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RES-E Support Schemes in Europe

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This presentation gives an overview of support schemes for electricy from renewable energy sources (RES-E) in Europe. It also refers to best practices for effective and efficient support schemes, …

This presentation gives an overview of support schemes for electricy from renewable energy sources (RES-E) in Europe. It also refers to best practices for effective and efficient support schemes, reports on the progress of Member States in achieving the 2020 RES targets and raises the question if convergence of RES-E policies in Europe would be a helpful option.

Dr Isabelle de Lovinfosse, Senior Consultant for Policy Design & Evaluation at Ecofys, held the presentation at the "Rencontre thématique de l’énergie CWAPE" in Namur, Belgium, on 19 April 2013.

Published in: Technology, Economy & Finance

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  • 1. Dr Isabelle de Lovinfossei.delovinfosse@ecofys.comRES-E support schemes inEuropeRencontre thématique de l’énergieCWAPE, Namur, Friday 19 April 2013
  • 2. © ECOFYS | |Structure of the presentation1. Overview of RES-E support schemes in Europe2. Best practices for effective and efficient supportschemes3. Progress of MS in achieving the 2020 RES targets4. Can convergence of RES-E policies in Europe help?Main sources:• European projects: RE-Shaping (2009-2012), Financing RE in the European Energy Market (2010-2011),Renewable energy progress and biofuels sustainability (2012), DIA-CORE (2013-2015)• Other projects: International Feed-in Cooperation (ongoing), Implementing Cooperation Mechanisms(2009-2012), FIT tracker (2011), IRENA tariff-based supports (2012)19/04/2013 Dr Isabelle de Lovinfosse
  • 3. © ECOFYS | |Why policies?> We don’t think too far aheadOur time-horizon of 2-3 years,equals 3-6 squirrel monthsBecause humans are like squirrels> We ignore externalities The (future) costs of climate change or adaptation Scarcity of fossil fuels / security of supply Other environmental and health costs The societal costs of accidents (Deepwater Horizonor Fukushima), or nuclear waste disposal3 Dr Isabelle de Lovinfosse19/04/2013
  • 4. © ECOFYS | | Name4Diversity of RES-E support schemes in Europebut some converging trends…Dr Isabelle de Lovinfosse19/04/2013
  • 5. © ECOFYS | |… some converging trends in RES-E supportschemes Diversity of support schemes in Europe is shown by differentcolours and patterns, but some converging trends have beenobserved:• Use of combination of instruments instead of one size fits all(many patterns instead of plain)• Diffusion of feed-in premiums across Europe as compromisebetween revenue security of investors and RES-E exposure tomarket signals (e.g. Netherlands, Germany, UK)• Use of tendering systems to allocate support only to selectedprojects• Joint support schemes (e.g. Sweden and Norway)• Moratoriums and uncertainties on the future of supportschemes because of unacceptably high cost of support (e.g.Spain, Portugal, Latvia, Bulgaria, Czech Republic)Dr Isabelle de Lovinfosse19/04/2013
  • 6. © ECOFYS | |Lessons from MS experience tell us how to designeffective and efficient RES-E support schemesProvide reliable framework:frequent and unexpected policychanges undermine investorconfidence• Policy changes transparent and predictable (e.g.automatic degression, clear formula for quotasetting, pre-set revision agenda)• No retroactive changes• Long term political commitment• Consultation with stakeholdersLessons learnt Best practice design criteriaReflect and limit investment risks:risk-conscious (triple-A) policiesincrease growth and reduce supportcosts by up to 50%• Tailor support scheme to RE market deploymentstatus and electricity market readiness• No abrupt or retroactive policy changes• Avoid rigid budget or capacity caps• Simple, transparent permitting process• Priority grid access and dispatch• Quota: long term horizon and serious penalties• Government facilitates access to capital (e.g.participation, financial guarantees, loans)Predictable flexibility: Adjust level ofsupport to technology and marketconditions• Apply technology specific support levels• Calculate level of support based on LCOE, sosupport neither too low nor too high• Planned and transparent adjustments based ontechnology and market changes6 29/04/2013 Dr Isabelle de Lovinfosse
  • 7. © ECOFYS | |29/04/2013 Dr. Corinna Klessmann, Dr. Isabelle de LovinfosseThe MS are currently on track with their 2011/2012trajectory but projections do not look good for 2020Dr Isabelle de Lovinfosse19/04/2013
  • 8. © ECOFYS | |The MS are currently on track with their 2011/2012trajectory but projections do not look good for 2020 In 2010 most MS were on track with their 2011/2012 trajectory, apartfrom Malta, the Netherlands, the UK and Latvia. The RES growth rate experienced in the last few years would need to bemaintained or even strengthened in order to reach the 2020 target but thisis very unlikely. RES target achievement is highly dependent on growth in energy demand.If the current low energy demand growth rate picks up again then RES targetswill become even more difficult to achieve. Projections for 2020 do not look good. Only Sweden, Austria and Estoniaare expected to meet their target, that is:• If they implement the measures planned in their progress report• If their energy demand follows their energy efficiency scenario (not theBAU) For most of the MS additional policy efforts (both on financial and non-financial incentives) are needed in RES-E, RES-H&C and RES-T to reach thetarget. The current moratoriums and uncertainties on support schemes are notheading in the right direction!Dr Isabelle de Lovinfosse19/04/2013
  • 9. © ECOFYS | |In Europe the RES-E policy debate has moved …9fromharmonisationtocoordinationandcooperationDr Isabelle de Lovinfosse19/04/2013
  • 10. © ECOFYS | |Supporting RES-E is and will remain challenging.Can more convergence in Europe help?Financial and economic crisis:puts pressure on governmentbudgets, consumers’ bills and accessto finance•Reducing RES-E support costs bystreamlining best-practice criteria•Joint European effort to attract moreinvestmentsChallenges Potential role of convergenceSystem impacts: High RES-Edeployment rates affect electricitysystems and markets•Trans-European grid development•Integration of European electricity markets•Coordinated reforms of electricity marketregulationsOpposition: With RES-E becomingmainstream, growing oppositionagainst RES-E (from incumbentelectricity actors and the public)Coordinated EU-wide effort on transparentand fair communication on the short andlong term benefits & costs of RES-E growth10 Dr Isabelle de Lovinfosse19/04/2013
  • 11. © ECOFYS | |RES-E support schemes in Europe - Conclusions Diversity of RES-E support schemes in Europe, butconverging trends towards FIP and tendering Additional policy efforts are needed to meet the 2020 target,but at lower cost than in the past Applying best practice RES-E support principles is key forfurther RES-E growth in Europe with economic and socialacceptability of support schemes Increased exchange, cooperation and EC guidance can helpstreamline best practice principles across Europe Now policy changes are needed but keep in mind: No retroactive changes, there are other solutions to smoothburden from past in the future Continuity with the past Transparent flexibility of support in future for necessarychanges11 Dr Isabelle de Lovinfosse19/04/2013
  • 12. © ECOFYS | |12Thank you for your attention!i.delovinfosse@ecofys.comDr Isabelle de Lovinfosse19/04/2013