- Lessons learnt & recommendations on the way forward Authors: - - PowerPoint PPT Presentation

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 1

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

towards2030-dialogue Dialogue on a RES policy framework for 2030

27% RES in the European Union by 2030

• Lessons learnt & recommendations
• n the way forward

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 2

• 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:

Project Summary … key facts

“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 3

Participant name Short name Technische Universität Wien, Energy Economics Group TU Wien Fraunhofer Institute for Systems- and Innovations Research Fraunhofer IS I Energy Research Centre of the Netherlands ECN Center for European Policy Studies CEPS National Technical University of Athens NTUA Consejo Superior de Investigagiones Cientificas CS IC Ecofys Netherlands and affiliates Ecofys REKK Energiapiaci Tanacsado Ltd REKK ET European University Institute, Florence School of Regulation EUI

Who We Are?

Project Summary … Partners involved

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 4

Intense dialogue & institutionalised consultation process

• f the relevant

stakeholders at policy, industry and expert level.

Analysis of the key policy pathways towards 2030, including different policy portfolios and pathways towards convergence.

Analysis of 2030 target setting options, and of approaches for an effective and efficient effort sharing Identification of key regulatory challenges and barriers for electricity market design and system

• peration.

Assessment from an integrated, overall policy perspective, relevant major external developments impacting

• n

post-2020 RES development and policy making in the EU.

Consolidation of the main outcomes

Promotion & dissemination

• f the proj ect

results.

Methodological Framework

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 5

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 & CO2 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

Method of approach

(quantitative assessment)

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 6

Methodological Framework

Method of approach

(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)

Based on PRIMES Based on Green-X database Defined for this assessment Primary energy prices Renewable energy technology cost (investment, fuel, O&M) Renewable energy policy framework Conventional supply portfolio and conversion efficiencies Renewable energy potentials Reference electricity prices CO2 intensity of sectors Biomass trade specification Energy demand by sector Technology diffusion / Non- economic barriers Learning rates Market values for variable renewables

www.green-x.at

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 7

Results and recommendations

• 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 Moderate dedicated support for renewables is required to reach the 2030 target of 27% renewables.  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 partly diminishes these gains in later years.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 8

• 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) 30% EE Reference

demand trend

 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

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.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 9

• 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,

• ave. 21-30

€ bn. 1928 1953 1943 1956 Total system cost,

• ave. 21-50

€ bn. 2130 2275 2264 2257 GDP impact

(compared to euco27)

%

change to euco

?

• 0.06%

0%

(serves as reference)

+0.13% Employment impact

(compared to euco27)

%

change to euco

?

• 0.03%

0%

(serves as reference)

+0.14% Electricity price increase compared to 2010 (ave.) % 18% 25% 21% 21% Other indicators Supply security: Import dependency % 57% 55% 54% 52%

Source: Data extracted from IA of RED II draft (EC, 2016)

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.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 10

• 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).  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.

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

“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)

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 11

• Until now, the European RES policies are still diverse and inhomogeneous. In general, we have

identified two groups of possible convergence pathways, that would either follow a top-down or a bottom-up approach:

• Top-down convergence pathways (i.e. forms of convergence in RES policy driven by European Institutions):

– the implementation of a harmonised EU-wide RES support scheme, and – the prescription of specific types of (market-based) instruments by the EU institutions to be implemented by Member States (e.g. strengthening of current state aid guidelines in the period post

2020).

• Bottom-up convergence pathways (i.e. those forms of convergence driven by Member States co-operating

with each other):

– increased coordination of national RES policies, – the partial opening of national RES support schemes, and – the implementation of joint or regional RES support schemes.  Different convergence processes may happen simultaneously and in parallel in the period post 2020. The EU RES policy landscape in 2030 will most probably be the result of a mix of these convergence

• pathways. Yet, according the EC’s proposal, it focusses largely on bottom-up convergence pathways, as a

harmonised EU-wide RES-support scheme has not been proposed nor implemented yet.

Results and recommendations

The harmonisation and/or convergence of European RES policies remain as topics of key interest within the political debate. Guiding & framing this process will be a major task for the evolving Energy Union.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 12

• Comparison of the required average (2021-2030)

yearly support expenditures for RES-E in the EU28

for all assessed RES-E policy pathways.  Policy pathway analysis shows clear preferences for feed-in premium schemes where support levels are determined in a tendering procedure in comparison to quota schemes with certificate trading.  Best performing are the policy variants where the allocation of RES investments is done at a multinational

• level. This can be facilitated through a partial or full

market opening while using tenders as well as through regional cooperation and specifically the establishment

• f regional tenders.

 A complete phase-out of dedicated RES-E support as assumed in the “ETS only” pathway would lead to zero direct policy cost for new RES installations. It would however also result in a strong market crash in early years and only a partial recovery in later years close to 2030. Additionally, an indirect cost-burden (due to higher wholesale prices) may arise for consumer thanks to the merit-order effect that comes along with an enhanced RES-electricity deployment

Results and recommendations

Concerning RES-E policy pathways for meeting the 2030 RES target our model-based analysis shows clear preferences for feed-in premium schemes where support levels are determined in a tendering procedure in comparison to quota schemes with certificate trading. Beneficial appears also the allocation of RES investments at a multinational level.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 13

• Comparison of resulting cumulative support

expenditures for all assessed scenarios (delayed action)

As a sort of sensitivity to default pathways for meeting the 2030 RES target we have looked at the impact of a delay in taking action for enhancing RES developments post 2020. This analysis allows for drawing important conclusions:  The results suggest that delayed action would lead to lower support expenditures in early years post 2020 but in the long-run policy costs may be significantly larger in magnitude than in case of stringent and constant policy ambition.  The present value of cumulative support expenditures, comprising the sum of costs within the focal period 2021 to 2030 and residual costs beyond 2030, may rise for total RES (within all energy sectors) in the case of delayed action by 46% to 48% compared to default. For RES in the electricity sector this trend is even more pronounced.

Results and recommendations

Delayed action would leads to lower support expenditures in early years post 2020 but in the long-run policy costs may be significantly larger in magnitude than in case of stringent and constant policy ambition for renewables.

15th IAEE European Conference 2017, Hofburg, Vienna … 04/09/2017 … Gustav Resch, TU Wien … Slide 14

Thanks for your attention!

Interested in further background information?  www.towards2030.eu

Interested in the dialogue process?  http://platform.towards2030.eu

Final reporting is available

... incl. brief issue papers, summary report, final report and detailed background reports

Policy recommendations

Moderate dedicated support for renewables is required to reach the 2030 target of 27% renewables. 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. 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 The harmonisation and/or convergence of European RES policies remain as topics of key interest within the political

• debate. Guiding & framing this process will be a major task for the evolving Energy Union.

Concerning RES-E policy pathways for meeting the 2030 RES target our model-based analysis shows clear preferences for feed-in premium schemes where support levels are determined in a tendering procedure in comparison to quota schemes with certificate trading. Beneficial appears also the allocation of RES investments at a multinational level. Delayed action would leads to lower support expenditures in early years post 2020 but in the long-run policy costs may be significantly larger in magnitude than in case of stringent and constant policy ambition for renewables.