© Prof. Dr. Georg Erdmann 1 RES Electricity and the Single EU Electricity Market Prof. Dr. Georg Erdmann TU Berlin; Chair Energy Systems AXPO European

© Prof. Dr. Georg Erdmann

1

RES Electricity and theSingle EU Electricity Market

Prof. Dr. Georg ErdmannTU Berlin; Chair Energy Systems

AXPO European Energy WorkshopBerlin, 15 May 2013


2

Why is there not yet an Integrated European REN Market?

The German Case as an Example of “Successful Unilateralism”

Ambiguous EU Initiatives Towards a REN Single Market

RES Integration into National Markets as a Blueprint for an European RES Market


3

PreussenElectra Decision C-379/98 of the European Court of Justice

• Article 87 of the Consolidated EC Treaty prohibits “direct” or “indirect” state aid that generates competitive advantages to certain sectors

• Minimum-pricing schemes like Stromeinspeisungsgesetz deliver such advantages without any doubt

• But the benefit is not financed by state resources

• Therefore the Stromeinspeisegesetz is, according to the European Court, no direct or indirect state aid


4PreussenElectra Decision C-379/98 (Cont.)

• Article 30 of the Consolidated EC Treaty allows “restrictions on imports justified on grounds of […] the protection of health and life of humans, animals or plants”

• Art 8(3) of EU-Electricity Directive 96/92 allows member states to give priority to generating installations using renewable energy sources

• According to the Court of Justice, Directive 96/92 „lässt Hemmnisse für den Elektrizitätshandel zwischen den Mitgliedstaaten fortbestehen“

• Therefore the Stromeinspeisungsgsetz doesn‘t violate Art. 30 „beim gegenwärtigen Stand des Gemeinschafts-rechts auf dem Gebiet des Elektrizitätsmarkts“


5REN Electricity share in the EU27

[Source: EUROSTAT]

0

5

10

15

20

Percent of electricity consumption

1990 1995 2000 2005 2010


6REN Electricity in the EU in 2010


7REN Electricity 2010 in the EU27

[Source: EUROSTAT]

Biomass

Hydro

Wind

PV


8






9German Energiewende of 2010 and 2011

Political target Base year 2020 2030 2040 2050

Greenhouse gas emissions 1990 40% 55% 50% 80-95%

Primary energy consumption 2008 20% 50%

Energy productivity 2,1% p.a.

Power consumption 2008 10% 25%

CHP electricity share 25%

Heat demand of building stock 2008 10%

Primary energy in building stock 80%

Modernization rate of buildings 2% p.a.

Final energy in transpprtation 2005 20% 40%

Number of electric vehicles 1 Mio. 6 Mio.

REN share in energy consumption 18% 30% 45% 60%

REN electricity share 35% 50% 65% 80%


10REN Power Generation in Germany [Source AGEB]

0

20

40

60

80

100

120

1990 1995 2000 2005 2010

TWh

Hydro Wind Biomass PV


11Regional Transfers from FITs within Germany

[Source BDEW 2013]

Mio EUR

0

1000

-1000

-2000


12






13EU Initiatives towards REN Integration

2001: Directive 2001/77 on the promotion of electricity from renewable energy sources

• Member states take measures to ensure that transmission and distribution system operators “guarantee the transport and distribution of electricity produced from renewable energy sources”

2009: Directive 2009/28 on the promotion of renewable energies

• 20%-goal of renewable energy share defined for 2020

• member states must provide either priority or guaranteed access to the grid for REN electricity

• Open trading in renewable electricity certificates was rejected in favor of a system of “statistical transfers” of REN credits


14There is also Strong Opposition

• February 2011: EU leaders acknowledged that REN electricity growth will require a 'smart' power grid – estimated to generate €200 billion investment costs

• But no initiatives towards an integrated single REN electricity market or the REN electricity integration into the single EU electricity market

• Comment by MEuP Claude Turmes ahead of an EU energy summit in February 2011:

"National support schemes for renewable energy have proved overwhelmingly successful in promoting the uptake of renewables. We welcome that the Commission has acknowledged this and resisted the lobby by big energy utilities to undermine these national schemes"


15

EU Communication of 15 November 2012: REN Support Schemes

• National REN support schemes introduced on the grounds of– incomplete market opening– incomplete internalization of the external costs of

conventional generation– early development stage of most REN technologies

Markets and technologies have evolved since then

• The Commission will issue guidance on – best practice in renewable energy support schemes – REN support scheme reforms

• The aim is to avoid fragmentation of the internal market


16

EU Communication of 15 November 2012:Capacity Mechanisms

• Some Member States are concerned that the 'energy only' market will not deliver sufficient investment in generation to ensure security of supply in the longer term

• Regulated capacity mechanisms may provide a stream of revenue to (selected) generators on behalf of electricity customers

• Regulated capacity mechanism may have impacts on on the internal energy market:– If capacity mechanisms are introduced without proper

coordination at EU level, they 'risk being counterproductive' – Regulated capacity mechanisms must follow

EU internal market rules, including state aid control– Fragmentation of the internal energy market must be

avoided


17






18REN Support Schemes

Fixed feed-in payments of REN costs with purchase obligation for grid operators (PO)

Fixed feed-in payments on REN sales (price difference between REN costs and market price)

Investment incentives for REN projects (percent of investments or fixed payment per kW)

Tax incentivesREN quota obligations for generators

REN quota obligations for retailers (balancing group managers) or final consumers

Tendering systems for new REN capacities

Voluntary willingness to pay a REN premium

Dominant in EU countries

Optional in some EU countries

NL, UK …

FI, UK, …Italy, UK

BE, SE, PL

Ireland (< 2006)


19Increase of the REN Electricity Share2001-2011

0%

5%

10%

15%

20%

25%D

enm

ark

Irela

nd

Ger

man

y

Esto

nia

Port

ugal

Spai

n

Belg

ium

Gre

ece

Net

herla

nds

Italy UK

Lith

uani

a

Czec

h Re

p.

Pola

nd

Hun

gary

Bulg

aria

Swed

en

Finl

and

EU-Average


20EU-Integration of REN Support Schemes

Fixed feed-in payments of REN costs with purchase obligation for grid operators

Fixed feed-in payments on REN sales (price difference between REN costs and market price)

Trade based onREN-register

Investment incentives for REN projects (percent of investments or fixed payment per kW) EU notification

Tax incentives EU notificationREN quota obligations for generators open to trade

REN quota obligations for retailers (balancing group managers) or final consumers

Trade based onREN-register

Tendering systems for new REN capacities open to trade

Voluntary willingness to pay a REN premium Trade based onREN-register


21Hot to get there

• Starting point: System of feed-in-payments (because most market players are used to it)

• Remove obligation of grid operators to purchase REN (because it violates unbundling rules and is an obstacle for REN market integration)

• Fixed feed-in payments (FIT) to REN operators for REN sales to traders, retailers, BGMs, …(FIT compensates for lacking REN competitiveness)– REN sales to foreign partiess qualify for FIT payments

• Market integration payments (MIP) to retailers or balancing group managers with rates depending on the REN share in the electricity portfolio (compensate for developing a delivery schedule with Intermittent REN)– REN purchases from other counties qualified for MIP

Challenge!


22Concept for the Market Integration Premium

Market integration premium [EUR/MWh]

0 20 40 60 80 100

BGM sales share of intermittent electricity [%]


23Thank You

Tel: +49 (030) 314 246 56Fax: +49 (030) 314 269 [email protected]@prognoseforum.de

Documents

© Prof. Dr. Georg Erdmann 1 RES Electricity and the Single EU Electricity Market Prof. Dr. Georg Erdmann TU Berlin; Chair Energy Systems AXPO European