Berg Connection to the Network EU WG Budapest 2007

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Marianna BergDept. for Electricity Licensing and SupervisionHungarian Energy Office

Workshop on Distributed GenerationBudapest. July 6. 2007

ERRA EU Integration Working Group

Distributed generation - Connection tothe network

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Internet: www.eh.gov.hu


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Budapest by night 1.

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Principles and regulations in the EUPrinciples and regulations in the EU

2003/54/EC directive concerning common rules for the internalmarket in electricity Chapter I. Definitions Art. 2. 31.: distributed generation'

means generation plants connected to the distributionsystem.

Chapter III. Generation Art. 6. (3): Member States shallensure that authorisation procedures for small and/or distributed generation take into account their limited size andpotential impact.

Chapter V. Tasks of Distribution System Operators Art. 14.7:

When planning the development of the distributionnetwork, energy efficiency/demand-side managementmeasures and/or distributed generation that might supplantthe need to upgrade or replace electricity capacity shall beconsidered by the distribution system operator. H

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Principles and regulations in the EUPrinciples and regulations in the EU contcont ..


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Chapter VII. Organisation of access to the system Art. 20.:

third party access to the transmission and distribution systemsbased on published tariffs, applicable to all eligible customers andapplied objectively and without discrimination between systemusers.

but The operator of a transmission or distribution system may refuse

access where it lacks the necessary capacity.

Regulatory authorities Art. 23. 1.f : are responsible for the terms,conditions and tariffs for connecting new producers of electricity toguarantee that these are objective, transparent and non-discriminatory, in particular taking full account of the costs and benefits

of the various renewable energy sources technologies, distributedgeneration and combined heat and power; 6


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Principles and regulations in the EUPrinciples and regulations in the EU contcont ..


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2005/89/EC directive concerning measures to safeguard securityof electricity supply and infrastructure investment

Art. 3. 3(c): Member States shall ensure a high level of security of electricity supply by taking the necessary measures to facilitate astable investment climateIn implementing the measures theymay also take account of the importance of encouragingrenewable energy technologies and distributedgeneration;

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Principles and regulations in the EU cont.

2001/77/EC on the promotion of electricity produced fromrenewable energy sources in the internal electricity market

Why using renewable energy sources? Because it contributes to environmental protection and supports sustainable development.

How does it support to achieve the mentioned targets? Member States are obliged to set national targets for the rate of

consumption of electricity produced from renewables to achievethe EU average target of a 20% share of renewable energies inoverall EU energy consumption by 2020

they have to support the connection of generators fromrenewable to the grid

EU Integration Working Group

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Hungarian regulation: Act CX. of 2001 on Electricity

Definitions 3. 21. small power plant: a power plant with a capacitybelow 50 megawatts

Access to the grid 31. (1): (1) The public power grid operated bynetwork licensees shall be made available for generators, operators of small power plants for the purposes of electricity transmission at theofficial price

Limitation and suspension of electricity transmission anddistribution 33.

(1) The system operator may deny access to the transmissionnetwork and to the distribution network influencing the operation

of the transmission network and/or limit, curtail or suspendcontracted supplies in an objective, transparent and nondiscriminatorymanner.

(3) Denial of access to the public power grid must be justified.

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Licensing of generation from renewables

Determination of the quantity on generated electricity from renewables and waste for mandatory takeover

Vhr. 41/A (1) The quantity of electricity generated from renewableenergy sources or waste under mandatory takeover shall be establishedby the HEO in the integrated small power plant licence.

(2) In establishing the quantity of the generated electricity for mandatorytakeover and in setting the duration of the operating licence, HEOshall take into account different factors among others

Hungarys target for using renewables, competitiveness of such generated electricity, effect of the used technology on the balanced operation of the grid, the financial load bearing capacity of the consumers,the opinion of the TSO, other subsidies given to such projects

(3) The expected return of the investment shall be taken into accountas well 10


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Licensing of generation from renewables cont.

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Vhr. 41/B (1) the applicant requesting an integrated small power plantlicence shall ask for the opinion of the system operator.

(2) The system operator shall provide its opinion within 15 daysa) what impact the mandatory takeover of the electricity would have

during the period of the requested licence on the safety of the system,on the preservation of the cooperation capability of the electricity gridand the balancing of the system.

b) whether feeding the electricity such generated into the grid can beprovided for.

(3) If not, a detailed description of the conditions to be met for feedingthe electricity into the grid shall be given

(4) a detailed explanation for its opinion



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Practise of simplified licensing on example of windpower plants

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The Act on Electricity was modified in summer 2005 containing a highmandatory takeover price for electricity generated from renewable(23.- HUF/kWh ca. 9 Eur cent/kWh) flood of applications for license

Mainly investors for generation from wind made a request for license very weather dependent ca. 80% reserve capacity is needed +problems by security of supply and balancing

up to March 2006 application for 1 138 MW built in capacity wind

power plans were submitted to HEO (wind power plants in operation:17.5 MW at that time)

HEO examined the situation with the Hungarian TSO and limited theinstallation of wind power plants in 330 MW



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Practise of simplified licensing on example of windpower plants cont.

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HEO allocated the 330 MW between the applicants onfollowing principles:

Unlimited license was given to the already operating wind power plants

All power plants with planned built in capacity below 50 MW wereselected. which had valid connection agreement beforeNovember 11. 2005 (date of effect of the amended Act and Decree)

All power plants with only one wind turbine were selected, which fulfilledthe mentioned conditions and submitted the application for licenseup to March 1 and all wind parks, which submitted applicationup to February 2. 2006



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Practise of simplified licensing on example of windpower plants cont.

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Based on the analysis of the rate of return of the projects, oninternational experiences and with regard to the development of thecost effectiveness of such projects HEO defined max. 15 years for

mandatory takeover in the license of the wind power plants

Based on the Act and the Decree the licensed projectshave to be built within 2 years HEO will analyse the results

of the years with bigger wind generated electricity with regard to theimpact on the system security. These experience will show if thelimitation can be eased or terminated



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Why is the mandatory takeover of supportedelectricity a big issue?

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Quantity of electricity under mandatory takeover:

4309

1 575

101

2566

2005.

438328281791Total

1184724124Renewable

1364765Waste

306320561603CHP

2006.2004.2003.[GWh]

Source: HEOEU Integration Working Group


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Financial burden

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2.070.7000.4610.210KP charge [Ft/kWh]7.512.64.22.6Cumulated deficit59.935.819.69.4Total demanded fund

12.74.22.60.0Deficit to be recovered

52.323.215.46.8Current KP receipts (paid as part of the system operation charge for supporting)

1413.95.60.9from this for renewables

47.231.617.09.4Current supporting payments

2006.2005.2004.2003.[Billon HUF]

Source: HEOEU Integration Working Group


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Principles for a new supporting scheme

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It is reasonable to keep the capacity limitation for wind power platsat present; in case the technical possibilities improve, HEO will callfor tender for new wind power plants

The new scheme shouldnt make the system balancing more difficultmoreover it should make it easier (investments in easy regulablepower plants)

The new scheme should take seriously account of the costs andrate of return of the used technology and investment, and in this contexta differentiated supporting scheme is proposed (e.g. type of energy source,technology, starting year of generation)



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New supporting scheme proposed by HEO

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Principle aim in the new Act on Electricity:

harmonisation of the aspects for environmental protection,agriculture and energy for sustainable development

to achieve this it is absolutely needed to use the supporting funds for electricity generation from renewable as well as from CHPs basedon expedient heat demand and by high efficiency

Way of realisation specific price and supporting duration for mandatory takeover bygenerating techniques, later on

green certificate system (based on government decision)

Up to the green certification system the certificate for origin willbe the evidence for electricity generated from renewables, from waste

and in CHPs EU Integration Working Group


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Useful information can be found on theweb page of HEO:

www.eh.gov.hu

Thank you for your [email protected]


Documents

Berg Connection to the Network EU WG Budapest 2007