Final Report
FORRES 2020: Analysis of the renewable
energy sources' evolution up to 2020
Mario Ragwitz, Joachim Schleich, Fraunhofer ISI
Claus Huber, Gustav Resch, Thomas Faber, EEG
Monique Voogt, Rogier Coenraads, ECOFYS
Hans Cleijne, KEMA
Peter Bodo, REC
Karlsruhe (Germany)
April 2005
Supported by:
Under Tender No. TREN/D2/10-2002
Foreword
This report provides an overview of the progress made on the European market for re1
newable energy sources for the EU-25 member states . The results and analysis describe
the situation at the end of 2004. A separate volume contains more detailed country reports
for each of these 25 countries as well as for the two EU candidate countries Bulgaria and
Romania.
This report was produced within the scope of the FORRES 2020 study, which was initiated and financed by the European Commission, Directorate-General Energy and Transport under tender no. TREN/D2/10-2002 with the aim to:
• provide input for monitoring the progress of the targets set in the White Paper “Energy
for the future: Renewable sources of energy”, the Directive on the promotion of electricity from renewable energy sources, and the Directive on biofuels; and
• provide insight into future developments of a green energy market in the European
Union and Bulgaria and Romania until 2020
An international consortium of research and consultancy partners was involved in conducting the study and compiling the report. The core project team contributing to this report consisted of Mario Ragwitz, Joachim Schleich (Fraunhofer-ISI, Germany), Claus Huber, Gustav Resch, Thomas Faber (EEG, Vienna University of Technology, Austria), Monique Voogt, Rogier Coenraads (ECOFYS, Netherlands), Hans Cleijne (KEMA, Netherlands) and Peter Bodo (Regional Environmental Centre, Hungary).
Support from the European Commission, DG TREN, is gratefully acknowledged. The authors would like to thank their colleagues for supporting the study and the report. The responsibility for the contents of the study and the views expressed remains with the core
project team and the main authors of this report. This view has not been adopted or in any
way approved by the European Commission and should not be relied upon as a statement
of the Commission's or DG Transport and Energy's view. The European Commission
does not guarantee the accuracy of the data included in this report, nor does it accept
responsibility for any use made thereof.
1
For reporting matters in some cases results are shown separately for the former EU-15
Member States (indicated as EU-15) and the ten Member States that joined in May 2004
(indicated as EU-10).
For further information, questions and comments, please contact the project manager at
the following address:
Dr. Mario Ragwitz
Fraunhofer-ISI
Breslauer Str. 48
D-76139 Karlsruhe
Germany
Tel: + 49 721 6809-157
E-mail: Mario.Ragwitz@isi.fhg.de
Analysis of the renewable energy sources' evolution up to 2020
V
Table of Contents
Page
Summary ........................................................................................................ XIII
1
2
3
Introduction .....................................................................................................1
1.1
Background - EU policy and targets for renewable energy
sources.............................................................................................1
1.2
Aim and scope of the report .............................................................3
1.3
Methodology and approach..............................................................4
Present status of renewable energy sources in EU-25 member
states................................................................................................................7
2.1
Current penetration, potentials and costs of renewable
energy sources.................................................................................7
2.1.1
Electricity..........................................................................................7
2.1.2
Heat................................................................................................15
2.1.3
Biofuels for transport ......................................................................23
2.2
RES-E achievements in the period 1997-2002 ..............................25
Assessment and evaluation of policy instruments for the
promotion of renewable energy sources ....................................................31
3.1
Main instruments in the sectors electricity, heat and
transport .........................................................................................31
3.1.1
Instruments to support RES electricity ...........................................31
3.1.2
Instruments to support RES heat ...................................................33
3.1.3
Instruments to support biofuels for transport ..................................34
3.2
Combining several support schemes .............................................34
3.3
Success stories and key barriers....................................................47
3.4
Recent policy developments ..........................................................48
VI
Analysis of the renewable energy sources' evolution up to 2020
4
The FORRES 2020 methodology and definition of scenarios ...................51
5
4.1
The computer programme Green-X ...............................................51
4.2
Econometric approach ...................................................................53
4.3
Scenario assumptions: the business-as-usual and the policy
scenario..........................................................................................54
Results: perspectives of renewable energy sources to 2020....................57
5.1
Analysis of the dynamic evolution of RES in the sectors of
electricity, heat and transport .........................................................57
5.1.1
RES-E generation up to 2020 ........................................................57
5.1.2
RES-H generation up to 2020 ........................................................66
5.1.3
Biofuel production up to 2020.........................................................73
5.2
Progress towards meeting the 2010 targets...................................75
5.2.1
Electricity........................................................................................75
5.2.2
Primary energy production and consumption .................................77
5.2.3
Biofuels for transport ......................................................................80
5.3
CO2-emission reductions and additional costs ...............................82
6
Conclusions...................................................................................................87
7
References.....................................................................................................89
Analysis of the renewable energy sources' evolution up to 2020
VII
List of Figures
Page
Figure 1:
Historical development of electricity generation from RES in the
European Union from 1990 to 2002 – in the EU-15 (left-hand
side) and EU-10 countries (right-hand side) ..............................................7
Figure 2:
Historical development of electricity generation from ‘new’ RES-E
in the European Union (EU-25) from 1990 to 2002....................................8
Figure 3:
Breakdown of electricity generation from ‘new’ RES-E for 2002
by country – EU-15 (left-hand side) and EU-10 countries (righthand side) ..................................................................................................9
Figure 4:
Achieved (2001) and additional mid-term potential 2020 for
electricity from RES in the EU-15 – by country (left-hand side)
and by RES-E category (right-hand side) ................................................10
Figure 5:
Achieved (2001) and additional mid-term potential 2020 for
electricity from RES in EU-10 countries & Bulgaria, Romania –
by country (left-hand side) and by RES-E category (for EU-10
alone) (right-hand side) ............................................................................10
Figure 6:
RES-E as a share of the total achieved potential in 2001 for the
EU-15 – by country (left-hand side) as well as for total EU-15
(right-hand side) .......................................................................................11
Figure 7:
RES-E as a share of the total achieved potential in 2001 for the
EU-10 & Bulgaria, Romania – by country (left-hand side) as well
as for total EU-10 & Bulgaria, Romania (right-hand side) ........................11
Figure 8:
RES-E as a share of the total additional realisable potential in
2020 for the EU-15 – by country (left-hand side) as well as for
total EU-15 (right-hand side) ....................................................................12
Figure 9:
RES-E as a share of the total additional realisable potential in
2020 for the EU-10 & Bulgaria, Romania – by country (left-hand
side) as well as for total EU-10 (right-hand side) .....................................12
Figure 10:
Long-term marginal generation costs (for the year 2002) of
different RES-E technologies ..................................................................13
Figure 11:
Development of the investment costs according to the businessas-usual case (BAU) ................................................................................15
Figure 12:
RES-H production development from 1990 to 2001 in EU-15 and
EU-10 [ktoe/year] .....................................................................................16
VIII
Analysis of the renewable energy sources' evolution up to 2020
Figure 13:
RES-H breakdown (2001) from grid and non-grid connected
systems EU-15 and EU-10 & Bulgaria, Romania.....................................17
Figure 14:
Share of renewable energy sources in heat production - EU-15
2001 .........................................................................................................17
Figure 15:
Achieved and additional mid-term potential 2020 for heat from
RES in EU-15 and EU-10 & Bulgaria, Romania.......................................18
Figure 16:
RES-H as a share of the total achieved potential in 2001 for EU15 member states ....................................................................................19
Figure 17:
RES-H as a share of the total achieved potential in 2001 for EU10 member states & Bulgaria, Romania. .................................................19
Figure 18:
Share of the total additional realisable potential of RES-H in 2020
for EU-15 ..................................................................................................20
Figure 19:
Share of the total additional realisable potential of RES-H in 2020
for EU-10 member states & Bulgaria, Romania. ......................................21
Figure 20:
Achieved grid connected RES-H consumption as a share of total
steam consumption in 2001 .....................................................................21
Figure 21:
Achieved non-grid-connected RES-H generation as a share of
total non-grid connected heat consumption in 2001 ................................22
Figure 22:
Pellets production for 2003 for selected EU-15 member states...............23
Figure 23:
Share of modern forms of biomass (pellets, wood chips) in nongrid connected biomass ...........................................................................23
Figure 24:
EU-15 biofuel production historical development 1993 – 2003................24
Figure 25:
EU-10 biofuel production historical development 1996 - 2003.................24
Figure 26:
Biofuel production in 2003 and production potential 2020 [Mtoe]. ...........25
Figure 27:
Actual penetration of RES-E in 1997 and 2002 versus 2010
target (as set in the RES-E Directive) for EU-15 countries ......................26
Figure 28:
Actual penetration of RES-E in 1997 and 2002 versus 2010
target (as set in the RES-E Directive) for EU-10 countries ......................26
Figure 29:
RES-E target achievement for total EU-15: development of actual
and potential RES-E penetration in the period 1997 to 2002
versus 2010 target ....................................................................................27
Figure 30:
RES-E target achievement for total EU-10: development of actual
and potential RES-E penetration in the period 1997 to 2002
versus 2010 target ....................................................................................28
Analysis of the renewable energy sources' evolution up to 2020
IX
Figure 31:
RES-E target achievement at country level: comparison of actual
and potential additional RES-E penetration (2002 versus 1997). ............28
Figure 32:
Changes in RES-E generation potential (2002 versus 1997) by
RES-E category at country level ..............................................................29
Figure 33:
Overview of renewable electricity support systems in EU-15 ..................32
Figure 34:
Overview of renewable electricity support systems in EU-10 &
Bulgaria, Romania....................................................................................33
Figure 35:
Development of RES-E generation in EU-15 under the BAU
scenario until 2020 ...................................................................................58
Figure 36:
Development of RES-E generation in EU-15 under the policy
scenario until 2020 ...................................................................................59
Figure 37:
Development of RES-E generation in EU-10 under the BAU
scenario until 2020 ...................................................................................61
Figure 38:
Development of RES-E generation in EU-10 under the policy
scenario until 2020 ...................................................................................62
Figure 39:
Country-specific RES-E generation in EU-15 under the BAU
scenario until 2020 ...................................................................................63
Figure 40:
Country-specific RES-E generation in EU-15 under the policy
scenario until 2020 ...................................................................................64
Figure 41:
Country-specific RES-E generation in EU-10 and Bulgaria,
Romania under the BAU scenario until 2020 ...........................................65
Figure 42:
Country-specific RES-E generation in EU-10 and Bulgaria,
Romania under the PS until 2020 ............................................................65
Figure 43:
Development of RES-H generation in EU-15 under the BAU
scenario until 2020 ...................................................................................66
Figure 44:
Development of RES-H generation in EU-15 under the Policy
scenario until 2020 ...................................................................................67
Figure 45:
Development of RES-H generation in EU-10 under the BAU
scenario until 2020 ...................................................................................69
Figure 46:
Development of RES-H generation in EU-10 under the Policy
scenario until 2020 ...................................................................................70
Figure 47:
Country specific RES-Heat generation in EU-15 under the BAU
scenario until 2020 ...................................................................................71
Figure 48:
Country specific RES-Heat generation in EU-15 under the Policy
scenario until 2020 ...................................................................................71
X
Analysis of the renewable energy sources' evolution up to 2020
Figure 49:
Country specific RES-Heat generation in EU-10 and Bulgaria,
Romania under the BAU scenario until 2020 ...........................................72
Figure 50:
Country specific RES-Heat generation in EU-10 and Bulgaria,
Romania under the Policy scenario until 2020.........................................73
Figure 51:
Total biofuel production up to 2020 for EU-15 .........................................74
Figure 52:
Total biofuel production up to 2020 for EU-10 .........................................74
Figure 53:
Country specific target compliance until 2010, EU-15, RES-E
generation as ratio of target .....................................................................76
Figure 54:
Country specific target compliance until 2010, EU-10, RES-E
generation as ratio of target .....................................................................76
Figure 55:
Country specific RES primary energy share until 2010, EU-15 ...............78
Figure 56:
Country specific RES primary energy share until 2010, EU-10 and
Bulgaria, Romania....................................................................................79
Figure 57:
Country-specific target compliance until 2010, EU-15, biofuel
production as a ratio of the target ............................................................81
Figure 58:
Country-specific target compliance until 2010, EU-10 and
Bulgaria, Romania. Biofuel production as a ratio of the target.................81
Analysis of the renewable energy sources' evolution up to 2020
XI
List of Tables
Page
Table A:
Projected RES electricity generation in 2020 in EU-25 under
BAU and policy scenario [TWh] ...............................................................15
Table B:
Projected RES heat generation in 2020 in EU-25 under the BAU
and the policy scenario ............................................................................17
Table C:
Projected biofuel production in 2020 in EU-25 under the BAU
and the policy scenario ........................................................................XVII
Table D:
Projected RES primary energy production in EU-25 in 2020
under the BAU and the policy scenario....................................................18
Table 1:
Renewable electricity targets specified as share of renewable
electricity consumption in the EU-25 states considered.............................2
Table 2:
Overview of the main policies for renewable electricity in EU-15
at technology level ...................................................................................35
Table 3:
Overview of the main policies for renewable electricity in EU-10
at technology level ...................................................................................37
Table 4:
Overview of the main renewable heat policies in EU-15 at
technology level .......................................................................................39
Table 5:
Overview of the main renewable heat policies in EU-10 at
technology level .......................................................................................43
Table 6:
Overview of the main renewable heat policies in the candidate
member states at technology level...........................................................45
Table 7:
Overview of biofuel policies in EU-15 at technology level
(reduction rate in % of tax level for conventional fuels and/or
cent/litre) ..................................................................................................46
Table 8:
Overview of biofuel policies in EU-10 at technology level
(reduction rate in % of tax level for conventional fuels and/or
cent/litre) ..................................................................................................47
Table 9:
Summary of recent renewable energy policy developments in the
EU-25 .......................................................................................................49
Table 10:
Model implementation of policy settings for RES-E & RES-H in
the Policy Scenario .................................................................................55
Table 11:
Development of RES-E generation in EU-15 under the BAU
scenario until 2020 ...................................................................................58
XII
Analysis of the renewable energy sources' evolution up to 2020
Table 12:
Development of RES-E generation in EU-15 under the policy
scenario until 2020 ...................................................................................60
Table 13:
Development of RES-E generation in EU-10 under the BAU
scenario until 2020 ...................................................................................61
Table 14:
Development of RES-E generation in EU-10 under the policy
scenario until 2020 ...................................................................................62
Table 15:
Development of RES-H generation in EU-15 under the BAU
scenario until 2020 ..................................................................................67
Table 16:
Development of RES-H generation in EU-15 under the policy
scenario until 2020 ...................................................................................68
Table 17:
Development of RES-H generation in EU-10 under the BAU
scenario until 2020 ...................................................................................69
Table 18:
Development of RES-H generation in EU-10 under the policy
scenario until 2020 ...................................................................................70
Table 19:
Comparison of White Paper targets at technology level and
realisations in the BAU and policy scenario for the EU-15 in the
year 2010 .................................................................................................80
Table 20:
CO2-emission reductions compared to 2001 levels for Total RES
in the BAU-scenario .................................................................................83
Table 21:
Costs for Total RES in the BAU-scenario as a share of GDP..................85
Table 22:
Additional CO2-emission reductions costs for Total RES in the
policy scenario versus the BAU-scenario.................................................85
Table 23:
Additional costs for Total RES in the policy scenario versus the
BAU-scenario as a share of GDP ............................................................86
Analysis of the renewable energy sources' evolution up to 2020
XIII
Summary
An important aspect of the EU policy to
Secondly, it provides a framework with
increase the share of renewable energy
which to analyse the impacts of these
sources (RES) is the monitoring and eva-
national policies and measures and the
luation of the progress made towards the
extent to which each of the EU-25 states
2010 targets and the assessment of real-
is realising the targeted deployment of
istic targets for the period up to 2020.
renewable energy. Based on different
The monitoring process concentrates on
assumptions with regard to the imple-
two main issues. Firstly, it examines the
mented policies, scenarios for the future
national adoption of EU legislation and
implementation of renewables until 2020
its translation into legal and policy in-
can be calculated.
struments in each of the 25 EU states.
Analysing current policies
The European renewable energy market
the amount and level of supporting poli-
with its set of supporting measures is
cies. For biofuels, changes in the fiscal
very dynamic. Countries are continuously
and agricultural policy can be observed
monitoring their sets of policies and
as a result of the Biofuels Directive. For
measures, which often results in the fine-
the heat sector, the recently formulated
tuning of instruments and sometimes the
Directive on the Energy Performance of
introduction of a completely new set of
Buildings represents a starting point for
instruments. For electricity, the formula-
policy setting on the European level. Mo-
tion of the Renewable Electricity Direc-
re significant policy changes are ex-
tive has clearly had a strong influence on
pected in the near future.
Calculation methodology
The calculations and projections con-
sources (RES-E), conventional electricity
ducted in this study are based on two
and CHP generation, demand-side activi-
different methods:
ties and GHG-reduction in the electricity
1. Forecasts of RES penetration with
the model Green-X.
2. Forecasts of RES penetration based
on econometric analyses.
sector in all EU-27 countries. The model
calculates the impacts of various renewable energy promotion strategies, taking
into account boundary conditions on the
markets. Technologies are specified by
The Green-X model allows for a com-
means of dynamic cost-resource curves.
parative, quantitative analysis of interac-
The econometric analysis uses correla-
tions between electricity from renewable
tions between historically observed pol-
XIV
Analysis of the renewable energy sources' evolution up to 2020
icy implementations and corresponding
analysis is used to set a benchmark for
RES
the results of the Green-X model.
penetration.
The
econometric
Scenarios for developments until 2020
Model calculations and analyses are ba-
future evolution based on the currently
sed on two different scenarios; each with
available best practice strategies of indi-
a different mix of promotion schemes
vidual EU member states. Strategies that
and assumptions. The first scenario is
have proven to be most effective in the
the business-as-usual scenario (BAU).
past for implementing a maximum share
This scenario models the future devel-
of RES have been assumed for all coun-
opment based on present policies with
tries. Furthermore, the policy scenario
currently existing barriers and restric-
assumes both a stable planning horizon
tions, e.g. administrative and regulative
and that currently existing barriers will be
barriers. Future policies, which have al-
overcome. Both scenarios include the
ready been decided on, but have not yet
effects of technology learning and eco-
been implemented, will also be consid-
nomies of scale, which have a higher
ered. The second scenario is the policy
impact in the policy scenario.
scenario (PS). This scenario models the
Projections until 2020
Electricity
The major outcomes of the electricity
current penetration under BAU assump-
sector projections for the EU-25 until
tions and about nine times the present
2020 are shown in Table A. To calculate
levels in the policy scenario. Only minor
the overall share, the BAU scenario is
growth is projected for hydropower due
related to the baseline demand scenario,
to the limited remaining potentials, espe-
whereas the policy scenario is compared
cially for large hydropower. Photovoltaic
to the efficiency demand scenario. As
electricity is projected to grow moder-
can be observed, wind energy shows the
ately in the BAU scenario due to the fact
strongest increase in both scenarios. The
that only few countries have imple-
major difference between the two is that,
mented sufficiently high support. Under
in the policy scenario, offshore wind ge-
the assumptions of the policy scenario,
neration is about 50% higher compared
PV will show a significant increase until
to the BAU scenario. Electricity genera-
2020 with average annual growth rates
tion from biomass, biogas and biowaste
of about 25%. Both solar thermal elec-
is expected to reach about four times the
tricity as well as wave & tide energy will
Analysis of the renewable energy sources' evolution up to 2020
XV
experience significant growth in the next
only conventional geothermal electricity
two decades. Geothermal energy grows
generation potentials are considered,
only moderately in both scenarios be-
e.g. not hot-dry-rock technologies.
cause, at the current stage of the project,
Table A:
Projected RES electricity generation in 2020 in EU-25 under BAU and
policy scenario [TWh]
2020
2001
Electricity [TWh] EU-25
Wind energy
Hydro power
large-scale
small-scale
Photovoltaic
Solar thermal electricity
Wave & tide
Biomass, biogas, biowaste
Geothermal
TOTAL RES-E
TOTAL DEMAND*
Share Demand [%]
34
326
288
38.0
0.2
0
0
37
6.3
403
2960
13.6%
BAU
385
337
293
44.3
8.8
12.7
8.4
141
7.5
900
4009
22.5%
Policy
461
354
306
48.4
17.9
21.7
33.2
338
8.2
1234
3583
34.4%
* European Energy and Transport Trends to 2030
The projected share of renewable energy
and policy scenario assumptions are
sources in the electricity sector (RES-E)
related to two different demand forecasts
for the EU-25 member states for the year
from the EU energy outlook 2003 (base2
line and efficiency) .
2020 is shown in Figure A. Projected
RES-E production figures under BAU
2
Demand forecasts are taken from the DG TREN Outlook 2030: European Energy and
Transport Trends to 2030. The baseline projection implies a demand growth for the EU-25 in
the electricity sector of 1.8% p.a. until 2010 and 1.5% p.a. thereafter, and in primary energy
terms of 0.8% p.a. until 2010 and 0.6% p.a. thereafter. The energy efficiency scenario corresponds to a demand growth of 1.1% p.a. until 2010 and of 1.0% p.a. thereafter in the electricity sector, and of 0.2% p.a. until 2010 and 0.1% p.a. thereafter in primary energy
terms. Of course, across countries, the level of changes of demand varies (country specific).
XVI
Analysis of the renewable energy sources' evolution up to 2020
Large differences exist between individ-
cies are feasible. For other countries,
ual countries with regard to the achiev-
such as Austria, higher priority should be
able generation due to differences in
placed on controlling electricity demand
current penetration and future potentials
in order to increase the share of RES-E.
for the different renewables. For some
Generally Figure A indicates the need for
countries like Ireland, Greece and Den-
additional support in most EU-25 coun-
mark, significant differences between the
tries in order to utilise higher shares of
BAU and the policy scenario indicate that
the existing RES-E potentials.
major improvements of the existing poli40
BAU - Demand Baseline
BAU - Demand Efficiency
POLICY - Demand Baseline
POLICY - Demand Efficiency
RES Electricity share [%]
35
30
25
20
15
10
5
0
EU-15
Figure A:
EU-10+
EU-25
Share of RES electricity production in EU-15, EU-10 and EU-25 in 2020
Heat
Far fewer policy measures have been
measures. Furthermore, it has to be no-
implemented in the heat sector than in
ted that, in the absence of an efficiency
the electricity sector in the EU-25 coun-
demand scenario from the EU energy
tries. This is particularly valid for bio-
outlook (2003), the baseline demand had
energy, for which significantly more ef-
to be used as a reference value for both
fective policy instruments are feasible
the BAU and the policy scenario. A fairly
than are currently implemented in any
large increase can be observed in the
country. Since the policy scenario pre-
policy scenario for geothermal heat gen-
sented here (see Table B) is based on
eration as well as for active solar thermal
the currently available best practice poli-
applications. This is mainly the result of
cies in an EU country, this implies that
assumed supportive regulations for geo-
stronger growth could be achieved by
thermal heat pumps similar to the Swed-
applying new and more effective policy
ish case, and of assumed effective in-
Analysis of the renewable energy sources' evolution up to 2020
XVII
vestment support instruments for solar
major lack of effective policies, clear tar-
thermal heat such as are currently being
get setting, and/or a commonly adopted
applied in Austria and Germany. How-
approach on the European renewable
ever, despite the success of these indi-
heat market.
vidual examples, it is clear that there is a
Table B:
Projected RES heat generation in 2020 in EU-25 under the BAU and the
policy scenario
2001
Heat [Mtoe]
Biomass
Geothermal
Solar Thermal
TOTAL RES-Heat
TOTAL Demand * **
Share of Demand
46
1.0
0.5
48
427
11.2%
2020
BAU
53
5
3
60
488
12.3%
Policy
78
18
7
103
488
21.1%
* European Energy and Transport Trends to 2030
** No efficiency scenario available
Biofuels
The projected biofuel consumption for
assumed to implement such tax exemp-
the EU-25 in 2020 is shown in Table C
tions. The high share of biofuels in the
for both scenarios. Since a number of EU
transport sector is due to the assumption
countries have since implemented tax
that a rapid take-off of biofuel production
exemptions for biofuels for transport, a
and consumption can also be achieved
major share is already projected in the
in the EU-10 countries and that the pro-
BAU scenario. In the policy scenario, the
duction of biofuels from solid biomass
increase in biofuel production is signifi-
(lignocellulose) is technically and eco-
cantly stronger because all countries are
nomically feasible after 2010.
Table C:
Projected biofuel production in 2020 in EU-25 under the BAU and
the policy scenario
2001
Transport [Mtoe]
TOTAL Biofuels
TOTAL Demand *
Share of Demand
1
279
0.41%
2020
BAU
19
351
5.5%
Policy ***
40
323
12.4%
* European Energy and Transport Trends to 2030
*** Processes based on lignocellulosic biomass assumed technically
and economically feasible
XVIII
Analysis of the renewable energy sources' evolution up to 2020
Total primary energy
Table D shows the projected RES pri-
compared to 2001 levels and reaches
mary energy production for the EU-25 in
about 20% of the total energy demand,
2020 for both scenarios. Primary energy
whereas it less than doubles under the
4
BAU scenario. The major difference
production was calculated using the classical EUROSTAT method as well the
3
substitution principle . In the policy sce-
between the BAU and the policy scenario
nario, primary energy production from
bution of bioenergy in the sectors of elec-
RES is projected to more than triple
tricity, heat and transport.
Table D:
corresponds to a more significant contri-
Projected RES primary energy production in EU-25 in 2020 under the
BAU and the policy scenario
2020
2001
Total primary energy [Mtoe]
TOTAL Renewables
TOTAL Demand *
Share of Demand
BAU
212
(302)
1900
11.1%
(15.2%)
101
(151)
1680
6.0%
(8.7%)
Policy
351
(457)
1700
20.6%
(25.3%)
according to classical EUROSTAT method
( ) according to substitution principle
* European Energy and Transport Trends to 2030
The projected share of primary energy
energy outlook 2003 (baseline and effi-
production from RES in the total demand
ciency). For most countries, the differ-
for the EU-15 member states and for the
ences between the two scenarios in pri-
EU-10 member states is shown in Figure
mary energy use from total RES are sub-
B and Figure C, respectively for the year
stantially larger than the differences in
2020. Projected RES production figures
the electricity sector. The reason for this
under the BAU and the policy scenario
is, in part, the large difference between
assumptions are again related to two
biomass electricity generation in the BAU
different demand forecasts from the EU
and the policy scenario, which has a
3
The main difference between both methods is in their treatment of electricity generation from
hydro, wind, wave & tide and solar energy. Under the substitution method, the contribution of
these renewable energy sources counts for about 2½ times as many tonnes of oil equivalent
as under the classical method, because the conventional fuels substituted are taken into account.
4
BAU share: 11.1%/12.5% (baseline/efficiency demand)
Policy share: 18.5%/20.6% (baseline/efficiency demand)
Analysis of the renewable energy sources' evolution up to 2020
XIX
strong impact on the primary energy bal-
significantly to closing the gap between
ance. This also suggests that, for many
the two scenarios by implementing more
countries, more effective policies are
effective policies for the promotion of
required in the heat and transport sec-
RES and by controlling electricity de-
tors. Figure B and Figure C list those
mand.
countries which could contribute most
60
RES primary energy share [%]
BAU - Demand Baseline
BAU - Demand Efficiency
POLICY - Demand Baseline
POLICY - Demand Efficiency
50
40
30
20
10
0
AT
BE
Figure B:
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
EU-15
Share of RES primary energy in EU-15 member states in 2020
80
BAU - Demand Baseline
BAU - Demand Efficiency
POLICY - Demand Baseline
POLICY - Demand Efficiency
RES primary energy share [%]
70
60
50
40
30
20
10
0
CY
Figure C:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
EU-10+
BG
RO
Share of RES primary energy in EU-10 member states and Bulgaria and
Romania in 2020
XX
Analysis of the renewable energy sources' evolution up to 2020
Analysis of the renewable energy sources' evolution up to 2020
1
Introduction
1.1
Background - EU policy and targets for renewable energy
sources
1
Renewable energy has become more and more significant in the European energy market
and will, without a doubt, play a very important role in the longer term. It makes up a considerable part of the solution to decreasing import dependency and diversifying sources of
production, and contributing to sustainable development in Europe. The European Community has been proactive in seizing opportunities to develop new renewable energy technologies and building-up leading industries. Moreover, renewables have provided an important impulse to realising social objectives such as increased employment opportunities
and supporting social cohesion in Europe.
Over the last decade, the European renewable energy market has altered considerably
and undergone many changes. Different policy papers have started to enhance the deployment of RES:
• The White Paper “Energy for the future”5, which has set a target of doubling the share
of renewable energy in primary energy consumption from 6% in 1997 to 12% in 2010.
• The Green paper on the security of energy supply in Europe.6
The currently existing Community legislation for stimulating the development of renewables in the European market comprises:
• The Directive on the promotion of renewable electricity (RES-E Directive) on the inter-
nal market, aiming at reaching a 21% share of renewable electricity by the year 2010
for the EU-25 and specifying indicative targets for all 25 member states.7
• The Directive on the energy performance of buildings8 supporting, among others, the
application of renewable heating applications.
5
EC (1997). Energy for the Future: renewable sources of energy. White Paper for a Community
Strategy and Action Plan. COM(1997) 599 final (26/11/1997).
6
European Commission; 29 November 2000 (COM(2000) 769 final).
7
EC (2001a) Directive 2001/77/EC of The European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market.
8
Directive proposal on the energy performance of buildings COM(2001) 226 final.
2
Analysis of the renewable energy sources' evolution up to 2020
• The Directive on the promotion of biofuels9, aiming to increase the share of biofuels in
total transport fuels to 5.75% by the year 2010.
• The Council Directive on restructuring the Community framework for the taxation of
energy products and electricity.10
The policy framework has defined several indicative targets and other requirements to be
fulfilled in the mid-term. Table 1 specifies the indicative targets for the share of renewable
electricity for each of the EU-25 countries. Other targets have only been specified at EU
level.
Table 1:
Renewable electricity targets for 2010 specified as share of renewable
electricity consumption in the EU-25 states considered
Country
RES-E target (%)
Country
RES-E target (%)
Austria (AT)
78.1
Belgium (BE)
6.0
Denmark (DK)
29.0
Estonia (EE)
5.1
Finland (FI)
31.5
Hungary (HU)
3.6
France (FR)
21.0
Latvia (LA)
Germany (DE)
12.5
Lithuania (LT)
7
Greece (GR)
20.1
Malta (MT)
5
Ireland (IE)
13.2
Poland (PL)
7.5
Italy (IT)
25.0
Slovak Republic (SK)
31
Luxembourg (LU)
5.7
Netherlands (NL)
9.0
Cyprus (CY)
6
Czech Republic (CZ)
8
Slovenia (SI)
49.3
33.6
Portugal (PT)
39.0
Total EU-15
22
Spain (ES)
29.4
Total EU-10
11
Sweden (SE)
60.0
Total EU-25
21
United Kingdom (UK)
10.0
9
Directive 2003/30/EC of the European Parliament and of the Council of 8 May 2003 on the
promotion of the use of biofuels and other renewable fuels for transport. The Directive aims to
increase the consumption of biofuels in the internal market from the current 0.6% to 2% of the
total consumption of transport fuels in 2005 and to 5.75% in 2010.
10
Directive 2003/96/EC of 27 October 2003 on restructuring the Community framework for the
taxation of energy products and electricity.
Analysis of the renewable energy sources' evolution up to 2020
3
An important aspect of the EU policy for increasing the share of renewables is the monitoring and evaluation of the progress towards the 2010 targets. This monitoring process
concentrates on two main issues. Firstly, it monitors the adoption of EU legislation into
national legislation and its translation into national action plans and policy instruments in
each of the 25 EU states. Secondly, it provides a framework to analyse the impacts of
these national policies and measures and the extent to which each of the EU-25 states is
realising the targeted deployment of renewable energy. The study report presented here
concentrates on this second aspect.
New market dimensions continuously affect the design of promotion policies. Since the
targets were set in the White Paper, and the Renewable Electricity Directive and the Directive on biofuels took effect, many important issues have arisen. One concerns the
enlargement of the EU, which has opened up new opportunities for the exploitation of renewable energy resources, specifically bioenergy. Another important issue is the interaction with other objectives and policies, such as environmental policies, the completion of
the internal EU energy market11, and the interaction with the Common Agricultural Policy
(CAP reform).12 The establishment of a carbon market, supported by the introduction of a
greenhouse gas emissions trading system13, affects the economic valuation of investment
opportunities. Free consumer choice on the European electricity market has created enhanced competition and the possibility to distinguish green products from conventional
power supplies. This will be further enhanced by the required disclosure of fuel mix and
the environmental impact of power supplies. The CAP is a highly important element of a
consistent RES strategy.
1.2
Aim and scope of the report
The objective of this project was to carry out an independent analysis and assessment of
the implementation of renewable energy sources in the member states of the European
Union, Bulgaria and Romania, since the publication of the White Paper on renewable energy sources in 1997 and to propose a perspective for the period up to 2020. The results
of the project provide:
11
Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC.
12
COM(2003) 698 final - Proposal for a Council Regulation amending Regulation (EC) No.
1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers.
13
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and
amending Council Directive 96/61/EC.
4
Analysis of the renewable energy sources' evolution up to 2020
• input for monitoring the progress of the targets set in the White Paper, the Directive on
the promotion of electricity from renewable energy sources, and the Directive on biofuels,
• insight into the future development of a green energy market in the European Union,
Bulgaria and Romania.
The work included carrying out a comprehensive assessment of the evolution of renewable energy sources and their contribution to the electricity, heat and transport
sectors in the European Union, Bulgaria and Romania. The study gives a complete
overview of the RES objectives by country in primary energy terms based on a detailed
analysis of existing policies, promotion schemes and barriers in the different countries.
The project results in a set of transparent indicators
• for monitoring the progress in the implementation of renewable energy sources up to
2010;
• for providing insights into the possible future implementation of renewable energy
sources under different policy developments up to 2020.
The study also proposes a perspective and a strategy for the period up to 2020, with a
clear indication of the prospects for meeting the indicative EU and member state targets
for 2010. The work involves modelling using the techno-economic model Green-X. Two
types of scenarios are modelled, among them, a business-as-usual and a policy scenario.
1.3
Methodology and approach
The approach chosen in the FORRES 2020 project combines a detailed assessment of
the current policies to promote renewable energy sources in the European Union and Bulgaria and Romania with a comprehensive modelling of the future evolution of the renewable energy markets based on an extensive database regarding RES penetration, potentials and costs. In more detail, the work was structured into the following phases:
1. Data collection on policies, RES penetration, technological, potential and cost information.
2. Policy impact assessment and derivation of indicators.
3. Stakeholder input consultation and risk assessment.
4. Software adaptation and modelling.
With regard to penetration data, we have relied on sources - insofar as available and possible - such as EUROSTAT, EuroObserv’ER, national statistics and statistical information
per renewable energy source from sector organisations and institutions such as EWEA
(European Wind Energy Association), ESTIF (European Solar Thermal Industry Federa-
Analysis of the renewable energy sources' evolution up to 2020
5
tion) and DEWI (German Wind-Energy Institute). This task was more difficult for the ten
new EU countries that joined in May 2004 as well as for Bulgaria and Romania. Here, we
contacted statistical offices, energy agencies and sector organisations in each of the respective countries. For information on potentials, technologies and costs in the EU-15, we
mainly used and refined data collected in the projects ElGreen, Green-X and Pretir. For
the other countries, original data had to be derived on the basis of country-specific data
sources, e. g. based on country-specific wind atlases. In addition, a new database was
compiled with regard to biofuels in transport and some of the technologies in the heat sector. The data on policy instruments was obtained mainly by analysing government documents
on national targets and policy instruments, e. g. specific policy plans for renewable energy.
Furthermore, independent evaluations were used as important sources of information, e. g.
the IEA evaluations of energy policies, NGO evaluations, general literature on possible barriers to the implementation of renewables and literature on the effectiveness of different types
of policy instruments.
Using validated concepts from techno-economic modelling and econometrics we derived
projections for the implementation of renewables in 2010 and 2020 under a business-asusual (BAU) scenario and a policy scenario (PS). Generally the prediction was made according to two different methods:
1. Forecasts of RES penetration with the model Green-X.
2. Forecasts of RES penetration with the help of econometric analyses.
The second method has the advantage of a high degree of transparency, whereas the
calculations with the model Green-X allow boundary conditions to be adjusted and defined (scenario variations) in a more accurate way.
Where forecasts were performed using econometric analyses, the policy scenario was
defined using correlations between historically observed best practice policy implementations and corresponding RES penetration. This method sets an important benchmark for
the results of the computer model Green-X.
6
Analysis of the renewable energy sources' evolution up to 2020
Analysis of the renewable energy sources' evolution up to 2020
7
2
Present status of renewable energy sources in EU-25
member states
2.1
Current penetration, potentials and costs of renewable energy sources
2.1.1
Electricity
Electricity produced by renewable energy sources (RES-E) in the EU-15 countries amounted to 363 TWh in 2002, corresponding to a share of 13.4% of gross electricity consumption. The relevant figures for the EU-10 are 17.7 TWh and 5.6%, respectively.
EU-15 countries
EU-10 countries
Small-scale hydro
400
18
350
16
New' RES-E excl. hydro
14
300
12
250
10
200
8
150
Figure 1:
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
2002
2001
2000
1999
1998
1997
1996
1995
0
1994
0
1993
2
1992
50
1991
4
1990
6
100
1990
Electricity generation [TWh/year] _
Large-scale hydro
Historical development of electricity generation from RES in the European
Union from 1990 to 2002 – in the EU-15 (left-hand side) and EU-10 countries (right-hand side)
8
Analysis of the renewable energy sources' evolution up to 2020
The historical development of RES-E14 is shown in Figure 1 for EU-15 and EU-10. As can
be seen, hydropower is the dominant source, but ‘new’ RES-E15 such as biomass or wind
have started to play a role. The following figures provide some information about these
technologies: Figure 2 outlines their historical development in the European Union (EU25) and Figure 3 a breakdown of their production by country for 2001. Wind energy is the
RES-E source with the highest yearly growth rates of about 38% in electricity production
over the last ten years. Especially in EU-15 countries, wind energy is predominant in recent portfolios of ‘new’ RES-E, whilst biomass is prominently represented in some of the
new member states.
Electricity generation [TWh/year] _
90
80
Wind off-shore
Wind on-shore
70
Photovoltaics
60
Geothermal electricity
50
40
Biowaste
Solid biomass
Biogas
30
20
10
0
1990
Figure 2:
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Historical development of electricity generation from ‘new’ RES-E in the
European Union (EU-25) from 1990 to 2002
14
Based on EUROSTAT data, which are only up-to-date until 2001. For many RES, e. g. windonshore and PV, more recent data from sector organisations and national statistics have been
used. Generally EUROSTAT data were modified where alternative data proved to be more accurate.
15
In general, definitions of RES-E sources are made in accordance with the Directive for the
promotion of electricity produced from renewable energy sources in the internal electricity
market, 2001/77/EC. The technologies assessed include hydropower (large and small), photovoltaic, solar thermal electricity, wind energy (onshore, offshore), biogas, solid biomass, biodegradable fraction of municipal waste, geothermal electricity, tidal and wave energy.
Analysis of the renewable energy sources' evolution up to 2020
9
EU-15 countries
Electricity generation [TWh/year] _
Gaseous biomass
Photovoltaics
Solid biomass
Wind on-shore
30
EU-10 countries
Biowaste
Wind off-shore
1,4
Geothermal electricity
Hydro small-scale
1,2
25
1,0
20
0,8
15
0,6
10
0,4
5
0,2
0,0
0
AT BE DK FI FR DE GR IE
Figure 3:
IT
LU NL PT ES SE UK
CY CZ EE HU LA LT MT PL SK SI
Breakdown of electricity generation from ‘new’ RES-E for 2002 by country
– EU-15 (left-hand side) and EU-10 countries (right-hand side)
As can be seen from the above figures (see, e.g. Figure 116), RES-E such as hydropower
or wind energy represent energy sources characterised by a natural volatility. Therefore,
in order to provide accurate forecasts of the future development of RES-E, historical data
for RES-E had to be translated into electricity generation potentials – the achieved potential. In addition, future potentials were assessed taking into account the country-specific
situation as well as realisation constraints. Figure 4 depicts the achieved and additional
mid-term potential for RES-E in the EU-15 by country (left-hand side) as well as by RES-E
category (right-hand side). A similar picture is shown for the new member states (EU-10)
and selected candidate countries (i.e. Bulgaria and Romania)17 in Figure 5. For EU-15
countries, the already achieved potential for RES-E equals 384 TWh18, whereas the additional realisable potential up to 2020 amounts to 1074 TWh (about 41% of current gross
electricity consumption). Corresponding figures for the EU-10 are 17.5 TWh for the achieved potential and 118.5 TWh for the additional mid-term potential (about 39% of current
gross electricity consumption).
16
Compare, e.g. the decrease of electricity generation from hydropower in EU-15 countries from
2001 to 2002 as depicted in Figure 1: The 0.55 GW growth of cumulative installed hydro capacity is accompanied by a decrease in actual generation of roughly 66 TWh.
17
In the following, the categorisation EU-10+2 refers to this set of countries – i.e. the new member states (as of 2004) plus the candidate countries Bulgaria and Romania.
18
The electricity generation potential represents the output potential of all plants installed up to
the end of each year. Of course, the figures for actual generation and generation potential differ in most cases – due to the fact that, in contrast to the actual data, the potential figures represent normal conditions, e.g. in case of hydropower, the normal hydrological conditions, and
furthermore, not all plants are installed at the beginning of each year.
10
Analysis of the renewable energy sources' evolution up to 2020
300
Additional potential 2020
250
250
Achieved potential 2001
200
150
200
100
150
50
Figure 4:
Wind offshore
Wind onshore
Tide & Wave
Photovoltaics
Hydro large-scale
Hydro small-scale
Solar thermal electricity
SE
UK
PT
ES
NL
LU
IT
IE
DE
GR
FI
Achieved (2001) and additional mid-term potential 2020 for electricity
from RES in the EU-15 – by country (left-hand side) and by RES-E category (right-hand side)
60
50
Additional potential 2020
60
Achieved potential 2001
50
40
30
40
20
30
10
Figure 5:
Wind offshore
Wind onshore
Tide & Wave
Photovoltaics
Hydro small-scale
Hydro large-scale
Solar thermal electricity
RO
BG
SI
SK
PL
MT
LT
LA
HU
EE
CZ
CY
0
Geothermal electricity
10
Biowaste
20
(Solid) Biomass
0
Biogas
RES-E - Electricity
generation potential [TWh/year] _
FR
BE
DK
AT
0
Geothermal electricity
50
Biowaste
Biogas
0
100
(Solid) Biomass
RES-E - Electricity
generation potential [TWh/year] _
300
Achieved (2001) and additional mid-term potential 2020 for electricity
from RES in EU-10 countries & Bulgaria, Romania – by country (left-hand
side) and by RES-E category (for EU-10 alone) (right-hand side)
The country-specific situation with respect to the achieved as well as the future potential
shares of available RES-E options is depicted below in more detail. Figure 6 indicates the
share of the various RES-E in the achieved potential for each EU-15 country. As already
mentioned, (large-scale) hydropower dominates current RES-E generation in most EU-15
countries. However, for countries like Belgium, Denmark or the Netherlands – all characterised by rather poor hydro resources – wind, biomass or biowaste are in a leading position. Figure 7 illustrates the shares of specific RES-E in the total achieved potential for
Analysis of the renewable energy sources' evolution up to 2020
11
EU-10 countries & Bulgaria, Romania: here, hydropower accounts for 95% of the RES-E
production and, of the other RES-E options, only biomass, biogas and wind were of any
relevance. Only in the Czech Republic, Estonia and Lithuania does biomass electricity
have shares of 15%, 56% and 25%, respectively. In all other countries, biomass contributes less than 2% to the RES-E share. In Estonia and Poland, wind energy has attained
shares of 10% and 3% in RES-E production, respectively.
Share of total RES-E generation 2001 __
100%
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & Wave
Wind offshore
90%
80%
70%
60%
8.7%
2% 5.3%
2%
50%
1.6%
9.3%
40%
30%
20%
10%
EU-15 total
0%
AT BE DK FI FR DE GR IE
Figure 6:
IT LU NL PT ES SE UK
71%
RES-E breakdown 2001
RES-E as a share of the total achieved potential in 2001 for the EU-15 –
by country (left-hand side) as well as for total EU-15 (right-hand side)
100%
Share of total RES-E generation 2001 __
(Solid) Biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & Wave
Wind offshore
90%
80%
70%
(Solid) Biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
60%
0.7%
50%
13.8%
0.8%
3.6%
40%
30%
20%
10%
EU-10+ total
0%
CY
Figure 7:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG RO
RES-E breakdown 2001
81.0%
RES-E as a share of the total achieved potential in 2001 for the EU-10 &
Bulgaria, Romania – by country (left-hand side) as well as for total EU-10
& Bulgaria, Romania (right-hand side)
12
Analysis of the renewable energy sources' evolution up to 2020
Figure 8 shows the share of different energy sources in the additional RES-E mid-term
potential for the EU-15 for 2020. The largest potential is found in the sector of wind energy
(44%) followed by solid biomass (24%), biogas (9%) as well as promising future options
such as tidal & wave (11%) or solar thermal energy (3%).
100%
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & Wave
Wind offshore
Share of additional RES-E _
generation potential 2020 __
90%
80%
70%
9%
60%
23%
50%
24%
40%
30%
EU-15 total
20%
10%
0%
AT BE DK FI FR DE GR IE IT LU NL PT ES SE UK
Figure 8:
Breakdown of
additonal RES-E 21%
generation potential
up to 2020
11%
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & Wave
Wind offshore
90%
80%
70%
3%
(Solid) Biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
60%
16%
50%
40%
3%
13%
3%
30%
EU-10 total
20%
10%
0%
CY CZ EE HU LA
Figure 9:
3%
2%
2%
2%
RES-E as a share of the total additional realisable potential in 2020 for
the EU-15 – by country (left-hand side) as well as for total EU-15 (righthand side)
100%
Share of additioanl RES-E _
generation potential 2020 _ __
(Solid) Biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
LT MT PL
SK
SI
BG RO
1%
2%
6%
Breakdown of
additional RES-E
generation potential 3%
up to 2020
53%
RES-E as a share of the total additional realisable potential in 2020 for
the EU-10 & Bulgaria, Romania – by country (left-hand side) as well as
for total EU-10 (right-hand side)
Analysis of the renewable energy sources' evolution up to 2020
13
Figure 9 illustrates the share of different energy sources in the additional RES-E mid-term
potential of the EU-10 countries & Bulgaria, Romania for 2020. In contrast to the EU-15,
the largest potentials for these countries exist in the sectors of solid biomass (53%) and
wind energy (19%) followed by biogas (13%). Unlike the situation in the EU-15, the refurbishment and construction of large hydro plants holds significant potentials (6%).
In the model Green-X, the electricity generation costs for the various generation options
are calculated by a rather complex procedure – internalized within the overall set of modelling procedures. In this way, plant-specific data (e.g. investment costs, efficiencies, full
load-hours, etc.) are linked to general model parameters such as interest rate and depreciation time. The latter parameters are dependent on a set of user input data as policy
instrument settings, etc. Nevertheless, in order to give a better illustration of the current
economic conditions of the various RES-E options, exemplary marginal electricity generation costs are depicted in Figure 10.
Generation costs19 refer to the starting year for model simulations, i.e. 2002 and, hence,
are expressed in €2002. The broad range of costs which results for several RES-E represents, on the one hand, resource-specific conditions such as are relevant, e.g. in the case
of photovoltaics or wind, and which vary between and also within countries. On the other
hand, costs also depend on the technological options available – compare, e.g. co-firing
and small-scale CHP plants for biomass.
Biogas
(Solid) Biomass
Biowaste
Geothermal electricity
Hydro large-scale
Hydro small-scale
Photovoltaics
PV: 460...1740 €/MWh
Solar thermal electricity
Tide & Wave
Wind onshore
Wind offshore
0
25
50
75
100
125
150
175
200
225
250
Long-run marginal costs [€/MWh]
Figure 10:
19
Long-term marginal generation costs (for the year 2002) of different
RES-E technologies
For long-term marginal generation costs (as applied to new plants), a default capital recovery
factor is used based on the following settings: interest rate z = 6.5%; payback time PT = 15
years.
14
Analysis of the renewable energy sources' evolution up to 2020
Future cost development – technological learning
Forecasting technology development is a crucial activity, especially for a long time horizon. Considerable efforts have been made recently to improve the modelling of technology development in energy models. A rather ‘conventional’ approach relies exclusively on
exogenous forecasts based on expert judgements of technology development (e.g. efficiency improvements) and economic performance (i.e. described by investment & O&M
costs). More recently within the scientific community this has often been replaced by technology-based cost dynamics which allow endogenous forecasts, at least to some extent,
of technological change in energy models. This approach of so-called technological learning or the experience/learning curves method takes into account the "learning by doing / producing / installing" effect.20
Within the model Green-X the approach chosen differs by technology. In principle, the
database is constructed to include two different approaches: standard cost forecasts or
endogenous technological learning. Default settings were applied as follows:
• for most RES-E technologies, e.g. wind power or PV, it was decided to adopt the ap-
proach of technological learning. Learning rates were assumed separately for each decade21 at least.
• For a few RES-E technologies where endogenous learning leads to non-accurate re-
sults – as e.g. in case of tidal & wave energy – it was decided to adopt well-accepted
expert judgements.
To obtain an impression of the induced cost reductions, Figure 11 depicts – as a summary
of the results presented later on – the expected progression of investment costs for various RES-E technologies. The highest cost reductions can be expected for tidal & wave
energy as well as for solar electricity - both photovoltaics and solar thermal electricity production – and wind power.
This figure refers to the business-as-usual development (BAU) – see Chapter 5 of this
report for details.
20
In principle the so-called ‘learning effect’ - which has been empirically observed in several
fields of technological development – states that for each doubling of producing / installing a
certain technology, a decline of the costs can be expected by a certain percentage, the socalled ‘learning rate’. For a brief description of the learning / experience curve approach, see
e.g. Wene et al., 2000.
21
In many cases experience has shown that the rate of technological learning is often closely
linked to the development stage of a certain technology – i.e. high learning rates can be expected at an early stage of development if a technology is ‘brand new’, and later, as the technology matures, a slowdown occurs.
Analysis of the renewable energy sources' evolution up to 2020
15
Cost reduction - share of initial investment costs
(as in the year 2002) [%]
100%
Hydropower
95%
Geothermal electricity
90%
Gaseous biomass
CHP
85%
Gaseous biomass
80%
Solid biomass CHP
75%
Solid biomass
70%
Wind energy
65%
Solar thermal
electricity
60%
Photovoltaics
Tidal & wave
Figure 11:
2.1.2
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
55%
Development of the investment costs according to the business-as-usual
case (BAU)
Heat
Heat production from renewable energy sources (RES-H) in the EU-15 member states
amounted to 42.2 Mtoe in 2001, corresponding to a share of 11% of the total heat consumption.22 For the new member states (EU-10), the corresponding RES-H figure amounted to 5.6 Mtoe in 2001, which also corresponds to a share of 11% of the total heat consumption. At EU-25 level, the share of heat production from renewable sources corresponds once again to about 11% of the total heat consumption.
Figure 12 illustrates the historic development of RES-H for the EU-15 and the EU-10 from
1990 to 2001. As can be observed in the following figures, heat production from biomass
sources outweighs geothermal and solar thermal heat technologies in both EU-15 and
EU-10.
22
The total heat consumption (including cooling) amounted to about 378 Mtoe for the EU-15 and
to about 50 Mtoe for the EU-10 in 2001.
16
Analysis of the renewable energy sources' evolution up to 2020
EU-10 countries
EU-15 countries
Biomass
Geothermal Heat
Heat Generation [ktoe/year]
Solar Thermal Heat
6000
45000
40000
5000
35000
4000
30000
25000
3000
20000
2000
15000
10000
1000
5000
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Figure 12:
1990
0
0
RES-H production development from 1990 to 2001 in EU-15 and EU-10
[ktoe/year]
In order to provide a complete analysis of the current status and the future evolution of the
heat sector at EU level, it is important to distinguish between grid connected and non-grid
connected heat production. Both grid and non-grid RES-H are based on biomass, solar
thermal and geothermal resources, as illustrated in Figure 13. The biomass sector is the
most important one in terms of current penetration and the most complex one in terms of
feedstock sources and applications. Non-grid systems based on biomass sources comprise traditional wood heat production as well as innovative biomass such as pellets and
woodchips, whereas the grid connected systems include district heating and combined
heat and power (CHP) plants.
It is important to note that the historical data for the RES-H sector at EU-25 member state
level and in particular for the new member states are of limited reliability. This is especially
valid for non-grid connected wood-heating systems in households because of the decentralised and often non-commercial nature of the activity. In contrast, the data on gridconnected systems, as well as on woodchip and pellet systems, are more reliable because of the fact that the relevant fuels or the generated heat are traded as commercial
products. Historical data are based on official sources of member states as well as on
publications of the relevant sector organisations. All data have been cross-checked with
Eurostat for consistency. Additional up-to-date figures were obtained from EurObserv’ER,
Afbnet biomass and the pellets information centre.
Analysis of the renewable energy sources' evolution up to 2020
17
EU-10 countries
EU-15 countries
Biomass Heat Grid
Solar Thermal Non-Grid
Geothermal Heat non-Grid
Geothermal Heat Grid
3000
10000
9000
2500
8000
7000
2000
6000
1500
5000
4000
1000
3000
2000
500
1000
BG
RO
SI
PL
SK
LT
MT
LA
HU
CZ
EE
SE
UK
ES
NL
PT
IT
LU
IE
GR
FR
DE
FI
DK
AT
Figure 13:
CY
0
0
BE
Heat generation - breakdown for 2001
[ktoe/year]
Biomass Heat Non Grid
RES-H breakdown (2001) from grid and non-grid connected systems EU15 and EU-10 & Bulgaria, Romania
Heat production from non-grid connected biomass systems is predominant in almost all
EU-15 and EU-10 countries except for Sweden, Finland, UK, and Denmark, where heat
production from biomass in grid connected systems is primary. There is only a minor contribution from solar thermal and geothermal heat production as shown in Figure 14. Only
1.2% of heat production stems from solar thermal sources and only 2.4% from geothermal
heat, while the overriding share of heat production (96.4%) comes from various biomass
sources.
2.0 % Pellets
1.2% Heat Solar
Thermal (non-Grid)
56.8% Wood in
households
96.4%
Heat Biomass
(Grid &non-Grid)
11.4 % Biomass
Industry
4.3% Biomass
District Heating
1.8% Biogas
2.4% Heat
Geothermal
(Grid & non-Grid)
Figure 14:
5.7% MSW
14.4% Biomass
Public CHP
Share of renewable energy sources in heat production - EU-15 2001
An important basis for the scenario development for the RES-H sector is provided by comparing the additional heat generation potentials with the potentials already achieved. The
18
Analysis of the renewable energy sources' evolution up to 2020
additional realisable potential was estimated taking into account each member state’s
technical potential as well as development barriers and constraints. Figure 15 shows the
achieved potential in 2001 and the additional heat generation potentials for 2020 at member state level (EU-15 and EU-10 & Bulgaria, Romania). The already achieved potential in
2001 amounts to 42.4 Mtoe for the EU-15 and 8.7 Mtoe for the EU-10 & Bulgaria, Romania; whereas the additional potential until 2020 totals 106 Mtoe for the EU-15 and 27 Mtoe
for the EU-10 & Bulgaria, Romania.
EU-15 countries
EU-10 countries
Figure 15:
RO
SI
BG
SK
PL
LT
MT
LA
HU
CZ
EE
SE
0
UK
0
ES
2000
NL
5000
PT
4000
LU
10000
IT
6000
IE
15000
DE
8000
GR
20000
FI
10000
FR
25000
DK
12000
AT
30000
CY
Additional Potential 2020
14000
BE
RES-H - Heat generation potential _
[ktoe/year] _
Achieved Potential 2001
35000
Achieved and additional mid-term potential 2020 for heat from RES in
EU-15 and EU-10 & Bulgaria, Romania
The composition of the heat sector in each member state is illustrated in greater detail in
the figures below, showing the share of biomass, geothermal and solar thermal energy in
the achieved as well as the additional potential. Figure 16 displays the share of the different RES-H technologies with reference to the total achieved potential for 2001 in the EU15 member states.
As already mentioned before, most of the EU-15 member states have a high share of heat
production from biomass sources. Moreover, heat production from solar thermal sources
is starting to play a role in countries like Greece, Germany, Austria and the Netherlands;
but its share remains low. There is a significant contribution from geothermal energy in
Sweden (mostly geothermal heat pumps) as well as in Italy and Portugal. Solar thermal
collectors provide two thirds of the hot water demands of Greek households, nearly 10%
of the demand in Austria and between 0-5% in the other countries.
Analysis of the renewable energy sources' evolution up to 2020
19
Figure 17 shows similar figures for the EU-10 countries & Bulgaria, Romania. Here, Cyprus is the exception to the biomass trend in heat production. Cyprus had a high solar
thermal heat production share of 92% in 2001. In addition, geothermal heat plays an important role in Slovakia (32%), Hungary (25%), Slovenia (10%) and Bulgaria (7%).
100%
Share of total RES-H
generation 2001 [%] _
90%
80%
Solar Thermal
70%
60%
Geothermal Heat
50%
40%
30%
Biomass Heat
20%
10%
Figure 16:
EU15
UK
SE
ES
PT
NL
LU
IT
IE
GR
DE
FR
FI
DK
BE
AT
0%
RES-H as a share of the total achieved potential in 2001 for EU-15
member states
100%
Share of total RES-H
generation 2001 [%] _
90%
80%
Solar Thermal
70%
60%
50%
Geothermal Heat
40%
30%
Biomass Heat
20%
10%
Figure 17:
EU10+2
RO
BU
EU10
SI
SK
PL
MT
LT
LA
HU
EE
CZ
CY
0%
RES-H as a share of the total achieved potential in 2001 for EU-10
member states & Bulgaria, Romania
Figure 18 and Figure 19 indicate the shares of different renewable sources with respect to
the additional realisable potential in 2020 for EU-15 and EU-10 & Bulgaria, Romania. In
the EU-15, there is a more equal distribution between the different sectors for 2020 poten-
20
Analysis of the renewable energy sources' evolution up to 2020
tials with almost 40% of heat production from biomass and 30% respectively for geothermal and solar thermal heat.
However, at the member state level, some countries exhibit a greater potential use of biomass for heat, e.g. Finland, Sweden and Austria, with more than 50% share of biomass
heat. Whereas the additional potential in the biomass sector mainly depends on fuel supply potentials, the respective potentials of geothermal heat pumps and solar thermal installations are limited by the low temperature heat demand of households and by the
maximum growth rate that can be reached for a particular sector. In respect to geothermal sources, the relatively high potentials here are mainly due to geothermal heat
pumps. With regard to the determination of the mid-term potential for geothermal heat
pumps, the main assumption on the EU level is that a maximum annual growth rate of
25% per year will not be able to be surpassed until 2020. This figure corresponds to the
growth rate observed in Sweden during the last four years. Therefore the total mid-term
potential of geothermal heat pumps in the EU-15 equals 28.3 Mtoe, corresponding to
100%
90%
80%
Solar Thermal
70%
60%
50%
Geothermal
40%
30%
Biomass
20%
10%
Figure 18:
EU15
UK
SE
ES
PT
NL
LU
IT
IE
GR
DE
FR
FI
DK
BE
0%
AT
Share of additional RES-H potential [%] _
about 12% of household heat demand in 2020.
Share of the total additional realisable potential of RES-H in 2020 for EU-15
For the EU-10 & Bulgaria, Romania the overall picture is rather different, with an average
share of 60% for biomass, 19% for solar thermal and 17% for geothermal heat. At the
individual country level, however, solar thermal shares are dominant in Cyprus and Malta,
whereas biomass dominates the trend in the other new member states with shares well
above 60%.
21
100%
90%
80%
Solar Thermal
70%
60%
50%
Geothermal
40%
30%
Biomass
20%
10%
Figure 19:
RO
BG
EU-10
SI
SK
PL
MT
LT
LA
HU
EE
CZ
0%
CY
Share of additional RES-H potential [%] _
Analysis of the renewable energy sources' evolution up to 2020
Share of the total additional realisable potential of RES-H in 2020 for EU10 member states & Bulgaria, Romania
Figure 20 shows the current contribution of grid connected heat from RES in the total
steam consumption in 2001 (total steam consumption amounts to about 22% of total heat
consumption in the EU-25). There is a large heterogeneity among the member states, with
Finland, Portugal and Sweden clearly leading with regard to grid connected heat from
RES. Generally the current share of RES in total steam consumption is already remarkable at EU level, but there are still significant future potentials, especially in countries like
Germany, the UK and the Netherlands. The demand data in Figure 20 and Figure 21 are
share of RES grid connected heat in total steam consumption
based on the EU Energy Outlook (2003).
80%
70%
60%
50%
40%
30%
20%
10%
0%
AT
Figure 20:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
EU15
Achieved grid connected RES-H consumption as a share of total steam
consumption in 2001
22
Analysis of the renewable energy sources' evolution up to 2020
Figure 21 shows the current contribution of non-grid connected heat from RES in the total
non-grid connected heat consumption. A similar picture results as in Figure 20. The progress in the area of grid-connected heat production appears to be significantly greater
than for non-grid connected applications, but this impression is mainly triggered by two
countries, Finland and Sweden (for Portugal the relative figures appear to be high, but the
share of RES non-grid connected heat in non-grid consumption
2001
absolute values are rather small).
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Figure 21:
AT
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
EU15
Achieved non-grid connected RES-H generation as a share of total nongrid connected heat consumption in 2001
Looking at the historical development of the sector of wood heat production in households, one observes a declining trend in many of the EU-15 countries over the last seven
years. Especially the sector of traditional log wood shows this negative trend. In some
countries, especially in Austria, the decline in traditional log wood is partially compensated
by significant growth of new heating systems based on pellets and wood chips. This sector grew by about 40% per year on average between 1997 and 2002 in Austria and experienced a similar success in Denmark, Finland, Sweden and Germany.
Figure 22 and Figure 23 illustrate the current status in this sector showing the volumes of
pellet production in the relevant countries and the ratio of modern biomass heating systems, i.e. those based on pellets and wood chips, to the total number of non-grid biomass
heating systems. As far as pellet heating systems are concerned, it is important to point
out that Sweden – which has a higher share of pellet and wood chip-heating systems than
Austria (see Figure 23) – has a lower share of non-grid connected biomass heating. Also
worth mentioning is the fact that Portugal, which has the highest share of non-grid biomass heating systems, has almost no pellet / woodchip heating systems.
Analysis of the renewable energy sources' evolution up to 2020
23
900,000
2003
Pellet Production [Ton / year]
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
SE
Figure 22:
DK
AT
FI
IT
GE
ES
UK
Pellet production for 2003 for selected EU-15 member states
Share of Woodchips
in wood heating systems [%]
7
6
5
4
3
2
1
0
AT
Figure 23:
2.1.3
DK
FI
DE
SE
Share of modern forms of biomass (pellets, wood chips) in non-grid
connected biomass
Biofuels for transport
As can be observed in Figure 24, biodiesel has the largest share of biofuels production in
the EU-15, reaching more than 1.2 Mtoe in 2003. During the last decade, biodiesel production increased by about a factor of ten. The growth in bioethanol production has been
more modest at about a factor of five compared to 1993 values. Especially Germany,
France, Austria, Italy, Sweden and Spain have set the pace for the biofuel sector in recent
years.
The development of the EU-10 biofuel sector since 1996 is shown in Figure 25. In general, the development here has been less dynamic than in the EU-15. The significant in-
24
Analysis of the renewable energy sources' evolution up to 2020
crease of bioethanol production was mainly due to developments in Poland. The rapid
decline of the market in Slovakia caused by the abolishment of the tax reduction scheme
was responsible for the drop in the biodiesel market during the last 3 years.
1600
Biodiesel [ktoe]
Bioethanol [ktoe]
1400
Biofuel Production [ktoe]
1200
1000
800
600
400
200
0
1993
Figure 24:
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
EU-15 biofuel production historical development 1993 – 2003
180
Biodiesel [ktoe]
Bioethanol [ktoe]
160
Biofuel Production [ktoe]
140
120
100
80
60
40
20
0
1996
Figure 25:
1997
1998
1999
2000
2001
2002
EU-10 biofuel production historical development 1996 - 2003
2003
Analysis of the renewable energy sources' evolution up to 2020
25
In the transport sector, the achieved potentials for 2001 showed 1480 ktoe for the EU-15,
and 153 ktoe for the EU-10. Major production capacities have been set up in Germany
and France followed by Spain, Poland, Italy and the Czech Republic. With regard to the
additional mid-term potential until 2020, the European Union, led by France, Germany and
Spain, accounts for 35 Mtoe. For the EU-10, the additional realisable potential until 2020
amounts to about 10 Mtoe. As observed in Figure 26, Poland and the Czech Republic are
the biggest players among the new member states.
Figure 26:
BG
RO
SI
SK
PL
MT
LT
LA
HU
CZ
EE
UK
SE
ES
0.0
NL
0
PT
1.0
IT
2
LU
2.0
IE
4
DE
3.0
GR
6
FI
4.0
FR
8
BE
5.0
DK
10
CY
6.0
Additional potential 2020
Achieved potential 2003
AT
RES-T - Transport
fuel production potential [Mtoe]
12
Biofuel production in 2003 and production potential 2020 [Mtoe].
The mid-term potentials shown above are based on the assumption of 15% of arable land
being used for biofuels. The split between biodiesel (rapeseed and sunflower) and bioethanol (wheat and sugar beet) depends on the quality of soil, climatic conditions and the
historically observed share of these crops. Secondary biofuels as well as agricultural residues are also considered. At present, the production of biofuels from solid biomass (lignocellulose) is still characterised by high production costs and is therefore not considered as
a relevant option before the year 2010.
2.2
RES-E achievements in the period 1997-2002
In the following, recent achievements – i.e. covering the period 1997 to 2002 –are described with respect to RES in the electricity sector for the European Union (it should be
noted that the RES-E directive was not yet transposed during this time frame).
As a starting point, Figure 27 compares actual RES-E penetration in 1997 and 2002 with
the 2010 target set in the RES-E Directive for EU-15 countries. The corresponding data
26
Analysis of the renewable energy sources' evolution up to 2020
set for EU-10 countries is given in Figure 28. At first glance, it looks as if there has been
no progress in most countries in terms of penetration. On an EU-15 level, a decrease from
13.7% in 1997 to 13.4% in 2002 can be observed, whilst there is a +0.5% increase for
total EU-10.
RES-E as share of
gross electricity consumption [%]
80%
RES-E penetration 1997
70%
RES-E penetration 2002
60%
RES-E target 2010
50%
40%
30%
20%
10%
0%
AT
Figure 27:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
EU15
Actual penetration of RES-E in 1997 and 2002 versus 2010 target (as set
in the RES-E Directive) for EU-15 countries
RES-E as share of
gross electricity consumption [%]
50%
RES-E penetration 1997
RES-E penetration 2002
40%
RES-E target 2010
30%
20%
10%
0%
CY
Figure 28:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
EU-10
Actual penetration of RES-E in 1997 and 2002 versus 2010 target (as set
in the RES-E Directive) for EU-10 countries
In order to account for the impact of the natural volatility for RES-E such as wind energy
and hydropower, potential23 figures are included in the further progress assessment. Time
series of the actual and potential penetration of RES-E are shown on the left-hand side of
Figure 29 for the period 1997 to 2002 for total EU-15, again, compared to the 2010 target
23
E.g. in case of hydropower, the electricity generation potential refers to standard long-term
hydrologic and climatic conditions.
Analysis of the renewable energy sources' evolution up to 2020
27
of 22%. On the right-hand side of Figure 29, additional actual and potential RES-E penetration (compared to the reference year of the RES-E Directive, i.e. 1997) are depicted as
a share of the additional deployment required to meet the RES-E Directive target for 2010.
In the diagram, annual ‘interim targets’24 roughly indicate a benchmark for the recent a-
Figure 29:
60%
50%
40%
30%
20%
10%
2010
2009
2008
2007
2006
2005
2004
-10%
2003
0%
2002
2010
…
2002
2001
2000
1999
1998
0%
Interim target (linear percentual
breakdown)
70%
2001
5%
POTENTIAL additional RES-E penetration
(compared to 1997)
80%
2000
10%
90%
1999
15%
ACTUAL additional RES-E penetration
(compared to 1997)
1998
RES-E target 2010
100%
1997
RES-E penetration - based
on generation POTENTIAL
20%
Additional RES-E penetration / interim target _
as share of RES-E directive target for 2010 [%] _
ACTUAL RES-E
penetration
1997
RES-E generation (ACTUAL & POTENTIAL) _
as share of gross electricity consumption [%] _
chievements made. The corresponding data for total EU-10 is illustrated in Figure 30.
RES-E target achievement for total EU-15: development of actual and potential RES-E penetration in the period 1997 to 2002 versus 2010 target25
In contrast to the actual data, the potential figures do indicate progress in terms of additional RES-E penetration for the observed period. For example, on EU-15 level, RES-E
penetration rose from 13.7% in 1997 to 14.9% in 2002. Taking into account the required
additional deployment up to 2010, it is clear that even greater efforts are necessary to
meet the 2010 target. As indicated on the right-hand side of Figure 29, 14.6% of the required additional penetration is currently achieved in total EU-15 in 2002, whilst the figure
is 5.8% for EU-10.26
24
‘Interim targets’ are calculated by applying a linear proportional breakdown of the necessary
additional RES-E penetration up to 2010 compared to the reference year 1997.
25
The above figure clearly displays the natural volatility of the existing RES-E technologies.
Roughly speaking the figure shows that 2001 was an extremely "wet" year, whereas 2002 was
exceptionally "dry".
26
For comparison, the ‘interim target’ for 2002 indicates a figure of 38.5%.
60%
50%
40%
30%
20%
10%
2010
2009
2008
2007
2006
2005
2004
0%
2003
2010
…
2002
2001
2000
1999
1998
0%
Interim target (linear percentual
breakdown)
2002
2%
70%
2001
4%
POTENTIAL additional RES-E penetration
(compared to 1997)
2000
6%
80%
1999
RES-E target 2010
8%
ACTUAL additional RES-E penetration
(compared to 1997)
90%
1998
RES-E penetration - based
on generation POTENTIAL
10%
100%
1997
ACTUAL RES-E
penetration
Figure 30:
Additional RES-E penetration (2002 versus 1997) _
as share of RES-E directive target for 2010 [%] _
Additional RES-E penetration / interim target _
as share of RES-E directive target for 2010 [%] _
Analysis of the renewable energy sources' evolution up to 2020
1997
RES-E generation (ACTUAL & POTENTIAL) _
as share of gross electricity consumption [%] _
28
RES-E target achievement for total EU-10: development of actual and potential RES-E penetration in the period 1997 to 2002 versus 2010 target
100%
ACTUAL additional RES-E penetration
(2002 versus 1997)
80%
POTENTIAL additional RES-E penetration
(2002 versus 1997)
60%
Interim target for 2002 (linear percentual breakdown)
40%
20%
0%
AT BE DK FI FR DE GR IE
IT LU NL PT ES SE UK CY CZ EE HU LA LT MT PL SK SI
-20%
-40%
-60%
Figure 31:
RES-E target achievement at country level: comparison of actual and
potential additional RES-E penetration (2002 versus 1997)
The country-specific progress is illustrated in Figure 31 with a comparison of actual and
potential RES-E penetration (2002 versus 1997). Almost all member states achieved an
increase in terms of additional RES-E deployment, but only a few, namely Denmark,
Germany and Slovenia, are well in line with the requirements to meet their 2010 targets.
For Austria, France, Portugal and Latvia, the assessment based on historical data highlights the need to set strong incentives in order to meet their goals.
Analysis of the renewable energy sources' evolution up to 2020
29
Finally, Figure 32 shows which RES-E options have contributed the most to recent country-level achievements. In more detail, it depicts the changes – in absolute terms –of generation potentials in the period 1997 to 2002 by RES-E category for all EU countries. It is
not surprising that in countries like Germany, Spain and Denmark, much of the recent
progress is due to wind energy, whilst (large- & small-scale) hydropower contributed the
most in Austria, Poland and Slovenia.
EU-15 countries
Changes of RES-E generation potential _
(2002 versus 1997) [TWh/year] _
Gaseous biomass
Hydro small-scale
Solid biomass
Photovoltaics
EU-10 countries
Biowaste
Wind on-shore
20
Geothermal electricity
Wind off-shore
Hydro large-scale
1.0
16
0.8
12
0.6
8
0.4
4
0.2
0
0.0
-0.2
-4
AT BE DK FI FR DE GR IE
Figure 32:
IT LU NL PT ES SE UK
CY CZ EE HU LA LT MT PL SK SI
Changes in RES-E generation potential (2002 versus 1997) by RES-E
category at country level
30
Analysis of the renewable energy sources' evolution up to 2020
Analysis of the renewable energy sources' evolution up to 2020
3
Assessment and evaluation of policy instruments for
the promotion of renewable energy sources
3.1
Main instruments in the sectors electricity, heat and
transport
31
The policies and measures currently implemented on the European renewable energy
market have so far been mainly directed towards the promotion of renewable electricity.
As the choice of instruments has not been prescribed or harmonised in Europe, each
country has adopted its own unique set of promotion instruments. The main drivers for the
specific choices made are often the national goals specified in relation to renewable energy. These include achieving environmental goals, security of supply, and creating employment support for (developing) national renewable energy industries.
3.1.1
Instruments to support RES electricity
The prime instrument used to support the generation of renewable electricity is still the
system of fixed feed-in tariffs. The system is well known for its success in deploying large
amounts of wind, biomass and solar energy in Germany, Denmark and Spain among others. Fixed feed-in tariffs are currently used in many of the EU-25 states. Their biggest advantage lies in the longer-term certainty about receiving support, which lowers investment
risks considerably. The capital costs for RES investments observed in countries with established feed-in systems have proven to be significantly lower than in countries with other
instruments that involve higher risks of future return on investments. For example, the
weighted average costs of capital are notably higher in countries with tradable green certificates based on quota systems.
Furthermore, there are two reasons why feed-in tariffs can result in low costs for society.
The application of stepped tariffs reduces producer surplus (by limiting windfall profits) in
comparison to a quota system with uniform market clearing, thus reducing the cost for
society. A tariff that is reduced over time in line with technology learning can also reduce
the cost for society.
Additionally, feed-in tariffs can be designed to promote a broad portfolio of RES technologies. This feature guarantees the early market diffusion of currently less mature technologies, which leads to a higher dynamic efficiency (lower costs for society in the long term).
The feed-in system is, however, often criticised for not stimulating competition among
RES generators to a sufficient degree to bring down the costs of renewable energy technology investments. For this reason, the generation costs for individual installations might
be higher than with other types of support systems.
32
Analysis of the renewable energy sources' evolution up to 2020
A relatively new system that has become increasingly popular in the last few years is that
of renewable obligations, also called quota obligations, where minimum shares of renewables are imposed on consumers, suppliers or producers. The system is often combined
with green certificate systems, although this does not necessarily have to be the case.
Renewable obligations are now used in 5 of the 25 EU states (Belgium, Italy, Sweden, UK
and Poland). Renewable obligation systems are considered to be more in line with requirements for market-conformity and competitive policies that provide a strong incentive
for short-term technology cost reductions. The perceived drawbacks of such systems include its initial stage of development, the complexity of the system and the risk of supporting only lower-cost technologies.
A third category of renewable energy promotion schemes is that of fiscal incentives, such
as tax exemption of CO2 or energy taxes. They are attractive because of the direct message transmitted to final energy consumers about the added value of renewable energy.
Their largest shortcoming is the fact that they do not provide a longer-term certainty about
investments, thus increasing the investment risks for project developers and other renewable energy investors.
The fourth category is the tender scheme that has been used in the UK and is still used in
Ireland and France. Its advantages include the amount of attention it draws towards renewable energy investment opportunities and the competitive element incorporated in its
design. Its handicap is that the overall number of projects actually implemented has been
very low, resulting in a much lower penetration of renewables than originally anticipated.
Figure 33 and Figure 34 provide an overview of the renewable electricity support systems
used in the EU-15 and the EU-10 states & Bulgaria, Romania, respectively.
Feed-in tariffs
DK
GE
ES
GR
RES-E obligation
FR
LU
PT
NL
AT
SE
IT
UK
BE
Certificate systems
NL
IE
FR
Tenders
Figure 33:
UK
FI
Fiscal
incentive
Overview of renewable electricity support systems in EU-15
Analysis of the renewable energy sources' evolution up to 2020
Feed-in tariffs
CZ
RO
EE
BG
LV
LT
HU
CY
PL SK
33
RES-E obligation
SI
PL
Certificate systems
MT
SI
Tenders
Figure 34:
3.1.2
CZ
Fiscal
incentive
Overview of renewable electricity support systems in EU-10 & Bulgaria,
Romania
Instruments to support RES heat
Despite the fact that a significant share of European primary energy use is for heating,
European policies so far provide very few incentives for the application of renewable heating possibilities. Support for renewable heat in Europe has been mainly concentrated on
selective, local support policies. Often these were based on local policy objectives which
combined industrial support or employment opportunities with promotion policies for renewable heating. Examples include the well-known programme for solar thermal heat in
Upper Austria and the support for biomass heating in Scandinavian countries. The first
EU-wide promotion policy was only formulated in the year 2002 when the Directive on the
energy performance of buildings (EPBD) was specified. This Directive provides possibilities for promoting selected renewable heating technologies, although these do not comprise its main target. However, in a highly diversified market, greater efforts are required
to build up a strong European market for renewable heating. These include the promotion
of qualified and experienced manufacturers and importers on the market, financial support
mechanisms to close the price gap to natural gas heating, increasing the level of awareness among users and increasing the knowledge and experience of installers.
If member states choose to implement a lenient interpretation of the EPBD and refrain
from further promotion policies, large potentials to increase the share of renewable heating on the European market will remain unexploited.
34
3.1.3
Analysis of the renewable energy sources' evolution up to 2020
Instruments to support biofuels for transport
The production and use of biofuels is still at an early stage of development on the European market, and so is the promotion of biofuels. In 2001, the EU gave the use of biofuels
in transport a strong push by formulating the Directive on the promotion of biofuels. The
Directive aims to increase the share of biofuels in total transport fuels to 2% in 2005 and
5.75% by the year 2010. Moreover, the Commission has formulated regulations allowing
full tax exemptions for biofuels. Several EU countries have used this opportunity to largely
exempt their biodiesel and bioethanol from energy taxes, making them more competitive
with conventional transport fuels. Impressive growth has been achieved in selected countries such as Germany, France, Spain and Italy, but there is still no common approach to
promotion policies. The challenging targets at EU level set in the EU Directive on the promotion of biofuels give member states a strong incentive to set indicative targets, but a
large number of countries have not yet taken pro-active measures. At country level, compensation schemes and tax exemptions have been and still are the main instruments to
promote renewable heat and biofuels; innovative support instruments have yet to be developed. Tax exemptions for biofuels are currently very effective in providing a good market position alongside conventional fuels. Major biofuel production capacities have been
set up in Germany, France, Italy, Spain, Poland and the Czech Republic.
3.2
Combining several support schemes
Single promotion instruments have seldom been able to deploy large amounts of renewables; most renewable investments have been realised through a combination of support
measures. Therefore the RES-E directive sets the clear goal to combine several support
measures. Next to the tariffs and purchase obligations offered for RES-E production by
many existing support instruments, capital subsidies, long-term policy support and target
setting have all contributed greatly to the creation of a stable investment climate for selected technologies in almost all European markets. The trend nowadays seems to be the
use of integrated policies, which combine the efficient use of energy with clean supplies.
One example is the Directive on the Energy Performance of Buildings, in which supporting
the efficient consumption of energy is combined with promoting decentralised energy production, preferably from renewable sources. Table 2 provides an overview of the main
instruments used to support individual technologies in each of the current EU-15 member
states. More details on support schemes for renewable heat and biofuels are included in
Table 4 to Table 8.
Analysis of the renewable energy sources' evolution up to 2020
Table 2:
35
Overview of the main policies for renewable electricity in EU-15 at technology level27
Country
Main electricity support schemes Comments
Austria
Feed-in tariffs (presently termi- Feed-in tariffs have been guaranteed for 13 years.
nated) combined with regional The instrument was only effective for new installainvestment incentives
tions with permission until December 2004. The
active period of the system has not been extended
nor has the instrument been replaced by an alternative one.
Belgium
Quota obligation system / TGC Federal government has set minimum prices for
combined with minimum prices electricity from RES.
for electricity from RES
Flanders and Wallonia have introduced a quota
obligation system (based on TGCs) with obligation
on electricity suppliers. In Brussels no support
scheme has been implemented yet. Wind off-shore
is supported on the federal level.
Denmark
Premium feed-in tariffs (envi- Settlement prices are valid for 10 years. The tariff
ronmental adder) and tender level is generally rather low compared to the forschemes for wind off-shore
merly high feed-in tariffs.
Finland
Energy tax exemption combined Tax refund and investment incentives of up to 40%
with investment incentives
for wind, and up to 30% for electricity generation
from other RES.
France
Feed-in tariffs
For power plants < 12 MW feed-in tariffs are guaranteed for 15 years or 20 years (hydro and PV).
For power plants > 12 MW a tendering scheme is
in place.
Germany
Feed-in tariffs
Greece
Feed-in tariffs combined with Feed-in tariffs are guaranteed for 10 years. Ininvestment incentives
vestment incentives up to 40%.
Ireland
Tendering scheme
Tendering schemes with technology bands and
price caps. Also tax incentives for investments in
electricity from RES.
Italy
Quota obligation system / TGC
Obligation (based on TGCs) on electricity suppliers. Certificates are only issued for new RES-E
capacity during the first eight years of operation.
27
Feed-in tariffs are guaranteed for 20 years (Renewable Energy Act). Furthermore soft loans and
tax incentives are available.
For more details see FORRES 2020 country reports contained in a separate volume for each
EU-25 member state and Bulgaria & Romania.
36
Country
Analysis of the renewable energy sources' evolution up to 2020
Main electricity support schemes Comments
Luxembourg Feed-in tariffs
Feed-in tariffs guaranteed for 10 years (for PV for
20 years). Also investment incentives available.
Netherlands Feed-in tariffs combined with Feed-in tariffs guaranteed for 10 years. Fiscal infiscal incentives
centives for investments in RES are available. The
energy tax exemption on electricity from RES was
terminated on 1 January 2005.
Portugal
Feed-in tariffs combined with Investment incentives up to 40%.
investment incentives
Spain
Feed-in tariffs
Electricity producers can choose between a fixed
feed-in tariff or a premium on top of the conventional electricity price. Soft loans, tax incentives
and regional investment incentives are available.
Sweden
Quota obligation system / TGC
Obligation (based on TGCs) on electricity consumers. For wind energy investment incentive and a
small environmental bonus available.
UK
Quota obligation system / TGC
Obligation (based on TGCs) on electricity suppliers. Electricity companies which do not comply
with the obligation have to pay a buy-out penalty.
Tax exemption for electricity generated from RES
is available (Levy Exemption Certificates which
give exemption from the Climate Change Levy).
Analysis of the renewable energy sources' evolution up to 2020
Table 3:
37
Overview of the main policies for renewable electricity in EU-10 at technology level
Country
Main electricity support schemes Comments
Cyprus
Grant scheme for promotion of Promotion scheme is only fixed for 3-year period.
RES (since Feb. 2004) financed
through electricity consumption
tax of 0.22 E/kWh (since Aug.
2003)
Czech Republic
Feed-in tariffs (since 2002), sup- Relatively high feed-in tariffs with 15 year guaranported by investment grants. teed duration of support supplemented by the choiRevision and improvement of the ce of a premium tariff.
tariffs in February 2005.
Estonia
Feed-in tariff system with pur- Feed-in tariffs paid for max. 7 years for biomass
chase obligation
and hydro and max. 12 years for wind and other
technologies. All support schemes are scheduled
to end in 2015. Together with relatively low feed-in
tariffs this makes renewable investments very difficult.
Hungary
Feed-in tariff (since Jan 2003) Medium tariffs (6 to 6.8 ct/kWh) but no differentiacombined with purchase obliga- tion among technologies. Actions to support RES
tion and tenders for grants
are not coordinated, and political support varies. All
this results in high investment risks and low penetration.·
Latvia
Quota obligation system (since Frequent policy changes and short duration of gua2002) combined with feed-in ranteed feed-in tariffs result in high investment
tariffs
uncertainty. High feed-in tariff scheme for wind and
small hydropower plants (less than 2 MW) was
phased out in Jan. 2003.
Lithuania
Relatively high feed-in tariffs
combined with a purchase obligation. In addition good conditions for grid connections and
investment programmes
Closure of Ignalina nuclear plant will strongly affect
electricity prices and thus the competitive position
of renewables as well as renewable support. Investment programmes limited to companies registered in Lithuania.
Malta
Low VAT rate for solar
Very little attention to RES so far.
Poland
Green power purchase obliga- No penalties defined and lack of target enforcetion with targets specified until ment.
2010. In addition renewables are
exempted from the (small) excise tax
Slovak
Republic
Programme supporting RES and Very little support for renewables. Main support
EE, including feed-in tariffs and programme runs from 2000, but no certainty on
tax incentives
time frame or tariffs. Low support, lack of funding
and lack of longer-term certainty make investors
very reluctant.
38
Analysis of the renewable energy sources' evolution up to 2020
Country
Main electricity support schemes Comments
Slovenia
Attractive feed-in system com- None.
bined with long-term guaranteed
contracts, CO2 taxation and public funds for environmental investments
Bulgaria
Combination of feed-in tariffs, Relatively low levels of incentive make penetration
tax incentives and purchase of renewables especially difficult as the current
obligation
commodity prices for electricity are still relatively
low. A green certificate system to support renewable electricity developments has been proposed.
Bulgaria recently agreed upon an indicative target
for renewable electricity with the European Commission, which is expected to provide a good incentive for further promotion of renewable support
schemes.
Romania
Subsidy fund (since 2000), feed- Normal feed-in tariff modest, but high tariff for auin tariffs
tonomous small wind systems (up to 11-13 €
cents/kWh). Romania recently agreed upon an
indicative target for renewable electricity with the
European Commission which is expected to provide a good incentive for further promotion of renewable support schemes.
Denmark (DK)
Belgium (BE)
Austria (AT)
Country
Table 4:
Investment incentive
Solar thermal heat
Investment incentive
Geothermal heat
39
W: investment incentive
(max. 30%)
W: investment incentive
(max. 30%)
15%)
F: investment incentive
20%)
B: investment incentive
Investment incentive
Investment incentive
gies
- biomass (max. 16%)
- biogas (max. 30%)
Solar heating obligation in new buildings (public/commercial)
gies (max. 30%)
gies
- heat pumps (15%)
− Act on utilisation of renewable ener- − Act on utilisation of renewable ener- − Act on utilisation of renewable ener-
Investment incentive
20%)
− Decree 01/07/93; 08/12/94 (max. B: investment incentive
− Decree 01/07/93; 08/12/94 (max.
20%)
20%)
− Decree 01/07/93; 08/12/94 (max.
B: investment incentive
− Decree 15/12/93; 19/01/94 (max. F: investment incentive
− Decree 15/12/93; 19/01/94 (max.
20%)
20%)
− Decree 15/12/93; 19/01/94 (max.
F: investment incentive
− Decree 25/06/92; 16/09/93 (max. − SOLTHERM
− Decree 25/06/92; 16/09/93 (max.
15%)
15%)
− Decree 25/06/92; 16/09/93 (max.
W: investment incentive
− biomass fired CHP
tems
− automated biomass heating sys-
(max. 30%)
− Environmental support programme − Environmental support programme − Environmental support programme
Investment incentive
Biomass heat
Overview of the main renewable heat policies in EU-15 at technology level
Analysis of the renewable energy sources' evolution up to 2020
Germany (DE)
France (FR)
Finland (FI)
Country
40
Investment incentive
no specific policies
Solar thermal heat
Investment incentive
Loans at reduced rates
no specific policies
Geothermal heat
Tax exemption for biofuels
- pure liquid and solid biofuels for
heat and transport
- large-scale biomass fired CHP (>
100kW)
- biogas (< 70 kW)
− Market Incentive Programme
Loans at reduced rates
40%)
- small-scale (3 - 50 kW) heat from
solid biomass with automatic fuel
supply (55 €/kW)
€/m2 in 2004)
− Investment incentive
- deep geothermal energy
− Market Incentive Programme (30- − Market Incentive Programme (110 − Market Incentive Programme
Investment incentive
Development Local (> 12 MW)
− PBEDL 2000-2006: Plan Bioenergy
Tender
Development Local (max. 40%)
− PBEDL 2000-2006: Plan Bioenergy − HELIOS 2000-2006 (30%)
Investment incentive
Energy tax exemption
- heat from solid biofuels
Investment incentive (max. 30%)
- heat from solid biofuels
Biomass heat
Analysis of the renewable energy sources' evolution up to 2020
Netherlands (NL)
− 2001 Grand Ducal Regulation (max.
− 2001 Grand Ducal Regulation
− Regulatory energy tax (REB)
− Regulatory energy tax (REB)
- heat from pure biomass
Tax exemption
under
Ducal Regulation
PEEC (max. 25%)
− Grand
40%)
Tax exemption
Ducal Regulation
PEEC (max. 25%)
− Grand
- central heating (using wood
chips, pellets or gasification):
max. 25%
- network heating (using wood
chips): max. 30%
Investment incentive
Investment incentive
Luxembourg (LU)
under
− lower VAT for solar heat systems
Tax incentive
Tax exemption (CO2 tax)
Tax exemption (CO2 tax)
Italy (IT)
Tax exemption (CO2 tax)
Tax exemption (CO2 tax)
− Tax incentives
30%)
not used
no specific policies
Tax exemption (CO2 tax)
Tax exemption (CO2 tax)
30%)
− Development Law 2601/1998 (up to − Development Law 2601/1998 (up to
− Development Law 2601/1998 (30%)
Investment incentive
Geothermal heat
Investment incentive
Solar thermal heat
41
Investment incentive
Biomass heat
Ireland (IE)
Greece (GR)
Country
Analysis of the renewable energy sources' evolution up to 2020
Investment incentive
Solar thermal heat
Investment incentive
Geothermal heat
Analysis of the renewable energy sources' evolution up to 2020
Equipment
Investment incentive
Thermal
Scheme
Investment
− Accelerated Depreciation on Solar
Tax incentive
consumption (MAPE) within Programme for Economic Activities
(POE): 40%
Investment incentive
consumption (MAPE) within Programme for Economic Activities
(POE): 40%
Investment incentive
UK
Investment incentive
Tax exemption (energy tax)
− Decree 2000:287 (max. 25%)
Investment incentive
Renovables (1999-2010)
mass energy from energy crops up
to 50%
- heat production and CHP from
biomass
- Clear Skies Scheme
- automated wood pellet stoves
- wood fuel boilers
− Government funds to promote bio- − Clear Skies Scheme
Tax exemption (energy tax)
(36.4% total financial investment)
Renovables (1999-2010)
- industrial and domestic heating
from biomass
- geothermal heat pumps
− Clear Skies Scheme
Investment incentive
Tax exemption (energy tax)
Renovables (1999-2010)
− Plan de Fomento de las Energías − Plan de Fomento de las Energías − Plan de Fomento de las Energías
Investment incentive
consumption (MAPE) within Programme for Economic Activities
(POE): 40%
− Use energy potential and streamline − Use energy potential and streamline − Use energy potential and streamline
Investment incentive
Biomass heat
Sweden (SE)
Spain (ES)
Portugal (PT)
Country
42
Malta (MT)
Lithuania (LT)
Latvia (LA)
Hungary (HU)
Estonia (EE)
Investment incentive
no specific policies
Investment incentive
no specific policies
− State Environmental Fund
Investment incentive
no specific policies
Geothermal heat
43
Investment incentive
(KAC)
Protection
Fund
Protection
Investment incentive
(KAC)
Action Plan
− Environmental
Fund
no specific policies
- Investment incentives and soft
loans for biomass boilers
− Environmental Investment Fund
Fund
no specific policies
no specific policies
Fund
no specific policies
no specific policies
Fund
− Latvian Environmental Investment − Latvian Environmental Investment − Latvian Environmental Investment
Investment incentive
(KAC)
Action Plan
Fund
− Environmental
Protection
Action Plan
− Environmental
− Energy Saving Programme and − Energy Saving Programme and − Energy Saving Programme and
Investment incentive
- reduced VAT for biomass (e.g.
wood and peat)
− Value Added Tax Act
Tax exemption
Investment incentive
− State Environmental Fund
Investment incentive
− State Environmental Fund
Czech Republic
(CZ)
stallations for new state buildings
− Compulsory solar thermal heat in-
Solar heat obligation
als for solar energy applications
− Custom duty exemption on materi-
Tax incentive
Solar thermal heat
no specific policies
Biomass heat
Overview of the main renewable heat policies in EU-10 at technology level
Cyprus (CY)
Country
Table 5:
Analysis of the renewable energy sources' evolution up to 2020
Slovenia (SI)
Slovak Republic
(SK)
Poland (PL)
44
Quota obligation
Tax incentive
Tax incentive
Supporting Energy
Savings and Utilisation of Alternative Energy Sources
− Programme
Investment incentive
Obligation
− Environment Ministry Fund
− Environment Ministry Fund
- heat generation from biomass,
e.g. wood biomass district heating
Investment incentive
emption on income from operation
of renewable energy utilisation appliances
Investment incentive
emption on income from operation
of renewable energy utilisation appliances
− Environment Ministry Fund
Investment incentive
emption on income from operation
of renewable energy utilisation appliances
− Income Tax Act: five year tax ex- − Income Tax Act: five year tax ex- − Income Tax Act: five year tax ex-
Tax incentive
Supporting Energy
Savings and Utilisation of Alternative Energy Sources
− Programme
− Programme
Obligation
Investment incentive
Supporting Energy
Savings and Utilisation of Alternative Energy Sources
Investment incentive
− Ecofund
− Green Power and Heat Purchase − Green Power and Heat Purchase
Quota obligation
Investment incentive
Obligation
− Green Power and Heat Purchase
Quota obligation
- heat generation from biomass,
e.g. straw and chopped wood
Investment incentive
− Ecofund
Investment incentive
− Ecofund
Analysis of the renewable energy sources' evolution up to 2020
Romania
Bulgaria
Country
Table 6:
Tax incentive
Solar thermal heat
no specific policies
no specific policies
− - Energy and Energy Efficiency Act − - Energy and Energy Efficiency Act
Tax incentive
Biomass heat
45
no specific policies
− - Energy and Energy Efficiency Act
Tax incentive
Geothermal heat
Overview of the main renewable heat policies in the candidate member states at technology level
Analysis of the renewable energy sources' evolution up to 2020
46
Table 7:
Analysis of the renewable energy sources' evolution up to 2020
Overview of biofuel policies in EU-15 at technology level (reduction rate in
% of tax level for conventional fuels and/or cent/litre)
Country
Austria (AT)
Tax reduction
biodiesel
Tax reduction
bioethanol
Blends exempted if up to
5% or 2% are blended with
gasoline or diesel respectively
95%
~ 28 cent/litre
Belgium (BE)
-
-
Denmark (DK)
-
-
Finland (FI)
France (FR)
Germany (DE)
Greece (GR)
-
-
84%
84%
33 cent/litre
50 cent/litre
100%
100%
~ 44 cent/litre
~ 62 cent/litre
-
-
Ireland (IE)
-
-
100%
100%
~ 40 cent/litre
~ 55 cent/litre
Luxembourg (LU)
-
-
Netherlands (NL)
-
-
Portugal (PT)
-
-
100%
100%
~ 29 cent/litre
~ 42 cent/litre
100%
(100%)
~ 34 cent/litre
~ 50 cent/litre
~42%
~42%
~29 cent/litre
~29 cent/litre
Italy (IT)
Spain (ES)
Sweden (SE)
United Kingdom (UK)
Comments
Only very minor support is
given by means of exemption from CO2 tax (< 5
cent/litre)
Ireland only allows excise
duty exemptions on use of
biofuels in certain approved
pilot projects
Only moderate growth due
to high biofuel production
costs.
For ethanol only in pilot
projects
Effective from January
2005 and until December
2010
Analysis of the renewable energy sources' evolution up to 2020
Table 8:
Overview of biofuel policies in EU-10 at technology level (reduction rate in
% of tax level for conventional fuels and/or cent/litre)
Country
Tax exemption
biodiesel
Tax exemption
bioethanol
-
-
100%
100%
~ 22 cent/litre
~ 26 cent/litre
Estonia (EE)
-
-
Hungary (HU)
-
-
Latvia (LA)
-
-
Lithuania (LT)
-
-
Malta (MT)
-
-
Poland (PL)
-
~ 56 cent/litre
Slovak Republic (SK)
-
-
Cyprus (CY)
Czech Republic (CZ)
3.3
47
Comments
Success stories and key barriers
With such a large diversity in the policy instruments applied throughout the European Union, it is not possible to select any single instrument as the best available support mechanism in all markets under all circumstances. The specific design or implementation of the
instrument rather than the type selected and the alleviation of market barriers are the success factors behind a strong development in renewables. This project identified (for more
information, see section 4.3) those policies currently in place that have resulted in the largest growth in renewable energy deployment. But this does not mean that these selected
policies are the best ones available on the market or the most cost-efficient ones in place.
They merely serve as an illustration of how fast developments could be if we applied more
effective policies throughout Europe. The project does not include a full analysis of market
barriers. Some barriers were identified by desk research; others were mentioned by stakeholders in the stakeholder consultation.
The German support system is applauded for its success in bringing large quantities of
renewable energy onto the market. Evidently the combination of feed-in tariffs and investment support plays an important role in this success, but the key factor has always
been – and still is – the clear and long-term institutional setting; providing good investor
security. Many other markets have also used high support tariffs (e.g. the Dutch green
48
Analysis of the renewable energy sources' evolution up to 2020
electricity support system in 2001/02 or the Portuguese feed-in tariff scheme) or provided
strong investment conditions (e.g. the Irish tender scheme) but lacked this long-term certainty. As a result, investors were reluctant and banks or other financiers requested higher
equity/debt ratios or higher interest rates, resulting in lower penetration than expected
from the level of financial support. Complex administrative systems are another key barrier in the market, leading to long lead times for actual project realisations and again higher investment uncertainty. The Belgium market is a good example of this. Despite the
existence of relatively high financial support (up to 125 Euros per MWh as the penalty rate
in the green certificate system), actual deployment rates have been relatively low due to
extensive and intransparent administrative procedures. Regional weaknesses in the grid
have hampered the stronger penetration of renewable electricity in Portugal, Spain, Italy
and Ireland among others. Whereas significant amounts of renewable electricity deployments have been planned and are ready for construction, the degree and pace of their
implementation have been severely delayed due to expected grid connection problems.
As well as overcoming physical constraints, greater transparency of grid connection costs
is urgently required in many European countries.
One of the recent success strategies is the site leasing arrangement for offshore wind
farms in the United Kingdom. This is expected to result in a large uptake and fast deployment of offshore wind power in the UK market in the next few years and gives the UK a
good chance of actually meeting its ambitious domestic target of 20% renewable electricity in the year 2020.
An extensive analysis of success stories and market barriers will form part of the follow-up
activities scheduled for 2005.
3.4
Recent policy developments
The renewable energy market and its set of supporting measures is a dynamically evolving. Countries are continuously monitoring their sets of policies and measures, which often results in the fine-tuning of instruments and sometimes the introduction of a completely new set of instruments. The formulation of the Renewable Electricity Directive has
clearly had a strong impact on the amount and level of supporting policies. Some changes
in the policy environment can be observed for heat and biofuels as a result of the recently
formulated Directive on the Energy Performance of Buildings and the Biofuels Directive.
More significant policy changes are expected in the near future. Table 9 summarises the
main policy developments over the last two years.
Analysis of the renewable energy sources' evolution up to 2020
Table 9:
49
Summary of recent renewable energy policy developments in the EU-25
Summary of recent RES policy developments in EU-25
Most significant recent changes
The years 2002 to 2004 have seen some drastic changes in renewable energy support programmes in a few EU member states. Austria, France, the Netherlands and Slovenia have introduced new feed-in systems. Sweden has introduced a renewables obligation for end users, linked
to a green certificate system. Ireland has issued large tender rounds for wind energy. Spain has
introduced very attractive feed-in tariffs for solar thermal electricity generation. Denmark has
changed most of its formerly successful schemes.
RES targets
The EU Renewable Electricity Directive is the leading policy document for national target setting
with respect to renewable electricity. Only a few countries have set selective targets for renewable
heat and no clear national targets have been set for biofuels.
Status of the renewable energy market
Renewable electricity production has continued to increase significantly in recent years. Most
countries, however, are still behind their targets. High growth rates are being experienced and are
expected to continue for wind energy, especially offshore in the medium term. Growth in biomass
is taking off, but still lagging behind expectations in most countries. Especially in the new member
states large unexploited potentials for biomass exist. PV is growing at constantly high rates and
growth even accelerated after the introduction of the new feed-in tariffs in Germany. Geothermal
energy (excl. heat pumps) and small-scale hydropower have grown only a little. Most of the environmentally sustainable potential for large-scale hydropower has been exploited (in particular in
the EU-15), there is some remaining potential for refurbishments. Significant growth rates are expected in the medium term for solar thermal electricity generation as well as wave and tide energy.
Active solar thermal heat generation is expected to continue to grow substantially by 15-20% annually. The use of biofuels is growing steadily in selected countries.
Main supporting policies
Renewable electricity
The feed-in tariff scheme is still the main choice of renewable electricity support. Countries that
have seen large increases in the deployment of renewables resulting from a feed-in tariff scheme
have continued to use the system. These include Germany, Spain, Greece and Portugal although
the latter two have had a smaller increase in installed capacity. Other countries have changed
their former system into a (partial) feed-in system (France, Austria, Slovenia and the Netherlands)
or are considering introducing such a system (Ireland).
Certificate systems are becoming increasingly popular and are linked to different support schemes. The UK, Italy and Sweden have linked theirs to a renewables obligation; the Netherlands to
its combined policy of feed-in tariffs and tax exemptions (until January 2005) and Belgium to its
guaranteed minimum tariffs and renewables obligation. In 2006 the Czech Republic will introduce
an obligation for renewable electricity, while Poland is considering the introduction of a certificate
system to support its already existing obligation scheme.
Renewable heat
Almost all countries have implemented compensation schemes and/or tax exemptions to support
renewable heat. These mainly concern solar thermal panels and small scale biomass heating.
Only Denmark has introduced an obligation scheme (to support solar heating in planned large
buildings).
50
Analysis of the renewable energy sources' evolution up to 2020
Biofuels
Austria, the Czech Republic, Finland, France, Germany, Italy, Poland Spain and Sweden have
introduced tax exemption for biofuels. Other countries have so far only directed limited R&D funds
at supporting biofuels, but have not yet introduced direct support.
Major issues
• Political uncertainty resulting in the withholding of new renewable energy investments represents a major barrier to further renewable energy deployment. This is particularly valid for
Denmark, Austria, the Netherlands, Finland, and to some extent for Italy and Sweden.
• Grid connection rules and planning issues still remain an obstacle in many countries. Tender
schemes are hampered by their stop-start nature and the uncertainty of winning a bid. Some
countries still face problems of social acceptance, especially for biomass and large-scale wind
projects.
• A sufficient level of support is necessary for good progress in renewable energy deployment.
The high feed-in tariffs and solid investment schemes – both used in several countries - are still
the main success factors, followed by high and long-term targets of obligation systems. Tax
exemptions are the only success factor behind strong growth in biomass heat and liquid biofuels. France has seen the largest change in market interest in new RES deployment as a direct
result of its new programme with high feed-in tariffs.
• Interesting new success factors have appeared recently, including the redistribution of the buyout revenues in the UK renewables obligation system, high penalties in Belgium and the mandatory disclosure of fuel mix in Austria.
Analysis of the renewable energy sources' evolution up to 2020
4
51
The FORRES 2020 methodology and definition
of scenarios
Using validated concepts from techno-economic modelling and econometrics projections
of the implementation of renewables up to 2020 in the EU-25 as well as for Bulgaria and
Romania under a BAU scenario and a policy scenario have been derived. Generally the
forecasts were performed using two different methods:
• Forecasts of RES penetration using the model Green-X.
• Forecasts of RES penetration using econometric analyses.
The latter method has the advantage of greater transparency, whereas the calculations
made with the model Green-X allow boundary conditions to be adjusted and defined in a
more accurate way (scenario variations).
For the calculation of scenarios with respect to electricity generation from RES as well as
grid-connected heat (i.e. district heating and heat from CHP-plants), the projections are
based on the software-simulation tool Green-X. The econometric analysis was used exclusively to obtain projections for non-grid-connected heat (i.e. wood in households, geothermal heat pumps, active solar thermal) and biofuels for transport.
A brief description of the computer model used as well as of the approach applied for the
economic analysis is given below.
4.1
The computer programme Green-X
The computer model Green-X is an independent software tool developed under Microsoft
Windows by EEG in the EC-funded project Green-X (5th FWP – DG Research, Contract
No: ENG2-CT-2002-00607).28 It allows a comparative, quantitative analysis of interactions
between RES-E, conventional electricity and CHP generation, demand-side activities and
GHG-reduction in the electricity sector, both within the EU as a whole, as well as for individual member states. To ensure stable and confidential results, scenarios were crosschecked with the existing and well developed computer tool ElGreen.
Within the model Green-X, the most important RES-E (e.g. biogas, biomass, biowaste,
wind on- & offshore) and RES-H technologies (e.g. biomass, geothermal energy) are described for each EU-27 country by means of dynamic cost-resource curves. Dynamic cost
curves are characterised by the fact that the costs as well as the potential for electricity
generation / demand reduction can change each year. The magnitude of these changes is
28
For more details see: http://www.green-x.at
52
Analysis of the renewable energy sources' evolution up to 2020
given endogenously in the model, i.e. the difference in the values compared to the previous year depends on the outcome of this year and the (policy) framework conditions set
for the simulation year.
Based on the derivation of the dynamic cost curve, an economic assessment takes place
considering scenario-specific conditions like selected policy strategies, investor and consumer behaviour as well as primary energy and demand forecasts.
Policies that can be selected are the most important price-driven strategies (feed-in tariffs,
tax incentives, investment subsidies, subsidies on fuel input) and demand-driven strategies (quota obligations based on tradable green certificates (including international trade),
tendering schemes). All the instruments can be applied to all RES and conventional options separately for both combined heat and power and power production only. In addition,
general taxes can be adjusted and the effects simulated. These include energy taxes (to
be applied to all primary energy carriers as well as to electricity and heat) and environmental taxes on CO2-emissions, policies supporting demand-side measures and climate
policy options (trading of emission allowances on both the national and international level). As Green-X is a dynamic simulation tool, the user has the possibility to change policy
and parameter settings within a simulation run (i.e. by year). Furthermore, each instrument can be set for each country individually.
Within this step, a transition takes place from generation and saving costs to bids, offers
and switch prices. It is worth mentioning that the policy setting influences the effective
support, e.g. the guaranteed duration and the stability of the planning horizon or the kind
of policy instrument to be applied.
The results are derived on a yearly basis by determining the equilibrium level of supply
and demand within each considered market segment – e.g. tradable green certificate
market (TGC, both national and international), electricity power market and tradable emissions allowance market. This means that the supply for the different technologies is summed up within each market and the point of equilibrium varies with the demand calculated.
A broad set of results with respect to RES can be gained on a country - as well as technology - level:
• total electricity generation of RES-E within the country,
• total grid-connected heat generation from RES-H (CHP and heat plants),
• share of RES-E / grid-connected RES-H generation in total electricity / grid-connected
heat production,
• average generation costs of RES-E / RES-H per kWh,
• electricity generation for each RES-E technology,
Analysis of the renewable energy sources' evolution up to 2020
53
• grid-connected heat generation (CHP and heat plants) from each RES-H technology,
• average generation cost of each RES-E / grid-connected RES-H technology per kWh,
• import / export balance of RES-E,
• impact of simulated strategies on generation costs,
• impact of selected strategies on total costs and benefits to the society (consumer) –
premium price due to RES-E / RES-H strategy.
4.2
Econometric approach
The projections based on the econometric analyses were performed by applying a robust
and tested statistical framework. The projections are generally based on trends observed
in the past as well as on estimated RES-specific mid-term potentials. Therefore the essential basis for this method is a reliable database containing the historical development of
each renewable energy source (RES) in each country. This information is supplemented
by data on the realisable mid-term potential of the different RES.
The method is based on the theory of technology diffusion processes, which are commonly modelled using the so called S-curve approach. In this approach the penetration of
a technology over time is represented by an S-shaped logistic curve. We apply this concept here in a slightly modified form. We transform the S-curve dependence of the penetration of a certain technology versus time into the dependence of the growth rate of this
technology versus penetration. The latter dependence proves to be a linear one (in the
case of a pure S-curve) allowing robust fitting of past trends, since one does not work in
the time domain involving non-linear functions. The future development of the technology
can then be modelled using the relationship between growth rate and penetration observed in the past and knowing the maximum potential of a technology. Reliable growthrate scenarios can be modelled using this method which avoids ad-hoc assumptions.29
When forecasts were performed using econometric analyses, the policy scenario was
defined using correlations between historically observed best practice policy implementations and corresponding RES penetration.
29
Note: this method was also applied within the computer model Green-X and also sets an important benchmark for Green-X results.
54
Analysis of the renewable energy sources' evolution up to 2020
4.3
Scenario assumptions: the business-as-usual and the policy scenario
Two different scenarios are modelled in FORRES 2020 with Green-X. These scenarios
are based on a different mix of promotion schemes and assume different non-economic
factors influencing the development of renewable energy sources. A brief outline of these
scenarios follows:
• business-as-usual scenario (BAU): this scenario models the future development
based on the present policies as well as currently existing barriers and restrictions,
e. g. administrative and regulative barriers. Future policies which have already been
decided on, but have not yet been implemented, will also be considered. Generally, all
the policy instruments listed in section 3 as well as in the country reports will be implemented in the model. Policy instruments have been updated until December 2004. The
level of social and administrative barriers as well as of the relevant grid restrictions has
been estimated using the output of the stakeholder survey as well as selected interviews with country experts.
• Policy scenario (PS): this scenario models the future evolution based on the best
practice strategies of individual EU countries. Strategies that have proven to be most
effective in the past30 in implementing a maximum share of RES have been assumed
for all countries.31 Table 10 provides an overview of the selected strategies. In the case
of wind energy, for example, the German feed-in tariff was selected as the best practice strategy for this technology. Furthermore, the policy scenario is based on the assumption of a stable planning horizon as well as the assumption that currently existing
social and technical barriers can be overcome. Both scenarios include the effect of
technology learning and economies of scale. One major difference between the BAU
and the policy scenario concerns the available biomass potential from agricultural products. Due to the significantly higher support level under the policy scenario, the corresponding competition between agricultural land use and energy farming becomes
stronger. Therefore a maximum share of 18% of arable land used for energy crops is
assumed on an EU-25 average under the policy scenario compared to 15% under BAU
assumptions, whereas individual countries can use up to 20% of their arable land for
energy crops. Biomass imports are not considered.
30
Of course, in the case of recently introduced promotion schemes such as the Austrian Renewables Act, effectiveness was judged on preliminary expected achievements.
31
Please note that the design of these promotion strategies in this scenario is not optimised in
such a way that costs for society are minimised. It can be expected that (partially significant)
cost reductions can be achieved by adapting the instrument for some technologies in some
countries.
Analysis of the renewable energy sources' evolution up to 2020
Table 10:
55
Model implementation of policy settings for RES-E & RES-H
in the Policy Scenario
Biogas
For agricultural digestion the strategies are set in accordance with the
Austrian Renewable Energy Act (2002)
For landfill and sewage gas policy settings are taken related to the German Renewable Energy Act (2004)
Solid biomass
Strategies are set in accordance with the Austrian Renewable Energy Act
(2002) and the German Renewable Energy Act (2004)
Geothermal electricity
Strategies are set in accordance with the German Renewable Energy Act
(2004)
Hydropower largescale
Strategies are set in accordance with the Spanish Energy Act (2002)
Hydropower smallscale
Strategies are set in accordance with the German Renewable Energy Act
(2004)
Photovoltaics
Strategies are taken related to the German Renewable Act (2004) – adapted for Southern European countries according to country specific
insolation
Solar thermal electricity
Strategies are set in accordance with the Spanish Energy Act (2002)
Wind onshore
Strategies are taken related to the German Renewable Act (2004) – adapted for country-specific conditions
Wind offshore
Strategies are taken related to the German Renewable Act (2004) – adapted for country-specific conditions32
Wave & Tidal
Strategy settings are based on own settings – in accordance with wind
offshore policy implementation
Biomass Heat
Strategy settings are based on own settings – in accordance with regional-specific investment programmes as implemented in the past in
Austria, Germany or Greece
Geothermal heat
Strategy settings are based on own settings – in accordance with regional-specific investment programmes as implemented in the past in
Austria, Germany or Greece
Geothermal heat
pumps
Strategies are set in accordance with the Swedish regulations on geothermal heat pumps in new dwellings
Solar thermal collectors
Strategies are set in accordance with the German market incentive programme and with the Austrian investment rebates
Biofuels
Strategies are set in accordance with country specific tax exemption implemented in several EU countries
32
Although the same feed-in tariffs as in Germany have been used throughout the EU, the level
of promotion depends on the wind conditions of each country. This is due to the fact that the
German feed-in system is designed in a stepped nature, i.e. very high yield locations (high full
load hours) get a lower support that low yield locations. Therefore the average promotion is
e.g. significantly lower in Ireland than in Germany.
56
Analysis of the renewable energy sources' evolution up to 2020
In the subsequent parts of this report the targets set in the White Paper as well as in the
different EU Directives will be assessed and possible shares of RES in the sectors of electricity, heat and transport until 2020 will be presented. Therefore the production of RES in
the different sectors has to be related to the demand forecast for the EU-25 and Bulgaria
and Romania. These projections have been taken from two scenarios of the EU energy
outlook (2003): the baseline scenario and the rational use of energy (RUE) scenario.33
These scenarios do not yet take into account the most recent EU policies on the increase
in energy efficiency, such as the proposed directive on end-use energy efficiency. Thus,
the actual overall growth rates of energy consumption could be lower; making the renewable energy targets less stringent in absolute terms.
33
Demand forecasts are taken from the DG TREN Outlook 2030: European Energy and Transport Trends to 2030. The baseline projection implies a demand growth of 1.8% p.a. until 2010
and 1.5% p.a. thereafter in the electricity sector, and of 0.8% p.a. until 2010 and 0.6% p.a. thereafter in primary energy terms. The rational use of energy (RUE) scenario corresponds to a
demand growth of 1.1% p.a. until 2010 and 1.0% p.a. thereafter in the electricity sector, and of
0.2% p.a. until 2010 and 0.1% p.a. thereafter in primary energy terms. Of course on country
level the changes of demand are different (country specific).
Analysis of the renewable energy sources' evolution up to 2020
57
5
Results: perspectives of renewable energy sources to
2020
5.1
Analysis of the dynamic evolution of RES in the sectors of
electricity, heat and transport
5.1.1
RES-E generation up to 2020
Figure 35 and Table 11 show the evolution of RES-electricity generation in the EU-15 under the BAU scenario until 2020. A strong increase of wind energy production both onshore and offshore is projected, where the dominant increase in offshore wind energy
production only starts after 2010 and reaches about 130 TWh in 2020. A major increase in
onshore wind energy is expected in Germany, France, Spain and the United Kingdom,
resulting in a total electricity generation of about 250 TWh in 2020.
Biomass electricity generation, including the biodegradable fraction of municipal waste, is
expected to increase by more than a factor of three until 2020. Electricity production from
biogas is projected to reach a level of more than four times the current penetration.
For large hydropower, only an increase of about 1% is projected from the current level
until 2020, whereas for small hydropower, the increase in the corresponding period is projected to amount to about 15%.
A significant growth in relative terms is projected for PV and solar thermal applications,
which are forecast to produce about 22 TWh in 2020. Wave and tidal energy will show a
similar growth; contributing about 8 TWh to total RES-E production by 2020.
58
Analysis of the renewable energy sources' evolution up to 2020
1,200,000
Electricity generation [GWh/year]
1,000,000
800,000
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & wave
Wind offshore
Solid biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
600,000
400,000
200,000
0
2001
2005
2010
2015
2020
Figure 35:
Development of RES-E generation in EU-15 under the BAU scenario
until 2020
Table 11:
Development of RES-E generation in EU-15 under the BAU scenario
until 202034
EU-15 BAU Scenario Electricity
Biogas
Solid biomass
Biowaste
Geothermal electricity
Hydro large-scale
Hydro small-scale
Photovoltaics
Solar thermal electricity
Tide & wave
Wind onshore
Wind offshore
RES-E TOTAL
TOTAL DEMAND
Share of Demand
34
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWh
%
2001
8
20
8
6
274
36
0
0
0
33
0
386
2,660
14.5%
2010
21
62
17
7
276
39
3
1
2
136
17
582
3,065
19.0%
2020
36
72
20
8
276
41
9
13
8
245
129
856
3,488
24.5%
Hydropower generation for a normal hydro year (instead of actual generation) is shown in the
table below for 2001.
Analysis of the renewable energy sources' evolution up to 2020
59
Figure 36 shows the results for the policy scenario regarding RES-E production in the EU15. This scenario projects a significantly stronger increase for wind energy and biomass
electricity in particular. In total, the RES-E generation in this scenario exceeds the production under BAU assumptions by about 270 TWh. More than three quarters of this difference will be contributed by wind and biomass electricity. One other major difference between the two scenarios is the significantly stronger growth of tide and wave energy and
solar thermal electricity. These two RES contribute about 5% of the RES-E production by
2020. Whereas solar thermal electricity will be exploited in only a few countries like Spain
and Italy, wave and tidal energy is distributed more evenly throughout Europe in this scenario.
1,200,000
Electricity generation [GWh/year]
1,000,000
800,000
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & wave
Wind offshore
Solid biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
600,000
400,000
200,000
0
2001
Figure 36:
2005
2010
2015
Development of RES-E generation in EU-15 under the policy scenario
until 2020
2020
60
Analysis of the renewable energy sources' evolution up to 2020
Table 12:
Development of RES-E generation in EU-15 under the policy scenario
until 202035
EU-15 Policy Scenario Electricity
Biogas
Solid biomass
Biowaste
Geothermal electricity
Hydro large-scale
Hydro small-scale
Photovoltaics
Solar thermal electricity
Tide & wave
Wind onshore
Wind offshore
RES-E TOTAL
TOTAL DEMAND
Share of Demand
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWhe
TWh
%
2001
8
20
8
6
274
36
0
0
0
33
0
386
2,660
14.5%
2010
22
161
22
8
284
41
5
2
4
163
26
739
2,904
25.4%
2020
57
189
31
8
285
45
17
22
32
250
187
1,125
3,164
35.5%
In Figure 37 the evolution of the electricity generation by RES in the EU-10 is shown until
2020 under the BAU scenario. Compared to the EU-15, biomass electricity is projected to
become the major element in RES-E growth until 2010. After 2005, wind energy and biomass will also start to grow more rapidly and both energy sources will become major players by 2010. In absolute terms, wind energy will reach about 11 TWh and biogas 3 TWh in
2020. Large hydropower will grow by about 3 TWh until 2010 and remain at an almost
constant level thereafter. None of the currently more expensive RES-E technologies such
as PV, solar thermal and wave and tide is projected to enter the market with statistically
significant shares.
35
Hydropower generation for a normal hydro year (instead of actual generation) is shown in the
table below for 2001.
Analysis of the renewable energy sources' evolution up to 2020
50,000
Electricity generation [GWh/year]
45,000
40,000
35,000
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & wave
Wind offshore
61
Solid biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
30,000
25,000
20,000
15,000
10,000
5,000
0
2001
2005
2010
2015
2020
Figure 37:
Development of RES-E generation in EU-10 under the BAU scenario until
2020
Table 13:
Development of RES-E generation in EU-10 under the BAU scenario until
2020
EU-10 BAU Scenario Electricity
Biogas
TWhe
Solid biomass
TWhe
Biowaste
TWhe
Geothermal electricity
TWhe
Hydro large-scale
TWhe
Hydro small-scale
TWhe
Photovoltaics
TWhe
Solar thermal electricity
TWhe
Tide & wave
TWhe
Wind onshore
TWhe
Wind offshore
TWhe
RES-E TOTAL
TWhe
TOTAL DEMAND
TWh
Share of Demand
%
2001
0.1
0.6
0
0
14
2
0
0
0
0.1
0
17
312
5.5%
2010
1
4
1
0
16
3
0
0
0
1
0
25
391
6.4%
2020
3
8
2
0
17
3
0
0
0
11
0
45
521
8.6%
In Figure 38 the evolution of the electricity generation by RES in the EU-10 is shown until
2020 under the policy scenario. The total RES-E generation more than doubles compared
to the BAU scenario. The main contributions to this increase are from the stronger growth
of solid biomass and biogas electricity generation. Furthermore wind onshore will show a
62
Analysis of the renewable energy sources' evolution up to 2020
two times higher generation than under BAU assumptions. In addition, the remaining potentials of large hydropower are further exploited after 2010. Unlike the BAU scenario,
wave and tidal electricity production will start after 2010 and will reach more than 1 TWh in
2020 and wind offshore energy will experience stronger growth, reaching 4 TWh in 2020.
120,000
Electricity generation [GWh/year]
100,000
80,000
Biogas
Biowaste
Hydro large-scale
Photovoltaics
Tide & wave
Wind offshore
Solid biomass
Geothermal electricity
Hydro small-scale
Solar thermal electricity
Wind onshore
60,000
40,000
20,000
0
2001
2005
2010
2015
2020
Figure 38:
Development of RES-E generation in EU-10 under the policy scenario
until 2020
Table 14:
Development of RES-E generation in EU-10 under the policy scenario
until 2020
EU-10 Policy Scenario Electricity
Biogas
TWhe
Solid biomass
TWhe
Biowaste
TWhe
Geothermal electricity
TWhe
Hydro large-scale
TWhe
Hydro small-scale
TWhe
Photovoltaics
TWhe
Solar thermal electricity
TWhe
Tide & wave
TWhe
Wind onshore
TWhe
Wind offshore
TWhe
RES-E TOTAL
TWhe
TOTAL DEMAND
TWh
Share of Demand
%
2001
0.1
0.6
0
0
14
2
0
0
0
0.1
0
17
312
5.5%
2010
3
16
2
0
19
3
0
0
0
4
1
49
351
13.8%
2020
13
43
4
0
21
4
0
0
1
20
4
109
419
26.0%
Analysis of the renewable energy sources' evolution up to 2020
63
In the following two figures (Figure 39 and Figure 40), the growth of the RES-E generation
in each individual member state of the EU-15 is shown for the BAU and the policy scenario, respectively. For each country we show the deployment for the years 2001, 2010
and 2020.
One observes that, under current policies, significant growth is only projected for a few
countries, for France, Germany, Spain, Finland and the United Kingdom in particular. Depending on the available potentials, as well as on the policies chosen, the increase might
be more equally spread over the periods 2001-2010 / 2010-2020, or the growth might be
more concentrated in either one of the two periods. Generally there is a more continuous
increase in countries with feed-in tariffs than in countries with quota systems.
Under the PS, all countries show significant growth depending on the available potential.
For example in Austria, which has a relatively high penetration already, the relative growth
will be only moderate, whereas countries like the United Kingdom and Germany have the
capacity to grow significantly under the conditions of the policy scenario. Wind energy will
hold the major share of the projected growth in these countries.
180,000
2020
2010
2001
Electricity generation [GWh/year]
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
AT
Figure 39:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
Country-specific RES-E generation in EU-15 under the BAU scenario
until 2020
UK
64
Analysis of the renewable energy sources' evolution up to 2020
Electricity generation [GWh/year]
250,000
2020
2010
2001
200,000
150,000
100,000
50,000
0
AT
Figure 40:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
Country-specific RES-E generation in EU-15 under the policy scenario
until 2020
The corresponding country-specific development of RES-E in the EU-10 and Bulgaria,
Romania is shown in Figure 41 and Figure 42. For each country we show the deployment
for the years 2001, 2010 and 2020. Strong growth even in the BAU scenario can be observed in Poland, the Czech Republic, Slovenia and Hungary in particular. For Poland, the
reason for this growth is the introduction of the Green Power Purchase Obligation for electricity utilities (although no reliable enforcement mechanism exists so far). In Slovenia, a
rather attractive feed-in tariff for RES-E exists.
Under the PS, the countries with high biomass potentials show large growth rates. After
2005 wind power will also contribute significantly in absolute terms to a rising RES-E production, which will especially affect Poland, Latvia, the Czech Republic and Bulgaria.
Analysis of the renewable energy sources' evolution up to 2020
65
18000
2020
2010
2001
Electricity generation [GWh/year]
16000
14000
12000
10000
8000
6000
4000
2000
0
CY
Figure 41:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
RO
Country-specific RES-E generation in EU-10 and Bulgaria, Romania
under the BAU scenario until 2020
45000
2020
2010
2001
Electricity generation [GWh/year]
40000
35000
30000
25000
20000
15000
10000
5000
0
CY
Figure 42:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
Country-specific RES-E generation in EU-10 and Bulgaria, Romania
under the PS until 2020
RO
66
Analysis of the renewable energy sources' evolution up to 2020
5.1.2
RES-H generation up to 2020
In Figure 43 and Figure 44 the evolution of the heat generation by RES in the EU-15 is
shown until 2020 for BAU and PS.
Under BAU assumptions one observes essentially a stagnation of the biomass heat production due to a lack of incentives throughout Europe. Geothermal heat production grows
moderately - predominantly driven by the Swedish progress in geothermal heat pumps
and by the developments in conventional geothermal heat applications in France, Austria
and Greece. Solar thermal heat production is projected to grow at a similar rate, with
Germany and Austria setting the pace.
In the policy scenario, biomass heat production shows a continuous growth mainly driven
by CHP development and district heating. In the sector of wood in households the wood
pellets will enter the market more rapidly and will prevent this sector from further decline in
some countries like Austria. Geothermal heat is expected to grow stronger than in the
BAU scenario by a factor of about four, which is, to a large extent, due to geothermal heat
pumps, for which promotion and regulation schemes are assumed throughout Europe
similar to the present one in Sweden. Solar thermal heat reaches a level of about 2.5 times the generation in the BAU scenario under PS conditions. This growth is reached by
assuming similar investment compensation schemes as are currently applied in Austria
and Germany.
Total heat output generation [ktoe/year]
60,000
Biomass
Geothermal heat
Solar thermal heat
50,000
40,000
30,000
20,000
10,000
0
2001
Figure 43:
2010
Development of RES-H generation in EU-15 under the BAU scenario
until 2020
2020
Analysis of the renewable energy sources' evolution up to 2020
Table 15:
Development of RES-H generation in EU-15 under the BAU scenario
until 2020
EU-15 BAU Scenario Heat
Biomass
Geothermal heat
Solar thermal heat
RES-H TOTAL
TOTAL DEMAND
Share of Demand
100,000
Total heat output generation [ktoe/year]
67
Biomass
2001
40.9
0.8
0.5
42
378
11.2%
Mtoe
Mtoe
Mtoe
Mtoe
Mtoe
%
Geothermal heat
2010
43.7
2.0
1.1
47
410
11.4%
2020
44.1
4.4
2.7
51
432
11.8%
Solar thermal heat
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2001
Figure 44:
2010
2020
Development of RES-H generation in EU-15 under the Policy scenario
until 2020
68
Table 16:
Analysis of the renewable energy sources' evolution up to 2020
Development of RES-H generation in EU-15 under the policy scenario
until 2020
EU-15 Policy Scenario Heat
Biomass
Geothermal heat
Solar thermal heat
RES-H TOTAL
TOTAL DEMAND
Share of Demand
Mtoe
Mtoe
Mtoe
Mtoe
Mtoe
%
2001
40.9
0.8
0.5
42
378
11.2%
2010
55.3
3.9
1.8
61
410
14.9%
2020
65.0
15.8
6.4
87
432
20.2%
In Figure 45 and Figure 46 the evolution of the heat generation by RES in the EU-10 is
shown until 2020 under BAU and PS. Both scenarios suggest a steady increase of biomass heat generation, in the PS, biomass heat generation more than doubles. The major
share of this increase is based on wood in households, but CHP and district heating biomass use will also rise leading to a doubling of this kind of generation in the BAU scenario
and to a threefold increase under PS assumptions. Solar thermal and geothermal heat
generation will show only a marginal growth in the BAU scenario. This is due to the fact
that only very few incentives exist in this sector in the new member states.
Under PS assumptions, the growth in the biomass heat sector will be stronger mainly due
to higher investment support schemes for wood in households, but also due to a better
promotion of the CHP sector. For geothermal applications, grid-connected heat production
and geothermal heat pumps contribute to the projected growth at a similar level. Solar
thermal investments are assumed to be supported in a similar way as by the Austrian incentives.
Analysis of the renewable energy sources' evolution up to 2020
Total heat output generation [ktoe/year]
10,000
Biomass
Geothermal heat
69
Solar thermal heat
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2005
2010
2020
Figure 45:
Development of RES-H generation in EU-10 under the BAU scenario
until 2020
Table 17:
Development of RES-H generation in EU-10 under the BAU scenario
until 2020
EU-10 BAU Scenario Heat
Biomass
Geothermal heat
Solar thermal heat
RES-H TOTAL
TOTAL DEMAND
Share of Demand
Mtoe
Mtoe
Mtoe
Mtoe
Mtoe
%
2001
5.3
0.2
0.0
5.6
50
11.3%
2010
6.9
0.3
0.1
7.2
51
14.1%
2020
8.5
0.3
0.1
9.0
56
15.9%
70
Analysis of the renewable energy sources' evolution up to 2020
Total heat output generation [ktoe/year]
18,000
Biomass
Geothermal heat
Solar thermal heat
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2001
2010
2020
Figure 46:
Development of RES-H generation in EU-10 under the Policy scenario
until 2020
Table 18:
Development of RES-H generation in EU-10 under the policy scenario
until 2020
EU-10 Policy Scenario Heat
Biomass
Geothermal heat
Solar thermal heat
RES-H TOTAL
TOTAL DEMAND
Share of Demand
Mtoe
Mtoe
Mtoe
Mtoe
Mtoe
%
2001
5.3
0.2
0.0
5.6
50
11.3%
2010
9.7
0.5
0.2
10.3
51
20.0%
2020
12.7
2.3
0.5
15.5
56
27.5%
In the following two figures (Figure 47 and Figure 48) the development of the RES heat
generation in each individual member state of the EU-15 is shown for the BAU and the
policy scenario, respectively. For each country we show the deployment for the years
2001, 2010 and 2020. Further continuous growth is projected for Germany and until 2010
also for the United Kingdom. The German increase corresponds to a rise of biomass CHP
and district heating on the one hand and to a further growth of solar thermal installations
and geothermal heat pumps on the other hand. For the UK the CHP and district heating
are the major growth sectors.
Analysis of the renewable energy sources' evolution up to 2020
71
The stronger growth in the policy scenario shows the strongest effects in countries like
France and Spain with large potentials but only very few active policies in place for RES
like biomass and active solar thermal collectors. In France also geothermal heat pumps
will enter the market more rapidly.
12,000
2020
2010
2001
Heat Production [ktoe]
10,000
8,000
6,000
4,000
2,000
0
AT
Figure 47:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
Country specific RES-Heat generation in EU-15 under the BAU scenario
until 2020
25,000
2020
2010
2001
Heat Production [ktoe]
20,000
15,000
10,000
5,000
0
AT
Figure 48:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
Country specific RES-Heat generation in EU-15 under the Policy scenario
until 2020
72
Analysis of the renewable energy sources' evolution up to 2020
In the following two figures (Figure 49 and Figure 50) the development of the RES heat
generation in each of the new member states and Bulgaria, Romania is shown for the
BAU and the policy scenario, respectively. In the BAU scenario the growth will be on average higher in these countries than in the EU-15 mainly because wood in households is
not stagnating in the EU-10. Furthermore CHP and district heating are projected to increase, whereas only minor growth is expected for the sectors of geothermal and solar
thermal heat.
Under the PS the augmented increase until 2010 compared to BAU stems approximately
to equal parts from biomass CHP & district heating and wood in households. Only after
2010 geothermal energy gets a significant share as well.
4,500
2020
2010
2001
4,000
Heat Production [ktoe]
3,500
3,000
2,500
2,000
1,500
1,000
500
0
CY
Figure 49:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
RO
Country specific RES-Heat generation in EU-10 and Bulgaria, Romania
under the BAU scenario until 2020
Analysis of the renewable energy sources' evolution up to 2020
73
8,000
2020
2010
2001
7,000
Heat Production [ktoe]
6,000
5,000
4,000
3,000
2,000
1,000
0
CY
Figure 50:
5.1.3
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
RO
Country specific RES-Heat generation in EU-10 and Bulgaria, Romania
under the Policy scenario until 2020
Biofuel production up to 2020
Medium and long-term production forecasts for biofuels in EU-15 and EU-10 are included
in Figure 51 and Figure 52. As it can be observed in the graphs, the production of biofuel
in the EU-25 under the BAU scenario is likely to increase moderately from approximately
1000 ktoe in 2001 up to about 19 Mtoe under BAU conditions until 2020. Only nine countries at the community level would be able to enlarge considerably the production of biofuels under the current policy setting, i.e. only those countries have implemented sufficiently
high tax exemptions for biofuels. However, under a more supportive policy scenario, including environmental tax exemptions, energy crops subsidies in all countries of the EU25 the production of biofuels is inclined to grow until almost 40 Mtoe in 2020. It is important to remark that at the specific country level, under the policy scenario, the evolution of
the biofuel production levels can differ considerably.
74
Analysis of the renewable energy sources' evolution up to 2020
40000
Policy
Biofuel production [ktoe]
35000
BAU
30000
25000
20000
15000
10000
5000
0
2002
Figure 51:
2005
2010
2015
2020
2015
2020
Total biofuel production up to 2020 for EU-15
7000
Policy
BAU
Biofuel production [ktoe]
6000
5000
4000
3000
2000
1000
0
2002
Figure 52:
2005
2010
Total biofuel production up to 2020 for EU-10
Analysis of the renewable energy sources' evolution up to 2020
5.2
Progress towards meeting the 2010 targets
5.2.1
Electricity
75
The growth in renewable electricity consumption should contribute to approximately half of
the overall White Paper target of doubling the share of renewable energy in the period
1997-2010. Progress towards meeting this target has been largely stimulated by the indicative target setting at country level for the share of renewables in total electricity consumption.
Will EU countries meet the targets as specified in the renewable electricity directive? This
is clearly one of the main questions in monitoring the current developments on the market.
Figure 53 and Figure 54 show the projected amount of electricity production in relation to
their national indicative target as specified in the Directive for the four scenarios. The figures again illustrate the need for additional support, as only a few countries will be able to
meet their targets on the basis of BAU developments. Implementation of effective bestpractice policies will evidently result in larger penetrations in nearly all countries. Assuming all countries would adopt such best-practice policies, the aggregated production in
both the current and future EU member states would be adequate to meet the aggregated
targets. Large differences, however, are expected between countries. Countries with relatively large potentials (such as Ireland) or countries with strong existing policies from a
project development perspective (such as Germany and the UK) could realise higher penetrations than required by the Directive.
In this respect it is important to realise that the targets specified in the Directive are consumption targets whereas the data projected in the figures concern production data. When
one country imports a certain amount of renewables – for instance via the system of Guarantees of Origin - it could possibly claim the renewable value for its target whereas the
country of origin would then have to abstain from this renewable value. In such instances,
agreements should be made between the countries on the claim to this renewable value
to prevent double counting.
76
Analysis of the renewable energy sources' evolution up to 2020
2.0
BAU - Demand Baseline
BAU - Demand RUE
POLICY - Demand Baseline
POLICY - Demand RUE
Electricity production / Target
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
AT
Figure 53:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
SE
UK EU15
Country specific target compliance until 2010, EU-15, RES-E generation
as ratio of target
BAU - Demand Baseline
2.0
BAU - Demand RUE
POLICY - Demand Baseline
POLICY - Demand RUE
1.8
Electricity production / Target
ES
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
CY
Figure 54:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
EU10+
Country specific target compliance until 2010, EU-10, RES-E generation
as ratio of target
The differences in projections between the baseline scenario and the scenario with a more rational use of energy show the importance of energy savings and energy efficiency,
also with respect to the realisation of renewable energy targets. As these targets are specified in terms of share in total consumption, a lowering of overall consumption induces a
lower absolute target on the required growth in renewables. Since both scenarios do not
Analysis of the renewable energy sources' evolution up to 2020
77
yet include possible effects of the most recent EU policies on the increase in energy efficiency - such as the proposed Directive on end-use energy efficiency – the resulting shares of renewable electricity production could even be higher.
Remarkably, the differences between the two demand variations (baseline and rational
use of energy; taken from the official EU energy outlook (2003)) are only small. Analysis
of these demand variations shows that the extent to which energy efficiency improvements and energy savings are implemented still leaves a significant potential for further
improvements. When, for instance end-use energy efficiency improvements targeted in
the proposed EU Directive are achieved, the resulting energy consumption in the year
2010 will be lower and thus the resulting renewable electricity targets will be smaller in
absolute terms.
5.2.2
Primary energy production and consumption
The White Paper target on doubling the share of renewable energy on the EU market can
be viewed as ‘the founding father’ of current European renewable energy policies. Although country specific indicative targets have been formulated for renewable electricity
and (implicitly) for biofuels, no such targets have been specified for renewable heat. We
therefore do not provide country-level projections for renewable heat, but for the overall
share of renewable primary energy in each of the countries.
The results projected on the share of renewables in terms of primary energy production
show a less optimistic picture than for renewable electricity only. One reason of this is
more a technical than a substantial one. Due to the fact that more electricity is produced
from wind and less from biomass than specified in the White Paper the primary energy
input into electricity production is less than specified in the White paper, although the White Paper electricity targets are met (at least in the policy scenario). To phrase it differently:
part of the reason that primary energy targets are not met is the classical EUROSTAT
convention36, which penalises wind energy as compared to biomass electricity with regard
to primary energy targets due to the lower efficiency of biomass plants.
However, also the lack of strong supporting policies to promote renewable heat makes the
achievement of the White Paper target challenging. Whereas the projected shares of renewable electricity in case of the policy scenarios are on average in line with the overall
target specified, the heat target and therefore the overall share of primary energy is not
36
According to the classical EUROSTAT convention the input of biomass (in energy terms) into
electricity and heat generation but only the output of wind, hydro, wave and tide and PV is taken (instead of the avoided input for conventional power generation).
78
Analysis of the renewable energy sources' evolution up to 2020
likely to be met under the chosen scenarios. It is most important to adopt strong supporting measures in the heat sector and that member states revise their national support
schemes or to introduce new ones. Nearly all countries have currently implemented compensation schemes and/or tax exemptions to support renewable heat. This is mainly directed towards support of biomass and using solar thermal panels. Notable instruments
are the obligation scheme that has been implemented in Denmark to support solar heating
in planned large buildings and the solar ordinance in Spain, requiring the use of solar
thermal collectors when new buildings are erected. However, also biomass use is promoted by means of tax exemptions on fuel taxes and investment subsidies.
RES primary energy share [%]
60.0
BAU - Demand Baseline
BAU - Demand RUE
POLICY - Demand Baseline
POLICY - Demand RUE
50.0
40.0
30.0
20.0
10.0
0.0
AT
Figure 55:
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
Country specific RES primary energy share until 2010, EU-15
UK EU15
Analysis of the renewable energy sources' evolution up to 2020
79
50.0
BAU - Demand Baseline
BAU - Demand RUE
POLICY - Demand Baseline
POLICY - Demand RUE
RES primary energy share [%]
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
CY
Figure 56:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
EU10+
BG
RO
Country specific RES primary energy share until 2010, EU-10 and Bulgaria, Romania
When analysing the possible developments at technology level, we observe that for the
EU-15 only the targets as specified in the White Paper for wind energy and geothermal
electricity will be met. In the electricity sector the overall target can still be met under the
assumptions of the policy scenario. For wind energy the realisations in both scenarios are
largely overshooting the targeted realisation from the White Paper. Also for geothermal
electricity and photovoltaics the scenario results quite strongly support the high likeliness
of the EU-15 meeting its targets. For hydropower the targets will be missed slightly. Only
for biomass the calculations show less optimistic results in particular in the BAU scenario,
indicating that additional efforts are required to meet the targeted growth. The calculated
available mid-term potentials indicate that availability of resources is not restricting the
chances of meeting the targets. EU enlargement as well as the CAP reform would provide
important additional opportunities for larger growth of bio-energy production in Europe.
For the biofuel sector it will be difficult to meet the White Paper objectives both in the BAU
and the policy scenario. The reason for the non-compliance in the policy scenario is mainly that to little happened during the recent years and since annual growth rates are limited
the target is not anymore feasible based on a dynamic analysis.
80
Analysis of the renewable energy sources' evolution up to 2020
Table 19:
Comparison of White Paper targets at technology level and realisations in
the BAU and policy scenario for the EU-15 in the year 2010
Electricity sector
TWh (2010)
Wind energy
Hydro
large-scale
small-scale
Photovoltaic
Biomass
Geothermal: Elec.
Total
BAU
152.6
314.8
275.8
39.0
3.3
99.8
7.3
577.9
Policy
White Paper
189.8
80.0
324.9
355.0
284.3
300.0
40.6
55.0
4.9
3.0
205.0
230.0
8.0
7.0
732.6
675.0
Heat sector
Mtoe (2010)
Biomass Heat
Geothermal Heat
Solar Thermal
Total
BAU
43.7
2.0
1.1
46.8
Policy
White Paper
55.3
75.0
3.9
1.0
1.8
4.0
60.9
80.0
BAU
Policy
White Paper
13.7
18.0
Biofuels
Mtoe (2010)
Liquid biofuels
5.2.3
7.2
Biofuels for transport
The use of biofuel for transport purposes has only recently begun to take off in Europe. Only
nine EU countries have currently implemented supporting policies, which have resulted in the
first significant uptake of biofuels on those national markets. Figure 57 and Figure 58 show the
calculated production of biofuels in the EU-15 and EU-10 and Bulgaria, Romania for the four
different scenarios compared to a national indicative target. We thus assume that each country
would be required to adopt a national target of achieving a share of 5.75% in their national petrol
and diesel consumption for transport purposes.
Analysis of the renewable energy sources' evolution up to 2020
81
1.6
BAU - Demand Baseline
BAU - Demand RUE
POLICY - Demand Baseline
Biofuel Production/Target
1.4
POLICY - Demand RUE
1.2
1.0
0.8
0.6
0.4
0.2
0.0
AT
BE
Figure 57:
DK
FI
FR
DE
GR
IE
IT
LU
NL
ES
SE
UK
EU15
Country-specific target compliance until 2010, EU-15, biofuel production
as a ratio of the target
BAU - Demand Baseline
BAU - Demand RUE
POLICY Baseline
POLICY - Demand RUE
2.0
1.8
Biofuel production / Target
PT
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
CY
Figure 58:
CZ
EE
HU
LA
LT
MT
PL
SK
SI
EU10+
BG
RO
Country-specific target compliance until 2010, EU-10 and Bulgaria, Romania. Biofuel production as a ratio of the target
The figures clearly show that large growth in the share of biofuel production (and consumption) may be expected to take place in Europe. Obviously, under the BAU scenario
typically those countries where actual stimulating policies are currently in place show actual penetration of biofuels. Germany might even slightly overshoot this indicative target
on the basis of current policies alone. Under the policy scenarios most countries will achieve a very large growth in the uptake of biofuels on their national markets. Again, sev-
82
Analysis of the renewable energy sources' evolution up to 2020
eral countries might overshoot their indicative target. In some countries the implementation of current best-practice policies is not sufficient to achieve a real up-take of national
biofuel production. Clearly these countries will struggle to achieve these targets since their
national potentials are relatively small or expensive to use.
5.3
CO2-emission reductions and additional costs
In this section, the future development of RES is related to reductions in CO2–emissions
and costs. In the BAU scenario present strategies and barriers are projected into the future. By contrast, in the policy scenario all countries apply the most effective strategies
and no barriers to RES are prevalent. First, emission reductions and costs associated with
Total RES in the BAU scenario are presented and discussed. In a second step, differences in CO2-emission and additional costs between the policy scenario and the BAU
scenario are presented. Most notably, the results for the BAU scenario suggest that the
EU-25 countries as a group as well as the EU-15 and the EU-10 as individual groups will
fail to achieve any of the RES targets for electricity, biofuels or primary energy use for
2010. Some countries, however, will manage to meet their national targets for electricity,
such as Germany, the Netherlands, the UK, Lithuania and Slovenia. In the policy scenario, the EU-25 as well as the EU-15 and the EU-10 as individual groups – but not all
countries individually –achieve the 2010 targets for RES in the electricity and the fuel sectors, but not for heating and primary energy use.
To calculate the CO2-emission reductions, the country-specific average emission factors
associated with the respective fossil and nuclear technology mix in the years 2005, 2010,
2015 and 2020 were derived from the EU energy outlook (2003). For example, for RES in
the electricity sector the average CO2-emissions from the national electricity generation
mix (excluding RES) were used. Therefore countries with an electricity sector dominated
by nuclear power exhibit low emission factors, whereas countries with a high share of coal
power production show high specific emission factors. It should be noted that using average emission factors of the generation mix yields only approximate estimates for the CO2emissions which will actually be avoided by RES.37 For heating a distinction was made
between CO2-emission factors of grid connected heat, i.e. CHP and district heating, on the
37
Using the average generation mix as a reference for calculating the resulting emission factor is
only one possible choice of a baseline. Another possibility would be to choose the emission
factor of the marginal producer in the generation mix (the last plant that would not have been
installed if an additional investment into RES capacity was made). Countries which are subject
to a phase out of nuclear power, tend to show higher emission factors if the marginal generation capacity is used as baseline instead of the average generation capacity.
Analysis of the renewable energy sources' evolution up to 2020
83
one hand, and the CO2-emission balance in private households on the other hand. For the
transport sector the average emission factors
The cost figures were taken from the Green-X model runs for the policy and the BAU scenarios and include the additional direct costs associated with the promotion strategies for
RES. Thus, macroeconomic effects or benefits from a decreased dependence on fossil
fuel imports or from emission reductions (externalities) are ignored. Also, the best-practice
strategies in the policy scenario are not necessarily cost-efficient, that is they may not
achieve the given target for RES at minimum cost. It can be expected that by adapting the
instrument for some technologies in some countries (partially significant) cost reductions
can be achieved.
Results for Total RES for the BAU-scenario appear in Table 20.
Table 20:
CO2-emission reductions compared to 2001 levels for Total RES in the
BAU-scenario
CO2 Reduction
Mt/yr
2005
AT
1.6
BE
0.5
DK
1.7
FI
1.0
FR
1.6
DE
19.6
GR
1.3
IE
0.9
IT
3.8
LU
0.0
NL
1.9
PT
1.3
ES
7.7
SE
1.2
UK
6.0
EU-15
50.1
2010
2.3
1.2
2.0
1.2
4.4
44.3
3.9
1.2
10.7
0.0
3.8
3.4
13.7
3.1
15.6
110.9
2015
2.6
1.7
2.6
2.3
9.7
71.1
6.4
1.1
17.3
0.1
5.0
5.2
23.2
5.1
26.8
180.2
2020
2.6
2.8
3.0
2.9
17.2
102.0
7.8
1.1
23.4
0.1
6.9
7.0
32.6
7.7
41.4
258.3
CY
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
RO
EU-10
EU-25
0.1
1.8
0.2
1.3
0.2
0.8
0.0
4.4
0.4
0.7
1.0
0.9
10.0
120.9
0.3
3.0
0.2
2.1
0.4
1.4
0.0
9.6
0.6
1.0
1.4
1.3
18.8
199.0
0.5
4.5
0.6
3.0
0.8
2.0
0.0
19.0
0.9
1.3
1.7
1.8
32.7
291.0
0.0
0.8
0.1
0.6
0.1
0.3
0.0
1.5
0.1
0.3
0.4
0.4
3.8
54.0
84
Analysis of the renewable energy sources' evolution up to 2020
By far the largest emission reductions associated with Total RES are generated in Germany which accounts for about one third of all EU-25 reductions until 2020. The largest
contribution until 2010 (over 60 %) in Germany comes from RES in the electricity sector
where electricity from on-shore wind installations is the dominating factor, and off-shore
wind and solid biomass are starting to penetrate the market. Between 2010 and 2020 additional emission reductions in Germany result predominantly from off-shore wind, and to
a lesser extent also from on-shore wind and solid biomass in electricity production. Emission reductions for Spain account for about 12 % of all EU-25 reductions in 2020. Until
2010 these reductions come mainly from the electricity sector followed by the transport
sector. In the electricity sector, they are mainly the result of an increase in on-shore wind,
and – to meet the 2010 target – in solid biomass. Emission reductions between 2010 and
2020 result primarily from a substantially higher use of biofuels as well as from a further
expansion of on-shore wind capacities. In the UK, the electricity sector contributes almost
entirely to the emission reductions presented in Table 20. Until 2010 these reductions
result from additional production of electricity from on-shore wind, and to a lesser extent
from solid biomass and some off-shore wind. Additional reductions until 2020 are due to a
high growth in off-shore wind. In Italy significant emission reductions after 2010 come
mainly from new on-shore wind capacities and from biofuels.
Compared to the emission reductions in the EU-15 countries, the reductions in the EU-10
countries are small, but their share in total EU-25 reduction slightly increases from about
8 % in 2010 to about 11 % in 2020. About 70 % the reductions in EU-10 countries over
that period result from only two countries, Poland and the Czech Republic. Both countries
exhibit similar emission reduction paths: reductions until 2010 are primarily the result of
increased electricity generation from solid biomass, and to a lesser extent from solid biowaste and on-shore wind. Between 2010 and 2020 most emission reductions can be traced back to additional biomass use in electricity generation, liquid biofuels in Poland and
some more on-shore wind capacities.
In general, the pattern of emission reductions in the BAU-scenario translates into a similar
pattern for costs. Table 21 relates the costs for RES in all sectors to GDP. For the EU-25
countries as a group and for most member states those costs as a fraction of GDP increase over time but are generally rather small. For the EU-10 countries, these costshares remain on average well below the shares for the EU-15 countries.
Analysis of the renewable energy sources' evolution up to 2020
Table 21:
85
Costs for Total RES in the BAU-scenario as a share of GDP
Costs/GDP
EU-15
EU-10
EU-25
Table 22:
2005
0.10%
0.04%
0.10%
2010
0.16%
0.07%
0.16%
2015
0.21%
0.11%
0.21%
2020
0.23%
0.18%
0.23%
Additional CO2-emission reductions costs for Total RES in the policy scenario versus the BAU-scenario
CO2 Reduction Policy vs BAU in Mt/yr
AT
BE
DK
FI
FR
DE
GR
IE
IT
LU
NL
PT
ES
SE
UK
EU-15
2005
1.3
0.3
1.5
2.0
5.2
4.1
1.4
0.5
3.4
0.0
0.4
1.4
4.7
0.9
0.7
27.9
2010
6.9
1.3
8.1
5.6
22.2
12.8
6.0
2.5
13.0
0.1
2.0
4.3
16.7
3.6
5.0
110.0
2015
9.9
3.2
12.2
9.7
42.9
24.6
8.6
4.4
19.6
0.1
4.1
5.5
19.6
5.4
13.6
183.5
2020
11.8
5.0
12.9
12.1
54.7
47.2
10.7
5.8
19.3
0.2
6.7
7.7
21.9
8.5
17.7
242.2
CY
CZ
EE
HU
LA
LT
MT
PL
SK
SI
BG
RO
EU-10
EU-25
0.1
0.7
0.5
0.3
0.5
0.1
0.0
2.5
0.8
0.6
0.4
1.9
6.0
37.0
0.3
3.6
2.2
1.7
1.8
1.0
0.1
12.3
4.3
3.6
2.3
7.8
30.9
152.7
0.6
7.2
3.5
5.0
3.4
2.6
0.3
29.6
5.4
4.3
6.5
15.4
61.7
268.7
0.6
7.5
4.5
8.0
4.3
4.1
0.3
33.2
6.1
4.4
11.0
21.4
72.7
347.3
Looking at the differences in emission reductions between the policy and the BAU in
Table 22 shows that all countries reduce more under the policy scenario. The highest additional emission reductions (in absolute terms) in the best-practise policy scenario are
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Analysis of the renewable energy sources' evolution up to 2020
found in France, Germany, Poland, Italy and Spain. After 2010 additional reductions under
the policy scenario are also quite substantial in the UK and – beyond the EU-25 – also in
Romania. For France, the major increase in emission reductions between the two scenarios is due to a much higher level of biofuels, and – after 2010 also from a much higher
share of solid biomass and some more off-shore wind in the electricity sector. For Germany, the increase in off-shore wind in the policy scenario is stronger and starts earlier
than in the BAU-scenario. After 2010, the contribution of non-grid solar thermal and nongrid biomass in the heating sector is also higher in the policy scenario for Germany. For
Italy and Spain, the major additional contributions stem from the electricity sector, most
notably from a higher use of solid biomass. For Italy, an increase in RES in the transport
sector also adds to the emission reductions in the policy scenario compared to the BAU
scenario by 2010. In the UK, the largest additional emission reductions can be observed
in the electricity sector, where on-shore wind and tide and wave take off between 2010
and 2020 compared to the BAU scenario due to a more effective support system for RES
in the UK.
For Poland and Romania the substantial differences between the policy and BAU scenario
result from an increase in RES in all sectors, in particular, more solid biomass and biogas
in the electricity and heat sector and increased biofuel use in the transport sector.
Table 23:
Additional costs for Total RES in the policy scenario versus the BAUscenario as a share of GDP
Additional Costs Policy vs. BAU /GDP
EU-25
2005
0.04%
2010
0.15%
2015
0.24%
2020
0.28%
Table 23 relates additional costs in the policy scenario compared to the BAU-scenario for
RES in all sectors to GDP. We show the table only in terms of aggregated values for the
EU-25 since the policy scenario assumes the same policy mix for all countries of the EU
and is therefore a harmonised scenario. In such a harmonised case a burden sharing of
the additional costs would be very likely and therefore the overall costs for the EU-25 are
of main interest.
For all countries, additional costs as a fraction of GDP increase over time. For most countries, in particular for most EU-15 countries, the additional costs as a fraction of GDP tend
to be moderate. Clearly, a switch from current RES support schemes in the BAU scenario
to the most effective support scheme in all countries in the policy scenario affects member
states asymmetrically.
Analysis of the renewable energy sources' evolution up to 2020
6
87
Conclusions
Renewable energy sources have the potential to make a large contribution to the sustainable energy future of the European Union. In particular they can help to reach the environmental goals of the EU - in particular with regard to the commitments under the Kyoto
Protocol - , increase the security of supply by mitigating the dependence on imported fuels
and increase social welfare by creating new employment opportunities. Finally the development of renewable energy sources contributes to the goal of the Lisbon process to
reach sustainable economic growth and to improve the competitiveness of the European
Union on a global scale by creating lead markets for innovative technologies.
The challenge of increasing the share of renewables in each sector of the energy system
has been recognised by the European Union and translated into a comprehensive regulatory framework. The existing EU legislation needs to be adopted into national legal and
policy measures of member states following the two main objectives of:
• the removal of economic barriers to the development of renewable energy sources by
introducing financial support mechanisms and promotion schemes,
• the mitigation of non-economic barriers such as administrative barriers, market imper-
fections, technical obstacles and grid restrictions.
The FORRES 2020 project analysed the possible contribution of RES to EU energy consumption based on two main scenarios, the business-as-usual scenario and the policy
scenario, which are defined as follows:
The business-as-usual scenario (BAU) assumes that recent policies and existing barriers in the EU member states are maintained, and includes expected future policies (which
have already been decided upon, but not yet implemented).
The policy scenario (PS) is based upon the following assumptions: for each technology,
the currently implemented best practice (most effective) policy in one of the member states is selected, additional energy efficiency efforts are assumed, a stable planning horizon
is guaranteed and existing social and technical barriers can be overcome.
Both scenarios include effects of technology learning and economies of scale.
The key outcomes of the analysis can be summarised as follows:
• Policy scenario: a RES share of about 34 % in the electricity sector and of about 20 %
in primary energy terms is feasible in 2020 for the EU-25; however, this requires immediate policy actions in most member states.
• BAU scenario: assuming the continuation of present policies, the RES market share
reaches 23 % in the electricity sector and 11 % in terms of primary energy in 2020.
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Analysis of the renewable energy sources' evolution up to 2020
• The growth of primary energy by RES in the BAU scenario leads to a CO2 emission
reduction of about 290 Mt until 2020 compared to 2001 emissions.
• Additional emission reductions of about 350 Mt can be achieved under the policy sce-
nario by 2020, whereas the difference between policy and BAU scenario corresponds
to more than half of the EU-25 commitment under the Kyoto protocol in the period
1990-2010.
• Greater energy efficiency efforts are required to achieve RES targets for 2010 and de-
fine ambitious targets for 2020.
Analysis of the renewable energy sources' evolution up to 2020
7
89
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