The efficiency of feed-in tariffs in Germany and Spain
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The efficiency of feed-in tariffs in Germany and Spain

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How effective are feed in tariffs for PV. ...

How effective are feed in tariffs for PV.
Case study: Germany and Spain.
Is it the most efficient instrument?

Amin Zayani: www.bouhablog.com

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  • I would like to use the Spanish FIT Impact Graph on your slide 10 for a renewable energy publication. Please let me know if I may.
    -thank you p.s. you can find me on linked-in.

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    I am preparing a manuscript entitled Project Development in the Solar Industry, to be published by CRC Press/Balkema, The Netherlands., with an estimated publication date of the 4th quarter of 2012.

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The efficiency of feed-in tariffs in Germany and Spain The efficiency of feed-in tariffs in Germany and Spain Presentation Transcript

  • TOPIC III: Instruments of environmental economics in environmental policy: The efficiency of feed-in tariffs in Germany and Spain Amin Zayani 2806043 Environmental Economics ER M WS 2009 / 2 0 1 0 16 January 2010 1
  • Table of content 1. PV electricity generation costs 2. Existing support systems in the EU 3. The EEG case in Germany 4. The FIT law in Spain 5. Criticism of FIT policies 6. Conclusion 7. References 2
  • 1. PV electricity generation costs Table 4.1: Expected PV generation costs for roof-top systems at different locations Sunshine hours 2007 2010 2020 2030 Berlin 900 0.44 € 0.35 € 0.20 € 0.13 € Paris 1,000 0.39 € 0.31 € 0.18 € 0.12 € Washington 1,200 0.33 € 0.26 € 0.15 € 0.10 € Hong Kong 1,300 0.30 € 0.24 € 0.14 € 0.09 € Sydney/Buenos Aires/ Bombay/Madrid 1,400 0.28 € 0.22 € 0.13 € 0.08 € Bangkok 1,600 0.25 € 0.20 € 0.11 € 0.07 € Los Angeles/Dubai 1,800 0.22 € 0.17 € 0.10 € 0.07 € 3
  • 1. PV electricity generation costs Figure 4.1: Development of utility prices and PV generation costs [€/kWh] Photovoltaics 1,0 Utility peak power Utility bulk power 0,8 900 h/a*: 0.44 €/kWh Table 4.1: Expected PV generation costs for roof-top0,6 systems at different locations 1800 h/a*: 0.22 €/kWh Sunshine hours 0,4 2007 2010 2020 2030 Berlin 900 0.44 € 0.35 € 0.20 € 0.13 € Paris 1,000 0,2 0.39 € 0.31 € 0.18 € 0.12 € Washington 1,200 0.33 € 0.26 € 0.15 € 0.10 € Hong Kong 1,300 0.30 € 0.24 € 0.14 € 0.09 € 1990 2000 2010 2020 2030 2040 Sydney/Buenos Aires/ Bombay/Madrid 1,400 0.28 € 0.22 € *h/a: Hours of sun per annum 0.13 € 0.08 € 900 h/a corresponds to northern countries of Europe Bangkok 1,600 0.25 € corresponds to southern countries of Europe 1800 h/a 0.20 € 0.11 € 0.07 € Note: The blue band indicates that market support programmes will be Los Angeles/Dubai 1,800 0.22 € 0.17 € necessary until about 2020 in some markets. 0.10 € 0.07 € 3
  • "56#$#' ,%' +1(5#' -*.' *--"6*.#' /,%);' <6#' ()=(%&(2#"' *-' (' &#%)#.' "56#$#' ,%514)#' &6#' ($*4%&'*-'(&&#%&,*%',&').(/"'&*'.#%#/(01#'#%#.23',%=#"&$#%&'*++*.&4%,&,#"'(%)'&6#'5*$> +#&,&,=#'#1#$#%&',%5*.+*.(&#)',%',&"')#",2%;'E*/#=#.?'&6#'*=#.(11'%4$0#.'*-'+.*@#5&"'(5&4> 2. Existing support systems in the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
  • #'.4%$&'#;! <,24.$! =>! #6*/#! 6*/! #4++*.'! ,&#'.4%$&'#! /$.$! .(&8$)! (55*.),&2! '*! +.$-$.? $&5$;! ! 2. Existing support systems in the EU !"#$%&#'()*$#+ ,#-&./#0 =@ E D C B ()*$# A : > 9 = @ F&G$#'%$&' <$$)?,& J.$%,4% I$&)$.,&2 K4*'( H40#,)3 I(.,-- J.*5$)4.$ L01,2(',*& ! Score of support instruments according to RE-Xpansion project (Morthorst et al. 2005) <,24.$!=>M! H5*.$!*-!#4++*.'!,&#'.4%$&'#!(55*.),&2!'*!N7?O+(&#,*&!+.*P$5'! 5
  • ,'6!'.()(01$!2.$$&!5$.',-,5('$#F!04'!+.*)45$.#!*-!+6*'*<*1'(,5!$1$5'.,5,'3!,&!'6,#!5*4&'.3!(.$! 11*/$)! '*! #$11! '6$,.! $1$5'.,5,'3! ('! '$56&*1*23>#+$5,-,5! -$$)>,&! '(.,--#B! K$12,4%! (1#*! (++1,$#! 2. Existing support systems in the EU +$5,(1!5*&),',*&#!-*.!+6*'*<*1'(,5#!03!#$'',&2!6,26!%,&,%4%!+.,5$#!-*.!'6,#!'$56&*1*23B! ?:LL D,&,%4%!'*!(<$.(2$!2$&$.(',*&!5*#'#!TUVDW6X "<$.(2$!'*!%(Y,%4%!#4++*.'!1$<$1!TUVDW6X ?LLL OLL NLL MLL :LL L "; K7 PQ AC AI P7 GI C7 C; R= SR H; 7E E7 =Q Price ranges for direct support of photovoltaic electricity in EU-15 compared to the long-term ,24.$!::Z! H.,5$!.(&2$#![(<$.(2$!'*!%(Y,%4%!#4++*.'!-*.!),.$5'!#4++*.'!*-!+6*> marginal generation costs for the year 2005 6 '*<*1'(,5!$1$5'.,5,'3!,&!7=>?@!D$%0$.!E'('$#![(<$.(2$!'(.,--#!(.$!,&),5(>
  • Renewable Energy Law (EEG) in Germany – how does it work in practice? 3. The EEG case 1. Government [Gov] Key responsibilities: Set up legal framework for grid connection and distribution of electricity in Germany Sets (decreasing) tariffs for all RE sources NO involvement in money flow 2. Renewable energy generator operator [RE] 6. Consumer [con] Key responsibilities: Key responsibilities: Follows technical standards for grid connection Pays electricity bill and operation (-> LG) (including the extra charge Reports every technical failure etc directly to LG for feed-in tariffs) Operator of RE power plant Gets renewable and conventional electricity 3. Local grid operator [LG] 5. Distributor [dis] Key responsibilities: Key responsibilities: Guarantees grid connection Collects money from consumer Reports quantity of estimated (based on forecast of TM) RE electricity (forecast) to TM and transfer it to TM Reports quantity of produced Organises billing for consumer RE electricity to TM Distributes RE electricity Pays feed-in tariff to RE power plant 4. Transmission grid operator [tm] Key responsibilities: Calculates the total estimated RE electricity generation based on forecasts from LG Calculates the total generated RE electricity based on information from LG Calculates needed total feed-in tariffs based on estimated RE electricity production Breaks down the additional costs per kWh for distributor Collects the money from Distributors (DIS) Distributes money to LG to pay feed-in tariffs to RE operators Supply [generation] 7 Demand [consumption]
  • Renewable Energy Law (EEG) in Germany – how does it work in practice? 3. The EEG case 1. Government [Gov] Key responsibilities: Set up legal framework for grid connection and distribution of electricity in Germany Sets (decreasing) tariffs for all RE sources NO involvement in money flow 2. Renewable energy generator operator [RE] 6. Consumer [con] Key responsibilities: Key responsibilities: Follows technical standards for grid connection Pays electricity bill and operation (-> LG) (including the extra charge Adjustment in feed in tariff digression rate Reports every technical failure etc directly to LG for feed-in tariffs) Operator of RE power plant Gets renewable and conventional electricity in Germany 2008 3. Local grid operator [LG] 2009 2010 Key responsibilities: 2011 5. Distributor [dis] Key responsibilities: Guarantees grid connection Collects money from consumer Roof top <100 kWp 5% 8% Reports quantity of estimated8% RE electricity (forecast) to TM 9% (based on forecast of TM) and transfer it to TM Reports quantity of produced Organises billing for consumer Roof top >100 kWp 5% 10% RE electricity to TM 10% Pays feed-in tariff to RE power plant 9% Distributes RE electricity Ground mounted 6.5% 10% 10% 9% 4. Transmission grid operator [tm] Degression KeyCalculates the total estimated RE electricity2011 2009 2010 responsibilities: generation based on forecasts from LG Calculates the total generated RE electricity Upper limit in MWp above: +1% 1,500 1,700 1,900 based on information from LG Calculates needed total feed-in tariffs based on estimated RE electricity production Lower limit in MWp below: -1% 1,000 1,100 1,200 Breaks down the additional costs per kWh for distributor Collects the money from Distributors (DIS) Distributes money to LG to pay feed-in tariffs to RE operators Supply [generation] 7 Demand [consumption]
  • 3. The EEG case in Germany 850 850 New feed-in Law 600 Feed-in Law 150 1,000 roof programm 100,000 roof programm 78 80 40 3 3 3 3 4 7 12 10 12 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 annually installed PV power in MWp Influence of Feed-in Tariff on annual PV installations in Germany 8
  • 4. The FIT law in Spain Law 54/97 of the Electric Sector 17 Royal Decree 661/2007 Retribution will be as follows: • P≤100 kW: for the first 25 years 44,0381 € then 35,2305 € • 100 kW<P≤10 MW: for the first 25 years 41,75€ then 33,4 • 10<P≤50 MW: for the first 25 years 22,9764€ then 18,3811   The revision of the feed in tariff will be done every four years. Revisions will not be retroactive. 9
  • the Czech Republic (51 MW), Portugal (50 MW) and Belgium (48 MW). 4. The FIT law in Spain Figure 2: Historical development of the Global annual PV market per Region 6,000 5,559 5,000 4,000 FIT law amendment MW 3,000 2,392 2,000 1,603 1,321 1,052 1,000 594 439 278 334 155 197 - MW 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Spain 0 1 - 2 9 10 6 26 88 560 2,511 USA - 17 22 29 44 63 90 114 145 207 342 Japan 69 72 112 135 185 223 272 290 287 210 230 Rest of the world 68 84 94 75 104 98 53 12 196 207 485 Rest of Europe 8 11 10 16 16 50 30 30 37 108 492 Germany 10 12 40 78 80 150 600 850 850 1,100 1,500 TOTAL 155 197 278 334 439 594 1,052 1,321 1,603 2,392 5,559 Historical development of the global annual PV market 2008 was an exceptional year due to the continuous development of PV in per Region 10 established markets (like Germany, the US and Japan), an astonishing growth
  • the Czech Republic (51 MW), Portugal (50 MW) and Belgium (48 MW). 4. The FIT law in Spain Figure 2: Historical development of the Global annual PV market per Region 6,000 5,559 5,000 4,000 FIT law amendment MW 3,000 2,392 2,000 1,603 1,321 1,052 1,000 594 439 278 334 155 197 - MW 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Spain 0 1 - 2 9 10 6 26 88 560 2,511 USA - 17 22 29 44 63 90 114 145 207 342 Japan 69 72 112 135 185 223 272 290 287 210 230 Rest of the world 68 84 94 75 104 98 53 12 196 207 485 Rest of Europe 8 11 10 16 16 50 30 30 37 108 492 Germany 10 12 40 78 80 150 600 850 850 1,100 1,500 TOTAL 155 197 278 334 439 594 1,052 1,321 1,603 2,392 5,559 Historical development of the global annual PV market 2008 was an exceptional year due to the continuous development of PV in per Region 10 established markets (like Germany, the US and Japan), an astonishing growth
  • 4. The FIT law in Spain 2009 cap introduction 11
  • in Spain, EPIA expects these 4 countries to represent more more than 75% of the 4. The FIT law in Spain European market by 2013. Figure 7: European annual PV market Outlook until 2013 (Policy-Driven scenario) 12,000 Rest of Europe 10,925 Belgium 10,000 Czech Republic Portugal Greece 8,785 France 8,000 Italy Spain 7,110 Germany MW 6,000 5,490 4,503 4,302 4,000 75% 2,000 1,768 975 - 2006 2007 2008 2009E 2010E 2011E 2012E 2013E European annual PV market outlook until 2013 (2009 to 2013 are estimations) 12
  • in Spain, EPIA expects these 4 countries to represent more more than 75% of the 4. The FIT law in Spain European market by 2013. Figure 7: European annual PV market Outlook until 2013 (Policy-Driven scenario) 12,000 Rest of Europe 10,925 Belgium 10,000 Czech Republic Portugal Greece 8,785 France 8,000 Italy Spain Cap introduction 7,110 Germany MW 6,000 5,490 4,503 4,302 4,000 75% 2,000 1,768 975 - 2006 2007 2008 2009E 2010E 2011E 2012E 2013E European annual PV market outlook until 2013 (2009 to 2013 are estimations) 12
  • 5. Criticism of FIT policies •Too expensive! Source: Wind PV Electricity produced: 42 660 GWh 4 374 GWh EEG cost: 4 Bn € 2.1 Bn € Cost per GWh: 94 000 € 480 000 € 13
  • 6. Conclusion 14
  • 6. Conclusion • Feed in tariffs are effective. 14
  • 6. Conclusion • Feed in tariffs are effective. • The most preferred policy by investors and industry. 14
  • 6. Conclusion • Feed in tariffs are effective. • The most preferred policy by investors and industry. • Technology adaptive. 14
  • 6. Conclusion • Feed in tariffs are effective. • The most preferred policy by investors and industry. • Technology adaptive. • Burden not on tax payers. 14
  • 6. Conclusion • Feed in tariffs are effective. • The most preferred policy by investors and industry. • Technology adaptive. • Burden not on tax payers. • Can be less efficient than other policies. 14
  • 7. References • Assessment and optimisation of renewable energy support schemes in the European electricity market. Ragwitz et al. 2007. • Global Market Outlook for Photovoltaics until 2013. EPIA. 2009 • EEG-Mittelfristprognose: Entwicklungen 2000 bis 2013. VDN. 2007 • Solar Generation V. EPIA. 2008 • Supporting Solar Photovoltaic Electricity An Argument for Feed-in Tariffs. EPIA. 2008 • http://www.epia.org/policy/national-policies/spain/legislation.html <last access: 15/01/2010> • http://www.export.gov.il/Eng/_Articles/Article.asp?CategoryID=640&ArticleID=6596 <last access: 15/01/2010> 15