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The energy landscape of the Netherlands IN2030
Energy scenarios and the impact in North West Europe
Name : Ronald de Vries
Address : Croeselaan 28
3521 CB Utrecht
Company : Rabobank International Industrial Knowledge Team (IKT)
Phone : +31 (0) 30 712 31 70 (mobile: +31 (0) 6 2040 6193)
e-mail : ronald.de.vries@rabobank.com
Course : International Mini MBA Energy Transition and Innovation
18 – 21 March 2013 and 24 – 25 May 2013
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Summary
The aim of this essay is directed to assess the outlook of the Dutch energy system up to 2030. Various questions have
been raised in the framework of this essay, such as:
How will the energy mix look like by 2030 and which types of scenarios can be considered?
What will happen with trends like energy consumption and savings?
Will The Netherlands achieve its energy transition goals in time? And what about the neighbouring countries,
their progress and lessons learned for The Netherlands?
In case targets cannot be met in time, which recommendations can be considered?
And moreover, to which extend will additional energy efficiency measures be effective and beneficial?
Questions which can be answered with the energy scenarios, developed on top of the IN2030 scenario’s of the
Rabobank. These energy scenarios recently have been developed, and will be published separately by Rabobank
International (IKT). Meanwhile, some of the results are already summarised in this essay, representing a view of the
author.
The IN2030 economic scenarios have been published in 2011. Via a website www.IN2030.nl the desirability and
credibility of the economic scenarios of Rabobank have been acquired among participants who gave their votes to a
poll. The results until recently are used for the assessment of two energy scenarios:
Flowingly Forward (FF): this scenario has received the highest score with 62% of the votes in a poll on the
question which scenario should be preferred above all other scenarios as the most desirable option for the future
community;
Slow Strife (SS) – Trage Twist: which has received the highest poll score as the most representative option for the
present situation, but the least desired option.
The results of the energy scenarios Flowingly Forward and Slow Strife have been reported in brief in this essay.
How will the Dutch gross energy consumption develop?
The outcomes of the energy scenarios show a fairly stable development of the gross energy consumption: in the FF-
scenario the level will rise to c. 71.5 Mton p.a in 2030 and in the SS-scenario 82 Mton p.a respectively.
However, the quasi-stability of gross energy consumption in the Netherlands hides strong changes in the fuel mix.
Looking at the developments in the Flowingly Forward scenario, it’s clear that the transition to a renewable energy
system is quite successful. The renewable share in the fuel mix has increased six-fold compared with the present 4%.
After an initial share of 9% (2010) the coal consumption is expected to rise to 13% in 2020 but will decline to c. 7%
(2030). For natural gas a more evenly trend shows up: the share of 47% in 2010 will gradually decrease to 34% in
2030. While consumption of renewable will increase to 13% in 2020 and 23% in 2030: almost six times the present
share of 4%. See for the details and trends, figure S.1., including a comparison with the Slow Strife outlook.
Figure S.1 Flowingly Forward versus Slow Strife: gross energy demand in The Netherlands up to 2030
Looking at the developments in the Slow Strife scenario, it’s clear that the renewable energy transition is hampering
completely. Compared with the consumption levels in 2005, the renewable share in the fuel mix has increased a bit:
from a 5% share in 2020 to 7% in 2030. Coal clearly is the winner with an increased share of 21% in 2020, which then
remains quite stable. Up to 2030 the total fossil fuel mix will not change at all: the shares of oil(31%) and gas (40%
slightly decrease but still play a dominant role.
Which changes in the energy mix can be expected?
The Dutch energy mix will evolve towards an increased share of renewable energy consumption. It seems plausible that
the share of renewable energy consumption in the Dutch fuel mix will be 5 – 13% in 2020, dependent on the future
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macro economic outlook. In case the economy is turning to an optimal scenario like Flowingly Forward, the 20-20-20
targets are neared or even exceeded. But in case the present economic downturn will continue, the energy transition
will be tailored to those investments which require the lowest investment levels and most favourable pay-back periods.
See for a comparison between the two scenarios, figure S.2: giving an insight in the fuel mixes at the time of 2030..
Figure S.2 Flowingly Forward versus Slow Strife: fuel mix of gross energy demand in The Netherlands (2030)
Which countries are front runners in the energy transition and why?
Norway, Denmark and Germany are the frontrunners in North West Europe. The country that is quite similar to The
Netherlands is Denmark: with respect to fuel independency and geography / demography. Denmark already has
demonstrated an energy transition which develops even beyond the 20-20-20 targets.
Which impact can be expected from every percentage of additional energy savings?
1% additional energy reduction per annum would contribute to 9% total energy and emission reduction in 2020. In
case the 20% energy reduction target (compared with 2005) should be achieved, solely by energy reduction, then it
depend on how our economy will develop. In the scenario of Flowingly Forward 1 – 1.5% additional energy reduction
will be enough. But in case a Slow Strife scenario will be the case, 2.8% is necessary to meet the targets. The present
energy landscape of the Netherlands shows similarities with the Slow Strife scenario. The Netherlands is far behind the
20-20-20 targets. In order to comply with the 16% renewable energy target, investments of circa EUR 35 billion are
required. It makes sense to consider the cost-effectiveness of energy reduction measures, because the accepted level of
marginal abatement costs (MACs) are in favour of co-firing biomass, onshore wind and energy reduction via combined
heat and power / energy efficiency measures. After these options, off shore wind and geothermal applications become
in the picture (in the sequence of low to higher MACs). The answer to the question, whether the investments in
renewable energy options would be cost effective: yes but in the sequence of the cheapest to the more expensive
options, starting with co-firing biomass, on shore wind and then off shore wind. In a future scenario in which cross
border grid development will continue (according to Flowingly Forward) large investments in renewable energy
generation makes sense . Otherwise modest investments should be taken for granted (fitting in the national grid
boundaries). At the same time energy efficiency measures should be given full support – in case the marginal
abatement costs are lower than renewable options; in the Danish situation this has been clearly demonstrated.
Will natural gas keep its role as the transition fuel in both scenarios?
The Netherlands has the most fossil fuelled energy mix of all North West European countries, and this situation will
most probably remain in the next two decades. The role of natural gas (from domestic resources) is significant and
needs to play an important role in the energy transition. An effective carbon price is needed to keep gas in the fuel mix
(of electricity generation): a level of EUR 20 – 30 per ton in 2020 and EUR 60 per ton in 2030 fits in the Flowingly
Forward scenario, and shows a viable outlook for renewable, nuclear and gas fired power generation options.
Brief Acknowledgement
The author would like to express his appreciation to the people of the Energy Delta Institute (EDI) who organised the
Mini MBA - Energy Transition and Innovation at Nyenrode Business University. Especially Eline de Wagt who looked
after all kind of organisational aspects around this course and Bert Stuij (vice president innovation at EDI) and Rene
Snijder (fellow at EDI) whose encouraging and inspiring guidance helped me to add the finishing touch / finalise the
underlying essay.
29%
34%
7%
5%
23%
2%
2030 Fuel Mix - Flowingly Forward
(Netherlands)
Oil
Gas
Coal
Nucleair
Renewable
Other
31%
40%
21%
1%
7%
0%
2030 Fuel Mix - Slow Strife
(Netherlands)
Oil
Gas
Coal
Nucleair
Renewable
Other
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Summary 3
1. Introduction 5
2. Methodology and assumptions for energy scenario’s towards 2030 6
3. Two energy scenario’s depicted: “Flowingly Forward” and “Slow Strife” 8
3.1. Development of gross energy consumption in the Netherlands 8
3.2. Reflection on the 20-20-20 targets for North West European countries 9
3.3. Impact of 1% additional energy savings on CO2 emissions 11
4. The Dutch electricity mix and grid capacity in perspective of the energy scenario’s 12
4.1. The role of gas in the electricity mix 12
4.2. The carbon footprint of electricity generation 13
4.3. The impact of CO2 price scenario’s on the Levelized Cost of Electricity 14
5. Conclusions and recommendations 15
Literature 16
Appendix
1 Assumptions for the four energy scenarios IN2030 17
2 Methodology for the four energy scenarios IN2030 18
3 The IN2030 website www.IN2030.nl (status 2013, May 17th) 19
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1. Introduction
The economic downturn has a significant impact on the Dutch energy system. Energy consumption levels are
decreasing and the transition towards more renewable energy supply and consumption is behind track. The
Netherlands is dealing with the challenge to realize the 2020-targets for the energy transition: (1) 20% energy
reduction compared to 2005 (2) 20% reduction of greenhouse gas (GHG-) emissions compared to 1990 and (3) a share
of 16% renewable energy in the total final energy consumption. With regard to the present situation our domestic gross
energy consumption is c. 2% lower than in 2005: c. 77.5 Mton oil equivalent per annum in 2011, while this was 79.2
MTon in 2005 (2012, CBS). With respect to the GHG emissions, 195 Mton CO2 equivalents have been reported in 2011:
8% below the level of 212 Mton per annum in 1990. The share of renewable energy consumption in the final energy
consumption is approximately 4% and has to be quadrupled in years up to 2020.
The renewable energy targets – status and perspective
The Dutch government adopted the 16%
renewable energy target to be realized by 2020
in the latest “regeerakkoord” (2012). This
commitment is related to the acceptance and
implementation of the European Renewable
Energy Directive 2009/28/EC into Dutch
legislation 1).
According to article 4 of this “Climate and
Energy Package” Directive each European
Member State provides a National Renewable
Energy Action Plan (2011, ECN, NREAP) to
the European Commission, detailing
projections for renewable energy development
up to the year 2020. By that year, the
cumulative consumption of renewable energy
in all European Member States should result
in an average share of renewable energy of
20% across the EU (figure 1).
Figure 1 Status of % renewable energy in final consumption (2012, Eurostat)
Where are we going to?
In the coming years the Dutch government should give full priority to stimulate the development of more renewable
energy supply in order to realize the 2020 targets, with provisions like:
An optimised mix of subsidies for renewable energy applications (2013, Agentschap NL, SDE+)
Prioritization of energy savings by means of Green Deals with energy production/consumption sectors
Regional / small scale fiscal stimulation of solar energy
Extension of electricity and gas grid infrastructure
In the European Union (EU) the implications of
security of supply 2) differ per country. For example,
in the Netherlands the domestic production of
natural gas is expected to decrease in 2020-2030,
while our fuel mix belongs to the most fossil mixes
of all EU-countries. This may put tension on the
provisions to protect national interests of affordable
access to alternative energy sources.
For the EU and the Netherlands, the period to
realize energy independency, by reduction of energy
import is estimated to take decades. Therefore, the
next 20 years will be crucial to develop the corner
stones for a future sustainable energy system.
Global competition around energy resources is
expected to increase: the Non-OECD-energy
demand is clearly on the rise, creating additional
competition in the global energy trade balance in
which Europe remains dependent on imports of
fossils, see figure 2.
Figure 2 Energy trade balances 1990 – 2030 (million ton per annum), 2013, BP Energy Outlook 2030
1
The European Union is committed to limiting the rise in global average temperature to 2 °C above pre-industrial levels: the 2 °C scenario (2DS)
It has set ambitious targets for greenhouse gas emissions reduction; Greenhouse gas emissions should be reduced to 20% below their 1990 levels
by 2020. About half of these emissions – essentially all energy-intensive industries are to be regulated under the European Trading Scheme (ETS).
2009,October 16th, Elsevier, Energy Economics
2
Adequate and sustainable levels of supply in the chosen energy mix that can meet growing demand and protect national interests
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Sweden
Latvia
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Austria
Portugal
Estonia
Romania
Denmark
Slovenia
Lithuania
Bulgaria
Spain
France
Germany
Italy
Slovakia
Poland
CzechRepublic
Greece
Hungary
Ireland
Belgium
Cyprus
Netherlands
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Malta
Norway
Croatia
2010 2020
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Balance
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The aim of this essay is directed to assess the outlook of the Dutch energy system up to 2030. How will the energy mix
look like? What will happen with trends like energy consumption and savings? Will The Netherlands achieve its energy
transition goals in time? In case targets cannot be met in time, which recommendations can be considered? And
moreover, to which extend will additional energy efficiency measures be effective and beneficial? Questions which can
be answered with the scenario tools, developed on top of the IN2030 scenario’s of the Rabobank.
Chapter 2 of this essay describes the methodology and assumptions, which have been applied for the calculations of the
energy scenarios towards 2030. In short, the methodology for this assessment is based on an existing scenario analysis
of the Rabobank’s “IN2030 – Vier Vergezichten”, published in 2011 (www.in2030.nl). On top of the Rabobank scenario
approach the energy scenarios have been related to the most recent trends and insights of:
the World Energy Outlook 2012 (IEA, 2012)
ECN/PBL (2013, “Referentieraming Energie & Emissies in de jaren 2012, 2020 en 2030”)
the Energy Transition Pathways - ETPs (IEA, 2012).
This essay is focussed on two energy scenario’s, which have been finalised in April 2013 and therefore proposed to be
summarised for the Mini MBA Energy Transition and Innovation:
Flowingly Forward (FF)– Vloeiend Vooruit: this scenario has received the highest score with 62% of the votes in a
poll on the question which scenario should be preferred above all other scenarios as the most desirable option for
the future community;
Slow Strife (SS) – Trage Twist: which has received the highest poll score as the most representative option for the
present situation.
The reason why these two scenarios have been chosen are related to the outcome (April 2013) of the poll on internet at
the time of preparations for - and writing on - the essay.
Chapter 3 summarises the results of the two energy scenarios (FF and SS). For both energy scenarios, the outlook on
the energy landscape has been depicted by answering main and sub questions with respect to:
How will the Dutch gross energy consumption develop?
Which changes in the energy mix can be expected?
The impact of the energy drivers are reported for The Netherlands, including the situation in neighbouring countries
like Belgium, Denmark, France, Germany, Norway and the United Kingdom:
Which countries are front runners in the energy transition and why?
Which impact can be expected from every percentage of additional energy savings on the gross energy consumption
in 2020 and 2030? (% in compound average growth rate - CAGR).
Chapter 4 is focussed on the forecast of the Dutch inland electricity consumption and from which sources the electricity
will be produced (impact on the electricity mix). In the FF-scenario an annual increase of 1% electricity consumption is
assumed, while in case of the SS-scenario the electricity consumption rate remains 0%. These assumptions are in line
with corresponding scenario’s in the TenneT-2030 vision (2011, TenneT). With respect to the consequences for
consumption of fossil fuels in the electricity mix, the following questions are adressed :
Will natural gas keep its role as the transition fuel in both scenarios?
Which average CO2-emissions p.kWh can be expected from power generation by 2030?
Which CO2 price scenario(s) can be considered as effective for (i) the development of clean fossil power generation
and (ii) the development of renewable energy supply options like on-/offshore wind and bio-energy? Are different
CO2 price scenario’s necessary per energy scenario?
Finally, the essay summarises the conclusions and will answer the main question whether the Netherlands will achieve
its energy transition goals in time, and if not: which recommendations can be considered, to move from the Slow Strife
(if this should represent the present situation) towards the Flowingly Forward area.
2. Methodology and assumptions for energy scenario’s towards 2030
The existing scenario analysis of the Rabobank’s “IN2030 – Vier
Vergezichten”, published in 2011 (www.in2030.nl) represents four
scenarios. In these scenarios, future projections have been
mapped (figure 3) on two main axes:
(1) The horizontal axis represents the degree to which
developments and processes occur gradually or explosively.
Revolution stands for rapid breakthroughs, extreme peaks and
troughs: dynamic changes! Evolution means more even-keeled
and longer lasting developments and processes: gradual change!
(2) The vertical axis represents the degree of harmony, in which
developments take place and how processes evolve. Harmony
and conflict are the two extremes on this axis. Harmony stands
for a peaceful society, consensus and cooperation. Conflict
implies a more polarised society, with each individual for himself
and less emphasis on collective interests.
Figure 3 The four scenarios IN2030 (2011, Rabobank)
Flowingly
Forward
Capricious
Consent
Slow Strife
Agile
Antipole
Harmony
Conflict
RevolutionEvolution
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Each of four squares represents a scenario, reflecting the limits of what might be reasonable possible. The axes are
meant to indicate processes and developments, rather than focussing on trends and issues. How these pan out, will
depend on the interaction between the two axes.
The scenario in the top right corner represents the harmonious-revolutionary world that is described as Capricious
Consent. This is a dynamic, uncertain, but harmonious world, where technological developments and ongoing
integration of the global economy play pivotal roles. The bottom right square represents a world of major conflicts and
changes. It is a world of Agile Antipoles with considerable polarisation both in and between countries. In the bottom
left square the world seems to be stalling: in other words, the Slow Strife scenario. Locked into a new east-west
polarisation, international dialogue fails to produce new solutions. Lastly, the top left square - the Flowingly
Forward scenario – represents a more sustainable world in which gradual progress is based on consensus.
For each scenario, fuel price developments have been assumed, in relation to geopolitical developments, technological
progress and regional circumstances. For example, figure 4 illustrates the historical trend of crude oil, including the
impact of the assumed future price developments up to 2030. Appendix 1 summarises all relevant fuel price trends
which have been used for the energy scenario calculations.
Figure 4 Crude oil price trend (USD per barrel), 1960-1983 Arabian Light posted at Ras Tanura, 1984> Brent dated
The assumed energy prices will have an impact on the fuel mix and will also influence the development of domestic
energy production, import and import dependencies. How does that work? For example, fuel prices, domestic energy
taxes and CO2 prices – or the absence of regulations for a CO2 price – put upward or downward pressure on the trend
of the levelized costs of electricity (LCOE). The LCOE is the constant unit cost (kWh or MWh) of a payment stream that
has the same present value as the total cost of building and operating a power generating plant over its life time. The
LCOEs will largely determine future viability of new and existing electricity production assets, such as (on/off shore)
wind, solar and (clean) fossil fuelled power plants. The LCOE includes energy taxes and CO2-prices. Hence the
development of LCOEs (via fuel prices) will have significant impact on the fuel demand by power producers, who
continuously want to optimise their fuel demand and mix by adapting their power production fleet to the most
economical favourable performance, so this results in a better competitive position in the power generation / supply
market.
The methodology, which has been applied to forecast the energy scenarios is based upon the following approach:
a) Assumptions for fuel price developments and general interest rate developments; calculation of the LCOE of
typically fossil fuelled and renewable power generation units, including their capital expenditures (CAPEX) and
operational expenditures (OPEX); as a result certain moments of grid parity of clean fossil and renewable energy
generation systems can be estimated for the periods of 2020 – 2030;
b) Estimation of the impact of the LCOEs and grid parities of various types of electricity generation options on the fuel
mix of electricity production and energy consumption
c) Forecast of future gross and final energy consumption, their fuel mixes and future electricity consumption volumes
as function of the four energy scenarios. For all four scenarios the same historical figures were taken into account
and related to the most recent energy statistics (2012, IEA and 2013, ECN/PBL); each energy scenario has been
defined by four trend developments: (1) population growth rate and rates of (2) energy consumption, (3) gross
domestic product (GDP) and (4) energy efficiency will affect the gross and final energy demand.
d) For each scenario an outlook at the feasibility of the three goals of the EU energy policy: (a) energy reduction (b)
reduction of greenhouse gas emissions and (c) the share of renewable energy in the total final energy consumption.
In order to be able to assess the trends in detail, a static scenario model has been composed. This allows manual
adjustment in the scenario-results with respect to the relation between grid parity and fuel mix assumptions. For this
essay, the assumptions (see appendix 1) and the outcome of two energy scenarios (in chapter 3 and 4) are reported with
regard to the latest polls on the website of the IN2030 scenarios.
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Capricious Consent Agile Antipole Slow Strife Flowingly Forward
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3. Two energy scenario’s depicted: “Flowingly Forward” and “Slow Strife”
In the world of the Flowingly Forward scenario there is a strong commitment to improve the effectiveness of
international cooperation between regulated governmental bodies and energy companies. One is very capable to solve
cross-border issues, to increase interconnection capacity to allow a growth in energy trade and liquid markets. In the
field of energy and climate management and security, a strong CO2-price regulation has been created: the emission
trade system has been reshaped. In 2020 the CO2 price is on a modest level of EUR 15 ton, but will be quadrupled up
to 60 EUR per ton in 2030. I this scenario decision-making takes time: slow but continuous progress, because so many
interested parties are involved. Technological breakthroughs are steered by the government, for example via subsidies
and focussed on the improvements of production processes.
In the bipolar world of Slow Strife the East and West oppose each other, with tensions between China and the Unites
States. Regionalism has become the norm with measures to protect domestic interests with economic sanctions. The
energy crisis is a fact. Each European country manages its own energy (import) portfolio without paying attention to
synergistically options beyond their borders. The gap between rich and poor – the “haves and haves-not” - is widening.
Interminable discussions will lead to long-term stalemate situations. The differences between the two energy scenarios
appear to be huge, see table 1.
Issues with significant
impact
Flowingly Forward Slow Strife
International cooperation
investments in electricity and gas grids,
with coordination by national
transmission system operators (TSOs)
and the ENTSO-E and –G
Investments in regular energy
infrastructure are stopped; each country
focuses on its own energy interests in
relation to the energy mix
Investment climate
Favourable but huge investment level in
grid / wind / solar / storage facilities
Poor access to capital markets: difficult for
energy companies to get capital for
funding investments
Scarcity of fossil fuels
There is no economical scarcity; energy
resources are traded around the world at
stable prices, which contribute to
predictable investment decisions
Due to unequal geographical distribution
of fossil-based raw materials economical
scarcity becomes critical. Countries who
control energy resources receive market
power; they take full advantage of it
Market price stability Stability and predictability are key Volatility and unpredictability are the rule
Environmental targets
The two degree scenario(2DS) might be
feasible; strong international focus on
climate change due to concerns regarding
the impact of greenhouse gas emissions;
bio-based economy is stimulated
Environmental targets belong to the past;
The environment in 2030 is less important
than economic security. Environmental
costs are not taken into account.
Table 1 Main developments per energy scenario
3.1. Development of gross energy consumption in the Netherlands
Before the assessment of the energy scenario results it makes sense how the Dutch energy system has been developed
until recently. Taking into account the statistics of CBS of 2012, the Dutch gross inland energy consumption gradually
has increased to a level of c. 80 Mtoe p.a, 25% above the level of 1990. This implies a year on year (YoY) growth rate of
c. 0.8%, which is 0.8% below the annual growth rate of 1.6% in electricity consumption. In The Netherlands the gross
energy consumption increased after 2009, but declined sharply after a cold winter in 2010: YoY a decline of -7.5% in
2011. The present Dutch gross energy consumption nears the level of 2008. Compared with the average level of gross
energy consumption in the EU-27, The Netherlands has a relatively high level of energy consumption: the present
energy consumption in the EU-27 nears the level of the nineties (c. 1700 Mtoe p.a). In order to achieve the 20% energy
reduction target in 2020, a notable change is required.
The outcomes of the energy scenarios show a fairly stable development of the gross energy consumption: in the FF-
scenario the level will rise to c. 71.5 Mton p.a in 2030 and in the SS-scenario 82 Mton p.a respectively. However, the
quasi-stability of gross energy consumption in the Netherlands hides strong changes in the fuel mix.
Looking at the developments in the Flowingly Forward scenario, it’s clear that the transition to a renewable energy
system is quite successful. The renewable share in the fuel mix has increased six-fold compared with the present 4%.
After an initial share of 9% (2010) the coal consumption is expected to rise to 13% in 2020 but will decline to c. 7%
(2030). For natural gas a more evenly trend shows up: the share of 47% in 2010 will gradually decrease to 34% in
2030. While consumption of renewable will increase to 13% in 2020 and 23% in 2030: almost six times the present
share of 4%.
9 | P a g e
Figure 5 Flowingly Forward – gross energy demand and fuel mix developments in The Netherlands up to 2030
Looking at the developments in the Slow Strife scenario, it’s clear that the renewable energy transition is hampering
completely. Compared with the consumption levels in 2005, the renewable share in the fuel mix has increased a bit:
from a 5% share in 2020 to 7% in 2030. Coal clearly is the winner with an increased share of 21% in 2020, which then
remains quite stable. Up to 2030 the total fossil fuel mix will not change at all: the shares of oil(31%) and gas (40%
slightly decrease but still play a dominant role.
Figure 6 Slow Strife - gross energy demand and fuel mix developments in The Netherlands up to 2030
3.2. Reflection on the 20-20-20 targets for the North West European countries
Because The Netherlands is lagging behind with respect to the
20-20-20 goals, it makes sense to take a close look at
neighbouring countries whose energy mix shows higher
shares of renewable energy consumption. What can we learn
from our neighbouring countries? In fact, The Netherlands is
a flat country with a relatively high population density. This
implies very limited potential for hydro power and a limited
area for domestic silviculture and biomass production.
With respect to the opportunities to translate the Dutch
energy mix towards 16% renewable share in 2020, ECN
recently has reported the latest insight in accordance with the
policy scenario of ECN/PBL (2010-2020VV 3). It becomes
clear that the TOP-5 of renewable energy generation options
is planned by off shore wind (3%), on shore wind (2%), co-
firing in coal fired power plants (2%), wood furnaces and bio
fuels (together 2%). The TOP-5 takes 9% of the 16% target.
The question is whether this is a cost effective approach.
Figure 7 Renewable energy target split-up in % and PJ per annum (2013, ECN)
3 RR2010-2020VV: “Beleidsvariant met vastgesteld en voorgenomen Schoon en Zuinig beleid”
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Flowingly Forward
Gross Energy Consumption
[Mtoe p.a]
Other Renewable Nucleair Coal Gas Oil
29%
34%
7%
5%
23%
2%
2030 Fuel Mix - Flowingly Forward
(Netherlands)
Oil
Gas
Coal
Nucleair
Renewable
Other
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Slow Strife The Netherlands
Gros energy consumption [Mtoe pa.]
Other Renewable Nucleair Coal Gas Oil
31%
40%
21%
1%
7%
0%
2030 Fuel Mix - Slow Strife
(Netherlands)
Oil
Gas
Coal
Nucleair
Renewable
Other
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
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3.0%
3.5%
-10
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2011 production [PJ]
Additional contribution 16% RES 2020
Contribution 2011 => 2020
10 | P a g e
With regard to the 20% renewable share in energy consumption, Denmark and Germany are examples, to take a closer
look at. Norway is the most developed NW-EU country in the dimensions of renewable (hydro) power and energy.
France, Belgium and the UK demonstrate the average share of renewable energy consumption outlook, compared to
NW-EU, while these countries also are applying significant capacities of nuclear power.
Figure 8 Impact of the Flowingly Forward scenario on the fuel mix of North West (NW) European countries
Denmark is very similar to the Netherlands: relatively
small and flat. But in Denmark the share of renewable
energy in 2011 already was about 21%: while in the
Netherlands only 4% was noted. What can we learn from
Denmark? Especially in case the future outlook is
considered of Denmark in the Flowingly Forward scenario:
the share of renewable in the Danish fuel mix develops
towards circa 40% in 2020, exceeding its target with
10%
an even more impressive outlook is given for 2030:
more than 50% renewable share in the fuel mix.
It already appeared that the stabilisation of the Danish
primary energy supply over more than three decades has
contributed to develop renewable energy supply, despite
different interests in relation to fossil and renewable energy
resources. Although rich in natural resources 4) Denmark
was heavily reliant on the import of fossil fuels until the
1970s. After the oil crisis, the Danish government decided
to develop wind power and combined heat and power. And
after the nuclear disaster in Chernobyl (1986), the option of
future nuclear power generation became politically
unfeasible 5).
Figure 9 Denmark in the Flowingly Forward scenario
To satisfy the energy demand, the Danish Government started subsidy programmes for research and development on
(i) biomass, (ii) combined heat and power, (iii) photovoltaic and wind turbines. The Danish wind power policy package
was quite successful, and can be summarised by a number of measures:
a. Financial and technical support by the government: via test facilities of wind turbines (1978 at Riso National
Laboratory) and by means of grants to support investments for building and exporting wind turbines;
b. Setting clear objectives for wind farm capacity extension: 1,000 MW of wind power by the year 2000 and in the
Danish Government’s Action Plan for Energy3 (published in 1999), the target was defined to realize 5,500 MW of
electricity supply from wind turbines by 2030;
c. The introduction of a feed-in tariff with ensured connection to the grid; the government mandated the utility sector
to purchase wind energy at a preferential price. To the power generators a fixed price of 70–85% of the local retail
price of electricity was guaranteed (excluding taxes).
d. Introduction of a carbon tax (2009, NREL): since 1992, households were charged with USD7.50. Firms had been
charged with USD 14.30 per ton of CO2 since 1993. However, tax rate was decreased by approximately 50% in
2005.
4
The degree of self-sufficiency rose from 5% in 1980 to 145% in 2002. Denmark is the third-largest oil producer in Western Europe. Denmark is
dependent on domestic oil and natural gas for its primary energy supply.
5
Denmark still does not have any nuclear power plant(s).
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Flowingly Forward
Fuel Mix NW EU 2020
Renewables Water / Others Nuclear
Coal Gas Oil
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Flowingly Forward
Fuel Mix NW EU 2030
Renewables Water / Others Nuclear
Coal Gas Oil
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1990
1995
2000
2005
2010
2015
2020
2025
2030
Denmark - Flowingly Forward
Gross Inland Consumption
[MToe p.a]
Renewable Energy Water
Nuclear Coal
Gas Oil
11 | P a g e
With regard to the lessons learned a combined
programme of subsidies on renewable investments, clear
targets for the energy transition, a feed-in tariff system,
focus on additional combined heat and power (CHP) and
a carbon tax can be identified as proven catalysts
(Denmark) in the scenario to more renewable energy.
With regard to Germany, to some extend the same trends
as in Denmark can be identified:
the recent decisions for a nuclear phase out, aiming at
complete shutdown of all nuclear power plants in 2021;
in the Flowingly Forward scenario for Germany (figure
10), the consequences are depicted of plant shut down in
2011, 2016 and 2021, (leaving some remaining nuclear
capacity in the fuel mix thereafter);
the strong development of wind and solar: up to
approximately 38% in installed power generation
capacity: 50 GW in 2012, while the fossil and nuclear
capacity is roughly 85 GW;
governmental support to the manufacturing industry,
dealing with innovations and developments in
equipment for renewable energy production.
Figure 10 Germany in the Flowingly Forward scenario
3.3. The impact of 1% additional energy savings on CO2 emissions
In case of a year on year (YoY) additional energy reduction percentage of 1%, the targets of (i) energy reduction (20%
less than the consumption in 2005) will be stimulated and (ii) the green house gas (GHG) emissions will be reduced,
(the renewable energy target is not actively influenced by additional energy reduction). If energy reduction is achieved
solely limited to the share of fossil fuel consumption, while the renewable energy consumption would remain the same,
then that would give a better figure in the score on renewable energy. That’s not assessed in detail. What is the impact
of 1% YoY energy reduction – for both fossil and renewable consumption - on the scores reported in figure 11 a and 11b?
Figure 11 a Slow Strife (reduction is “-“) Figure 11 b Flowingly Forward (reduction is “-“)
In the Dutch Slow Strife scenario, 1% YoY additional energy reduction would result into
-9% additional energy reduction in 2020 (the final score would be 3% - 9% => -6% energy reduction)
and -18% additional reduction in 2030: then the final score ends up with 4% - 18% => -14%
Energy reduction of 1% YoY will reduce the GHG emissions to the same significant extent:
-9% additional CO2 emission reduction in 2020; the final score would be 2% - 9% => -7% while -20% is the target
and -18% additional reduction in 2030: then the final GHG score ends up with -6% - 18% => -24%
In case the 20% energy reduction target (reduction compared with 2005) should be achieved by 2020, at least 2.8%
YoY energy saving measures are required, in the Slow Strife scenario. And in that case also the GHG emission
reduction would be 20% lower than in 1990. In this scenario the share of renewable energy in the final energy
consumption would remain 5% in 2020 and only 7% in 2030, without any additional provisions.
The 2.8% additional YoY energy reduction package would have a drastic impact on the domestic gross energy
consumption: that would be reduced to 63 Mton oil equivalents in 2020: even lower than in 1990.
0
50
100
150
200
250
300
350
400
1990
1995
2000
2005
2010
2015
2020
2025
2030
Germany - Flowingly Forward
Gross Inland Consumption [MToe p.a]
Renewable Energy Water
Nuclear Coal
Gas Oil
3%
10%
3% 4%
-11% -11%
2%
-6%
14%
19%
5%
7%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
EU 2020 EU2030 NL 2020 NL 2030
Slow Strife 20-20-20 results
20% Energy reduction
20% Reduction GHG emission
20% Renewable Energy
-3% -4% -3% -10%
-30%
-49%
-15%
-38%
23%
37%
13%
25%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
EU 2020 EU2030 NL 2020 NL 2030
Flowingly Forward 20-20-20 results
20% Energy reduction
20% Reduction GHG emission
20% Renewable Energy
12 | P a g e
In figure 12 the impact of 1% additional energy reduction is presented for the two energy scenarios. It’s clear that 1% is
not sufficient in the slow strife scenario to achieve the 20% reduction target of GHG emissions (compared with the
1990 emission level). In the Flowingly Forward scenario the additional 1% energy reduction is required to achieve the
target of 20% GHG emission reduction(compared with 1990) in 2020.
Figure 12 Greenhouse gas (GHG) emissions in Mton CO2 equivalents per annum for The Netherlands
The most cost effective manners to achieve additional energy reductions are related to system integration, combined
heat and power generation and reuse of waste heat. The investment level, which is estimated to be required in the
Flowingly Forward scenario amounts EUR 35 billion for all options mentioned in figure 7: in order to realize the 16%
renewable energy target in 2020. In case this figure will be related to the volume of emission reduction in 2020 (Slow
Strife) as a result of 2.8% YoY additional energy savings, then:
49 Mton CO2 eq. p.a will be avoided and GHG emissions arrive at circa 172 Mton p.a: 20% below the level of 1990;
Specific investments of EUR 800 per ton avoided CO2 will be avoided, by not investing in options of renewable
energy generation. Corrected for 12% annuity, the average marginal abatement costs would be approximately EUR
95 per ton CO2. That’s still a significant level with respect to the marginal abatement costs (MACs) for the last
tonne of CO2 emissions (eliminated via abatement measures). MACs are often used as a trigger for which carbon
price is needed for abatement, by making the costs of CO2-emitting higher than those of avoidance. According to
the Energy Technology Perspectives of the IEA, MAC values of USD 30 – 50 per ton CO2 are indicated for the
period until 2020 and USD 80 – 100 by the time of 2030. Therefore it seems that the investment package to
achieve the 2020 targets indicated by figure 7 seems to be very ambitious, and beyond the accepted MAC values
until 2020.
So answering the question (page 7, paragraph 3.2 in connection with figure 7), whether the investments in renewable
energy options would be cost effective: yes but in the sequence of the cheapest to the more expensive options, starting
with co-firing biomass, on shore wind and then off shore wind. In a future scenario in which cross border grid
development will continue (according to Flowingly Forward) large investments in renewable energy generation makes
sense . Otherwise modest investments should be taken for granted (fitting in the national grid boundaries). At the same
time energy efficiency measures should be given full support – in case the marginal abatement costs are lower than
renewable options; in the Danish situation this has been clearly demonstrated.
4. The Dutch electricity mix and grid capacity in perspective of the energy scenario’s
4.1. The role of gas in the electricity mix
In both scenarios natural gas will play a key role. In the Flowingly Forward scenario we have seen a decrease of gas in
the fuel mix share over time: from 47% (2010) => 39% (2020) => 34% (2030). In this scenario the price of natural gas
remains on a modest level. In the Slow Strife scenario we have noticed a fairly stable share of 47% => 42% => 40% over
the period 2010 – 2020 - 2030.
According to Gas Transport Services (2012, GTS) the gas production in The Netherlands, Germany, the United
Kingdom and Denmark will decrease with a downward trend of -3.6% (YoY0 from 160 billion cubic metre (bcm) in
2012 to 40 bcm in 2030. At the same time the import via pipelines and Liquefied Natural Gas (LNG) will be doubled:
150 (2012) => 300 bcm (2030), representing an upward trend of +4.8% YoY.
The role of natural gas – with emphasis on imported gas – gains importance in the Dutch fuel mix. Whereas the
Netherlands will not be able to continue gas exports in the decade after 2020, all NW-EU countries will become even
more dependent on gas import from Norway and Russia (pipelines) and LNG (world market).
0
50
100
150
200
250
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
GHG emissions in The Netherlands
[Mton p.a]
Slow Strife - SS Flowingly Forward - FF CO2 Mton eq. target
1% energy reduction - SS 1% energy reduction - FF
13 | P a g e
Figure 13a Flowingly Forward electricity production Figure 13b Slow Strife electricity production
It is assumed that in the FF-scenario the power consumption growths with 1% YoY and in the SS-scenario growth is
absent (0% YoY). At the same time it’s assumed that the efficiency of power generation will gradually increase from an
average of 43% (2012, CBS) to 57% in the FF-scenario: due to closure of old gas and coal fired power plants. In case of
the SS-scenario the electrical efficiency will develop to circa 50% (coal remains in the mix, but due to new power
capacity, the trend still increases. Consequently, the fuel input for fossil fuelled power plants is higher in the SS-
scenario compared with the FF-scenario. This is visible in the figures 14a and 14b.
4.2. The carbon footprint of electricity generation
Figure 14a Flowingly Forward and primary energy demand Figure 14a Slow Strife and primary energy demand
The carbon footprint of electricity generation mainly depends on the share of renewable energy in the total electricity
mix, the trend of electrical efficiency in gas and coal fired power plants and how gas and coal are developing in the
electricity mix. It’s quite striking that the carbon footprint of electricity produced in the Slow Strife scenario is almost
twice as high as in the Flowingly Forward scenario. Two main causes are due:
The share of renewable electricity amounts 44% in the FF scenario and only 17% in the SS scenario
Coal and gas are represented with 8 and 35% respectively in the FF scenario but with 29 and 44% in the SS
scenario.
The Flowingly forward scenario has a very clean electricity carbon footprint with less than 300 gram per kWhe; this is
because the fossil share in the electricity mix is exceeded by the renewable share!
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
140
160
1990
1995
2000
2005
2010
2015
2020
2025
2030
Dutch electricity mix in power
production
Flowingly Forward [TWhe p.a]
Other
Renewable
Nuclear
Gas
Oil
Coal
Trend Gas and Coal Power Efficiency (right axis)
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
140
1990
1995
2000
2005
2010
2015
2020
2025
2030
Dutch electricity mix in power
production
Slow Strife [TWhe p.a]
Other
Renewable
Nuclear
Gas
Oil
Coal
Trend Gas and Coal Power Efficiency (right axis)
0
100
200
300
400
500
600
700
800
900
0
5
10
15
20
25
30
1990
1995
2000
2005
2010
2015
2020
2025
2030
Primary energy for
Dutch electricity mix
Flowingly Forward [MToe p.a]
Other
Renewable
Nuclear
Gas
Oil
Coal
CO2 emissions gas & coal [gram p.kWh right axis]
0
100
200
300
400
500
600
700
800
900
0
5
10
15
20
25
30
1990
1995
2000
2005
2010
2015
2020
2025
2030
Primary energy for
Dutch electricity mix
Slow Strife [MToe p.a]
Other
Renewable
Nuclear
Gas
Oil
Coal
CO2 emissions gas & coal [gram p.kWh right axis]
14 | P a g e
4.3. The impact of CO2 price scenario’s on the Levelized Cost of Electricity
Figure 15 Marginal costs of operations of fossil fuelled and renewable electricity generation in 2030
In 2030 the CO2 price will arrive at EUR 60 per ton of CO2. On a marginal cost operation basis (in which only
operational costs are counting in the decision to start or shut down the facility), modern gas fired capacity like open
cycles with only gas turbines (OCGT) and combined cycles with gas- and steam turbines (CCGT) are able to operate in
peak and base load. Existing coal fired power plants – without provisions of carbon capture storage and / or co-firing of
biomass are not able to operate profitable.
It’s clear that renewable power from wind is quite attractive (on marginal cost basis); which is applicable too for
nuclear power and the new clean fossil fuelled options. In case the levelized cost of electricity is assessed, the same
conclusions count, if the market price of power has developed to at least EUR 100 per MWh in base load, see figure 16.
Figure 16 Levelized cost of electricity and the assumed required market price of EUR 100 per MWhe
We see in figure 16 grid parity for offshore wind and nuclear power stations. That’s the reason why in the FF scenario
new nuclear power can be allowed (in case of no resistance in the community, 2 more nuclear power stations can be
realized before 2030). Existing coal fired power plants are too expensive and are phased out somewhere between 2020
and 2030, only the really clean coal options remain viable. In case the present fuel tax (EUR 14 per ton coal) would be
abolished, the conclusions will not change.
In case the Slow Strife scenario would be depicted, the conclusions are: coal is more viable than gas, due to the absence
of CO2 taxes; and only onshore wind achieves grid parity. Offshore wind remains dependent on subsidies. Nuclear
power is far too expensive to be developed. In the Flowingly Forward scenario, EUR 60 per ton CO2 is very effective
and contributes to keep gas more attractive than coal in the fuel mix. This level cannot be decreased, without losing its
impact. In the Slow Strife scenario, a carbon price or tax system can contribute to deviate towards renewable options.
0
20
40
60
80
100
120
140
MarginalCosts (Eur p.kWhe) of Power Generation 2030
FlowinglyForward
Fuel Tax
CO2
Staffing
Insurance
O&M
Fuel
Power (base load) (€/Mwhe)
Power (peak load) (€/Mwhe)
0
20
40
60
80
100
120
140
LCOE (WACC 7.5%) of Power Generation 2030
FlowinglyForward (Eur p.kWhe)
Fuel Tax
CO2
Staffing
Insurance
O&M
Fuel
Cap. Cost
Power (base load) (€/Mwhe)
Power (peak load) (€/Mwhe)
15 | P a g e
5. Conclusions and recommendations
5.1 Conclusions
1. The Dutch energy mix will evolve towards an increased share of renewable energy consumption. It seems
plausible that the share of renewable energy consumption in the Dutch fuel mix will be 5 – 13% in 2020,
dependent on the future macro economic outlook. In case the economy is turning to an optimal scenario like
Flowingly Forward, the 20-20-20 targets are neared or even exceeded. But in case the present economic
downturn will continue, the energy transition will be tailored to those investments which require the lowest
investment levels and most favourable pay-back periods.
2. Norway, Denmark and Germany are the frontrunners in North West Europe. The country that is quite similar
to The Netherlands is Denmark: with respect to fuel independency and geography / demography. Denmark
already has demonstrated an energy transition which develops even beyond the 20-20-20 targets.
3. 1% additional energy reduction per annum would contribute to 9% total energy and emission reduction in
2020. In case the 20% energy reduction target (compared with 2005) should be achieved, solely by energy
reduction, then it depend on how our economy will develop. In the scenario of Flowingly Forward 1 – 1.5%
additional energy reduction will be enough. But in case a Slow Strife scenario will be the case, 2.8% is
necessary to meet the targets.
4. The present energy landscape of the Netherlands shows similarities with the Slow Strife scenario. The
Netherlands is far behind the 20-20-20 targets. In order to comply with the 16% renewable energy target,
investments of circa EUR 35 billion are required. It makes sense to consider the cost-effectiveness of energy
reduction measures, because the accepted level of marginal abatement costs (MACs) are in favour of co-firing
biomass, onshore wind and energy reduction via combined heat and power / energy efficiency measures. After
these options, off shore wind and geothermal applications become in the picture (in the sequence of low to
higher MACs).
5. The Netherlands has the most fossil fuelled energy mix of all North West European countries, and this
situation will most probably remain in the next two decades. The role of natural gas (from domestic resources)
is significant and needs to play an important role in the energy transition.
6. An effective carbon price is needed to keep gas in the fuel mix (of electricity generation): a level of EUR 20 –
30 per ton in 2020 and EUR 60 per ton in 2030 fits in the Flowingly Forward scenario, and shows a viable
outlook for renewable, nuclear and gas fired power generation options.
5.2 Recommendations
1. The coming national energy report (SER) should have a close look to the lessons learned from the Danish and
German energy policy. An approach of clear targets, sustainable investment climate and effective feed-in tariff
structures combined with a modest carbon tax policy is recommended to be implemented.
2. The role of solar PV should not be under estimated. People without having access to the buy market of solar
panels, should be supported somehow. Otherwise the “have not’s “ are financing the “haves”: people who are
able to buy solar panels benefit from the tax system, which is supported by all people (haves and have-not’s).
3. In the energy scenarios the role of solar PV has not been assessed in detail, because the viability depends on
retail price levels (including tax and energy transport costs) instead of whole sale prices. In the following
release solar PV will be assessed too, it might cause game changing impacts in the combination with smart
grid developments, demand response and energy storage.
16 | P a g e
Literature
2013, February 12th, AgentschapNL, SDE+ 2013, “zo vraagt u subsidie aan voor de productie van duurzame energie”.
2013, ECN/PBL, Referentieraming Energie & Emissies in de jaren 2012, 2020 en 2030.
2013, ECN, 16% Hernieuwbare energie in 2020 – Wanneer aanbesteden? (rapport ECN-E—13-006).
2013, BP, British Petroleum, Energy Outlook 2030.
2012, October 29th, Regeerakkoord VVD – PvdA, “Bruggen slaan”.
2012, International Energy Agency (IEA), Energy Transition Pathways – ETPs.
2012, November 12th, International Energy Agency (IEA), World Energy Outlook 2012.
2012, CBS, Centraal Bureau voor de Statistiek. Energie balans, Kerncijfers.
2012, GTS, Rapportage voorzieningszekerheid Gas.
2011, November 28th, ECN, Renewable Energy Projections as Published in the National Renewable Energy Action
Plans of the European Member States.
2011, Rabobank, Stegeman, H., IN2030 Vier vergezichten (Rabobank Kennis en Economisch Onderzoek (KEO)).
2011, June 23th, TenneT, Aansluit beleid en congestiemanagement, visie 2030.
2010, October, Elsevier, The implementation of renewable energy systems. Lessons learned from the Danish case.
2009, December, NREL (National Renewable Energy Laboratory), Carbon Taxes: A Review of Experience and Policy
Design Considerations.
2009, October, 16th, Elsevier, Energy Economics, “THE EU 20/20/2020 targets: An overview of the EMF22
assessment”.
2009, April 23th, Directive 2009/28/EC of the European Parliament and of the council, on
on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives
2001/77/EC and 2003/30/EC.
17 | P a g e
Appendix 1 Assumptions for the four energy scenarios IN2030
Capricious
Consent
Agile Antipoles Slow Strife Flowingly
Forward
GDP World [%] 4.5 2 2.5 3.5
GDP US [%] 3.5 0.5 1.5 2.5
GDP China [%] 7.5 5 5.5 6.5
GDP EU [%] 2.2 0.7 1.3 1.5
GDP NL [%] 2.00 0.43 1.08 1.59
CPI NL [%] 1.48 7.09 5.44 1.93
Oil Price (USD p. Barrel) 155 300 350 125
Oil Price index (YoY) 2010 – 2030
(same for natural gas and coal)
1.8 % 5.4 % 6.2 % 0.6 %
Exchange rate (USD – Euro) 1.67 2 1.45 1.78
Long term interest rate Eurozone 3.5 % 5.5 % 5.5 % 4 %
Demographics
World 8.8 bn 7.8 bn 8 bn 8.3 bn
NL 18.6m 16.9m 17.2m 17.7m
Energy consumption YoY – World 2.08% 0.82% 1.42% 0.67%
Energy demand YoY – EU 1.60% 0.10% 0.90% 0.20%
Energy demand YoY – NL 1.00% -0.56% 0.33% -0.42%
Table A.1 trends for IN2030 scenarios of the Rabobank
For the breakdown of annual change of energy demand, in the figures A.1 and A.2 four trends are detailed: (i)
Population growth (ii) energy consumption p.p. (iii) GDP and (iv) energy efficieny p.p.
In the Flowingly Forward scenario the
assumptions of the World Energy Outlook 2012
(New Policy Scenario) are related to the EU. The
same counts for the assumptions of the
“Referentieraming” 2013, ECN/PBL: their
RR2010-2020VV scenario is connected to the
Flowingly Forward scenario of the Netherlands.
In the flowingly forward scenario the YoY
change in energy demand amounts c.:
0,67% on global level
0.20% for the EU-27
-0.42% in the Netherlands
Figure A.1 Assumptions for Flowingly Forward (trends in %)
In the slow strife scenario the YoY change in
energy demand amounts c.:
1.42% on global level
0.90% for the EU-27
0.33% in the Netherlands
Figure A.2 Assumptions for Slow Strife (trends in %)
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Population
Growth
Energy
consumption
GDP Energy efficiency Change energy
demand
World EU-27 The Netherlands
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Population
Growth
Energy
consumption
GDP Energy efficiency Change energy
demand
World EU-27 The Netherlands
18 | P a g e
Appendix 2 Methodology for the four energy scenarios IN2030
The energy scenarios are connected to the economic scenarios of Rabobanks IN2030 publication. The way this is done
is described in accordance with the following approach:
1. determine primary energy consumption trends in the past
2. determine drivers for energy consumption and energy mix
3. assumptions primary energy consumption 2012 – 2030, see also appendix 1 for the four trends of growth:
3.1. population growth
3.2. energy consumption p.p.
3.3. GDP and
3.4. energy efficieny p.p
4. Fuel mix changes by
4.1. the energy price trends (oil/coal/gas/..)
4.2. the calculation of Levelized Costs of Electricity (LCoE) 2012 – 2030 as function of cost of capital (CAPEX)
and operational expenditures (OPEX), and in which the fuel price component depends on the trends
mentioned under (4.1); and
4.3. check on grid parity: this gives an indication of the timing when grid parity (or socket parity) occurs and thus
when fuel (or electricity-) mixes will or can change: it happens when an alternative energy sources can
generate electricity at a levelized cost (LCoE) that is less than or equal to the price of purchasing power from
the electricity grid: per scenario: game changers of the future!
4.4. The use of the Rabobank IN2030 (www.IN2030.nl) model, for calculation of the fuel mix changes and
predicted energy consumption volumes by 2020 and 2030.
4.5. An iteration for the role of taxes and CO2 prices was done and finally
5. The check on the results of energy consumption, fuel mixes (in which the trend in the electricity mix is assumed to
be similar to the trend in the fuel mix, except for non-electricity related energy carriers like oil: which has it’s own
trend assumptions, connected to for example transport.
Step 1 to 5 are visualised in figure A.3 and Step 4 (breakdown) is visualised in figure A.4.
Figure A.3 Approach for energy scenarios IN2030
Figure A.4 Approach for energy scenarios with respect to the fuel mix changes – related to electricity generation
The methodology applied in this essay - for energy scenarios – is based on cost management (LCoEs for example);
market dynamics as influences from changing spark-/dark spreads and marginal cost considerations are not taken into
account in the energy model. Should this have been done, then a dynamic energy model might be required, including a
number of market assumptions as well. In Figure A.5 the results are presented of grid parity in accordance of the two
assessed scenarios. This gives an indication at which moment a certain type of electricity generation becomes viable.
19 | P a g e
Figure A.5 Grid parity for a number of electricity generation options in two energy scenarios
Appendix 3 The IN2030 website www.IN2030.nl (status 2013, May 17th)
0
20
40
60
80
100
120
140
160
180
200
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
LCoE[EURp.MWhe]
Slow Strife
Coal CCGT
Nuclear Onshore Wind
Offshore Wind CSP (SOLAR)
0
20
40
60
80
100
120
140
160
180
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
LCoE[EURp.MWhe]
FlowinglyForward
Coal CCGT
Nuclear Onshore Wind
Offshore Wind CSP (SOLAR)

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2013-05-17 Final Draft Essay RdV

  • 1. 1 | P a g e The energy landscape of the Netherlands IN2030 Energy scenarios and the impact in North West Europe Name : Ronald de Vries Address : Croeselaan 28 3521 CB Utrecht Company : Rabobank International Industrial Knowledge Team (IKT) Phone : +31 (0) 30 712 31 70 (mobile: +31 (0) 6 2040 6193) e-mail : ronald.de.vries@rabobank.com Course : International Mini MBA Energy Transition and Innovation 18 – 21 March 2013 and 24 – 25 May 2013
  • 2. 2 | P a g e Summary The aim of this essay is directed to assess the outlook of the Dutch energy system up to 2030. Various questions have been raised in the framework of this essay, such as: How will the energy mix look like by 2030 and which types of scenarios can be considered? What will happen with trends like energy consumption and savings? Will The Netherlands achieve its energy transition goals in time? And what about the neighbouring countries, their progress and lessons learned for The Netherlands? In case targets cannot be met in time, which recommendations can be considered? And moreover, to which extend will additional energy efficiency measures be effective and beneficial? Questions which can be answered with the energy scenarios, developed on top of the IN2030 scenario’s of the Rabobank. These energy scenarios recently have been developed, and will be published separately by Rabobank International (IKT). Meanwhile, some of the results are already summarised in this essay, representing a view of the author. The IN2030 economic scenarios have been published in 2011. Via a website www.IN2030.nl the desirability and credibility of the economic scenarios of Rabobank have been acquired among participants who gave their votes to a poll. The results until recently are used for the assessment of two energy scenarios: Flowingly Forward (FF): this scenario has received the highest score with 62% of the votes in a poll on the question which scenario should be preferred above all other scenarios as the most desirable option for the future community; Slow Strife (SS) – Trage Twist: which has received the highest poll score as the most representative option for the present situation, but the least desired option. The results of the energy scenarios Flowingly Forward and Slow Strife have been reported in brief in this essay. How will the Dutch gross energy consumption develop? The outcomes of the energy scenarios show a fairly stable development of the gross energy consumption: in the FF- scenario the level will rise to c. 71.5 Mton p.a in 2030 and in the SS-scenario 82 Mton p.a respectively. However, the quasi-stability of gross energy consumption in the Netherlands hides strong changes in the fuel mix. Looking at the developments in the Flowingly Forward scenario, it’s clear that the transition to a renewable energy system is quite successful. The renewable share in the fuel mix has increased six-fold compared with the present 4%. After an initial share of 9% (2010) the coal consumption is expected to rise to 13% in 2020 but will decline to c. 7% (2030). For natural gas a more evenly trend shows up: the share of 47% in 2010 will gradually decrease to 34% in 2030. While consumption of renewable will increase to 13% in 2020 and 23% in 2030: almost six times the present share of 4%. See for the details and trends, figure S.1., including a comparison with the Slow Strife outlook. Figure S.1 Flowingly Forward versus Slow Strife: gross energy demand in The Netherlands up to 2030 Looking at the developments in the Slow Strife scenario, it’s clear that the renewable energy transition is hampering completely. Compared with the consumption levels in 2005, the renewable share in the fuel mix has increased a bit: from a 5% share in 2020 to 7% in 2030. Coal clearly is the winner with an increased share of 21% in 2020, which then remains quite stable. Up to 2030 the total fossil fuel mix will not change at all: the shares of oil(31%) and gas (40% slightly decrease but still play a dominant role. Which changes in the energy mix can be expected? The Dutch energy mix will evolve towards an increased share of renewable energy consumption. It seems plausible that the share of renewable energy consumption in the Dutch fuel mix will be 5 – 13% in 2020, dependent on the future 0 10 20 30 40 50 60 70 80 90 1990 1995 2000 2005 2010 2015 2020 2025 2030 Flowingly Forward Gross Energy Consumption [Mtoe p.a] Other Renewable Nucleair Coal Gas Oil 0 10 20 30 40 50 60 70 80 90 1990 1995 2000 2005 2010 2015 2020 2025 2030 Slow Strife The Netherlands Gros energy consumption [Mtoe pa.] Other Renewable Nucleair Coal Gas Oil
  • 3. 3 | P a g e macro economic outlook. In case the economy is turning to an optimal scenario like Flowingly Forward, the 20-20-20 targets are neared or even exceeded. But in case the present economic downturn will continue, the energy transition will be tailored to those investments which require the lowest investment levels and most favourable pay-back periods. See for a comparison between the two scenarios, figure S.2: giving an insight in the fuel mixes at the time of 2030.. Figure S.2 Flowingly Forward versus Slow Strife: fuel mix of gross energy demand in The Netherlands (2030) Which countries are front runners in the energy transition and why? Norway, Denmark and Germany are the frontrunners in North West Europe. The country that is quite similar to The Netherlands is Denmark: with respect to fuel independency and geography / demography. Denmark already has demonstrated an energy transition which develops even beyond the 20-20-20 targets. Which impact can be expected from every percentage of additional energy savings? 1% additional energy reduction per annum would contribute to 9% total energy and emission reduction in 2020. In case the 20% energy reduction target (compared with 2005) should be achieved, solely by energy reduction, then it depend on how our economy will develop. In the scenario of Flowingly Forward 1 – 1.5% additional energy reduction will be enough. But in case a Slow Strife scenario will be the case, 2.8% is necessary to meet the targets. The present energy landscape of the Netherlands shows similarities with the Slow Strife scenario. The Netherlands is far behind the 20-20-20 targets. In order to comply with the 16% renewable energy target, investments of circa EUR 35 billion are required. It makes sense to consider the cost-effectiveness of energy reduction measures, because the accepted level of marginal abatement costs (MACs) are in favour of co-firing biomass, onshore wind and energy reduction via combined heat and power / energy efficiency measures. After these options, off shore wind and geothermal applications become in the picture (in the sequence of low to higher MACs). The answer to the question, whether the investments in renewable energy options would be cost effective: yes but in the sequence of the cheapest to the more expensive options, starting with co-firing biomass, on shore wind and then off shore wind. In a future scenario in which cross border grid development will continue (according to Flowingly Forward) large investments in renewable energy generation makes sense . Otherwise modest investments should be taken for granted (fitting in the national grid boundaries). At the same time energy efficiency measures should be given full support – in case the marginal abatement costs are lower than renewable options; in the Danish situation this has been clearly demonstrated. Will natural gas keep its role as the transition fuel in both scenarios? The Netherlands has the most fossil fuelled energy mix of all North West European countries, and this situation will most probably remain in the next two decades. The role of natural gas (from domestic resources) is significant and needs to play an important role in the energy transition. An effective carbon price is needed to keep gas in the fuel mix (of electricity generation): a level of EUR 20 – 30 per ton in 2020 and EUR 60 per ton in 2030 fits in the Flowingly Forward scenario, and shows a viable outlook for renewable, nuclear and gas fired power generation options. Brief Acknowledgement The author would like to express his appreciation to the people of the Energy Delta Institute (EDI) who organised the Mini MBA - Energy Transition and Innovation at Nyenrode Business University. Especially Eline de Wagt who looked after all kind of organisational aspects around this course and Bert Stuij (vice president innovation at EDI) and Rene Snijder (fellow at EDI) whose encouraging and inspiring guidance helped me to add the finishing touch / finalise the underlying essay. 29% 34% 7% 5% 23% 2% 2030 Fuel Mix - Flowingly Forward (Netherlands) Oil Gas Coal Nucleair Renewable Other 31% 40% 21% 1% 7% 0% 2030 Fuel Mix - Slow Strife (Netherlands) Oil Gas Coal Nucleair Renewable Other
  • 4. 4 | P a g e Summary 3 1. Introduction 5 2. Methodology and assumptions for energy scenario’s towards 2030 6 3. Two energy scenario’s depicted: “Flowingly Forward” and “Slow Strife” 8 3.1. Development of gross energy consumption in the Netherlands 8 3.2. Reflection on the 20-20-20 targets for North West European countries 9 3.3. Impact of 1% additional energy savings on CO2 emissions 11 4. The Dutch electricity mix and grid capacity in perspective of the energy scenario’s 12 4.1. The role of gas in the electricity mix 12 4.2. The carbon footprint of electricity generation 13 4.3. The impact of CO2 price scenario’s on the Levelized Cost of Electricity 14 5. Conclusions and recommendations 15 Literature 16 Appendix 1 Assumptions for the four energy scenarios IN2030 17 2 Methodology for the four energy scenarios IN2030 18 3 The IN2030 website www.IN2030.nl (status 2013, May 17th) 19
  • 5. 5 | P a g e 1. Introduction The economic downturn has a significant impact on the Dutch energy system. Energy consumption levels are decreasing and the transition towards more renewable energy supply and consumption is behind track. The Netherlands is dealing with the challenge to realize the 2020-targets for the energy transition: (1) 20% energy reduction compared to 2005 (2) 20% reduction of greenhouse gas (GHG-) emissions compared to 1990 and (3) a share of 16% renewable energy in the total final energy consumption. With regard to the present situation our domestic gross energy consumption is c. 2% lower than in 2005: c. 77.5 Mton oil equivalent per annum in 2011, while this was 79.2 MTon in 2005 (2012, CBS). With respect to the GHG emissions, 195 Mton CO2 equivalents have been reported in 2011: 8% below the level of 212 Mton per annum in 1990. The share of renewable energy consumption in the final energy consumption is approximately 4% and has to be quadrupled in years up to 2020. The renewable energy targets – status and perspective The Dutch government adopted the 16% renewable energy target to be realized by 2020 in the latest “regeerakkoord” (2012). This commitment is related to the acceptance and implementation of the European Renewable Energy Directive 2009/28/EC into Dutch legislation 1). According to article 4 of this “Climate and Energy Package” Directive each European Member State provides a National Renewable Energy Action Plan (2011, ECN, NREAP) to the European Commission, detailing projections for renewable energy development up to the year 2020. By that year, the cumulative consumption of renewable energy in all European Member States should result in an average share of renewable energy of 20% across the EU (figure 1). Figure 1 Status of % renewable energy in final consumption (2012, Eurostat) Where are we going to? In the coming years the Dutch government should give full priority to stimulate the development of more renewable energy supply in order to realize the 2020 targets, with provisions like: An optimised mix of subsidies for renewable energy applications (2013, Agentschap NL, SDE+) Prioritization of energy savings by means of Green Deals with energy production/consumption sectors Regional / small scale fiscal stimulation of solar energy Extension of electricity and gas grid infrastructure In the European Union (EU) the implications of security of supply 2) differ per country. For example, in the Netherlands the domestic production of natural gas is expected to decrease in 2020-2030, while our fuel mix belongs to the most fossil mixes of all EU-countries. This may put tension on the provisions to protect national interests of affordable access to alternative energy sources. For the EU and the Netherlands, the period to realize energy independency, by reduction of energy import is estimated to take decades. Therefore, the next 20 years will be crucial to develop the corner stones for a future sustainable energy system. Global competition around energy resources is expected to increase: the Non-OECD-energy demand is clearly on the rise, creating additional competition in the global energy trade balance in which Europe remains dependent on imports of fossils, see figure 2. Figure 2 Energy trade balances 1990 – 2030 (million ton per annum), 2013, BP Energy Outlook 2030 1 The European Union is committed to limiting the rise in global average temperature to 2 °C above pre-industrial levels: the 2 °C scenario (2DS) It has set ambitious targets for greenhouse gas emissions reduction; Greenhouse gas emissions should be reduced to 20% below their 1990 levels by 2020. About half of these emissions – essentially all energy-intensive industries are to be regulated under the European Trading Scheme (ETS). 2009,October 16th, Elsevier, Energy Economics 2 Adequate and sustainable levels of supply in the chosen energy mix that can meet growing demand and protect national interests 0 10 20 30 40 50 60 70 80 EU-27 Sweden Latvia Finland Austria Portugal Estonia Romania Denmark Slovenia Lithuania Bulgaria Spain France Germany Italy Slovakia Poland CzechRepublic Greece Hungary Ireland Belgium Cyprus Netherlands UnitedKingdom Luxembourg Malta Norway Croatia 2010 2020 -1000 -800 -600 -400 -200 0 200 400 600 800 1990 2010 2030 1990 2010 2030 1990 2010 2030 1990 2010 2030 1990 2010 2030 1990 2010 2030 1990 2010 2030 Gas Oil Coal China Saudi Arabia Russia EU Africa USA World Balance
  • 6. 6 | P a g e The aim of this essay is directed to assess the outlook of the Dutch energy system up to 2030. How will the energy mix look like? What will happen with trends like energy consumption and savings? Will The Netherlands achieve its energy transition goals in time? In case targets cannot be met in time, which recommendations can be considered? And moreover, to which extend will additional energy efficiency measures be effective and beneficial? Questions which can be answered with the scenario tools, developed on top of the IN2030 scenario’s of the Rabobank. Chapter 2 of this essay describes the methodology and assumptions, which have been applied for the calculations of the energy scenarios towards 2030. In short, the methodology for this assessment is based on an existing scenario analysis of the Rabobank’s “IN2030 – Vier Vergezichten”, published in 2011 (www.in2030.nl). On top of the Rabobank scenario approach the energy scenarios have been related to the most recent trends and insights of: the World Energy Outlook 2012 (IEA, 2012) ECN/PBL (2013, “Referentieraming Energie & Emissies in de jaren 2012, 2020 en 2030”) the Energy Transition Pathways - ETPs (IEA, 2012). This essay is focussed on two energy scenario’s, which have been finalised in April 2013 and therefore proposed to be summarised for the Mini MBA Energy Transition and Innovation: Flowingly Forward (FF)– Vloeiend Vooruit: this scenario has received the highest score with 62% of the votes in a poll on the question which scenario should be preferred above all other scenarios as the most desirable option for the future community; Slow Strife (SS) – Trage Twist: which has received the highest poll score as the most representative option for the present situation. The reason why these two scenarios have been chosen are related to the outcome (April 2013) of the poll on internet at the time of preparations for - and writing on - the essay. Chapter 3 summarises the results of the two energy scenarios (FF and SS). For both energy scenarios, the outlook on the energy landscape has been depicted by answering main and sub questions with respect to: How will the Dutch gross energy consumption develop? Which changes in the energy mix can be expected? The impact of the energy drivers are reported for The Netherlands, including the situation in neighbouring countries like Belgium, Denmark, France, Germany, Norway and the United Kingdom: Which countries are front runners in the energy transition and why? Which impact can be expected from every percentage of additional energy savings on the gross energy consumption in 2020 and 2030? (% in compound average growth rate - CAGR). Chapter 4 is focussed on the forecast of the Dutch inland electricity consumption and from which sources the electricity will be produced (impact on the electricity mix). In the FF-scenario an annual increase of 1% electricity consumption is assumed, while in case of the SS-scenario the electricity consumption rate remains 0%. These assumptions are in line with corresponding scenario’s in the TenneT-2030 vision (2011, TenneT). With respect to the consequences for consumption of fossil fuels in the electricity mix, the following questions are adressed : Will natural gas keep its role as the transition fuel in both scenarios? Which average CO2-emissions p.kWh can be expected from power generation by 2030? Which CO2 price scenario(s) can be considered as effective for (i) the development of clean fossil power generation and (ii) the development of renewable energy supply options like on-/offshore wind and bio-energy? Are different CO2 price scenario’s necessary per energy scenario? Finally, the essay summarises the conclusions and will answer the main question whether the Netherlands will achieve its energy transition goals in time, and if not: which recommendations can be considered, to move from the Slow Strife (if this should represent the present situation) towards the Flowingly Forward area. 2. Methodology and assumptions for energy scenario’s towards 2030 The existing scenario analysis of the Rabobank’s “IN2030 – Vier Vergezichten”, published in 2011 (www.in2030.nl) represents four scenarios. In these scenarios, future projections have been mapped (figure 3) on two main axes: (1) The horizontal axis represents the degree to which developments and processes occur gradually or explosively. Revolution stands for rapid breakthroughs, extreme peaks and troughs: dynamic changes! Evolution means more even-keeled and longer lasting developments and processes: gradual change! (2) The vertical axis represents the degree of harmony, in which developments take place and how processes evolve. Harmony and conflict are the two extremes on this axis. Harmony stands for a peaceful society, consensus and cooperation. Conflict implies a more polarised society, with each individual for himself and less emphasis on collective interests. Figure 3 The four scenarios IN2030 (2011, Rabobank) Flowingly Forward Capricious Consent Slow Strife Agile Antipole Harmony Conflict RevolutionEvolution
  • 7. 7 | P a g e Each of four squares represents a scenario, reflecting the limits of what might be reasonable possible. The axes are meant to indicate processes and developments, rather than focussing on trends and issues. How these pan out, will depend on the interaction between the two axes. The scenario in the top right corner represents the harmonious-revolutionary world that is described as Capricious Consent. This is a dynamic, uncertain, but harmonious world, where technological developments and ongoing integration of the global economy play pivotal roles. The bottom right square represents a world of major conflicts and changes. It is a world of Agile Antipoles with considerable polarisation both in and between countries. In the bottom left square the world seems to be stalling: in other words, the Slow Strife scenario. Locked into a new east-west polarisation, international dialogue fails to produce new solutions. Lastly, the top left square - the Flowingly Forward scenario – represents a more sustainable world in which gradual progress is based on consensus. For each scenario, fuel price developments have been assumed, in relation to geopolitical developments, technological progress and regional circumstances. For example, figure 4 illustrates the historical trend of crude oil, including the impact of the assumed future price developments up to 2030. Appendix 1 summarises all relevant fuel price trends which have been used for the energy scenario calculations. Figure 4 Crude oil price trend (USD per barrel), 1960-1983 Arabian Light posted at Ras Tanura, 1984> Brent dated The assumed energy prices will have an impact on the fuel mix and will also influence the development of domestic energy production, import and import dependencies. How does that work? For example, fuel prices, domestic energy taxes and CO2 prices – or the absence of regulations for a CO2 price – put upward or downward pressure on the trend of the levelized costs of electricity (LCOE). The LCOE is the constant unit cost (kWh or MWh) of a payment stream that has the same present value as the total cost of building and operating a power generating plant over its life time. The LCOEs will largely determine future viability of new and existing electricity production assets, such as (on/off shore) wind, solar and (clean) fossil fuelled power plants. The LCOE includes energy taxes and CO2-prices. Hence the development of LCOEs (via fuel prices) will have significant impact on the fuel demand by power producers, who continuously want to optimise their fuel demand and mix by adapting their power production fleet to the most economical favourable performance, so this results in a better competitive position in the power generation / supply market. The methodology, which has been applied to forecast the energy scenarios is based upon the following approach: a) Assumptions for fuel price developments and general interest rate developments; calculation of the LCOE of typically fossil fuelled and renewable power generation units, including their capital expenditures (CAPEX) and operational expenditures (OPEX); as a result certain moments of grid parity of clean fossil and renewable energy generation systems can be estimated for the periods of 2020 – 2030; b) Estimation of the impact of the LCOEs and grid parities of various types of electricity generation options on the fuel mix of electricity production and energy consumption c) Forecast of future gross and final energy consumption, their fuel mixes and future electricity consumption volumes as function of the four energy scenarios. For all four scenarios the same historical figures were taken into account and related to the most recent energy statistics (2012, IEA and 2013, ECN/PBL); each energy scenario has been defined by four trend developments: (1) population growth rate and rates of (2) energy consumption, (3) gross domestic product (GDP) and (4) energy efficiency will affect the gross and final energy demand. d) For each scenario an outlook at the feasibility of the three goals of the EU energy policy: (a) energy reduction (b) reduction of greenhouse gas emissions and (c) the share of renewable energy in the total final energy consumption. In order to be able to assess the trends in detail, a static scenario model has been composed. This allows manual adjustment in the scenario-results with respect to the relation between grid parity and fuel mix assumptions. For this essay, the assumptions (see appendix 1) and the outcome of two energy scenarios (in chapter 3 and 4) are reported with regard to the latest polls on the website of the IN2030 scenarios. 0 50 100 150 200 250 300 350 400 1960 1970 1980 1990 2000 2010 2020 2030 Capricious Consent Agile Antipole Slow Strife Flowingly Forward
  • 8. 8 | P a g e 3. Two energy scenario’s depicted: “Flowingly Forward” and “Slow Strife” In the world of the Flowingly Forward scenario there is a strong commitment to improve the effectiveness of international cooperation between regulated governmental bodies and energy companies. One is very capable to solve cross-border issues, to increase interconnection capacity to allow a growth in energy trade and liquid markets. In the field of energy and climate management and security, a strong CO2-price regulation has been created: the emission trade system has been reshaped. In 2020 the CO2 price is on a modest level of EUR 15 ton, but will be quadrupled up to 60 EUR per ton in 2030. I this scenario decision-making takes time: slow but continuous progress, because so many interested parties are involved. Technological breakthroughs are steered by the government, for example via subsidies and focussed on the improvements of production processes. In the bipolar world of Slow Strife the East and West oppose each other, with tensions between China and the Unites States. Regionalism has become the norm with measures to protect domestic interests with economic sanctions. The energy crisis is a fact. Each European country manages its own energy (import) portfolio without paying attention to synergistically options beyond their borders. The gap between rich and poor – the “haves and haves-not” - is widening. Interminable discussions will lead to long-term stalemate situations. The differences between the two energy scenarios appear to be huge, see table 1. Issues with significant impact Flowingly Forward Slow Strife International cooperation investments in electricity and gas grids, with coordination by national transmission system operators (TSOs) and the ENTSO-E and –G Investments in regular energy infrastructure are stopped; each country focuses on its own energy interests in relation to the energy mix Investment climate Favourable but huge investment level in grid / wind / solar / storage facilities Poor access to capital markets: difficult for energy companies to get capital for funding investments Scarcity of fossil fuels There is no economical scarcity; energy resources are traded around the world at stable prices, which contribute to predictable investment decisions Due to unequal geographical distribution of fossil-based raw materials economical scarcity becomes critical. Countries who control energy resources receive market power; they take full advantage of it Market price stability Stability and predictability are key Volatility and unpredictability are the rule Environmental targets The two degree scenario(2DS) might be feasible; strong international focus on climate change due to concerns regarding the impact of greenhouse gas emissions; bio-based economy is stimulated Environmental targets belong to the past; The environment in 2030 is less important than economic security. Environmental costs are not taken into account. Table 1 Main developments per energy scenario 3.1. Development of gross energy consumption in the Netherlands Before the assessment of the energy scenario results it makes sense how the Dutch energy system has been developed until recently. Taking into account the statistics of CBS of 2012, the Dutch gross inland energy consumption gradually has increased to a level of c. 80 Mtoe p.a, 25% above the level of 1990. This implies a year on year (YoY) growth rate of c. 0.8%, which is 0.8% below the annual growth rate of 1.6% in electricity consumption. In The Netherlands the gross energy consumption increased after 2009, but declined sharply after a cold winter in 2010: YoY a decline of -7.5% in 2011. The present Dutch gross energy consumption nears the level of 2008. Compared with the average level of gross energy consumption in the EU-27, The Netherlands has a relatively high level of energy consumption: the present energy consumption in the EU-27 nears the level of the nineties (c. 1700 Mtoe p.a). In order to achieve the 20% energy reduction target in 2020, a notable change is required. The outcomes of the energy scenarios show a fairly stable development of the gross energy consumption: in the FF- scenario the level will rise to c. 71.5 Mton p.a in 2030 and in the SS-scenario 82 Mton p.a respectively. However, the quasi-stability of gross energy consumption in the Netherlands hides strong changes in the fuel mix. Looking at the developments in the Flowingly Forward scenario, it’s clear that the transition to a renewable energy system is quite successful. The renewable share in the fuel mix has increased six-fold compared with the present 4%. After an initial share of 9% (2010) the coal consumption is expected to rise to 13% in 2020 but will decline to c. 7% (2030). For natural gas a more evenly trend shows up: the share of 47% in 2010 will gradually decrease to 34% in 2030. While consumption of renewable will increase to 13% in 2020 and 23% in 2030: almost six times the present share of 4%.
  • 9. 9 | P a g e Figure 5 Flowingly Forward – gross energy demand and fuel mix developments in The Netherlands up to 2030 Looking at the developments in the Slow Strife scenario, it’s clear that the renewable energy transition is hampering completely. Compared with the consumption levels in 2005, the renewable share in the fuel mix has increased a bit: from a 5% share in 2020 to 7% in 2030. Coal clearly is the winner with an increased share of 21% in 2020, which then remains quite stable. Up to 2030 the total fossil fuel mix will not change at all: the shares of oil(31%) and gas (40% slightly decrease but still play a dominant role. Figure 6 Slow Strife - gross energy demand and fuel mix developments in The Netherlands up to 2030 3.2. Reflection on the 20-20-20 targets for the North West European countries Because The Netherlands is lagging behind with respect to the 20-20-20 goals, it makes sense to take a close look at neighbouring countries whose energy mix shows higher shares of renewable energy consumption. What can we learn from our neighbouring countries? In fact, The Netherlands is a flat country with a relatively high population density. This implies very limited potential for hydro power and a limited area for domestic silviculture and biomass production. With respect to the opportunities to translate the Dutch energy mix towards 16% renewable share in 2020, ECN recently has reported the latest insight in accordance with the policy scenario of ECN/PBL (2010-2020VV 3). It becomes clear that the TOP-5 of renewable energy generation options is planned by off shore wind (3%), on shore wind (2%), co- firing in coal fired power plants (2%), wood furnaces and bio fuels (together 2%). The TOP-5 takes 9% of the 16% target. The question is whether this is a cost effective approach. Figure 7 Renewable energy target split-up in % and PJ per annum (2013, ECN) 3 RR2010-2020VV: “Beleidsvariant met vastgesteld en voorgenomen Schoon en Zuinig beleid” 0 10 20 30 40 50 60 70 80 90 1990 1995 2000 2005 2010 2015 2020 2025 2030 Flowingly Forward Gross Energy Consumption [Mtoe p.a] Other Renewable Nucleair Coal Gas Oil 29% 34% 7% 5% 23% 2% 2030 Fuel Mix - Flowingly Forward (Netherlands) Oil Gas Coal Nucleair Renewable Other 0 10 20 30 40 50 60 70 80 90 1990 1995 2000 2005 2010 2015 2020 2025 2030 Slow Strife The Netherlands Gros energy consumption [Mtoe pa.] Other Renewable Nucleair Coal Gas Oil 31% 40% 21% 1% 7% 0% 2030 Fuel Mix - Slow Strife (Netherlands) Oil Gas Coal Nucleair Renewable Other -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% -10 0 10 20 30 40 50 60 70 2011 production [PJ] Additional contribution 16% RES 2020 Contribution 2011 => 2020
  • 10. 10 | P a g e With regard to the 20% renewable share in energy consumption, Denmark and Germany are examples, to take a closer look at. Norway is the most developed NW-EU country in the dimensions of renewable (hydro) power and energy. France, Belgium and the UK demonstrate the average share of renewable energy consumption outlook, compared to NW-EU, while these countries also are applying significant capacities of nuclear power. Figure 8 Impact of the Flowingly Forward scenario on the fuel mix of North West (NW) European countries Denmark is very similar to the Netherlands: relatively small and flat. But in Denmark the share of renewable energy in 2011 already was about 21%: while in the Netherlands only 4% was noted. What can we learn from Denmark? Especially in case the future outlook is considered of Denmark in the Flowingly Forward scenario: the share of renewable in the Danish fuel mix develops towards circa 40% in 2020, exceeding its target with 10% an even more impressive outlook is given for 2030: more than 50% renewable share in the fuel mix. It already appeared that the stabilisation of the Danish primary energy supply over more than three decades has contributed to develop renewable energy supply, despite different interests in relation to fossil and renewable energy resources. Although rich in natural resources 4) Denmark was heavily reliant on the import of fossil fuels until the 1970s. After the oil crisis, the Danish government decided to develop wind power and combined heat and power. And after the nuclear disaster in Chernobyl (1986), the option of future nuclear power generation became politically unfeasible 5). Figure 9 Denmark in the Flowingly Forward scenario To satisfy the energy demand, the Danish Government started subsidy programmes for research and development on (i) biomass, (ii) combined heat and power, (iii) photovoltaic and wind turbines. The Danish wind power policy package was quite successful, and can be summarised by a number of measures: a. Financial and technical support by the government: via test facilities of wind turbines (1978 at Riso National Laboratory) and by means of grants to support investments for building and exporting wind turbines; b. Setting clear objectives for wind farm capacity extension: 1,000 MW of wind power by the year 2000 and in the Danish Government’s Action Plan for Energy3 (published in 1999), the target was defined to realize 5,500 MW of electricity supply from wind turbines by 2030; c. The introduction of a feed-in tariff with ensured connection to the grid; the government mandated the utility sector to purchase wind energy at a preferential price. To the power generators a fixed price of 70–85% of the local retail price of electricity was guaranteed (excluding taxes). d. Introduction of a carbon tax (2009, NREL): since 1992, households were charged with USD7.50. Firms had been charged with USD 14.30 per ton of CO2 since 1993. However, tax rate was decreased by approximately 50% in 2005. 4 The degree of self-sufficiency rose from 5% in 1980 to 145% in 2002. Denmark is the third-largest oil producer in Western Europe. Denmark is dependent on domestic oil and natural gas for its primary energy supply. 5 Denmark still does not have any nuclear power plant(s). 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Flowingly Forward Fuel Mix NW EU 2020 Renewables Water / Others Nuclear Coal Gas Oil 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Flowingly Forward Fuel Mix NW EU 2030 Renewables Water / Others Nuclear Coal Gas Oil 0.0 5.0 10.0 15.0 20.0 25.0 30.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 Denmark - Flowingly Forward Gross Inland Consumption [MToe p.a] Renewable Energy Water Nuclear Coal Gas Oil
  • 11. 11 | P a g e With regard to the lessons learned a combined programme of subsidies on renewable investments, clear targets for the energy transition, a feed-in tariff system, focus on additional combined heat and power (CHP) and a carbon tax can be identified as proven catalysts (Denmark) in the scenario to more renewable energy. With regard to Germany, to some extend the same trends as in Denmark can be identified: the recent decisions for a nuclear phase out, aiming at complete shutdown of all nuclear power plants in 2021; in the Flowingly Forward scenario for Germany (figure 10), the consequences are depicted of plant shut down in 2011, 2016 and 2021, (leaving some remaining nuclear capacity in the fuel mix thereafter); the strong development of wind and solar: up to approximately 38% in installed power generation capacity: 50 GW in 2012, while the fossil and nuclear capacity is roughly 85 GW; governmental support to the manufacturing industry, dealing with innovations and developments in equipment for renewable energy production. Figure 10 Germany in the Flowingly Forward scenario 3.3. The impact of 1% additional energy savings on CO2 emissions In case of a year on year (YoY) additional energy reduction percentage of 1%, the targets of (i) energy reduction (20% less than the consumption in 2005) will be stimulated and (ii) the green house gas (GHG) emissions will be reduced, (the renewable energy target is not actively influenced by additional energy reduction). If energy reduction is achieved solely limited to the share of fossil fuel consumption, while the renewable energy consumption would remain the same, then that would give a better figure in the score on renewable energy. That’s not assessed in detail. What is the impact of 1% YoY energy reduction – for both fossil and renewable consumption - on the scores reported in figure 11 a and 11b? Figure 11 a Slow Strife (reduction is “-“) Figure 11 b Flowingly Forward (reduction is “-“) In the Dutch Slow Strife scenario, 1% YoY additional energy reduction would result into -9% additional energy reduction in 2020 (the final score would be 3% - 9% => -6% energy reduction) and -18% additional reduction in 2030: then the final score ends up with 4% - 18% => -14% Energy reduction of 1% YoY will reduce the GHG emissions to the same significant extent: -9% additional CO2 emission reduction in 2020; the final score would be 2% - 9% => -7% while -20% is the target and -18% additional reduction in 2030: then the final GHG score ends up with -6% - 18% => -24% In case the 20% energy reduction target (reduction compared with 2005) should be achieved by 2020, at least 2.8% YoY energy saving measures are required, in the Slow Strife scenario. And in that case also the GHG emission reduction would be 20% lower than in 1990. In this scenario the share of renewable energy in the final energy consumption would remain 5% in 2020 and only 7% in 2030, without any additional provisions. The 2.8% additional YoY energy reduction package would have a drastic impact on the domestic gross energy consumption: that would be reduced to 63 Mton oil equivalents in 2020: even lower than in 1990. 0 50 100 150 200 250 300 350 400 1990 1995 2000 2005 2010 2015 2020 2025 2030 Germany - Flowingly Forward Gross Inland Consumption [MToe p.a] Renewable Energy Water Nuclear Coal Gas Oil 3% 10% 3% 4% -11% -11% 2% -6% 14% 19% 5% 7% -15% -10% -5% 0% 5% 10% 15% 20% 25% EU 2020 EU2030 NL 2020 NL 2030 Slow Strife 20-20-20 results 20% Energy reduction 20% Reduction GHG emission 20% Renewable Energy -3% -4% -3% -10% -30% -49% -15% -38% 23% 37% 13% 25% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% EU 2020 EU2030 NL 2020 NL 2030 Flowingly Forward 20-20-20 results 20% Energy reduction 20% Reduction GHG emission 20% Renewable Energy
  • 12. 12 | P a g e In figure 12 the impact of 1% additional energy reduction is presented for the two energy scenarios. It’s clear that 1% is not sufficient in the slow strife scenario to achieve the 20% reduction target of GHG emissions (compared with the 1990 emission level). In the Flowingly Forward scenario the additional 1% energy reduction is required to achieve the target of 20% GHG emission reduction(compared with 1990) in 2020. Figure 12 Greenhouse gas (GHG) emissions in Mton CO2 equivalents per annum for The Netherlands The most cost effective manners to achieve additional energy reductions are related to system integration, combined heat and power generation and reuse of waste heat. The investment level, which is estimated to be required in the Flowingly Forward scenario amounts EUR 35 billion for all options mentioned in figure 7: in order to realize the 16% renewable energy target in 2020. In case this figure will be related to the volume of emission reduction in 2020 (Slow Strife) as a result of 2.8% YoY additional energy savings, then: 49 Mton CO2 eq. p.a will be avoided and GHG emissions arrive at circa 172 Mton p.a: 20% below the level of 1990; Specific investments of EUR 800 per ton avoided CO2 will be avoided, by not investing in options of renewable energy generation. Corrected for 12% annuity, the average marginal abatement costs would be approximately EUR 95 per ton CO2. That’s still a significant level with respect to the marginal abatement costs (MACs) for the last tonne of CO2 emissions (eliminated via abatement measures). MACs are often used as a trigger for which carbon price is needed for abatement, by making the costs of CO2-emitting higher than those of avoidance. According to the Energy Technology Perspectives of the IEA, MAC values of USD 30 – 50 per ton CO2 are indicated for the period until 2020 and USD 80 – 100 by the time of 2030. Therefore it seems that the investment package to achieve the 2020 targets indicated by figure 7 seems to be very ambitious, and beyond the accepted MAC values until 2020. So answering the question (page 7, paragraph 3.2 in connection with figure 7), whether the investments in renewable energy options would be cost effective: yes but in the sequence of the cheapest to the more expensive options, starting with co-firing biomass, on shore wind and then off shore wind. In a future scenario in which cross border grid development will continue (according to Flowingly Forward) large investments in renewable energy generation makes sense . Otherwise modest investments should be taken for granted (fitting in the national grid boundaries). At the same time energy efficiency measures should be given full support – in case the marginal abatement costs are lower than renewable options; in the Danish situation this has been clearly demonstrated. 4. The Dutch electricity mix and grid capacity in perspective of the energy scenario’s 4.1. The role of gas in the electricity mix In both scenarios natural gas will play a key role. In the Flowingly Forward scenario we have seen a decrease of gas in the fuel mix share over time: from 47% (2010) => 39% (2020) => 34% (2030). In this scenario the price of natural gas remains on a modest level. In the Slow Strife scenario we have noticed a fairly stable share of 47% => 42% => 40% over the period 2010 – 2020 - 2030. According to Gas Transport Services (2012, GTS) the gas production in The Netherlands, Germany, the United Kingdom and Denmark will decrease with a downward trend of -3.6% (YoY0 from 160 billion cubic metre (bcm) in 2012 to 40 bcm in 2030. At the same time the import via pipelines and Liquefied Natural Gas (LNG) will be doubled: 150 (2012) => 300 bcm (2030), representing an upward trend of +4.8% YoY. The role of natural gas – with emphasis on imported gas – gains importance in the Dutch fuel mix. Whereas the Netherlands will not be able to continue gas exports in the decade after 2020, all NW-EU countries will become even more dependent on gas import from Norway and Russia (pipelines) and LNG (world market). 0 50 100 150 200 250 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 GHG emissions in The Netherlands [Mton p.a] Slow Strife - SS Flowingly Forward - FF CO2 Mton eq. target 1% energy reduction - SS 1% energy reduction - FF
  • 13. 13 | P a g e Figure 13a Flowingly Forward electricity production Figure 13b Slow Strife electricity production It is assumed that in the FF-scenario the power consumption growths with 1% YoY and in the SS-scenario growth is absent (0% YoY). At the same time it’s assumed that the efficiency of power generation will gradually increase from an average of 43% (2012, CBS) to 57% in the FF-scenario: due to closure of old gas and coal fired power plants. In case of the SS-scenario the electrical efficiency will develop to circa 50% (coal remains in the mix, but due to new power capacity, the trend still increases. Consequently, the fuel input for fossil fuelled power plants is higher in the SS- scenario compared with the FF-scenario. This is visible in the figures 14a and 14b. 4.2. The carbon footprint of electricity generation Figure 14a Flowingly Forward and primary energy demand Figure 14a Slow Strife and primary energy demand The carbon footprint of electricity generation mainly depends on the share of renewable energy in the total electricity mix, the trend of electrical efficiency in gas and coal fired power plants and how gas and coal are developing in the electricity mix. It’s quite striking that the carbon footprint of electricity produced in the Slow Strife scenario is almost twice as high as in the Flowingly Forward scenario. Two main causes are due: The share of renewable electricity amounts 44% in the FF scenario and only 17% in the SS scenario Coal and gas are represented with 8 and 35% respectively in the FF scenario but with 29 and 44% in the SS scenario. The Flowingly forward scenario has a very clean electricity carbon footprint with less than 300 gram per kWhe; this is because the fossil share in the electricity mix is exceeded by the renewable share! 0% 10% 20% 30% 40% 50% 60% 0 20 40 60 80 100 120 140 160 1990 1995 2000 2005 2010 2015 2020 2025 2030 Dutch electricity mix in power production Flowingly Forward [TWhe p.a] Other Renewable Nuclear Gas Oil Coal Trend Gas and Coal Power Efficiency (right axis) 0% 10% 20% 30% 40% 50% 60% 0 20 40 60 80 100 120 140 1990 1995 2000 2005 2010 2015 2020 2025 2030 Dutch electricity mix in power production Slow Strife [TWhe p.a] Other Renewable Nuclear Gas Oil Coal Trend Gas and Coal Power Efficiency (right axis) 0 100 200 300 400 500 600 700 800 900 0 5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 2030 Primary energy for Dutch electricity mix Flowingly Forward [MToe p.a] Other Renewable Nuclear Gas Oil Coal CO2 emissions gas & coal [gram p.kWh right axis] 0 100 200 300 400 500 600 700 800 900 0 5 10 15 20 25 30 1990 1995 2000 2005 2010 2015 2020 2025 2030 Primary energy for Dutch electricity mix Slow Strife [MToe p.a] Other Renewable Nuclear Gas Oil Coal CO2 emissions gas & coal [gram p.kWh right axis]
  • 14. 14 | P a g e 4.3. The impact of CO2 price scenario’s on the Levelized Cost of Electricity Figure 15 Marginal costs of operations of fossil fuelled and renewable electricity generation in 2030 In 2030 the CO2 price will arrive at EUR 60 per ton of CO2. On a marginal cost operation basis (in which only operational costs are counting in the decision to start or shut down the facility), modern gas fired capacity like open cycles with only gas turbines (OCGT) and combined cycles with gas- and steam turbines (CCGT) are able to operate in peak and base load. Existing coal fired power plants – without provisions of carbon capture storage and / or co-firing of biomass are not able to operate profitable. It’s clear that renewable power from wind is quite attractive (on marginal cost basis); which is applicable too for nuclear power and the new clean fossil fuelled options. In case the levelized cost of electricity is assessed, the same conclusions count, if the market price of power has developed to at least EUR 100 per MWh in base load, see figure 16. Figure 16 Levelized cost of electricity and the assumed required market price of EUR 100 per MWhe We see in figure 16 grid parity for offshore wind and nuclear power stations. That’s the reason why in the FF scenario new nuclear power can be allowed (in case of no resistance in the community, 2 more nuclear power stations can be realized before 2030). Existing coal fired power plants are too expensive and are phased out somewhere between 2020 and 2030, only the really clean coal options remain viable. In case the present fuel tax (EUR 14 per ton coal) would be abolished, the conclusions will not change. In case the Slow Strife scenario would be depicted, the conclusions are: coal is more viable than gas, due to the absence of CO2 taxes; and only onshore wind achieves grid parity. Offshore wind remains dependent on subsidies. Nuclear power is far too expensive to be developed. In the Flowingly Forward scenario, EUR 60 per ton CO2 is very effective and contributes to keep gas more attractive than coal in the fuel mix. This level cannot be decreased, without losing its impact. In the Slow Strife scenario, a carbon price or tax system can contribute to deviate towards renewable options. 0 20 40 60 80 100 120 140 MarginalCosts (Eur p.kWhe) of Power Generation 2030 FlowinglyForward Fuel Tax CO2 Staffing Insurance O&M Fuel Power (base load) (€/Mwhe) Power (peak load) (€/Mwhe) 0 20 40 60 80 100 120 140 LCOE (WACC 7.5%) of Power Generation 2030 FlowinglyForward (Eur p.kWhe) Fuel Tax CO2 Staffing Insurance O&M Fuel Cap. Cost Power (base load) (€/Mwhe) Power (peak load) (€/Mwhe)
  • 15. 15 | P a g e 5. Conclusions and recommendations 5.1 Conclusions 1. The Dutch energy mix will evolve towards an increased share of renewable energy consumption. It seems plausible that the share of renewable energy consumption in the Dutch fuel mix will be 5 – 13% in 2020, dependent on the future macro economic outlook. In case the economy is turning to an optimal scenario like Flowingly Forward, the 20-20-20 targets are neared or even exceeded. But in case the present economic downturn will continue, the energy transition will be tailored to those investments which require the lowest investment levels and most favourable pay-back periods. 2. Norway, Denmark and Germany are the frontrunners in North West Europe. The country that is quite similar to The Netherlands is Denmark: with respect to fuel independency and geography / demography. Denmark already has demonstrated an energy transition which develops even beyond the 20-20-20 targets. 3. 1% additional energy reduction per annum would contribute to 9% total energy and emission reduction in 2020. In case the 20% energy reduction target (compared with 2005) should be achieved, solely by energy reduction, then it depend on how our economy will develop. In the scenario of Flowingly Forward 1 – 1.5% additional energy reduction will be enough. But in case a Slow Strife scenario will be the case, 2.8% is necessary to meet the targets. 4. The present energy landscape of the Netherlands shows similarities with the Slow Strife scenario. The Netherlands is far behind the 20-20-20 targets. In order to comply with the 16% renewable energy target, investments of circa EUR 35 billion are required. It makes sense to consider the cost-effectiveness of energy reduction measures, because the accepted level of marginal abatement costs (MACs) are in favour of co-firing biomass, onshore wind and energy reduction via combined heat and power / energy efficiency measures. After these options, off shore wind and geothermal applications become in the picture (in the sequence of low to higher MACs). 5. The Netherlands has the most fossil fuelled energy mix of all North West European countries, and this situation will most probably remain in the next two decades. The role of natural gas (from domestic resources) is significant and needs to play an important role in the energy transition. 6. An effective carbon price is needed to keep gas in the fuel mix (of electricity generation): a level of EUR 20 – 30 per ton in 2020 and EUR 60 per ton in 2030 fits in the Flowingly Forward scenario, and shows a viable outlook for renewable, nuclear and gas fired power generation options. 5.2 Recommendations 1. The coming national energy report (SER) should have a close look to the lessons learned from the Danish and German energy policy. An approach of clear targets, sustainable investment climate and effective feed-in tariff structures combined with a modest carbon tax policy is recommended to be implemented. 2. The role of solar PV should not be under estimated. People without having access to the buy market of solar panels, should be supported somehow. Otherwise the “have not’s “ are financing the “haves”: people who are able to buy solar panels benefit from the tax system, which is supported by all people (haves and have-not’s). 3. In the energy scenarios the role of solar PV has not been assessed in detail, because the viability depends on retail price levels (including tax and energy transport costs) instead of whole sale prices. In the following release solar PV will be assessed too, it might cause game changing impacts in the combination with smart grid developments, demand response and energy storage.
  • 16. 16 | P a g e Literature 2013, February 12th, AgentschapNL, SDE+ 2013, “zo vraagt u subsidie aan voor de productie van duurzame energie”. 2013, ECN/PBL, Referentieraming Energie & Emissies in de jaren 2012, 2020 en 2030. 2013, ECN, 16% Hernieuwbare energie in 2020 – Wanneer aanbesteden? (rapport ECN-E—13-006). 2013, BP, British Petroleum, Energy Outlook 2030. 2012, October 29th, Regeerakkoord VVD – PvdA, “Bruggen slaan”. 2012, International Energy Agency (IEA), Energy Transition Pathways – ETPs. 2012, November 12th, International Energy Agency (IEA), World Energy Outlook 2012. 2012, CBS, Centraal Bureau voor de Statistiek. Energie balans, Kerncijfers. 2012, GTS, Rapportage voorzieningszekerheid Gas. 2011, November 28th, ECN, Renewable Energy Projections as Published in the National Renewable Energy Action Plans of the European Member States. 2011, Rabobank, Stegeman, H., IN2030 Vier vergezichten (Rabobank Kennis en Economisch Onderzoek (KEO)). 2011, June 23th, TenneT, Aansluit beleid en congestiemanagement, visie 2030. 2010, October, Elsevier, The implementation of renewable energy systems. Lessons learned from the Danish case. 2009, December, NREL (National Renewable Energy Laboratory), Carbon Taxes: A Review of Experience and Policy Design Considerations. 2009, October, 16th, Elsevier, Energy Economics, “THE EU 20/20/2020 targets: An overview of the EMF22 assessment”. 2009, April 23th, Directive 2009/28/EC of the European Parliament and of the council, on on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC.
  • 17. 17 | P a g e Appendix 1 Assumptions for the four energy scenarios IN2030 Capricious Consent Agile Antipoles Slow Strife Flowingly Forward GDP World [%] 4.5 2 2.5 3.5 GDP US [%] 3.5 0.5 1.5 2.5 GDP China [%] 7.5 5 5.5 6.5 GDP EU [%] 2.2 0.7 1.3 1.5 GDP NL [%] 2.00 0.43 1.08 1.59 CPI NL [%] 1.48 7.09 5.44 1.93 Oil Price (USD p. Barrel) 155 300 350 125 Oil Price index (YoY) 2010 – 2030 (same for natural gas and coal) 1.8 % 5.4 % 6.2 % 0.6 % Exchange rate (USD – Euro) 1.67 2 1.45 1.78 Long term interest rate Eurozone 3.5 % 5.5 % 5.5 % 4 % Demographics World 8.8 bn 7.8 bn 8 bn 8.3 bn NL 18.6m 16.9m 17.2m 17.7m Energy consumption YoY – World 2.08% 0.82% 1.42% 0.67% Energy demand YoY – EU 1.60% 0.10% 0.90% 0.20% Energy demand YoY – NL 1.00% -0.56% 0.33% -0.42% Table A.1 trends for IN2030 scenarios of the Rabobank For the breakdown of annual change of energy demand, in the figures A.1 and A.2 four trends are detailed: (i) Population growth (ii) energy consumption p.p. (iii) GDP and (iv) energy efficieny p.p. In the Flowingly Forward scenario the assumptions of the World Energy Outlook 2012 (New Policy Scenario) are related to the EU. The same counts for the assumptions of the “Referentieraming” 2013, ECN/PBL: their RR2010-2020VV scenario is connected to the Flowingly Forward scenario of the Netherlands. In the flowingly forward scenario the YoY change in energy demand amounts c.: 0,67% on global level 0.20% for the EU-27 -0.42% in the Netherlands Figure A.1 Assumptions for Flowingly Forward (trends in %) In the slow strife scenario the YoY change in energy demand amounts c.: 1.42% on global level 0.90% for the EU-27 0.33% in the Netherlands Figure A.2 Assumptions for Slow Strife (trends in %) -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 Population Growth Energy consumption GDP Energy efficiency Change energy demand World EU-27 The Netherlands -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 Population Growth Energy consumption GDP Energy efficiency Change energy demand World EU-27 The Netherlands
  • 18. 18 | P a g e Appendix 2 Methodology for the four energy scenarios IN2030 The energy scenarios are connected to the economic scenarios of Rabobanks IN2030 publication. The way this is done is described in accordance with the following approach: 1. determine primary energy consumption trends in the past 2. determine drivers for energy consumption and energy mix 3. assumptions primary energy consumption 2012 – 2030, see also appendix 1 for the four trends of growth: 3.1. population growth 3.2. energy consumption p.p. 3.3. GDP and 3.4. energy efficieny p.p 4. Fuel mix changes by 4.1. the energy price trends (oil/coal/gas/..) 4.2. the calculation of Levelized Costs of Electricity (LCoE) 2012 – 2030 as function of cost of capital (CAPEX) and operational expenditures (OPEX), and in which the fuel price component depends on the trends mentioned under (4.1); and 4.3. check on grid parity: this gives an indication of the timing when grid parity (or socket parity) occurs and thus when fuel (or electricity-) mixes will or can change: it happens when an alternative energy sources can generate electricity at a levelized cost (LCoE) that is less than or equal to the price of purchasing power from the electricity grid: per scenario: game changers of the future! 4.4. The use of the Rabobank IN2030 (www.IN2030.nl) model, for calculation of the fuel mix changes and predicted energy consumption volumes by 2020 and 2030. 4.5. An iteration for the role of taxes and CO2 prices was done and finally 5. The check on the results of energy consumption, fuel mixes (in which the trend in the electricity mix is assumed to be similar to the trend in the fuel mix, except for non-electricity related energy carriers like oil: which has it’s own trend assumptions, connected to for example transport. Step 1 to 5 are visualised in figure A.3 and Step 4 (breakdown) is visualised in figure A.4. Figure A.3 Approach for energy scenarios IN2030 Figure A.4 Approach for energy scenarios with respect to the fuel mix changes – related to electricity generation The methodology applied in this essay - for energy scenarios – is based on cost management (LCoEs for example); market dynamics as influences from changing spark-/dark spreads and marginal cost considerations are not taken into account in the energy model. Should this have been done, then a dynamic energy model might be required, including a number of market assumptions as well. In Figure A.5 the results are presented of grid parity in accordance of the two assessed scenarios. This gives an indication at which moment a certain type of electricity generation becomes viable.
  • 19. 19 | P a g e Figure A.5 Grid parity for a number of electricity generation options in two energy scenarios Appendix 3 The IN2030 website www.IN2030.nl (status 2013, May 17th) 0 20 40 60 80 100 120 140 160 180 200 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 LCoE[EURp.MWhe] Slow Strife Coal CCGT Nuclear Onshore Wind Offshore Wind CSP (SOLAR) 0 20 40 60 80 100 120 140 160 180 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 LCoE[EURp.MWhe] FlowinglyForward Coal CCGT Nuclear Onshore Wind Offshore Wind CSP (SOLAR)