The importance ofrenewable heating and cooling in the Hungarian and European energy mix

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1 RHC -Conference The importance ofrenewable heating and cooling in the Hungarian and European energy mix Peter OLAJOS Deputy State Secretary Green Economy & Climate Policy Ministry of National Development Hungary

2 Events in the field of Energy Policy during the Hungarian Presidency in May Informal Session of Energy Ministers, Gödöllő, 2-3 May Topic: Roadmap 2050 RENEXPO and Conference, Budapest 5-6 May RenewableEnergy, Energy Infrastructure Conference, Budapest, May Topic: Energy Infrastructure Package EREC th Europe s Renewable Energy Policy Conference, Brussels, May

3 Priorities during the Hungarian Presidency 1. Europe 2020 (Resource Efficiency Europe Flagship Initiative) 2. Decarbonisation Roadmap Energy Efficiency (Action) Plan Energy Infrastructure Package (EIP) 5.Regulation (draft) on the transparency of energy markets 3

4 Roadmap 2050 Goals: Coordination of the energy sector after 2020 Determination of the direction of the relevant EU policies (industry, transport, ) Reduction of GHG emission Highlights: GHG reduction of 80-95% by 2050 compared to 1990 levels (current: 16%, 2030: 40%, 2040: 60%) Increased share of electricity in low carbon energy mix Large share of renewables(security of supply wind and solar energy) Infrastructure development - Smart grids for the demand side 100% 100% 80% Power Sector 80% Current policy 60% Residential & Tertiary 60% Industry 40% 40% Transport 20% 20% Non CO 2 Agriculture 0% Non CO 2 Other Sectors 0%

5 Decarbonisation Pathway % Hungary -36%? % Years

6 Roadmap 2050: Investing in the EU economy Additionaldomestic investment: 270 billion annuallyduring , equivalent to 1.5% of GDP (Total investment 19% of GDP in 2009), of which built environment (buildings and appliances): 75 bn transport (vehicles and infrastructure): 150 bn power (electricity generation, grid): 30 bn Note: Renewable energy investments (trasport, heating, electricity) 35 bn/ annum This would need to double to 70 bn/ annum to ensure we achieve our goals.* * EC + ECOFYS, Ernst &Young, FraunhoferISI, TU Vienna

7 Energy Infrastructure Package(EIP) Conference: Budapest May 2011 Infrastructure adaptation for handling intermittent RES Replacement of the TEN-E with a more flexible instrument New framework for determining project eligibility for Community financing Implemented through: Regional coordination Policy and decision-making support Faster, easier permitting procedures Innovative financing mechanisms 7

8 Electricity: EIP -Challenges and key drivers Challenge: Increasing demand Increase of RES production (weather dependent RES) Measure: Smart grids connecting distributed generation sites and also large-scale storage facilities Beyond 2020, need for higher voltage long-distance transmission Oil and Gas: Challenge: Remains significative Security of supply where EU is most exposed: CEE countries Diversification of sources Measure: Diversification of supply sources 8

9 Energy info of Hungary in Nutshell 9

10 TPES in 2009: 1040 PJ Domestic production: ~ 440 PJ RES in TPES 77 PJ (7.35%) Natural Gas facts: 37% of energy mix (45% in 2003) Import dependency >80 %(same applies to oil) Source of supply Russia via Ukraine Import dependency: 80% 10

11 Hungary s energy import dependency (%) 11

12 RE mix structural changes in Hungary Renewable energy(pj) Hydro Geo Heat Solar Wind Bio BioG thermal pumps mass Data source: Energy Center, Hungary 14,65% 55 PJ 120 PJ 12

13 Hungarian energy outlook: Heating and cooling Hő ellátás százaléka 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Villamos Electric energia Tűzifa Solid biomass Távhő Central heating Szén Coal Olaj Oil Földgáz Gas 0%

14 Future Hungarian heating and cooling sector 100% 90% 80% 70% 10% 9% 11% 20% 5% 9% 37% 60% 50% 40% 30% 70% 65% 2% 61% Megújuló RES energia Szén Coal Olaj Oil Földgáz Gas 20% 10% 0%

15 Financial Challenges 15

16 National Renewable Energy Action Plan Primary aims: 1) Job creation 2) Reduction of energy dependence Svédország SE Lettország LT Finnország FI Ausztria AT Portugália PT Dánia DK Szlovénia SI Litvánia LV Románia RO Franciaország FR Spanyolország ES 3) Enhancement of competitiveness Görögország EL Németország 4) Rural development DE 5) Improving living conditions Secondary aims: 1) Security of energy supply 2) Sustainability 3) Stimulation of economy 4) Reduction of energy poverty Bulgária BG Olaszország IT Írország IE Szlovákia SK Egyesült Királyság UK MAGYARORSZÁG HU 14,65% 14,6% Hollandia NL Csehország CZ Ciprus CY MAGYARORSZÁG 13% MT Málta LU Luxemburg EU27 NREAP targets 0,0% 20,0% 40,0% 60,0% 0,00% 20,00% 40,00% 60,00% We need 70 bn/ annum to ensure we achieve our goals!!! Az EU EU binding által kijelölt, jogilag targets kötelező részarány A Voluntary tagországok MS által önként targets vállalt új célszámok

17 RE financing toolbox Reducing capital cost: Grants R&D Grants Public loans Equity funds Venture capital Mezzanine funds Guarantees Contingent grants or loans Covering generating cost through revenues: Regulated price (feed in tariff) Regulated premium Quota/certificates Fiscal incentives (Tax, credits, ) Tenders + EU support for RE: Structural & Cohesion Funds R&D budget (FP7) EIB 17

18 EIB (European InvestmentBank) RenewableE & EE Lending in the EU Region* EIB has invested 10 bnin the deployment of EU renewable energy (close to 30% of total energy lending) A significant part of this investment (22%) has supported European RE manufacturing industries In addition, EE investments have mounted to 2.2bnin the last two years * Includes EU 27, potential candidates and candidate countries 18

19 Thank you for your attention! Best Practice Book in the Hungarian Renewable Energy sector HungarianNational Renewable Energy Action Plan