Cost assessment for FIT, study presentation Litijska cesta 45 - - PDF document

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Cost assessment for FIT, study presentation Litijska cesta 45 - - PDF document

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Cost assessment for FIT, study presentation Litijska cesta 45 Franko Nemac, Katarina Vertin, Aleks Jan, 1000 Ljubljana tel.: 01/586 38 70 ApE Ljubljana, Slovenija faks: 01/586 38 79 e-pota: info@ape.si 4th workshop of the International

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Litijska cesta 45 1000 Ljubljana tel.: 01/586 38 70 faks: 01/586 38 79 e-pošta: info@ape.si

Cost assessment for FIT, study presentation

Franko Nemac, Katarina Vertin, Aleks Jan, ApE Ljubljana, Slovenija

4th workshop of the International Feed-In Cooperation

  • 19. October 2007

Legislation for FIT and status of qualified producers

Law on Energy (1999, amended 2000, 2002, 2004, 2005, 2007);

National Energy Program (2004); Decree on condition and process for obtaining energy license (Off.Gaz. RS, no. 21/2001, 31/2001, 66/2005) Decree on condition for status of Qualified Producers (2001, 2002changed in 2007) Decree on Prices and Premiums for Purchase of Electricity from Qualified Producers (2002, amended 2004, 2006). Status of qualified producers can obtain: power plants on RES, CHP with high yield and thermo power plant Trbovlje.

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Decree on prices and premiums for purchase of electricity from qualified producers (Off.Gaz. RS no. 75/06)

5,4 Up to 1 MW inclusive Industrial heating plant 5,8 5,6 Up to 1 MW inclusive From 1 MW up to 10 MW inclusive Heating plant for district heating 5,3 5,0 Up to 1 MW inclusive From 1 MW up to 10 MW inclusive QPP or heating plant using communal waste 6,7 Combined QPP using RES 12,5 Other QPP 37,4 37,4 Up to 36 kW inclusive Above 36 kW Photovoltaic QPP 5,8 Geothermal QPP 6,0 5,8 Up to 1 MW inclusive Above 1 MW Wind QPP 6,9 6,7 Up to 1 MW inclusive Above 1 MW Biomass QPP 6,1 5,9 Up to 1 MW inclusive From 1 MW up to 10 MW inclusive Hydroelectric QPP Uniform annual price (€ Cent/kWh) Power capacity Type of QPP regarding the primary energy source

Regulatory Conditions for Qualified Producers Ministry for Economy grant the status for 10 years. Contract for selling the electricity is valid also for 10 years. FIT’s are lowered for 5% after 5 years and another 5% after 10 years of operation. Every 10 % of subsidy to the investment, lowers the FIT for 5 %. FIT are normally determined every year; levelized at least for the inflation.

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Main Bases for the RES law in Slovenia

Slovenia joined in 2007 as third country the Feed-in Cooperation organisation Ministry for economy decided that EC demands for changes in decrees on electricity form RES, will be considered in the new Law on RES The new law will have common regulatory framework for RES and CHP but separate tariff systems CHP tariff system is under elaboration and research at IJS, the part for RES is in elaboration at ApE.

Basis for Calcuations of new FIT

Starting points: Full load operating hours according to local natural conditions Specific investment for each specific source Consideration of realistic fuel and M&O costs Amortization of investments in 10 years Discount rate of 7% Financing costs: 70% commercial credit (i=7,6%) 30 % own capital (i=5%)

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Basis for Calcuations of new FIT(2)

  • Tariff validation for 10 years (purchase obligation)
  • System of unified purchase prices and premiums

Unified prices up to 5 MWe Premiums over 5 MWe

  • Considered demands for calculation of the height of FIT:

IRR = 10% Simple payback period below 10 years

  • Estimated electricity market price for 2008 is estimated at

54 €/MWh

  • After 5 years, government will evaluate the scheme and

fixed new prices for the next 10 years. The new prices will be valid only for new power plants.

10,0

  • 7.000

2.000 Landfield QP 13,0 12,0 3.800

  • ver 5 MW

13,0 12,0 4.000 from 1 MW to 5 MW 15,0 15,0 6.000 4.500 up to 1 MW Biogas QP 20,0

  • 4.300
  • ver 5 MW

20,0

  • 4.500

from 50 kW to 5 MW 20,0

  • 1.100

5.000 up to 50 kW Photovoltaic QP 30,0

  • 4.500

3.000

  • ver 5 MW

30,0

  • 4.500

3.500 up to 5 MW Geothermal QP 15,0 1,5% inc. 1.000

  • ver 5 MW

20,0 1,5% inc. 2.200 1.100 up to 5 MW Wind QP 7,5 12,6 4.000 3.000

  • ver 5 MW

7,8 12,6 3.500 from 1 MW to 5 MW 8,3 12,6 5.000 fom 50 kW to 1 MW 8,3 12,6 4.500 7.500 up to 50 kW Biomass QP 9,0 7 % of inc. 4.000 1.800

  • ver 5 MW

10,0 7 % of inc. 4.000 2.000 from 1 MW to 5 MW 11,0 7 % of inc. 4.000 2.200 from 50 kW to 1 MW 12,5 7 % of inc. 4.000 2.500 up to 50 kW Hydro QP

(€/MWh) (€/MWh) €/kWe O&M costs Fuel costs Full-

  • peration

hours Specific investment Size classes

Summary of presumptions for FIT calculations

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Hydro power plants

40% 56% 66% 88% (%) Required increase €/kWe

  • ver 5 MW

from 1 MW to 5 MW from 50 kW to 1 MW 5,94 5,94 6,16 6,16 (c€/kWh) Current price 10 years 6,51 8,34 1.800 6,65 9,26 2.000 9,67 -6,65 10,2 2.200 9,67 11,57 2.500 up to 50 kW (c€/kWh) (c€/kWh) Price in GER 30 years

  • Max. purchase

price 10 years Specific investment Size classes 4.000 full operating hours

Generation costs and the value of FIT for the hydro power plant of 1 MW

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CHP on biomass in Slovenia

6.750 (trial operation) Merkscha furnirnica d.o.o.

14 MWe Total

552 (trial operation) Bohor Žaga, Šentjur 1.900 2006 Novoles, lesna industrija Straža d.d. 608 2006 Toplarna Železniki d.o.o. 980 2003 Eko Energetika, d.o.o. 700 2002 Merkscha furnirnica d.o.o. 1.300 2002 Tanin Sevnica d.d. 1.280 2001 Eko Energetika, d.o.o.

Installed power (kWe) Start of the operation CHP on biomass

4.000 - 4500 full operating hours

Wastes 1: wood wastes in forestry and processing industry (bark, saw dust …) without adding's Wastes 2: wood wastes in manufacturing (wastes from grinderies, chipped waste palettes) wastes from the wood used in construction engineering

  • 64%

76% 144% 266% (%) Required incre ase

  • 3.000

3.500 5.000 7.500

€/kWe Specific investment

  • 6,7

6,7 6,9 6,9 (c€/kWh) Current price 10 years minus 40% minus 25% 6,3 minus 40% minus 25% 11,00 11,80 16,90 25,30 (c€/kWh)

  • Max. purchase

price 10 years (c€/kWh) Price in GER 20 years Size classes

  • wastes 2
  • wastes 1
  • Solid

biomass Co-firing

  • wastes 2
  • wastes 1

Wastes with biogen share 8,03 from 5 MW 8,51 from 1 MW to 5 MW 10,99-8,9 from 50 kW to 1 MW 10,99 to 50 kW Solid biomass

FIT for CHP biomass power plants

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Wind power plants

46% 67% (%) Required increase 1.000 1.100 €/kWe Specific investment 5,86 5,86 (c€/kWh) Current price 10 years 8,19 - 5,18 8,56

  • ver 5 MW

8,19 - 5,18 9,78 up to 5 MW (c€/kWh) (c€/kWh) Price in GER 20 years

  • Max. purchase

price 10 years Size classes 2.200 full operating hours, O&M costs 15-20 €/MWh +1,5% of income for land use Off grid wnd power plants on Kredarica 2 x 6 kW

Geothermal power plants

125% 153% (%) Required increase 3.000 3.500 €/kWe Specific investment 5,86 5,86 (c€/kWh) Current price 10 years 14,00 (up to 10 MW) 13,16

  • ver 5 MW

15,00 14,83 up to 5 MW (c€/kWh) (c€/kWh) Price in GER 20 years

  • Max. purchase

price 10 years Size classes 4.500 full operating hours O&M costs 30 €/MWh

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PV power plants – on roofs

65% 72% 90% (%) Required increase 49,21 37,42 71,29 5.000 up to 50 kW 4.300 4.500 €/kWe Specific investment 37,42 37,42 (c€/kWh) Current price 10 years 46,30 61,56

  • ver 5 MW

46,81 (30 - 100 kW) 46,30 (over 100 kW) 64,36 from 50 kW to 5 MW (c€/kWh) (c€/kWh) Price in GER 20 years Max. purchase price 10 years Size classes 1.100 full operating hours

PV power plants in 2007

On roof

(in construction)

70.000 84 Strahovica, Gorenjske elektrarne On roof +horiz. + tracking 25.000 25 SŠTS Šiška, Elektro Ljubljana On a dam

(in construction)

72.000 72 Savske elektrarne, HE Vrhovo On roof

(in construction)

110.000 100 Pipistrel, Ajdovščina On roof 5.000 5 E7+ Ambrož pod Krvavcem On roof 3.500 3 Zvonko Beli, Pševo 350.5 36 3,5 20 2 Power (kWp) 364.000 36.000 4.200 20.000 2.000 Production (kWh) TOTAL On a dam Savske elektrarne,HE Mavčiče- added On roof E-bajt, Kamna gorica On roof Punt International, Žirovnica On roof Aleš Rom, Vrhnika Type INVESTOR

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Biogas and land field + sewage gas

1% 5% 10% 25% (%) Required increase 2.000 3.800 4.000 4.500 €/kWe Specific investment 8,03 12,09 12,75

  • ver 5 MW

8,51 12,09 13,25 from 1 MW to 5 MW 9,33-8,36 5,32 5,35

  • Land field

Sewage gas 10,99- 8,51 12,09 15,15 up to 1 MW Biogas (c€/kWh) Current price 10 years (c€/kWh) (c€/kWh) Price in GER 20 years Max. purchase price 10 years Size classes Type of RES QP 6.000 full operating hours for biogas 7.000 full operation hours for land field gas and sewage

Recommendations for Slovenia

Slovenia needs new, clear and ambitious goals that can be reached. To reach 33,6 % of electricity production by RES-E up to 2010, Slovenia needs official targets in MW for each type of RES and formal obligation to achieve them. The new feed-in law for RES has to be stable, predictable and not complicated. The system has to support new investments capacities! There has to be clear difference between new and old ones.

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Recommendations for Slovenia (2)

New legislation must guarantee, that the adopted supporting strategy for new investments will last for exact time frame (from 10 to 25 years) Supports for already amortized or properly subsidized RES power plants in the past have to be abolished. Some simplifications regarding licensing, payments, taxes, etc., have to be done for micro RES-E producers –individual investors.

5,32 12,09 12,09 12,09 37,42 37,42 37,42 5,86 5,86 5,86 5,86 9,12 9,12 9,41 9,41 5,94 5,94 6,16 6,16 (c€/kWh) Current price 1 5 10 25 65 72 91 125 153 46 67 21 29 80 169 40 56 66 88 (%) Required increase 5,35 Land field QP 12,75

  • ver 5 MW

13,25 from 1 MW to 5 MW 15,15 up to 1 MW Biogas QP 61,56

  • ver 5 MW

64,36 from 50 kW to 5 MW 71,29 up to 50 kW Photovoltaic QP 13,16

  • ver 5 MW

14,83 up to 5 MW Geothermal QP 8,56

  • ver 5 MW

9,78 up to 5 MW Wind QP 11,00

  • ver 5 MW

11,80 from 1 MW to 5 MW 16,90 fom 50 kW to 1 MW 25,30 up to 50 kW Biomass QP 8,34

  • ver 5 MW

9,26 from 1 MW to 5 MW 10,2 from 50 kW to 1 MW 11,57 up to 50 kW Hydro QP (c€/kWh)

  • Max. purchase price

Size classes Type of RES QP

Summary of current and new prices

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Current and new prices of RES for 10 years

10 20 30 40 50 60 70 80 u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

M W u p t

  • 5

M W u p t

  • 5

k W

  • v

e r 5 M W f r

  • m

1 M W t

  • 5

M W Type and size of RES FIT (cE/kW h) New FIT 10 years (c€/kWh) Current FIT 10 years (c€/kWh)

5,32 12,09 12,09 12,09 37,42 37,42 37,42 5,86 5,86 5,86 5,86 9,12 9,12 9,41 9,41 5,94 5,94 6,16 6,16 (c€/kWh) Current FIT 10 years 9,33-8,36 8,03 8,51 10,99 -8,51 46,30 46,81-46,30 49,21 14,00 15,00 8,19-5,19 8,19-5,19 8,03 8,51 10,99-8,9 10,99 6,51 6,65 9,67 -6,65 9,67 (c€/kWh) FIT GER 20 years 4,3 5,35 Land field 10,40 12,75

  • ver 5 MW

10,80 13,25 from 1 MW to 5 MW 12,3 15,15 up to 1 MW Biogas 46,96 61,56

  • ver 5 MW

49,02 64,36 from 50 kW to 5 MW 54,26 71,29 up to 50 kW Photovoltaic 10,67 13,16

  • ver 5 MW

12,00 14,83 up to 5 MW Geothermal 6,85 8,56

  • ver 5 MW

7,9 9,78 up to 5 MW Wind 8,20 11,00

  • ver 5 MW

8,85 11,80 from 1 MW to 5 MW 12,70 16,90 fom 50 kW to 1 MW 19,00 25,30 up to 50 kW Biomass 6,53 8,34

  • ver 5 MW

7,26 9,26 from 1 MW to 5 MW 8,00 10,2 from 50 kW to 1 MW 9,08 11,57 up to 50 kW Hydro (c€/kWh) (c€/kWh) New FIT 20 years ? New FIT 10 years Size classes Type of RES

Comparison with German’s prices for RES

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Comparison with German’s prices for RES

10 20 30 40 50 60 70 80 u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

M W u p t

  • 5

M W u p t

  • 5

k W

  • v

e r 5 M W f r

  • m

1 M W t

  • 5

M W Type and syze of RES FIT (cE/kWh) New FIT 10 years (c€/kWh) FIT GER 20 years (c€/kWh) 10 20 30 40 50 60 u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

k W f r

  • m

1 M W t

  • 5

M W u p t

  • 5

M W u p t

  • 5

M W u p t

  • 5

k W

  • v

e r 5 M W f r

  • m

1 M W t

  • 5

M W Type and syzes of RES FIT (cE/kWh) FIT GER 20 years (c€/kWh) New FIT 20 years (c€/kWh)

QUESTIONS FOR DISCUSSION

Is the calculation and guaranted period of 10 years, with relatively high tarifs, an appropriate decision for Slovenia? How it goes with the 20 or 25 years of our feed-in partners, Germany and Spain? Is some harmonisation of FIT desired or even required for long-term success? Do we need the same basis for calculations of FIT in all feed-in countries? Is for Slovenia the best option to change the FIT system burocraticly, according the requirements of DG Competition, and accepting that we are dealing with state aids? Is there an option to change the existing FIT in Slovenia in direction of German FIT system? What should be done? What are the realy needed and required formal changes?

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Thank you for your attention! Franko.nemac@ape.si