Energy and Environmental Policy: Overview of Current Topics

Transcription

1 Energy and Environmental Policy: Overview of Current Topics Volker Heck September 13, 2006

2 European Energy Policy Energy increasingly in the focus of European politics EU Lisbon Agenda is focussed on jobs and growth, taking energy policy as an important instrument. The Commission is looking for areas of action to justify its work. It is addressing popular challenges for energy policy: - Protection of consumer rights - Limiting energy prices - Sector inquiry - Ensuring security of supply - Taking action on climate protection Foreign energy policies triggered by conflicts in Russia/Ukraine First-ever approach by the Commission aiming for a uniform EU energy policy by publishing the Energy Green Paper 2

3 European Energy Policy Ongoing discussion on liberalization: Actions expected by the Commission Progress report Preliminary published results of sector Country reviews Final progress Possible legislative proposals inquiry published What the Commission requires us to deliver: Legal unbundling is as efficient as ownership unbundling Integrate regional markets Increase market transparency Improve capacity management Today Enhance interconnection capacities report and final results of sector inquiry (e.g. on ownership unbundling) to be submitted in

4 German Energy Policy German government in search of a basic, long-term energy concept First Energy Summit held on April 3, 2006 Objectives: National energy concept for 2020 Identify core topics for the upcoming German presidencies De-emotionalize existing contentious issues Tensions inside the coalition, e.g., nuclear issues Further summit meetings to be held in autumn 2006 and in the first half of 2007 Key building blocks to be detailed in three working groups International aspects National aspects R&D, energy efficiency 4

5 German Energy Policy Grid fee and Incentive Regulation Regulatory challenges in 2006/07 Grid fee approval for electricity Grid fee approval for gas Implementation of new grid access model for gas Drafting of incentive regulation Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Limited readiness on the part of the German Federal Network Agency (BNetzA) to engage in dialogue Reductions in grid fees in 2006/2007 Further reductions through incentive regulation in

6 German Energy Policy Grid fee and Incentive Regulation Average grid fees have changed by between -3% and -21% 10 0 % Total Baden Württemberg Bavaria Brandenburg Saarland Sachsen Sachsen Anhalt BNetzA -50 (72) (10) (4) (8) (10) (29) (10) (1) geringste Absenkung/größte Erhöhung mittlere Änderung größte Absenkung Basis: SLP-Lastfälle der VV II+ (1700kWh/a, 3500kWh/a, kwh/a) Substantial heterogeneity among regulatory authorities, not just of methods, but also of the results RWE TSO 9% RWE DSO Westfalen-Weser Ems -10% 6

7 German Energy Policy Grid fee and Incentive Regulation Incentive regulation BNetzA s draft: Further revenue reduction starting 2008 Costs in 2006 Comparative cost check in 2007 Benchmark: efficient grid operators Productivity gains of efficient grid operators: X general Reduction of inefficient OPEX and to a certain extent CAPEX: X individual Reduction of inefficient CAPEX: X individual Regulatory period 1 (3 years) Revenue cap 2 (3 5 years) Revenue cap 3 (2-year periods) Yardstick 7

8 German Environmental Policy Emissions Trading Emissions balance 2005: Surplus of allowances in the EU, but deficit at RWE EU Surplus of 44.1 million t + 2.4% surplus of allocation over emissions D Surplus of 21.4 million t + 4.3% Thereof 9 million t resulting from reductions by plant operators (upgrading, changed scheduling, etc.) and 12 million t resulting from special rules (e.g., option rule) Around 10 million t of the excess allowances will be taken out of the market by ex-post rules if the European Court of Justice accepts ex-post adjustments. A decision is expected by the end of Excess allocation mainly to industry UK Deficit of 33.0 million t % RWE Deficit of approx. 8 million t -6% Thereof some 1 million t at RWE Power in Germany and some 7 million t at RWE npower in the UK The deficit in Germany was lower than expected, due to an unplanned outage and a retroactive allocation for a power plant. 8

9 German Environmental Policy Emissions Trading German NAP II Main idea Resolute continuation of NAP I, modernisation and investment incentives Market mechanism Establishing market-orientated CO2 and electricity prices Allocation Free allocation for existing plants on the basis of historic emissions; compliance factor of 0.85; no auctioning Investment incentives Maintaining the regulation for replacement and new plants, regulation in order to create long-term, reliable terms for investments New installations Standard load factors and fuel-specific benchmarks 9

10 German Environmental Policy Emissions Trading Current status of new power plant projects in Continental Europe Topping gas turbines Weisweiler 2 x 190 MW BoA 2/3 twin unit Neurath 2 x 1,050 MW Hard coal-fired power plant Hamm 2 x 800 MW Construction and operation permit received in Feb Start of construction in April 2005 Start of commercial operation: August 2006 Budget: 150m Permit received in June 2005 Start of construction in January 2006 Expected start of commercial operation: January 2010 Budget: 2.2bn Announced in November 2005 (poss. with partners) Expected commissioning: 2012 Budget: 1,500m CCGT plant 850 MW Construction option: kept open Budget: 400m Hard coal & bio massfired power plant Netherlands 2 x 800 MW Announced in April 2006 Expected commissioning: 2012/2013 Budget: 1,600m 10

11 German Energy Policy Nuclear power generation in Germany Plant lifetime based on residual electricity generation TWh remaining by 2000 according to Nuclear Energy Act 2006 Obrigheim Biblis A Neckarwestheim-1 Biblis B Brunsbüttel Isar-1 Unterweser Philippsburg-1 Grafenrheinfeld Krümmel Gundremmingen B Gundremmingen C Philippsburg-2 Grohnde Brokdorf Isar-2 Emsland Neckarwestheim Replacement of more than 20,000 MW in nuclear power capacity required! 11

12 UK Environmental Policy Emissions Trading UK NAP II Main idea Modernisation and investment incentives via ambitioned caps Market mechanism Establishing market-orientated CO2 and electricity prices Allocation Free allocation based on category-average load factors, auctioning of 7%; toughest NAP Investment incentives No special rule, e.g., for transfers New installations CCGT plant operating at 66.4% load factor and 58% thermal efficiency 12

13 UK Environmental Policy Emissions Trading Modernizing our UK power plant portfolio Replanting steam turbines at Aberthaw Replanting steam turbines at Tilbury Flue gas desulphurization at Aberthaw Upgrading turbines at CCGT plants Turbine contracts already placed All three units will be retrofitted by 2008 Thermal efficiency will increase from 36.5% to 38.9% Additional capacity of 69 MW Programme of turbine improvements underway All three available units will be upgraded by the end of 2007 Reduction of fuel input and emissions by up to 1.5% Additional capacity of up to 15 MW per unit achievable Retrofit three units to comply with Large Combustion Plant Directive Preliminary enabling work has begun Scheduled to be completed by 2008 Investigating options for improving efficiency and output at Didcot B and Little Barford Target heat rate improvement of +1% Construction of a new CCGT plant and coal option Final decision not yet taken: investments will depend on environmental legislation and market conditions Option 1: Applied for consent to build a 2,000 MW plant in Pembroke Option 2: 1,500 MW consented site at Staythorpe 13

14 Environmental Action RWE s contribution to climate protection comprises a package of measures Energy efficiency Increase energy efficiency invest in best available technology: lignite, hard coal, gas, CHP... strong R&D: Develop new technologies, e.g., fluidised bed drying, increasing steam parameters Renewable energies Invest up to 650 million over next five years CDM/JI 150 million budget for developing international projects for the reduction of greenhouse gas emissions CO 2 -free power plant Industrial scale with coal gasification, CO 2 sequestration and storage; integrated project; 450 MW; 2014 commissioning 14