EU Electricity Market Prof. Dr. Georg Erdmann TU Berlin; Chair Energy Systems AXPO European Energy Workshop Berlin, 15 May 2013
© Prof. Dr. Georg Erdmann 2 Why is there not yet an Integrated European REN Market? The German Case as an Example of Successful Unilateralism Ambiguous EU Initiatives Towards a REN Single Market RES Integration into National Markets as a Blueprint for an European RES Market
© Prof. Dr. Georg Erdmann 3 PreussenElectra Decision C-379/98 of the European Court of Justice Article 87 of the Consolidated EC Treaty prohibits direct or indirect state aid that generates competitive advantages to certain sectors Minimum-pricing schemes like Stromeinspeisungsgesetz deliver such advantages without any doubt But the benefit is not financed by state resources Therefore the Stromeinspeisegesetz is, according to the European Court, no direct or indirect state aid
© Prof. Dr. Georg Erdmann 4 PreussenElectra Decision C-379/98 (Cont.) Article 30 of the Consolidated EC Treaty allows restrictions on imports justified on grounds of […] the protection of health and life of humans, animals or plants Art 8(3) of EU-Electricity Directive 96/92 allows member states to give priority to generating installations using renewable energy sources According to the Court of Justice, Directive 96/92 lässt Hemmnisse für den Elektrizitätshandel zwischen den Mitgliedstaaten fortbestehen Therefore the Stromeinspeisungsgsetz doesnt violate Art. 30 beim gegenwärtigen Stand des Gemeinschafts- rechts auf dem Gebiet des Elektrizitätsmarkts
© Prof. Dr. Georg Erdmann 5 REN Electricity share in the EU27 [Source: EUROSTAT] Percent of electricity consumption
© Prof. Dr. Georg Erdmann 6 REN Electricity in the EU in 2010
© Prof. Dr. Georg Erdmann 7 REN Electricity 2010 in the EU27 [Source: EUROSTAT] Biomass Hydro Wind PV
© Prof. Dr. Georg Erdmann 8 Why is there not yet an Integrated European REN Market? The German Case as an Example of Successful Unilateralism Ambiguous EU Initiatives Towards a REN Single Market RES Integration into National Markets as a Blueprint for an European RES Market
© Prof. Dr. Georg Erdmann 9 German Energiewende of 2010 and 2011 Political targetBase year Greenhouse gas emissions % 55% 50% 80-95% Primary energy consumption % 50% Energy productivity 2,1% p.a. Power consumption % 25% CHP electricity share 25% Heat demand of building stock % Primary energy in building stock 80% Modernization rate of buildings 2% p.a. Final energy in transpprtation % 40% Number of electric vehicles1 Mio.6 Mio. REN share in energy consumption18%30%45%60% REN electricity share35%50%65%80%
© Prof. Dr. Georg Erdmann 10 REN Power Generation in Germany [Source AGEB] Hydro Wind Biomass PV
© Prof. Dr. Georg Erdmann 11 Regional Transfers from FITs within Germany [Source BDEW 2013] Mio EUR
© Prof. Dr. Georg Erdmann 12 Why is there not yet an Integrated European REN Market? The German Case as an Example of Successful Unilateralism Ambiguous EU Initiatives Towards a REN Single Market RES Integration into National Markets as a Blueprint for an European RES Market
© Prof. Dr. Georg Erdmann 13 EU Initiatives towards REN Integration 2001: Directive 2001/77 on the promotion of electricity from renewable energy sources Member states take measures to ensure that transmission and distribution system operators guarantee the transport and distribution of electricity produced from renewable energy sources 2009: Directive 2009/28 on the promotion of renewable energies 20%-goal of renewable energy share defined for 2020 member states must provide either priority or guaranteed access to the grid for REN electricity Open trading in renewable electricity certificates was rejected in favor of a system of statistical transfers of REN credits
© Prof. Dr. Georg Erdmann 14 There is also Strong Opposition February 2011: EU leaders acknowledged that REN electricity growth will require a 'smart' power grid – estimated to generate 200 billion investment costs But no initiatives towards an integrated single REN electricity market or the REN electricity integration into the single EU electricity market Comment by MEuP Claude Turmes ahead of an EU energy summit in February 2011: "National support schemes for renewable energy have proved overwhelmingly successful in promoting the uptake of renewables. We welcome that the Commission has acknowledged this and resisted the lobby by big energy utilities to undermine these national schemes"
© Prof. Dr. Georg Erdmann 15 EU Communication of 15 November 2012: REN Support Schemes National REN support schemes introduced on the grounds of –incomplete market opening –incomplete internalization of the external costs of conventional generation –early development stage of most REN technologies Markets and technologies have evolved since then The Commission will issue guidance on –best practice in renewable energy support schemes –REN support scheme reforms The aim is to avoid fragmentation of the internal market
© Prof. Dr. Georg Erdmann 16 EU Communication of 15 November 2012: Capacity Mechanisms Some Member States are concerned that the 'energy only' market will not deliver sufficient investment in generation to ensure security of supply in the longer term Regulated capacity mechanisms may provide a stream of revenue to (selected) generators on behalf of electricity customers Regulated capacity mechanism may have impacts on on the internal energy market: –If capacity mechanisms are introduced without proper coordination at EU level, they 'risk being counterproductive' –Regulated capacity mechanisms must follow EU internal market rules, including state aid control –Fragmentation of the internal energy market must be avoided
© Prof. Dr. Georg Erdmann 17 Why is there not yet an Integrated European REN Market? The German Case as an Example of Successful Unilateralism Ambiguous EU Initiatives Towards a REN Single Market RES Integration into National Markets as a Blueprint for an European RES Market
© Prof. Dr. Georg Erdmann 18 REN Support Schemes Fixed feed-in payments of REN costs with purchase obligation for grid operators (PO) Fixed feed-in payments on REN sales (price difference between REN costs and market price) Investment incentives for REN projects (percent of investments or fixed payment per kW) Tax incentives REN quota obligations for generators REN quota obligations for retailers (balancing group managers) or final consumers Tendering systems for new REN capacities Voluntary willingness to pay a REN premium Dominant in EU countries Optional in some EU countries NL, UK … FI, UK, … Italy, UK BE, SE, PL Ireland (< 2006)
© Prof. Dr. Georg Erdmann 19 Increase of the REN Electricity Share % 5% 10% 15% 20% 25% Denmark Ireland Germany Estonia Portugal Spain Belgium Greece Netherlands Italy UK Lithuania Czech Rep. Poland Hungary Bulgaria Sweden Finland EU-Average
© Prof. Dr. Georg Erdmann 20 EU-Integration of REN Support Schemes Fixed feed-in payments of REN costs with purchase obligation for grid operators Fixed feed-in payments on REN sales (price difference between REN costs and market price) Trade based on REN-register Investment incentives for REN projects (percent of investments or fixed payment per kW) EU notification Tax incentivesEU notification REN quota obligations for generatorsopen to trade REN quota obligations for retailers (balancing group managers) or final consumers Trade based on REN-register Tendering systems for new REN capacitiesopen to trade Voluntary willingness to pay a REN premium Trade based on REN-register
© Prof. Dr. Georg Erdmann 21 Hot to get there Starting point: System of feed-in-payments (because most market players are used to it) Remove obligation of grid operators to purchase REN (because it violates unbundling rules and is an obstacle for REN market integration) Fixed feed-in payments (FIT) to REN operators for REN sales to traders, retailers, BGMs, … (FIT compensates for lacking REN competitiveness) –REN sales to foreign partiess qualify for FIT payments Market integration payments (MIP) to retailers or balancing group managers with rates depending on the REN share in the electricity portfolio (compensate for developing a delivery schedule with Intermittent REN) –REN purchases from other counties qualified for MIP Challenge!
© Prof. Dr. Georg Erdmann 22 Concept for the Market Integration Premium Market integration premium [EUR/MWh] BGM sales share of intermittent electricity [%]
© Prof. Dr. Georg Erdmann 23 Thank You Tel: +49 (030) Fax: +49 (030)
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