EU Climate Policy Roadshow

EU Climate Policy Roadshow
Energy Efficiency in the EU Policies and implementation Mr. Andrzej Werkowski Energy Max Power, Poland Moscow, 8-9 April 2014

Energy Efficiency in the EU Policies and implementation
Agenda Energy Efficiency in the EU – strategic approach and actions Implementation of the EU Energy Efficiency Directive 2012 Cogeneration – one of the most effective tools to improve energy efficiency Case Study – Cogeneration in Poland Conclusions Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Instead of Introduction „There is only one thing one can be sure of Energy prices WILL grow” (Connie Hedegaard – European Commissioner for Climate Action) „#1 Priority – Achieving an energy efficient Europe” (EU Strategy – Energy 2020, November 10, 2010) THE CHEAPEST ENERGY IS ENERGY WE DON’T USE (Essence of energy efficiency) Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Main pillars of the EU Climate and Energy Policy Competitiveness Security of supply Sustainability Moscow, 8-9 April 2014 EU Climate Policy Roadshow

At the same time … Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Business as Usual Scenario Growing dependence on fossil fuel imports % % Moscow, 8-9 April 2014 EU Climate Policy Roadshow

EU Climate and Energy Policy The 2020 Climate and Energy Package 3 x (adopted in 2009, under implementation) 2030 Framework for Climate and Energy Policies (to be adopted by October 2014) Reducing greenhouse gas emissions in 2030 by 40% compared to 1990 Increasing the share of renewable energy to at least 27% in 2030 Continued improvements in energy efficiency Roadmap (under consultation) Further emissions reduction to 80% below 1990 levels Milestones: 40% by 2030 and 60% by 2040 Guidance for main sectors resonsible for Europe’s emissions on how they can make the transition to a low-carbon economy most cost-effectively Moscow, 8-9 April 2014 EU Climate Policy Roadshow

EU Climate and Energy Policy Key improvement directions Competitiveness Reduce EU’s energy bill by € 200 bn in 2020 Create up to 2 million new jobs by 2020 Boost R&D and markets Security of Supply Reduce EU’s energy dependence Reduce investment in energy sector Improve the energy trade balance Sustainability Reduce CO2 emission Limit environment degradation Moscow, 8-9 April 2014 EU Climate Policy Roadshow

EU Energy Efficiency Energy efficiency is at the heart of the EU’s Europe 2020 Strategy for smart, sustainable and inclusive growth and of the transition to a resource efficient economy Energy efficiency is one of the most cost effective ways to enhance security of energy supply, and to reduce emissions of greenhouse gases and other pollutants In many ways, energy efficiency can be seen as Europe's biggest energy resource This is why the EU has set itself a target for 2020 of saving 20% of its primary energy consumption compared to business as usual projections, and why this objective was identified as a key step towards achieving the EU long-term energy and climate goals Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Climate and Energy Package 3 x 20 The climate and energy package is a set of binding legislation which aims to ensure the European Union meets its ambitious climate and energy targets for 2020 These targets, known as the " " targets, set three key objectives for 2020: 20% reduction in EU greenhouse gas emissions from 1990 levels Raising the share of EU energy consumption produced from renewable resources to 20% 20% improvement in the EU's energy efficiency Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy efficiency Is the EU on the right track to meet the EE objective? Primary energy consumption, [Mtoe] Additional efforts needed to fill the gap Moscow, 8-9 April 2014 EU Climate Policy Roadshow

EU Climate and Energy Policy Improvement potential until 2020 Economic potential [Mtoe] potential Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Plan 2011 – Key Effects Meeting the EU energy efficiency 20% reduction target should lead to: Potential to generate financial savings of up to € per household every year Improvement of Europe’s industrial competitiveness Creation up to 2 million jobs Reduction of annual greenhouse gas emissions by 740 million tons Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Directive 2012/27/EU Amends Directives 2009/125/EC and 2010/30/EU and repeals Directives 2004/8/EC and 2006/32/EC Entered into force on 4 December 2012 Most of its provisions have to be implemented by the Member States by 5 June 2014 All EU-28 countries are required to use energy more efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption All EU-28 countries are required to establish indicative national energy efficiency targets for 2020 Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Directive 2012/27/EU – National targets EU Member State Indicative national EE targets for 2020 (Examples) Energy consumption in 2020 [Mtoe] Primary Final EU - 27 20% reduction on energy consumption until 2020 compared to BaU scenario 1.474 1.078 France 17.4% reduction of final energy consumption in 2020 compared to a baseline 236 131 Germany Annual improvement of energy intensity (energy productivity) by 2.1% pa on average until 2020 277 194 Ireland 20% energy savings in 2020 along with a public sector energy saving target of 33% 14 12 Poland 13.6 Mtoe primary energy savings in 2020 96 70 Sweden Energy use shall be 20% more efficient by 2020 compared with 2008 and a 20% reduction in energy intensity between 2008 and 2020 43 30 Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Directive – Actions Public sector to lead as example Purchase of products, services & buildings with high energy efficiency performance Annual renovation target of 3% for public buildings above 250 m² Local energy efficiency plans and introduction of energy management systems More systematic use of Energy Performance Contracting Share of Public sector Consumption of EU’s GDP Share of public buildings in the EU building stock Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Directive – Actions Creating benefits for consumers through the provision of tailored energy services and information National energy efficiency obligation scheme for utilities Obligation for individual energy meters, reflecting actual energy consumption & information on actual time of use Ensure accuracy & frequency of billing based on actual consumption Appropriate information with the bill providing comprehensive account of current energy costs Smart Metering Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Directive – Actions Improving energy efficiency in transformation and distribution of energy 10-year national heat & cooling plans: transparency, predictability & alignment of policies for investments Waste heat recovery (CHP) obligation for new and existing power & industrial plants Network tariffs design to encourage offering services for consumers allowing them to save energy & control consumption National annual inventories of generation installations to monitor efficiency levels Remaining potential Achieved savings Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Efficiency Directive – Actions Increase awareness for benefits stemming from energy efficiency improvements in industry Member States to create incentives for SMEs to undergo energy audits Dissemination of best practices on benefits of energy management systems for SME businesses Mandatory audits for large companies & incentives for the implementation of recommended measures and the introduction of Energy Management Systems Moscow, 8-9 April 2014 EU Climate Policy Roadshow

EU Energy Efficiency Policy Implementation Instrument Country Frequency of use DK EE DE FR IE IT PL SE UK Incentives for reduction of losses in energy transmission and distribution 10 Support for development of highly efficient cogeneration 19 Priority for other highly efficient units like wind farms & photovoltaic plants 8 Support for local heating systems focused on efficiency improvement 11 Promotion of grid load management 1 Promotion of smart grid and smart metering technologies Support for efficiency improvements of oil and gas supplies 3 Voluntary agreements resulted in savings on the energy/fuel supply side 4 Incentives stimulating competition among energy and fuel suppliers Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration – Benefits Increased efficiency as the plant is tailored to meet the needs of local customers Large cost savings, providing additional competitiveness for industrial and commercial users, and offering affordable heat for domestic users Lower emissions to the environment, in particular of CO2 Reduction of transmission losses due to decentralisation Increase in flexibility in system use - particularly if natural gas is the energy carrier Improved local and general security of supply Important vehicle for stimulating competition in generation and for promoting liberalisation in energy markets Increased employment – development of CHP systems is a generator of jobs Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration Cogeneration is the most effective and efficient form of power generation, offering savings ranging between 15-40% when compared against the supply of electricity and heat from conventional power stations and boilers Cogeneration optimises the energy supply to all types of consumers Through the utilisation of the heat, the efficiency of cogeneration plant can reach 90% or more Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration Principle Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in the EU Today 11% of electricity is generated using cogeneration Today cogeneration saves Europe around 200 million tonnes of CO2 per year – it is the single biggest solution to the Kyoto targets In the next 20 years, at least 25% of electricity production could come from cogeneration Highest CHP application potential: industry, district heating, buildings, agriculture Emerging areas: Micro-CHP Biomass CHP New technologies: cooling, polygeneration and fuel cells Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in the EU Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Policy of Poland until Primary directions „Low energy efficiency is one of the most importing factors threatening Poland’s energy security” (Prof. Jerzy Buzek, Former EP Chaiman and Prime Minister of Poland, EUROPOWER 2008) Improve energy efficiency - #1 Priority Enhance security of fuel and energy supplies Diversify the electricity generation structure by introducing nuclear energy Develop the use of renewable energy sources, including bio-fuels Develop competitive fuel and energy markets Reduce the environmental impact of the power industry Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy policy of Poland until Energy efficiency improvement – Key objectives Achieve zero-energy economic growth, i.e. economic growth with no extra demand for primary energy Reduce the energy intensity of Polish economy to the EU-15 level The key objectives are to be met mainly through: Building highly efficient generation units Twofold increase in power generation with the use of highly efficient cogeneration technology by 2020 Limit grid loss Increase efficiency of final use of energy Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy policy of Poland until 2030 Polish economy will grow in the next decades to decrease the distance to the EU-15 economies, therefore final energy usage will increase dynamically – 31% by Same applies for primary energy usage – 27% increase. Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy policy of Poland until 2030 Aiming at achieving “zero emission” economic growth Polish economy will steadily lower energy-intensity GDP ratio. Over 45% improvement is forecasted by 2030 Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy policy of Poland until 2030 Renewable energy and natural gas are to steadily replace coal in energy generation processes Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy policy of Poland until 2030 Growing role of district heating, electric energy, oil products and gas, Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Energy Policy of Poland until 2030 – Cogeneration Increasing efficiency of electricity generation, through construction of high efficiency units, reducing network losses and development of distributed generation Doubling electric energy production in high efficiency cogeneration technologies until 2020, compared to production in 2006 Stimulating developments of cogeneration, including cogeneration from sources below 1 MW, through support mechanisms, and adequate regional policies Aiming at replacing the heat only plants supplying district heating systems with cogeneration by 2030. Preferential treatment of cogeneration as the technology recommended for building new generation capacity Implementation measures to achieve the target in the national action plan for energy efficiency Maximising the utilization of local renewable energy potential in cogeneration of heat, cold and electricity Developing district heating systems Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland CHP Installed electrical capacity [GW] Total heat supplied [TWh] Total electricity generated Share in gross electricity production 2008 8,8 62,2 25,0 16,1 % 2009 8,6 62,5 24,8 16,3 % 2010 8,7 70,0 26,9 17,1 % 2030 Target > 12,0 > 120,0 ≥ 48,0 ≥ 22,0 % Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – District Heating Potential District heating plays the most important role in the Polish heating system (> 42%) > 70% of heat suppliers fall into SME category Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – Industrial Energy Potential 2010 [GW] [GW] Industrial energy is supposed to make the biggest contribution to the Polish overall energy capacity Cogeneration should be considered as preferable solution Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – Policy development The current support scheme for electricity production in cogeneration has been in force since 2007 and will be valid until 2018 The support scheme for electricity generation in cogeneration is based on a quota system and on the instruments so-called “certificates of origin from cogeneration” Certificate Type of installation Substitute fee(1) [% energy price(3)] Fees for 2013(2) [EUR/MWh] Yellow Certificate Cogeneration units fired by gaseous fuels or with total capacity below 1 MW 15% - 110% 35,7 Red Certificate Cogeneration units over 1 MW fired with coal 15% - 40% 7,1 Purple Certificate Cogeneration units fired with methane obtained from mines or biomass methane 30% - 120% 60,0 (1) Established on yearly basis by Energy Regulatory Office (URE) (2) Market price varies from the Substitute fee level (3) Average energy price reference in 2012 on the wholesale market ≈ EUR 45/MWh Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – Why support is needed? 50 kWe 1 MWe > 10 MWe Gas-fired 0,5 MWe Biogas IRR 4 % 17 % - 1 % 6 % Main reasons: Low electricity wholesale market price Low ratio between electricity and natural gas price (< 2, while the necessary level > 2,5) Additional support through certificate scheme is key instrument, essential for securing necessary returns of new cogeneration plants Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – Awareness among key market actors Customers Market Manu-facturers Installers Grid operators Industry Commercial Households Consultants Architects Banks Utilities ESCOs Engineering companies Influencers Policy Federal Regional Local Sector organisation General public Specialist media Energy agencies Regional planners Academia NGOs Research Poor Low Early awareness Interest Active market Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Germany – Awareness among key market actors Customers Market Manu-facturers Installers Grid operators Industry Commercial Households Consultants Architects Banks Utilities ESCOs Engineering companies Influencers Policy Federal Regional Local Sector organisation General public Specialist media Energy agencies Regional planners Academia NGOs Research Poor Low Early awareness Interest Active market Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration in Poland – Economic climate for growth Poland Micro Small & Medium Large up to 50 kW up to 10 MW more than 10 MW Gas RES Coal Industry District heating Services Households „Normal” Interest for new investments exists, no significant economic barriers „Modest” Modest/limited economic benefits, limited interest for new investments „Poor” No interest/possibilities for new investments Not applicable for the sector Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Strategy for development of cogeneration till 2030 – Key goals Double CHP electricity generation CHP electricity production should double from 24 TWh in the year 2006 to 48 TWh till the year 2030 (22 % share in domestic gross electricity demand) 20 % share of RES CHP RES CHP should have at least 20 % share in total installed CHP capacity in the year (1 % in the year 2006) Enforce sustainable local heat planning and implementation Further development of district heating and other sustainable heat supply options Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration Road Map for Poland until Contribution to growth The expected increase of cogeneration in the future will be based on: Extended capacities of existing cogeneration plants Introduction of cogeneration in electrical plants and industry Large increase of cogeneration plants using bioenergy fuels Growth of natural gas cogeneration will be rather moderate with only 10% share of total new expected cogeneration capacities Dominating share with more than 60% will have solid biomass and biogas Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration Road Map for Poland until 2030 – Deliverables Exploitation of the estimated more than MWe economic potential of high efficiency cogeneration in Poland, by removing the barriers and facilitating faster and more balanced growth of high efficient cogeneration utilisation in all applicable sectors till the year 2030, could result in: Contribution of 57 TWh to primary energy savings Supply of 48 TWh or more than 22% of gross final electricity demand Heat generation from cogeneration > 120 TWh (more than 55 TWh additional heat) Increase of RES use up to 20% of total installed cogeneration capacity Reduce CO2 emissions by at least 23 million tons/annum Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Case study factsheet CHP Częstochowa, Poland Electrical capacity – 64,5 MWe Heat capacity – 120 MWt Fuel – Coal, Biomass Technology – CFB Electricity generation – 385 GWh/annum Heat production – 540 GWh/annum Year of commissioning – 2010 The first cogeneration plant built on greenfield site in Poland Electricity supplied to the national grid Heat supplied to the district heating of Częstochowa city, covering more than 80% district heat demand CHP's gross efficiency in first operational year was 70,7%, share of biomass – 21,2% Environment friendly Success factors Green and Red Certificates CFB technology – efficient in different loads, flexible for different fuel mixes Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Innovative technology Gas Max Power CHP Plant Designed with the innovative combined gas-steam cycle with residual heat recovery Maximizing the heat power from burning gas in a three-stage gas turbines system application driven by: natural gas combustion superheated steam vapour of lowboiling organic liquid The whole heat of combustion of the gas may be converted into electricity while maintaining the minimum energy loss No need to use heat produced from the combustion of gas at the outside of cogeneration plant, if not demanded Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Innovative technology Gas Max Power CHP Plant General turbine system Gas turbine LM2500 Steam turbine Organic Rankine Cycle (ORC) 1100 °C 500 °C GT HRSG 450 °C 200 °C ST HEx 200 °C 40 °C HEx ORC 11-15kV Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Steam Hot water Chill Module 2 Module 3 Electric energy Gas Gas Gas 40, 80, MWe Steam Steam Steam Modules ORC ORC ORC Module 1 Module 2 Type of fuel: Natural gas, syngas, diesel-oil … Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Distinguishing features of Gas Max Power CHP Plant Self start – no need for external electric power supply Standby – to achieve the rated power in 10 min. Power control range – a large dynamic range of the turbine set Method of regulating flows of energy: Large gas turbine dynamics - maintaining continuity at low load Sectional steam boiler (shifting power from steam turbines) Sectional heat exchanger of the organic liquid (power shifting between turbines and ORC) Modular design – availability for step-by-step implementation Environment friendly Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Advantages of Gas Max Power CHP Plant Scalability Small and medium-sized power stations from 5 to 200 MWe Very high efficiency, reaching over 80% Low failure rate linked with large availability Reduced investment costs as a result of: Optimized layout Short investment implementation period Container-based assembling technology High flexibility in working conditions Diversification of fuels: Natural gas Syngas from thermal conversion of biomass and from industrial processes Gasification of coal Hydrogen Liquid fuels Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Conclusions Energy efficiency improvement is the and most effective way to: Reduce energy bill Strengthen competitiveness Improve energy security Reduce GHG emissions There are many „low hanging fruits” like thermal insulation of buildings that may lead to huge energy savings, with the scale influencing the whole economy The EU energy efficiency policy is focused on taking full advantage of the accumulated Member States efforts concentrated on exploitment of the existing potentials and on exercising local energy efficiency improvement initiatives Cogeneration is by far the most effective way to improve energy efficiency in the energy generation and heat production processes and should be considered #1 option whenever modernization and/or new investments are undertaken Moscow, 8-9 April 2014 EU Climate Policy Roadshow

THE CHEAPEST ENERGY IS THE ENERGY WE DON’T USE! Thank you for your attention Andrzej Werkowski President of the Management Board Energy Max Power Sp. z o.o. Tel Moscow, 8-9 April 2014 EU Climate Policy Roadshow

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