Harmonization of feed-in laws in the European Union Miquel Muoz - - PowerPoint PPT Presentation

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

Harmonization of feed-in laws in the European Union

Miquel Muñoz Cabré Institut de Ciència i Tecnologia Ambientals Universitat Autònoma de Barcelona miquel.munoz@uab.es

Miquel Muñoz Cabré

Madrid 23 November 2006

Article accepted for publication at:

Harmonization of feed-in law s in the European Union

Miquel Muñoz Cabré Volker Oschmann Joan David Tàbara

Authors:

Miquel Muñoz Cabré

Madrid 23 November 2006

1 - premium system 2 - flexibility mechanisms 3 - complementary considerations

Harmonization of feed-in law s in the European Union

Harmonized methodology:

investment costs grid services political incentive

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

{

{

{ {

National Nat Harmonized Incentive Political U E EU Services Grid Grid Investment RoI

σ σ σ σ σ + + + = 4 4 4 4 4 4 8 4 4 4 4 4 4 7 6

_ _ _

revenue = market price + modular premium (σ)

national priorities

1- premium system

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

1.1 - premium σRoI :

• bjective: to provide reasonable expectation of cost

recovery for investment reflects: technology costs cost of financing expected revenues from electricity sales

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

• bjective: to compensate for grid services which are not

explicitly reflected in electricity prices

in the long run will be integrated into the pricing system for electricity

1.2 - premium σGrid :

examples: grid stability, distributed generation, resilience, sustaining tension gaps.

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

refects EU-willingness to reach targets linked to the EU stated targets same across Member States for all renewable electricity generators of the same kind gives “teeth” to EU targets, by linking them to a financial instrument

1.3 - premium σEU :

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

• bjective: to allow national priorities

(which may include regional priorities)

4 3 4 2 1 4 3 4 2 1 4 3 4 2 1 4 3 4 2 1

ies externalit

• ther

ext NAT

• n

distributi regional reg NAT benefits tal environmen env NAT benefits social soc NAT NAT _ _ _ _ − − − −

+ + + = σ σ σ σ σ

• ptional

σnat can be used as transition mechanism from

previous support schemes

1.4 - premium σNat :

Miquel Muñoz Cabré

Madrid 23 November 2006

profitability threshold semi-linear step function target revison trigger

Harmonization of feed-in law s in the European Union

allow to reflect:

• technology innovation
• changes in economics of

the energy sector

2- flexibility mechanisms:

facilitate:

• fulfilment of targets
• fair distribution of costs
• stable investment framework

Miquel Muñoz Cabré

Madrid 23 November 2006

2.1 - profitability threshold

Harmonization of feed-in law s in the European Union

specifies the overall remuneration that would make a technology competitive at the time of deployment defined at the same time as the premium, locked for each installation for the 20-year duration of the support scheme affects σRoI, and σEU but notσGrid

Miquel Muñoz Cabré

Madrid 23 November 2006

2.2 - semi-linear step function

Harmonization of feed-in law s in the European Union

Innovation Rent = Area A + Area B

Miquel Muñoz Cabré

Madrid 23 November 2006

2.3 - target revison trigger

Harmonization of feed-in law s in the European Union

when a technology is nearing its goal (e.g. 50%) a revision of established goals would be mandated

• bjective: to avoid policy gaps

Miquel Muñoz Cabré

Madrid 23 November 2006

Harmonization of feed-in law s in the European Union

3 - complementary considerations

grid access funding definitions and standards,

• wnership of rights derived from

renewable electricity exceptions for small non-commercial producers and energy intensive industries.

Miquel Muñoz Cabré

Madrid 23 November 2006

grid access

Harmonization of feed-in law s in the European Union

explicit provisions to guarantee connection and transmission technical requirements for connection and delivery allocation of costs for connection and grid upgrading deviations allowed for intermittent renewable sources length of bidding window

Miquel Muñoz Cabré

Madrid 23 November 2006

funding

Harmonization of feed-in law s in the European Union

premiums paid at the national level by national consumers

σEU, can be shifted to the European electricity consumer σNAT can be differently funded

Miquel Muñoz Cabré

Madrid 23 November 2006

definitions and standards

Harmonization of feed-in law s in the European Union

definitions on what constitutes a renewable energy source what technologies qualify for support technical standards Agreement on:

Miquel Muñoz Cabré

Madrid 23 November 2006

• wnership of rights derived

from renewable electricity

Harmonization of feed-in law s in the European Union

• wnership falls on the TSO

revenue used: (1) to offset premium costs (2) to offset grid upgrading costs (3) for environmental measures related to the grid if producer forfeits premiums then he/she retains

• wnership of tradable assets + grid-access provisions

Miquel Muñoz Cabré

Madrid 23 November 2006

small non-commercial producers

Harmonization of feed-in law s in the European Union

Simplified systems non-commercial feed-in tariff aggregation system specific taxation and accounting provisions

Miquel Muñoz Cabré

Madrid 23 November 2006

energy intensive industries.

Harmonization of feed-in law s in the European Union

Special consideration regarding their obligation to fund the premium renewable electricity can actually reduce the overall costs of electricity (Martin 2004, Bode 2006, Neubarth et al. 2006,

Ragwitz et al. 2006a)

based on actual electricity price increases

,

Miquel Muñoz Cabré

Madrid 23 November 2006

4 - conclusions

Harmonization of feed-in law s in the European Union

It is in principle possible to harmonize feed-in laws The proposed scheme builds on the strengths of feed-in laws and proposes mechanisms to address their shortfalls The proposed scheme incorporates its own obsolescence: σRoI – profitability threshold and revision σEU – achievement of targets σGrid – integrated into pricing