1. EWEC 2007 … Milano, 8 th of May 2007 … Slide 1 Mario Ragwitz*, Gustav Resch**, *Fraunhofer Institute for Systems and Innovation Research (Fh-ISI), Germany **Vienna University of Technology, Institute of Power Systems and Energy Economics, Energy Economics Group (EEG) Project's website: www.futures-e.orgwww.futures-e.org Harmonisation of support schemes

2. EWEC 2007 … Milano, 8 th of May 2007 … Slide 2 What is meant by “harmonisation”? Harmonisation of binding framework conditions: Clear separation of new and existing capacity, fixed duration of support for new capacity, similar conditions for grid access & planning, technology-specific support vs. technology neutral support Full harmonisation of support schemes: Establishment of a unique support mechanism in all Member States possibly including a component to consider national circumstances Equalisation of costs of the promotion system between EU Member States

3. EWEC 2007 … Milano, 8 th of May 2007 … Slide 3 Generic framework conditions of partially harmonised instruments as well as detailed design options of fully harmonised instruments should be based on presently implemented best practices

4. EWEC 2007 … Milano, 8 th of May 2007 … Slide 4 Overview on best practice support schemes – feed-in tariffs: Country Stepped tariff Tariff degression Premium option Extra premiums Equal burden sharing Forecast obligation Austriax---x 1) - Cyprusx---x- Czech Rep.x-x-x- Denmarkx-x (wind)Repoweringx 1) - Estonia-- x (new draft) -x Francexx (wind)-Variousx- Germanyxx- Repowering, PV x 1) - Greecex---x- Hungary---Demandx-

5. EWEC 2007 … Milano, 8 th of May 2007 … Slide 5 Overview on best practice support schemes – feed-in tariffs: Country Stepped tariff Tariff degression Premium option Extra premiums Equal burden sharing? Forecast obligation Irelandx---x- Italyxx (PV)- PV: net metering x- Lithuania----x- Luxembourgx---x- Netherlandsx--- 2) - Portugalx--Demandx- Slovakiax---x- Sloveniax-xDemandxx Spainx-x-xx

6. EWEC 2007 … Milano, 8 th of May 2007 … Slide 6 Overview on best practice support schemes – quota systems:

7. EWEC 2007 … Milano, 8 th of May 2007 … Slide 7 Overview on best practice support schemes – quota systems:

8. EWEC 2007 … Milano, 8 th of May 2007 … Slide 8 General questions on a full harmonisation: Is any kind of full harmonisation beneficial for the European Energy market compared to an optimisation of national instruments? It has been shown that 2/3 of the potential efficiency improvements can be reached through an optimisation of national support schemes. Which preconditions at the conventional power market need to be fulfilled? full unbundling & liberalisation, better interconnections What is the relation between harmonisation and national interests of Member States with respect to sharing costs and benefits (Norwegian – Swedish example)? Will a the introduction of a fully harmonised support system survive negotiations on EU level?

9. EWEC 2007 … Milano, 8 th of May 2007 … Slide 9 Issues on burden sharing: For the implementation of a burden sharing a harmonisation of support schemes is not needed Burden sharing could as well be implemented through bilateral agreements between governments The burden sharing refers to the definition of the national targets and not necessarily to the technical implementation of any harmonised instrument Any burden sharing should consider national costs and benefits in a balanced manner, e.g. additional costs for consumers, additional employment due to RES development, effects on supply security

10. EWEC 2007 … Milano, 8 th of May 2007 … Slide 10 Candidates for a harmonised scheme: Quota system based onTGCs Fixed feed-in tariffs Premium feed-in tariffs Tender systems possibly for particular technologies, e.g. off-shore wind Experience with respect to effectiveness as well as economic efficiency should decide about the choice of instrument! If a harmonised policy is pursued, a technology specific support is superior to non-technology specific with respect to cost minimisation!

11. EWEC 2007 … Milano, 8 th of May 2007 … Slide 11 1.Diminish the key barriers for RES-E development in each Member State 2.Set long term targets on EU level 3.Set correct framework conditions for conventional power markets (full liberalisation) 4.Set minimum design criteria for support schemes (generic and instrument specific) 5.Start regional coordination of RES-E markets e.g. Nordic TGC market, Feed-in Cooperation Full EU-wide harmonisation only after successful completion of steps 1-5 On the path towards an EU-wide harmonisation the following steps are suggested: