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towards2030 -dialogue Dialogue on a RES policy framework for 2030 27% RES in the European Union by 2030 - Lessons learnt & recommendations on the way forward Authors: Gustav Resch, Lukas Liebmann, Jasper Geipel, Energy Economics Group (EEG), Technische Universität Wien (TU Wien) Luis Janeiro (Ecofys), Anne Held and Mario Ragwitz (Fraunhofer ISI) Contact: Web: http://eeg.tuwien.ac.at Email: resch@eeg.tuwien.ac.at 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 1

Project Summary … key facts  Title: Dialogue on a RES policy framework for 2030  Financial Support: Intelligent Energy for Europe Programme, managed by the Executive Agency for Small and Medium Enterprises (EASME)  Duration: March 2014 to December 2016  Core objective: “ In line with the key priorities related to strategic initiatives for RES electricity (i.e. informing the debate on the post 2020 horizon) it is the core aim of towards2030 -dialogue to facilitate and guide the RES policy dialogue for the period towards 2030.” 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 2

Project Summary … Partners involved Participant name Short name Technische Universität Wien, TU Wien Energy Economics Group Who We Are? Fraunhofer Institute for Systems- and Fraunhofer IS I Innovations Research Energy Research Centre of the ECN Netherlands Center for European Policy Studies CEPS National Technical University of NTUA Athens Consejo Superior de Investigagiones CS IC Cientificas Ecofys Netherlands and affiliates Ecofys REKK Energiapiaci Tanacsado Ltd REKK ET European University Institute, EUI Florence School of Regulation Project coordination: Energy Economics Group (EEG) Technische Universität Wien Dr. Gustav Resch (resch@eeg.tuwien.ac.at) Contact: Web: www.towards2030.eu Email: contact@towards2030.eu 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 3

Methodological Framework Analysis of the key policy pathways towards 2030, including different policy portfolios and pathways towards convergence. Intense dialogue & institutionalised consultation process Analysis of 2030 target setting options , and of of the relevant approaches for an effective and efficient effort stakeholders at sharing policy, industry and expert level. Identification of key regulatory challenges and barriers for electricity market design and system operation. Assessment from an integrated, overall policy Promotion & perspective , relevant major external dissemination developments impacting on post-2020 RES of the proj ect development and policy making in the EU. results. Consolidation of the main outcomes 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 4

Method of approach (quantitative assessment) Analysis of future RES developments in the EU up to 2030: … The applied modelling system … RES policy analysis done by use of TU Wien’s Green-X model to assess RES deployment and related costs (generation cost) , expenditures (support, capital) and benefits (fossil fuel & CO 2 savings) For assessing the interplay between RES and future electricity market design , Green-X was complemented by its power-system companion – i.e. the HiREPS model – to shed further light on the interplay between supply, demand and storage in the electricity sector 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 5

Method of approach Methodological Framework (quantitative assessment) Analysis of future RES developments in the EU up to 2030: … Key input parameter … Key input parameter to modelling are aligned to recent EC assessments (i.e. taken from PRIMES modelling (PRIMES reference, euco27 and euco30 scenario) and own Green-X database) www.green-x.at Based on PRIMES Based on Green-X database Defined for this assessment Primary energy prices Renewable energy technology Renewable energy policy cost (investment, fuel, O&M) framework Conventional supply portfolio Renewable energy potentials Reference electricity prices and conversion efficiencies CO 2 intensity of sectors Biomass trade specification Energy demand by sector Technology diffusion / Non- economic barriers Learning rates Market values for variable renewables 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 6

Results and recommendations Moderate dedicated support for renewables is required to reach the 2030 target of 27% renewables.  Future development of remuneration levels and corresponding market values of RES technologies (on average) at EU-28 level according to a Green-X scenario of 27% RES by 2030  On the one hand … a strong decline in remuneration levels for renewables over the whole assessment period as a result of expected technological progress across all key renewable technologies.  On the other hand, the decrease in market values of variable renewables 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 7 partly diminishes these gains in later years .

Results and recommendations RES ambition and the role of energy efficiency: to maintain the ambition level for renewables the newly established 30% energy efficiency target calls for an increase of the targeted renewables share.  RES developments at EU-level up to 2030: Net and gross increase of RES generation at EU level by decade (2010-2020 vs. 2020-2030) in accordance with a 27% RES target for 2030 … … across all energy sectors (left) and in the electricity sector (right) Reference demand trend 30% EE  In principle … the ambition level of 27% renewables by 2030 should not be underestimated, specifically in the power sector  But … energy efficiency is a key determinant  30% EE significantly lowers the ambition 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 8

Results and recommendations RES ambition and the role of energy efficiency: to maintain the ambition level for renewables the newly established 30% energy efficiency target calls for an increase of the targeted renewables share.  In the light of the Paris Agreement …  30% energy efficiency & 30% renewables as preferable combination ... that can be achieved at no/low additional cost (cf. EC Impact Assessment of RED II draft) Scenario Unit REF16 CRA (Baseline) euco27 euco30-30 RES deployment RES share 2030 % 24.3 27 27.1 30.0 Economic indicators Total system cost, € bn. 1928 1953 1943 1956 ave. 21-30 Total system cost, € bn. 2130 2275 2264 2257 ave. 21-50 GDP impact % ? -0.06% 0% +0.13% change (serves as reference) (compared to euco27) to euco Employment impact % ? -0.03% 0% +0.14% change (serves as reference) (compared to euco27) to euco Electricity price increase % 18% 25% 21% 21% compared to 2010 (ave.) Other indicators Supply security: % 57% 55% 54% 52% Import dependency Source: Data extracted from IA of RED II draft (EC, 2016) 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 9

Results and recommendations The bulk of support expenditures in the forthcoming decade will be dedicated to RES installations that have been erected in the years up to 2020  Support vs. RES deployment: Comparison of the resulting 2030 RES deployment (horizontal axis) and the corresponding (yearly average) support expenditures (vertical axis) for total RES in the EU28 for all assessed cases (pre-assessment of ambition level and RES(-e) policy pathway analysis) . “ETS only” scenario assumes phase-out of dedicated support for new RES installations post 2020 (and a discontinuation of blending obligations for biofuels) … indicates the support needs for “existing” RES (installed up to 2020)  Only 13% to 18% of total RES support , and only 5% to 11% of all RES-E related support expenditures in the forthcoming decade will be for new installations built in the years 2021 to 2030. 15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 10