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Some Remarks on Future Electricity Generation in Europe
CenSES Annual Conference
Andreas Schröder, Supervision Prof. C. von Hirschhausen
Oslo, 30 November 2012
Road Map
European Investment-
Dispatch Model
Investment and Grid Congestion
in Central Europe
What is not part of the
future power mix!
1
2
3
CenSES Annual Conference
Model #1
Integrated Investment-Dispatch
Model for Europe
CenSES Annual Conference
CenSES Annual Conference
Regional and technical resolution
Description IIASA Denomination
Nuclear Generation 3 Old Nuclear
Generation 3 EPR Nuclear
Coal
Lignite Subcritical Coal|PC|w/o CCS
Lignite Supercritical Coal|PC|w/o CCS
Old Subcritical Coal|PC|w/o CCS
Coal Supercritical Coal|PC|w/o CCS
Lignite Oxyfuel CCS Coal|PC|w CCS
Coal IGCC CCS Coal|IGCC|w CCS
Gas
Gas Pre-comb. CCS Gas|CC|w CCS
Gas Combined Cycle Gas|CC|w/o CCS
Gas Comb. Turbine Gas|CT
Gas Steam Turbine Gas|CT
Oil Oil Steam Turbine Oil|w/o CCS
Oil Comb. Turbine Oil|w/o CCS
Hydro Hydroelectric -
EMELIE-ESY (Schröder, Traber 2013)
Capacity evolution of conventional power plants
EMELIE-ESY PRIMES
CenSES Annual Conference
Power Generation Mix under a 40% target in 2050
2020 2050
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Model #2
Grid Congestion and power plant
investment
CenSES Annual Conference
Grid Development Plan
1. Three BNetzA scenarios
2. 4 HVDC-corridors (28 GW, 3100 km)
3. Additonal measures in the AC-Grid (3100 km retrofit,
1600 km newly constructed, 1100 km adding lines)
CenSES Annual Conference
Data
Geographical Coverage
Central Europe 41 nodes (18 of which lie in Germany) with aggregated zones
Temporal Coverage
2030 Uses time series from 2011 8760 hours optimized
Generation
7 conventional technologies + wind, solar, hydro, biomass PLATTS European Power Plant Database & dena zones German capacities aligned to Scenario B 2032 (2012) Fuel & carbon prices from NEP (2012) RES feed-in scaled to 2030 EcoFys projections (NREAP basis) No CHP constraints
Demand German net demand set at 535 TWh/a (NEP, 2012 incl. industry) European demand 9% growth over 2011
Storage & DSM
3 types of storage (compressed air storage, pump hydro, battery) DSM accounts for consumer heterogeneity
Grid Recent plans from German TSOs & TYNDP (Boldt et al. 2012) 41 nodes, 263 AC lines, up to 50 DC lines
CenSES Annual Conference
Investments in gas-fired power
plants in Germany (5.3 GW)
Scenario without HVDC
Maurer et al. (2012): 19 GW
4 Results
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New CCGTs in
EU (23-32 GW)
IEA WEO (2011):
139 Coal+67 Gas
4 Results
CenSES Annual Conference
Congestion on German HVDC lines in the reference scenario
4 Results
CenSES Annual Conference
Participation in
the policy debate
Oei et al. (2012)
Schröder et al. (2012)
4 Results
CenSES Annual Conference
Part #3
What is not part of future back-up
capacity
CenSES Annual Conference
What is NOT Part of the Future Backup Capacity:
Nuclear in Europe: Uncertainty Beyond Spring 2013
►“The obligation to have
insurance cover will lead
to costs that will be
reflected in the costs to
the consumer of buying
electricity. Certainly this
will not lead to nuclear
energy becoming more
competitive” – G. Öttinger
Source: Schröder et al. (2012) Source: FT.com (2012)
Countries Having Recently Opted for
Nuclear Phase-Out (more or less binding)
What is NOT Part of the Future Backup Capacity:
Carbon Capture, Transportation and Storage (CCTS)?
“Wishful Thinking”: Expected Investment Volumes for CCTS
Additional investment needs for CCTS over the next ten years. IEA, 2009
Global CO2 pipeline development 2010-50. IEA, 2009
►The next 10 years are a critical period for CCTS (IEA, 2009).
►Among the 62 announced CO2 capture projects, only 7 pilot projects are operating on the pilot scale.
►Assuming that all of the announced projects are realized by 2050 there still remains a gap of 40 projects to reach the IAE blue map scenario.
►This gap is higher with respect to regional projections. Only Europe could reach the IEA forecast by 2020 given 37 announced CCTS projects.
IEA., 2009
IEA., 2009
Source: IEA (2009)
CCTS in Europe:
no successful demonstration project to date
Source: BOLESTA (2009)
Status of EERP (2008) and NER 300 Projects
(MIT 2012, Global CCS Institute 2011)
Project Jänsch
walde
Porto-
Tolle
Maasvl
akte
(Rotter
dam)
Belchat
ow
Compo
stilla
Don
Valley
Power
Project1
UK Oxy
CCS
Demon
stratio
n
Project
C.GEN,
Killing
holme,
Yorkshi
re
Peel
Energy
CCS
Project2
Longan
net
Project
Peterhe
ad Gas
CCS
Project
Eston
Grange
CCS
Plant
Getica
CCS
Demon
stratio
n
Project
ULCOS
– Blast
Furnac
e
Green
Hydrog
en
Countr
y DE IT NL PL ESP UK UK UK UK UK UK UK RO FR NL
Techno
logy Oxyfuel
Post-
Combus
tion
Post-
Combus
tion
Post-
Combus
tion
Oxyfuel
Pre-
Combus
tion
Oxyfuel
Pre-
Combus
tion
Post-
Combus
tion
Post-
Combus
tion
Post-
Combus
tion
Pre-
Combus
tion
Post-
Combus
tion
Post-
Combus
tion
Pre-
combust
ion
Storage Aquifer
onshore
Aquifer
offshore
Enhan.
Gas
Recov.
offshore
Aquifer
onshore
Aquifer
onshore
Enhan.
Oil
Recov.
offshore
Aquifer
offshore
Aquifer
offshore
Oil and
gas
fields
Enhan.
Oil
Recov.
offshore
Oil and
gas field
Aquifer
offshore
Aquifer
onshore
Aquifer
onshore
Enhan.
Gas
Recov.
offshore
Size 250 MW 660
MW 250 MW 260 MW 323 MW
900
MW 426 MW 450 MW
1.600
MW 330 MW
400
MW
400
MW 250 MW
Industry
(steel)
Industry
(hydro.)
NER300
Applica
tion
Yes Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Further
Fundin
g
180 M€
(EEPR)
100 M€
(EEPR)
180 M€
(EEPR)
150 M€
(NL)
180 M€
(EEPR)
137 M€
(NOR)
180 M€
(EEPR)
180 M€
(EEPR) - - - - - - - - -
Year of
Operati
on
2011
cancel.
2011
stopped 2015 unclear unclear
2010
stopped
announ.
(2016)
announ.
(2016)
announ.
(2016)
2011
cancel.
announ.
(2016)
announ.
(2016)
announ.
(2015)
announ.
(2016)
announ.
(2016)
1formerly Hatfield 2formerly Hunterston
Source: MIT 2012, Global CCS Institute 2011
What is NOT Part of the Future Backup
Capacity: Lignite
► Inputs
► Data + trend over time
Electricity Price Base
CO2 –Certificate-price
Fuelprice
Efficiency
CO2-Emissions
Full load hours
Installed capacity
Specific investment cost
Fix O&M Cost
Variable O&M Cost
Equity capital rate
Market interest rate
Internal Interest rate
Cash conversion cycle
Investment criteria
Financial data
Power plant data
Market data
Outputs
Cost of electricity
Cash Flows
Net present Value
Internal rate of return
Static payback period
Dynamic payback period
Investment appraisal as a basis for an analysis of profitability
Quantitative assumptions Input Value Trend per year [in %]
Average electricity price 51 €/MWh –
CO2-Certificate price 8 €/t CO2 + 9,25
Fuelprice 1,4 €/MWhthermisch –
Full load hours 7500 h - 2,5
Installed capacity 1100 MW –
Fix O&M cost 30 €/kW/a + 0,33
Equity capital rate 40 % –
Market interest rate 6 % –
Internal interest rate 9 % –
Cash conversion cycle 20 a –
period under review 40 a –
Efficiency 43 % 0 %
CO2-Emissions 0,950 t CO2/MWh
0 %
Specific investment cost 1700 €/kW
Variable O&M cost 6 €/MWh 0 %
Investment not profitable: NPV = -298 m€
Result: New Investments in lignite unlikely, too
24,20 29,98
37,04
45,66
-600 €
-500 €
-400 €
-300 €
-200 €
-100 €
0 €
100 €
200 €
300 €
400 €
2830
3127
3453
3811
420
5
46
36
510
9
5628
619
6
68
19
750
0
CO2-Price 2032
NPV M
illi
on
Full load hours 2032
Result: New Investments in lignite unlikely, too
1 2,2
3,4 4,6
-1,000 €
-800 €
-600 €
-400 €
-200 €
0 €
2830
3127
3453
3811
420
5
46
36
510
9
5628
619
6
68
19
750
0
Fuelprice (€/MWhth)
NPV M
illi
on
Full load hours 2032
Investment not profitable: NPV = -298 m€
Conclusion
CenSES Annual Conference
1. Our calculations show that private investors are unlikely to
invest in huge amounts of capacity under the current
market design
2. CCTS and Nuclear Power are more expensive than most
studies assume
3. There is little to no future for CCTS, lignite & nuclear
Conclusion
CenSES Annual Conference
Thank you very much for your kind attention.
DIW Berlin — German Institute for Economic Research TU Berlin – Technische Universität Berlin
Mohrenstraße 58, 10117 Berlin Workgroup for Economic and Infrastructure Policy
www.diw.de Str. des 17. Juni 135, 10623 Berlin
www.wip.tu-berlin.de