EU Climate Policy Roadshow Energy Efficiency in the EU Policies and implementation Mr. Andrzej Werkowski Energy Max Power, Poland Moscow, 8-9 April 2014

EU Climate Policy Roadshow

Energy Efficiency in the EU Policies and implementation

Mr. Andrzej WerkowskiEnergy Max Power, Poland

Moscow, 8-9 April 2014


• Energy Efficiency in the EU – strategic approach and actions• Implementation of the EU Energy Efficiency Directive 2012• Cogeneration – one of the most effective tools to improve

energy efficiency• Case Study – Cogeneration in Poland• Conclusions

Moscow, 8-9 April 2014 EU Climate Policy Roadshow

Agenda


„There is only one thing one can be sure of Energy prices WILL grow”

(Connie Hedegaard – European Commissioner for Climate Action)

„#1 Priority – Achieving an energy efficient Europe” (EU Strategy – Energy 2020, November 10, 2010)

THE CHEAPEST ENERGY IS ENERGY WE DON’T USE(Essence of energy efficiency)


Instead of Introduction


• Competitiveness• Security of supply• Sustainability


Main pillars of the EU Climate and Energy Policy



At the same time …

79 %

10 %

8 % 3 %

GHG Emissions in 2008

EnergyAgricultureIndustry processesWaste

2005 2008 2020 20300

20

40

60

80

100

58 %62 %

76 %83 %

GAS


2005 2008 2020 20300

20

40

60

80

100

82 % 84 %93 % 94 %

OIL

% %


Business as Usual Scenario Growing dependence on fossil fuel imports


• The 2020 Climate and Energy Package 3 x 20 (adopted in 2009, under implementation)

• 2030 Framework for Climate and Energy Policies (to be adopted by October 2014)– Reducing greenhouse gas emissions in 2030 by 40% compared to 1990– Increasing the share of renewable energy to at least 27% in 2030 – Continued improvements in energy efficiency

• Roadmap 2050 (under consultation) – Further emissions reduction to 80% below 1990 levels – Milestones: 40% by 2030 and 60% by 2040– Guidance for main sectors resonsible for Europe’s emissions on how they can

make the transition to a low-carbon economy most cost-effectively


EU Climate and Energy Policy



EU Climate and Energy Policy Key improvement directions

Competitiveness Reduce EU’s energy bill by € 200 bn in 2020 Create up to 2 million new jobs by 2020Boost R&D and markets

Security of Supply Reduce EU’s energy dependenceReduce investment in energy sectorImprove the energy trade balance

Sustainability Reduce CO2 emissionLimit environment degradation


• Energy efficiency is at the heart of the EU’s Europe 2020 Strategy for smart, sustainable and inclusive growth and of the transition to a resource efficient economy

• Energy efficiency is one of the most cost effective ways to enhance security of energy supply, and to reduce emissions of greenhouse gases and other pollutants

• In many ways, energy efficiency can be seen as Europe's biggest energy resource

• This is why the EU has set itself a target for 2020 of saving 20% of its primary energy consumption compared to business as usual projections, and why this objective was identified as a key step towards achieving the EU long-term energy and climate goals


EU Energy Efficiency


• The climate and energy package is a set of binding legislation which aims to ensure the European Union meets its ambitious climate and energy targets for 2020

• These targets, known as the "20-20-20" targets, set three key objectives for 2020:– 20% reduction in EU greenhouse gas emissions from 1990 levels– Raising the share of EU energy consumption produced from

renewable resources to 20%– 20% improvement in the EU's energy efficiency


Climate and Energy Package 3 x 20

140015001600170018001900

1842 1648 1474

Primary Energy consumption in 2020 - Scenarios


Prim

ary

ener

gy c

onsu

mpti

on,

[Mto

e]


Energy efficiency 2020 Is the EU on the right track to meet the EE objective?

Additional efforts needed to fill the gap



EU Climate and Energy Policy Improvement potential until 2020

Industry Commercial Residential Transport Energy sector

0

20

40

60

80

100

120

Savings expected with existing measuresRemaining saving potential to be addressed with new measures

Econ

omic

pot

entia

l [M

toe]


Meeting the EU energy efficiency 20% reduction target should lead to:

• Potential to generate financial savings of up to € 1.000 per household every year

• Improvement of Europe’s industrial competitiveness • Creation up to 2 million jobs • Reduction of annual greenhouse gas emissions

by 740 million tons


Energy Efficiency Plan 2011 – Key Effects


• Amends Directives 2009/125/EC and 2010/30/EU and repeals Directives 2004/8/EC and 2006/32/EC

• Entered into force on 4 December 2012 • Most of its provisions have to be implemented by the

Member States by 5 June 2014• All EU-28 countries are required to use energy more

efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption

• All EU-28 countries are required to establish indicative national energy efficiency targets for 2020


Energy Efficiency Directive 2012/27/EU



Directive 2012/27/EU – National targetsEU Member State Indicative national EE targets for 2020

(Examples)Energy consumption in 2020

[Mtoe]

Primary Final

EU - 27 20% reduction on energy consumption until 2020 compared to BaU scenario

1.474 1.078

France 17.4% reduction of final energy consumption in 2020 compared to a baseline

236 131

Germany Annual improvement of energy intensity (energy productivity) by 2.1% pa on average until 2020

277 194

Ireland 20% energy savings in 2020 along with a public sector energy saving target of 33%

14 12

Poland 13.6 Mtoe primary energy savings in 2020 96 70

Sweden Energy use shall be 20% more efficient by 2020 compared with 2008 and a 20% reduction in energy intensity between 2008 and 2020

43 30



Energy Efficiency Directive – ActionsPublic sector to lead as example

19%

12%

Share of Public sectorConsumption of EU’s GDP

Share of public buildings in the EU building stock

• Purchase of products, services & buildings with high energy efficiency performance

• Annual renovation target of 3% for public buildings above 250 m²

• Local energy efficiency plans and introduction of energy management systems

• More systematic use of Energy Performance Contracting



Energy Efficiency Directive – ActionsCreating benefits for consumers through the provision of tailored energy services and information

• National energy efficiency obligation scheme for utilities

• Obligation for individual energy meters, reflecting actual energy consumption & information on actual time of use

• Ensure accuracy & frequency of billing based on actual consumption

• Appropriate information with the bill providing comprehensive account of current energy costs Smart Metering



Energy Efficiency Directive – ActionsImproving energy efficiency in transformation and distribution of energy

Remainingpotential

Achievedsavings

• 10-year national heat & cooling plans: transparency, predictability & alignment of policies for investments

• Waste heat recovery (CHP) obligation for new and existing power & industrial plants

• Network tariffs design to encourage offering services for consumers allowing them to save energy & control consumption

• National annual inventories of generation installations to monitor efficiency levels



Energy Efficiency Directive – ActionsIncrease awareness for benefits stemming from energy efficiency improvements in industry

29%

IndustryShare in overall final energy consumption

• Member States to create incentives for SMEs to undergo energy audits

• Dissemination of best practices on benefits of energy management systems for SME businesses

• Mandatory audits for large companies & incentives for the implementation of recommended measures and the introduction of Energy Management Systems



EU Energy Efficiency Policy ImplementationInstrument Country Frequency

of useDK EE DE FR IE IT PL SE UK

Incentives for reduction of losses inenergy transmission and distribution

10

Support for development of highly efficient cogeneration

19

Priority for other highly efficient units like wind farms & photovoltaic plants

8

Support for local heating systems focused on efficiency improvement

11

Promotion of grid load management 1

Promotion of smart grid and smart metering technologies

10

Support for efficiency improvements of oil and gas supplies

3

Voluntary agreements resulted in savings on the energy/fuel supply side

4

Incentives stimulating competition among energy and fuel suppliers

3


• Increased efficiency as the plant is tailored to meet the needs of local customers

• Large cost savings, providing additional competitiveness for industrial and commercial users, and offering affordable heat for domestic users

• Lower emissions to the environment, in particular of CO2

• Reduction of transmission losses due to decentralisation• Increase in flexibility in system use - particularly if natural gas is the energy

carrier • Improved local and general security of supply• Important vehicle for stimulating competition in generation and for

promoting liberalisation in energy markets• Increased employment – development of CHP systems is a generator of

jobsMoscow, 8-9 April 2014 EU Climate Policy Roadshow

Cogeneration – Benefits


• Cogeneration is the most effective and efficient form of power generation, offering savings ranging between 15-40% when compared against the supply of electricity and heat from conventional power stations and boilers

• Cogeneration optimises the energy supply to all types of consumers• Through the utilisation of the heat, the efficiency of cogeneration plant

can reach 90% or more


Cogeneration



Cogeneration Principle


• Today 11% of electricity is generated using cogeneration• Today cogeneration saves Europe around 200 million tonnes of CO2 per

year – it is the single biggest solution to the Kyoto targets • In the next 20 years, at least 25% of electricity production could come from

cogeneration • Highest CHP application potential: industry, district heating, buildings,

agriculture• Emerging areas:

– Micro-CHP– Biomass CHP – New technologies: cooling, polygeneration and fuel cells


Cogeneration in the EU









Energy Policy of Poland until 2030 Primary directions

„Low energy efficiency is one of the most importing factors threatening Poland’s energy security”

(Prof. Jerzy Buzek, Former EP Chaiman and Prime Minister of Poland, EUROPOWER 2008)

• Improve energy efficiency - #1 Priority• Enhance security of fuel and energy supplies• Diversify the electricity generation structure by introducing nuclear energy• Develop the use of renewable energy sources, including bio-fuels• Develop competitive fuel and energy markets• Reduce the environmental impact of the power industry



Energy policy of Poland until 2030 Energy efficiency improvement – Key objectives

• Achieve zero-energy economic growth, i.e. economic growth with no extra demand for primary energy

• Reduce the energy intensity of Polish economy to the EU-15 level

The key objectives are to be met mainly through:

– Building highly efficient generation units– Twofold increase in power generation with the use of highly efficient

cogeneration technology by 2020– Limit grid loss– Increase efficiency of final use of energy



Energy policy of Poland until 2030

Polish economy will grow in the next decades to decrease the distance to the EU-15 economies, therefore final energy usage will increase dynamically – 31% by 2030. Same applies for primary energy usage – 27% increase.

2006 2010 2015 2020 2025 20300

102030405060708090

65.5 64.4 67.372.7

79.384.4

Demand for final energy

years

Mto

e

2006 2010 2015 2020 2025 20300

20

40

60

80

100

120

140

97.8 93.2 95.8 101.7111,0

118.5

Demand for primary energy

years

Mto

e




2006 2010 2015 2020 2025 20300

20

40

60

80

100

120

140

160

137.7

110.4

90.4

77.867.8 60.6

Energy-intensity of GDP

years

MW

h/m

ln P

LN'0

7

Aiming at achieving “zero emission” economic growth Polish economy will steadily lower energy-intensity GDP ratio. Over 45% improvement is forecasted by 2030




Renewable energy and natural gas are to steadily replace coal in energy generation processes

2006 2010 2015 2020 2025 2030

Lignite 12.6 11.2 12.2 9.3 11.2 9.7

Coal 43.8 37.9 35.3 34.6 34 36.7

Crude oil & oil products 24.3 25.1 26.1 27.4 29.5 31.1

Natural gas 12.3 12 13 14.5 16.1 17.2

Renewable energy 5 6.3 8.4 12.2 13.8 14.7

Nuclear 0 0 0 2.5 5 7.5

Other 0.700000000000001

0.700000000000001

0.9 1.1 1.4 1.6

2.5

7.5

12.5

17.5

22.5

27.5

32.5

37.5

42.5

Demand for primary energy by carriersM

toe




Growing role of district heating, electric energy, oil products and gas,

2006 2010 2015 2020 2025 2030

Coal 12.3 10.9 10.1 10.3 10.4 10.5

Oil products 21.9 22.4 23.1 24.3 26.3 27.9

Natural gas 10 9.5 10.3 11.1 12.2 12.9

Renewable energy 4.2 4.6 5 5.9 6.2 6.7

Electric energy 9.5 9 9.9 11.2 13.1 14.8

District heating 7 7.4 8.2 9.1 10 10.5

Other 0.600000000000001

0.5 0.600000000000001

0.8 1 1.2

2.5

7.5

12.5

17.5

22.5

27.5 Demand for final energy by carriersM

toe


• Increasing efficiency of electricity generation, through construction of high efficiency units, reducing network losses and development of distributed generation

• Doubling electric energy production in high efficiency cogeneration technologies until 2020, compared to production in 2006

• Stimulating developments of cogeneration, including cogeneration from sources below 1 MW, through support mechanisms, and adequate regional policies

• Aiming at replacing the heat only plants supplying district heating systems with cogeneration by 2030.

• Preferential treatment of cogeneration as the technology recommended for building new generation capacity

• Implementation measures to achieve the target in the national action plan for energy efficiency

• Maximising the utilization of local renewable energy potential in cogeneration of heat, cold and electricity

• Developing district heating systems


Energy Policy of Poland until 2030 – Cogeneration



CHP Installed electrical capacity

[GW]

Total heat supplied

[TWh]

Total electricity generated

[TWh]

Share in gross electricity

production2008 8,8 62,2 25,0 16,1 %

2009 8,6 62,5 24,8 16,3 %

2010 8,7 70,0 26,9 17,1 %

2030 Target

> 12,0 > 120,0 ≥ 48,0 ≥ 22,0 %

Cogeneration in Poland



Cogeneration in Poland – District Heating Potential

42%

38%

20%

Heat supply to households

District heatingIndividual heatingOther

1.5% 4.0% 7.4%

6.5%

10.3%

9.0%21.2%

31.1%

9.0%

District Heating Companies

> 1000 MW 500 - 1000 MW 200 - 500 MW125 - 200 MW 75 - 125 MW 50 - 75 MW25 - 50 MW < 25 MW No own sources

• District heating plays the most important role in the Polish heating system (> 42%)• > 70% of heat suppliers fall into SME category



Cogeneration in Poland – Industrial Energy Potential

33,9

2

Other sources Industrial energy

4,8

34,1

5,6

Other sources

Industrial energy > 20 MW

Industrial energy < 20 MW

2010 [GW] 2030 [GW]

• Industrial energy is supposed to make the biggest contribution to the Polish overall energy capacity

• Cogeneration should be considered as preferable solution



2007 2008 2009 20100

5,000

10,000

15,000

20,000

25,000

30,000

5 8 14 102,514 2,892 2,876 2,991

22,413 22,113 21,88523,891

Structure of electricity production from CHP

Units below 1 MWGas-fired unitsCoal-fired units

GW

h/ye

ar

Coal – 88 %Gas – 12 %

Cogeneration in Poland


• The current support scheme for electricity production in cogeneration has been in force since 2007 and will be valid until 2018

• The support scheme for electricity generation in cogeneration is based on a quota system and on the instruments so-called “certificates of origin from cogeneration”


Certificate Type of installation Substitute fee(1)

[% energy price(3)]Fees for 2013(2)

[EUR/MWh]

Yellow Certificate

Cogeneration units fired by gaseous fuels or with total capacity below 1 MW

15% - 110% 35,7

Red Certificate

Cogeneration units over 1 MW fired with coal

15% - 40% 7,1

Purple Certificate

Cogeneration units fired with methane obtained from mines or biomass methane

30% - 120% 60,0

Cogeneration in Poland – Policy development

(1) Established on yearly basis by Energy Regulatory Office (URE)(2) Market price varies from the Substitute fee level (3) Average energy price reference in 2012 on the wholesale market ≈ EUR 45/MWh



Cogeneration in Poland – Why support is needed?

50 kWe 1 MWe >10 MWe Gas-fired

0,5 MWe Biogas

0

2

4

6

8

10

12

8.3

4.6

10.4

7.4

Simple pay back time

year

s

50 kWe 1 MWe > 10 MWe Gas-fired

0,5 MWe Biogas

IRR 4 % 17 % - 1 % 6 %

Main reasons:• Low electricity wholesale market price• Low ratio between electricity and natural gas

price (< 2, while the necessary level > 2,5)

Additional support through certificate scheme is key instrument, essential for securing necessary returns of new cogeneration plants



Cogeneration in Poland – Awareness among key market actors

Customers

Policy Influencers

MarketInstallers

Architects

Engineering companies

Grid operators

Manu-facturers

Consultants Banks

ESCOs

CommercialIndustry Households

Utilities

Sector organisation

Academia ResearchNGOs

Specialist media

General public

Regional planners

Energy agencies

LocalRegionalFederal

PoorLowEarly awarenessInterestActive market



Cogeneration in Germany – Awareness among key market actors

Customers

Policy Influencers

MarketInstallers

Architects

Engineering companies

Grid operators

Manu-facturers

Consultants Banks

ESCOs

CommercialIndustry Households

Utilities

Sector organisation

Academia ResearchNGOs

Specialist media

General public

Regional planners

Energy agencies

LocalRegionalFederal

PoorLowEarly awarenessInterestActive market



Cogeneration in Poland – Economic climate for growth

PolandMicro Small & Medium Large

up to 50 kW up to 10 MW more than 10 MW

Gas RES Gas RES Gas Coal RES

IndustryDistrict heatingServicesHouseholds

„Normal” Interest for new investments exists, no significant economic barriers„Modest” Modest/limited economic benefits, limited interest for new investments„Poor” No interest/possibilities for new investments

Not applicable for the sector



Strategy for development of cogeneration till 2030 – Key goals

Double CHP electricity generation

20 % share of RES CHP

Enforce sustainable local heat planning

and implementation

• CHP electricity production should double from 24 TWh in the year 2006 to 48 TWh till the year 2030 (22 % share in domestic gross electricity demand)

• RES CHP should have at least 20 % share in total installed CHP capacity in the year 2030 (1 % in the year 2006)

• Further development of district heating and other sustainable heat supply options



20300

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Natural gasHard coalBiogasSolid biomassIndustrial OtherIndustrial GasIndustrial Coal

Ad

dit

ion

al C

HP

pot

enti

al [

MW

e]

Cogeneration Road Map for Poland until 2030 Contribution to growth

• The expected increase of cogeneration in the future will be based on:

• Extended capacities of existing cogeneration plants

• Introduction of cogeneration in electrical plants and industry

• Large increase of cogeneration plants using bioenergy fuels

• Growth of natural gas cogeneration will be rather moderate with only 10% share of total new expected cogeneration capacities

• Dominating share with more than 60% will have solid biomass and biogas



Cogeneration Road Map for Poland until 2030 – Deliverables

Exploitation of the estimated more than 4.000 MWe economic potential of high efficiency cogeneration in Poland, by removing the barriers and facilitating faster and more balanced growth of high efficient cogeneration utilisation in all applicable sectors till the year 2030, could result in:

• Contribution of 57 TWh to primary energy savings• Supply of 48 TWh or more than 22% of gross final electricity demand• Heat generation from cogeneration > 120 TWh (more than 55 TWh

additional heat)• Increase of RES use up to 20% of total installed cogeneration capacity• Reduce CO2 emissions by at least 23 million tons/annum



CHP Częstochowa, Poland • Electrical capacity – 64,5 MWe • Heat capacity – 120 MWt• Fuel – Coal, Biomass• Technology – CFB • Electricity generation – 385 GWh/annum• Heat production – 540 GWh/annum• Year of commissioning – 2010 • The first cogeneration plant built on greenfield site in Poland• Electricity supplied to the national grid • Heat supplied to the district heating of Częstochowa city, covering more than 80%

district heat demand • CHP's gross efficiency in first operational year was 70,7%, share of biomass – 21,2%• Environment friendly • Success factors

• Green and Red Certificates • CFB technology – efficient in different loads, flexible for different fuel mixes

Case study factsheet

EU Climate Policy Roadshow


• Designed with the innovative combined gas-steam cycle with residual heat recovery

• Maximizing the heat power from burning gas in a three-stage gas turbines system application driven by: – natural gas combustion – superheated steam – vapour of lowboiling organic liquid

• The whole heat of combustion of the gas may be converted into electricity while maintaining the minimum energy loss

• No need to use heat produced from the combustion of gas at the outside of cogeneration plant, if not demanded

Moscow, 8-9 April 2014

Innovative technology Gas Max Power CHP Plant


EU Climate Policy RoadshowMoscow, 8-9 April 2014

General turbine system

Gas turbine LM2500

Steam turbine

Organic Rankine

Cycle (ORC)

GT HRSG

ST HEx

HEx ORC 11-1

5kV

1100 °C 500 °C

450 °C 200 °C

40 °C200 °C

Innovative technology Gas Max Power CHP Plant



o

Gas

Steam

ORC

40, 80, 120...200 MWe

Type of fuel: Natural gas, syngas, diesel-oil …

Mod

ules

Electric energy

Module 2

Module 3

Gas Gas

Steam Steam

ORC ORC

Module 1 Module 2

• Steam• Hot water• Chill


• Self start – no need for external electric power supply• Standby – to achieve the rated power in 10 min.• Power control range – a large dynamic range of the turbine

set• Method of regulating flows of energy:

– Large gas turbine dynamics - maintaining continuity at low load– Sectional steam boiler (shifting power from steam turbines)– Sectional heat exchanger of the organic liquid (power shifting

between turbines and ORC)• Modular design – availability for step-by-step implementation• Environment friendlyMoscow, 8-9 April 2014 EU Climate Policy Roadshow

Distinguishing features of Gas Max Power CHP Plant


• Scalability – Small and medium-sized power stations from 5 to 200 MWe

• Very high efficiency, reaching over 80%• Low failure rate linked with large availability• Reduced investment costs as a result of:

– Optimized layout– Short investment implementation period– Container-based assembling technology

• High flexibility in working conditions• Diversification of fuels:

– Natural gas – Syngas from thermal conversion of biomass

and from industrial processes – Gasification of coal – Hydrogen– Liquid fuelsMoscow, 8-9 April 2014 EU Climate Policy Roadshow

Advantages of Gas Max Power CHP Plant



Conclusions • Energy efficiency improvement is the and most effective way to:

– Reduce energy bill– Strengthen competitiveness– Improve energy security– Reduce GHG emissions

• There are many „low hanging fruits” like thermal insulation of buildings that may lead to huge energy savings, with the scale influencing the whole economy

• The EU energy efficiency policy is focused on taking full advantage of the accumulated Member States efforts concentrated on exploitment of the existing potentials and on exercising local energy efficiency improvement initiatives

• Cogeneration is by far the most effective way to improve energy efficiency in the energy generation and heat production processes and should be considered #1 option whenever modernization and/or new investments are undertaken


THE CHEAPEST ENERGY IS THE ENERGY WE DON’T USE!

Thank you for your attention

Andrzej WerkowskiPresident of the Management Board

Energy Max Power Sp. z o.o. Tel. +48 695 777 883

email: [email protected]


Documents

EU Climate Policy Roadshow Energy Efficiency in the EU Policies and implementation Mr. Andrzej Werkowski Energy Max Power, Poland Moscow, 8-9 April 2014