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Low Carbon Earth Summit 28th September 2013. Xi’an, China
Citation preview
Energy Certification - an Efficient Tool to Achieve Ambitious RES Targets
Case Norway and Sweden
Low Carbon Earth Summit 28th September 2013. Xi’an, China
Slide 2 13.04.2023
Grexel in One Sentence
We enable energy certification by
providing market infrastructure
solutions and services
Slide 3 13.04.2023
Grexel Fact Sheet
• Field of Business Energy certification
• Services Central certificates
registries Regulatory and market
engineering• Achievements & Figures
80% of European energy certificates volume
11 countries covered Trade volume in registries
> 5 b€ annually
• Customers Government agencies
o Ministry of Employment and Economics, Finland
o ILR (Luxembourg)o Croatian Energy Market
Operatoro EgyptERA (Egypt)o Ministry of Industry and
Innovation, Iceland Main Grids
o Statnett (Norway)o Svenska Kraftnät (Sweden)o Energinet.DK (Denmark)o Landsnet (Iceland)o EMS (TSO, Republic of
Serbia)
Slide 4 13.04.2023
I Will Tell You About…
1. Energy certification and Renewable Portfolio Standards (RPS)
2. Swedish-Norwegian certificate based RPS
3. EU 20-20-20 targets burden sharing
4. RPS versus FiT efficiency data
5. Explanation to the above
6. What’s next
Slide 5 13.04.2023
What are Energy Certification?
• Unbundling the value related to origin from physical energy
• Enable efficient financial incentives to increase renewable energy generation and energy savings
• Do not require a liberalized physical power market in order to be effective
Production
attributeSold in
compliance or voluntary market
ElectricitySold in energy
market
Slide 6 13.04.2023Slide 3/26/13
Energy Certificates Enable Commercial Tracking of Electricity from Generation to Consumption
Certificate Markets
Certificate Registry
Cancellation Issuing Transfer
Electricity Markets
Authority issues certificates for eligible production based on valid measurement data
Certificates are traded separately from energy. Green investors get money from selling certificates.
Certificates are cancelled to meet quota or prove green consumption / sales.
Slide 7 13.04.2023
Renewable Portfolio Standard (RPS) Using Energy Certificates
• RPS = producer, consumers or e.g. regional government has to prove that certain share of electricity (quota) was produced using eligible production methods Eligible production is usually newly built renewable
• Authority issues quota certificate to the account of producer 1 MWh of produced electricity = 1 certificate
• Certificates are freely tradable separately from physical power• Quota Obliged Parties have to prove quota compliance by cancelling enough
certificates yearly
Certificate Markets
Electricity Markets
X
Y
Z = X + Y
Z
q*Z = YProducers
Y
Suppliers/Grid Company
Interaction with other Domains
Z = Total Electricity Sales of the Grid CompanyX = Fossil&Nuclear Production Y = Renewable Production q = Quota % for renewables for Producers
Slide 8 13.04.2023
How Governments Use RPS to Reach Their Quotas
• With quota certificates government can harness the market forces without loosing control over the electricity market
• In case of multiple support schemes, the RPS scheme can act as the flexibility element
Time
Unsupported RES
FIT Supported RES
GC Supported RES (QOP Quota)
Country RES Target
Slide 9 13.04.2023Slide 7 8/29/12
Case: Quota Certificate System for Sweden and NorwayBackground
• Both countries are bound by the 20-20-20 targets of the EU directive 2009/28/EC
• All RES support schemes were replaced by a joint quota certificate scheme
• Yearly elevating quota on consumption
• Quota obliged parties: electricity suppliers and major consumers
• Eligible production: all new renewable capacity for 15 years
• Competent authorities: Grid operators and regulators
NorwayTarget 67,5%
SwedenTarget 49%
Joint Quota Certificate Scheme
Slide 10 13.04.2023
Quotas in the European Union
• Common 20-20-20 target agreed in directive 2009/28/ECo 20 % of consumed primary energy from renewable sources by 2020o 20 % of GHG reduction as compared to 1990 level by 2020
• Burden sharing according to RES potential and economical capability• Member states are free to select strategies to reach the targets
o Support schemeso Build own capacity / buy from others
• Member states can trade using defined flexibility mechanismso Statistical transferso Joint projectso Joint support schemes
Bottom line: It is equally difficult to reach the targets for all countries.
Now it is interesting to see how different strategies have worked out!
Slide 11 13.04.2023
EU 20 RES Targets by Country
EU (27 co
untries)
Belgium
Bulgaria
Czech
Republic
Denmark
Germany
Estonia
Ireland
GreeceSpain
France
CroatiaIta
ly
Cyprus
Latvi
a
Lithuania
Luxe
mbourg
HungaryMalta
Netherlands
Austria
Poland
Portugal
Romania
Slovenia
Slovakia
Finland
Sweden
United Kingdom
Norway
0
10
20
30
40
50
60
70
80
2005 2011 TARGET 2020
Slide 12 13.04.2023
Premium in RPS and FiT
?
FiT price = F
Elec
tric
ity p
rice
= E
Premium =F-E
FiT
?
Elec
tric
ity p
rice
= E
Premium =C
RPS
Certi
ficat
e pr
ice
= C ?
Slide 13 13.04.2023
FiT vs. RPS Costs in the EU after 20-20-20 Targets
2009 2010 20110.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
25.8022.84
18.12
Onshore Wind Premiums (normalized to 20 y duration)
Czech Republic Germany Greece Netherlands Spain Sweden
€
Slide 14 13.04.2023
How do FiT and RPS Schemes Deal with Changes Assuming % RES Targets?
Change Energy Markets FiT RPS
Economy down • Electricity price ↘• Consumption ↘
• Investment ↗• Over/under target ↗• Cost to consumers ↗
• Investment ↘• Over/under target →• Cost to consumers ↘
Economy up • Electricity price ↗• Consumption up ↗
• Investment ↘• Over/under target ↘• Cost to consumers ↘
• Investment ↗• Over/under target →• Cost to consumers →
Give up Nuclear or Fossil(other replaces the other)
• Electricity price ↗• Consumption ↘
• Investment ↘• Over/under target ↘• Cost to consumers ↘
• Investment →• Over/under target →• Cost to consumers →
Build more Nuclear / Fossil
• Electricity price ↘• Consumption ↗
• Investment →• Over/under target ↘• Cost to consumers ↗
• Investment ↗• Over/under target →• Cost to consumers ↗
Slide 15 13.04.2023
Conclusions
• Well designed RPS scheme seems to cope better with changes Economic up/downturn Electricity consumption increase / decrease Electricity price changes Maturing of technology Changes in investment climate Political decisions
• Well designed RPS scheme seems to reach targets more efficiently. Why? Market optimizes itself in changing environment The market automatically drives towards the target using price flexibilities both in
consumption and production
• RPS is more sustainable in the long term. Why? Being market based, investors do not have to worry government budget cuts No danger of being suspended because of over investments
Slide 16 13.04.2023
Future Work
• Data is partly in contradiction Wait 3 more years for cost data
• See how investments go in SE and NO Likely to stall Cost to consumers going even more down
• Why are some RPS schemes expensive? Marked design failed?
• After 3-5 years, there should be enough of data to draw consclusions New genenric theory on optimal usage of support schemes
o Investment supporto FiTo RPS
Slide 17 13.04.2023
Thank You!
Marko Lehtovaara
CEO
Grexel Systems Ltd.
Finland
Marko.lehtovaara(at)grexel.com