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This presentation gives an overview of support schemes for electricy from renewable energy sources (RES-E) in Europe. It also refers to best practices for effective and efficient support schemes, reports on the progress of Member States in achieving the 2020 RES targets and raises the question if convergence of RES-E policies in Europe would be a helpful option. Dr Isabelle de Lovinfosse, Senior Consultant for Policy Design & Evaluation at Ecofys, held the presentation at the "Rencontre thématique de l’énergie CWAPE" in Namur, Belgium, on 19 April 2013.
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Dr Isabelle de Lovinfosse
RES-E support schemes in Europe
Rencontre thématique de l’énergie
CWAPE, Namur, Friday 19 April 2013
© ECOFYS | |
Structure of the presentation
1. Overview of RES-E support schemes in Europe
2. Best practices for effective and efficient support
schemes
3. Progress of MS in achieving the 2020 RES targets
4. Can convergence of RES-E policies in Europe help?
Main sources:
• European projects: RE-Shaping (2009-2012), Financing RE in the European Energy Market (2010-2011),
Renewable energy progress and biofuels sustainability (2012), DIA-CORE (2013-2015)
• Other projects: International Feed-in Cooperation (ongoing), Implementing Cooperation Mechanisms
(2009-2012), FIT tracker (2011), IRENA tariff-based supports (2012)
19/04/2013 Dr Isabelle de Lovinfosse
© ECOFYS | |
Why policies?
> We don’t think too far ahead
Our time-horizon of 2-3 years,
equals 3-6 squirrel months
Because humans are like squirrels
> We ignore externalities
The (future) costs of climate change or adaptation
Scarcity of fossil fuels / security of supply
Other environmental and health costs
The societal costs of accidents (Deepwater Horizon
or Fukushima), or nuclear waste disposal
3 Dr Isabelle de Lovinfosse 19/04/2013
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Diversity of RES-E support schemes in Europe
but some converging trends…
Dr Isabelle de Lovinfosse 19/04/2013
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… some converging trends in RES-E support
schemes
Diversity of support schemes in Europe is shown by different
colours and patterns, but some converging trends have been
observed:
• Use of combination of instruments instead of one size fits all
(many patterns instead of plain)
• Diffusion of feed-in premiums across Europe as compromise
between revenue security of investors and RES-E exposure to
market signals (e.g. Netherlands, Germany, UK)
• Use of tendering systems to allocate support only to selected
projects
• Joint support schemes (e.g. Sweden and Norway)
• Moratoriums and uncertainties on the future of support
schemes because of unacceptably high cost of support (e.g.
Spain, Portugal, Latvia, Bulgaria, Czech Republic)
Dr Isabelle de Lovinfosse 19/04/2013
© ECOFYS | |
Lessons from MS experience tell us how to design
effective and efficient RES-E support schemes
Provide reliable framework:
frequent and unexpected policy
changes undermine investor
confidence
• Policy changes transparent and predictable (e.g. automatic degression, clear formula for quota setting, pre-set revision agenda)
• No retroactive changes
• Long term political commitment
• Consultation with stakeholders
Lessons learnt Best practice design criteria
Reflect and limit investment risks:
risk-conscious (triple-A) policies
increase growth and reduce support
costs by up to 50%
• Tailor support scheme to RE market deployment status and electricity market readiness
• No abrupt or retroactive policy changes
• Avoid rigid budget or capacity caps
• Simple, transparent permitting process
• Priority grid access and dispatch
• Quota: long term horizon and serious penalties
• Government facilitates access to capital (e.g. participation, financial guarantees, loans)
Predictable flexibility: Adjust level of
support to technology and market
conditions
• Apply technology specific support levels
• Calculate level of support based on LCOE, so support neither too low nor too high
• Planned and transparent adjustments based on technology and market changes
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© ECOFYS | | 29/04/2013 Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
The MS are currently on track with their 2011/2012
trajectory but projections do not look good for 2020
Dr Isabelle de Lovinfosse 19/04/2013
© ECOFYS | |
The MS are currently on track with their 2011/2012
trajectory but projections do not look good for 2020
In 2010 most MS were on track with their 2011/2012 trajectory, apart
from Malta, the Netherlands, the UK and Latvia.
The RES growth rate experienced in the last few years would need to be
maintained or even strengthened in order to reach the 2020 target but this
is very unlikely.
RES target achievement is highly dependent on growth in energy demand.
If the current low energy demand growth rate picks up again then RES targets
will become even more difficult to achieve.
Projections for 2020 do not look good. Only Sweden, Austria and Estonia
are expected to meet their target, that is:
• If they implement the measures planned in their progress report
• If their energy demand follows their energy efficiency scenario (not the
BAU)
For most of the MS additional policy efforts (both on financial and non-
financial incentives) are needed in RES-E, RES-H&C and RES-T to reach the
target. The current moratoriums and uncertainties on support schemes are not
heading in the right direction!
Dr Isabelle de Lovinfosse 19/04/2013
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In Europe the RES-E policy debate has moved …
9
from harmonisation
to coordination
and cooperation
Dr Isabelle de Lovinfosse 19/04/2013
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Supporting RES-E is and will remain challenging.
Can more convergence in Europe help?
Financial and economic crisis: puts pressure on government
budgets, consumers’ bills and access to finance
•Reducing RES-E support costs by streamlining best-practice criteria
• Joint European effort to attract more
investments
Challenges Potential role of convergence
System impacts: High RES-E deployment rates affect electricity
systems and markets
•Trans-European grid development
• Integration of European electricity markets
•Coordinated reforms of electricity market
regulations
Opposition: With RES-E becoming mainstream, growing opposition against RES-E (from incumbent electricity actors and the public)
Coordinated EU-wide effort on transparent and fair communication on the short and long term benefits & costs of RES-E growth
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RES-E support schemes in Europe - Conclusions
Diversity of RES-E support schemes in Europe, but
converging trends towards FIP and tendering
Additional policy efforts are needed to meet the 2020 target,
but at lower cost than in the past
Applying best practice RES-E support principles is key for
further RES-E growth in Europe with economic and social
acceptability of support schemes
Increased exchange, cooperation and EC guidance can help
streamline best practice principles across Europe
Now policy changes are needed but keep in mind:
No retroactive changes, there are other solutions to smooth
burden from past in the future
Continuity with the past
Transparent flexibility of support in future for necessary
changes
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Thank you for your attention!
Dr Isabelle de Lovinfosse 19/04/2013
