Work package 2 - European Commission · 2014. 8. 11. · Measurement and verification The concept of measurement and verification within the white certificate markets is quite different

Report presented to Intelligent Energy

Executive Agency by Ecofys

on behalf of the EWC team

European Commission Intelligent Energy Programme Work package 2 Certificate Systems in Europe Report in scope of task 2 “Review and analysis of national and regional certificate schemes”

Summary report

E I E / 0 4 / 1 2 3 / S 0 7 . 3 8 6 4 0

Stepwise towards European energy efficiency policy portfolios involving White Certificates

Project description The EuroWhiteCert project will support the conceptual and technical development of tradable white certificates systems covering energy savings and energy efficiency. In order to promote the introduction of such systems in the ecologically and economically most beneficial way at the European level, recommendations will be made for handling the interactions of white certificates and their possible integration with other existing and planned tradable certificate and permit systems (such as green certificates, cogeneration certificates), with other policy tools for sustainable energy, as well as with the EU ETS and the JI and CDM schemes. The project involves a critical evaluation of the experiences with already established certificate schemes in the energy sector and explores the practical implementation of a white certificate scheme by developing a uniform measurement and verification methodology, certifying existing projects, identifying a set of alternative market participants and by eliciting voluntary demand among these. The EuroWhiteCert project is supported within the Intelligent Energy for Europe (IEE) Programme of the European community (contract no. EIE/04/123/S07.38640). The kick-off meeting was in April 2005 and the project will last till April 2007. Project partners

www.eerg.it www.energyagency.at www.ademe.fr www.apat.gov.it www.armines.net www.ceu.hu www.cres.gr www.ecofys.com www.eneffect.bg www.esdb.bg www.esd.co.uk www.iiiee.lu.se www.isr.uc.pt www.vatt.fi www.zsw-bw.de

www.eurowhitecert.org Report authors: Monique Voogt, Ecofys Maxim Luttmer, Ecofys Erika de Visser, Ecofys

1


CONTENTS 1. Introduction.................................................................................................................................... 3

The concept of white and green certificates ................................................................................. 3 Design of a certificate scheme...................................................................................................... 3 Measurement and verification ....................................................................................................... 3 Trading aspects............................................................................................................................. 4 Case studies.................................................................................................................................. 4

2. CERTIFICATE SYSTEMS IN EUROPE....................................................................................... 5 White Certificate System in France............................................................................................... 5 White Certificate System in Italy ................................................................................................... 7 White Certificate System in the UK............................................................................................... 9 Green Certificate System in the UK ............................................................................................ 11 Green Certificate System in the Netherlands.............................................................................. 13 Green Certificate System in Poland............................................................................................ 14 Green Certificate System in Belgium .......................................................................................... 16 Green Certificate System in Sweden .......................................................................................... 17 Green Certificate System in Romania......................................................................................... 19 Green Certificate System in Austria ............................................................................................ 20 Green Certificate System in Italy................................................................................................. 21

The sole responsibility for the content of this document lies with the authors. It does not represent the opinion of the European Communities. The European Commission is not responsible for any use that may be made of the information contained therein.

2


1. INTRODUCTION This report contains a summary of the main report “Review and analysis of national and regional certificate schemes” produced within the framework of WP2 of the Eurowhitecert project. The first sections specify in short the concept of white and green certificates, followed by a summary of the certificate schemes in Europe.

The concept of white and green certificates White and green certificate schemes are relatively new instruments in the European policy framework. They are an illustration of the steady movement towards implementation of market-based instruments and the gradual development from supply-side towards demand-side policy measures. The certificate systems are not a policy instrument in itself, but a means to achieving the objectives specified in a cost-efficient way.

A white certificate represents a certain amount of energy saving that has been achieved or is to be achieved during a certain pre-specified timeframe. Certificates can be created from investments in projects that result in energy savings beyond business as usual. The market actor receives certificates for savings achieved, which can be used for own target compliance or can be sold to (other) obliged parties.

A green certificate represents the attributes of a certain amount of energy produced from renewable energy sources. The major characteristic of the system is that electricity produced from renewable energy sources is certified, or guaranteed. The certificates have two main purposes. First, they function as an accounting system to the amount of electricity produced from renewable energy sources, and verify whether demand (voluntary or obligatory) has been met. When tradable, green certificates facilitate the creation of a green certificate market that functions independently from the commodity electricity market.

Design of a certificate scheme Establishment of any certificate scheme is not an easy task. Choices made on a large number of design elements will strongly influence the success and operability of the scheme. Certificates schemes can be quite complicated in terms of operation and definitions. Although this is not necessarily the case, some minimum requirements have to be met to ensure the reliability of the scheme. When setting up a certificate system the following steps have to be organised: • Appoint an independent body that is responsible for issuing of certificates • Provide a clear definition of a certificate in terms of resource eligibility, validity, size, etc • Formulate the ‘rules of the game’: what are the rules to trading, who is responsible for what • Establish a registration system where each certificate and each trade is registered. • Establish independent monitoring and verification system • Formulate clear rules on compliance and in case of a mandatory system set automatic non-

compliance penalties • Organise that each certificate consumed is redeemed, i.e. taken out of the system

Measurement and verification The concept of measurement and verification within the white certificate markets is quite different from that in the green certificate market. In the white certificate market a certain amount of energy or emissions are saved compared to a hypothetical reference scenario. In the green certificate market energy production from renewables can be easily measured (metered or calculated) without specific knowledge of

3


such a reference situation. Both for green and white certificates internationally agreed guidelines on measurement and verification have not yet been developed. However, a number of standards do exist.

Trading aspects There is yet very little experience in Europe with white certificate markets and limited experience with green certificate markets. Although several European countries have set up a green certificate market system, it is yet quite far from achieving a single European market. Instead, there exist a wide variety of very fragmented markets in which design, conditions, market actors and prices vary largely. The very few experiences with white certificate markets in Europe already show that each system is based upon different specific national requirements and specific policy objectives. The main report of WP2 discusses issues such as trading rules, market transparency and marketing issues. Moreover it illustrates first market experiences, volumes of trade, and existing market prices.

Case studies The main report of WP2 describes implementation of white and green certificate schemes in several European countries. The table below provides an overview of existing and planned schemes.

Certificate system Green White Country Austria GoO system since Jan 2003; tradable Belgium Three regional green certificate systems; first one in

operation in Jan. 2002. Energy saving obligation in Flanders without tradability of certificates

Bulgaria Planning to implement a TGC system with obligations from 2006/07.

Denmark Planned a scheme to start Jan 2003; scheme now cancelled.

Considering energy saving obligations, possibly with a TWC system.

France Will start a full TWC system with energy saving obligations in Jan. 2006

Italy Started a TGC system in Jan. 2002 Started energy saving obligation with TWC system in Jan 2005.

Netherlands TGC system in place since July 2001 Planning to start a TWC system in 2006/07

Poland Renewable obligation scheme combined with a tradable GoOs since Oct. 2005. No formal TGC system.

Romania Obligation system with TGC since May 2005. Sweden Swedish scheme started May 2003. Norway initially

planned to join the scheme in 2006, but has recently dediced not to join .

United Kingdom/-Scotland/Northern Ireland

UK ans Scottisch scheme started April 2002. Northern Ireland scheme started April 2005.

United Kingdom Scheme started April 2002. Trade in obligations allowed; no certificate trade.

4


2. CERTIFICATE SYSTEMS IN EUROPE

White Certificate System in France Introduction In France a system of energy saving obligations and tradable white certificates (TWC-system) has been introduced in January 2006. The French government aims with these instruments to increase the activities on energy demand side management in order to contribute to: national energy independence, security of energy supply, competitiveness of energy tariffs, preservation of health of human beings and the environment. The overall objective is a reduction of 2% of French energy intensity by 2015 and of 2.5% by 2030 (with respect to the present one). In order to reach this objective a national energy saving target has been established of 54 TWh in final energy for the first three years (2006-2008). On average this will result in a reduction of approx. 1% of annual final energy demand. Organisation Tradable White Certificates are issued by the Ministry of Industry, DRIRE (Regional Directorate of the Industry, Research and Environment of Ile-de-France). ADEME (French Agency for Environment and Energy Management) and ATEE (Association Technique Energie Environment) are in charge of the definition of standardised actions (i.e. set methodologies for saving calculation). The Ministry of Industry verifies that energy saving measures are properly implemented. Public officers appointed are responsible for the enforcement. The certificate system Obligations are set for energy suppliers1 delivering electricity, gas, domestic fuel (not for transport), cooling and heating for stationary applications. The obliged actors have received targets in proportion to their market quota (sales) in the residential and tertiary sectors. Annual adjustments are made to take into account variations in the market (rising or lowering of the market quota, new entrants, etc.). The obligation must be fulfilled over the whole 3 year period (2006-2008) and at the end of this period a quantity of certificates corresponding to the obligation must be delivered. Any economic actor can realise actions in order to make savings and get certificates for it. A threshold is set for savings of 3 GWh. Actions must be additional relatively to their usual activity and there is a possibility to gather savings to reach the threshold. All the energies (including fuel) and all the sectors (including transports and excluding installations covered by ETS) are eligible. Substitution of renewable energy for heat generation in buildings is allowed (substitutions of fossil fuels with other fossil fuels will not be considered eligible measures). Several standardised actions in the residential/tertiary sectors, the industry and transport are defined (isolation measures, efficient boilers, temperature control systems, engines, etc). Despite that standardised actions are preferred, also non-standardised actions are permitted. ADEME and ATEE (Association Technique Energie Environment) are in charge of definition of standardised actions and of setting methodologies for saving calculation. The market As the system is just introduced no real trade has been realised. The French government will stimulate a gradual increase in the exchange of certificates and will publish a list of potential sellers of certificates at the end of the first period of application (2008). The average price of certificates will be regularly published

1 The threshold (minimum savings) for electricity, gas, cooling and heating is 0,4 TWh/year, and for domestic fuel is 5000 litres.

5


from the responsible of the national register of certificates. An upper limit for the price of certificates is established at 0,02 €/KWh (costs of penalty).

6


White Certificate System in Italy Introduction The Italian tradable white certificate system started in January 2005. The Italian mechanism of energy efficiency obligations and white certificates aims to reduce the total of the national consumption of energy in order to contribute to: the reduction of greenhouse gasses (Kyoto protocol), the reduction of energy costs, an improvement in energy services, security of energy supply and to increase balance between demand and supply of energy. In order to reach these objectives the government aims at the end of the first five years of application (2005-2009), an amount of annual energy savings equal to 2,9 millions tep (tons equivalent petroleum). Organisation The white certificate system is managed by AEEG (Italian Regulatory Authority for Electricity and Gas), which has the task of definition of the technical rules, administration, monitoring and enforcement of the whole mechanism. The certificate system The Italian mechanism of energy efficiency obligations and white certificates is based on the energy saving target imposed, in terms of primary energy, on electricity and gas grid distribution companies (>100,000 customers as from 31.12.2001). The obligations are set according to market share of the companies. To comply with the obligation, the companies are free to choose one of the following four options: develop “in-house” energy efficiency projects, develop energy efficiency projects jointly with third parties (e.g. ESCO’s), buy on the market or via bilateral contracts tradable Energy Efficiency Certificates which attest energy savings achieved by third parties (i.e.: other distributors, companies controlled by distributors or energy service companies), via the implementation of energy efficiency projects or pay the sanction for non compliance with the obligation. Projects can be realised in all energy end-use sectors (plus intermediate uses in the gas sector), but at least 50% via a reduction of electricity and gas end-uses. Eligible energy efficiency measures are grouped in 14 categories that cover typologies ranging from electric motors to very efficient appliances and office equipment and education, information and training. The amount of savings for a project are determined by the ‘default approach’ (defined savings), the ‘engineering approach’ (calculation) or by a monitoring plan (measurement). White Certificates are valid for five years after being issued with the exception of those related to room conditioning (wall insulation, double glasses) which are valid for 8 years. Each year AEEG verifies the correspondence of the value of redeemed white certificates with the grid distribution company’s burden. After the obligation period of five years, 50% of the target should be achieved. In case of non-compliance the grid distribution company is allowed to compensate for the residual quota during two successive years. Grid distribution companies are entitled to recover through energy tariffs part of the costs met to comply with the obligation. Part of the state incomes deriving from energy tariffs applied to consumers are re-directed to a national compensation fund created to repay grid distribution companies with 100 €/tep saved. Market At the moment 23 obliged actors exists in the gas sector (10,600,000 customers served), while obliged actors in the electricity sector reach the number of 10 (32,800,000 customers served). The number of

7


existing ESCOs amounts to about 400. No exchange of white certificates has occurred yet. First data will be available at beginning of 2006. Considering that grid distribution companies are allowed to employ projects developed as from 2001 for the compliance of their first year obligation, it is likely that also data relative to the first year of implementation of the system will not be significant and that it will be necessary to wait for 2007.

8


White Certificate System in the UK Introduction The Energy Efficiency Commitment (EEC); formerly known as the Energy Efficiency Standards of Performance programme (EESoP) that ran from 1994 until 2002, is an obligation on gas and electricity suppliers that sets mandatory targets for the promotion of higher energy efficiency in the residential sector2. The EEC is not a tradeable certificate-based scheme as such. However, suppliers are allowed to trade their obligation or energy savings with other suppliers. The EEC aims at contributing to the UK’s Climate Change Programme by supporting the UK’s legally binding target under the Kyoto Protocol to reduce greenhouse gas (GHG) emissions by 12.5% below 1990 levels by 2008-2012 (DEFRA, 2004a). The first phase of the EEC (April 2002- March 2005) involved a target of 62 TWh (about 1% of annual demand). The EEC phase 2 runs from April 2005 to March 2008 and entails an overall energy saving target of 130 TWh. The Government is committed to a continuation of the EEC until 2011. The EEC also supports the ‘Fuel Poverty Strategy’. With a strong social focus, at least 50% of the energy savings have to take place in low-income households. Organisation OFGEM (Office of Gas and Electricity Markets) is the institution in charge of administering the EEC and thus the one in charge of registering energy savings. OFGEM assess if a supplier’s proposal is a qualified measure under the program, approves the schemes and determines the quantitative improvements as a result of the achieved energy savings. OFGEM enforces the compliance of the EEC and thus the suppliers’ EEC obligation. It administers and supervises the overall progress of the EEC. Each year, OFGEM reports the performance of the EEC to the Secretary of State for environmental, food and Rural Affairs. The Certificate system Electricity or gas suppliers having at least 15,000 domestic costumers are subject to a target. OFGEM is responsible for the apportionment of the overall target among obliged parties. The target was based on the ‘Target-setting Model’ developed by DEFRA with the assistance of other organizations. It takes information given by a number of stakeholders such as the assumed number of costumers for electricity and gas and the fuel mix for domestic purposes. Suppliers have to submit information, regarding the compliance, to OFGEM each quarter. Eligible measures are for example: cavity wall insulation, loft insulation, fridge saver-type program, condensing boilers, appliance replacement, CFL – first or extra bulbs, etc. It has to be mentioned that these are part of an ‘open’ list of measures. Suppliers of electricity and gas are always invited to include other measures. OFGEM assess whether supplier’s proposed measures lead to improvements in energy efficiency that would not have happened otherwise. Suppliers must demonstrate that energy efficiency improvements are implemented beyond business-as-usual (BAU) or are above market trends/average. The market As a result of the EEC 1, very little trading activity of savings and obligations has been seen so far. This gives indications that obliged parties do prefer to implement their own measures rather than buy energy savings from other suppliers in order to comply with their individual targets. For the EEC 2, it is expected that the delivery of measures will follow, to some extent, the trend given during the EEC 1. This means, for instance, that insulation related measures might continue to dominate the delivery of energy savings.

2 The Energy Efficiency Commitment applies to England, Scotland and Wales.

9


Until March 2005, overall savings accounted for 86.8 TWh. This means that overall EEC 1 target was exceeded by 40%. According to OFGEM, the order of magnitude of energy efficiency activity is by far higher than energy suppliers would have undertaken under business-as-usual. Parties having energy savings in excess have carried over their savings to the EEC 2. For the insulation segment, cavity wall and loft insulation were the dominant measures covering around 1 million households. Other types of measures included ‘tank jackets’, ‘draught stripping’, and ‘radiator panels’. For lighting, around 40 million CFLs were installed during the EEC 1. When it comes to appliances, meaning mostly energy efficient white goods, 6.5 million A rated cold and wet appliances were installed. Savings in the heating segment were achieved mostly with A or B rated gas boilers installed in around 300,000 dwellings. As far as the social focus of the EEC 1 is concerned, which establishes that at least 50% (i.e., 31TWh) of the energy savings have to be realized in the so called ‘priority group’ (i.e., low-income households), suppliers largely exceeded this target. Roughly 42 TWh of the total energy savings were achieved by measures installed in low-income households (OFGEM, 2005a, p.9). Still, consumers need to be persuaded to increase the efficient use of energy in their households.

10


Green Certificate System in the UK Introduction The Renewables Obligation (RO), in place in England and Wales, and the Renewables Obligation in Scotland (SROC), were introduced in April 2002. The (Northern Ireland) Renewables Obligation (NIRO) was introduced on 1 April 2005. The Renewables Obligation is a significant part of the UK government's Climate Change Programme. The obligation aims at contributing to the UK government's policy that renewable energy should make an increasing contribution to UK energy supplies in the years 2010 and beyond. The government aims at a share of 10% of electricity from renewable sources in 2010. Organisation ROCs are issued by OFGEM (the energy market regulator). OFGEM is also the organisation who administers and performing audits (monitoring and control) of generating stations which are accredited. The certificate system The quotas are set quite high and the whole market is designed to be short at least over the first years. This is to ensure that fees have to be paid into the buy-out fund and thus the value of the recycle payment does not go to zero. For each year OFGEM calculates the buy-out price. The RO/ROS/NIRO imposes the obligation on licensed suppliers to source a certain and growing percentage of their electricity from renewables. The obligation has been set for a longer period of time, increasing from 3.0% in the first obligation period (2002/2003) till 10.4% in 2010/2011. Electricity suppliers meet their obligation by handing over the necessary number of Renewables Obligation Certificates (ROC) to OFGEM. As an alternative, electricity suppliers can also choose to pay a certain amount into the so called buy-out fund. The buy-out fund is then redistributed to the suppliers who have met their obligations by redeeming ROCs, in proportion to the number of ROCs they presented in that year. Eligible renewable energy sources are for example wind, solar, thermal, wave and tidal, certain types of hydroelectric stations and biomass3. Also co-firing is eligible. However the contribution of ROCs coming from co-firing is limited4. The generating stations need to be accredited in order to receive ROCs. Generating stations apply to OFGEM for accreditation that their electricity is generated from eligible renewable energy sources. Regarding monitoring and control, OFGEM performs audits of generating stations and audits of suppliers (for example, during the second obligation period OFGEM carried out 2 audits among electricity suppliers). Eligible stations are: stations built from 1 January 1990 onwards, new and refurbished hydroelectric stations up to 20 MW. Exported renewable electricity is not eligible for ROCs, as the electricity is not supplied to customers in the UK. A generating station starts to receive ROCs when it starts generating electricity from eligible renewable energy sources. Eligible electricity generators can sell their certificates to electricity suppliers or third parties (traders, brokers). No limitations regarding the period during which a generating station can receive ROCs have been defined, except for co-firing (co-firing will cease to be eligible for ROCs after 31 March 2016). The market

3 Defined according to Article 2(b) of the Renewable Electricity Directive (2001/77/EC) 4 To 25% of an individual supplier’s obligation. This limit will be further reduced to 10% (from 1 April 2006 until 31 March 2011) and to 5% (from 1 April 2011 until 31 March 2016).

11


The majority of trade is done on a bilateral basis and there is a little trading for speculative purposes. The number of ROCs and SROCs correctly produced to OFGEM for the obligation period 2003-2004 is 7,610,144. The largest shares in this period are taken by land-fill gas (41%), hydro (17%) and on-shore wind (16%). As the obligation has been set high, the market is short of certificates, which implies that payments to the buy-out fund are inevitable. As the buy-out fund and late payment fund are distributed among the suppliers who produced certificates to OFGEM, the value of a certificate for a supplier is higher than the established buy-out price. Each year the buy-out price is defined ex-ante by OFGEM. For 2005/2006 the buy-out price is £32.33 per MWh. Based on this value and, among others the total obligation, the amount of ROCs and SROCs produced, the buy-out paid, the percentage obligation met by ROCs and SROCs, the value of a certificate can be estimated (theoretical, ex-post). The estimated value for the period 2002/2003 is for 1 ROC/SROC £45.94 under the RO and £53.55 under the ROS. The estimated value for the period 2003/2004 is for 1 ROC/SROC £53.43 under the RO and £54.21 under the ROS. See also the table below (OFGEM, 2005)5:

5 The Renewables Obligation, Ofgem's second annual report, 44/05, February 2005

12


Green Certificate System in the Netherlands Introduction The Dutch government has introduced production certificates to enable a distinction to be made between electricity produced in an ecologically sound manner and ‘standard’ electricity. These certificates constitute a ‘guarantee of origin’ and serve as proof that electricity was produced in an ecologically sound manner. A certificate may be both a RECS (European Renewable Energy Certificate System). However, as soon as the certificate is transferred to a non-Dutch account, the green certificate becomes void and only the RECS certificate remains. There are no policy objectives or renewable energy targets formulated in the Dutch Guarantees of Origin regulation, however the Dutch government aims with the system to support the renewable energy target mentioned in the EU RES-E Directive (9% in 2010). Organisation The Dutch certificate issue system is managed by CertiQ. CertiQ’s shares are fully owned by TenneT, the Dutch national grid operator. As from 1 January 2004 CertiQ acts as issuing body for the Guarantee of Origin on behalf of TenneT. Besides Guarantees of Origin, CertiQ also manages the issuing of RECS certificates and Dutch CHP 'certificates'. To register with CertiQ, a producer has to be approved by the grid operator TenneT. The grid operator verifies that the producer’s electricity output can be measured in accordance with the metering codes and checks that the producer is generating renewable energy. If a producer wishes to be registered with CertiQ, the producer has to send a production declaration to the grid operator. The grid operator assesses this production declaration to determine whether the producer is in compliance with the legal requirements. If everything is found to be in order, the grid operator approves the producer for registration. Once approved, the producer is eligible to receive certificates. After checking and countersigning it, the grid operator forwards the production declaration to CertiQ. Grid operators provide CertiQ with electricity production data, which they obtain from the certified metering companies. The certificate system The Dutch green certificate system is a voluntary market. No targets are set upon market actors. In order to stimulate green energy uptake there used to be a partial energy tax exemption for buyers of green energy. From 2005, this exemption has been abolished. Currently, investors in renewable energy plants in the Netherlands receive a production subsidy (called MEP). The amounts of subsidy differ per technology. Generating units eligible for green certificates are wind turbines, biomass plants (including waste incinerators), solar power plants and hydropower plants. The minimum production for one certificate is 1 MWh. Issued certificates are valid for one year. The producer of guarantees of origin indicates the trader to which the certificates will be transferred after creation. The certificates are placed on a trader’s account. The trader himself may choose which certificates he wants to use. He can transfer certificates to other traders, but he may also choose to use (redeem) certificates as evidence of supply of renewable electricity to a final consumer. Moreover, the trader may withdraw certificates and possibly split them up into smaller coupon values. The market Currently, about half of all 7 million households in the Netherlands buy green energy. However, since the abolishment of the energy tax exemption in 2003, the market for guarantee of origin’s is not liquid. Most remaining demand comes from consumers in the Netherlands. Most trades are bilateral and OTC. The price of imported guarantees of origin is very low as the Dutch demand/import is not subtracted for the realisation of the RES-E target by the exporting country. Since beginning of 2005 the price of a GoO lies around 20-25 eurocent/MWh.

13


Green Certificate System in Poland Introduction A number of amendments of the Energy Law of 1997 and an ordinance of Minister of Economy, Labour and Social Policy (currently the Minister of Economy) of May 2003 on obligatory purchase of electricity and heat from renewable energy sources and electricity form cogeneration form the basis of the present quota system in Poland. In April 2005 amendments to the Energy Law and the Environmental Protection Law were passed and the legislative changes relevant for the RES-E support came into force on 1st October 2005. The main features of the Polish RES-E support mechanism are (see details in the country table): GO quota obligation on suppliers (defined as production and trading companies supplying electricity to final consumers) and electricity purchase obligation on each distribution and transmission system operator, Guarantee of Origin system with possibility to trade on the Polish Power Exchange (there are no green certificates in Poland in the strict sense of the word, just GOs that could be indirectly traded by derivatives created at the Polish Power Exchange PolPX). Buy out price and non-compliance penalties have been introduced, along with transmission priority for RES-E and special rules for wind generators balancing. All electricity consumers are charged with the costs of RES-E support via the electricity price. The Polish target according to the Renewable Energy Sector Development Strategy is a share of RES in primary energy of 7.5% in 2010 and 14% in 2020 and a share of RES-e in gross domestic electricity consumption of 7.5% in 2010. Additional objectives as formulated in the "Energy policy" chapter of the “Long-term strategy for sustainable development of Poland until 2025” are: decrease of demand for coal and lignite, increase of natural gas and petroleum. Organisation General governance of the system is done by the Ministry of Economy. The Energy System (transmission and distribution grid) Operators deal with applications for GOs for installations that are directly interconnected to their grid and after conformation send them to Energy Regulatory Office (URE). URE is the issuing body of GOs. GOs are traded via the power exchange through derivatives. URE among others issues also licenses for production and trade of electricity and approves tariffs of regulated energy companies. The Polish Power Exchange (PolPx) is responsible for registry of GO and organization of trading platform for GO. The certificate system Obligations are set for electricity supply companies. The annual targets are increasing according to a pre-defined schedule from year to year to 2014. To further support the system the government provides an exemption of excise tax on electricity (10% of electricity price) and exemption of excise tax on fuels (around 45% of the fuel price for bio-ethanol). Each GO constitutes a legal right and evidences the production of a specified quantity of renewable energy. GOs can represent different amounts of energy though one GO derivative represents 1 kWh. Each renewable energy producer can offer GOs (derivatives) at the PolPx. Electricity suppliers are able to buy GOs on the PolPx in order to meet the renewable energy obligation. A buy out price has also been just introduced. Compliance for previous year will be checked by the regulator at the end of first quarter of the following year. At present (March 2006) there is no time limit for the validity of GOs. All RES technologies are eligible as defined in the EU Directive 2001/77/EC. It includes wind, hydro (including large hydro) and all biomass (including the use of timber). ”The Renewable Energy Sector Development Strategy” adopted in August 2001 predicts that the required capacity to meet the target

14


could be shared in the following way: 600 MW in wind power, 200 MW in small hydro power, 590 MW in biogas CHP units, 1200 MW in biomass CHP units, 2 MW in photovoltaic power. This however should be considered only as reference data and cannot be considered as a governmental target although the strategy was approved by the government. The market Share of RES-E in total consumption in 2002 is 2 % (mainly large hydro followed by wind and biomass). Information about the trade on the PolPx will be available at www.tge.pl.

15


Green Certificate System in Belgium Introduction In Belgium three regional green certificate systems are active: in Flanders since Jan. 2002, in Wallonia since Jan. 2003 and in Brussels (Capital) since July 2004. On federal level green certificates may only be obtained for offshore wind. The green certificate systems are into place to support the national target for renewable electricity at federal level, which equals the national indicative target of 6% in 2010 as set in the EU renewables Directive. The specific targets set for renewable electricity are: for Flanders 6% in 2010 (renewables and CHP), for Wallonia 12% in 2010, for Brussels 2,5% in 2006. Organisation In Flanders the VREG (Flemish office for regulation of electricity and gas markets) is the issuing body for green certificates. The VREG is also responsible for M&V and control. In Wallonia the CWAPE (Commission Wallone pour l’electricite), the regional regulator, is the issuing body for green certificates and in Brussels the IBGE-BIM is the regulator in the Brussels region and issues green certificates. In Wallonia M&V is organized by a certified verification body or by CWAPE. The certificate system In Flanders obligatory targets have been put upon electricity suppliers. The minimum targets set are: 2% in 2005 (31 March), 5.25% in 2010 (31 March) and 6% in 2011 (31 March). Similar to the Flemish region also the Walloon region uses a quota obligation for electricity suppliers. The targets however are different. The target for 2003 was 3%, whereas the target for 2007 is 7%. The quota for electricity suppliers in Brussels are: 2% in 2004, 2.25% in 2005 and 2,5% in 2006. Electricity suppliers have to prove each year that they comply with the set obligations. Suppliers who do not reach the annual quota have to pay a fine for each missing certificate. For example, the fine in 2003 was 100 Euro (Flanders and Wallonia). The fine indicates the theoretical ceiling price of certificates. In Flanders, producers, suppliers and traders can buy and sell certificates. The system only accepts certificates originating from production plants within the Flemish region. Since 2003 foreign production is eligible. Trades from outside Flanders can be used for selling “green power” to consumers in Flanders. In Wallonia certificates issued by another Belgian region are automatically accepted if reciprocity. Certificates issued by another country are accepted if they are mutually recognized. In Flanders M&V is based on meter reading. One certificate in Flanders equals to 1 MWh (electricity). In Brussels, as in Wallonia, M&V is based on calculations with standard factors on avoided CO2. The factor differs though, as the standard mix of electricity production varies between regions. Brussels, one certificate stands for 217 kg CO2- emission avoided. In Wallonia one green certificate is 456 kg CO2-emission avoided. In all systems green certificate are valid for a period of 5 years and in all three systems eligible technologies are: wind, small hydro, biomass or solar PV. In Flanders and Wallonia CHP are eligible technologies too. The market In Flanders the VREG publishes potential buyers and sellers of certificates on their website. At the end of 2004 in total 515 production sites (installations) where eligible for certificates. Its represented a total green electricity production of 200.332 kWh. In Flanders, the monthly average certificate prices started at around 60-70 €/MWh at the start of the system in 2002/2003, and have stayed above 100 €/MWh for eligible certificates since the spring of 2004. For Wallonia and Brussels no specific market information is available.

16


Green Certificate System in Sweden Introduction The green certificate system in Sweden came into force on 1st May of 2003. Since 1990, there have been various instruments used to support RES-e in Sweden. The green certificate system replaces earlier policy instruments that had a similar goal, such as public grants, subsidy programmes and investments schemes. The scheme aims at assisting the growth of RES-e by stimulating cost-effective penetration of RES independent from the state budget. Green certificates in Sweden are also called elcerts. Despite that Norway planned to join the Swedish green certificate market in 2006 they recently have decided not to join. The quantitative target is to increase the production of RES-e by 10TWh by 2010 compared to 2002 level. The promotion of RES-e via green certificates aims at supporting to achieve the Swedish Kyoto target (- 4% by 2008-2012 compared to 1990 levels) and to support the European Directive on RES-e (60% in 2010). Organisation Certificates are issued and credited to the RES-e generator's account by the Swedish National Grid Company (‘Svenska Kraftnät’). The Swedisch National Grid Company is responsible for establishing and maintaining the register of certificate accounts and monitors and analyses the development of the certificate market. The Swedish Energy Agency (STEM) enforces the compliance. The Agency decides on penalty charges for those who have not submitted a declaration by 1st March. In addition, it sets the quota liability charges if quota liabilities are not fulfilled. The certificate system Consumers are the obliged actors under the Swedish green certificate scheme. Electricity suppliers are responsible for meeting their customer’s quota obligation6. This brings together or creates the necessary market forces for green certificates: supply side -owners of production plants-, demand side –suppliers/end-users subject to a quota-. For the first year (i.e. 2003), users were required to buy 7.4% of RES-e. The quota rises gradually, reaching 16.9 % by 2010. Suppliers are allowed to charge their customers for managing their quota. Since 2004 consumers can choose to handle their own quota. This can be done by paying the value of the certificates as well as the respective administrative fees to the authorities. Parties that do not meet their obligation are charged with a penalty fee. This accounts for 150% of the average certificate price of the previous period. In order to be able to receive certificates, a production facility has to be approved by the Swedish Energy Agency. The facility has to be connected to an electricity grid, and production must be metered on an hourly basis. RES-e producers receive one certificate for each MWh of qualifying production from an approved plant. The certificate remains valid as long as no supplier/customer uses it for meeting his quota obligation or transferring it to the RECS system. Brokers/traders are allowed to participate in the market. The types of renewable energy technologies (RETs) that are eligible for gaining certificates are for example: wind power, solar energy, geothermal energy, biofuels (including ‘peat’ since April 2004) and hydro power. The market

6 In the last year the Swedish government have prepared a proposal for the Swedish parliament in which they suggest to change the obligation for consumers to electricity suppliers (starting from January 2007).

17


Trade has to be reported to the Swedish National Grid Company. The system is closed so there can be no anonymous trades. It mostly works with bilateral trades. The producers mainly have agreements for their whole yearly production so when the certificates are issued they are directly moved to a buyer’s account. Issued certificates by type of RES, until January 2005 are: 74% biofuels, 18% hydro and 8% wind. During 2003 there was a rapid escalation of the price, going from around 17 to 25 Euro per certificate. Prices reached a peak of 26-29 Euro at the beginning of 2004 followed by a rapid fall that brought the prices around 21 Euro in April-May 2004. In 2005, prices have been within the range of 21-23 Euro per certificate.

18


Green Certificate System in Romania Introduction 2005 was the first year of operation of the Romanian system of mandatory quotas for renewable electricity and green certificates. Besides green certificates, all green electricity receives a guarantee of origin. The green certificate system should contribute to the national indicative target for 2010: 30% of gross national electricity consumption to be covered by electricity produced by renewable energy sources (corresponding to EU RES-e target). Other objectives of the government are to increase energy independence from imported electricity by getting a wider range of energy sources and economic and social cohesion. Organisation Transelectrica carries out the activities of a transmission operator, system operator (dispatcher), commercial operator (electricity exchange) and coordinates the power system planning and development. Transelectrica is the issuing body for green certificates. The electricity market operator OPCOM is the green certificates market operator in charge of organizing monthly green certificate trading platforms. Monitoring is performed by the regulator ANRE, just as is issuing the guaranties of origin. The measurement is performed by the distribution company, which owns the grid to which the RES-E units are connected. The data is used for billing the energy and also is forwarded to the TSO Transelectrica. Green certificates are issued following the producer’s request and provided that he has the qualification certificate for priority production from the regulator ANRE. A RES-E producer firstly needs a location approval and technical connection approval from the distribution company. The regulator ANRE is then responsible for setting-up authorization for power units above 10 MW, RES-E generation licenses for power units above 250 kW and issuing qualification certificate for priority electricity production (refers to mainly RES and efficient cogeneration and is a pure technical certification). The certificate system The system is based on pre-defined yearly quotas for share of electricity in gross national consumption (the quotas can be changed under certain circumstances by the regulator ANRE). Obligations are imposed on suppliers (traders of electricity); obligations cover the period till 2010. Every supplier faces the same quota, calculated as % of its electricity sales. At the end of each year the suppliers have to show the necessary number of certificates. Non-compliance penalties are collected and invoiced by the Transelectrica. Once a certificate is used to demonstrate compliance, the regulator redeems it. Wind, biomass, solar and small hydro (below 10 MW commissioned or modernised in or after 2004) qualifies for green certificates. The size of one certificate is 1 MWh, this is therefore the minimum production. Certificates are valid for one year after being issued. There are no requirements regarding project lifetime. The market The system has just started and hence it is too early to say something about the traded volumes (no statistics available). A centralised market exchange for green certificates will be organised once per month by the market operator OPCOM. There is also the possibility of bilateral OTC agreements/contracts. In the future statistics will be compiled by the Transelectrica. Based on minimum and maximum prices determined by the government, the expectation is that green certificates will be traded for 29 to 44 Euro/MWh.

19


Green Certificate System in Austria Introduction Austria introduced in 2000 a certificate system for domestic small scale hydropower together with an 8% supply obligation. For other renewables, a general renewables obligation was introduced that should be achieved in addition to the hydropower obligation. However, these obligation schemes were rapidly abolished. In July 2002, the Austrian parliament adopted new legislation to comply with the EU renewable electricity Directive. From 1st January 2003, this Green act introduced a new support scheme in the form of a feed in system replacing the old legislation. The Act also established a system of Guarantee of Origin. The indicative target for eco-electricity in Austria is 78.1% in 2010. The following objectives are formulated in the Eco Electricity Act: to raise the share of small-scale hydro plants (<10 MW) in total energy generation to 9% in 2008 and to increase the electricity generation from eco power plants stepwise with 2% by 1 January 2004, 3% by 1 January 2006 and at least 4% by 1 January 2008. Organisation Within the hydropower system, producers were entitled to issue the certificates themselves. With the guarantee of origin system the energy regulation office, Energie Control GmbH (E-Control), supervises the issuing of guarantees of origin. The regulator, E-Control, is also the issuing body for RECS in Austria. RECS is compatible with the Austrian Guarantee of Origin and therefore RECS can be used for the import and export of Austrian certificates (GoO). The certificate The electricity suppliers must purchase a certain quota of electricity from renewable energy sources for a fixed price (equal to the ratio that they distribute). Further, all electricity companies supplying final consumers are obliged to disclose the origin (primary energy source) of the electricity delivered to the consumers in the previous year. Consumers have to be informed at least once a year (annual bill). As proof (for disclosure) are applied: guarantees of origin (from all Member States), certificates from an Accredited Certification and Inspection Body and RECS-Certificates. Utilities must document the calculations and information concerning the disclosure and a chartered accountant must verify this documentation. Eligible technologies within the hydropower certificate system where: small-scale hydropower plants up to 10 MW. Within the feed-in tariff system eligible technologies are: RES-E sources small scale hydropower (<10MW), wind, biomass, biogas, landfill gas, small PV (<15MW) and geothermal energy. Hydropower certificates had a lifetime of two years and the commitment period was done on an annually and semi-annually basis depending on the federal province. The compliance period for guarantees of origin is one year. The market Because 71% of the electricity production in Austria comes from hydropower, the supply of GoO has at least the same size and is therefore currently the biggest market for GoOs/certificates.

20


Green Certificate System in Italy Introduction The system of green certificates (GC’s) was introduced in Italy in 2002. The Italian green certificate scheme supports the European directive 2001/77/CE concerning the promotion of energy produced by renewables (25 % in 2010) and the aim at increasing consumption of energy produced by renewables, reducing risks on the stability of energy supply, promoting employment growth and reducing environmental impacts. Organisation Green certificates are issued by Transmission System Operator (GRTN) while GME (the Electricity Market Operator) organises and manages the Green Certificates market. Every year (before March 31) obliged subjects have to transmit to GRTN certificates related to the previous year. GRTN verifies if electricity from renewable and GCs transmitted by obliged subject equal or exceeds subject’s burden. The certificate Since 2000 energy producers and importers have to put into the Italian grid an amount of renewable energy that equals at least 2% of total of energy produced and imported. From 2004 till 2006 this percentage increases yearly 0.35%. The system of green certificates foresees a yearly check of obligation fulfilment. Non compliant subjects are obliged by AEEG to pay a sanction corresponding to 1.5 times the price of a number of GCs equivalent to the quota of non-fulfilment. To get green certificates plant owners have to obtain IAFR qualification before asking GRTN for Green Certificates. This qualification implying that a series of quality criteria related to the “greeness” of generated energy have been satisfied (IAFR is the Italian acronym for renewable energy plant). Green certificates are valid for one year after being issued. For a given plant certificates can be emitted only for the first 8 years of full production. The production of the plant has to be above 50 MWh/year to gain green certificates. Eligible technologies are: wind turbines, biomass plants (including waste incinerators), solar power plants, hydropower plants, geothermic sources, tides, undulating motion. For green certificates the Transmission System Operator (GRTN), national and foreign producers, electricity importers, wholesale dealers, consumer associations, NGOs and trade unions may participate to the market of Green Certificates as buyers or sellers. The green certificate market actors are allowed to exchange certificates through bilateral contracts (private GCs only) or on the market (both private GCs and GCs generated on behalf of GRTN) called Power Exchange and organised by Electricity Market Operator (GME) The market In 2002 demand of certificates from the 35 obliged actors amounted to 3.23 TWh and the offer was of 0.9 TWh. The residual amount of 2.33 TWh was covered with 23,300 green certificates emitted by GRTN on its behalf. In 2003 demand from 42 obliged actors reached 3.46 TWh, while the offer was of 1.3 TWh. The residual amount of 2.16 TWh, corresponding to 21,600 GCs, was covered with GRTN GCs. In 2003 5,860 GCs were emitted on behalf of hydropower plants and 4825 GCs were emitted on behalf of geothermal installations.

21


www.eurowhitecert.org

eERG - Politecnico di Milano

EuroWhiteCert is supported by the European Commission and several national governments. It is conducted under the auspices of the Intelligent Energy for Europe (IEE) Programme of the European community and fifteen national agencies: Austria – AEA, the Austrian Energy Agency; Bulgaria – EnEffect, Centre for Energy Efficiency; ESD Bulgaria Ltd, Energy for Sustainable Development; Finland – VATT, the Government Institute for Economic Research; France – ARMINES, Contract research organisation of the Ecole des Mines de Paris; ADEME, French Agency for Environment and Energy Management; Germany – ZSW, Centre for Solar Energy and Hydrogen Research; Greece – CRES, Centre for Renewable Energy Sources; Hungary – CEU, Department of Environmental Sciences and Policy of the Central European University; Italy – eERG, end-use Efficiency Research Group of Politecnico di Milano with the support of la220; APAT, the Italian Agency for Environmental Protection and Technical Services; The Netherlands - Ecofys, international consultancy company specialised in sustainable energy and climate change issues; Portugal – ISR-UC, research and technology transfer institute associated with the University of Coimbra; Sweden – IIIEE, the International Institute for Industrial Environmental Economics with the support of ELFORSK (Swedish Electrical Utilities R&D Company) and STEM (Swedish Energy Agency); United Kingdom – ESD, Energy for Sustainable Development Ltd with the support of DEFRA (Department for Environment, Food and Rural Affairs)

Documents

Work package 2 - European Commission · 2014. 8. 11. · Measurement and verification The concept of measurement and verification within the white certificate markets is quite different