Energy Certification - an Efficient Tool to
Achieve Ambitious RES Targets
Case Norway and Sweden
Low Carbon Earth Summit 2...
Slide 2 8.10.2013
Grexel in One Sentence
We enable energy
certification by
providing market
infrastructure
solutions and s...
Slide 3 8.10.2013
Grexel Fact Sheet
• Field of Business
 Energy certification
• Services
 Central certificates
registrie...
Slide 4 8.10.2013
I Will Tell You About…
1. Energy certification and Renewable Portfolio Standards (RPS)
2. Swedish-Norweg...
Slide 5 8.10.2013
What are Energy Certification?
• Unbundling the value related to origin from physical energy
• Enable ef...
Slide 6 8.10.2013Slide 3/26/13
Energy Certificates Enable Commercial Tracking of Electricity from
Generation to Consumptio...
Slide 7 8.10.2013
Renewable Portfolio Standard (RPS) Using Energy Certificates
• RPS = producer, consumers or e.g. regiona...
Slide 8 8.10.2013
How Governments Use RPS to Reach Their Quotas
• With quota certificates government can harness the marke...
Slide 9 8.10.2013
Slide 7 8/29/12
Case: Quota Certificate System for Sweden and Norway
Background
• Both countries are bou...
Slide 10 8.10.2013
Quotas in the European Union
• Common 20-20-20 target agreed in directive 2009/28/EC
o 20 % of consumed...
Slide 11 8.10.2013
EU 20 RES Targets by Country
0
10
20
30
40
50
60
70
80
2005 2011 TARGET 2020
Slide 12 8.10.2013
Premium in RPS and FiT
?
FiT price = F
Electricityprice=E
Premium =
F-E
FiT
?
Electricityprice=E
Premiu...
Slide 13 8.10.2013
FiT vs. RPS Costs in the EU after 20-20-20 Targets
25.80
22.84
18.12
0.00
10.00
20.00
30.00
40.00
50.00...
Slide 14 8.10.2013
How do FiT and RPS Schemes Deal with Changes Assuming %
RES Targets?
Change Energy Markets FiT RPS
Econ...
Slide 15 8.10.2013
Conclusions
• Well designed RPS scheme seems to cope better with changes
 Economic up/downturn
 Elect...
Slide 16 8.10.2013
Future Work
• Data is partly in contradiction
 Wait 3 more years for cost data
• See how investments g...
Slide 17 8.10.2013
Thank You!
Marko Lehtovaara
CEO
Grexel Systems Ltd.
Finland
Marko.lehtovaara(at)grexel.com
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Energy Certification - an Efficient Tool to Achieve Ambitious RES Targets - Case Norway and Sweden

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Low Carbon Earth Summit 28th September 2013. Xi’an, China

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Energy Certification - an Efficient Tool to Achieve Ambitious RES Targets - Case Norway and Sweden

  1. 1. Energy Certification - an Efficient Tool to Achieve Ambitious RES Targets Case Norway and Sweden Low Carbon Earth Summit 28th September 2013. Xi’an, China
  2. 2. Slide 2 8.10.2013 Grexel in One Sentence We enable energy certification by providing market infrastructure solutions and services
  3. 3. Slide 3 8.10.2013 Grexel Fact Sheet • Field of Business  Energy certification • Services  Central certificates registries  Regulatory and market engineering • Achievements & Figures  80% of European energy certificates volume  11 countries covered  Trade volume in registries > 5 b€ annually • Customers  Government agencies o Ministry of Employment and Economics, Finland o ILR (Luxembourg) o Croatian Energy Market Operator o EgyptERA (Egypt) o Ministry of Industry and Innovation, Iceland  Main Grids o Statnett (Norway) o Svenska Kraftnät (Sweden) o Energinet.DK (Denmark) o Landsnet (Iceland) o EMS (TSO, Republic of Serbia)
  4. 4. Slide 4 8.10.2013 I Will Tell You About… 1. Energy certification and Renewable Portfolio Standards (RPS) 2. Swedish-Norwegian certificate based RPS 3. EU 20-20-20 targets burden sharing 4. RPS versus FiT efficiency data 5. Explanation to the above 6. What’s next
  5. 5. Slide 5 8.10.2013 What are Energy Certification? • Unbundling the value related to origin from physical energy • Enable efficient financial incentives to increase renewable energy generation and energy savings • Do not require a liberalized physical power market in order to be effective Production attribute Sold in compliance or voluntary market Electricity Sold in energy market
  6. 6. Slide 6 8.10.2013Slide 3/26/13 Energy Certificates Enable Commercial Tracking of Electricity from Generation to Consumption Certificate Markets Certificate Registry CancellationIssuing Transfer Electricity Markets Authority issues certificates for eligible production based on valid measurement data Certificates are traded separately from energy. Green investors get money from selling certificates. Certificates are cancelled to meet quota or prove green consumption / sales.
  7. 7. Slide 7 8.10.2013 Renewable Portfolio Standard (RPS) Using Energy Certificates • RPS = producer, consumers or e.g. regional government has to prove that certain share of electricity (quota) was produced using eligible production methods  Eligible production is usually newly built renewable • Authority issues quota certificate to the account of producer  1 MWh of produced electricity = 1 certificate • Certificates are freely tradable separately from physical power • Quota Obliged Parties have to prove quota compliance by cancelling enough certificates yearly Certificate Markets Electricity Markets X Y Z = X + Y Z q*Z = Y Producers Y Suppliers/Grid Company Interaction with other Domains Z = Total Electricity Sales of the Grid Company X = Fossil&Nuclear Production Y = Renewable Production q = Quota % for renewables for Producers
  8. 8. Slide 8 8.10.2013 How Governments Use RPS to Reach Their Quotas • With quota certificates government can harness the market forces without loosing control over the electricity market • In case of multiple support schemes, the RPS scheme can act as the flexibility element Time Unsupported RES FIT Supported RES GC Supported RES (QOP Quota) Country RES Target
  9. 9. Slide 9 8.10.2013 Slide 7 8/29/12 Case: Quota Certificate System for Sweden and Norway Background • Both countries are bound by the 20-20-20 targets of the EU directive 2009/28/EC • All RES support schemes were replaced by a joint quota certificate scheme • Yearly elevating quota on consumption • Quota obliged parties: electricity suppliers and major consumers • Eligible production: all new renewable capacity for 15 years • Competent authorities: Grid operators and regulators Norway Target 67,5% Sweden Target 49% Joint Quota Certificate Scheme
  10. 10. Slide 10 8.10.2013 Quotas in the European Union • Common 20-20-20 target agreed in directive 2009/28/EC o 20 % of consumed primary energy from renewable sources by 2020 o 20 % of GHG reduction as compared to 1990 level by 2020 • Burden sharing according to RES potential and economical capability • Member states are free to select strategies to reach the targets o Support schemes o Build own capacity / buy from others • Member states can trade using defined flexibility mechanisms o Statistical transfers o Joint projects o Joint support schemes Bottom line: It is equally difficult to reach the targets for all countries. Now it is interesting to see how different strategies have worked out!
  11. 11. Slide 11 8.10.2013 EU 20 RES Targets by Country 0 10 20 30 40 50 60 70 80 2005 2011 TARGET 2020
  12. 12. Slide 12 8.10.2013 Premium in RPS and FiT ? FiT price = F Electricityprice=E Premium = F-E FiT ? Electricityprice=E Premium = C RPS Certificateprice=C ?
  13. 13. Slide 13 8.10.2013 FiT vs. RPS Costs in the EU after 20-20-20 Targets 25.80 22.84 18.12 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 2009 2010 2011 € Onshore Wind Premiums (normalized to 20 y duration) Czech Republic Germany Greece Netherlands Spain Sweden
  14. 14. Slide 14 8.10.2013 How do FiT and RPS Schemes Deal with Changes Assuming % RES Targets? Change Energy Markets FiT RPS Economy down • Electricity price ↘ • Consumption ↘ • Investment ↗ • Over/under target ↗ • Cost to consumers ↗ • Investment ↘ • Over/under target → • Cost to consumers ↘ Economy up • Electricity price ↗ • Consumption up ↗ • Investment ↘ • Over/under target ↘ • Cost to consumers ↘ • Investment ↗ • Over/under target → • Cost to consumers → Give up Nuclear or Fossil (other replaces the other) • Electricity price ↗ • Consumption ↘ • Investment ↘ • Over/under target ↘ • Cost to consumers ↘ • Investment → • Over/under target → • Cost to consumers → Build more Nuclear / Fossil • Electricity price ↘ • Consumption ↗ • Investment → • Over/under target ↘ • Cost to consumers ↗ • Investment ↗ • Over/under target → • Cost to consumers ↗
  15. 15. Slide 15 8.10.2013 Conclusions • Well designed RPS scheme seems to cope better with changes  Economic up/downturn  Electricity consumption increase / decrease  Electricity price changes  Maturing of technology  Changes in investment climate  Political decisions • Well designed RPS scheme seems to reach targets more efficiently. Why?  Market optimizes itself in changing environment  The market automatically drives towards the target using price flexibilities both in consumption and production • RPS is more sustainable in the long term. Why?  Being market based, investors do not have to worry government budget cuts  No danger of being suspended because of over investments
  16. 16. Slide 16 8.10.2013 Future Work • Data is partly in contradiction  Wait 3 more years for cost data • See how investments go in SE and NO  Likely to stall  Cost to consumers going even more down • Why are some RPS schemes expensive?  Marked design failed? • After 3-5 years, there should be enough of data to draw consclusions  New genenric theory on optimal usage of support schemes o Investment support o FiT o RPS
  17. 17. Slide 17 8.10.2013 Thank You! Marko Lehtovaara CEO Grexel Systems Ltd. Finland Marko.lehtovaara(at)grexel.com

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