POLICIES TO SHAPE AN ALTERNATIVE ENERGY FUTURE Measures to move towards a sustainable energy future...

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POLICIES TO SHAPE AN ALTERNATIVE ENERGY FUTURE Measures to move towards a sustainable energy future by Oliver Schäfer, Policy Advisor of the European Renewable Energy Council - EREC Edinburgh, 6th Interparliamentary Forum on Renewable Energy and Energy Efficiency, Thursday 07 October 2005

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POLICIES TO SHAPE AN ALTERNATIVE ENERGY FUTURE Measures to move towards a sustainable energy future by Oliver Schäfer, Policy Advisor of the European Renewable Energy Council - EREC Edinburgh, 6th Interparliamentary Forum on Renewable Energy and Energy Efficiency, Thursday 07 October 2005. - PowerPoint PPT Presentation

Transcript of POLICIES TO SHAPE AN ALTERNATIVE ENERGY FUTURE Measures to move towards a sustainable energy future...

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POLICIES TO SHAPEAN ALTERNATIVE ENERGY FUTURE

Measures to move towards a sustainable energy future

byOliver Schäfer, Policy Advisor of the European Renewable Energy

Council - EREC

Edinburgh, 6th Interparliamentary Forum on Renewable Energy and Energy Efficiency, Thursday 07 October 2005

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EREC – European Renewable Energy CouncilEREC – European Renewable Energy Council

Umbrella organisation representing all RES sectors:Umbrella organisation representing all RES sectors:

AEBIOMAEBIOM European Biomass Association EGECEGEC European Geothermal Energy Council EPIAEPIA European Photovoltaic Industry Association ESHAESHA European Small Hydropower Association ESTIFESTIF European Solar Thermal Industry Federation EUBIAEUBIA European Biomass Industry Association EWEAEWEA European Wind Energy Association EURECEUREC AgencyAgency European Renewable

Energy Research Centres Agency

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Please keep two things in mind:

• Investments in energy infrastructure are always long term investments and therefore we rely on forecasts (and visions – including the „unthinkable“ of a change in energy supply)

• Your decissions influence future generations

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0

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1950-1959

1960-1969

1970-1979

1980-1989

1990-1999

Growth and costs of major climate related naturaldisasters

billion €

source: Münchner Rück

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The Reality Today Market Development in

Wind and PV

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Cumulative Wind Energy Installed Capacity

05

101520253035404550

GW

EUROPE 0.4 0.6 0.8 1.2 1.7 2.5 3.5 4.8 6.5 9.7 12.9 17.3 23.2 28.6 34.2WORLD 1.7 2.0 2.3 2.8 3.5 4.8 6.1 7.6 10.2 13.6 17.4 23.9 31.1 39.3 47.3

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Source: Source: EWEA EWEAGrowth rates 1994-1999 : 31.2%

1999-2004 : 28.3%

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The Top-10 Markets in the World

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MW 2002 2003 2004

Source: Source: EWEA EWEA

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The Top 10 Suppliers in the World

REPOWER (Germany)

3%

NORDEX (Germany)

2%

GE WIND (USA)11%

SUZLON (India)4%

VESTAS (Denmark)

32%

SIEMENS (Denmark)

6%

GAMESA (Spain)

17%

ECOTECNIA (Spain)

3%

ENERCON (Germany)

15%

Others4%

MITSUBISHI (Japan)

3%

Source: Source: BTM Consult BTM Consult

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Cumulative Photovoltaic Installed Cumulative Photovoltaic Installed Capacity (MWp)Capacity (MWp)

Source: Source: Eurec Agency, EPIA, Observ‘ER Eurec Agency, EPIA, Observ‘ER

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5000MWp

World 314 371 432 502 580 669 795 948 1150 1428 1829 2387 3151 4345

EU-25 90 128 188 284 392 594 1004

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Growth rates 1994-1999 : 18.0%1999-2004 : 30.5%

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The Top PV Markets in the World

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Japa

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Italy

Luxe

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MWp 2001 2002 2003 2004

Source: Source: EPIA, Observ‘ER, IEA-PVPS EPIA, Observ‘ER, IEA-PVPS

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The Top PV Manufactures in the World

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Shar

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Kyo

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BP S

olar

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MWp 2001 2002 2003 2004

Source: Source: EPIA, Observ‘ER, IEA-PVPS EPIA, Observ‘ER, IEA-PVPS

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Policy Works!

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Main policy issue: Create a level playing field

• Energy prices do not reflect the true social costs of generation - a market failure: The social and environmental costs of polluting energy

are not internalised There are still massive subsidies to ‘conventional’

energy sources

• To achieve the benefits of Renewable Energy, support frameworks should be established They should be viewed as compensation mechanisms

for correcting these market failures.

Renewables would not need special provisions if markets were not distorted by the fact that it is

still virtually free for energy producers to pollute.

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EU Power Production Mix 2003Other

renewable energy1.7% Nuclear

31.5%

Coal30.4%

Gas17.0%

Large Hydro10.0%

Oil6.1%

Wind Power2.1%

Other1.2%

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Competition in the internal electricity market ?

“Much work still has to be done to deal with the dominant and even monopolistic positions of the incumbent operators and investments will be needed to guarantee the interoperability of grids and networks, interconnection and an adequate level of capabilities and infrastructure”

Loyola de Palacio, 13 October 2004

“The current level of competition is not encouraging. (…) In most national markets, customer switching rates are modest, substantial barriers remain for new entrants, market structures are highly concentrated and, last but not least a single European energy market has not been achieved.”Mario Monti, 21 September 2004

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Distortions in the internal electricity market

• 4 Commission benchmarking reports: Endless distortions• National and regional monopolies / oligopolies• No real consumer choice• Lack of interconnectors• Little separation of production and transmission• Power companies acting on both demand and supply side

in the wholesale market• 75% of electricity subsidies goes to conventional power• Euratom shields nuclear (33% of total EU production) from

internal market rules (since 1958!)• Complete absence of any meaningful internalisation of

environmental costs

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Liberalised Markets?Liberalised Markets?• 95% of the EU power market is still affected by huge

market distortions• Electricity prices do not reflect full costs as long as

polluter pays principle is missing• Subsidies -direct and indirect- to conventional power

production is still massive• National and regional monopolies / oligopolies

Competition not effective, but precondition for competition on RES market

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Let´s be honest• A liberalised market is not existing• No support mechanism is market oriented• Any support mechanism relies on the

political willNo electricity generating technology in

history has ever been developed, introduced and become competitive

without initial support.

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National Policy MeasuresEstablish a successful framework for the development

of renewable energy

A successful framework requires political effort in four vital fields : Well designed support scheme ensuring investor confidence Appropriate administrative procedures Fair grid access and strategic grid planning Public acceptance and support

If one or more of these key components are missing, little progress will happen.

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National Policy Measures• Establish legally binding targets for renewable energy

National targets for the share of renewable energy are vital for maintaining and further stimulate investor confidence

• Establish incentive mechanisms which provide defined and stable returns for investors– The price for renewable power must allow for risk return

profiles that are competitive with other investment options.– The duration of a project must allow investors to recoup

their investment.Available options:– Capital Grants– Price-based Mechanisms

• feed-in price• fixed premium

– Quantity-based Mechanisms• quotas with tendering• quotas with trading- green certificates

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National Policy MeasuresThe Reforms Needed to Address Market Barriers to Renewables :

• Streamlined and uniform planning procedures and permitting systems and integrated least cost network planning;

• Fair access to the grid at fair, transparent prices and removal of discriminatory access and transmission tariffs;

• Fair and transparent pricing for power throughout a network, with recognition and remuneration for the benefits of embedded generation;

• Unbundling of utilities into separate generation and distribution companies;

• The costs of grid infrastructure development and reinforcement must be carried by the grid management authority rather than individual renewable energy projects;

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Policy Measures – International Level

• Establishment of legally binding RES targets• More emphasis on RES projects in development

policy• Support from International Financial Institutions,

Export Credit Agencies and Multi-lateral Development Banks– A defined and increasing percentage of overall energy sector

lending directed to RES projects– A rapid phase out of support for conventional, polluting

energy projects• Increased research and development• Increase awareness of RES• Substantial measures beyond Kyoto

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Conclusion• RE has the technological potential to replace fossil

fuels as mainstream energy source.

• RE is integral part of the energy supply in many countries today.

• RE has tangible economic, ecological and social benefit.

• BUT: RE market development depends on a coherent, predictable, supportive political & legal framework.

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Thanks for your attention

For more information please visit

www.erec-renewables.orgOr write me on schaefer@erec-

renewables.org