Euro-MediterraneanEnergy Market Integration Project  Germany  France  Lebanon                                           De...
Support for the enhanced integration and      the improved security of the   Euro-Mediterranean Energy MarketThis project ...
MED-EMIP Mandate in One SentenceMED-EMIP is expected to be the catalyst of thereinforcement of EU-MPC energy cooperation,w...
Paving and Debating  “Paving” the way may start after we have  “Debated” the way to a MSP and have  identified the “Pothol...
…. Debating the Way to the MSP is the subject              of this presentation  Many potholes of   disagreement    This p...
…. Paving the way to the MSP is the nextstep and requires intensive consultations ….A few parties are already applying mod...
Can or should “we” seriously negotiate the export of solar power from this region “into” the European Union ? In the real ...
GWh   GWhThis project is fundedby the European Union                                     8
Present situation with transmission paths• Synchronously interconnected system spanning in  North-South direction from Jut...
… Finding a buyer in the European Union• In principle possible under the RES- Directive• Bilateral contracts are allowed• ...
• Threat to local generation                                         400 € / MWh                                          ...
PV may outrun CSP                                             PV and CSP                                                 W...
... Finding electricity buyers at homeOver twenty years of developing a solar power industryaround the world in over 20 co...
We only have toscale up of whatwe already knowand do well !This project is fundedby the European Union                    ...
Finding a market at home                             Electricity      Solar power                           Tariff Average...
3. Finding buyers at home: Conclusion• The “finding electricity buyers athome” strategy is insufficient and willnot genera...
The Way Forward • Identify and seriously negotiate one   single pilot case under Article 9 of   the RES directive of the E...
The Way Backward• Subsidize the first 100 MW through  a variety of concessional loans and  grants without negotiating impr...
One topic worthwhile to discussWhen it comes to solar electricity from PV, twoprogramme design options exist that differco...
MSP will have little effect on mitigating technology cost This project is funded by the European Union                    ...
The “Principle of Hope” StrategyAssume that conventional gas, oil andcoal power plans become uncompetitivewithin 15 years ...
Energy modesty as inconvenient truth  Best case future   scenario                                                  India a...
Convergence and Contraction by ALL         The one                   scenario of                         Earth         con...
“Obstacles are those frightfulthings you see when you takeyour eyes off your goal”Henry Ford   This project is funded   by...
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Session2 debating the way to a mediterranean solar plan authored and_or presented by albrecht kaupp

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MENA Energized: Regional Challenges to "Green the Power" Sector July 28, 2009

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Session2 debating the way to a mediterranean solar plan authored and_or presented by albrecht kaupp

  1. 1. Euro-MediterraneanEnergy Market Integration Project Germany France Lebanon Debating the Way to a Mediterranean Solar Plan Belgium Dr. Albrecht Kaupp, Team Leader On the occasion of the RCREEE and MED-EMIP Joint Event Sharm El Sheikh, Egypt, 28 June 2009 “The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Union”. This project is funded by the European Union 1
  2. 2. Support for the enhanced integration and the improved security of the Euro-Mediterranean Energy MarketThis project is fundedby the European Union
  3. 3. MED-EMIP Mandate in One SentenceMED-EMIP is expected to be the catalyst of thereinforcement of EU-MPC energy cooperation,with particular emphasis on energy security andsustainability, through enhanced dialogue andinformation exchange. This project is funded by the European Union 3
  4. 4. Paving and Debating “Paving” the way may start after we have “Debated” the way to a MSP and have identified the “Potholes of disagreement”This project is fundedby the European Union 4
  5. 5. …. Debating the Way to the MSP is the subject of this presentation Many potholes of disagreement This project is funded by the European Union 5
  6. 6. …. Paving the way to the MSP is the nextstep and requires intensive consultations ….A few parties are already applying modern “equipment” to “push” the old MSP ….Avoiding ineffective paving delivery mechanism ! This project is funded by the European Union 6
  7. 7. Can or should “we” seriously negotiate the export of solar power from this region “into” the European Union ? In the real world the following 6 major steps are necessary 1. Find a power plant location 2. Find an export transmission path 3. Find a buyer for the electricity 4. Agree on financing the power plant and transmission 5. Built the power plant and transmission line 6. Commence generation and selling of “green” electricity This project is funded by the European Union 7
  8. 8. GWh GWhThis project is fundedby the European Union 8
  9. 9. Present situation with transmission paths• Synchronously interconnected system spanning in North-South direction from Jutland to the borders between Egypt and Sudan and in West-East direction from Morocco to the borders between Turkey and Iran -meaning a “full AC” solution- is highly unlikely !• We need dedicated power transmission corridors.• However dedicated transmission corridors will only be an option if large power plant capacities above 2000 MW are In the power industry it is common that negotiated from the very beginning. power plants and transmission lines are built together and neither one is built without a market for the electricity This project is funded by the European Union 9
  10. 10. … Finding a buyer in the European Union• In principle possible under the RES- Directive• Bilateral contracts are allowed• Solar power from the South will be always today, tomorrow and in the far future less expensive than average generation costs in Central Europe. (The sun is twice as “strong”)• Call it the T-shirt manufacturing cost phenomena This project is funded by the European Union 10
  11. 11. • Threat to local generation 400 € / MWh of solar electricity, since 300 imports are cheaperSolar Electricity Prices - TODAY • Solar power for local consumption too expensive 250 € / MWh • Some exports needed to This project is funded by the European Union finance the power plant 11
  12. 12. PV may outrun CSP PV and CSP WINDThis project is fundedby the European Union 12
  13. 13. ... Finding electricity buyers at homeOver twenty years of developing a solar power industryaround the world in over 20 countries have shown the way.There are only three options and a few derivatives to kickstart and maintain a solar power industry.1. Cross subsidize incremental tariff costs by all electricity consumers.2. Subsidize it through a public budget at the expense of other public services such as health, education etc.3. Kick start it by fiscal incentives for “rich investors” and make sure it can be sustained This project is funded by the European Union 13
  14. 14. We only have toscale up of whatwe already knowand do well !This project is fundedby the European Union 14
  15. 15. Finding a market at home Electricity Solar power Tariff Average Average Tariff €ct / kWh = 5.3 €ct / kWh = 15 Large cross• The tariff gap is very large subsidies in %• Utilities are small in terms of GWh needed to finance• Utilities sales $ revenues are small a modest solar plant capacity This project is funded by the European Union 15
  16. 16. 3. Finding buyers at home: Conclusion• The “finding electricity buyers athome” strategy is insufficient and willnot generate the necessary additionalrevenues from cross subsidies todevelop the solar power market.• It may also increase “energy poverty” This project is funded by the European Union 16
  17. 17. The Way Forward • Identify and seriously negotiate one single pilot case under Article 9 of the RES directive of the EU. • Identify and seriously support one country willing to introduce cross subsidies large enough to finance a 1000 MW plant, which is built in 50 MW modules anyway.This project is fundedby the European Union 17
  18. 18. The Way Backward• Subsidize the first 100 MW through a variety of concessional loans and grants without negotiating improved market transformation conditions.• Remain silent or speechless if someone is asking“How do you finance the next 1000 MW ?” This project is funded by the European Union 18
  19. 19. One topic worthwhile to discussWhen it comes to solar electricity from PV, twoprogramme design options exist that differcompletely(I) Let each consumer, mostly buildings, generate their own electricity on their own building structure and feed this electricity into the grid. VERSUS(II) Built very large PV solar fields of size 50 MW to 500 MW. This project is funded by the European Union 19
  20. 20. MSP will have little effect on mitigating technology cost This project is funded by the European Union 20
  21. 21. The “Principle of Hope” StrategyAssume that conventional gas, oil andcoal power plans become uncompetitivewithin 15 years in the region.This means incremental costs for solarpower will be zero and “grid parity” hasbeen achieved. Lobbyist assumption for tariffs in the EU This project is funded by the European Union 21
  22. 22. Energy modesty as inconvenient truth Best case future  scenario  India and China 2060 This scenario may require  CHINA two resource worlds INDIAHUMAN DEVELOPMENT INDEX, a  measure  of  human  well‐being,  reaches  Earth I Earth IIits maximum plateau at about 4000 kWh of annual electricity use per capita. Poverty  alleviation  is  therefore  strongly linked  to  increased    electricity consumption up to a certain level.
  23. 23. Convergence and Contraction by ALL The one                   scenario of  Earth convergence and contraction of  the energy consumption among  industrialized and industrializing  Countries
  24. 24. “Obstacles are those frightfulthings you see when you takeyour eyes off your goal”Henry Ford This project is funded by the European Union 24

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