in Russia and EU Andrey Khorshev, Tatiana Pankrushina The Energy - - PowerPoint PPT Presentation

▶
in russia and eu
SMART_READER_LITE
LIVE PREVIEW

in Russia and EU Andrey Khorshev, Tatiana Pankrushina The Energy - - PowerPoint PPT Presentation

Oct 10, 2022 322 likes •461 views

Carbon avoided costs for the low- carbon technologies in Russia and EU Andrey Khorshev, Tatiana Pankrushina The Energy Research Institute of the Russian Academy of Sciences 13th Conference on Energy Economics and Technology ENERDAY 2019

slide-1
SLIDE 1

LOGO

Carbon avoided costs for the low- carbon technologies in Russia and EU

Andrey Khorshev, Tatiana Pankrushina

Dresden, April 12, 2019

The Energy Research Institute

  • f the Russian Academy of Sciences

13th Conference on Energy Economics and Technology ENERDAY 2019

slide-2
SLIDE 2

LOGO

2

GHG Emissions in Russia

Russia has signed the Paris agreement but yet to ratify it. Even if Russia ratifies it with submitted INDC we will have the considerable positive gap between the actual emissions and possible limitation. At present, mitigation of GHG emissions is NOT one of the main concerns for Russian Government.

0% 20% 40% 60% 80% 100% 120% 500000 1000000 1500000 2000000 2500000 3000000 3500000 4000000 4500000 GHG Emissions, kt CO2eq (left scale) INDC to Paris agreement (left scale) Carbon intensity of GDP (% to 1990) (right scale)

Источники: Второй двухгодичный доклад Российской Федерации, представленный в соответствии с Решением 1/СР.16 Конференции Сторон Рамочной Конвенции Организации Объединенных Наций об изменении климата. Москва, 2015 г. Обзор состояния и загрязнения окружающей среды в Российской Федерации за 2015 год. Росгидромет РФ. Москва, 2016.

slide-3
SLIDE 3

LOGO

3

Carbon avoided costs as a marker of carbon price  Power sector forms >25% of GHG and >35% of national CO2 emissions nowadays  Power sector will be the main area of GHG mitigation through the unique technological

  • pportunities for the inter-fuel competition and

competition between fossil fuels and renewables  Carbon avoided costs in electricity generation will form the long-term basis for carbon taxes and/or prices

slide-4
SLIDE 4

LOGO

4

Russian Power Sector at a Glance – Present

84 95 108 58 57 55 24 25 28 44 46 48 0.0 0.0 0.7

50 100 150 200 250 2007 2012 2017

Installed Capacity, GW

Hydro Solar+Wind Nuclear Gas Coal

169 155 179 160 177 203 402 439 451 251 260 220 0.0 0.0 0.7

200 400 600 800 1000 1200 2007 2012 2017

Gross Generation, GWh

  • Slow growth of electricity demand (only +7% over 10 years), but 2x faster growth
  • f available capacities (+14%) => big amount of spare capacities (≈30 GW)
  • Mainstay of the power sector is GAS-fired generation–45% (of which 55% - CHP)
  • Considerable share of non-carbon generation – 36%, but share of solar and wind

is negligible (0,1%, 700 MW installed)

  • Only 20% of TPPs has up-to-date equipment (efficient CCGT, OCGT)

*All data for IPS of Russia

slide-5
SLIDE 5

LOGO

More than 40% of Russian TPPs will exceed their life time until 2025 with another 25% until 2035. It is considered as one of the biggest threats for Russian power sector in near future.

Thermal PPs in 2015 Exceeding lifetime before 2025 Exceeding lifetime before 2035 Exceeding lifetime after 2035 Installed capacity, GW

Russian Power Sector at a Glance – Future

slide-6
SLIDE 6

LOGO

6

Russian Power Sector at a Glance – Future: Latest General Scheme of Russian Power Sector Development Main Investment Priorities up to 2035:

  • Modernization of existing TPPs (about 50 GW)
  • New nuclear reactors (VVER-TOI, “Fast” Reactors) – up to 22 GW
  • RES (Solar & Wind) – at least 3 GW (later increased to 5 GW)
  • New effective Thermal Power Plants – CCGT (localized) + Coal USC
  • Smart-grids and demand response

200 400 600 800 1000 1200 1400 2015 2020 2025 2030 2035

Demand +30%

GWh

50 100 150 200 250 300 2015 2020 2025 2030 2035

Capacity +12%

GW

  • 600

1400 2015 2020 2025 2030 2035

Nuclear Hydro RES Fossil Demand

*All data for IPS of Russia

slide-7
SLIDE 7

LOGO

7

Methodology of CAC calculation Main assumptions:

  • Coal USC plant as a REFERENCE technology;
  • LCOE calculations do NOT take into account:
  • EU ETS carbon prices;
  • tax, investment and other support measures for RES;
  • Discount rate – 10%;
  • We assumed that all wind and solar capacity is unstable and must be

RESERVED by:

  • existing thermal generation (+O&M costs to maintain the availability of

existing gas/coal fired plants are included in LCOE) or;

  • new open cycle gas turbines (1-to-1) (+ capital costs of OCGT + O&M

costs of OCGT) or;

  • new storage capacity (from 50% to 100%) (+ capital costs of storage +

O&M costs of storage + additional losses due to the storage efficiency).

CarbonAvoidedCosts alt = (LCOE alt – LCOE ref) (Emission alt – Emission ref)

slide-8
SLIDE 8

LOGO

8

Assumed Fuel Prices in Russia and EU, $2016/toe

Source: for Russia – ERI RAS forecast, for EU – based on Columbia University (2018). The Role of Natural Gas in Europe's Electricity Sector Through 2030.

  • Currently, Russia maintains regulation of domestic gas prices and their

level is about 2.5 times lower than in EU

  • It seems realistic that Russian policy of keeping the growth of gas prices

around inflation will continue up to 2030. It will keep the 2-3 times gap between gas prices in Russia and the EU

  • Despite the fact that coal prices in Russia are formed using market

mechanisms, they still will be lower than in the EU by 20-30%

80 90 100 110 120 130 140 150 gas coal gas coal 2016 2030

Russia (Moscow)

50 100 150 200 250 300 350 400 gas coal gas coal 2016 2030

EU (CE)

slide-9
SLIDE 9

LOGO

500 1000 1500 2000 2500 3000 3500

Coal USC CCGT Nuclear Wind

  • nshore

Solar PV Coal USC CCGT Nuclear Wind

  • nshore

Solar PV 2016 2030

Russia

500 1500 2500 3500 4500 5500 6500

Coal USC CCGT Nuclear Wind

  • nshore

Solar PV Coal USC CCGT Nuclear Wind

  • nshore

Solar PV 2016 2030

EU

9

Assumed Capital Costs for Russia and EU, $2016/kW

Source: for Russia – ERI RAS forecast, for EU – based on Columbia University (2018). The Role of Natural Gas in Europe's Electricity Sector Through 2030.

  • Until recently, the development of large CCGT and RES in Russia was based on the imported
  • equipment. This made their cost almost equal in Russia and the EU.
  • However, a sharp drop in the ruble exchange rate and imposed sanctions made imported equipment

too expensive or difficult to acquire. This led to the launch of a government localization program.

  • Its implementation is already bringing results. At the 2018 auction for RES PPA capital costs of wind

decreased 2 times, solar PV – almost 3 times (comparing with 2014-2016 auctions)

  • There is a big difference in the cost of nuclear power plants in Russia and the EU. Mass construction
  • f VVER-1200 units in recent years will keep their cost as low as 2200 $/kW. It’s assumed that

introduction of new VVER-TOI units after 2025 will reduce the cost for another 10-15% making nuclear very cost competitive in Russia

slide-10
SLIDE 10

LOGO

10

LCOE Ranges in Russia and EU, $2016/MWh

  • At present, on average both in Russia and the EU most effective technology is CCGT,

even considering long-term cost reduction of RES and the growth of gas prices.

  • However, in Europe all non-carbon technologies remain more expensive, while in Russia,

nuclear power plants, both now and in the future are competitive carbon-free sources of electricity.

  • An important factor limiting the development of RES is the need for capacity reserve.

Related costs are comparable to the actual LCOE values of these technologies even in the long-term.

50 100 150 200 250 300 350 400 450 500 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 Coal USC (Reference) CCGT Nuclear Wind

  • nshore

Solar PV

Russia (Moscow) Cost of the capacity reserve

50 100 150 200 250 300 350 400 450 2015 2030 2015 2030 2015 2030 2015 2030 2015 2030 Coal USC (Reference) CCGT Nuclear Wind

  • nshore

Solar PV

EU (CE) Cost of the capacity reserve

slide-11
SLIDE 11

LOGO

11

Carbon Avoided Costs in EU, $2016/ t CO2

  • At present conditions best technology for carbon mitigation in the EU is CCGT. All other
  • ptions need some support or carbon prices over 70$/t CO2
  • In 2030 decrease in capital costs of RES will sharply decrease the amount of needed
  • support. For example, at carbon price about 20$/t CO2 solar PV will be more effective

than coal generation, at 40 $/t CO2 - onshore wind plants.

  • When considering the cost of RES capacity reservation those types of plants will be

significantly more expensive than any other option even with assumed decrease in cost

  • f RES generation and storage
  • 14

68 97 115 68 97 262 439 16 43 23 71 43 23 194

  • 50

50 100 150 200 250 300 350 400 450 2030 2015

EU (CE)

slide-12
SLIDE 12

LOGO

12

Carbon Avoided Costs in Russia, $2016/ t CO2

  • In Russia as well as in the EU most efficient way of cutting carbon emissions is to

substitute coal plants with CCGTs.

  • But unlike the EU nuclear generation could be a way to go, especially after 2030.
  • It appears that by 2030 amount of needed support for RES in Russia will become

comparable to the one in EU – at carbon price of about 30$/t CO2 Solar and Wind could be effective sources of carbon mitigation

  • 37

104 269 17 104 269 244 482

  • 34

27 34

  • 6

26 34 160

  • 50

50 150 250 350 450 550 2030 2015

Russia (Moscow)

slide-13
SLIDE 13

LOGO

13

The Energy Research Institute of the Russian Academy

  • f Sciences

www.eriras.ru Andrey Khorshev, PhD, Head of the Centre for Energy Modeling epos@eriras.ru

The research was supported by the Russian Science Foundation (project No. 17-79-20354)