Andres Meesak, Solar PV in Estonia 18022016

SOLAR PV EXPERIENCE,

CHALLENGES AND OPPORTUNITIES IN

ESTONIAAndres Meesak

Estonian PV Energy Association@AndresMeesak

Topics:

■ Background / statistics

■ Estonian electricity market

■ Estonian PV sector

■ Challenges and opportunities

■ Conclusions

• 9 kW peak power• Comissioned August 2012• Generated > 35 000 kWh electricity

Estonian Development Fund – Coop energy mentor

Research topic:Small scale RE feasibility and economics

Statistics...

Presenter

Presentation Notes

In Estonia, the total greenhouse gas emissions amounted to 19 million tonnes of CO2 equivalents in 2012, and in 2010–2012 the emission remained around 20 million tonnes. CO2 made up 89% of the greenhouse gases emitted in Estonia, methane and nitrous oxide both accounted for 5% and the share of F-gases was 1%. The biggest share of CO2 emissions came from the oil shale-based energy sector, 85% of nitrous oxide and 51% of methane originated from the agricultural sector, waste management created one-third of methane emissions.

Generation of hazardous waste per capita in EU

>90% of hazardous waste generated in Estonia originates from oil-shale industry (energy

industry)

Statistics...

Statistics...

Presenter

Presentation Notes

The energy intensity of the economy has decreased by a sixth compared to the time 10 years ago. Estonia is a country with a large energy consumption; the main reason is the low efficiency of energy production from oil shale (in Estonia, the efficiency of the production of electricity from oil shale is about 30%). In 2012, Estonia used 3.3 times more energy (479 kg of oil equivalent) for the production of a unit of GDP, compared to the average of the European Union (143 kg of oil equivalent). In order to reduce the energy intensity of the economy, it is necessary to take measures related to energy production, distribution networks as well as energy consumption.

Statistics...

Presenter

Presentation Notes

The bigger the share of energy produced from renewable sources in energy consumption, the greater the sustainability of the energy sector. The use of renewable energy reduces the dependence on fossil fuels. What is more, the production of energy from renewable sources generates fewer greenhouse gas emissions than energy production from fossil fuels. It also supports the creation of new jobs in production, has a favourable impact on social cohesion and contributes to the security of energy supply. In the European Union, the use of renewable energy sources is a priority of the energy policy, as it helps to reduce the dependence on fuel supply from non-EU countries, lower CO2 emissions and decouple energy costs from oil prices. The Council of Europe has set the target of increasing the average share of renewable energy in EU countries to 20% by 2020. The draft of the National Development Plan of the Energy Sector Until 2020 includes the following objective: the share of renewable energy in final consumption should be raised to 25% by 2020.

■ Fully liberalized market since Jan. 1st 2013

■ Grid regulated, „natural“ monopoly– TSO – Elering– DSO – Elektrilevi (87,5% of dist. grid); Imatra, VKG

■ NordPoolSpot area

■ AC frequency controlled from Russia („BRELL area“)

■ AC links to Latvia and Russia

■ 1000 MW HVDC links to Finland (average consumption 1000 -1200 MW, peak 1600MW)

■ RE generation has Feed-In-Premium (FIP) in amount of 53,7 €/MWh (12 years)

■ Average cost of electricity:– Household (municipality) 125-130 €/MWh incl all taxes and fees (VAT non-deductable)– Small/medium commercial 100-105 €/MWh (low voltage customers, VAT deductable)– Large industrial 80-90 €/MWh (medium voltage customers, VAT deductable)

Electricity market setup

Electricity spot price and price for household

2012 2013 2014 2015

Market liberalisationin Estonia

600MW EstLink2HVDC cable launch

Market liberalisation01.01.2013.

EstLink2 launch

Household consumer price per kWh:

Solar PV sector in Estonia■ Total installed capacity ~ 6MW■ First grid-connected installations 2012 summer

– 1 M€ kick-off investment subsidy for households– No regulation for pro-sumer

■ Grid regulation■ Tax regulation

■ Households with PV installation ~ 500■ Average power of household installation ~ 7,5kW■ Annual revenue of the PV sector ~ 4,5 M€ (2015 estimate)■ Largest installations 300 – 400 kW■ Several MW-scale projects in pipeline■ 2015 – historically significant year – only capacities comissioned in Estonia

was solar PV

0

500000

1000000

1500000

2000000

2500000

Co1 Co2 Co3 Co4 Co5 Co6 Co7 Co8

Revenue €

2013 2014

€ 2,6 M

€ 3,7 M

Market size

Market size €2013 2014

Solar PV market in Estonia

- Regulative- Informational

- Financial

Main barriers for implementing PV

Regulative

InformationalFinancial

Challenges and opportunities: Regulation...

■ Feed-in Premium (FIP) 53,7 €/MWh■ Simplified connection to grid up to 11kW■ Grid fee only on consumption ■ Microgrids not allowed■ Strict direct line regulations■ Administrative barriers > 100kW

– Operating licence– Minimum equity requirement (33k€)– Limited company requirement

CURRENT regulation: Governing Acts:

• Electricity Market Act• Grid Regulation• Alcohol, Tobacco, Fuel and Electricity Excise Duty Act• State Duty Act• Construction Act

Regulator: Competition Authority

Challenges and opportunities: Ever Changing Regulation...

Challenges:

■ Technology neutrality

■ Introduction of auction system for FIP

■ NPS + FIP capped at 93 €/MWh

Opportunities:

■ Capacities < 200 kW exempt from FIP auction

■ Simplified connection to grid < 200 kW

■ No capping

■ Non-discriminative grid fee system

■ Possibility to run microgrids

■ Lifting administrative barriers– Operation licence > 100kW– Minimum equity requirement (33k€)– Type of legal entity (coop)

The cost of equity for onshore wind projects ranged between 6% (Germany) and more than 15% in Estonia, Greece, Latvia, Lithuania, Romania and Slovenia in 2014.

Across all EU Member States, the risks induced by policy designs is perceived as most pressing.

Source: The impact of risks in renewable energy investments and the role of smart policies. Final Report

More challenges...

Source: The impact of risks in renewable energy investments and the role of smart policies. Final Report

Energy supply mix with rooftop PV forhousehold

Electricity from grid

Energy generated

Feed to grid 60-80% Own consumption 20-40%

Value of energy fed to grid:

Spot price + FIP (12 years)

Value of energy consumed on site:

Energy grid price for household incl all taxes and fees

Solar investment and IRR

Household< 10 (11) kW

AppartmenthouseSME

10 - 99 kW

IndustrialCommercial

101 – 500 kW

Utility scale0,5 - ... MW

Dimensioning according toconsumptionIRR: 4,5 ... 8%

NPS Market price (+FIP)IRR: 3 ... 5%

1,3 – 2 €/W 1,1 – 1,5 €/W 0,9 – 1,1 €/W

Rooftop PV perspective for Estonia

Directive of energy efficiency in buildings (2010/31/EL):

01.01.2019 all state-owned new buildings

01.01.2021 ALL new buildings

Near-zero or net zero-energy buildings

Issued annually in Estonia1300 - 1500 residential building permits2300 - 2400 non-residential building permits3000 buildings X 10 kW = 30 MW peak power = ~ 30 GWh produced electricity per annum

2015 in Estonia ~ 4 MW PV installed capacity

From 2021 onwards added ~ 30MW PV capacity in form of new buildings, generating ~ 30 GWh electricity per annum

Utility scale PV opportunities

■ Continued focus on own consumption

■ Environmental projects (closed landfill PV parks – 2 X 5MW in development)

■ Combined on-shore wind + PV (pilot Aburi 0,7MW in 2016?, Saaremaa)– Supplemental resources– Maximum utilisation of available grid connection capacities

Conclusion

■ Policy consistency needed– Main barrier for investment uncertainty

■ Fossile divestment plan not existing

■ Rather modest growth till early 2020-s

■ Energy efficiency targets are important trigger

■ DSR and storage technologies will also bring boost– Yet, we need storage 6 months, not 6 hours...

Estonian PV Energy Association

“I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.” Thomas A. Edison, 1931

TÄ[email protected]

Ph: +3725014711

mailto:[email protected]

Andres Meesak, Solar PV in Estonia 18022016

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