Salzburg Reform Group September 16, 2008

Transcription

1 Salzburg Reform Group September 16, 2008 Organizing Renewable Electricity Support Flanders experience Aviel Verbruggen University of Antwerp Aviel Verbruggen 1

2 Introduction Skipping context and frameworks: Phenomenon Electricity Characteristics RES-E Integration Power Demand, Supply, Systems Market Structures: Monopolies vs. Markets Regulatory Capability Charging Grey vs. Supporting Green Electricity Focus on Flemish experience: Instruments Comparing uro German FIT vs. Flemish TGC Attributes, Performance, Findings 2

3 IPCC: +2 C limit ~450ppm limit CO2 emission reduction trajectory 3

4 Implications for international agreements on Greenhouse Gas Emissions Reductions Scenario category A- 450 ppm CO 2 eq Region Annex I -25% to -40% -80% to -95% Non-Annex I Substantial deviation from baseline in Latin America, Middle East, East Asia Substantial deviation from baseline in all regions By 2050: Almost carbon-free energy systems Fossil fuels limited to auxiliary role 4

5 RES-E SUPPORT in Europe: Instruments CITERIA for selection (limited to basic set): Effectiveness: the RES-E sources are developed -Incl. technological diversity + disruptive discoveries Efficiency: development at least social costs -Incl. dynamic efficiency + technological innovation Fairness -Fair distribution of Costs and Benefits of the transition Crucial Choices: Levies on Grid power >< Subsidies for Green power? Subsidies: Y/N limited by fixed Targets (% of Grid power)? Subsidies: Y/N mingled with Grid electricity pricing? Subsidies: Y/N source, technology, scale specific?

6 Rents and Excess Profits /MWh Uniform price (certificate / subsidy / tax) 100 Excess Profits Rents 50 Cost coverage Costs of new RES-E OLD NEW GWh 6

7 RES-E SUPPORT in Europe: German Success Story German Subsidy Choices Not limited by fixed Targets (% of Grid power) Not mingled with Grid electricity pricing Yes source, technology, scale specific Effects Effectiveness - All RES-E gets Priority in the electric systems merit order - Technological diversity + frontrunning explicitly targeted Efficiency - Source, technology and scale adapted - Dynamic efficiency by fine-tuning support Fairness - Costs spread over all end-users of grid power - Excess profit making avoided

8 RES-E SUPPORT in Europe: Flanders Story Flanders Subsidy Choices Yes limited by fixed Targets (% of Grid power) Yes mingled with Grid electricity price Not source, technology, scale specific Effects Effectiveness - RES-E balancing cost accounting unclear - No technological diversity targeted - High GCprices trigger projects, most bio-waste processing Efficiency - Excess profits are excessive - Dynamic efficiency out of scope (bio-waste dominance) Fairness - Excess profits paid by most end-uses of grid power

9 RES-E SUPPORT : traffic German /Flemish prices :/MWh received by RES-E (price grid pow er + certificate) 180 Uniform treatment of technologies causes swindle profits Biomass waste incin. Biomass selected waste Biomass agric.& forest Biogas landfill Biogas other Wind on land 20 0 Cost coverage Sw indle Share in RES-E MWh generation

10 Flanders : Size of excess profits Flemish consumers paid M 809 (=100%) If German FIT applied: M 287 (=35,4%) Excess (swindle) profits: M 522 (=64,6%) Shares of technologies in swindle profits 12% 34% Wind on land Biogas landfills 7% 69% 16% Biogas other Biomass selected waste 12% 19% Biomass waste incineration Biomass agriculture & forestry 10

11 Flanders : end-users pay 6 Flanders: Price increase due to GC-bill on obligated electricity use /MWh ,60 1,13 2,26 2,77 3,28 5, Year 11

12 Flanders : who owns RES-E? Flanders (spring 2008): RE capacity (kw) by owner type and by technology agr&forest w aste incin. recov.w aste gas other landfill Incumbents Public w aste processors Diverse ow nership Local companies sew age hydro wind kw 12

13 Flanders : market clearing? Flanders: certificates short, traded and non-traded 100% Share of quota 80% 60% 40% 20% short to quota submitted without trade traded 0% Year 13

14 Findings about Flemish TGC 1. NOT a market system 1. Dominant position of incumbents 2. Trade = distribute burden over el.suppliers 3. Quota set ex-post at actual output 4. Also minimum prices guaranteed 2. BUT premiums with high excess profits 1. Full cashing by incumbents 2. Outsider el.suppliers nipped 14

15 Conclusion: Flemish experience Simplistic approach occasions hughe excess profits + other bias Flanders: representative for (bad) premium system, not for Tradable Certificate Market CRUCIAL: Clear LT goal: 80~95% RES-E by 2050 Public Governance: energy policy, regulation Qualify RES-E Sources & Technologies Interaction Green & Grey power systems... 15