Converging support
schemes in Europe?
Best practice design criteria for
effective and efficient future
RES-E support
19.09.2012
Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Structure of the presentation
Lessons on RES-E support schemes in Europe
1. Status of RES-E support schemes in Europe
2. Progress of MS achieving the RES targets
Isabelle de Lovinfosse
3. Lessons learnt and best practices in designing RES-E
support schemes
Routes towards convergence
4. Recapitulation of the European debate on convergence
5. Benefits and challenges of convergence
Corinna Klessmann
6. Options for convergence
7. Conclusions
Main sources:
• European projects: RE-Shaping (2009-2012), Financing RE in the European Energy Market (20102011), Renewable energy progress and biofuels sustainability (2012), Beyond 2020 (ongoing)
• Projects for national governments: International Feed-in Cooperation (ongoing), Implementing
Cooperation Mechanisms (2009-2012), FIT tracker (2011)
• Dissertation Klessmann (2012)
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Still diversity of support schemes in Europe but
with some converging trends
Source:
Ecofys based on
Ragwitz et al. (2012). REShaping
Ecofys et al. (2012). RE
progress and biofuels
sustainability.
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Still diversity of support schemes in Europe but
with some converging trends
 Diversity of support schemes in Europe is shown by different
colours and patterns, but some converging trends have been
observed:
•
Use of combination of instruments instead of one size fits all
(e.g. FIT for small scale, auctions for offshore wind) – many
patterns instead of plain
•
Diffusion of feed-in premiums across Europe as compromise
between revenue security of investors and RES-E exposure to
market signals
•
Moratoriums and uncertainties on the future of support schemes
because of public deficits (e.g. Spain, Portugal, Latvia, Bulgaria,
Czech Republic)
•
Joint support schemes (e.g. Sweden and Norway)
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Lessons from MS experience tell us how to design
effective and efficient RES-E support schemes
Lessons learnt
Best practice design criteria
•
Provide reliable framework: frequent
and unexpected policy changes
undermine investor confidence
•
•
•
•
•
Reflect and limit investment risks:
risk-conscious (triple-A) policies
increase growth and reduce support
costs by up to 50%
Adjust level of support to technology
and market conditions
•
•
•
•
•
•
•
•
•
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Policy changes transparent and predictable (e.g.
automatic degression, clear formula for quota
setting, pre-set revision agenda)
No retroactive changes
Long term political commitment
Guarantee support level for long term
Consultation with stakeholders
Tailor support scheme to RE market deployment
status and electricity market readiness
No abrupt or retroactive policy changes
Avoid rigid budget or capacity caps
Simple, transparent permitting process
Priority grid access and dispatch
Quota: long term horizon and serious penalties
Government facilitates access to capital (e.g.
participation, financial guarantees, loans)
Apply technology specific support levels
Calculate level of support based on LCOE, so
support neither too low nor too high
Planned and transparent adjustments based on
technology and market changes
Supporting RES-E is and will remain challenging.
How can convergence help?
Challenges
Financial and economic crisis in
Europe puts pressure on government
budgets, consumers’ bills and access
to finance
Impact of high RES-E deployment rates
on the electricity system and markets
With RES-E becoming mainstream,
growing opposition against RES-E (from
incumbent electricity actors and the
public)
Potential role of convergence
• Reducing RES-E support costs by
streamlining best-practice criteria
• Joint European effort to attract more
investments
• Trans-European grid development
• Integration of European electricity markets
• Coordinated reforms of electricity market
regulations
Coordinated EU-wide effort on transparent
and fair communication on the short and
long term benefits & costs of RES-E growth
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Structure of the presentation
Lessons on RES-E support schemes in Europe
1. Status of RES-E support schemes in Europe
2. Progress of MS achieving the RES targets
Isabelle de Lovinfosse
3. Lessons learnt and best practices in designing RES-E
support schemes
Routes towards convergence
4. Recapitulation of the European debate on convergence
5. Benefits and challenges of convergence
6. Options for convergence
7. Conclusions
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Corinna Klessmann
The focus of the European RE policy debate has moved
from harmonisation to coordination and cooperation
Aim of convergence: creating an internal market for electricity
1996
2009
2014
RES-E Directive
RES Directive
2014: Evaluation
2001/77/EC:
2009/28/EC:
of RES Directive
national support
national support
and cooperation
schemes;
schemes +
mechanisms
evaluation 2005
cooperation mechs
2003
Beyond
2020?
COM (1998) 167
COM(2005) 627:
Proposal RES
COM(2012) 271:
on harmonisation
Too early to
directive
Guidance on best
requirements:
harmonise;
COM(2008) 19:
practice support
propose common
optimisation and
Harmonised GO
and on increased
rules for RES-E
coordination
trade
cooperation
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Converging national support schemes holds many
benefits but also some risks and challenges
Potential benefits
Joint RES-E support methodology
Support
scheme
design
could lead to increased transparency
and stability
RES-E investors could reduce their
transaction costs and tap economies
of scale; increased competition
Increased RE investments and
reduced support costs per MWh
Potential challenges/risks
Reduced sovereignty of Member
States needs to be accepted by
national Parliaments
Support schemes could be less
suited to overcome local market
barriers
Windfall profits and increased
support costs if cross-country support
level is not well adjusted
Decoupling of costs and benefits of
Tapping low-cost potentials
Greater flexibility and lower cost for
RES
reaching national RES targets
allocation
Increased efficiency of European
RES target achievement
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
RES-E; challenge of balancing costs
and benefits between Member States
Negligence of domestic benefits
could lead to loss of public
acceptance and reduced willingness
to pay for RES
European cooperation can reduce the support costs for
reaching European RE targets but uniform harmonisation
would increase costs
Changes in support costs for reaching the 2020 target
(average yearly consumer expenditures for new RES installations)
€ bn/year
Sources:
Resch et al. (2009). futures-e.
Ecofys et al. (2011). Financing RE in
the European Energy Market.
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Convergence of RES-E support needs to build on converging
electricity markets
Support framework
Common
(best) practice
Cooperation
Coordination
Harmonisation
Convergence of RES-E market conditions
Common
(best) practice
Cooperation
Coordination
Electricity market framework
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Harmonisation
Current steps for converging support frameworks mainly
focus on best practice exchange. Steps towards
implementing joint principles/design elements.
Support framework
Common
(best) practice
Member
States
exchange
(Concerted
Action, IFIC,
etc.)
EC: Best
practice
guidance
Cooperation
Coordination
Some MS
discuss coop
mechs
Joint support
scheme SENO; Italy...
EC:
Guidelines to
facilitate trade
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Harmonisation
Future: Minimum
design standards
for RES-E support?
The integration of European electricity markets is ongoing
but not yet completed. Market adjustments for integrating
large shares of variable RES-E.
Future: Increase “readiness” for RES-E
through alignment of electricity market
regulations (gate closure, balancing markets,
etc.); incentives for flexibility options?
Transmission
network
development
Cooperation
of regulators
(ACER)
Common
(best) practice
Cooperation
Multi-country
market
coupling
RES-E priority
or guaranteed
grid access &
priority
dispatch
Coordination
Harmonisation
Electricity market framework
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
There are multiple support elements that benefit from
joint principles and coordination
Joint ambitions
& growth
Common calculation
pathways
Common risk
Support
scheme
methodology for LCOE
& reference electricity
prices
mitigation &
allocation rules
(e.g. for policy
Support level & underlying
methodology
adjustments)
Level/limitation of investment risk
(market revenue risk, policy risk, etc.)
Alignment to institutional, regulatory and market
framework
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse
Conclusions
 Applying best practice RES-E support principles is key for
further RES-E growth in Europe. Increased exchange,
cooperation and EC guidance can help streamline best
practice principles across Europe.
 Convergence of RES-E support is only part of the solution
and bears some risks. Uniform harmonisation of RES-E
support is not the solution: it would lead to higher
support costs and loss of public support for RES-E.
How can we create public acceptance for joint RES-E
policy efforts and cost sharing in Europe?
© ECOFYS | 08/04/2015 | Dr. Corinna Klessmann, Dr. Isabelle de Lovinfosse