Presentation on theme: "Comment on Bruegel Policy Brief: Elements of Europe‘s Energy Union Daniel Fürstenwerth, Agora Energiewende BRUSSELS, 01.10.2014."— Presentation transcript:
Comment on Bruegel Policy Brief: Elements of Europe‘s Energy Union Daniel Fürstenwerth, Agora Energiewende BRUSSELS,
Agora Energiewende – an Overview 2 →Financed by Mercator Foundation and European Climate Foundation, →Independent and non-partisan →Think Tank based in Berlin →Mission: How to make the Energiewende a success story?
Focus of this comment: EU support for low-carbon technologies 3 - Innovation vs. Deployment -Targets and Markets
Innovation vs. Deployment? 4 Cost of Power per Technology (LCOE 2014, new build, Germany) Wind and PV are cost competitive today - with new conventional and nuclear power plants Future* *“Future Cost of PV until 2050“, Agora Energiewende/Fraunhofer ISE, forthcoming ct/kWh
Other European countries have similar, some even better conditions for Wind and PV power production 5 Quality of WindQuality of Solar Cost competitive technology is available for Wind onshore and PV Focus should be on removal of market barriers and appropiate market design
Technology-specific analysis required: cost varies between renewable technologies 6 Price (ct/kWh) Power Generation (TWh) ~11 TWh Biomass Wind offshore Wind onshore & PV Price and Quantity of yearly deployment of renewables in Germany, 2015 (Objective) Focus on innovation appropiate for new renewable energy technologies (e.g. geothermal, tidal, wave)
Targets help policy to fulfill its role: enable the market to find efficient solutions Brussels, | Daniel Fürstenwerth 7 Power Market, Germany% 100% %25%40-45% 2025 Targets enable investors to make efficient investment decisions Renewable Non - Renewable Building Investment payback Example: Investment in new fossil power plant Investment decision Research Question: What are cost of suboptimal investment decisions? Year
Summary -Stronger deployment of Wind onshore and PV does not increase cost of the power system until 2030 – removal of market barriers is key -Stronger focus on innovation is appropiate for new renewable technologies (geothermal, tidal, etc) -Renewable targets allow market actors to make efficient investment decisions – for both non-renewable and renewable investments 8
Comments and questions: Agora Energiewende Rosenstraße Berlin T +49 (0) F +49 (0) Brussels, | Daniel Fürstenwerth 9
Innovation vs Deployment 10
: „Solar Years“ Success Story for Technology, Challenge for Policy Makers Brussels, | Daniel Fürstenwerth 11 Feed-in Tarif (EUR/MWh) Cost (EUR/MWh, illustrative) Build-up of Solar (GW/a) Increased margin leads to massive investment in solar „Race“ between investors and policy: market moved faster ~ 30 GW solar build in 5 years Cost was >2 times higher than today
12 Remuneration of new nuclear power in the UK, and large PV and wind onshore in Germany after accounting for inflation, in real Euro 2013 /MWh Note: Wind onshore remuneration in Germany is presented here in a simplified way by showing average payments. In reality, remuneration at the beginning differs from remuneration at the end. Source: EEG 2012, UK Government 2013a, calculations by Prognos AG.
13 Comparison of average remuneration for new nuclear power in the UK, and PV and wind in Germany, in Euro 2013 /MWh * Hinkley Point C agreement ** Wind offshore 2013 without grid costs; in Germany, the regulatory approach excludes grid costs from being covered by the remuneration. Offshore grid costs are estimated to be between 25 and 35 EUR/MWh, depending on the distance to shore. Source: DECC 2013; ECB 2014a; EEG 2012; Prognos AG 2013; UK Government 2013a; calculations by Prognos AG. -34% -50% -15% Remuneration, in Euro 2013 /MWh
14 Comparison of annual system costs, in million Euro 2013 Source: ECB 2014a; EEG 2012; Prognos AG 2013; UK Government 2013a; calculations by Prognos AG. Annual system cost, million Euro %