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Scaling up renewable energies

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This presentation was used in Euro Arab Training Course “SMART GRID AND INTEGRATION OF RENEWABLE ENERGY”. The course took place 25 – 29 April 2016

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Scaling up renewable energies

  1. 1. Seite 1 - Experiences with high shares of fluctuating RE in electricity grids - Granada, April 26, 2016 Jens Burgtorf Head of Project ‚Technology Cooperation in the Energy Sector‘ Scaling-up Renewable Energies
  2. 2. Page 2 GIZ Services in the Energy Sector  Increase of capacity and competence  Provision of current expert knowledge about technology and management  Strengthening sector institutions and key actors  Creation of cost-effective pre-conditions  Assistance in creating supportive political conditions on the national level  Support in the implementation of national renewable energy strategies  Assistance in including the private sector  Support in creating a multi-stakeholder dialogue in the energy sector  Playing the role of a ‘trustworthy agent’ among political institutions, civil society, the research sector and the business sector  Supporting national and regional political processes  Technical advisory services  Technology transfers and introduction of innovative RE/EE technologies  Planning and implementation of demonstration projects
  3. 3. Page 3 GIZ Energy Projects Worldwide GIZ worldwide energy projects: 137  Africa: 30 %  Asia: 27 %  Europe: 12 %  Latin America: 18 %  MENA region: 6 %  Trans-regional: 7 % Current projects
  4. 4. Page 4 Objectives of vRE development in emerging and developing countries  Security of supply e.g. by reducing import dependence  Cost efficiency / economic benefits from vRE generation  Grid stability  Capacity expansion  Energy access  Climate change  Industrial and innovation policies
  5. 5. Seite 5 Drivers and challenges for renewable energy scale-up (RE) Current state  Strong demand growth  Partially weak infrastructure  Monopolistic market structure  Striving for cost efficiency and co-benefits (jobs etc.) Drivers for renewable energies  Strongly decreasing investment costs  Historically low interest level  Growing number of support initiatives  Price parity in important market segments (particularly PV ↔ diesel generators)  etc. Challenges for renewable energies  Historically low fossil fuel prices  Risk of geopolitical conflicts  Partially high financing and transaction costs  Lack of governmental guarantees  Strong interest in rapid capacity deployment  Uncertainty due to power market reforms  Uncertain development of climate finance
  6. 6. Seite 6  Global framework conditions for RE have changed in recent years  Market transformation is disruptive and causes structural changes  Developing & emerging economies are embarking on RE “take-off” phases  Mainstream concepts and methods used in 1st generation RE countries (GER, ES, US) are no longer appropriate  Sectors with – intended - high shares of vRE require a consistent focus on  (i) Specific national challenges  (ii) Changing international boundary conditions for RE  (iii) Robust cost-benefit analysis for optimal, country specific RE pathways RE Outlook – 2016 and beyond
  7. 7. Seite 7 • Almost any power system can digest 5%- 10% of vRE fairly easy • Put “System friendly deployment” at the center of your strategy • Follow a system-wide approach for integration • Integrate evolving yield prognostics into system operation from the start • Avoid Hot Spots IEA study supports benefits of vRE in 15 case countries Flagship publication, IEA: The Power of Transformation, April 2014 However, the integraton of larger shares of vRE require attention to detail
  8. 8. Seite 8 Supporting the Development of “Sustainable Energy Systems” Erneuerbare Energie
  9. 9. Seite 9 The System Perspective Sustainable Power System Does not focus on the specific costs and emissions of a technology or project per kWh, but on the total emissions and costs of the power system
  10. 10. Seite 10 Boundary conditions for planning markets with higher shares of vRE • National Macro-economic perspective needed to guide discussion • vRE to be integrated into historically grown systems and markets • Paradigm: Generation is adapted to load -> Unit Comittment • vRE intermittent & CAPEX dominated / Unit Commitment OPEX oriented • Technical Nature of vRE – high geospatial dependency • Grid Integration a challenge • Increased cycling from thermal generations [due to unit commitment constraints] therefore needs attention to detail
  11. 11. Seite 11 Boundary condition for planning markets with higher shares of vRE – cont‘d • High CAPEX necesitates sound financing conditions • Market integration a challenge – Regulations and Tariffs needed • So far, only few tools and methods which can adequately handle the intermittent nature of vRE
  12. 12. Page 12 A systematic approach to vRE assessments 25.04.2016 In order to maximize the Net Benefits of vRE in existing power systems, a closer look on the following aspects is needed during the planning phase: • vRE Generation Potential • Local (regional) and aggregated vRE generation profiles • Saisonalities of Load and Generation • Grid Integration • Grid infrastructure including automation and Grid Code Compliance • Power Flow, Short Circuit and Stability considerations • Spinning Reserve Requirements • Local (regional) Load Profiles and aggregated Load • Market Integration • Electricity Market / System Design and organization of energy sector • Power Park Characteristics (CAPEX, OPEX) and generation alternatives • Financing • Risk Premiums for Legal, Country, FX, Regulatory and Procedural Risks • Interest Rates, Liquidity of Capital Markets
  13. 13. Page 13 25.04.2016 • “optimal dispatching solution” will require increased cycling from thermal generators • Important to assess contractual arrangements Exemplary dispatch of a summer week in 2018, 2030, 2050 2018 2030 2050 Based on research by DLR
  14. 14. Seite 14 Characteristics of Power Systems Germany Majority of partner countries Stagnating demand Dynamically growing demand Highly meshed grid Weak grid and transmission system infrastructure and operation Continuity of service Frequent blackouts Power exchange Different institutional set-ups Ability and willingness to pay (Energy) poverty Connect & forget Where, when, & how much power, which technology? Mediocre RE resources Excellent RE resources
  15. 15. Seite 15 National RE Governance for Optimal Scale-Up National RE scale-up pathways need to: • Handle the massive intended volumes efficiently (by optimizing costs and benefits on project and system level); • be country-specific, and • empower all stakeholders with cutting-edge planning and implementation capacity
  16. 16. Seite 16 Policies for National RE Pathways • Develop plausible and evidence-based roadmaps to scale-up green investments • How much RE should be implemented at which point in time – and where – to optimize national welfare? • Formulate an overarching & transparent regulatory framework • Clarify objectives, regulation, procedures, and responsibilities • Ensure long-term, legally enforcable contracts for investors • Best case: back decisions with government guarantees Active public guidance to private sector RE investments will be needed to avoid unnecessary losses.
  17. 17. Seite 17 Why Policies Matter Putting the value of RE to the system at the center of the strategy will reduce (financial) costs: • A plausible contribution of RE to the system‘s cost- efficiency and stability will make future harmful changes less likely, lowering politcal risk • A plausible RE policy & deployment plan will assure a long- term market volume for RE, thereby attracting investors
  18. 18. Seite 18 Contact: Jens Burgtorf (jens.burgtorf@giz.de) Head of Project ‚Technology Cooperation in the Energy Sector‘ Thank you for your attention
  19. 19. Seite 19 BACK-UP SLIDES Erneuerbare Energie25.04.2016
  20. 20. Seite 20 Integration challenge for higher shares of vRE The power system and power markets will need to cope with a highly fluctuating power production from wind and solar [Case for Germany]
  21. 21. Seite 21Erneuerbare Energie
  22. 22. Seite 22 The Evolution of German RE Policies 1st Generation (early 1990s)  Objective: R&D, technology demonstration, initial diffusion to citiziens  Instruments: „1000 roofs programme“ & „100 000 roofs programme“  Subsidies initially paid up front against kWp (capacity) 2nd Generation (2000s)  Objective: Technologies (especially PV) mature, but expensive  thus, focus lies on bringing down costs via Economies of Scale (EoS)  Instrument: Renewable-Energy-Act (EEG) with incentive paid against „kWh results“ (energy yield) 3rd Generation (current)  Objective: Massive and cost-efficient integration of RE into national and EU power systems.  Instrument: Intelligent, evolving and cost- benefit optimized bundle of market-based incentives and regulatory measures Policies that have been adjusted to boundary conditions and national priorities (t) Technical feasibility Reduced costs System Perspective: Low cost at high value

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