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Perspectives for the energy system of the future Frank-Detlef Drake - - PowerPoint PPT Presentation
Perspectives for the energy system of the future Frank-Detlef Drake - - PowerPoint PPT Presentation
Perspectives for the energy system of the future Frank-Detlef Drake Head of Group Research & Development, RWE AG RWE Credit Day London, 9 October 2012 Energy for the future Overview of Perspectives Implications for R&D at RWE for
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Innovative R&D has been a tradition at RWE that we want to continue R&D budget: more than €100 million (excl. investments of suppliers and other co-operation partners into demonstration plants and R&D) R&D along the entire value chain with a focus on reducing CO2 emissions R&D portfolio with more than 250 projects; over 50 patents in 2011 Most R&D projects are developed close to operations in co-operation with suppliers and research institutions Ranked as “most innovative utility in Europe” in Innovation Index of European School for Management and Technology (ESMT Berlin, 2012)
RWE currently ranked as “most innovative utility in Europe”
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RWE R&D projects cover the entire value chain
Gas/oil Coal-based Electricity grids Residential households
> Reservoir characterisation > Sedimentation and maturity history > Gas hydrates > CCS/CCU* > Lignite drying > High temperature materials > Coal quality
Renewable Electricity storage Transport
> Wind offshore > Biogas production > Marine energy > E-mobility > Comparison H2 vs.electric drive
Mining
> Automation of large-scale equipment > Diagnosis conveyor-belt systems > Groundwater modelling
Nuclear Gas grids/reservoirs Industry/commerce
> Distributed electricity and heat supplies > Gas sensors > Pipeline integrity monitoring > Smart grids > High Voltage DC > Delimitation of steel towers > Smart metering > Smart home > Compressed-air storage > Distributed storage via batteries of electric cars > Safety > Securing of know-how > Dismantling
Application Transport/storage Power generation Upstream
Overarching technology and systems analysis
EXAMPLES
* CCS/CCU: Carbon Capture and Storage/Usage;
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Overview of R&D at RWE Perspectives for the energy system of the future
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Implications for markets and market design
Energy for the future
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Two tons of CO2 per capita per year are quickly used up with today's energy supply
- r
Auto- mobiles Heat Air travel Products Annual CO2 emissions
- f a medium-sized
passenger car Heating of a single- family home with four people Return flight Frankfurt – Los Angeles Production
- f goods worth
- approx. €4,000
Transformation of entire energy system needed if ambitious CO2-reduction shall be achieved
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2 3 1
A common view on how CO2-targets can be met in a cost-efficient way is emerging
Key guidelines for the design of the energy world of tomorrow
Generation Infrastructure Demand High efficiency Low-CO2 electricity mix More electricity
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Indicated preference
2 1
Main elements
Two theoretical paths towards a low-CO2 electricity system to be achieved by 2050
2050 “Short bridge”
Photo source: Wikipedia.org/Sandö Bridge
> Quick and massive expansion
- f renewables
> No construction of conventional
- r nuclear power plants
> Massive development of grid infrastructure and, if necessary, storage facilities > Continuous expansion of renewables > At least one more round of conventional and nuclear power plant new-build > Use of carbon capture & storage > Gradual adaptation of infrastructure in line with change in generation
“Long bridge”
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25% 58% 17%
Germany pursues the short bridge assuming a reduction of domestic power generation by 45%
German energy concept for electricity (“short bridge”)
Source: EWI/Prognos/GWS study
2010 2020 2050 2010 2020 Nuclear Conventional Generation 10% Renewables 45%* Import 20% Demand reduction 25%
- 45%
* In relation to the reduced power generation, this comprises the often quoted 80% of RES generation
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40 200 160 120 80 240
The “short bridge” builds on the expected further cost reduction of RES
Levelized costs of electricity for Renewables in Europe [€2011/MWhel]
Large PV North Europe Large PV South Europe CSP Europe Biomass (average) Offshore Wind (3,200h) Onshore Wind (2,000h)
2010 2020 2050 2010 2020
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Combination of and is most cost-effective, and as additional options.
For both “bridges” we need to cope with increasing shares of volatile Renewables
Power generation Power consumption 230 V 50 Hz Potential solutions/measures Grid expansion Energy storage Flexible power generation “Smart” Technologies
1 3 1 2 3 4 2 4
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Requirement
Combination of flexible generation and grid expansion is the most cost-effective way
Advantage Challenge Times w/o sun and wind
Doubling of grid capacity until 2030 needed > Cost-effective: Full European grid < 10% of generation capex > Increased “secure” RES generation due to interconnection
> 10 GW 5 – 10 GW 1 – 5 GW < 1 GW
Times of surplus energy
> Public acceptance > Complex and long permission and approval processes > Back-up capacity is more cost-effective than storage or DSM (demand side management) > Very low utilisation of back-up plants > Acceptance of old plants (since not a 100% CO2 free option) Demand in GW 150 400 400 With Supergrid EU W/o Supergrid Capacity today Realization highly challenging
Source: ECF Scenarios
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For long-term storage, hydrogen based solutions are an option, but far too expensive
“Wind-methane” concept
Volatile generation Electrolysis Methane production Gas grid
+ -
η≈65% η≈90% CCGT
G
η≈60% el. H2 CH4 el. CO2 CH4 €/MWh: 80 – 200 800 – 1,500 300 – 500 400 – 700 420 – 750
1 Assumption: CAPEX total value chain (w/o gas infrastructure) ca. 5,500 €/kW
System efficiency Costs of electricity Methane production costs 35%
- ca. 1,000 €/MWh
- ca. 500 €/MWh
Considering electrolysis, methane production and reelectrification1
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A pan-European approach has significant cost advantages
1 Today’s generation mix continued with modernization/reinvestment 2 Compared with today (2008); assumption: constant quantity of electricity
Average Levelized Cost of Electricity per scenario, 2050 [€/MWh, real terms] “Long bridge” (European) Base case1 National 100% RES (Germany) “Short bridge” (European) Local/distributed gen. (Germany) +19% 115 97 180 133 235 +37% +86% +142% CO2 reduction in each scenario > 85% 20% CO2 reduction in %2: Storage facilities Distribution grid Ultra high voltage grid Generation 72 59 109 85 142 10 8 10 12 10 33 30 39 36 45 22 38
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RWE activity
„Lange“ Brücke
Clear commitment to achieving carbon-neutral electricity generation by 2050
Continuous expansion of renewables
Founding member of Desertec Industrial Initiative (DII)
()
New-built and operation of modern, highly efficient and flexible gas- and coal-fired power plants
Transition to a more flexible conventional power plant fleet
Extensive, international development programme for CCS and Carbon Capture and Usage (CCU)
Development of technologies and business models around decentral generation, such as PV and micro-CHP (combined heat and power)
Photo source: Wikipedia.org / Sandö Bridge
RWE is shaping the future of energy (1/2)
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RWE activity
Leading expertise in grid planning and operation at all voltage levels
Development/testing of smart grid concepts
Leading role in driving forward electric mobility
Foundation of RWE Effizienz GmbH to commercialise efficiency
Systematic research and development along the entire value chain
Development and open discussion of the prospects of tomorrow's energy supply
RWE is shaping the future of energy (2/2)
Photo source: Wikipedia.org / Sandö Bridge
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Overview of R&D at RWE Perspectives for the energy system of the future Implications for markets and market design
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Energy for the future
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Forecast is difficult, but RES on the rise and conv. power plants with reduced full load hours
Load > Success of energy efficiency > Degree of electrification RES share > Persistence of subsidies/incentives > Availability of capital > Public acceptance > Speed of grid expansion > Security of supply issues Influencing factors
2010 2050
% of load today
Load
20 50 100
RES generation
Residual load (conventional) > Volatile > Shrinking
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RES impact on EU-ETS
Supply of subsidized RES depresses CO2-price and distorts wholesale markets
Mitigation costs [€/t CO2eq]
Without subsidised RES
Mitigated emissions [t CO2eq/a]
With subsidised RES
Mitigation costs [€/t CO2eq]
Fixed mitigation target RES
Mitigated emissions [t CO2eq/a]
CO2-price [EUA, €/t CO2]
2006 2010 2008 2012 2014 2016
Historic Forward Thus, CO2-price is and remains depressed
30 20 10
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Regulators all over Europe discuss capacity markets as a “cure”
Measures to attract investments in carbon-free technologies
- r in stable thermal technologies at an efficient cost are needed.
Capacity payments basically agreed on, but no decision on selection of mothball market
- r fully fledged capacity
market. Capacity obligations. Access to EDF production by new entrants through regulated price/ contracts. Capacity payments with volume depending on system capacity margin. Mothball market in order to secure supply in years with low hydro availability. Ongoing discussion on a capacity market with not defined design. Fully fledged capacity market
- envisaged. Extra system for
reserves by battery storages discussed.
Not exhaustive
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A single Euro- pean electricity market needs a harmonized single European legislation
A new European market design is needed
E.g. a European hybrid quota system with suppliers’ obliga- tion for RES A restrengthe- ning of the EU- ETS to achieve cost-efficient CO2-mitigation An efficient mechanism to ensure system stability (e.g. reserve market)
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And finally: Who will fund the transformation?
Source of future net investment data: McKinsey study 2010 “Transformation of Europe’s power system until 2050”. Own calculation.
EU energy invest and sources of finance > Energy world of the future offers manifold investment opportunities > However, ambitious political targets can only be met with additional sources of funding > In order to attract capital, politics needs to establish a market/ regulatory framework that allows for sufficient returns > Partnership models need to be explored [€ bn/a, real 2010] ~55% ~45% ~70% ~30%
Institutional Investors Private Investors Public Utilities/EU Funds Listed Utilities Today Ø Future (2020 – 2050)
52 78 23 23 6 11 15 29 8 15
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