Low-emission energy investments in rural areas

SPOŁECZNA RADA DS. ROZWOJU GOSPODARKI NISKOEMISYJNEJ

Marina CoeyDyrektor ds. MiędzynarodowychStowarzyszenie na Rzecz

Efektywności ETA

Low-emission energy investments in rural areas

Impact Study of the Renewable Energy DirectiveEuropean Economic and Social Committee

Warsaw, 09/04/2014.

SOCIAL COUNCIL TO DEVELOP LOW-EMISSION ENERGY INVESTMENTS IN RURAL AREAS

Director for International Relations

One of the greatest discrepancies in terms of people's well-being is their level of energy comfort which is close to European standards in Poland's urban regions yet which still remains at a post-Soviet level in the country's rural areas.

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Energy comfort standards


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Level of urbanisation:

CITIES OF OVER 20 000 INHABITANTS

Rural areas represent:

40% of the country's population

90% of its area


LEVEL OF URBANISATION in Poland

Urban population as percentage of total, by county

The situation is bad in rural areas

The problems are reflected by quality indicators such as:

•power cuts – the most frequent in the EU, 20 times more frequent than in Germany. Polish standards are extremely low;•voltage levels for rural customers often falling below 180V (the European standard is 230V);•frequent problems obtaining the connection capacity needed for agricultural activity;•lack of Service Level Agreements guaranteeing, among other things, reliable supplies to sensitive facilities (hatcheries, chicken farms, broilers, veal farms, cooling facilities, milking parlours, etc.);•excessive levels of harmonics (grid contamination).

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SWOT analysis of DirectiveSWOT analysis of Directive

Strengths Weaknesses

Catalyst for development of prosumer energy but not for SMEs.

Removal of future market distortions (e.g. overhang) thanks to tariff auction mechanism.

Discourages diversification of sources - monoculture.

Risk of generating investment avatars (selling options).

Opportunities Threats

Possibility to significantly improve the system with just small changes.

Danger of the system becoming frozen.

Lack of certified installation technicians. 5/22


Rural development and improving the quality of supplies

• Rural development, particularly in terms of promoting innovation in rural areas, requires significantly improved electricity supplies.

One solution would be an overhaul of electricity grids, which would require at least PLN 30-60 billion up to 2020 and as much again during the following 10 years.

• A much faster solution would be to launch a programme to develop low-emission energy in rural areas.

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Rural development and funding

If Polish villages and the Polish economy are to develop, changes

are needed to electricity supplies in rural areas. In the 2007-2013 period, rural local councils were eligible for funding from the “Infrastructure and Environment” operational programme.

Total funding earmarked for implementation of priorities IX and X up to 2013 was EUR 3.1 billion. This might seem like a lot, but was intended not just for rural areas, and above all the programme was targeted at large investment programmes with a budget of several million euros or more. Most rural councils find it difficult to implement such large projects. The “Rural development for 2007-2013” programme and other funding programmes included only minimal funding for improving electricity supplies.

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State of rural grid

• In Poland electrical energy distribution is fairly inefficient (8-9% of losses, more locally).

• The rural electricity grid comprises around 490,000 km of medium- and low-voltage cables and 169,000 transformer stations (2011).

• Over 75% of them are in poor technical condition.

• Supplies are of significantly lower quality than the European average.

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Modernising cables

It is estimated that in order to halt the process of deterioration in rural electricity grids, at least 12-14,000 km of cables and around 4.5 thousand stations would have to be modernised every year.

Upgrading grids would cost twice as much.

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Modernising cables up to 2020

Minimum investment to avoid blackout can be estimated as follows:

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Estimated minimum cost of modernising rural cables in 2012

Based on: Sieć elektroenergetyczna na terenach wiejskich. Potrzeby rozwojowe i modernizacyjne (Electricity grids in rural areas. Development needs and modernisation); “Energia elektryczna” PTPiREE; April 2012

Grid componentsCost of regeneration thousand PLN/year

Cost of upgrading thousand PLN/year

Total cost PLN/year

Medium-voltage cables

606 390 244 120 850 510

Low-voltage cables 571 560 291 720 863 280

Pole-mounted stations 15(20)/0.4

kV 276,450 100,890 377,340

Razem 1,454,400 636,730 2,091,130


Developing low-emission energy in rural areas

The best possible solution is to develop dispersed energy sources in less urbanised areas. The logical conclusion is therefore to develop low-emission energy, with three main focuses in rural areas:

1.Improving energy efficiency.

2.Developing dispersed, low-emission energy sources, by means of the following options:

a. Municipal low-emission energy centres;

b. Prosumer energy sources.

3.Developing smart grids together with accompanying logistical/services/operational infrastructure at the main voltage levels:

a. low.

b. medium.

Nearly all of the above areas (except pt. 3b) have been prioritised by the European Commission.

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We need to overcome the relics of Poland’s historical division into occupied zones

12/22Source: FDP Polska wieś 2012. Raport o stanie wsi - Potencjał obszarów wiejskich szansą rozwoju; FDP Polska wieś 2012. Raport o stanie wsi; Forum Debaty Publicznej; President’s Office; June 2012


Potential for developing micro installations in villages

Estimates of the potential for developing heat and electricity production from micro-installations suggest that with around 2 million farms and 4 million houses we have a total potential of around 6 million Polish households. Even very low-level use of this potential at say 7%, thanks to additional support for purchasing and installing micro-installations with an average capacity of 3 kW, would result in a total production capacity of 1260 MW.

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In Great Britain:

There are already over:

5oo,ooohome installations.

In Germany:

There are already over

1,ooo,ooohome installations.

In Poland:

We could have over

2,ooo,ooohome installations.


Legislative facilitation and obstacles

• According to the revised Article 7(8)(3)(b) of the Energy Law Act, no fees are charged for connecting micro-installations to electrical grids. It is only possible to connect to the grid if connection of the micro-installation is included in the contractual connection capacity.

• Unfortunately, one area which has not been regulated by the Economic Affairs Ministry and the Polish government is support for small and micro co-generation sources based on fossil fuels such as gas.

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Legislative facilitation and obstacles

• According to the new draft Renewable Energy Act submitted to the Parliament, persons not operating a company can become prosumers (and without having to set up a company in order to do so);

• Unfortunately, persons operating any kind of company are treated as ordinary producers and have to undergo the same kind of laborious procedures as wind or photovoltaic farms;

• The new Renewable Energy Act introduces net metering, with net electricity balance calculated on a half-yearly basis!

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Energy cooperatives

Based on our analysis, another proposal we would like to make is the possibility to set up

energy cooperatives.Local and regional authorities play a key role in promoting the development of prosumer micro-installations at the initial investment stage.

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In Germany:

Already over

1,000energy cooperatives

(Energiegenossenschaft)


Guidelines for local authorities – investments in low-emission energy

Local authorities are responsible for energy planning on the basis of the Energy Law Act. Such planning can offer the following benefits:•ensuring reliable, high-quality energy supplies to consumers,

•meeting consumer needs at the lowest possible cost while

ensuring high-quality transmission and distribution services, •enabling regional economic development, •making rational use of local energy resources and energy surpluses in the system,•developing innovative technologies, etc.

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Dismantling the barriers to dispersed energy supplies

Administrative measures are needed to provide mechanisms and incentives together with institutional, financial and legal frameworks enabling dismantlement of barriers to efficient energy production.

The public sector can set a good example here. Public construction projects can pilot investments in dispersed energy.

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In France:

Public buildings

from 2019will be zero energy.

Benefits of smart grids

Optimal grid use – greater energy security, more reliability; Integration of dispersed sources – increasing the share of renewable

energy sources;

Transforming passive consumers into active prosumers – decentralising the energy sector;

Improving the distribution sector – monitoring breakdowns, limiting electricity theft;

Effective energy demand management – possibility of bidirectional communication, matching supply and demand.

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Rural energy technology

Photovoltaic panels, Wind turbines, Micro co-generation systems, Heat pumps, Energy storage systems.

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Bottom-up initiatives – new prospects

In the Polish situation, with serious energy problems in rural and weakly urbanised areas, bottom-up local civic initiatives to develop modern municipal energy infrastructures – such as municipal renewable energy centres, municipal micro-grids, municipal civic energy initiatives – can make a huge contribution, for example in the form of energy cooperatives.

In just a few years, this could change the face of Polish villages.

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Poland already has tools

such as

GE Strategto optimise the municipal energy

mix.


Marina Coey

Director for International Relations

Stowarzyszenie na Rzecz Efektywności ETA 22/22

Thank you for your attention


Documents

Low-emission energy investments in rural areas