FinSolar - Creating solar energy market growth in Finland

Transcription

1 FinSolar - Creating solar energy market growth in Finland M.Sc.(Eng.) Karoliina Auvinen Aalto University

2 Headline Presentation Times 33 pt Subline Arial 20pt Introduction to FinSolar project State of the art: solar energy market, energy policy and solar business in Finland

3 FinSolar project I First period 9/2014-2/2016 creating solar energy business growth in Finland Goal: Generate concrete solar investments in Finland, because export companies need references and domestic market is important for new business model, technology and expertise development Partners: 60 companies, municipalities and NGOs Target groups: house co-operatives, municipalities, companies and policy makers Funded by companies, municipalities and Tekes the Finnish Funding Agency for Technology and Innovation Karoliina Auvinen

4 FinSolar project II Second period 5/ piloting and testing virtual metering and micro-grid solutions Goal: Unlock the solar PV market for the house co-operatives, approx. 2 million people live in apartment buildings in Finland Solution: energy community IT services based on smart meters Current legislation doesn t allow the use of transmission grid as base of the new service models Partners: companies, grid operators, house co-operatives & housing foundation, regulators and NGOs Funded by STEK, Fingrid (high-voltage grid operator) and companies Karoliina Auvinen

5 FinSolar methods: co-creation and action research Participatory and practical action research purpose is to solve particular problems and to produce guidelines for best practice more driven by participants than researcher s agenda an active moment-to-moment theorizing, data collecting and inquiry occurring in the midst of emergent structure Researchers involve actively participating in a change situation whilst simultaneously conducting research work as designers and stakeholders with others to propose a new course of action to help their community improve its practices Karoliina Auvinen

6 Solar energy market in Finland

7 Solar energy market emerging in Finland The Finns are excited about solar energy: 9/10 wants more Finnish solar industry consists of approx. 100 companies Some of them are large international companies like ABB, Luvata and Fortum Great majority are small companies whose survival depends of the demand from domestic market The solar PV market has more than doubled yearly after 2014: installed grid-connected capacity 8 MW in 2015, estimated total capacity 20 MW in 2016 The PV system prices have declined following German trend -> started to be profitable since year 2014 Solar thermal market is growing slowly, no reliable statistics

8 Market survey: solar energy service offering in Finland Solar energy service and financing models Number of the service providers in 2015 (49/100 answers in total) Turn-key system installation services 28 Solar energy by leasing funding 22 Solar energy by PPA, power purchase agreements 12 Crowdfunding 2 Solar electricity retail products 9 Memberships from co-operatives, shares or solar bonds 6 Consulting and training services 38 Available (in Finnish) Karoliina Auvinen

9 Finnish solar energy policy Government doesn t have solar energy targets or specific policies Solar PV is excluded from the current feed-in tariff system Next support scheme based on auctioning - solar PV not competitive with wind power Solar electricity self-consumers exempted from grid fees and electricity taxes up to 100 kva system size or 800 MWh yearly production Investment grants available for municipalities and companies: 25% for PV and 20% for solar heat collectors Housing sector and state properties are excluded Single houses can get household tax deduction from solar system installation work (approx. 5-10% from the whole investment price) doesn t apply to house co-operatives Karoliina Auvinen

10 Comparison of PV support policies between Finland and other countries Finland Support policy, small scale Exemption from grid fees and taxes Support policy, large scale Investment grants, exemption from grid fees and taxes up to 100 kva or 800 MWh Installed capacity MW Approx. 20 MW (2016) UK Feed-in Tariffs Renewables Obligation 4979 MW (2014) Belgium Net-metering South Korea Home Subsidy Program Capital subsidies, income tax credits Renewable Portfolio Standard 3008 MW (2013) 1555 MW (2013) Market growth modest fast fast modest Karoliina Auvinen

11 Solar energy in Finland a business case?

12 Price of retail electricity [e/kwh] (VAT 0%) Return on investment (ROI) 1-8% in solar PV investments 0,25 0,24 0,23 0,22 0,21 0,2 0,19 0,18 0,17 0,16 0,15 0,14 0,13 0,12 0,11 0,1 0,09 0,08 0,07 0,06 0,05 0,04 0,03 0,02 0,01 0 Price of PV system eur/wp with 30% investment aid Price of PV system eur/wp without investment aid Price of electricity in investigated investment cases in 2014 by FinSolar project 0,6 0,7 0,8 0,9 1 1,1 1,2 1,3 1,4 1,5 1,6 1,7 1,8 1,9 2 Investment cost of solar PV system eur/wp (VAT 0%) 9% ROI 7% ROI 5% ROI 3% ROI

13 Comparison of profits Solar energy investments in profitable locations IRR 4-8% Criteria: access to investment aid solar replaces oil, gas or retail electricity no production to the grid Compare profits: Saving account interest rates 0,1-1,65% (Jan 2015) Real estate investors average profit 4,4% (2013) Heat pump investments >10% Karoliina Auvinen

14 Case example:educational center Vuores-house, Tampere 45 kw PV power plant IRR 6,7% Payback period 14,5 years System lifetime 30 years Electricity production cost 6 c/kwh during 25 years Installed in 2014 Karoliina Auvinen

15 Case example: commercial building Aurinkopaja, Pori PV power plant 49,5 kw and heat pump system 60 kw (2014) IRR 8% Payback period 14 years System lifetime 30 years Solar electricity production cost 6-8 c/kwh during 25 years Karoliina Auvinen

16 Comparison of solar electricity production vs. electricity purchase prices Solar electricity production costs approx c/kwh (VAT 0-24%, WACC 0%) during 25 years Vs: Electricity retail price for companies and cities 9 c/kwh (VAT 0%) and houses 14 c/kwh (VAT 24%) in 2014 Future market??? Case calculation: If energy based grid fees change to power-based tariffs, the PB of municipality s solar PV investment changes from 13 to 23 years Karoliina Auvinen

17 Comparison of solar heat production prices vs. other heating prices in residential houses (VAT 24%) Solar heat production cost /MWh (WACC 0%, 30 years) without storage Vs: District heating /MWh summer tariffs /MWh Electricity heating in houses 108 /MWh in Heating oil ,4 /MWh Pellets 64 /MWh / system LCOE 86 /MWh (20 years) Ground heat pumps system LCOE 66 /MWh (20 years) Karoliina Auvinen

18 Case example: House co-operative Erämaantie, Kangasala Solar collectors 27,6 kwth and heat pump system 90 kw IRR 11% Payback period years System lifetime 30 years Heat production cost 3,8 c/kwh during 25 years Installed in 2014 Karoliina Auvinen

19 Comparison of renewable heating vs. coal Case investment calculations based on average prices in 2015: Is replacement of coal costing 39 eur/mwh (incl taxes and ETS) with renewable energy profitable for district heating energy companies with 7% profit requirement in 15 years and CAPEX 3%? Pellet plant, 115 MW, inv. aid 0% Heat pumps, 90 MW, inv. aid 0% System life time 20 years 20 years 30 years Heat production price Solar heating plant, m2, inv. aid 20% 43 /MWh 35 /MWh 19 /MWh Payback period PB Over 20 years Over 30 years Over 30 years Net present value NPV Absender Titel TT.MM.JJJJ Seite 19

20 Conclusion: Solar energy is becoming feasible, but market growth would require better support policies

21 Bottlenecks General attitude is in favor of centralized and large energy production plants, like nuclear and CHP plants Distributed energy considered as inefficient, insignificant and expensive Government has strong focus on bioenergy Lack of economical incentives for housing sector and consumers Lack of human resources and investment expertise especially among municipalities Lack of general knowledge Fear of technological failures Laitoksen nimi

22 Opportunities Solar combined to energy efficiency, demand response, demo projects and R&D projects Interest and expertise in solar energy is growing Existing demand for customer friendly clean products and services that are economic, easy and reliable When energy and climate policies develop or fossil fuel prices get up -> market growth can happen very fast!

23 Thank you! Any questions? Karoliina Auvinen, Aalto University, Helsinki

24 References (in Finnish) Gaia Consulting Saatavissa: _final_%28id_15372%29.pdf Kallio Atte ja Rasinkoski Asko Säätövoimaa Suvilahden aurinkovoimalasta [blogi]. Saatavissa: Tahkokorpi Markku. 12/2014. Case Vuores-talo and Case KOy Aurinkopaja yrityskiinteistön aurinkosähköinvestointi. Kauppalehti. Talletuskorot [verkkojulkaisu]. Säästötilit [viitattu: ]. Saatavissa: Kaleva Hanna The Finnish Property Market KTI Kiinteistötieto Oy. Saatavissa: Sulpu ry Lämpöpumppujen merkitys ja tulevaisuus. Saatavissa: Tilasto: Energian hinnat [verkkojulkaisu]. ISSN= Vuosineljännes Helsinki: Tilastokeskus [viitattu: ]. Saatavissa: 17_tie_001_fi.html Korea Energy Management Corporation, Annual report IEA-PVPS-2013-Korea See