Decarbonisation of the electricity sector is central to Europe’s plans to reduce carbon emissions in an effort to tackle climate change. But the policy and market design
framework for delivering decarbonisation remains uncertain.
Poyry - Europe’s energy future – the shape of the beast - Point of ViewPöyry
Decarbonisation requires large scale investment by European energy companies, but threatens their existing revenue streams. Financial investors are becoming wary of the power sector, and new sources of capital are urgently required. Meanwhile, Europe faces a policy dilemma; whether to rely on markets and a strong CO2 regime, or to build national solutions with government-channelled investment. Whichever way this dilemma is
resolved, the traditional role of the electricity companies must adapt: embracing innovation is the first necessary step to the future world.
The document criticizes the European Commission's Green Paper on energy policy for being too ideologically driven by assumptions of market liberalization rather than taking a fact-based approach. It argues the paper's stated goals of sustainability, competitiveness, and security of supply are inconsistent and incompatible with each other. Market mechanisms are seen as incompatible with sustainability and security objectives. The document calls for a more realistic assessment of different policy tools and scenarios given uncontrollable external factors like global fuel prices.
The document is a statement from E.ON AG responding to the European Commission's Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy. E.ON welcomes many of the Green Paper's goals but expresses concerns that some proposals contradict the principle of open and competitive energy markets. Specifically, E.ON is worried that targets for renewable energy and energy mixes could distort investments. E.ON calls for removing barriers to integrated energy markets in Europe and for allowing market forces rather than political mandates to drive investment and innovation.
- European utilities are undergoing significant changes due to a shifting energy market and political environment, with traditional centralized generation models being replaced.
- To create new value, utilities must pursue growth opportunities downstream in areas like energy services, efficiency solutions, distributed generation, and new verticals like electric mobility and smart homes.
- Successful growth will require utilities to get the basics of their existing business right, carefully select opportunities where they can compete against established players, and reorganize internally to build focused new business units.
The document is a response from the Sussex Energy Group to the EU's Green Paper on energy strategy. It discusses some of the tensions between pursuing sustainability, competitiveness, and security of supply as goals of energy policy. Specifically, it notes that sustainability and competitiveness may conflict if competitiveness is defined solely as low energy prices. It also argues that some government interventions to improve security of supply could conflict with competition objectives. However, sustainability and security may be mutually supportive if developing EU renewable resources reduces import dependence. Overall the response aims to provide a more nuanced perspective on balancing and potentially reconciling the different policy objectives.
The document discusses how new technologies could impact energy markets. It summarizes discussions from the 10th SITE Energy Day regarding wind energy, smart grids, and electromobility. Wind power is now competitive with fossil fuels and is pressuring energy prices down through increased supply. However, it also introduces more volatility. Smart grids make renewable integration and prosumer activity easier but require regulatory and legal frameworks. Electromobility could reduce transport emissions if supported by renewable electricity. New technologies may allow carbon neutrality by reducing oil and gas use, though cross-border cooperation and investment in new connections will be needed.
5467470000 capacity markets in europe final february 2014 v1 4Niclas Damsgaard
Final report from Sweco's multiclient project "Capacity Markets in Europe - Impact on Trade and Investments" (Feb 2014).
The study was supported by 15 industry stakeholdes (power companies, TSO:s, national regulators) from 8 countries.
The document summarizes the conclusions from a seminar in Spain on the EU's Green Paper on Energy Policy. Key points discussed include:
- The need for a common EU energy policy due to increasing energy dependence and supply risks.
- Markets are not fully developed but are benefiting consumers; more infrastructure is needed.
- Electricity and gas markets remain isolated; regional integration is key.
- More gas import infrastructure and interconnections are needed to improve supply security.
- Greater infrastructure capacity and cooperation can boost energy solidarity across Europe.
- Diversifying energy sources requires policies coherent with efficient market functioning.
Poyry - Europe’s energy future – the shape of the beast - Point of ViewPöyry
Decarbonisation requires large scale investment by European energy companies, but threatens their existing revenue streams. Financial investors are becoming wary of the power sector, and new sources of capital are urgently required. Meanwhile, Europe faces a policy dilemma; whether to rely on markets and a strong CO2 regime, or to build national solutions with government-channelled investment. Whichever way this dilemma is
resolved, the traditional role of the electricity companies must adapt: embracing innovation is the first necessary step to the future world.
The document criticizes the European Commission's Green Paper on energy policy for being too ideologically driven by assumptions of market liberalization rather than taking a fact-based approach. It argues the paper's stated goals of sustainability, competitiveness, and security of supply are inconsistent and incompatible with each other. Market mechanisms are seen as incompatible with sustainability and security objectives. The document calls for a more realistic assessment of different policy tools and scenarios given uncontrollable external factors like global fuel prices.
The document is a statement from E.ON AG responding to the European Commission's Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy. E.ON welcomes many of the Green Paper's goals but expresses concerns that some proposals contradict the principle of open and competitive energy markets. Specifically, E.ON is worried that targets for renewable energy and energy mixes could distort investments. E.ON calls for removing barriers to integrated energy markets in Europe and for allowing market forces rather than political mandates to drive investment and innovation.
- European utilities are undergoing significant changes due to a shifting energy market and political environment, with traditional centralized generation models being replaced.
- To create new value, utilities must pursue growth opportunities downstream in areas like energy services, efficiency solutions, distributed generation, and new verticals like electric mobility and smart homes.
- Successful growth will require utilities to get the basics of their existing business right, carefully select opportunities where they can compete against established players, and reorganize internally to build focused new business units.
The document is a response from the Sussex Energy Group to the EU's Green Paper on energy strategy. It discusses some of the tensions between pursuing sustainability, competitiveness, and security of supply as goals of energy policy. Specifically, it notes that sustainability and competitiveness may conflict if competitiveness is defined solely as low energy prices. It also argues that some government interventions to improve security of supply could conflict with competition objectives. However, sustainability and security may be mutually supportive if developing EU renewable resources reduces import dependence. Overall the response aims to provide a more nuanced perspective on balancing and potentially reconciling the different policy objectives.
The document discusses how new technologies could impact energy markets. It summarizes discussions from the 10th SITE Energy Day regarding wind energy, smart grids, and electromobility. Wind power is now competitive with fossil fuels and is pressuring energy prices down through increased supply. However, it also introduces more volatility. Smart grids make renewable integration and prosumer activity easier but require regulatory and legal frameworks. Electromobility could reduce transport emissions if supported by renewable electricity. New technologies may allow carbon neutrality by reducing oil and gas use, though cross-border cooperation and investment in new connections will be needed.
5467470000 capacity markets in europe final february 2014 v1 4Niclas Damsgaard
Final report from Sweco's multiclient project "Capacity Markets in Europe - Impact on Trade and Investments" (Feb 2014).
The study was supported by 15 industry stakeholdes (power companies, TSO:s, national regulators) from 8 countries.
The document summarizes the conclusions from a seminar in Spain on the EU's Green Paper on Energy Policy. Key points discussed include:
- The need for a common EU energy policy due to increasing energy dependence and supply risks.
- Markets are not fully developed but are benefiting consumers; more infrastructure is needed.
- Electricity and gas markets remain isolated; regional integration is key.
- More gas import infrastructure and interconnections are needed to improve supply security.
- Greater infrastructure capacity and cooperation can boost energy solidarity across Europe.
- Diversifying energy sources requires policies coherent with efficient market functioning.
This document summarizes a presentation on wind power financing and investing in Turkey. The key points are:
1) Turkey has a very favorable wind regime for wind power generation with high average capacity factors. However, subsidies are insufficient to make all projects financially viable.
2) Onshore wind power is growing significantly in Turkey, driven by climate change concerns, energy security, and domestic industry support. Offtake agreements and turbine choice are important factors in project success.
3) Access to financing remains challenging due to risk aversion among banks following the 2008 credit crunch. Transactions require a club of lenders and more equity. Project and sponsor quality are critical for attracting capital.
EU - Financing Energy Efficient Retrofit - nuances public affairs analysis 2013nuances
Buildings account for over 40% of EU energy consumption, with heating making up 85% of building energy use. The EU has set targets to reduce greenhouse gas emissions 20%, increase renewable energy 20%, and improve energy efficiency 20% by 2020. To achieve efficiency goals, EU members must submit plans to reduce energy sales 1.5% annually, and the EU will provide €17 billion from 2014-2020 for efficiency projects through the European Regional Development Fund. Additionally, €6.5 billion will fund efficiency research. Germany and the UK offer models through subsidies and loans to increase private investment in efficiency measures like building insulation, which typically have long payback periods.
The document discusses the scale of changes needed to limit global warming to 450 parts per million of CO2, including improving energy efficiency, increasing renewable energy sources, deploying carbon capture and storage technologies, and increasing nuclear power. It emphasizes that a coordinated global policy approach is required, including government policies to support low-carbon technologies through all stages from research to large-scale demonstration and deployment. Cap-and-trade systems and international cooperation on projects are presented as important policy mechanisms.
1. The document analyzes two energy scenarios for the Netherlands in 2030 called "Flowingly Forward" and "Slow Strife" that differ in their success in transitioning to renewable energy.
2. Under the Flowingly Forward scenario, the renewable energy share increases six-fold to 23% by 2030. However, under the Slow Strife scenario, the renewable energy share only increases slightly to 7% due to hampered transition.
3. Key factors in the scenarios include expected changes in energy consumption levels and mix, ability to meet 20-20-20 renewable energy targets, impact of additional energy efficiency measures, and natural gas's continuing role in the transition.
This document discusses policy options for transitioning to a low-carbon economy by 2050. It explores sustaining economic growth while transforming energy production and consumption. The presentation builds on previous publications by identifying policy ideas without prescribing specific approaches. It discusses challenges like uncertain development pathways and high/low carbon scenarios. Milestones by 2025 include efficiency gains, commercializing carbon capture and storage, renewable deployment, and vehicle efficiency. National policy frameworks and international cooperation on technology and emissions management can help achieve long-term climate goals.
Hungary supports the European Commission's efforts to develop a common European energy policy to address energy challenges. The policy should focus on competitiveness, security of supply, and sustainability. Hungary agrees with the Green Paper's identification of key policy areas including energy markets, infrastructure, renewable energy, and energy efficiency. Hungary emphasizes the importance of diversifying energy sources and routes to improve security of supply, highlighting several proposed pipeline and LNG projects as important to central Europe. Hungary supports common EU research and development objectives to improve energy security, reduce consumption, and develop alternative energy sources.
The document analyzes opportunities in the EU biofuels market. It notes that EU biofuels policies have driven strong growth but fundamentals are challenging. Good biofuels projects require lower costs, product differentiation, and control over the value chain. Size and experience matter as the market becomes more competitive and consolidation is expected. Opportunities remain for independent projects that can secure feedstock and exploit niches.
Zinaida Dimitrijevic has expertise in using cost-benefit analysis and multi-criteria decision analysis to evaluate environmental policy options for electricity generation. Her research focuses on calculating external costs of pollution and comparing them to investment costs to determine the most economically acceptable scenarios for reducing air emissions in Bosnia and Herzegovina and other Southeast European countries. Her doctoral thesis and published papers apply these methods to assess policies for decreasing sulfur dioxide and nitrogen oxide emissions from coal-fired power plants.
This document provides the opinion of the Finnish Energy Industries on the European Commission's Green Paper on a European strategy for sustainable, competitive and secure energy. Some key points made in the document include:
- The Finnish Energy Industries welcomes the Commission's initiative to launch a broad debate on European energy policy and strategy.
- Developing a coherent European energy policy is important but should not replace national energy policies. Countries should still decide their own energy mixes.
- Completing the internal energy market is important but the focus should also be on meeting growing energy demand and replacing aging infrastructure while ensuring an optimal diversified energy mix.
- All energy sources, including nuclear, should have equal access to ensure secure and affordable
The document provides a reaction to the European Commission's 2006 Green Paper on energy policy. It makes three main points:
1) The Green Paper raised high expectations about developing an integrated EU energy policy that addresses internal market issues, security of supply, and environmental concerns in a coherent manner. However, member states still jealously guard their sovereignty over energy choices.
2) An EU energy policy must better connect upstream and downstream parts of the energy value chain and account for Europe's growing import dependence, the rising role of national oil companies, and need for a coherent external energy relations strategy.
3) The Green Paper missed an opportunity to signal the EU takes external energy relations seriously by starting with that topic instead of
This document summarizes a study that uses a fuzzy multi-objective linear programming model to determine the optimal allocation of Iran's energy resources from 2011 to 2020. The model considers three objectives: minimizing energy imports, maximizing economic benefits, and minimizing greenhouse gas emissions. Energy demands are forecasted using neural networks and fuzzy linear regression. The model then determines the optimal allocation of oil, natural gas, and electricity to meet demands while achieving the three objectives. The results provide a basis for optimal energy resource allocation in Iran through 2020.
EU wishes to decrease its external energy dependency. The reason is that more control of our own energy usage enable more stable prices for you, me as well as for companies in EU. Three important measures to evaluate is Europe’s need to produce more of our own energy, buy energy clever from abroad and reduce our energy consumption to decrease our energy demand. In the centre of this paper a Control Price Mechanism is used that can help us achieve these goals.
The document discusses opportunities to reduce energy intensity in UK industry. It analyzes trends that have decreased energy consumption and intensity over decades. Key opportunities identified include encouraging work from home, improving building insulation and efficiency, and optimizing transportation of goods and employees. The government provides incentives for efficiency measures. Further reductions may come from intermodal freight transport, larger trucks, and coordinating truck driving to reduce drag. While progress has been made, there is still potential to lower industry's energy intensity through innovative solutions.
Keeping The Lights On - MSLGROUP Energy Report January 2014MSL
Rising consumer prices, unrealistic renewable energy subsidies, crumbling financial models -- in this report, we share insights on the challenges facing the European power market and the role of communications in trying to re-establish trust and build empathy between producers and their customers.
At MSLGROUP, we represent a wide range of power companies across Europe, ranging from large scale utilities to small scale renewables; from nuclear to solar and all points in between. We are actively engaged in helping our clients communicate around these issues and relish the challenge! We hope that you enjoy this report and welcome your feedback.
So don’t hesitate to contact us with your thoughts.
This document discusses government subsidies provided to producers and consumers. It defines subsidies as financial or other support from the government. Examples of subsidies for producers include biofuel subsidies for farmers and subsidies for wind farm investment. Examples of subsidies for consumers include food/fuel subsidies and child care for working families. The document then examines how subsidies work through diagrams, showing how they lead to a lower equilibrium price and higher equilibrium quantity. It also justifies why governments introduce subsidies and evaluates their impacts through concepts like cost-benefit analysis.
The document discusses various types of maximum prices or price caps that governments may implement, including caps on housing rents, energy prices, CEO pay, mobile roaming charges, and interest rates charged by payday lenders. It analyzes the effects of price caps using supply and demand diagrams, noting they may result in shortages if set below the market equilibrium price. Price caps also risk unofficial "black market" prices emerging above the capped level. The document evaluates price caps in different markets, outlines potential benefits in terms of consumer welfare but also downsides like reduced profits and investment.
The Ukraine Crisis - could gas supply disruptions affect Europe?Pöyry
As tensions between Russia and Europe have increased over the situation in Ukraine, very real concerns have emerged regarding the security of gas supplies. Whilst there is a longer-term question of whether Europe should consider reducing European dependence on Russian gas, in this Point of View, Pöyry examines the potential short-term impacts of a curtailment in Russian gas supplies through Ukraine over the next winter.
Poyry - Paper business in mature markets - is there hope? - Point of ViewPöyry
It is old news that the profitability of
European graphic paper producers has been
unsatisfactory in the 2000’s. In fact, the
industry never recovered from the recession of
2001-2002. Since then, paper production has
returned less than 2% on capital employed.
Poyry - Survival innovations in the wood products webPöyry
Increasing the use of wood in building and furniture is good for the wood industry but it is also good for our climate: wood captures carbon and has a smaller carbon footprint than most competing materials. Product innovation is the key to making this happen.
Poyry - How must plantation forestry change to survive? - Point of ViewPöyry
There is growing global evidence that in order to survive, plantation forestry 1 must change. Moving beyond supplying pulp and paper producers and wood products manufacturers, global forestry players must now meet
increasing demands from new bioenergy producers, compete for land and water with food growers, deal with changing societal beliefs about sustainability, and comply with complex environmental regulations.
This document summarizes a presentation on wind power financing and investing in Turkey. The key points are:
1) Turkey has a very favorable wind regime for wind power generation with high average capacity factors. However, subsidies are insufficient to make all projects financially viable.
2) Onshore wind power is growing significantly in Turkey, driven by climate change concerns, energy security, and domestic industry support. Offtake agreements and turbine choice are important factors in project success.
3) Access to financing remains challenging due to risk aversion among banks following the 2008 credit crunch. Transactions require a club of lenders and more equity. Project and sponsor quality are critical for attracting capital.
EU - Financing Energy Efficient Retrofit - nuances public affairs analysis 2013nuances
Buildings account for over 40% of EU energy consumption, with heating making up 85% of building energy use. The EU has set targets to reduce greenhouse gas emissions 20%, increase renewable energy 20%, and improve energy efficiency 20% by 2020. To achieve efficiency goals, EU members must submit plans to reduce energy sales 1.5% annually, and the EU will provide €17 billion from 2014-2020 for efficiency projects through the European Regional Development Fund. Additionally, €6.5 billion will fund efficiency research. Germany and the UK offer models through subsidies and loans to increase private investment in efficiency measures like building insulation, which typically have long payback periods.
The document discusses the scale of changes needed to limit global warming to 450 parts per million of CO2, including improving energy efficiency, increasing renewable energy sources, deploying carbon capture and storage technologies, and increasing nuclear power. It emphasizes that a coordinated global policy approach is required, including government policies to support low-carbon technologies through all stages from research to large-scale demonstration and deployment. Cap-and-trade systems and international cooperation on projects are presented as important policy mechanisms.
1. The document analyzes two energy scenarios for the Netherlands in 2030 called "Flowingly Forward" and "Slow Strife" that differ in their success in transitioning to renewable energy.
2. Under the Flowingly Forward scenario, the renewable energy share increases six-fold to 23% by 2030. However, under the Slow Strife scenario, the renewable energy share only increases slightly to 7% due to hampered transition.
3. Key factors in the scenarios include expected changes in energy consumption levels and mix, ability to meet 20-20-20 renewable energy targets, impact of additional energy efficiency measures, and natural gas's continuing role in the transition.
This document discusses policy options for transitioning to a low-carbon economy by 2050. It explores sustaining economic growth while transforming energy production and consumption. The presentation builds on previous publications by identifying policy ideas without prescribing specific approaches. It discusses challenges like uncertain development pathways and high/low carbon scenarios. Milestones by 2025 include efficiency gains, commercializing carbon capture and storage, renewable deployment, and vehicle efficiency. National policy frameworks and international cooperation on technology and emissions management can help achieve long-term climate goals.
Hungary supports the European Commission's efforts to develop a common European energy policy to address energy challenges. The policy should focus on competitiveness, security of supply, and sustainability. Hungary agrees with the Green Paper's identification of key policy areas including energy markets, infrastructure, renewable energy, and energy efficiency. Hungary emphasizes the importance of diversifying energy sources and routes to improve security of supply, highlighting several proposed pipeline and LNG projects as important to central Europe. Hungary supports common EU research and development objectives to improve energy security, reduce consumption, and develop alternative energy sources.
The document analyzes opportunities in the EU biofuels market. It notes that EU biofuels policies have driven strong growth but fundamentals are challenging. Good biofuels projects require lower costs, product differentiation, and control over the value chain. Size and experience matter as the market becomes more competitive and consolidation is expected. Opportunities remain for independent projects that can secure feedstock and exploit niches.
Zinaida Dimitrijevic has expertise in using cost-benefit analysis and multi-criteria decision analysis to evaluate environmental policy options for electricity generation. Her research focuses on calculating external costs of pollution and comparing them to investment costs to determine the most economically acceptable scenarios for reducing air emissions in Bosnia and Herzegovina and other Southeast European countries. Her doctoral thesis and published papers apply these methods to assess policies for decreasing sulfur dioxide and nitrogen oxide emissions from coal-fired power plants.
This document provides the opinion of the Finnish Energy Industries on the European Commission's Green Paper on a European strategy for sustainable, competitive and secure energy. Some key points made in the document include:
- The Finnish Energy Industries welcomes the Commission's initiative to launch a broad debate on European energy policy and strategy.
- Developing a coherent European energy policy is important but should not replace national energy policies. Countries should still decide their own energy mixes.
- Completing the internal energy market is important but the focus should also be on meeting growing energy demand and replacing aging infrastructure while ensuring an optimal diversified energy mix.
- All energy sources, including nuclear, should have equal access to ensure secure and affordable
The document provides a reaction to the European Commission's 2006 Green Paper on energy policy. It makes three main points:
1) The Green Paper raised high expectations about developing an integrated EU energy policy that addresses internal market issues, security of supply, and environmental concerns in a coherent manner. However, member states still jealously guard their sovereignty over energy choices.
2) An EU energy policy must better connect upstream and downstream parts of the energy value chain and account for Europe's growing import dependence, the rising role of national oil companies, and need for a coherent external energy relations strategy.
3) The Green Paper missed an opportunity to signal the EU takes external energy relations seriously by starting with that topic instead of
This document summarizes a study that uses a fuzzy multi-objective linear programming model to determine the optimal allocation of Iran's energy resources from 2011 to 2020. The model considers three objectives: minimizing energy imports, maximizing economic benefits, and minimizing greenhouse gas emissions. Energy demands are forecasted using neural networks and fuzzy linear regression. The model then determines the optimal allocation of oil, natural gas, and electricity to meet demands while achieving the three objectives. The results provide a basis for optimal energy resource allocation in Iran through 2020.
EU wishes to decrease its external energy dependency. The reason is that more control of our own energy usage enable more stable prices for you, me as well as for companies in EU. Three important measures to evaluate is Europe’s need to produce more of our own energy, buy energy clever from abroad and reduce our energy consumption to decrease our energy demand. In the centre of this paper a Control Price Mechanism is used that can help us achieve these goals.
The document discusses opportunities to reduce energy intensity in UK industry. It analyzes trends that have decreased energy consumption and intensity over decades. Key opportunities identified include encouraging work from home, improving building insulation and efficiency, and optimizing transportation of goods and employees. The government provides incentives for efficiency measures. Further reductions may come from intermodal freight transport, larger trucks, and coordinating truck driving to reduce drag. While progress has been made, there is still potential to lower industry's energy intensity through innovative solutions.
Keeping The Lights On - MSLGROUP Energy Report January 2014MSL
Rising consumer prices, unrealistic renewable energy subsidies, crumbling financial models -- in this report, we share insights on the challenges facing the European power market and the role of communications in trying to re-establish trust and build empathy between producers and their customers.
At MSLGROUP, we represent a wide range of power companies across Europe, ranging from large scale utilities to small scale renewables; from nuclear to solar and all points in between. We are actively engaged in helping our clients communicate around these issues and relish the challenge! We hope that you enjoy this report and welcome your feedback.
So don’t hesitate to contact us with your thoughts.
This document discusses government subsidies provided to producers and consumers. It defines subsidies as financial or other support from the government. Examples of subsidies for producers include biofuel subsidies for farmers and subsidies for wind farm investment. Examples of subsidies for consumers include food/fuel subsidies and child care for working families. The document then examines how subsidies work through diagrams, showing how they lead to a lower equilibrium price and higher equilibrium quantity. It also justifies why governments introduce subsidies and evaluates their impacts through concepts like cost-benefit analysis.
The document discusses various types of maximum prices or price caps that governments may implement, including caps on housing rents, energy prices, CEO pay, mobile roaming charges, and interest rates charged by payday lenders. It analyzes the effects of price caps using supply and demand diagrams, noting they may result in shortages if set below the market equilibrium price. Price caps also risk unofficial "black market" prices emerging above the capped level. The document evaluates price caps in different markets, outlines potential benefits in terms of consumer welfare but also downsides like reduced profits and investment.
The Ukraine Crisis - could gas supply disruptions affect Europe?Pöyry
As tensions between Russia and Europe have increased over the situation in Ukraine, very real concerns have emerged regarding the security of gas supplies. Whilst there is a longer-term question of whether Europe should consider reducing European dependence on Russian gas, in this Point of View, Pöyry examines the potential short-term impacts of a curtailment in Russian gas supplies through Ukraine over the next winter.
Poyry - Paper business in mature markets - is there hope? - Point of ViewPöyry
It is old news that the profitability of
European graphic paper producers has been
unsatisfactory in the 2000’s. In fact, the
industry never recovered from the recession of
2001-2002. Since then, paper production has
returned less than 2% on capital employed.
Poyry - Survival innovations in the wood products webPöyry
Increasing the use of wood in building and furniture is good for the wood industry but it is also good for our climate: wood captures carbon and has a smaller carbon footprint than most competing materials. Product innovation is the key to making this happen.
Poyry - How must plantation forestry change to survive? - Point of ViewPöyry
There is growing global evidence that in order to survive, plantation forestry 1 must change. Moving beyond supplying pulp and paper producers and wood products manufacturers, global forestry players must now meet
increasing demands from new bioenergy producers, compete for land and water with food growers, deal with changing societal beliefs about sustainability, and comply with complex environmental regulations.
Poyry - How will intermittency change Europe’s gas markets? - Point of ViewPöyry
The rapid development of renewables across Europe is having profound effects, shaking up electricity markets and transforming how we generate electricity. An area that has never been fully investigated is what the impact will
be on gas markets, as gas-fired CCGTs are likely to become the back-up to intermittent wind generation, leading to a concept we have dubbed ‘gas intermittency’.
Poyry - Within day flexibilitypress - Point of ViewPöyry
The integration of renewable generation on the GB electricity system leads to a greater need for flexibility, whilst risks for wind generators increase
Poyry - How can small-scale LNG help grow the European gas market? - Point of...Pöyry
A large new market for natural gas is under rapid development whilst also reducing emissions. LNG is reaching markets previously inaccessible to pipeline gas; as a fuel for transport and for communities remote from the gas grid. A significant development is the use of LNG in marine transport, which currently uses heavy fuel oils.
Poyry - UK Shale Gas - where are we now? - Point of ViewPöyry
Exploratory drilling activity on the part of shale gas developers remains low despite widespread coverage in the media and announcements that the UK is to “go all
out for shale”. Although regulation must remain thorough and robust, there is a risk that the complex approvals process will hinder production. Industry, government
and regulatory authorities should ensure that the institutional capacity is in place to make the approvals process efficient so that the potential benefits of shale gas can be realised.
Poyry - Pulp, Paper and Packaging: from local to globalPöyry
Is your regional market reach aligned to meet your growth expectations? Are you taking full advantage of export market opportunities? What is the best strategic path forward in
terms of international presence and growth? Should you stay domestically focused or be
more internationally diversified? How should you execute? In this Pöyry Point of View we
explore the opportunities and investigate what it takes to go global.
Our latest Point of View report explores when grid parity for solar and wind might happen and what the implications could be. Grid parity occurs where emerging technologies such as wind and solar produce electricity at the same levelised cost as buying power from the grid.
It has long been considered the ‘holy grail’ for renewables as it will usher in a new era of unsubsidised renewables where market forces, not subsidies, would drive large scale deployment. The revenues of any investment now undertaken with a defined economic life (e.g. 30 year) will be affected by the build of unsubsidised renewables (as typical subsidy regimes are 10-20 years in duration).
As a result, investors must ensure their revenue projections post-subsidy period take into account the impact of increasing amounts of competing (unsubsidised) renewables – which will act to lower their capture prices and revenue post-subsidy. If they don’t take this into account, they risk overestimating the long-term profitability of projects built at the moment.
With a focus on Europe, the analysis has been conducted by Poyry’s state-of-the-art electricity model BID3. The report defines grid parity, explores where and when it might happen first and the implication of it being reached.
Poyry - Is biocoal a game changer? - Point of ViewPöyry
Climate change concerns have created pressure to reduce fossil fuel consumption. Once heralded as the next big thing - the potential of co-firing biomass in coal boilers
has been limited by the significant capital investment required to modify fuel handling and combustion systems. However, biocoal can be co-fired in existing coal fired power plants, produced from a vast array of feedstock, and is efficient to ship, even over long distances. Is biocoal a game changer?
Poyry - Global Diet: A menu with radical business consequences - Point of ViewPöyry
There is nothing more everyday and downto-earth than choosing what to eat. With increased living standards, the range of choice expands. At the same time, we are here dealing with a powerful engine of disruption. The hand that picks the milk carton at the store is the very “visible hand”
that disturbs global patterns of resource use and trade flows. Land use, energy consumption, mining and the consumption of packaging and hygiene products are but a few examples.
Poyry-How will Lancashire shale gas impact the GB energy market? - Point of ViewPöyry
Shale gas production in the US is massive, exceeding 200bcm per annum. This has
led to a dramatic drop in gas prices and has returned the US to near self-sufficiency in
natural gas. High volumes of shale gas have even triggered requests for LNG exports.
However, the US picture has not been replicated anywhere in the world. In Europe,
shale gas continues to be hotly debated. Pöyry investigated this for the GB energy
regulator, Ofgem, in 2011 to examine the potential impacts of unconventional gas on
European gas markets. However, much has changed recently that has caused us to revisit
our analysis.
Poyry - Are you ready for the Age of Confluence? - Point of ViewPöyry
Our global ecosystem is evolving. We have entered a new era, characterised by an increasingly complex mesh of interconnections and linkages across the world’s major resource groups: land, biomass, energy, fresh water, chemicals, manpower, and metals and minerals. Another parallel phenomenon is emerging: our digital and
bio-based worlds are also converging. We are living in what we call the ‘Age of Confluence’.
It is time for industries to understand and master the bio-economic implications of these interconnections – or risk facing serious issues, which cut deep into the core of a
sustainable future.
The Government will publish the draft EMR Delivery Plan in July 2013. This sets out the Government’s proposed draft strike prices for renewable projects and the plans for a capacity market. Everyone with an interest will have the opportunity to respond to the consultation before final strike prices are set at the end of the year.
In preparation for this DECC has produced an explanation of the methodology underlying the analysis being undertaken to help inform Ministers’ decisions on strike prices.
The explanation is designed to help prepare stakeholders for the consultation in July 2013, enabling them to better understand and respond to the content.
The consultation events held during the summer 2013 will be interactive sessions, during which there will be ample opportunity to raise any queries which these slides may generate.
Myth busting - sifting energy facts from wishful thinkingGas Forum
In the furore about the rise of UK energy costs, several factors have been cited as contributing to escalating prices. David Cox, managing director of the Gas Forum, untangles the truth from the myths in the UK government’s argument for committing a minimum £38bn to subsidise energy generation over the next eight years
NGO data manipulation of financial markets?
Everywhere data has been manipulated to suite or fit
the Greenpeace & Co 100% WindSolar UTOPIA?
Not 1 word on Methane 10,000 billion tons of Gas? Puts long term large Green Energy investment decisions into an unforeseeable level of risk, as the go no go or careful timing for these very capital intensive investments in the long term, is suddenly unimaginable or non existing 4 the investor = Not a word Not 1 in Carbon Tracker?
Design of Pareto optimal CO2 cap-and-trade policies for de.docxcarolinef5
Design of Pareto optimal CO2 cap-and-trade policies for deregulated electricity
networks
h i g h l i g h t s
A mathematical–statistical model for designing Pareto optimal CO2 cap-and-trade policies.
The model fills a gap in the current literature that primarily supports cap-and-trade policy evaluation but not policy design.
Pareto optimal policies accommodate conflicting goals of the market constituents.
Electricity demand-price sensitivity and social cost of carbon have significant influence on the cap-and-trade policies.
Higher demand-price sensitivity increases the influence of penalty and social cost of carbon on reducing carbon emissions.
a r t i c l e i n f o a b s t r a c t
Article history:
Received 15 August 2013
Received in revised form 2 January 2014
Accepted 4 January 2014
Keywords:
Electricity networks
Cap-and-trade
Game theory
MPEC/EPEC
Among the CO2 emission reduction programs, cap-and-trade (C&T) is one of the most used policies. Economic studies have
shown that C&T policies for electricity networks, while reducing emissions, will likely increase price and decrease consumption
of electricity. This paper presents a two layer mathematical– statistical model to develop Pareto optimal designs for CO2 cap-
and-trade policies. The bottom layer finds, for a given C&T policy, equilibrium bidding strategies of the competing generators
while maximizing social welfare via a DC optimal power flow (DC-OPF) model. We refer to this layer as policy evaluation.
The top layer (called policy optimization) involves design of Pareto optimal C&T policies over a planning horizon. The
performance measures that are considered for the purpose of design are social welfare and the corresponding system marginal
price (MP), CO2 emissions, and electricity consumption level.
2014 Elsevier Ltd. All rights reserved.
1. Introduction
A major part of the total CO2 emissions come from the electricity
production sector, e.g., 40% in the U.S. ([1]). In 2009, 70% of the electricity
was produced from fossil fuel such as gas, coal, and petroleum ([2]). In 2005,
the European Union Emissions Trading System (EU ETS) launched a cap-
and-trade system that seeks to reduce the greenhouse gas (GHG) emissions
by 21% by 2020 from the 2005 level. Currently, the EU ETS is the largest
emission market in the world [3], and according to the European Commission
[4], at least 20% of its budget for 2014–2020 will be spent on climate-related
projects and policies. In the United States, as well as in the EU, different
regulations have been discussed to cut CO2 emissions such as carbon tax,
renewable portfolio standards (RPS), and capand-trade programs (C&T). In
the northeastern U.S., the Regional Greenhouse Gas Initiative (RGGI) has
already implemented a C&T program through a nine state collaborative effort,
which seeks to cut the CO2 emissions by 10% by 2018. Recently the
California Air Resources Board .
See page 10 for Professor Jillian Anable's contribution on low carbon transport and air quality.
www.ukerc.ac.uk/news/ukerc-calls-for-urgent-action-on-uk-energy-during-this-parliament-.html
Copyright UKERC.
This document summarizes the conclusions of a book that assesses the current and future potential of renewable energy technologies for electricity generation. The authors address whether there is a case for promoting renewable energy and the implications of widespread adoption of renewable generation on power markets and systems. Key points include:
- Government intervention, not market forces, is largely driving the growth in renewable generation through various support schemes.
- There are valid justifications for some support of renewables, such as addressing climate change, but no justification for subsidizing the most expensive forms of renewable energy.
- Widespread adoption of intermittent renewable generation like wind will significantly impact power markets through increased price volatility and a need for more flexible generation capacity.
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Decarbonization of the electricity sector through increasing renewable energy is transforming electricity markets in Europe. This is creating challenges around intermittent generation, reduced dispatchable capacity, and investment risks. National capacity markets intended to address these risks may distort the internal electricity market. There is currently a lack of political commitment around the EU to long-term solutions, and energy markets are at a crossroads between market principles and regulated investments. The future of EU electricity market design will depend on how policies balance emissions reductions, renewables targets, and ensuring timely efficient investment.
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Regulatory Assistance Project (RAP) provides an assessment of various emergency policy measures to address the energy crisis in Europe. They find that demand reduction efforts and targeted financial support are most effective. Price signals are still needed to avoid rationing. Wholesale interventions like gas price caps face challenges in ensuring cost savings are passed to consumers without increasing demand and risk of blackouts. Group gas purchases and infra-marginal rent capture may offer opportunities if implemented properly.
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- Energy efficiency, renewables and diversification should be encouraged
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The attached slides outline our ideas on how the value of flexibility could be traded in the European electricity markets, within the context of the Target Model. Contact Stephen Woodhouse at Pöyry for further details of an ongoing study
Flexibility will be increasingly important for operating electricity systems as renewable targets lead to more variable generation. Current incentives may not sufficiently reward flexibility. A proposal is made to (1) allow intraday cross-border trading of flexibility, (2) define balancing services by capability rather than standardized products, and (3) optimize resources across locations and timeframes through market mechanisms. This could help reveal the true value of flexibility.
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2. 2 | PÖYRY POINT OF VIEW
Deliveringdecarbonisation
-amarketledoraregulated
approach?
Most sector stakeholders support a market-
based approach in which a strong CO2
pricing
regime drives investment in low carbon
generation. However, government-sponsored
policies, such as direct financial support
or organised mechanisms for capacity
procurement, are increasingly being used
to deliver the ‘required’ mix of generation
instead. Europe is facing a policy dilemma:
• to rely on markets, European coordination
and a strong CO2
pricing regime;
• or: to build national solutions with
government channelled investment.
This Pöyry Point of View examines how
European electricity markets could evolve to
meet the decarbonisation challenge. It probes
both market-based and regulated approaches
to understand the implications and credibility
of different options in order to consider the
question - what is a workable model for
future electricity market design, given stated
policy objectives towards decarbonisation?
Decarbonisation of the electricity sector is
central to Europe’s plans to reduce carbon
emissions in an effort to tackle climate
change. But the policy and market design
framework for delivering decarbonisation
remains uncertain.
A critical underlying factor behind a credible
electricity market is acceptance from energy
customers that the costs of decarbonisation
are acceptable and therefore that they are
willing to pay for it. Conversely, a short-term
politicised focus on energy prices undermines
trust, and the ability of governments to offer
longer-term credibility to investors.
Informed by qualitative policy analysis and
detailed analysis of power sector investment
and market operation, Pöyry’s modelling
explores how different frameworks operate to
deliver power sector carbon intensity levels of
150gCO2
/kWh in 2030 and then 20gCO2
/kWh
in 2050 across northern and western Europe
and at what cost, whilst also maintaining
consistent security of supply. We draw on
a selection of four core cases which define
different policy permutations. These range
from a carbon pricing led market solution
(termed Absolute Markets) to a national
support payment model (termed Building
National Solutions). Key differences between
the cases are shown in Table 1.
To explore the underlying question, we explore
issues linked to:
• the nature of the decarbonisation challenge,
irrespective of the specific route;
• the carbon pricing, market-led route; and
• the support payment, nationally-planned
route.
3. 3PÖYRY POINT OF VIEW |
Absolute
Market (AM)
Dual
Support (DS)
Coordinated European
Planning (CEP)
Building National Solutions
(BNS)
National carbon intensity targets None None None Yes
Renewable energy source targets None None EU wide EU wide and national, if set
Power sector CO2
price cap None Moderate Low Low
Support payments None Available Available Available
Table 1 – Building blocks of Core cases
“What is a workable model for future
electricity market design, given
stated policy objectives towards
decarbonisation?”
5. 5PÖYRY POINT OF VIEW |
Figure 2 – 2012 carbon emissions intensity in each of the modelled countries (gCO2
/kWh)Investor certainty within a market-
wide carbon pricing regime
Carbon markets are a political construct. As
such, the carbon regime is entirely open to
future policy change. We live in a democratic
society in which legislative frameworks can
(and must) evolve in response to changing
political and public will (as well as potential
changes in the underlying science). However,
the economic life of a generation asset
spans multiple political cycles – something
which has led to the creation of independent
regulators at country level, shielded to a
certain extent from regular political changes.
Policy changes can occur during an asset’s
lifetime that can undermine its commercial
and/or operational prospects. Without
“The ‘market’ pathway for
decarbonisation therefore relies heavily
on the credibility of the carbon scheme
for long periods into the future, and the
compatibility of this with democracy
needs to be demonstrated.”
6. 6 | PÖYRY POINT OF VIEW
Carbonpricing-whatare
theissuesandmitigation
options?
project-specific support (such as a feed-
in tariff), investors considering a potential
low carbon project backed by a carbon
price regime will need to form a view of the
carbon price trajectory and the resultant
power price for the economic lifetime of
the project. Critically, this view needs to be
bankable. Any deviation between outturn
carbon (and therefore electricity) prices and
those anticipated at the point of investment
results in the risk of financial exposure,
increasing project costs (risk premia) or
delaying investment. Importantly, any
policy change that results in a weakening
of the decarbonisation aspirations and/or a
downward impact on future carbon prices
affects all low carbon plants, existing and new
alike, as all rely on a common carbon price,
and there are no obvious ways of hedging
this political risk. The ‘market’ pathway for
decarbonisation therefore relies heavily
on the credibility of the carbon scheme
for long periods into the future, and the
compatibility of this with democracy needs
to be demonstrated.
Diminishing returns from carbon
prices and revenue volatility
Delivering low carbon investment without
direct support requires a carbon price (and
associated wholesale electricity prices)
that can incentivise delivery of the marginal
low carbon technology. However, as the
generation mix becomes less carbon intensive,
the influence of the carbon price upon
wholesale electricity price formation starts to
reduce. There are, therefore, diminishing
returns from increases in carbon prices.
Combined with the lumpiness of the supply
curve and uncertainty regarding future costs,
this means that the future carbon price
required to drive further decarbonisation
ultimately becomes high, uncertain and
sensitive to marginal technology costs. This is
illustrated for markets cases in Figure 3, with
prices increasing over time from today’s levels
on the assumption of a credible carbon regime
capable of delivering carbon prices that
enable market-led investment in low carbon
technologies. It shows the implications of
higher and lower ‘flexibility’ (from demand
response) in the electricity system, a less
optimistic view of the development of CCS and
nuclear costs, and a hybrid case in which the
CO2
price is limited.
The carbon market is a political construct and
carbon prices are consequently affected by
political decisions, as well as economic drivers.
Low prices emerging from the EU ETS during
Phases II and III have not been sufficient to
deliver investment in lower carbon generation,
increasing reliance on support mechanisms.
0
5
10
15
20
25
30
35
Jan2005
Jul2005
Jan2006
Jul2006
Jan2007
Jul2007
Jan2008
Jul2008
Jan2009
Jul2009
Jan2010
Jul2010
Jan2011
Jul2011
Jan2012
Jul2012
Jan2013
Jul2013
Spotcarbonprice(€/tCO2)
Phase 1
Phase 2
Phase 3
Phase 1
NAPs cut
Dry period in Spain
Rising oil prices &
cold winter
Phase 1 oversupply
revealed
Record oil (and therefore gas)
price increases
Recession leads to oil price
decreases and lower energy
demand
Expectation of recovery in
demand and & commodity
prices
Fukushima disaster
Eurozone
debt crisis
Phase 3 auctioning begins and
back-loading uncertainty
1st back-loading
vote rejected
Further Phase 1
oversupply revealed
Source: Thomson Reuters
8. 8 | PÖYRY POINT OF VIEW
2012 2015 2020 2025 2030 2035 2040 2045 2050
0
20
40
60
80
100
120
EndUserEnergyPrice(CO2recycling)(€/MWh)
DECARBONISATION VIA SUPPORT
PAYMENTS
Recent experience suggests growing reliance
on national, government administered support
schemes to stimulate investment in low
carbon generation technologies. Continued
dependence upon systems of support
payments presents its own set of issues:
• inefficiency potential under central
planning;
• growing risk for supported generation; and
• distortionary impacts of RES targets on
operation and investment.
For example, support regimes require
central planning to varying degrees,
risking inflated costs through decisions on
location, technology choice and payment,
as shown in Figure 4. Additionally, existing
support mechanisms distort price and
dispatch whilst still leaving volume risk
which becomes an ever greater issue under
the existing ‘production-based’ support
schemes. As penetration of ‘autonomous-
fuelled’ generation increases, the ability for all
low carbon generation to be accommodated
on the system becomes more problematic.
Ultimately, not all generation can run in
all circumstances. This issue is particularly
pertinent for low carbon generation that has
a positive Short Run Marginal Cost or SRMC
(i.e. the cost of producing an additional MWh
of generation), such as CCS or biomass.
Finally, linking support payments to RES
targets can, without specific adjustment,
have a distortionary impact on CO2
price and
other carbon abatements. It can also have
a distortionary impact upon the balance of
investment across the range of low carbon
generation options.
Choosing a pathway to
decarbonisation
The ‘markets’ approach requires a credible
long term policy framework (within the
constraints of a democratic framework
whose legislature is ultimately drawn
towards short term issues), and delivers
the conventional market results: risks,
profits and innovation to deliver lower cost
solutions. The balance must ultimately be
acceptable in the short and long term to the
voters and customers for long-term credibility
to be possible. Conversely, the regulated
approach includes a centralist view which
mitigates market risks, but may in turn stifle
innovation and efficiency and thereby deliver
higher overall costs to consumers.
Overall generation costs, particularly
total capex requirements, are lower in
market cases, particularly to 2035. Capex
investment is higher overall in the BNS case
due to higher levels of renewable generation
with high capital costs and, for variable
technologies, lower load factors. The (market)
AM and DS scenarios require much lower
capital investment in the medium term to
2035 as significant decarbonisation takes
place through the fuel switching of existing
assets and investment in cheaper low carbon
generation technologies like onshore wind.
Average annual capex spend increases in
the market cases beyond 2035, as more
expensive options need to be progressed
(e.g. CCS). Efforts to use innovation funding
to pursue cost reductions in critical immature
low carbon technologies in the run-up to
this period could help to mitigate the capex
requirements.
Choosingapathwayfor
decarbonisation
Figure 4 – End
User Energy
Cost under the
AM scenario and
the BNS
scenarios with
different levels
of imperfection
9. 9PÖYRY POINT OF VIEW |
Mitigation options
If support payments are to be used to deliver low carbon investment, it is important that
they work in the context of the wholesale electricity market, as well as for the investor. This
requires that support is non-distortionary in terms of its interaction with the market (e.g.
avoids the incentive for negative pricing in order to secure support payments), supporting
the delivery of ‘flexibility’ whilst also appropriately mitigating the evolving risks expected to
be faced by low carbon generators. One possibility is to adopt a revenue support concept,
which provides improved long-term revenue certainty while retaining commercial exposure
to the wholesale market in the short-term.
Within the power sector specifically, if targets are to be set, they should be based on carbon-
related metrics, given that decarbonisation is the primary focus, and not focused on delivery
of RES generation (or any other subset of low carbon generation).
Customers face lower costs under a carbon
pricing regime to 2030’s even when
compared to the assumed ‘perfect’ support
payment regime. Once potential support
payment imperfections are built in, the
markets-based solution looks favourable in
the longer-term also, as shown in Figure 4.
However, efforts to reduce the costs of critical
low carbon technologies in the run-up to
2030/35 will also help to reduce the extent to
which prices increase at that point.
How could a revenue support concept operate in
practice?
• An overall revenue requirement for each low carbon technology is agreed up front
• Wholesale market revenue expectations are determined ex-ante, potentially each
year
• The revenue support is set based on difference between revenue requirements
and anticipated wholesale revenue
• Payment is not made based on production, which removes incentive to bid below
SRMC and so dispatch reflects ‘true’ short-run costs
• The generator trades through the wholesale market, incentivised to beat
expectations – projects have a commercial interest in wholesale market operation
Projectrevenue-€/kW
Difference payment to generator
Revenue strike price
Wholesale market revenue
Time
12. Photos: colourbox.com
Pöyry Management Consulting
www.poyry.com
Pöyry is an international consulting and engineering company. We serve clients globally
across the energy and industrial sectors and locally in our core markets. We deliver strategic
advisory and engineering services, underpinned by strong project implementation capability
and expertise. Our focus sectors are power generation, transmission & distribution, forest
industry, chemicals & biorefining, mining & metals, transportation, water and real estate
sectors. Pöyry has an extensive local office network employing about 6,500 experts.
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