Comment on Bruegel Policy Brief: Elements of Europe‘s Energy Union Daniel Fürstenwerth, Agora...
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Transcript of Comment on Bruegel Policy Brief: Elements of Europe‘s Energy Union Daniel Fürstenwerth, Agora...
Comment on Bruegel Policy Brief:Elements of Europe‘s Energy Union
Daniel Fürstenwerth, Agora Energiewende
BRUSSELS, 01.10.2014
Agora Energiewende – an Overview
2
→ Financed by Mercator Foundation and
European Climate Foundation, 2012-
2017
→ Independent and non-partisan
→ Think Tank based in Berlin
→ Mission: How to make the
Energiewende a success story?
3
Focus of this comment:EU support for low-carbon technologies
- Innovation vs.
Deployment
-Targets and
Markets
4
Innovation vs. Deployment?
Combined Cycle Gas
Turbine (new)
Hard Coal (new)
Wind Power (onshore,
new)
Solar Power (large scale,
new)
Nuclear (new)
Lignite* (new)
0
2
4
6
8
10
12
14
Cost of Power per Technology (LCOE 2014, new build, Germany)
Wind and PV are cost competitive
today - with new
conventional and nuclear
power plantsFuture*
*“Future Cost of PV until 2050“, Agora Energiewende/Fraunhofer ISE, forthcoming
ct/kWh
Other European countries have similar, some even better conditions for Wind and PV power production
5
Quality of Wind Quality of Solar
Cost competitive technology is available for
Wind onshore and PV
Focus should be on removal of
market barriers and appropiate market design
6
Technology-specific analysis required: cost varies between renewable technologies
0
5
10
15
20
25
Pric
e (c
t/kW
h)
Power Generation (TWh)~11 TWh
Biomass
Wind offshore
Wind onshore & PV
Price and Quantity of yearly deployment of renewables in Germany, 2015 (Objective)
Focus on innovation
appropiate for new renewable
energy technologies
(e.g. geothermal, tidal, wave)
Targets help policy to fulfill its role:enable the market to find efficient solutions
Brussels, 01.10.2014 | Daniel Fürstenwerth 7
Power Market, Germany%
100%
20352014
55-60%25% 40-45%
2025
Targets enable investors to make efficient investment
decisions
Renewable
Non - Renewable
BuildingInvestmentpayback
Example: Investment in new fossil power plant
Investmentdecision
Research Question:What are cost of suboptimal
investment decisions?
Year
8
Summary
- Stronger deployment of Wind onshore and PV does not
increase cost of the power system until 2030 – removal of market barriers is
key
- Stronger focus on innovation is appropiate for new renewable technologies
(geothermal, tidal, etc)
- Renewable targets allow market actors to make efficient investment
decisions – for both non-renewable and renewable investments
Comments and questions:[email protected]
Agora EnergiewendeRosenstraße 210178 Berlin
T +49 (0)30 284 49 01-00F +49 (0)30 284 49 01-29www.agora-energiewende.de
Brussels, 01.10.2014 | Daniel Fürstenwerth 9
10
Innovation vs Deployment
2009 - 2012: „Solar Years“ Success Story for Technology, Challenge for Policy Makers
Brussels, 01.10.2014 | Daniel Fürstenwerth 11
20
08
20
09
20
10
20
11
20
12
20
13
0
100
200
300
400
0
2
4
6
8
Feed-in Tarif (EUR/MWh)
Cost (EUR/MWh, illustrative)
Build-up of Solar (GW/a)
Increased margin leads to massive investment in solar
• „Race“ between investors and policy: market moved faster
• ~ 30 GW solar build in 5 years
• Cost was >2 times higher than today
12
Remuneration of new nuclear power in the UK, and large PV and wind onshore in Germany after accounting for inflation, in real Euro2013/MWh
1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031323334350
20
40
60
80
100
120 Nuclear in the UK PV (utility-scale) in Germany Wind onshore in Germany
EU
R2
01
3/M
Wh
Year of operationNote: Wind onshore remuneration in Germany is presented here in a simplified way by showing average payments. In reality, remuneration at the beginning differs from remuneration at the end.Source: EEG 2012, UK Government 2013a, calculations by Prognos AG.
13
Comparison of average remuneration for new nuclear power in the UK, and PV and wind in Germany, in Euro2013/MWh
* Hinkley Point C agreement ** Wind offshore 2013 without grid costs; in Germany, the regulatory approach excludes grid costs from being covered by the remuneration. Offshore grid costs are estimated to be between 25 and 35 EUR/MWh, depending on the distance to shore. Source: DECC 2013; ECB 2014a; EEG 2012; Prognos AG 2013; UK Government 2013a; calculations by Prognos AG.
New nuclear*, (UK, 2023)
PV (Germany, 2013)
Wind onshore (Germany, 2013)
Wind offshore**(Germany, 2013)
0
20
40
60
80
100
120
112
73
56
95-34%
-50%
-15%
Rem
un
erat
ion
, in
Eu
ro 2
01
3 /M
Wh
14
Comparison of annual system costs, in million Euro2013
Source: ECB 2014a; EEG 2012; Prognos AG 2013; UK Government 2013a; calculations by Prognos AG.
Annual system cost, million Euro2013
Renewables and gas Nuclear and gas0
100
200
300
400
500
600
700
800
900
174.81688
93.19231
383
36628.0391547694641
491
679
857
Gas OCGT
Gas CCGT
Nuclear
PV
Wind onshore
-21%