The Challenge and Opportunities of Energy Transformation - A German

Transcription

1 The Challenge and Opportunities of Energy Transformation - A German Perspective Presentation for the Annual Meeting of EREA Uwe Leprich Institut for Future uueenergy egysyse Systems s( (IZES) Dublin, March 27, 2013

2 Uwe Leprich Professor at the business school of the University of Applied Sciences in Saarbruecken since 1995 At the same time scientific head of the Institute for Future Energy Systems (IZES), a university based research institute focussing on renewable energies, energy efficiency and decentralised power generation Author and co-author of several books and articles liberalised electricity i markets, feed-in law regulations and instruments for promoting renewable energies in the heat market. Alternate member of the Administrative Board of ACER (Agency for the cooperation of Energy Regulators) Spokesman of the Renewable Energy Research Association since December [ Leprich, March 27, 2013, Dublin ]

3 IZES ggmbh Institut für ZukunftsEnergieSysteme Management Dr. Michael Brand Sha areholde er / Supe ervisory Board Scientific Directors Prof. Dr. Uwe Leprich, Prof. Frank Baur (deputy) Applied Research and Development Energy Markets Prof. Dr. Uwe Leprich Technical Innovations Dr. Bodo Groß Material Flow Management Prof. Frank Baur Technology and Scientific Infrastructure Applied Solar Technology / TZSB Danjana Theis Sustainable Space Prof. Stefan Ochs Social-Scientific Energy Research Prof. Dr. Petra Schweizer-Ries Sc ientific Advisory Board 3 [ Leprich, March 27, 2013, Dublin ]

4 Agenda The German Energiewende How will the electricity system look like in the medium run? System design instead of market design: How to finance the future electricity system? Resume 4 [ Leprich, March 27, 2013, Dublin ]

5 The global compass: IEA 450 scenario Source: IEA [ Leprich, March 27, 2013, Dublin ]

6 The European compass: Energy Roadmap 2050 EU Energy Targets for 2020: Reduction of the greenhouse gas emissions by 20 % (compared to 1990) Increase the share of renewables in energy consumption to 20 % Increase in energy efficiency by 20 % Range of different EUscenarios of fuel shares in primary energy consumption Source: EC [ Leprich, March 27, 2013, Dublin ]

7 Targets of the German Energy Concept 2010 Source: Schafhausen 2011 as cornerstones of the German Energiewende 7 [ Leprich, March 27, 2013, Dublin ]

8 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

9 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

10 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

11 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

12 Learning curve wind turbines Source: Renews Juli [ Leprich, March 27, 2013, Dublin ]

13 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

14 Development of costs and feed-in tariffs for PV Costs and remunerations for PV have been cut by more than 50% within 4 years! 14 [ Leprich, March 27, 2013, Dublin ]

15 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

16 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

17 The renewable revolution in Germany Source: BMU [ Leprich, March 27, 2013, Dublin ]

18 The power system as the centerpiece of the Energiewende Energy related CO2 emissions in Germany 2010 (forecast) space heating: 20,7% traffic electricity generation and district heating Source: UBA 2011 process heating: 14,6% 18 [ Leprich, March 27, 2013, Dublin ]

19 The German compass: Leitstudie 2011 Gross Electricity Generation Source: DLR/IWES/IfNE [ Leprich, March 27, 2013, Dublin ]

20 Leitstudie 2011: Cost analysis Source: DLR/IWES/IfNE [ Leprich, March 27, 2013, Dublin ]

21 Agenda The German Energiewende How will the electricity system look like in the medium run? System design instead of market design: How to finance the future electricity system? Resume 21 [ Leprich, March 27, 2013, Dublin ]

22 The triangle of electricity policy for % (39%) Renewables Framework conditions 3 further NPPs off-grid no significant storage expansion Grid restrictions eliminated? 10% (0%) Reduction 25% (28%) CHP 22 [ Leprich, March 27, 2013, Dublin ]

23 System Part #1 52 GW PV The VRES (wind, PV, water) will cover up to one half of the total power generation due to that reason they determine the rationality of the system Variable Renewable Energy Sources GW Onshore 5-7 GW Offshore Uncertainties Will the government hold on to the renewable energy targets? Will the current storage capacities be sufficient for that? Will the grid extension keep up? 23 [ Leprich, March 27, 2013, Dublin ]

24 By the way: The development of wind and PV is increasingly less justified with CO2 reduction targets, but increasingly with reduction of import dependency increase of added domestic value job creation stabilization of electricity prices in the long term export opportunities of the system etc. 24 [ Leprich, March 27, 2013, Dublin ]

25 System Part #2 Facilities for System Services are network- related facilities, usually large power plants Variable Renewable Energy Sources System Services reactive power voltage control re-establishment of power 25 [ Leprich, March 27, 2013, Dublin ]

26 By the way: Must run is one significant factor of inflexibility Share of the production that was affected by power management without the use of flexibilities (weather year 2007) Source: Sensfuss (2012) 26 [ Leprich, March 27, 2013, Dublin ]

27 System Part #3 Infrastructure as a system requirement and supplement 27 [ Leprich, March 27, 2013, Dublin ]

28 System Part #4 Variable Renewable Energies 28 [ Leprich, March 27, 2013, Dublin ]

29 The future electricity system A lot of flexibility is needed for the coverage of the residual load! 29 [ Leprich, March 27, 2013, Dublin ]

30 The future electricity system 4 technical system components: VRES FfSS FO Grids 30 [ Leprich, March 27, 2013, Dublin ]

31 Agenda The German Energiewende How will the electricity system look like in the medium run? System design instead of market design: How to finance the future electricity system? Resume 31 [ Leprich, March 27, 2013, Dublin ]

32 1st segment Lead question How can the VRES be refinanced? Variable R Renewable Energy Sources 32 [ Leprich, March 27, 2013, Dublin ]

33 Hypothesis: the markets will not do it! Market prices are declining; one of the reasons is the merit order effect which will continue Phelix Baseload Year Futures 33 [ Leprich, March 27, 2013, Dublin ]

34 Hypothesis: the markets will not do it! Market values are even declining more! A market value is the ratio of the price one gets if one sells electricity at the power exchange and the average spot market price 34 [ Leprich, March 27, 2013, Dublin ]

35 Preliminary Note: Electricity markets Markets are more a means than an end in itself Electricity it wholesale l markets are a very good means for an optimal dispatch of existing generation capacities with marginal costs larger than zero There has been the hope (and the theoretical consideration) that electricity wholesale markets as energy only markets will allow for new investment in generation capacities; this hope is vanishing Electricity wholesale markets as marginal cost oriented markets were not designed for a significant amount of options with zero marginal costs 35 [ Leprich, March 27, 2013, Dublin ]

36 The Feed-in Tariff Main idea: a framework to ensure investments Market entry against the interests of the incumbents Priority access to the grid Enabling the financing of the investment through the banks stable remuneration for moderate returns Technical progress output oriented remuneration with a built-in degression Create a protected market to use market forces for technology development! 36 [ Leprich, March 27, 2013, Dublin ]

37 There is a relationship between efficiency and effectiveness! Source: ISI et al (OPTRES) 37 [ Leprich, March 27, 2013, Dublin ]

38 The best remuneration mechanism so far is the FIT Of course the German Feed-in law (EEG) has to be developed further: Signals for a more system oriented design of the RES plants eventually locational signals better market access to the dispatch markets, especially the balancing markets eventually suppliers with more responsibilities for VRES integration 38 [ Leprich, March 27, 2013, Dublin ]

39 2nd segment Lead question How can the FfSS be chosen by competition and replaced by RES in the medium run? Variable R Renewable Energy S Sources 39 [ Leprich, March 27, 2013, Dublin ]

40 The financing of the FfSS and the role of RES balancing power is financed through the balancing markets other system services are financed through the network charges for the high voltage grid RES have usually been operated according the generate and forget rule now they have to switch to operate and serve in order to replace the fossil and nuclear FfSS 40 [ Leprich, March 27, 2013, Dublin ]

41 3rd segment Lead question How can the dispatch markets better adapt to the VRES? Variable R Renewable Energy S Sources 41 [ Leprich, March 27, 2013, Dublin ]

42 Better harmonisation between the dispatch markets and the VRES The short-term markets should play a more important role in the wholesale business The day-ahead trade should allow deals every 15 minutes The intraday trade should have a higher number of auctions The auctions for minutes reserve could take place in the intraday market 42 [ Leprich, March 27, 2013, Dublin ]

43 4th segment Lead question How can the CM be designed to allow competition between the FO? Variable R Renewable Energy S Sources 43 [ Leprich, March 27, 2013, Dublin ]

44 The design of capability mechanisms is necessary in order to guarantee security of supply is really complicated is very difficult with respect to timing should avoid large free-rider rider effects should be compatible with the necessities of the system transformation and climate policy 44 [ Leprich, March 27, 2013, Dublin ]

45 Actual flexibility options which have been politically implemented in Germany grid: grid extensions and upgrades as the most cost effective FO CHP: the amended law gives clear signals for more flexibility through investment support for heat storages biomass: the EEG gives clear signals for more flexibility through a flexibility premium load management: the load management ordinance supports industrial and commercial LM efforts electrical storages: there will be a support programme for storages in combination with PV on the roofs 45 [ Leprich, March 27, 2013, Dublin ]

46 System design: interdependencies between the system segments Variable R Renewable Energy Sources 46 [ Leprich, March 27, 2013, Dublin ]

47 Agenda The German Energiewende How will the electricity system look like in the medium run? System design instead of market design: How to finance the future electricity system? Resume 47 [ Leprich, March 27, 2013, Dublin ]

48 Resume The center of the German Energiewende is the electricity system The future electricity system will be dominated by variable renewable energies; they will define the rationality of the system To finance the future electricity ect c ty system one has to differentiate between four segments; however these segments have interdependencies The selection of the necessary flexibility options will be the key question with respect to competition. It s answer will decide whether and how the liberalisation paradigm will adapt to the VRES dominated future electricity system 48 [ Leprich, March 27, 2013, Dublin ]

49 Thank you very much for your attention! Institut für ZukunftsEnergieSysteme (IZES) Altenkesselerstr. 17, Gebäude A Saarbrücken Tel Fax Homepage 49 [ Leprich, March 27, 2013, Dublin ]