Presentation on theme: "Impact of the EU Renewables Directive on major European utilities 9 October 2008."— Presentation transcript:
Impact of the EU Renewables Directive on major European utilities 9 October 2008
Page 29. October 2008Impact of the EU Renewables Directive on major European utilities Success is not guaranteed Renewable electricity production will have to triple by 2020 if the overall 20% target is to be achieved Large projects will have to deliver 2/3 of the growth Historical trend of low renewables use has to be broken Our view? Without deep structural cuts the renewables target for the EU is unlikely to be achievable Sources: Eurostat; Ernst & Young calculations
Page 39. October 2008Impact of the EU Renewables Directive on major European utilities Renewable electricity is only part of the story Great flexibility for each EU Member State to achieve country targets Necessary future RES-E production depends on GFEC and RES-H EU overall target for a Member State = Share of national energy production from renewable sources (RES) ++ Renewable energy for transport (RES-T) Heat produced from renewable energy (RES-H) Gross production of renewable electricity (RES-E) Gross final energy consumption (GFEC) =
Page 49. October 2008Impact of the EU Renewables Directive on major European utilities What are the country targets? Assessment of RES-E targets for selected EU Member States Sources: Eurostat, Directorate-General for Energy and Transport; Futures-e: 20% RES by 2020 - a balanced scenario to meet Europe's renewable energy target; Ernst & Young calculations
Page 59. October 2008Impact of the EU Renewables Directive on major European utilities Can countries deliver? Sources: RES-E potential according to Futures-e, February 2008; targets: Ernst & Young calculations Maximum achievable potential assuming that all existing barriers can be overcome and all drivers are active
Page 69. October 2008Impact of the EU Renewables Directive on major European utilities Which markets could deliver? The big five countries (FR, GE, IT, SP, UK) could deliver 70% of necessary RES-E growth Further 25% could be contributed by AT, Bulgaria (BG), Denmark (DK), FI, GR, NL, PL, PT, RO, SW European RES-E priority markets Between 20 and 100 TWh growth potential More than 100 TWh growth potential Source: Ernst & Young calculations
Page 79. October 2008Impact of the EU Renewables Directive on major European utilities Target markets Technology Primary target markets Secondary target markets Tertiary target markets Growth potential (TWh) Growth potential (GP) in TWh GP 5020 GP < 5010 GP < 20 all European markets Wind FR, GE, UKIT, NL, SP, SWDK, FI, GR, PL, PT525 Biomass FRGE, IT, PL, SP, UKFI, NL, RO, SW340 Tide and wave UKSP, FR125 PV and solar SPIT115 Hydro SP, ITSW, FR120 Geothermal electricity IT65 Total (TWh) 5303501551,290 Target markets by technology These 32 target markets include a growth potential of more than 1,000 TWh (covering 80% of total EU potential) Source: Ernst & Young calculations
Page 89. October 2008Impact of the EU Renewables Directive on major European utilities Growth potential future renewable electricity production
Page 99. October 2008Impact of the EU Renewables Directive on major European utilities Conflicting pressures on future production DriversBarriers AccelerateBrake EU Emissions Trading Scheme Increasing fuel prices Support schemes Increasing environmental awareness Unstable legal and regulatory framework Grid connection Administrative barriers Social barriers Financial barriers Technological risks Lack of manufacturing capacity Future RES-E production
Page 109. October 2008Impact of the EU Renewables Directive on major European utilities Main effects Consequences New market opportunities Need for a strategic decision about renewables New requirements on existing power plant fleet (more flexibility, increasing costs etc.) Decreasing market share and revenues for utilities (autoproducers) Complexity of business increases Increasing importance of renewables Need for smart grids Additional network costs Adaption of grid structure to new supply structure Higher frequency fluctuations Grid integration Increasing importance of weather on electricity markets Higher price volatility Higher volatility Main impacts on utilities The ambitious EU targets cause greater uncertainty about the future deployment of renewables The great flexibility of EU Member States to achieve the targets increases uncertainty about future renewables electricity production Greater uncertainty
Page 119. October 2008Impact of the EU Renewables Directive on major European utilities Todays energy value chain: Supply driven Linear model, supply dictated by actions of suppliers Coal/gas fired power station Energy volume drives energy company revenue Small range of conventional technologies Large centralised generation Static infrastructure Price and reliability are main determinants of customer choice Energy flows to users Gas productionHydro- electric power Nuclear power station Energy flows to users Ageing electro-mechanical infrastructure, with limited automation Reflective of large-scale thermal plant being connected, and cascade to local distribution points Limited valuable information fed back through system to suppliers Huge replacement programme required – question is whether to replace like-for-like, or to take the opportunity to re-engineer to enable different future state?
Page 129. October 2008Impact of the EU Renewables Directive on major European utilities Tomorrows energy value chain: The future aint what it used to be Next generation energy web model Supply dictated by customers Electricity flows to users, and surplus from distributed generation flows back to grid CO 2 emission reduction and wider energy services drives energy company revenue Micro wind Smart metering Biomass Smart grid technology rolled out Micro CHP CCS plant (coal/gas) Solar water heating Nuclear power station CO 2 transport and storage Hydro- electric power Micro solar Solar Gas production Onshore and offshore wind Technology choice proliferates Key challenges Choice of strategy Role in value chain CO 2 emission reduction and wider energy services drives energy company revenue
Page 139. October 2008Impact of the EU Renewables Directive on major European utilities Conclusions Ambitious EU targets are unlikely to be met without structural changes to energy markets Even under a policy scenario exploiting the total RES-E potential, some countries are over-stretched An EU-wide approach is necessary, encouraging: Accelerated establishment of a single European electricity market Harmonization of support schemes and regulatory framework Full trading of renewable certificates Large projects are indispensible: Local and regional political resistance against large projects must be overcome Such projects need the involvement of large companies to ensure effective project and risk management
Page 149. October 2008Impact of the EU Renewables Directive on major European utilities Ernst & Young AG Graf-Adolf-Platz 15, 40213 Düsseldorf Germany Office:+49 (0)211 9352 11476 Mobile:+49 (0)160 939 11476 Fax:+49 (0)211 9352 18327 E-mail:email@example.com Thank you for listening – your questions? Dr. Helmut Edelmann Director Utilities, Global Power & Utilities Center
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