Michel Roggo / WWF-Canon How can the next Chief Executive build on Government s Climate Action Plan 2030+ and encourage renewable energy uptake? Gavin Edwards Director, Conservation WWF-Hong Kong 24 February 2017 1
Global GHG emissions in GtCO2e 50 IPCC and Paris COP Require Reductions for 2 C 40 30 Non-CO2 CO 2 from forestry 20 10 CO 2 from fossil fuels and industry 0 2000 2005 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Source: own figure, based on marker scenario RCP 2.6 of the IPCC, from RCP scenario database http://tntcat.iiasa.ac.at:8787/rcpdb/dsd?action=htmlpage&page=download More detail on ranges from the IPCC data base see Climate Action Tracker update: http://climateactiontracker.org/assets/publications/briefing_papers/cat_bonn_policy_update final.pdf 10/06/2014 Dr. Niklas Höhne, n.hoehne@ecofys.com
Hong Kong's greenhouse gas emissions from electricity have continued to rise in the past decade
Annual energy use (PJ) 1000 Energy use in another major Asian city, Tokyo is falling through decisive policies 257 219 172 169 161 500 202 217 221 212 212 245 274 260 233 237 0 97 81 70 63 61 2000 2005 2010 2011 2012 Industrial sectors Commercial sectors Residential sectors Transport sectors
Yet large number of countries that generate >20% or even >50% of power from renewables Renewables production over total power production (%) Canada 66% UK 25% Spain 35% Germany 30% Japan 16% US 13% No data <10% 11-20% 21-50% >50% Brazil 73% 1 South Africa 1% 1 India 15% 1 Australia 14% China 23% 1 1. 2014 / Note: Including hydro in renewables Source: Bloomberg New Energy Finance; IEA 2014 / 2015 Climate and energy external landscape (selection) 30Jan17.pptx 5
China: Proportion of installed power capacity from Renewables 2006 to 2013 Source of primary data: data up to 2011 available from the US EIA, data for 2012 and 2013 available from the China Electricity Council
2015 2020 2025 2030 2035 2040 2050 WWF 2050 energy vision for Hong Kong 43 (billion kwh) Nuclear Gas 5% domestic renewables by 2030, no Mainland renewables yet 1-2% annual electricity consumption BAU 16% CO 2 than 1990 61.5 (billion kwh) Aggressive End-use Energy Saving 50% 29.8 (billion kwh) ~ 15% Coal Renewables (China) 92% CO2 1990 level ~85% Renewables (HK)
Green Groups call for Fitter Electricity Market 1. Open up grid for distributed generation 2. Improve the incentive / penalty scheme for energy efficiency
Climate Ready is an Important Step Forward to Hong Kong meeting the Paris Commitments Government expects its carbon intensity target to reduce absolute emissions 26 to 36 per cent by 2030. Government has suggested that 3 to 4 per cent RE by 2030 is feasible. Mention of feed-in tariff policy and renewable energy certificates in the post-2018 SCA Large scale RE projects at Government premises Review of climate ready plan scheduled for 2019 and revised plan in 2020 But, are policies to increase energy efficiency enough to attain GHG target?
HK Government s suggested shares of different RE technologies that might be achieved by 2030 3.6 km 2 of solar PV across territory = 1% Two 100 MW offshore wind farms = 1.5% Energy from waste = 1.5%
Policy instruments to encourage uptake of RE Feed-in Tariff Payments to RE generators by utility for any RE power that is generated. Price reflects scale & technology Feed-in Tariff Tendered prices for Utility scale RE. Price determined in competitive auction between generators Net Metering Feed-in tariff where small generator receives same price for its RE surplus, as its retail electricity price Renewable Portfolio Obligation / Standard obligation on utility to source an annually increasing share from RE Renewable Energy Certificates customers / utilities purchase certified renewable RE power from local / international markets Capital subsidies to developers where capital scarce, or investment risky. Used for early stage technologies
Which instrument to use in Hong Kong? Feed-in Tariff Administered Price Feed-in Tariff Tender price Used for Technology Scale Suitability in HK Price set by government, adjusted overtime When installation industry is mature PV, waste / biomass and wind Off-shore wind, large-scale solar All scales. Common for small scale Large scale >50 MW Highly suited to distributed generators Will enough competing generators participate in auction? Renewable Portfolio Standard Instead of FIT for utility scale RE Wind, large solar plants Large scale Need another mechanism for small PV Renewable Energy Certificate If market or trade in renewables PV, wind, biomass Needs verification to ensure additionality Only suitable after local potential exhausted Capital Subsidies For early stage technologies, where finance hard to raise Tidal, Wave All scale Suited to early stage & novel. Can HK innovate?
Policies to raise finance for RE As well as the policies described above to incentivise RE there are policies to RE developers raise or structure capital: - Solar leasing instead of paying for the purchase and maintenance of RE technology site owners pay a regular fee to lease the RE equipment and receives payment for any RE generated. Roof leasing here the installer pays the site owner (or provides the power free) for providing space for installing RE Green bonds utility scale RE projects raise finance by the project promoter issuing bonds, often bought by green investors
Key features of Feed-in tariff An agreed long-term tariff this is guaranteed price paid to RE generator per kwh of power generated. Price differs by RE s size and technology and reflects the annualised cost of generation when the generator is first connected. Price set for new generators revised periodically to ensure reasonable payback time (8-10 years) Guaranteed access to the grid the utility is required to efficiently and quickly connect RE generators that comply with their safety and secure metering standards, and have to purchase all offered. Building and Planning regulations need to be streamlined. A mechanism to allocate for the cost of the tariff amongst customers A mechanism needs to be agreed to finance the FiT: customers, perhaps utilities and Government pay. Some customers might be exempt
Government should develop a supportive policy environment, centered around a feed-in tariff
Hong Kong has better solar resources than countries that have deployed solar PV at scale 900-1200kWh/ m 2 1350 kwh/m 2
Analysis funded by Central Policy Unit suggests considerable scope for PV in Hong Kong Solar PV potential estimated using LiDAR and satellite imaging to identify suitable non-shaded rooftops and include losses from cloud cover Total rooftop & open space sufficient for 5.54 TWh, 12.6% of HK demand Source: # Wong, M S (2015) A Remote Sensing Study of Solar Energy Supply in Cloud-prone Areas of Hong Kong. Hong Kong Polytechnic University: Hong Kong.
Feedin tariff HK$/kWh Solar PV Feed-in Tariffs in UK and Germany fell as installer experience and technology improved 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 UK Production Solar PV <10kW new building Germany rooftop UK Production Solar PV >250kW, connected Germany large roof/ground mounted
Feedin tariff HK$/kWh Installed capacity (GW) Despite the cuts in feed-in tariffs PV capacity continued to grow 6.00 45 5.00 40 35 4.00 30 3.00 25 20 2.00 15 1.00 10 5 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 0 UK PV installed capacity, GW UK Production Solar PV <10kW new building Germany rooftop Germany PV capacity, GW UK Production Solar PV >250kW, connected Germany large roof/ground mounted
Where might the money to pay the FiT come from? Consumers: Feed-in tariff funded through electricity customers bills. Exemptions might be given for low income customers, or Government might pay their share Utilities: the electricity companies could directly or indirectly pay for the feed-in tariff by reducing the amount of profit made Government: could contribute to the fund, or pay a grant to some customers to reduce the up front costs of installation. This might be particularly important at the initial stage of the scheme
Feed-in tariff rate ($/kwh) Cost of feed-in tariff as a proportion of electricity tariff What if Hong Kong solar uptake through FIT follows the UK and Germany path? 4.00 6.0% 3.00 average over period of 3.8% 4.5% 2.00 3.0% 1.00 1.5% 0.00 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0.0% Increase in bill (6.3% capacity & $4/kWh) Feed-in tariff ($4 scenario new capacity) Feed-in tariff ($4 scenario average all capacity)
LNG price HK$/kWh Dash to gas is not a free lunch 0.500 Price Japanese LNG 0.450 0.400 0.350 0.300 0.250 0.200 0.150 0.100 0.050 0.000 1987 1992 1997 2002 2007 2012 22
Is RE possible in cities? Sunny London has 20,000 PV installations with 85MW capacity, New York City has 7,300 installations with 88MW capacity Hong Kong has 24 km 2 of reservoirs if half covered they would provide more than 1GW of capacity and meet 3.3% of demand! Wind power in Chinese cities Installed capacity 2013 Hong Kong 0.8 MW, Beijing 156 MW, Chongqing 124 MW, Tianjin 305 MW, Shanghai 370 MW Hong Kong can only obtain 1.5% from biological wastes: In UK 10% of electricity demand met from biological products: 1.5% landfill gas, 1% energy from waste combustion, 6% from plant biomass, 1.5% anaerobic digestion / sewage sludge / manure
Solarize Tai O: Innovative uses of PV and electricity storage to supply in rural areas
Renewables: Poor people cross-subsidise the rich? Solar PV in reduces reliance on expensive peak day time electricity. Can reduce the need to build little used gas generation capacity Price of solar is fast falling Poorest customers can be protected by designing lower tariffs for subdivided flats and strengthening the existing tiered tariffs
The Four T s for Renewable Energy Targets & Timeline Government to commit to a goal of 5% domestic renewables by 2030 Together Waste treatments facilities, homeowners (especially in rural areas), new developments and other stakeholders can play an important role is hosting distributed energy generation Feed-in tariff has proved itself as an effective instrument administratively set tariffs for solar PV, wind, waste payment into the FIT fund should be carefully calibrated to protect vulnerable customers perhaps with Government paying vulnerable people s share Transparency Utilities need to develop an efficient procedure for connecting up distributed generators that ensures grid security and safety, without imposing undue costs on RE generators
References WWF-HK (2015) Hong Kong Energy Vision 2050 WWF International (2011) 100% Renewable Energy By 2050 Marke, A & Vaze, P: Sources of Funding for Renewable Energy WWF-HK (FORTHCOMING) Final Energy Consumption and Greenhouse Gas Emissions in Tokyo (2015) http://www.kankyo.metro.tokyo.jp/attachement/2012ghgsummary_english.pdf Wong, M S (2015) A Remote Sensing Study of Solar Energy Supply in Cloud-prone Areas of Hong Kong. Hong Kong Polytechnic University: Hong Kong New York City PV - https://pv-magazine-usa.com/2017/02/22/new-york-solar-grows- 795-in-five-years/ Chinese cities wind - National Renewable Energy Centre, Table 1-5 China Wind Power Review and Outlook http://www.gwec.net/wp-content/uploads/2012/06/2014 风电报告 2 英文 -20150317.pdf
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