1. EU policy for renewable energy: The European context Daniel Becker Ecofys, Berlin Office 28 April 2006, Ankara

2. Outline of the presentation Principles of EU RES Directive Current situation Perspectives for reaching the targets

3. RES-E share in EU25 – current situation Sources: - Data 2002: Energy and Transport in figures, European Commission in cooperation with Eurostat, 2004 - Annex to the Directive 2001/77/EC

4. Principles of the Directive 2001/77/EC Quantified national targets for consumption of electricity from renewable sources of energy National support schemes plus, if necessary, a harmonised support system Simplification of national administrative procedures for authorisation Guaranteed access to transmission and distribution of electricity from renewable energy sources

5. Adoption of national targets in the EU All EU-15 Member States have adopted national targets, in line with the reference values listed in Annex I of Directive 2001/77/EC. The 10 New Member States of the EU have set up national targets published in the Accession Treaty in April 2003. 2010 Targets have been agreed with Bulgaria and Romania.  If EU-15 Member States meet these national targets, the 2010 target of about 20% (21% at EU25) will be achieved.

6. The Commission assessment report May 2004 Commission has approved the communication COM(2004) 366 final: “The share of renewable energy in the EU”. Commission Staff Working Document SEC(2004) 547: EU- 25 country reports  Main conclusion: An important first step has been done, but extra efforts are still needed

7. Will the EU achieve its 2010 RES-E target? Extrapolation scenarios set out in the Commission Staff Working Document show that Europe is in its half way related to the 2010 target under current policies and measures. This is even true if reductions in total electricity demand as a result of new energy efficiency measures is taken into account.  Currently implemented policies will probably result in a share of between 18% and 19%

8. Will the EU achieve its 2010 RES-E target? Source: Communication from the Commission to the Council and the European Parliament – The share of renewable energy in the EU (SEC(2004) 547), p 13 RES-E share in 2010 – practicable scenario vs. current national policies

9. Explanations Progress in achieving the national targets differ strongly between the Member States. Not all Member States have adopted complementary proactive measures geared to national conditions. Success of wind energy is not outweighing the slow growth of biomass electricity. Biomass is lagging behind.

10. Wind – the success story Installed wind energy capacity in EU15 grew 20% in the last 6 years. 34 GW total installed capacity at the end of 2004. In an average wind year this capacity can produce 74 TWh (= around 2.4% of EU electricity consumption) Germany, Spain and Denmark contribute 80% of total EU15 wind power capacity: Source: Communication from the Commission to the Council and the European Parliament – The share of renewable energy in the EU (SEC(2004) 547), p 13

11. Biomass electricity 2010 target will only be achieved if biomass contributes 40% to it. Biomass electricity will need to grow by 18%/year compared to 7% during the past 7 years. Additional need of around 32 Mtoe – indicative figure on the biomass availability for energy purposes at EU15 level is 150 Mtoe (additional 32 Mtoe for EU10).

12. New initiatives – action at European level Strengthening of the future Community Programme “Intelligent Energy Europe” A Community action plan for biomass Developing renewable energy actions in heating & cooling Offshore wind policy Research and technological development Future Financial Perspectives Using major Community financing instruments Structural and cohesion funds, second pillar of the CAP Placing biofuels on the market Source: Communication from the Commission to the Council and the European Parliament – The share of renewable energy in the EU (SEC(2004) 547)

13. Next steps by the European Commission The Commission acknowledges the importance of providing a longer term perspective. The Commission will carry out regular reviews of progress in the development of renewable energy sources. In 2007 the Commission will set targets for the period after 2010. Studying the national measures taken to implement the RES-E Directive in the 25 countries of the EU and to take, if necessary, legal actions.

14. A closer look at the EU Member States – EU 15 Assessment of progress at the national level by the European Commission: On track: DK, DE, ES, FI About to be on track: NL, UK, SE, AUT, BE, IE, FR Not on track: GR, PT Source: Communication from the Commission to the Council and the European Parliament – The share of renewable energy in the EU (SEC(2004) 547 ) No information available: LU, IT

15. On track DK: –likely to achieve 2010 target in 2005 DE: –increased the share of RES-E from 4.5% in 1997 to >9% in 2004 ES: –second largest European country for wind power FI: –impressive evolution of the biomass sector  Driving force: attractive support system in a stable and long-term framework

16. About to be on track UK, NL: –activity in a new policy; full results still have to materialize IE: –support system through tendering; difficulties of grid connection of wind farms BE: –Green certificate system since 2002; no visible results yet FR: –attractive tariff system in place; too soon for a review SWE: –green certificate system since May 2003; RES-E production rose hardly AU: –good perspective for growth

17. Not on track GR: –High administrative barriers prevent considerable exploitation of RES PT: –High administrative and grid barriers

18. Feed-in systems and Green Certificates Daniel Becker Ecofys, Berlin Office 28 April 2006, Ankara

19. Inhibitory forces ti increase RES-E share Inhibitory forces Weak support instruments Structural barriers Financial restrictions Technical Administrative Grants Amount of tariffs Weak domestic financial power Access to capital Socio-economic Design of instruments

20. Elements to launch RE-S successfully political support support schemes administrative structures public support take-off barrier

21. EEG: Legal Foundations Source: Kernenergie.net (a nuclear-power website) Prof. Alt, Versorgungsicherheit im Europäischen Verbundnetz 2004 (Supply Security in the European Integrated Grid System, 2004) Of which EEG levy 1.88% Federal law (further development of the Power Feed-In Law of 1991) Priority for feed-in of RE Extensive regulation for grid access legally regulated payment rates –Long-term perspective and investment security (15–30 years) –Incentive for the opening up new potentials and technologies (esp. biomass and geothermal energy) –Strong incentive for efficiency boost, by degression of payment rates Cost of electric power for households

22. Features of EEG and its incentives for success Sales at fixed rate are guaranteed for 20 years Produced electricity must be purchased Balances competitive advantage of conventional energy sources Legal certainty (20 years amortisation period) Attractive rate of return for investors Does not put a burden on public funds Renewable Energy Sources Act (EEG)

23. Grid operator Transmission grid operator Grid operator Supply company Supply company € EEG – how does it work?  Feed-in tariffs

24. Implications of EEG RE power supply increased from 4.7% (1998) to 10% (2004) more than 8 million Germans are supplied solely with RE power Additional costs for private households are low (0.4 cent/kWh) i.e. € 14 per household / year = 2% of annual electricity budget Some 120,000 people now working in RE sector – twice as many as in 1998 Renewable Energy Sources Act (EEG)

25. Feed-in and Green Certificates Feed-in Systems should have an integrated GoO-component What happens with gererated RE-kWh: 1.With remuneration by feed-in tarriff, GoO is generated and used at once 2.If not remunerated (e.g. biomass-cofiring, bilateral agreements, amortised hydropower), GoO can be traded Advantages: –avoids abuse (double selling of green electricity) –Transparency for customers („Greenness“ is purchased)

26. Green Certificates and ETS Green Certificates can not be integrated into ETS and, because no additionality is given (as RES- target exists) CDM can not be counted as GoO Qualitative distinction: CDM is counting CO2- Reduction, while GoO certifies produced kWh