Dynamics of cost-resource curves for RES-E Dynamics of cost... · • To facilitate a significant increased RES-E generation in a liberalised electricity market with minimal costs

Dissemination Workshop project Green-X September 28th 2004, Madrid Green-X

Gustav Resch, Claus Huber, Thomas Faber, Reinhard Haas, Energy Economics Group (EEG)

DynamicsDynamics of of costcost--resourceresourcecurvescurves forfor RESRES--EE


ContentContent1. Introduction

! Modelling aspects

2. Basic principles! Static cost-resource curves ! Experience curves! Dynamic cost-resource curves

3. Overview: RES-E in EU-15 countries! Achieved vs. additional realisable potentials! Costs of electricity! Cost-resource curves

4. Comparison! Potentials vs. future targets! Concluding remark


1. Introduction:1. Introduction: The computer model The computer model Green-X

• has been developed within the EU-project „Deriving optimal promotion strategies for increasing the share of RES-E in a dynamic European electricity market - Green-X“ funded by the EC DG RESEARCH

• Objective of Green-X:• To facilitate a significant increased RES-E generation in a

liberalised electricity market with minimal costs to European citizen.

• To find a set of efficient, sustainable and integrated strategies for RES-E, conventional electricity production (incl. CHP), DSM activities and GHG-reduction


1. Introduction:1. Introduction: The computer model The computer model Green-X

• Within Green-X the most important energy policy instruments can be simulated and their effects analysed in a dynamic framework:• RES-E (e.g. feed-in tariff, quota system, tendering systems)

• Conventional technologies (e.g. nuclear phase-out)

• Combined heat and power production (e.g. quota system)

• Demand side activities (e.g. investment subsidies, tax relief)

• GHG-emission strategies (certificate trade, taxes)

• All RES-E technologies in every country are described by dynamic cost-resource curves for the EU-15 member states.


1. Introduction:1. Introduction: Forecasting RESForecasting RES--E deployment E deployment within within GreenGreen--XX

Remark: RES-E … Renewable energy sources for electricity generation

What are the important aspects? How to implement them into a model?

! Energy Policy: Promotions strategies for RES-E

" Modelling of policy instruments(see presentation “the dynamic computer-model Green-X”)

! Potentials (achieved & future potentials)

" Inclusion of limitations, described by cost-resource curves

! Economics – Costs of electricity for RES-E

" Cost assessment, e.g. done by cost-resource curves

! Dynamic development (of costs & potentials)

" Costs: “learning curve – approach” or expert forecast" Potentials: Dynamic restrictions


2. Basic principles:2. Basic principles: Static costStatic cost--resource curvesresource curves

costs = f (potential); t = constantcontinuous function stepped (discrete) function

band 1

costs

potential

band 2band 3

costs

potential

!Combines information on the potential and the according costs (of electricity for a specific energy source).

!All costs/potentials-bands are sorted in a least cost way!For limited resources (as RES-E) costs rise with increased utilization.

„…every location is slightly different“ Practical approach: Sites withsimilar characteristics described by one band


0

10

20

30

40

50

60

70

80

90

100

0 200 400 600 800 1000

Cumulative production of units

Cos

ts p

er u

nit

linear scale log-log scale

10

100

1 10 100 1000

Cumulative production of units

Cos

ts p

er u

nit

2. Basic principles:2. Basic principles: Experience curvesExperience curves!describe how costs decline with cumulative production.!costs decline by a constant percentage with each

doubling of the units produced or applied.

bCUM CUMCC ∗= 0

CCUM Costs per unitC0 Costs of the first unit CUM Cumulative productionb Experience indexLR Learning rate (LR=1-2b)

e.g. Learning rate LR = 15%


2. Basic principles:2. Basic principles: Dynamic costDynamic cost--resource curvesresource curves

A dynamic cost-resource curverepresents a tool to provide the linkage between both

approaches described before, i.e. the dynamic cost assessment as e.g. done by

application of experience curvesand the formal description of costs and potentials

by means of static cost-resource curves.


TheThe GreenGreen--XX approach: approach: costcost--resource curvesresource curves

Potentials•by RES-E technology (by band)•by country

Costs of electricity•by RES-E technology (by band)•by country

COST-RESOURCE CURVES•by RES-E technology•by country

costs

potential

Dynamic aspects•Costs: Dynamic cost assessment•Potentials: Dynamic restrictions

DYNAMIC

•by year

The The GreenGreen--XX approach: approach: DynamicDynamic costcost--resource curvesresource curves


1995 2000 2005 2010 2015

Historical deployment

Theoretical potential

Ele

ctric

ity g

ener

atio

n

Economic Potential

Technical potential R&D

2020

additional realisableadditional realisablepotential for 2020potential for 2020

achieved potential achieved potential in 2001in 2001

Policy, Society

Maximal time-path for penetration (Realisable Potential)

! (additional) realisable mid-term potential

2. Basic principles:2. Basic principles: Dynamic costDynamic cost--resource curvesresource curvesPART 1: PART 1: STATIC costSTATIC cost--resource curvesresource curves


X

X

Linkageto policy

(Band-specific) limitation of annualrealisable potential

XXXX‘Willingness to accept‘

…

…

Societalconstraints

…X(X)XX„bureaucracy“

…XXXMarket transparencyMarket &

administr. constraints

…

Band-specificlimitation of annualinstallations, additional costs for gridextension…

X(X)XXXGridconstraints(i.e. extensionnecessary)

Technicalconstraints

…

EU-wide limitation of annual installations… XXGrowth rate of

industryIndustrial constraints

Methodology to implement

Impact on Potentials

Impact onCosts

Band-specific

Country-specific

Techn.-specific

DynamicDynamic restricitonsrestricitons& & theirtheir characterizationcharacterization

2. Basic principles:2. Basic principles: Dynamic costDynamic cost--resource curvesresource curvesPART 2: PART 2: Dynamic assessmentDynamic assessment

!Dynamic cost assessment done by experience curves or expert forecast!Dynamic limitation of annual realisable potential…


RES-E technologies considered:1. Biogas2. Biomass Forestry products,

Forestry residues, Agricultural products Agricultural residues Biodegradable fraction of waste

3. Geothermal electricity4. Hydro power Small scale hydro power (<10 MW)

Large scale hydro power (>10 MW)

5. Landfill gas6. Sewage gas7. Solar Photovoltaics

Solar thermal electricity

8. Tidal (stream) energy9. Wave energy10. Wind Wind on-shore

Wind off-shore

E & CE & CE & CE & C

E & CE & CEE

E & CE & CE & CE & CEE

EEEEEE

Abbreviation:Abbreviation:

E … E … ElectricityElectricity

C … CHPC … CHP

3. Overview 3. Overview –– RESRES--E in EUE in EU--15:15: DefinitonsDefinitons


0

5

10

15

20

25

30

35

40

1993

1994

1995

1996

1997

1998

1999

2000

2001

Cap

acity

[MW

]

0

10

20

30

40

50

60

70

80

90

100

Cap

acity

- cu

mul

ativ

e [M

W]

Annual installationsInstalled capacity - cumulative

0

20

40

60

80

100

120

140

160

180

200

1993

1994

1995

1996

1997

1998

1999

2000

2001

gene

ratio

n (p

oten

tial)

[GW

h/a]

generation potential

actual generation

3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: Existing plant Existing plant –– achieved potentialachieved potentialExample: Wind onshore in Austria

Band name Constr. yearBase(B)/

Peak(P) loadPotential

[GWh]Load hours

ele [h/a]Load hours

heat [h/a]Efficiency

ele [1]Efficiency

heat [1]O+M costs [€/kWinst.] Fuel category

Investment costs

[€/kWinst.]AT-E-RES-X-WI-ON-1 1993 B 0,02 1850 0 1 0 45 0 1511AT-E-RES-X-WI-ON-2 1994 B 0,54 1850 0 1 0 45 0 1337AT-E-RES-X-WI-ON-3 1995 B 0,88 1850 0 1 0 45 0 1299AT-E-RES-X-WI-ON-4 1996 B 20,21 1850 0 1 0 45 0 1245AT-E-RES-X-WI-ON-5 1997 B 14,80 1850 0 1 0 45 0 1172AT-E-RES-X-WI-ON-6 1998 B 18,32 1850 0 1 0 45 0 1144AT-E-RES-X-WI-ON-7 1999 B 9,99 1850 0 1 0 45 0 1076AT-E-RES-X-WI-ON-8 2000 B 77,70 1850 0 1 0 45 0 1028AT-E-RES-X-WI-ON-9 2001 B 32,38 1850 0 1 0 45 0 1010


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: Existing plant Existing plant –– achieved potentialachieved potentialOverview: Achieved potential vs. Gross electricity consumption (EU-15)

0

100

200

300

400

500

600

AT BE

DK FI FR DE

GR IE IT LU NL

PT ES

SE

UK

Gross electricity consumption 2001Achieved potential 2001

69% 1% 19% 27% 15% 7% 8% 5% 17% 3% 3% 29% 19% 50% 3%

Elec

tric

ityge

nera

tion

(pot

entia

l) [T

Wh/

a]


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: Existing plant Existing plant –– achieved potentialachieved potentialOverview: RES-E technologies as share of total achieved potential (EU-15)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AT

BE

DK FI FR DE

GR IE IT LU NL

PT

ES

SE

UK

EU

15

Shar

e of

tota

l R

ES-E

gen

erat

ion

2001

Wind offshore

Wind onshore


Photovoltaics

Small-scale hydro

Large-scale hydro

Sewage gas

Landfill gas

Geothermal electricity

Biodegradable fraction of waste

Agricultural residues

Agricultural products

Forestry residues

Forestry products

Biogas

Dominating RES-E technologies:•(Large) Hydropower•Wind onshore•MSW-incineration


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: New plant New plant –– additional midadditional mid--term potentialterm potentialOverview: Achieved (2001) and additional mid-term (2020) potential (EU-15)

0

50

100

150

200

250

300

350

AT

BE

DK FI FR DE

GR IE IT LU NL

PT

ES

SE

UK

Ele

ctric

ity g

ener

atio

n po

tent

ial [

TWh/

a]

Additional mid-term potential 2020Achieved potential 2001

EU-15:•Achieved potential … 387 TWh•Additional mid-term potential … 1295 TWh


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: New plant New plant –– additional midadditional mid--term potentialterm potentialOverview: RES-E technologies as share of total additional potential (EU-15)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AT

BE

DK FI FR DE

GR IE IT LU NL

PT

ES

SE

UK

EU

15

Shar

e of

tota

l ad

ditio

nal p

oten

tial 2

020

Wind offshore

Wind onshore


Photovoltaics

Small-scale hydro

Large-scale hydro

Sewage gas

Landfill gas

Geothermal electricity

Biodegradable fraction of waste

Agricultural residues

Agricultural products

Forestry residues

Forestry products

Biogas

Dominating RES-E technologies:•Wind on- & offshore•Biomass (especially forestry products & energy crops)•Biogas•Photovoltaics


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: Costs of electricity Costs of electricity -- Model implementation Model implementation --

Band specific parameter:(i.e. included in the database for potentials & costs!!!)!Investment costs!O&M costs!Fuel costs ("Biomass)

Strategy-/Setting-specific parameter:(i.e. internalised into model-calculation)!Depreciation time!Interest rate!Electrcity market price (peak/base)

Refering to the start yearof the simulation (i.e. 2002)

The following overview on electricity generation costs is based on defaultfigures for interest rate (i.e. 6,5%) & depreciation time (i.e. 15 years)!!!


2. 2. Overview Overview –– RESRES--E in EUE in EU--1515 :: Costs of electricity Costs of electricity Overview: LongLong--runrun marginal marginal generationgeneration costscostsby RES-E (for EU-15)

0

50

100

150

200

250

300

Bio

gas

Fore

stry

pro

duct

s

Fore

stry

resi

dues

Agr

icul

tura

l pro

duct

s

Agr

icul

tura

l res

idue

s

Bio

degr

adab

le

frac

tion

of w

aste

Geo

ther

mal

ele

ctric

ity

Land

fill g

as

Sew

age

gas

Larg

e-sc

ale

hydr

o

Smal

l-sca

le h

ydro

Phot

ovol

taic

s

Sola

r the

rmal

ele

ctric

ity

Win

d on

shor

e

Win

d of

fsho

re

Long

-run

mar

gina

l ge

nera

tion

cost

s [€

/MW

h]

average PV: 460...1740 €/MWh(average: 925)


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: Costs of electricity Costs of electricity Overview: ShortShort--runrun marginal marginal generationgeneration costscostsby RES-E (for EU-15)

0

20

40

60

80

100

120

140

Bio

gas

Fore

stry

pro

duct

s

Fore

stry

resi

dues

Agr

icul

tura

l pro

duct

s

Agr

icul

tura

l res

idue

s

Bio

degr

adab

le fr

actio

n of

was

te

Geo

ther

mal

ele

ctric

ity

Land

fill g

as

Sew

age

gas

Larg

e-sc

ale

hydr

o

Smal

l-sca

le h

ydro

Phot

ovol

taic

s

Sola

r the

rmal

ele

ctric

ity

Win

d on

shor

e

Win

d of

fsho

re

Shor

t-run

mar

gina

l ge

nera

tion

cost

s [€

/MW

h]

average


3. 3. Overview Overview –– RESRES--E in EUE in EU--1515 :: CostCost--resource curves resource curves Example: Wind Wind onshoreonshore in Germanyin Germany

0

20

40

60

80

100

120

0 10000 20000 30000 40000 50000Potential [GWh/a]

Cos

ts [€

/MW

h] DE - new plant(LRMC)DE - new plant(SRMC)

0

1000

2000

3000

4000

5000

6000

2800

2600

2400

2200

2000

1800

1600

full load-hours [h/a]

Elec

tric

ity p

oten

tial [

GW

h/a]

Additional mid-termpotential

Achieved potential 2001

Distribution of potential on full-load hours

Resulting cost-resource curve(for new plant)


4. Comparison :4. Comparison : Potentials vs. targetsPotentials vs. targetsOverview: AchievedAchieved potential vs. RESpotential vs. RES--E E targetstargetsby country (for EU-15)

0

20

40

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AT BE

DK FI FR DE

GR IE IT LU NL

PT ES

SE

UK

Elec

tric

ityge

nera

tion

(pot

entia

l) [T

Wh/

a]

RES-E targets 2010 in 2020RES-E targets 2010Achieved potential 2001


4. Comparison :4. Comparison : Potentials vs. targetsPotentials vs. targetsOverview: MidMid--termterm potential vs. RESpotential vs. RES--E E targetstargetsby country (for EU-15)

0

50

100

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200

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300

350

AT BE

DK FI FR DE

GR IE IT LU NL

PT ES

SE

UK

Mid-term potential 2020RES-E targets 2010 in 2020RES-E targets 2010Achieved potential 2001

Elec

tric

ityge

nera

tion

(pot

entia

l) [T

Wh/

a]


4. Comparison:4. Comparison: Concluding remarkConcluding remarkThe derived database on RES-E potentials & costs– done by dynamic cost-resource curves – provides a comprehensive picture of the EU-wide situation& is ready to start in-depth analysis!

Documents

Dynamics of cost-resource curves for RES-E Dynamics of cost... · • To facilitate a significant increased RES-E generation in a liberalised electricity market with minimal costs