1. SPANISH ENERGY
OUTLOOK 2012
LEAP Analysis of Future Energy Scenarios
Course MJ 2413 – Energyand Environment
ALBERTO RODRÍGUEZ
EZGI BAŞAR
GAYAN SUBASINGHE
LUCIA DE STRASSER
SARANAPALA BOGAHAWATTE
2. SPANISH ENERGY OUTLOOK 2012
Contents
List of Tables .......................................................................................................................................... 3
ABSTRACT.............................................................................................................................................. 4
1. INTRODUCTION ............................................................................................................................. 5
2. BACKGROUND OF SPAIN ................................................................................................................. 6
3. METHODOLOGY ............................................................................................................................... 9
Model Structure ............................................................................................................................ 10
4. SCENARIO DEFINITIONS AND RESULTS.......................................................................................... 11
4.1. REFERENCE SCENARIO (BUSINESS AS USUAL) .................................................................... 12
4.2. NEW POLICY SCENARIO ...................................................................................................... 17
4.3. GREEN HOUSE GASES (GHGs) EMISSIONS MITIGATION SCENARIO ................................... 20
4.4. CONCENTRATED SOLAR POWER ENHANCEMENT SCENARIO ............................................ 22
5. ANALYSIS AND DISCUSSION........................................................................................................... 25
5.1. GHGs emission .................................................................................................................... 25
5.2. Social Cost of Power Generation ........................................................................................ 27
5.3. Social Cost of Power Generation –With Externalities ........................................................ 29
5.4. Social Cost of Demand Side Management ......................................................................... 30
5.5. Fuel Dependency: ............................................................................................................... 30
6. CONCLUSION ................................................................................................................................. 32
7. REFERENCES................................................................................................................................... 33
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3. List of Figures
Figure 1: Electricity Production by Source in 2010 (Spanish Ministry of Industry) ........................ 7
Figure 2: Final Energy Consumption per Sector in 2010 (Spanish Ministry of Industry) ................ 7
Figure 3: Green House Gas Emission per Sector (OECD Library 2012) ............................................. 7
Figure 4: Spain CO2 Emissions by transport in 2007 (International Transport Forum) ................. 8
Figure 5: LEAP Model Structure .......................................................................................................... 10
Figure 6: GDP Growth in the Reference Scenario(EU Energy Trends for 2030, European
Commission, 2010) ............................................................................................................................. 14
Figure 7: Population Growth in the Reference Scenario (EU Energy Trends for 2030, European
Commission, 2010) ............................................................................................................................. 14
Figure 8: Energy Demand trends in Reference Scenario for 2040 ................................................... 15
Figure 9: Energy Demand by sector without Electricity in the Reference Scenario ....................... 15
Figure 10: Electricity Demand in Reference Scenario ....................................................................... 16
Figure 11: Electricity Generation by source in Reference Scenario ................................................. 16
Figure 12: Energy Demand in New Policies Scenario ........................................................................ 18
Figure 13: Electricity Demand by Sector in New Policy Scenario..................................................... 19
Figure 14: Electricity Generation by source in New Policies Scenario ............................................ 20
Figure 15: Non-Electricity Demand by Sector in GHGs Mitigation Scenario ........................................ 21
Figure 16: Electricity Demand by Sector in GHGs Mitigation Scenario ................................................ 22
Figure 17:Electricity Generation by Source in GHGs Mitigation Scenario ............................................ 22
Figure 18: GHGs emission in Power Generation for Different Scenarios ......................................... 26
Figure 19: GHGs emission in Demand Side for New Policy, GHG Mitigation vs Reference. ................. 26
Figure 20 : Total GHGs emission since 1990 ......................................................................................... 27
Figure 21 : Social cost encounter in Various Scenarios......................................................................... 28
Figure 22 : Cost breakdown for CSP Strategy ....................................................................................... 28
Figure 23: Cost breakdown for Business as Usual Scenario.................................................................. 29
List of Tables
Table 1: Comparison of Spain to Italy, Germany and USA (OECD Library 2012) ............................. 6
Table 2: Energy Intensity Increase for Different Sectors – New Policy Scenario ........................... 18
Table 3: CSP installed capacity evolution in the different scenarios .................................................... 24
Table 4: Table CSP electricity share evolution in the different scenarios............................................. 24
Table 5: Total GHGs Emission for Various Scenarios ........................................................................ 25
Table 6: Natural Gas imports forecast for different scenarios ......................................................... 30
Table 7: Oil imports forecast for different scenarios ........................................................................ 30
Table 8: Coal imports for different scenarios .................................................................................... 31
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4. ABSTRACT
The following report explores the energy forecast of Spain from 2010 to 2040. It analyses the
effects of different energy policies in terms of Energy Security, Energy Consumption and
Greenhouse Gases Emissions (GHGs). The study has been conducted using the Long-range
Energy Alternatives Planning System (LEAP) software developed by the Stockholm
Environment Institute. The analysis of different energy and climate policies has been integrated
with a feasibility analysis that considers costs and social impacts.
This project is part of the forecast analysis of European Countries developed in the course of
Energy and Environment offered by the Royal Institute of Technology (KTH) of Stockholm.The
results of this study are expected to give a coherent insight of the energy situation of Europe,
the current and future policies applied in every country and possible improvement suggested.
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5. 1. INTRODUCTION
This report provides a description of the Spanish Energy System in terms of the current energy
mix and greenhouse gases emissions together with an analysis of possible future scenarios
based on different energy policies. The simulation of the different scenarios has been performed
using LEAP software and a comparison of their environmental effects is proposed.
This type of analysis may be a potential useful tool in the assessment of future energy
generation, in the current and future policy advisory and in the effectiveness measurement of
current policies. In other words, it has the potential to help policy makers and politicians when
it comes to decide about the energy future of a country or region.
The aim of this report is to show which are the benefits and drawbacks of the different paths
that Spain could follow in the forthcoming 30 years. Particularly, this report aims to highlight
the sustainable paths among the other possible future scenarios.
Finally, this report can be integrated with the study of the other European Countries giving an
interesting overview of the current energy profile of the continent.
Starting from the current situation (Current Accounts) and the historical data (Baseline) four
main scenarios are developed:
• Reference (Business as Usual) - This scenario is developed according to current trends
and to the already implemented energy policies specifically in renewables energy sector.
It shows how population, social and economic growth (GDP) will influence energy
consumption, resource requirements, security of supply, and GHGs emissions.
• New Policy Scenario - In this second scenario renewable energies and energy efficiency
targets have been considered, the main difference from the first scenario is then the
energy efficiency targets. Population and GDP are expected to grow with the same rate
than in the previous case.
• GHGs Mitigation - This third scenario focuses on further energy efficiency
improvements in the sectors of industry and transportation (demand side), and power
generation and distribution (supply side), which are the biggest contributors to GHGs
emissions. Essential shift from conventional fuels to bio-fuels is also considered.
• Concentrated Solar Power Enhancement- This fourth proposed scenario aims to
enhance concentrated solar power (CSP) technology up to a significant value by 2040 in
the electric mix generation of Spain.
In 2010, Spain has developed a well-defined and ambitious energy policy regarding the
improvement of renewables in the energy mix, the reduction of GHGs and the achievement of
new levels of energy efficiencies. This plan named PANER (Plan de AcciónNacional de
EnergíasRenovables de España) was launched in 2010 and it contains a detailed forecast of
production and consumption. Unfortunately in 2012 the government changed and it has
decided to interrupt the feed-in tariffs due to the critical financial situation. However, for the
purposes of this analysis it has been decided to not consider this temporary arrest (excepting
the fourth scenario as mentioned further on), assuming that the incentives will be reintroduced
soon.
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6. By knowing what Spain has done in the last decade and modelling it in the reference scenario,
three additional scenarios are proposed according to Spain’sfuture requirements in order to
compare their results and discuss the most suitable scenario to achieve the following targets:
- Energy independence
- GHGs mitigation
- Keeping a leading position in the Clean-Tech sector.
2. BACKGROUND OF SPAIN
Spain is part of the European Union since 1986, and a member of Organisation for Economic Co-
operation Development (OECD) since 1991. It has the world’s 12th and Europe’s 5th largest
economy measured by gross domestic product. Spain is in the euro-zone since 1999.
Spain is located intheSouthWestern Europe, bordering the Mediterranean Sea, North Atlantic
Ocean, Bay of Biscay, and Pyrenees Mountains. It has a temperate climate; clear, hot summers in
the interior part, more moderate and cloudy along the ocean cost; however, cloudy, cold winters
in interior, partly cloudy and cool along coast. There are several major rivers such as the Ebro,
the Duero, the Tagus and the Guadalquivir. The autonomous Canary Islands are located by the
African coast and the Balearic Islands are offshore in the Mediterranean. Spain has 17
autonomous regions and 2 autonomous cities under its organism. There are several regional
identities within Spain such as the Basques, Catalans, Galicians and Castilians.
After an extraordinary period of economic growth due to the rapid development of the
construction sector (from 1997 to 2007) Spain entered to a recession period in 2008 and an
economic fall started. This financial crisis cause a massive rise in unemployment. The economy
had a slow growth in the first half of 2010, nevertheless the unemployment is expected to
remain high.
It can be seen on the Table 1. 1that Spain has a lower population density than some other
European countries. A low population density is an advantage for several renewable energy
technologiessuch as Wind or Solarin terms of energy security and area availability. Currently,
Spain has a high share of electricity produced from wind and solar (seen Figure 1) and it is in a
leading position in the implementation of Concentrated Solar Power. It is remarkable to say that
in 2010, from the total electricity mix generation, Spain produced 33.6% from renewable
sources (including hydropower).
SPAIN ITALY GERMANY USA
Population 45 989 016 60 483 390 81 777 000 309 330 200
Population growth 0,35 % 0,48 % -0,15 % 0,83 %
GDP per capita 31 829 $ 31 911 $ 37 723 $ 46 587 $
Area 504,000 km² 301,300 km² 357,100 km² 9,827,000 km²
Table 2: Comparison of Spain to Italy, Germany and USA (OECD Library 2012)
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7. Figure 1: Electricity Production by Source in 2010 (Spanish Ministry of Industry)
As it can be seen in Figure 2, in Spain the highest energy demand comes from the sectors of
transportation and Industry. Agriculture and forestry are accounted under others, since their
energy consumption is a small part of the total amount.
Figure 2: Final Energy Consumption per Sector in 2010 (Spanish Ministry of Industry)
Figure 3 shows how the greenhouse gases emissionmainly arises from industry, power
generation (energy industries) and transportation. Therefore in the GHGs mitigation scenario
the main objective is to reduce the energy intensity in these sectors.
Figure 3: Green House Gas Emission per Sector (OECD Library 2012)
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8. Figure 4 indicates the CO2 emissions per transport mode. It can be noticed that the road
transport is the biggest contributor to the GHGs emissions in Spain.
Figure 4: Spain CO2 Emissions by transport in 2007 (International Transport Forum)
Spain, together with Germanyhave been the most successful cases in Europe of renewable
energy implementation thanks to the feed-in-tariffs implemented by the government. Wind,
solar PV, solar CSP, biomass and other less developed renewables have been pushed in Spain by
different laws that established particular feed-in-tariffs for every technology and for different
capacities. Even though this feed-in-tariffs have been criticized for being too generous to
investors and allow big economic margins, they have allowed renewables to be present in the
Spanish electricity market.
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9. 3. METHODOLOGY
Data Collection
- Data gathering from relevant resources such as IEA, OECD, Eurostat, Spanish Ministry of Energy
- Identification of inconsistencies and data differences between the different sources and verification of the causes
Scenario Definition
- The main scenarios are defined: Reference (Business as Usual), New Policies (PANER), GHGs Mitigation and
Enhancement of Concetrated Solar Power
- Context and the parameters for each scenario are defined and allocated;
Implementation on Leap
-Data entry and Scenarios are similuated within Leap
- Required Further information and necessary changes coming from the next step is continuously modified/added in
the model
- The final model in established and simulated
Evaluation and Comparison
- Inconsistencies and errors between data from the different models is identified and feed it back in the previous step
until consistent values are obtanied.
- The results between the different models are compared
- An analysis and discussion is done.
Conclusion and Recommendations
- Policy Advisory for the energy future of Spain
- Potential future measures
- Conclusions
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10. Model Structure
The LEAP model has been developed in a
tree structure that starts from the
breakdown of the Total Energy demand into
Electricity and Non-Electricity. Under both,
Electricity and Non-Electricity, the four
main categories of consumption are
Industry, Households, Transportation and
Commercial Sector. Electricity Own Use
category includes the electricity
consumption in pump storage, and
consumption in power plants own use. It
has to be remarked that, because of a lack of
information, regarding heat production and
consumption the electricity demand is not
as detailed as the Electricity Demand, and in
that folder only aggregate values are
considered.
Next to the Demandcategory, it can be
found Transformation and Distribution
category, where the primary energies are
converted into secondary (if needed) and
delivered to the final sectors of
Figure 5: LEAP Model Structure
consumption. Finally, at the basis of the tree
there are the Resources the country can rely
on.
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11. 4. SCENARIO DEFINITIONS AND RESULTS
In order to build the energy scenarios for the country, first of all it is necessary to introduce the
current accounts into LEAP. In this study, for the current accounts, the year 2010 has been
taken as the base year, since it is the latest available year with full essential data.
Assumptions and Considerations for Current Accounts
Current Account has been filled based on data taken from the official following sources:
- EUROSTAT database.
- Spanish Ministry of Industry annual reports (MITYC).
- OECD database.
- International Energy Agency reports.
- SEI study Europe´s Share of Climate Challenges (and its correspondent LEAP file
EU27).
Due to the fact that five different sources have been considered for the input data, and in order
to maintain consistency and coherence through the whole model, the unmatched in numbers
have been identified and have been adjusted. Therefore unmatched values are prevented.
For different data type, different sources have been considered according the availability or
suitability, in the following paragraphs it is detailed which source has been considered for
which reason.
- Historical data: Electricity Shares and Capacities
Historical data has been considered for the period from 2001 to 2010 from the annual reports
of the Spanish Ministry of Industrydue to the fact that it is the most reliable and detailed
resource found. Since this report focuses on the electricity sector and the Spanish Ministry of
Industry released a yearly report, this investigation has considered the following data from
those yearly reports: historical installed capacities and historical energy shares
- Population and GDP
Population and GDP values for 2010 are taken from EUROSTAT Database.
- Heat
An important assumption has been made regarding Heat Production and Consumption. Due to
the lack of specific information it has been assumed that the heat demand for both sectors,
Industry and Households, is covered by the use of Oil and Natural Gas. As a consequence, it has
been decided to use aggregate figures therefore there is no distinction between heat
consumption and others non-electricity consumption in the demand side and power generation
in the production side. Oil and natural gas are not produced but imported, thus in the model
they are not accountedfor production, but only in distribution to the final user.
- Costs of Power Generation
The cost of electricity generation varies from technology to technology. It is important to have
this information because the cost, after the merit order, is the major factor determining the
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12. decision of producing electricity from one source or another. IEA-ETSAP and IRENA databases
and reports are the source that has been considered for the costs.
- Efficienciesand Availability of Power Generation
Regarding the efficiency, availability of the single technologies this investigation has taken them
from the EU27 LEAP file. Particular efficiencies for the national power plants have not been
found in all the sources mentioned earlier.
4.1. REFERENCE SCENARIO (BUSINESS AS USUAL)
Definition
The first scenario represents a reference for the comparison with the other three further
investigated. It is the result of policies and measures that have been implemented in Spain
before 2010 and that are going to meet the targets within an acceptable level of certainty. At the
same time, this scenario represents the natural energy market evolution and its responses to
the policies and measures.
To define this scenario, PANER data was used. Within PANER report two scenarios can be
found; in the first scenario, PANER-reference, it is assumed that the desired share of renewables
is going to be met in the future (with its respective decrease of GHGs emissions); in the second
scenario, PANER-energy-efficiency scenario, it also contains additional measures such as
improvement in the sector of electrical production, industry and transportation aggregated
under the category of energy efficiency.
Between the two scenarios presented in PANER report, the PANER-reference has provided the
main assumptions for Reference or Business as Usual scenario of this study, while the PANER-
energy-efficiency has provided the main assumptions for the New Policy scenario as it can be
seen further in this report.
Assumptions and considerations
In order to have a clear breakdown of the shares of energy sources in the electrical production
and to assess the installed capacity by source, data from the reference scenario of PANER have
been taken.
The model of the reference scenario has been developed to match the main considerations from
the reference scenario of PANER report. Because the PANER report does not provide all the
detailed necessary informationto run a complete model in LEAP the missing information has
been taken from a forecast study developed by the European Commission (EU Energy Trends
for 2030, European Commission, 2010), making sure that the results of the simulations were
matching the report.
Two scenarios are presented in the EU Energy Trends for 2030 report: a baseline (current
accounts) in which the trends are based on the analysis of historical data combined to an
evaluation of the effects of the economic crisis, and a reference which takes into account the
new efforts of each country of the union to reduce GHGs emissions and improve renewables. For
the development of our Business As Usual Scenario, only the trend-lines from the first one have
been taken.
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13. This report does not take into account almost three years of recession that characterised Spain
from 2009 to the end of 2012. However it provides an accurate analysis of the historical data
from 1980, therefore it appears to be more reliable than the direct extrapolation of trends from
data from 2000-2010 collected to develop the LEAP model, where the disturbance of the last
years of recession makes very difficult to determine a long-term trend. Assuming no variation in
demand from the year 2011 until 2040 seems very unrealistic because currently the Spanish
industry is experiencing a period of stagnation that is not expected to last for much longer.
The objectives mentioned above are of equal importance and the results obtained reflect this
compromise.
Therefore, following main points have been assumed:
• Population, GDP and their respective growth rates are taken from the report EU Energy
Trends for 2030.
• Industry, transportation and household demand growth rates are taken from the report
EU Energy Trends for 2030.
• Consumption of Total Primary Energy will Increase of about 17% (on 2010 basis) by
2020; the same growth rate is projected until 2040.
• Energy Demand from Renewable will be doubled from 2010 to 2020; the same
behaviour is expected until 2040.
• Share of Renewables in the Primary Demand will grow from 12 % in 2010, to 16 % in
2020, to 20% in 2040.
• Natural gas cumulative growth of 43% from 2010 to 2020. From 2010 to 2040 the total
growth will be22%.
• Installed Capacities for Electricity Generation: no New Nuclear will be built and the Old
Nuclear plants will be upgraded if necessary; no New Hydro will be built; the increase in
electricity demand which will not be covered by renewables, but by new Natural Gas if
necessary. The increasing renewable capacities from 2010 to 2020 have been adapted
from PANER report. For 2020 to 2040 increasing renewable capacities have been
projected following the trends from 2010 to 2020.
• Shares for Electricity Generation are projected until 2040 assuming: constant
production from Nuclear and Hydro (as it was assumed by PANER report also),
increasing renewable power generation, and natural gas powered electricity production.
Existing oil power plant production will be gradually reduced to 1.6 TWh by 2040 due to
some of these will be decommissioned. On the other side, coal will experiment an
increase up to 35TWh by 2040 which accounts for a significant increase of 35% from
2010 to 2040.
The projections of these trends into 2040 in the reference scenario can be seen in the figures 6
and 7. According to this projection, the GDP of Spain in 2040 will be double of 2010 values. In
the meantime population is about to reach 50 million people in 2040, nonetheless, after this
year population is expected to remain constant.
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14. Figure 6: GDP Growth in the Reference Scenario(EU Energy Trends for 2030, European Commission, 2010)
Figure 7: Population Growth in the Reference Scenario (EU Energy Trends for 2030, European Commission,
2010)
Results
In the Reference Scenario, main part of the demand comes from the energy consumption for
Non-Electricity purposes, such as fuel for transport and heat for industry and households. Total
energy demand is going to be 120 million tonnes of oil equivalents by the 2040. This division
can be seen in the figure 8.
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15. Figure 8: Energy Demand trends in Reference Scenario for 2040
Most of the non-electricity energy demand of Spain is going to arise from road transportation.
Industries, especially energy intensive industries are going to have significant contribution to
the energy demand in 2040. Detailed division of this branch can be seen in the figure 9.
Figure 9: Energy Demand by sector without Electricity in the Reference Scenario
On the other hand, according to reference scenario, electricity demand is going to increase from
275 TWh to almost 450 TWh by the 2040. As it is shown in the figure 10, main part of the
electricity demand will arise from the commercial and otherservices, and households.
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16. Figure 10: Electricity Demand in Reference Scenario
Under the current policies trends, by the 2040, Spain is going to increase its renewable energy
share in the mix power generation. In the figure 11, the mix generation trends can be found.
According to these trends, share of natural gas will be increased as well as the renewables.
Nevertheless the nuclear and hydro power share in the mix generation expected to remain as
they are today.
Figure 11: Electricity Generation by source in Reference Scenario
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17. 4.2. NEW POLICY SCENARIO
Definition
As mentioned before, the New Policy scenario is based on the PANER plan: it includes new
energy efficiency measures, to be taken from now to 2020, that go to complete the current
energy policy of Spain. It analyses how Spain´s energy policy to reach 20/20/20 European
targets can reshape the energy mix by improving not only renewables, but also energy efficiency
in industrial and household sectors and addressing adequate legislation in the transportation
sector.
The regulatory framework that will allow to achieve the objectives defined for this scenario is
represented by the Sustainable Economy Act and the Energy Efficiency and Renewable Energies
Act, currently evaluated by the parliament. Those acts will establish a new environmental
taxation that will encourage a reduction in consumption, a shift to renewable technologies and
an improvement in energy efficiency.
In the industrial sector, the energy efficiency will be stimulate by public incentives according to
the IDAE (Institute for Energy Diversification and Saving) aid programme for strategic
investment projects in energy savings and efficiency, which reflects the European Commission
Community Guidelines. (PANER 2010)
Also the transportation sector will be regulated through appropriate measures, such as a
taxation that will stimulate the use of more efficient vehicles. This, together with a predicted
saturation of energy consumption inside the sector and social pressure, will cause a final share
of Transportation in Total Energy Demand of around 40%.
Further improvements will be increasing investments in rail transport and the approval of a
Sustainable Urban Mobility Plans to encourage collective ways of transportation and non-
motorised modes.
The electrification of rail transport will play a major role in the CO2 emissions reduction, as well
as the increase in conventional hybrid, hybrid plug-in vehicles and total electric vehicles. They
will represent for 2020 the 10% of the total fleet and they will respectively contribute to reduce
CO2 emissions (compared to an average city-car) by 20-25%, 35-40% and 50-55%.
The demand coming from household will be reduced by stimulating the rehabilitation of
existing buildings (operating on: thermal sheeting; efficiency of existing thermal installations
such as cooling heating and hot water production; improving lighting efficiency; renovating
appliances) and by regulating the energy efficiency requirements for new buildings. The
measures regarding existing buildings have a much higher potential than the ones for new ones,
nevertheless they are more difficult to be implemented given their higher costs and the financial
crisis.
Finally, further measures will be taken to achieve higher energy efficiency in the sectors of
Agriculture and Fishery and to increase the potential of high-efficiency in Cogeneration.
Assumptions and considerations
As said before, the New Policy scenario is based on the PANER-energy-efficiency scenario
presented in PANER report. The improvement of energy efficiency, combined with an
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18. environmental taxation and more incentives for renewable is going to reduce the primary
energy demand by 11% (compared to the reference scenario) in 2020.
The Population and GDP growth are expected to be the same as in the Reference scenario, taken
from EU Energy Trends for 2030.
The main assumptions are:
• Growth rates for various sectors starting from 2010 to 2020 are calculated based on the
information for final energy consumption (demand) for various sectors by PANER
report. From the achievement of the targets described before, the growth rates of total
energy intensity for various sectors from year 2020 to 2040 are calculated to be the
ones summarized in the following table.
2010-2015 2015-2020 2020-2040
Household/ Commercial Sector 0.15% 0.89% 0.70%
Industry 0.27% 0.21% 0.18%
Transportation 0.27% 0.32% 0.30%
Table 3: Energy Intensity Increase for Different Sectors – New Policy Scenario
• Power generation: PANER report highlights the various capacities and energy
generation specifically for renewable sector from 2010 to 2020. rates of total
Results
Figure 12 shows the total energy demand of electricity and other fuels by 2040 in the New
Policies Scenario. The non-electricity demand is more than double of the electricity demand in
2010 and it will be around three times higher in 2040, reaching all together a total of about 100
MTOE.
Figure 12: Energy Demand in New Policies Scenario
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19. Non-electricity energy demand is going to generate about 75 % of the total energy demand.
Main part of this energy demand will be come from road transportation and industries. Division
of the energy demand (without electricity) by 2040 under new policies can be seen in figure 12.
According to the new policy scenario there will be some efficient use of electricity
implementations, therefore the electricity demand will also be reduced to 330 TWh by the 2040.
Figure 13 indicates the electricity consumption per sector for the new policies scenario.
Figure 13: Electricity Demand by Sector in New Policy Scenario
According to the national renewable energy action plan, Spain is planning to increase the
renewables share significantly in the mix generation. Thus, it can be seen in the figure 14 that
there are very important growths on wind, biomass and solar shares. As a consequence of this
increase in the renewable share, natural gas and coal go into a reduction period in the mix
generation.
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20. Figure 14: Electricity Generation by source in New Policies Scenario
4.3. GREEN HOUSE GASES (GHGs) EMISSIONS MITIGATION SCENARIO
Definition
In this scenario, only the effects of a hypothetical policy meant to reduce the GHGs emissions is
considered. This eventual policy would be an answer to the global needs of decreasing CO2 (and
other GHGs) emissions at any cost.
After the beginning of the crisis in 2008, the estimated CO2 emissions growth rates have
drastically reduced and global GHGs emissions have dropped in 2009 more than anytime in the
past 40 years (IEA 2009). Of course this tendency can be seen mostly in the country affected by
the crisis (OECD) and it is largely counterbalanced by the fast economic growth of other regions
(Asia). As a result, the emissions of GHGs are still predicted to grow at a global level.
As mentioned above reduction in CO2 emission growth rates caused by the crisis will not
determine a long lasting reduction unless appropriate measures are taken. After the recession
the economy will restart following business-as-usual patterns and it will not take long to reach
the rates of emission touched before the crisis. (Reducing Transport Greenhouse Gas Emissions,
OECD 2010)
The absence of a well-defined international agreement after the meeting of Copenhagen 2009
on Climate Change represents an enormous barrier to the achievement of actual results in terms
of emissions reduction. Only an indicative number is given for the reduction of emissions
expected in different countries or areas of the world, and its achievement relies strongly on each
country’s commitment.
For Europe, the Copenhagen Accord Quantified Emission Reduction Target is a reduction of
20% from 1990 levels by 2020 (30% for countries adopting strong climate protection policies).
(Reducing Transport Greenhouse Gas Emissions, OECD 2010).
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21. As well as in the New Policies Scenario, in this third scenario, the Population and GDP growth
are expected to be the same as in the Reference scenario, taken from EU Energy Trends for
2030.
Assumption and considerations for GHGs Mitigation Scenario
This investigation has considered two main actions to be carried out by the Spanish government
in order to achieve a remarkable GHGs reduction:
• Transportation: in the road sub-sector, there will be a shift from fossil fuels to biofuels:
diesel and gasoline will be reduced by 10% each and this energy gap will be covered by
ethanol and biogas.Another 10% of diesel fuel consumption in transportation sector will
be replaced by electricity based transportation in road and railtransportation by 2040.
• Electricity: Spain will decide to install new nuclear power plants in order to reduce the
expected big natural gas consumption for electricity generation. This measure will
require a huge effort but it will make theelectricity generation system cleaner.In this
scenario, 4.5 GW of nuclear power capacity will be added to the energy mix between
2025 and 2035, in three steps.
Results
The energy consumption in the non-electricity category is significantly changed mainly due to
the improvements in the transportation sector. Fuel shift from fossil fuel to biogas, ethanol and
electricity (including hybrid vehicles) in road transportation will be effective in particular
between 2030 and 2040 (see figure 15).Totalenergy consumption is expected to reduce by9.3
MTOE from the expected new policy scenario energy requirement in non- electricity category.
Figure 15: Non-Electricity Demand by Sector in GHGs Mitigation Scenario
As it is expected the electricity demand in GHGs mitigation scenario is gradually increased as
more electricity based transportation has been introduced. By 2040, the total electricity
demand will be 340.9 TWh (excluding own consumption) which means a 6.8% increase from
New Policy Scenario: the electricity consumption in transportation sector which was 1% in
2010, is gradually increased to 8% of the total demand by 2040 as shown in figure 16.
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22. Figure 16: Electricity Demand by Sector in GHGs Mitigation Scenario
Figure 17 shows how the natural gas energy share in the future energy mix is partly replaced by
the increase of nuclear energy share after 2025. Coal, Oil and renewable energy shares do not
vary significantly between GHGs mitigation and New Policy scenario.
Figure 17:Electricity Generation by Source in GHGs Mitigation Scenario
4.4. CONCENTRATED SOLAR POWER ENHANCEMENT SCENARIO
Definition
Concentrated Solar Power Enhancement scenario is built on top of the New Policies Scenario
and Current Accounts, therefore it takes all the considerations and assumptions pointed in these
scenarios.
This scenario aims to take the most of the climate conditions, sun in particular, of the Spanish
geography as well as the industry and expertise created in Spain from 2007 to 2011 when
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23. Concentrated Solar Technology has been successfully developed. In fact, this industry has
created a sector able to contribute with € 1,650 million to the Spanish economy in 2010. (Page
54, reference 19).
On 27 January 2012; the existing government of Spain decided to eliminate the national feed-in-
tariff renewable system. This measure is highly criticized by the European Commission,
different international agencies and associations and companies because of endangering, not
only a leading sector worldwide, but also to achieve the 2020 targets imposed by the European
Union.
Spain electricity mix generation has the potential to become free from fossil fuels and therefore
become energy independent from importations. CSP technology, still in its youth, has the
potential to be a base-load technology thanks to the thermal storage, which make this
technology to have a high dispatch ability (i.e. to deliver power when the sun is not shinning and
the grid requires electricity). This particularity is not currently available with any other
renewable energy sources except hydropower at economical cost.
Assumption and considerations for CSP Enhancement Scenario
In this scenario the following considerations are:
• A pause (cut-off) in the renewable energies incentives from 2012 to 2014 and therefore
an almost constant installed capacity in this period.
• A final installed capacity of 30GW by 2040of CSP technology through a gradual increase
from 2015 to 2040 thanks to the expected feed-in-tariff return in 2015.
• The demand remains the same as for GHGs scenario.
• Existing nuclear continues operation whereas new nuclear which is proposed in GHGs
mitigation scenario is not be built. The increasing energy demand will match with CSP
technology.
Results
In CSP enhancement scenario, there is an essential decrease in the share of coal that can be seen
in figure 18. According to this scenario, by 2040, installed capacity by CSP will reach 30 GW.
Meanwhile, the share of other renewables will be significantly improved in the mix generation.
As we can see in figure 18, the energy mix generation of Spain by 2040 in the CSP enhancement
scenario will have very little share of fossil fuels and around 75% it will be renewables.
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25. 5. ANALYSIS AND DISCUSSION
5.1. GHGs emission
In the reference scenario there willbe an increase in GHGs emission of 11.2 % from 2010 to
2020 as shown in table 6. The emissions continue to increase up to 345.1 million tons by 2040,
which is almost 19.3 % increase from 2010 level.
GHG Emission in million tons of CO2 2010 2020 2030 2040
Baseline Scenario 289.3 321.6 330.4 345.1
New Policies Scenario 289.3 261.1 260.1 262.8
GHG Mitigation Scenario 289.3 252.2 234.3 213.1
CSP Scenario 289.3 244.2 232.1 211.4
Table 6: Total GHGs Emission for Various Scenarios
Energy efficiency strategies and higher share of renewables have a positive impact as new
policy scenario is to reduce GHGs emission by 20.9% from base year value by 2020. However
the total GHGs emission in the new policy scenario remains almost stable from 2020 to
2040.There is a significant reduction of GHGs emission in the power generation sector in all
scenarios from reference levels: renewable energy sector improvement leads to reduce the
GHGs emission by 74 % reaching 17.5 million tons by 2040 (figure 18). Expected growth in
Wind, Solar and Biomass will ensure that the major portion of the electricity generation is based
on renewable sources. However, the natural gas plants will remain in operation for
intermittence of renewable sources, and as a peak load solution. The demand side emission
gradually is expected to increase (figure 19) to 200 million ton by 2040 in this new policy
scenario. It is noteworthy that even though there are development strategies to reduce energy
consumption in the transport sector, significant improvements will not be achieved, and the
overall increase of GHGs emission will be 9.3% from base year value (totalling up to 109 million
tons). In terms of reducing GHGs emissions, the industrial sector will achieve the most
important results in this new policy scenario: GHGs emission will be cut down by 21.4 million
tons by process improvements and energy efficiency measures. The improvements will bemore
significant in the first half of the period, from year 2010 to 2020.
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26. Figure 19: GHGs emission in Power Generation for Different Scenarios
Figure 20: GHGs emission in Demand Side for New Policy, GHG Mitigation vs Reference.
GHGs Emissions Mitigation scenario will have more significant improvements. The overall
improvement is 12.8 % and 26.4 % emission reduction from base year (2010) to 2020 and 2040
respectively. Even though GHG emissionin power generation category will not change
significantly compared to the new policy scenario, increasing electricity demand partly due to
the expected changes in transportation sector will be covered by the new nuclear plants which
willlimit thefossil fuel based power plant operation.The planned improvements in the road
transportation will be very effective as additional 11 million tons of GHGs emission can be
brought down by 2020 through these measures with respect tothe new policy scenario.
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27. Theseimprovements will become more significant by 2040 when total GHGs emission is
reduced by 47 million tons of CO2 equivalent in transportation category. The overall emission
will limit to 213 million tons by 2040.
Slightly better GHGs emission results will be achieved in the fourth scenario where CSP will
cater the rising demand of electricity. Overall emissions in the demand category remains same
as the GHGs Mitigation scenario, as there are no further improvements.
Future forecast GHGs emission for various scenarios is shown in Figure 20 which includes the
historically recorded values. EU 20:20:20 target for Spain is indicated on this graph as a red
spot. By 2020, Spain should limit its GHGs emission to 267 million tons to comply with EU
revised target (EEA, 2010). It should be highlighted that Spain will likely reach this target by
2020 if Spain adheres to one of the three strategies represented in the last three scenarios.
However GHGs mitigation and CSP strategies can be considered more environmental friendly as
these two scenarios will have meaningful results by 2040.
Total GHGs Emission
400
350
300
EU -202020 target Spain
Million tons of CO2
250
200
150
CSP Development GHG MIT
100
New Policies Senario Reference
50
0
1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038
Figure 21 :Total GHGs emission since 1990
5.2. Social Cost of Power Generation
Performances of the different scenarios are here compared in terms of costs. Figure 21 gives the
different cumulative social cost values that will be encountered in the future inthe power
generation category. These costs are depreciated at 5% cost of opportunity and do not include
the social cost that is to be spent on fuel. Costs of various scenarios are gradually increasing and
a significant difference between reference scenario and new policy, CSP and GHGs mitigation
can be observed by 2040. The social cost accounts to US$241.4 billion by 2040 in the Reference
scenario, whereas it accountsto US$280.5 billion and US$ 281.4 billion in the New Policy and in
theGHGs Mitigation scenarios respectively. An additional cost of US$ 9.7 billion is expected in
CSP scenario.
These results are realistic as the New Policy, GHGs mitigation and CSPdevelopments need more
investment in new renewable and nuclear in the power generation sector.
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28. Annual investments on CSP strategy are shown in Figure 22. In the power generation category,
the major portion of the cost will be the capital investmentwhile the fixed O&M cost becomes
the second major cost.
As a final remark, it can be noticed that the total expenditure for society in the reference
scenario is significantly lower than any other strategy. But this cost saving will be outweighed
by the increasing fossil fuel expenditures. This will be further discussed in section 5.5.
Figure 22 :Social cost encounter in Various Scenarios
Figure 23 :Cost breakdown for CSP Strategy
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29. 5.3. Social Cost of Power Generation –With Externalities
The external damage costs are associated with the pollution occurred by burning fossil fuels.
These costs are often ignored because adverse effects are not directly monetized in most energy
systems.However these externalities should be considered and accountedin the cost of power
generation since there is increasing stakeholder commitment for sustainable development. The
cost of externalities does not become a major contributor in CSP strategy (figure 22) but the
externalities become more significant in the reference scenario (figure 23) due to the
externalities associated with fossil fuel burning power plants.
Figure 24: Cost breakdown for Business as Usual Scenario.
Internalizing costs is a complex issue that definitely affects the way the Energy industry behaves as it
is shown previously in this report, the previous comparison of running costs dispatch rule simulation
against a merit order dispatch rule simulation. In this comparison it can clearly seen that how
inadequate regulations can end up in an unwanted electricity mix generation because some
regulations are ambiguous,insufficient or simply bad defined.
Internalizing costsas many as possible for every single energy generation technology is suggested by
the authors of this report to the Spanish Energy System if Spain is willing to, not only achieve 2020
targets, but also move into a sustainable mode of energy governance.
An unsustainable mode of energy governance could eventually lead a country into collateral
unsustainable practices in other sectors.
How and where to allocate these external costs is even more complex and difficult to put in place.
The consequences thereof can go in the opposite way as pretended. As an example it can be
commented the fact that in the last 2 decades, many industries that were producing goods in Spain
have moved out their factories to other places due to, in part, cheaper electricity prizes.
Unemployment rates are achieving maximum figures in Spain in the current year, where Spanish
industry does not drop as much as unemployment, due to these foreign factories count as national
production.
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30. Spain electricity bill is raising year-by-year, subsidies to renewables and fossil fuels between other
costs are being allocated in the individual bills that everyone individually pays. As a consequence
Spain has the 3rd most expensive average electricity bill in Europe, not because of the electricity
generation price but a cost entry called “distribution costs” which includes the subsidies and others
that make the electricity bill expensive.
5.4. Social Cost of Demand Side Management
Other costs shall not be discussed in this section due to lack of detailed information and
complexity. The costs in the demand side expected in last three different strategies are higher
thanin the business as usual scenario since more investments in energy efficiency and new
infrastructure development are proposed.
5.5. Fuel Dependency:
Spainhas very few fossil fuel resources and almost no crude oil and natural gas. Only coal is
currently and historically produced in mines in the North. In 2010, Spain imported 60% of the
coal consumed (source Industry Ministry of Spain) and all the natural gas and oil consumed.
Translating those into numbers, in 2010, Spain imported 52.460 million tons of crude oil,
13.201 million tons of coal (OECD, 2010) and 36,721 mcm of natural gas (IEA, 2012).
In 2000, Spain spent around €20 billion on imported fossil fuel resources. This amount has
gradually increased to €50 billion by 2011 even though the total import is 0.5% less than total
import in 2000 (Source: IMF and CNE). This €50 billion fuel import cost is equivalent to 5.3% of
the GDP. Thus it can be concluded that Spain is strongly dependent on fossil fuel import and
country's economy is directly affected by this position. Therefore strong movement to change
this current position is required. The priority should be to reduce fossil fuel imports by
promoting energy conservation, an urgent and massive electrification specifically in the
transportation sector, and to promote renewable energy resources in most cost effective way.
The next tables show how different scenarios affect in the energy importation of Spain:
Natural Gas Imports (ktoe) 2010 2020 2030 2040
Baseline Scenario 30 830 35 332 39 060 43797
New Policies Scenario 30 830 24 018 23546 23 444
GHG Mitigation Scenario 30 830 24505 22 369 22414
CSP Enhancement Scenario 30 830 22 698 21 840 21 973
Table 7: Natural Gas imports forecast for different scenarios
Oil Imports (ktoe) 2010 2020 2030 2040
Baseline Scenario 45 238 48 504 49 489 50 824
New Policies Scenario 45 238 43 534 45 118 46 879
GHG Mitigation Scenario 45 238 39 948 37 886 31 529
CSP Enhancement Scenario 45 238 39 871 37 871 31 521
Table 8: Oil imports forecast for different scenarios
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31. Coal Imports (ktoe) 2010 2020 2030 2040
Baseline Scenario 9129 12 154 11 471 11 451
New Policies Scenario 9129 7 288 6 053 5 360
GHG Mitigation Scenario 9129 7 532 5 786 5 260
CSP Enhancement Scenario 9 129 6 623 5 551 5 086
Table 9: Coal imports for different scenarios
Looking at the previous tables it can be analysed that both GHGs Scenario and CSP scenario not
only reduces the global warming potential and emissions of Spain but also helps the country to
reduce dependency on fossil fuels.
It is highly remarkable to note that less than half of natural gas (Table 7) and less than 60% of
crude oil (Table 8)will be consumed by Spain in GHGs Mitigation Scenarioby 2040 compare to
Business as Usual. In order to achieve this GHGs Mitigation scenario, as it has been said
previously, an important effort in the nuclear sector and biofuels in transportation has to be
implemented. Those two measures have to be analysed more in depth.
The first; biofuels have a great potential in Spain. Boosting biofuels in the Spanish energy
market will have many of pros and cons. On one hand, a lot of diesel engines could work
with many biofuels that can be produced locally from sunflower and others. Land
availability does not seem to be a main problem for growing energy crops as well as it will
help to rural development. On the other hand, Spain as many European countries has a
deficit in cereals and oil-seeds so it envisions a contradictory future if this trend persist and
biofuels start being produced.
The second; more nuclear energy for Spain will encounter lots of social problems since
Fukushima disaster happened. Beside, even though nuclear power plants require very few
quantities of uranium all the uranium used in the Spanish power plants come from
Australia, Canada and SouthAfrica. Therefore having a system with a higher nuclear energy
share will not solve completely the issue of energy dependency. Nonetheless, since uranium
prices are not expected to grow as high as natural gas, oil or coal the economy would not be
affected as much as if the system imports other kind of fossil fuels.
Extra effort that is needed in biofuel development in GHGs Mitigation Scenario, is also expected
in CSP Scenario where the new nuclear is not suggested as a green fuel. Thus the new risk
associated with nuclear operation and waste, waste management is avoided, and dependency of
importing nuclear product is partly reduced. Increasing energy demand is covered by more
sustainable way implementing more CSP applications to Spain’s energy mix.
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32. 6. CONCLUSION
By 2040 Spain has the potential to become independent of fossil fuels for the Electricity
Generation system. Although Spain is on the right track, further and more significant efforts
need to be done in the forthcoming years.
Spanish transportation sector is strongly dependent on fossil fuels; this has to be reshaped if
GHGs emissions and energy dependency want to be redirected into a sustainable path. As this
report shows, an increase in electricity and biofuels contribution in the transportation sector
will have a positive impact in the system.
The target (revised) to achieve 267 millions of CO2 tons proposed from the European Union
seems very unlikely to be achieved with the current policies, energy trends and consumption
patterns of society (reference scenario). A sustainable greener future can be envisioned if a
substantial change in consumption patterns takes place, not only with measures in energy
efficiency and renewable energies.
The financial crisis has slowed down the ambitious run towards sustainability that Spain had
started before. The risk of entering a technological recession on top of the economical one is
very high, that’s why the incentives for renewables and energy efficiency should be a priority for
the national policy. If the crisis will be overcome by re-establishing the economy leaving behind
the innovation of the energy sector, Spain will miss a big opportunity of being at the forefront
for clean-tech in Europe. Moreover, the sectors of Energy Efficiency and Renewable Energy are
proved to be a source of new jobs. Given the high rate of unemployment that keeps on growing
in Spain because of the crisis, it would be wise to develop appropriate measures to integrate
employment within the energy sector.
Internalizing costs as taking the most of renewable energies seem to be one of the potential
sustainable paths that Spain might follow in the coming 30 years if Spain wants the 3 pillars of
sustainability to be full-filled; environment, economics and social.
“Wind, sun and biomass are destined to be the Spanish oil of the future”
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