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Overview of Economic, policy and regulatory constrains for DER integration in EU

Dive into the market presence of renewable energy sources and CHP in the EU, examining support mechanisms, regulatory issues, and barriers for integration. Understand the current status, future prospects, and implications for the energy sector.

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Overview of Economic, policy and regulatory constrains for DER integration in EU

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  1. Overview of Economic, policy and regulatory constrains for DER integration in EU Miroslav Maly (Enviros), Michael ten Donkelaar (ECN) SOLID-DER National Seminar Vilnius March 6, 2007

  2. Contents of the presentation • Market presence of DER in NMS • DER support in NMS • DER regulatory issues • Main barriers to DERincrease • Conclusions

  3. Market presence of RES / CHPin the new EU10+ • Current status - major part of RES-E production in large hydro-power stations (e.g. Latvia, Romania, Slovakia, Slovenia): • Wind energy developing since 2004: Baltic States, Czech Republic, Poland • Some wind energy projects realised, many more are planned • RES-E targets for 2010 - very ambitious • For some countries perhaps too ambitious (e.g. Czech Republic, Slovakia)  above expected economic potential in short-term • Main potential for RES-E up to 2010 – biomass / biogas applications, wind energy and small hydro • CHP has major share in all new MS, 10-20% of E-production from CHP but large part is not DER • CHP connected to industry, district heating • Little small-scale applications (e.g. gas engines, RES-CHP)

  4. Market presence of RES / CHPin the new EU10+

  5. Market presence of DER in Europe Source:DG-GRID / SOLID-DER

  6. RES / CHPsupport in the new EU10+ • DER support mechanisms developed during the last 5 years: • Predominantly feed-in tariff systems for RES-E • Green (feed-in) Premium System – bonus to market price (e.g. Czech Republic, Hungary) • Tradable green certificates introduced in Poland and Romania • TGC combined with quota system and fines • Some countries provide additional support through investment subsidies, soft loans or tax exemptions • Future (investment) support expected from EU Structural Funding • Support to CHP in 6 out of 10 countries • Bulgaria, Czech Republic, Hungary, Latvia, Poland (from 2007), Slovenia • Feed-in tariffs or premiums, usually lower rates than for RES-E, mostly for small- to medium-scale CHP

  7. RES / CHP support in the new EU10+

  8. Overview of RES-Esupport schemes in Europe

  9. Is RES-E / CHP support effective? • Support existing for only a few years, no conclusion possible yet about effectiveness of FIT or TGC • Strong growth of RES-E not yet noticed with exception of Hungary (growth in biomass co-firing and small CHP) • But, many new RES-E projects are under implementation orplanned • Support mechanisms can overcome economic barriers such as large upfront investments, depending on tariff level • Tariff level is not sufficient in every country • Little differentiation benefits some technologies too little, other perhaps too much (e.g. co-firing of biomass in Hungary)

  10. DER regulatory issues – Market Access Regulated purchase obligation most common Also access to wholesale market in most new Member States RPO = Regulated Purchase Obligation GC = Green Certificates

  11. DER regulatory issues – Balancing conditions • No common balancing conditions • Obligatory notification of DER generation amounts in some countries • DER is not active part of generation reserve

  12. DER regulatory issues – Network access • No uniform connection charging method • Large differences in charging approaches • Use-of-System charges for DER operators not common in NMS

  13. Main barriers to DERincrease – short-term • Policy barriers: • Frequently changing policies and priorities • Regulatory barriers: • Long procedures for spatial planning, construction permissions • Network (regulatory) barriers: • Complicated (non-standardised) connection procedures • Prices sometimes discriminatory to small-scale generators • Dominant position of DSOs • Financial barriers: • Large initial investments and credit availability • Availability of support (schemes are often unstable) • Feed-in tariff schemes not cost-effective in the long term • Technical barriers: • DER connected in less populated areas means higher connection costs or network upgrades •  Preferential wind power locations often in remote areas

  14. Main barriers to DERincrease – long-term • Long-term barriers • No long-term RES-E / CHP targets and policies • What targets to be expected after 2010? • Are long-term policy plans in line with increased DER shares? • Costs for network upgrades when not taking DER into account in planning • Threat of higher costs of electricity with more DER connected • Fragmented and also often changing support for DER (both in EU15 as in NMS • Soon no overcapacity but shortage of capacity (e.g. due to nuclear phase-out in Lithuania, Slovakia, Bulgaria) • Questions • What countries have structural generation overcapacity (still in 2010 or 2020), perhaps Czech Republic, Poland? • What kind of power capacity will replace nuclear power plants? • Are most efficient technologies supported with existing support schemes, what about CHP? • What is the opinion of major stakeholders?

  15. Preliminary conclusions • DER plays an increasing role in the new MS • In the form of CHP and recently new RES-E capacity • DER support schemes introduced (to meet RES-E targets) • Mainly in the form of FIT combined with RPO • Support levels in some countries comparable to that in EU15 • Slow but steady uptake of RES-E capacity • Participation of DER in energy markets still limited • But some countries provide access to wholesale and/or balancing market • DER regulatory framework shows large differences between countries: • System of connection charging • Balancing conditions (obligations and access)

  16. Short- and medium term policy and regulatory recommendations • Complete the unbundling process, within the legal framework as well as in practise • Simplify authorisation procedures for spatial planning and construction permits through a “one-stop shop system” for project authorisation • Introduce transparent and non-discriminatory grid connection, grid use conditions as well as cost allocation between DER operators and network operators • Ensure market access for DER operators through simplified procedures to wholesale, balancing and ancillary services markets • In the development of support schemes, take into account their cost-effectiveness in the long-term and the stability it has to create for investors

  17. Thank you for your attention ! SOLID-DER project website: http://www.solid-der.org/ miroslav.maly@enviros.cz tendonkelaar@ecn.nl

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