Community power and public regulation - changing taxes, and implementing the subsidiarity principle on planning for Renewable Energy.

Transcription

1 Community power and public regulation - changing taxes, and implementing the subsidiarity principle on planning for Renewable Energy. Community power Workshop 20 May 2015 Frede Hvelplund Department of Development and Planning, Aalborg University hvelplund@plan.aau.dk

2 1. The big transition to renewable energy

3 Change of money flow from fossil fuel system to renewable energy systems Renewable Energy technologies will replace fossil fuels and fossil fuel technologies for around 160 billion Dkr/21 billion EUROs annually. Where will this money go??

4

5 Revival of the economy of the hinterland areas. (Estimates that should be further examined/dokumented) 1. If the wind turbines are owned locally a netprofit of around 1 billion Dkr will go to the hinterland areas in Around Dkr. annually per 4 person family. 2. If the learning and innovation processes are linked to active ownership, the turnover per year is much higher, and could be billion Dkr. annually in these areas. (employment persons) 3. If the tax system is changed so that tax on wind for heat is the same as tax on biomass for heat, this could mean reduced heat bills per family of around Dkr. 4. The hinterland areas has the new energy, and could benefit considerable from a change to RE. But what happens depends upon policies------

6 2. The two renewable energy roads 1. The smart electricity grid system road. (Building powerlines etc.) 2. The smart energy system road (Integrating heat,electricity, transportation, biomass)

7 2.1.The smart electricity grid path A blind alley!

8 Characteristics 1. Trying to solve the fluctuation/flexibility problem by investing in high tension grid systems and long distance transportation of electricity. 2. This is combined with electricity sector smart grid solutions and flexible electricity consumption. 3. Investment in grid systems are usually examined without analysing the integration capacity of electricity, heat and transportation.(smart energy systems) 4. Wind power projects are mainly supposed owned by power companies.

9 The merit order effect or the economic suicide of wind power on the present power market. Eurocent per kwh Electricity demand 2005 Electricity demand 2020 Power capacity and marginal costs 2005 Power capacity and marginal costs 2020 Price 2005 Price 2020 Windpower capacity 2005 Windpower capacity 2020 Power capacity

10 Price of wind power at Nordpool spot market

11 Nordpool spotmarket price as a function of wind power share. Frede Hvelplund and Kristiian Brun Madsen consumption

12 Estimated of coming wind power prices in a smart grid solution. year , , ,0 Average wind power price per kwh at Nordpool market. (Øre/kWh) Ref: Frede Hvelplund and Alexander Brun Madsen

13 Conclusion: The smart electricity system is a blind alley!

14 2.2.The smart energy system road- Energy system integration between electricity-, heat- transportation and energy conservation.

15 Characteristics of the smart energy system Integration of fluctuating Renewable Energy Sources should be placed as close to the energy consumers as socio-economic feasible/possible. This is donoe by integrating electricity-, heat-, transportation- and biomass production. NB: This does not mean that there will be no distant ownership and distant integration. It only means that distant ownership and integration should only be developed and implemented, when nearby ownership and integration is not feasible/practical.

16 Transition from a hierarchial centralised to a semi-decentralised energy system Status

17 System 4 ( wind power 50%-100%) Activating RE via increased electricity consumption for heat pumps and transportation, electricity and heat conservation. (Green means local and regional ownership. Black means distant ownership) In-active components Active components Heat Consumption Basic electricity Consumption Electricity Central power plants and cogeneration Decentral producers 50% heat conservation Renewable energy (Photovoltaic, household wind,etc.) Wind Increased distant ownership Heat/cooling pumps Water storage El and SG for transportation etc. Wind syngas?

18 3. The smart energy system and the need for community power and participation

19 Community power as a historical technological necessity because The old fossil fuel solution is characterized by coal mines, shipping and distant power plants. The old fossil fuel companies are designed to manage these conditions. 2. In the new Renewable Energy system the fluctuating sources requires integration investments and acitivities. These are to- and often owned by- the users. (District heating systems, cars, biomass, wind turbines, etc). 3. The users will see (and hear) the new RE technologies and should be both compensated for accepting them and actively participate in their development. We are in a techno-historical situation of change, where the old fossil fuel companies such as Vattenfall, E.ON, DONG, EDF does not have much to offer. New companies and new ownership models are needed. There is a need for community power models.

20 4. Present DK tax policy hinders integration of heat and electricity Wind power should have the same (or less) tax level as biomass.!

21 Tax and grid tarif systems must be changed. Price at district heating level of 1 MWh. (2014 numbers. There is a slight change in 2015 numbers) Present taxes and grid tariffs Electricity for heat pumps Biomass Proposed taxes and grid tariffs Electricity for heat pumps (100% wind power) Electricity for heatpumps (0% wind power) Electricity for heatpumps 50% vindkraft Biomass (1) Price 292 Ab transmissionsnet 300 An fjernvarme værk (2) Electricity and energy tax (3) PSO (4)VAT of tax and PSO (2)+(3) (5)Sum tax and PSO plus VAT of tax and PSO.(2)+(3)+(4) , (6) Distribution grid payment (7) Transmission grid p (8) VAT of (1)+(6)+(7) ,5 90,5 90,5 75 (9) Consumerprice at District heating level

22 Politik til sikring af kraftværkskapacitet og integration af vindkraft baseret el og varme 1. Reduce the elektricity tax+ PSO+ vat from 800 kroner to 300 kroner per MWh. 2. Introduce roadpricing for gridpayment. The 1+2 condition for certified plants that: a. -buy wind power shares equivalent with their annual consumption of heat. b. -keep power capacity alive equivalent with annual max electricity consumption. For capacity in periods with too little windpower. c. - establish a flexibility infrastructure (heat pump + heat storage capacity). 3. Increase the tax incl. VAT on biomass to around 300 kroner per MWh.

23 Integrating electricity and RE heat markets and RE price increase Electricity price eurocent per kwh Electricity demand 2005 and 2020 without RE heat market Electricity demand 2020 with RE heat market Power capacity and marginal costs 2005 Power capacity and marginal costs 2020 El price with RE heat market Windpower capacity 2005 El price 2020 without RE heat market Wind power capacity 2020 RE heat 2020 Power Capacity

24 5. Other policies for local ownership 1. Establish a legislation that makes it a must that any wind power project shall have at least 60% local ownership. (Defined as ownership by municipalities,local companies, local households etc.) 2. That investors investing in flexibility infrastructure such as heat pumps, heat storage, electric car which can be regulated according to system needs, should have first priority as owners of wind power shares. 3. Independent auditors should check the prices of wind power shares,when a company sells wind power shares to local- and regional actors. 4. Give municipalities right to use the profit from wind power projects to any purpose. (Today they can only use it within the electricity sector) 5. A legislation should be in place that statues a broad acces to investing in offshore plants. This is far from the case today. Wind people actual case!!! 6. Free funds should be made available for newcomer investors in wind power projects. In order to open the road for more bidders and more competition.

25 6. General conclusion: Ownership, integration and the subsidiarity principle The EU subsidiarity principle: Political decisions in the EU must always be taken at the lowest possible administrative and political level, and as close to the citizens as possible. I am here extending this principle to the design of basic infrastructure such as water-, energy-, food production. At the energy area it means that. a. Ownership and management of Renewable Energy supply should be placed as close to the consumers as socio-economic feasible/practical possible. b. Integration of flexible Renewable Energy Sources should be placed as close to the energy consumers as socio-economic feasible/possible. NB: This does not mean that there will be no distant ownership and distant integration. It only means that distant ownership and integration should only be developed and implemented, when nearby ownership and integration is not feasible/practical.

26 Thank you!