RES in SEERMAP results on capital and support expenditures

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1 results on capital and support expenditures Authors: Gustav Resch, Lukas Liebmann, Albert Hiesl all Energy Economics Group, TU Wien Contact Web: developed initially in the period 2002 to 2004 within the research project Green-X (5th framework programme of the European Commission, DG RESEARCH) SEERMAP Meeting Belgrade, 4 May 2017 Slide 1

2 Content RES modelling in SEERMAP: Key assumptions in our modelling exercise on SEE countries a regional approach to support renewables Results on capital and support expenditures a regional approach to support renewables SEERMAP Meeting Belgrade, 4 May 2017 Slide 2

3 : Key inputs to the modelling exercise Key assumptions To ensure maximum consistency with existing EU scenarios and projections the key input parameters of the Green-X scenarios are (as default) based on REKK s EEMM modeling and the (updates of the) Green-X database. Based on EEMM Energy demand by sector Primary energy prices Conventional supply portfolio and conversion efficiencies Defined for this study RES policy framework Reference electricity prices RES cost & learning rates (Green-X database, incl. biomass) RES potential (Green-X database) Biomass trade specification Technology diffusion Financing conditions Main input sources for scenario parameters * SEERMAP Meeting Belgrade, 4 May 2017 Slide 3

4 RES policy concept The policy concept used in our default scenarios A regional policy approach post As default we assumed a regionally harmonised (i.e. for the whole SEERMAP region, including all 9 countries) policy concept for supporting new RES installations post 2020 with this one can take the full benefits of doing it regionally rather than purely nationally, increasing cost-effectiveness and allowing to use renewables there where most beneficial / attractive from a system perspective The required uptake of new RES (installed post 2020) across the SEERMAP region is shown below SEERMAP Meeting Belgrade, 4 May 2017 Slide 4

5 RES policy concept The policy concept used in our default scenarios A regional policy approach post 2020 Different policy concepts for supporting the uptake of RES-electricity are/will be assessed: - Regionally harmonised quota scheme with tradable green certificates technology-neutral, uniform pricing - Feed-in premium scheme with technology-specific auctions for price determination - National quota schemes with tradable green certificates technology-neutral, uniform pricing (to be added to the scenario calculations as sensitivity later on) Sensitivity analysis on the market value of decentralised photovoltaics (i.e. competing on the retail instead of the wholesale market) Are further sensitivity analyses required? for example on the WACC assumptions and these impacts, on energy price trends? SEERMAP Meeting Belgrade, 4 May 2017 Slide 5

6 RES investments No Target scenario: With and without consideration of the higher market value of decentralised photovoltaics PV can compete on the retail market post 2030 (at sites with favourable conditions) even in the absence of dedicated support SEERMAP Meeting Belgrade, 4 May 2017 Slide 6 Figure: Investments in RES (sum over 5 year period) in the SEERMAP region according to the No target scenario with and w/o acknowledging the higher value of decentral PV

7 RES investments Comparison of capital expenditures among all 3 key scenarios SEERMAP Meeting Belgrade, 4 May 2017 Slide 7 Figure: Investments in RES (sum over 5 year period) in the SEERMAP region according to assessed key scenarios (acknowledging the higher value of decentral PV)

8 Some general lessons learnt from recent EU assessments The required financial support post 2020 Moderate dedicated financial support is required for meeting the 2030 RES target SEERMAP Meeting Belgrade, 4 May 2017 Slide 8

9 The value of variable RES exemplified for Albania ca % by 2050 ca % by 2050 Hardly any decline to default SEERMAP Meeting Belgrade, 4 May 2017 Slide 9

10 The required financial support the required net support, incorporating already the merit-order effect (i.e. the benefits of lower wholesale prices in the case of stronger RES deployment) some worst case examples in case of bad policy design: Uniform support for all RES-technologies (in the case of technology-neutral quotas with tradable green certificates) SEERMAP Meeting Belgrade, 4 May 2017 Slide 10 Figure: The extra cost related to RES (support expenditures minus benefits due to lower whole prices (meritorder effect)) in the SEERMAP region according to assessed key scenarios (acknowledging the higher value of decentral PV)

11 The required financial support the required net support, incorporating already the merit-order effect (i.e. the benefits of lower wholesale prices in the case of stronger RES deployment) technology-specific support that meets the required needs: Technology-specific feed-in premiums (price determination through auctions) vs. uniform support for all RES-technologies (in the case of technology-neutral quotas with tradable green certificates) SEERMAP Meeting Belgrade, 4 May 2017 Slide 11 Figure: The extra cost related to RES (support expenditures minus benefits due to lower whole prices (meritorder effect)) in the SEERMAP region according to the No target and the decarbon scenario with uniform support, or with payas-bid tendering (acknowledging the higher value of decentral PV)

12 Thanks for your attention! In case of questions/remarks (or ) SEERMAP Meeting Belgrade, 4 May 2017 Slide 12

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