IFIEC ENERGY FORUM Renewable Energy Support Schemes 19 June 2012 BRUSSELS Dr Mukund Bhagwat Corporate Energy Affairs, Aurubis Member of Electricity & Climate WP’s

Percentage of electricity generated from renewable sources in gross electricity consumption: => Development until 2020 is ambitious, given the current financial situation

Average level of support (per MWh of renewable electricity produced). => Different support per member state

Level of support provided versus achieved target  There is no linear relationship between level of support provided and achieved target

Direct Cost Comparison => Direct Cost per member state is different

Costs for a 150 GWh user (calculated) Total Cost of 150 GWh user is difficult to estimate due to complexity of levy’s and hardship regims. It is significantly different per member state. In any case, cost to industrial consumers is between 500 k€/y to 1 M€/y in many Member States

19 June Summary of conclusions from the RE Study: RE support schemes, in different MS are diverse, complex, constantly changing and not coherent. This creates uncertainty, all of which increase costs. RE has an increasing impact on cost of electricity because of investments and support in RE- generation, transmission, distribution, balancing and storage as well as priority access. However this cost as charged in the end-user electricity price is non-transparent.

Outline of an optimized support scheme - 1 A system to support the renewable electricity production should meet the following aspects: Any support scheme should be considered as temporary and reviewed periodically against technical and economical benefit criteria and level of support should be down-revised annually. RES-E operators must respond to market signals and thereby contribute to balancing the system : with RES-E becoming the major electricity source according to EU targets, time has come for a smarter RES-E development. Current priority access to intermittent renewable electricity is putting strains on the existing grids where there is abundant sun or wind, endangering grid stability. Grid priority should not jeopardize grid stability. This must be prevented. When the spot price reaches zero, stop subsidising.

Outline of an optimized support scheme - 2 continued.. Back-up investments should be decided to ensure the necessary base-load and semi-base supply but the investment cost must be included in the RES support scheme amount : the high marginal cost of such tools should not impact the market price. Such investments would be decided only after the cheapest voluntary demand management options have been exhausted. Support schemes must be made as cost efficient as possible at EU level –Subsidies limited to the difference between the guaranteed price and the average market electricity price. –The premiums must give incentives to save as much CO2 as possible per Euro support in order to allow the more cost efficient proven technologies to develop. Direct and indirect financial burden for industry must be made transparent and capped to avoid competitiveness distortions for those industries facing international competition Current RES-E technologies do not allow us to come to an energy policy, which results in a clean, affordable and reliable electricity supply. Research and investments for innovation in flexible energy storage and generation as well as back-up systems should be stimulated.

Recommendations  Keep Europe attractive for present industries and new investments, in the medium and long term, particularly in industries exposed to international competition. Support the RE in a cost efficient way, giving support only for innovation for non-mature technologies and only a limited, capped and transitional support for maturing technologies which have the potential to become competitive. The speed of development of RES and the support schemes must be adjusted in order to prioritize those investments which do contribute in an optimized cost- and climate-efficient way to 2050 target Until a global level playing field is established, exempt industrial users exposed to global competition from all these locally imposed extra costs to protect the global competitiveness of these industries.