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D2.5 Analysis of Solar Valleys of Opportunity

Date: February 2012

D2.5 Analysis of Solar Valleys of Opportunity i

Project no.:

IEE/09/999/SI2.558312

Deliverable number: D2.5

Deliverable title: Analysis of Solar Valleys of Opportunity

Work package: WP2

Lead contractor: Ciemat

Logo of the contractor

The sole responsibility for the content of this report lies with the authors. It does

not necessarily reflect the opinion of the European Communities. The European

Commissionis not responsible for any use that may be made of the information

contained therein.

Author(s)

Name Organisation E-mail

Marta Santamaría CIEMAT [email protected]

Natalia Caldés CIEMAT [email protected]

Irene Rodríguez CIEMAT irene.rodrí[email protected]

Dissemination Level

PU Public

PP Restricted to other programme participants (including the Commission Services)

RE Restricted to a group specified by the consortium (including the Commission Services)

CO Confidential , only for members of the consortium (including the Commission Services)

mailto:[email protected]

mailto:[email protected]

mailto:irene.rodrí[email protected]

D2.5 Analysis of Solar Valleys of Opportunity ii

PERFACE/ACKNOWLEDGEMENTS

This document reports activities and results of Task 2.5 of the Intelligent Energy Europe

supported project RES4Less. This work has been conducted on the base of data provided by the

modelling tool RESolve-E. The development and improvement of the tool is the result of the

work carried on by some members of ECN, specially Francesco Dalla Longa and Joost van

Stralen, jointly with Lachlan Cameron and Rodrigo Rivera Tinoco.

This input has been provided by ECN and later, fruitfully discussed with some of its members:

Francesco Dalla Longa, Tjaša Bole-Rentel and Paul van der Oosterkamp, as well as internally

with some members of CIEMAT: Rosa Sáez; Yolanda Lechón and Helena Cabal, to all of

whom we are specially thanked for gathering impressions and ideas with us. The preliminary

results were also shared and enriched by comments from other members of the RES4Less Team

during an internal meeting of the project with the ECN Team and Dierk Bauknecht (Oeko

Institute), Henrik Klinge Jacobsen (DTU), Lise-Lotte Pade Hansen (DTU),, Michael ten

Donkelaar (Enviros). Outside the project consortium, Luís Crespo (Protermosolar) and Sofía

Martínez (IDEA) provided us some invalueable insights on solar-thermal and the use of

cooperation mechanism, respectively.

D2.5 Analysis of Solar Valleys of Opportunity iii

EXECUTIVE SUMMARY

Previous work within Work Package 2 of the RES 4 Less project has allowed to identify the

surplus of renewable electricity (RES-E) potential over the national RES target - specified in the

National Renewable Action Plans (NREAPs) -. The costs and technology composition of the

surpluses have been determined using ECN RESolve-E model, and a set of so-called Valleys of

Opportunity (parts of the identified surpluses that are readily exploitable for cross-border

cooperation via a suitable cooperation mechanisms) has been proposed. A Valley of

Opportunity is typically characterized by a Host country (seller of surplus) and a User country

(buyer of surplus): by buying RES-E from a host country the user country can potentially realize

some cost savings in reaching its NREAP target.

The report presented here analyzes the proposed Valleys of Opportunities from a technological

perspective. Specifically, this report focuses its attention on solar energy, mainly photovoltaic

(PV) and concentrated solar power (CSP), combining the results from the VoO assessment of

task 2.2 with insights from other relevant sources.

The following conclusions can be extracted from the various steps of the analysis conducted:

- Firstly, based on cost data, it can be concluded that the most cost-competitive countries for

solar energy are located in South Europe and Germany and that, from a technology

perspective, PV is more cost competitive than CSP. Morever, PV is expected to reach higher

cost reduction due to learning effects than CSP.

- Secondly, solar surplus is expected to increase over time, going from 11% of total EU

surplus in 2015 to 22% of EU surplus in 2020. In both cases, half of it comes from PV and

the other half from CSP. From a country perspective, the ranking varies depending on the

specific technology. On one side, in 2015 PV surplus is found mostly in Spain and France.

However, by 2020, Spain is no longer a key player while France maintains its leading

position together with Germany. On the other side, CSP surplus shows more of a steady

pathway, since Spain stands as a leading country both in 2015 and 2020.

Going beyond the analysis of the results of Task 2.2, this report also addresses practical

constraints and barriers for the further deployment of solar technologies. Some of them include

legal, administrative, as well as grid infrastructure limitations.

Finally, a first deployment path draft has been outlined as a way to identify those aspects that

should be deeply analyzed in the subsequent case studies that will be conducted in the next

work package of the RES 4 Less project.

D2.5 Analysis of Solar Valleys of Opportunity 1

TABLE OF CONTENTS

Page

1.) INTRODUCTION 6

2.) ANALYSIS OF SURPLUS POTENTIAL ON REGIONAL/COUNTRY

LEVEL

6

2.1. Insights from the NREAPs 6

2.2. Analyses of cost supply curves in solar rich regions & countries 7

2.3. Assessment of surplus potential by country, and region 10

3.) OVERVIEW OF POTENTIAL VoO FOR SOLAR 11

3.1. Geographic overview of most promising VoO for solar 11

3.2. Comparing results from RESolve-E and other sources 14

3.3. Historical and policy development of the identified VoO 15

4.) ASSESSMENT OF CONSTRAINTS ON VoO FOR SOLAR IN

SELECTED COUNTRIES

17

4.1. Specific PV constraints 17

4.2. Specific CSP constraints 19

4.3. Grid constraints 20

5.) DEPLOYMENT PATH FOR VoO SOLAR IN CASE STUDY

COUNTRY

20

6.) CONCLUSIONS 22


1. Introduction Previous work conducted in WP2 of RES 4 Less project has identified, firstly -within task 2.1 -

the amount of RES surplus potential by Member States (MS), that is the excess of renewable

(RES) potential over the national RES target fixed by the RES Directive by combining MS RES

production potential data as well as RES targets and RES production cost for each Member

States. Secondly - within the task 2.2 -, all the information has been integrated in a common

framework analysis with the aim of estimating the Valleys of Opportunity (VoO) for the whole

Europe, that consist on identifying potential host and user countries of RES surplus within EU.

This analysis has been conducted from a country perspective.

The aim of the subsequent tasks 2.3, 2.4 and 2.5 consists on, based on previous results,

conducting the analysis from a specific RES technology perspective. The purpose of these tasks

resides on identifying what are the main countries as well as constraints and opportunities for

each RES technology in order to define tailored deployment pathways. In particular, the current

report (D.2.5) is focused specifically on solar energy technologies, mainly photovoltaic (PV)

and concentrated solar power (CSP).

The first section of this report focuses its attention on analyzing, step by step, data related to

solar surplus for various countries and solar Valleys of Opportunity for both 2015 and 2020.

After conducting this quantitative analysis, a more qualitative analysis has been conducted to

identify potential constraints for solar technologies. Finally, a first draft deployment path has

been elaborated to identify those aspects that should be taken into account in the case studies

implemented in next work package.

2. Analysis of surplus potential on regional/country level

2.1. Insights from the NREAPs

As a first step, the information from National Renewable Action Plans (NREAP´s) and data

related to RES cost production (see Deliverable 2.1. of RES 4 Less project), has been combined

in order to identify those countries expected to have a solar surplus (that is excess solar

production potential over their national targets). Figure 1 shows results for those countries

forecasted to have solar technologies surplus - considering PV and CSP, but also thermal energy

-. As can be seen in Figure 1, Germany has the highest solar excess potential (4,804 KToe),

mainly from PV (3,559 KToe) but also from thermal energy (1.245 KToe). Spain also shows

high solar excess potential (1320 KToe) from CSP technology.

On the other side, Italy and Luxembourghave reported a deficit to achieve their RES production

2020 targets, and are therefore potential candidates to purchase (part of) the solar excess from

the countries displayed in Figure 1.


0

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Bugaria Denmark Germany Spain Lithuania Hungary Slovakia Sweden

Solar

excess

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PV

CSP

Thermal

Figure 1. Solar excess potential by country, based on NREAP´s and cost data [KToe]

2.2. Analysis of cost supply curves in solar rich regions & countries

As a second step, cost supply curves for solar electricity throughout EU have been analyzed,

both for 2015 and 2020. This analysis has been conducted on the same cost supply curves that

were used in the modelling exercise of RES 4 Less task 2.2. Figure 2 shows the cost of

electricity production for PV and CSP throughout EU in 2015 and 2020, compared with the PV

cost supply curve in 2010. By comparing PV cost curves in 2010 and 2015, a significant

increase in PV production as well as a decrease in costs is expected to be reached from 2010 to

2015. As a proof of this improvement, Figure 2 shows that the inflection point in the 2010 PV

cost curve is around 15.000 GWh, while in 2015 that point is displaced to the level of 40.000

Gwh. Comparing PV and CSP cost curves in 2015, results show that CSP cost production is

significantly higher than PV. Besides, Figure 2 shows that in both cases (PV and CSP),

comparing the 2015 and 2020 curves, it can be concluded that the production capacity is

expected to increase significantly (especially for PV), and that costs are expected to decrease.

Figure 2. PV and CSP cost of electricity production in EU in 2015 and 2020 [€ct/kWh]

The amount of PV electricity produced by country in 2015 is displayed in Figure 3. In order to

analyze this information, seven different cost ranges have been considered: [i] from 9 to 12

PV-2010 PV-2015

PV-2020

CSP-2015 CSP-2020

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c€/kWh; [ii] from 12 to 15 c€/KWh; [iii] from 15 to 18 c€/KWh; [iv] from 18 to 21 c€/KWh;

[v] from 21 to 30 c€/KWh; [vi] from 30 to 40 c€/KWh and [vii] over 40 c€/KWh. As expected,

most countries displaying the lowest solar cost are located in South-Europe, mainly Spain, Italy,

Greece and Portugal. Nevertheless, there are other countries outside this area with low

generation cost such as Germany and France. Regarding CSP production, by 2015, Spain is

expected to be the only producer of electricity from CSP (24,960 MWh).

Figure 3. Contribution by country to the PV cost curve in 2015 [GWh]

The estimated amount of electricity produced by PV in each country is displayed in Figure 4.

As can be seen, as result of learning effects, a new cost range (7-9 c€/KWh) has been added in

2020. As in the previous analysis, countries that play a relevant role and could potentially

produce a significant amount of solar energy at a competitive cost are: those located in

Southern-Europe, but also Germany and France figure as competitive countries in PV

production. UK could also be included in the same MS group of relevant PV producers. As in

the previous analysis, by 2020, the total expected electricity produced by CSP is provided by

Spain.

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Figure 4. Contribution by country to the PV cost curve in 2020 [MWh]

2.3. Assessment of surplus potential by country, and region

Based on the results from task 2.2, Table 1 and Figure 5 shows the evolution of total solar

surplus throughout the studied period and its share compared to the total renewable electricity

surplus according to the NREAPS. By 2015 solar surplus will reach 13 GWh (5 GWh of PV and

8 GWh of CSP) and by 2020, 36 GWh (18 GWh of PV and 18 GWh of CSP).

Table 1. Solar and total UE surplus [TWh]

2015 2020

PV surplus 5 18

CSP surplus 8 18

Total solar 13 36

Total EU surplus 119 163

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Contribution by country to each cost range [MWh]

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Figure 1 / Solar and other technologies surplus [GWh]

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Other tech. surplus

CSP surplus

PV surplus

Figure 5. Solar and total EU surplus [TWh]

Analyzing the results in relative terms (Table 2), it could be concluded that solar energy could

represent 22% of EU total surplus by 2020, half of it from of CSP (11%) and half from PV

(11%).

Table 2. Solar surplus over total EU surplus [%]

2015 2020

PV surplus 5% 11%

CSP surplus 6% 11%

Total 11% 22%

Analyzing the surplus from a geographic perspective (Figure 6), EU solar surplus will be

mostly originated:

- In case of PV, by 2015, Spain stands as the country with the highest surplus (71%),

followed by France (20%). In contrast, by 2020 Germany stands as the country with the

highest surplus (67%) followed by France (28%). One possible explanation to this change

lies in that total German RES potential in 2015 is supposed to be used to cover its own

RES target, thus, having a reduced surplus. Over the next period 2015-2020, Germany is

expected to have a great increase in its RES potential, thus allowing for significant increase

of its surplus.

- In case of CSP, both 2015 ad 2020 surplus will be exclusively in Spain (100%).


Figure 2a / PV surplus, contribution by country [GWh]

France;2

France,

6

Germany

33

Spain

7

Spain; 1

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Spain;

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2010 2015 2020

Figure 6. Contribution to solar surplus, country by country in 2015 and 2020 [TWh]

a) PV

b) CSP

3. OVERVIEW OF POTENTIAL SOLAR VoO

3.1. Geographic overview of most promising VoO for solar

a) Pair-wise analysis

Based on the previous analysis where the main “host countries” for solar technologies have

been identified, this section presents potential “user countries” for the solar surplus production.

The results are based on the pair-wise analysis carried out within task 2.2 of RES 4 Less, where

candidate VoOs have been identified by comparing the cost supply curves of each possible pair

of Member States in EU.


PV VoO in 2015

- Spain: Figure 7 shows the potential user countries for Spanish PV surplus in 2015.

Potential user countries interested in purchasing a significant amount of PV energy from

Spain would be: Belgium (3.8 TWh); Germany (3.8 TWh); Greece (3.8 TWh); Poland (3.8

TWh); Portugal (3.8 TWh); UK (3.8 TWh); Denmark (3.2 TWh); Italy (3.2 TWh); Czech

Republic (2.6 TWh); Netherlands (2.6 TWh); Bulgaria (2.1 TWh); Romania (1.2 TWh) and

Luxembourg (0.3 TWh).

PV - 2015: Spain as a host country

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Figure 7. Potential user countries for Spain PV VoO in 2015 – Pair wise analysis [TWh]

- France: The only potential user country for the PV surplus of France in 2015 is Germany

(0,9 TWh).

PV VoO in 2020

- France: Figure 8 shows the potential user countries for French PV surplus by 2020.

Potential user countries possibly interested in purchasing a significant amount of PV

energy from France are: UK, 5,1 TWh; Netherlands, 5,1 TWh; Poland, 4,4 TWh; Germany,

3,5 TWh; Greece, 3,5 TWh; Belgium, 2,7 TWh; Spain, 2,7 TWh; Italy, 2,3 TWh; Portugal,

2,3 TWh. Others with a minor amount are: Austria, 0,7 TWh; Bulgaria, 0,7 TWh; Czech

Republic, 0,7 TWh; Denmark, 0,7 TWh; Estonia, 0,7 TWh; Hungary; 0,7 TWh; Ireland,

0,7 TWh; Cyprus, 0,4 TWh; Slovak Republic, 0,4 TWh.

PV - 2020: France as a host country

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ublic


Figure 8. Potential user countries for France PV VoO in 2020 - Pair wise analysis [TWh]

- Germany: Figure 9 shows the potential user countries for the PV surplus of Germany in

2020. Potential user countries interested in purchasing a significant amount of PV energy

from Germany are: UK, 10.5 TWh; Netherlands, 6.4 TWh; Belgium, 3.2 TWh; Greece, 3.2

TWh; Poland, 3.2 TWh; Portugal, 3.2; Spain, 3.2 TWh; Italy, 2.3 TWh.

PV - 2020: Germany as a host country

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Figure 9. Potential user countries for Germany PV VoO in 2020 - Pair wise analysis [TWh]

CSP VoO

- Spain-2015: Figure 10 shows the potential user countries for CSP surplus of Spain, both in

2015 and 2020. Potential user countries interested in purchasing a significant amount of

CSP energy from Spain in 2015 are: Germany, 1.2 TWh; UK, 1.2 TWh.

- Spain-2020: Figure 10 shows the potential user countries for CSP surplus of Spain, both in

2015 and 2020. Potential user countries interested in purchasing a significant amount of

CSP energy from Spain in 2020 are: Greece, 9.4 TWh; Netherlands 4.7 TWh; Poland, 4.7

TWh; Bulgaria, 2.4 TWh; Czech Republic, 2.4 TWh; Portugal, 2.4 TWh. CSP: Spain as a host country

0.0

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2015 2020

Figure 10. Potential user countries for Spain CSP VoO in 2015 & 2020 - Pair wise anal.

[TWh]


b) Global analysis

Besides the pair-wise analysis, In RES 4 Less task 2.2 also a complementary global analysis

has been carried out, where candidate VoOs have been determined by constructing a cost supply

curve for EU as a whole, and allocating the cheapest surpluses to replace the most expensive

RES-E options. The results reported in this section build on the outcome of the global analysis.

Global analysis in 2015

Figure 11 shows results from the global analysis for solar technologies in 2015. As can be seen,

potential host countries are France, Spain and Austria. PV is the only solar technology that

appears to be object of transaction. On the other side, potential user countries that reduce their

PV potential production are Germany, Poland and UK.

Global Analysis 2015: Eligible RES-E Potential -

Solar Breakdown

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PV

User CountriesHost Countries

Figure 11. Potential user & host countries for solar energy in 2015 – Global analysis [TWh]

Global analysis in 2020

Figure 12 shows the global analysis results for solar technologies by 2020. As can be seen,

potential host countries are France and Germany, both from PV energy. On the other side,

potential user countries that could reduce their solar production by purchasing cheaper RES

potential elsewhere are Spain (by reducing its CSP production) and UK and Poland (by

reducing their PV production).


Global Analysis 2020: Eligible RES-E Potential -

Solar Breakdown

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Figure 12. Potential user & host countries for solar energy in 2020 – Global analysis [TWh]

3.2. Historical and policy development of the identified VoO

This section is intended to analyze the modelling results in the context of the RES historical

development and policy support in each of the potential host countries identified: Germany,

France and Spain.

PV results

Since 2000, PV production worldwide has experienced a rapid increase. Nowadays, Asia stands

as the highest producer (more than 60%) and Europe is the leader in terms of renewable energy

investment, mainly due to the increased investment in small-scale solar installations in Germany

and Italy.

As described by the Joint Research Centre (JRC, 2011), in the last decade, Europe has

experienced a rapid increase of generation capacity from 185 MW in 2000 to 29.5 GW in 2010.

Last year, PV capacity was nearly doubled thanks to the installation of 13.5 GW (Figure 13).


Source: JRC (2011)

Figure 13. Annual photovoltaic installations from 2000 to 2010 [MWp]

This section will focus on the analysis of the historical and policy context of the countries

identified in the last section (JRC, 2011):

- France: After the great increase of capacity experienced in 2010 (720 MW, reaching a

cumulative capacity of 1.05 GW), feed-in scheme was revised in February 2011: [i] a cap

of 500 MW for 2011 and 800 MW for 2012 was set up, and [ii] new tariffs were fixed:

0.29-0.46 €/kWh for roof-top, depending on the categories; and 0.12 €/kWh for the rest.

- Germany: The market growth of PV sector in Germany is due to the feed-in system

introduced by the Renewable Energy Source Act in 2000. The guaranteed tariff for 20 years

from PV systems has a fixed built-in annual decrease that has been reduced over time on the

base of price reductions due to high growth rates. By 2010, Germany had the largest

installed capacity in EU (7.4 GW) and the the market experienced two peaks of installation:

in June, 2.1 GW and December, 1.2 GW. Both peaks are prior to the 13% feed-in tariff

reduction that took effect in July 2010 and January 2011. Cumulative reduction of feed-in

tariff during 2010 reached 33-36%.

- Spain has the second cumulative installed capacity in Europe (with 3.9 GW), most of it

installed in 2008 (2.7 GW). This increase was a consequence of an increase of feed-in tariff

set in 2007. Given the rapid unforeseen expasion, in autumn 2008, the Spanish Government

introduced a cap of 500 MW in the yearly installation and a reduction in feed-in tariffs. As a

result of the new legal framework, 100 MW of capacity were installed in 2009 and 380 MW

in 2010. At the end of 2010, the Spanish Government limited the feed-in tariffs to 28 years

and fixed a limit of hours to which feed-in tariffs could be given. Both changes affect

installed plants, so the PV sector has taken legal actions on the base of retroactivity.


CSP results

As described by ESTELA (2009), technical viability of CSP technology has been demonstrated

since the early 80´s, mainly by the operation of two plants located in Almería (Spain) and

Albuquerque (U.S.A.). Commercial development of CSP started on the second half of 80´s with

the installation of nine plants (400 MW) in the Mojave Desert (California). During the 90´s the

deployment of CSP stopped due to the lack of effective supporting systems. This situation

changed with new requirements in some states of the U.S.A. and the new feed-in tariff system in

Spain. Yet, since 2000, several test loops of real size were installed in the U.S.A and Spain to

provide financial institutions with technical evidence in terms of feasibility and performance.

Thanks to these changes and the R&TD programs carried out in several countries (Germany,

Spain, Italy, U.S.A., etc.), in mid 2007 operation of a plant with a new generation of parabolic

trough collectors in Nevada (USA) (64 MW) and the first commercial power plant of a central

receiver in Seville (Spain) (10 MW) started. Since the end of 2008, the first European parabolic

troughs plant with storage is operating successfully in Granada (Spain).

The Spanish feed-in tariff system provided the right incentives to many Spanish companies to

participate in solar thermoelectric projects. Partly due to past and current favourable Spanish

regulatory scheme as well as due to optimum climatic conditions, a remarkable promotion of the

solar thermal industrial activity has taken place in Spain. As stated by the Royal Decree (RD

661/2007), a 0.27€/KWh fare1 for the electricity generated by solar thermal technologies, added

to the possibility to construct mixed plants with gas2, has generated a great interest for solar

concentration technologies among investors and the Spanish industrial sector. Since the

construction of the first CSP plant in 2006, a rapid increase of projects has taken place. As a

result of it, by the end of 2010 total installed capacity reached 632MW, most of them parabolic

trough (95%) but also some central receiver plants. Moreover, the recently approved Spanish

Renewable Energy Plan 2011-2020 considers a solar thermal installed capacity of 4.800 MW by

2020. Its associated energy production amounts to 14.379GWh, which accounts for

approximately 10% of the total RES (renewable energy sources) energy forecasted production

by 2020. Based on national NREAP´s, other countries forecasted an increase in its CSP capacity

by 2020: Italy (600 MW); Portugal (600 MW); France (540 MW) and Greece (250 MW).

1 The RD 661/2007 established that solar thermal producers can choose between: [i] obtaining a fix fare of

0.27€/KWh for the energy or [ii] selling it in the electricity market, taking in the price paid for the energy in the

market plus a 0.25 €/kWh premium - with a minimum turnover (considering the price of the market and adding

the premium) guaranteed of 0.25 €/kWh and a maximum limit of 0.34 €/kWh. 2 Between 12% to 15% to compensate for any heat losses during the process.


4. Assessment of constraints on VoO for solar in selected countries

4.1. Specific PV constraints

The European project PV LEGAL, supported by Intelligent Energy Europe programme, has

identified some of the most relevant administrative hurdles for PV systems. This section

summarizes some of the main barriers detected by PV LEGAL project for Spain; France and

Germany.

Germany - Medium and large-scale ground installations3

Site selection and administrative barriers:

- Granted feed-in tariff limited to areas with an urban development plant. Additional requirements

in case of urban development plan created or altered after 1/9/2003.

- Installation limited to ecologically less valuable areas.

- Long time invested in searching optimum areas for installation and in negotiations with the

owners of areas of the future installation.

- Prohibition of installation in certain areas marked in the Germany Renewable Energy Law

(EEG).

- Long process when the urban and land plans are modified: preliminary planning permission by

the municipal council and then, various municipal council meetings.

Grid connection permit barriers:

- Technical standards for grid safety 4 have been criticized by planners, installers and operators.

- Network operators are not complying with the obligation of expanding their networks envisaged

on the German Energy Industry Law.

- Problems for medium-small systems in rural areas with lines in poor conditions because the

EEG Law established that the extension is considered reasonable when its costs do not exceed

25% of commissioning up the system.

Grid connection and operation barriers:

- Slow and expensive proceedings.

- Critical problems with the application of a connection point.

- Problems with the allocation of the technically and economically most favourable connection.

- The procedure of connecting to the grid is not completely regulated, so grid operators have a

margin to make the connection of a system more difficult.

- Appearance of disputes about when feed-in tariff payments are made.

Corporal legal-fiscal barriers:

- Some municipalities refuse to allow PV settlement arguing unclear distribution of revenEUs

from business tax and no economic benefits from granting a license.

- In most cases, modifications of land or urban development plans are required for granting feed-in tariff payments.

Source: PV LEGAL project (Persem et al., 2011)

3 It should be noted that barriers in Germany are not as severe as in Spain or France, but still remain high

barriers. 4 Defined by FNN committee (Forum Network Technology/Network)

http://www.pvlegal.eu/en/glossary.html?tx_sbakronymmanager_pi1%5Bpseudo%5D=true#sbakronymmanager48




Spain - Medium and large-scale size installations (>10 MW)

Site selection barriers:

- Limited to municipalities within the General Urban Plan.

- Problems in the evacuation to the electrical network, which is often saturated

Administrative process barriers:

- Complex and time-consuming permitting procedures related to small systems.

- Delays in the response from Authorities.

Grid Connection Permit barriers:

- Opacity in the information from electricity retailers regarding the capacity of energy evacuation.

- Delays in obtaining a response from electricity retailer.

- High connection costs by electricity retailers (sometimes unjustified).

- Fixed study costs by some electricity retailers (expensive for small projects).

Support scheme barriers

- The payment of works licence and the guarantee is required before obtaining the assignment, so

the risk of non-allocation must be considered.

- Uncertainty on future retribution: inclusion in the Pre-registry depends on the quantity of

systems in the waiting list.

Financing barriers

- Many problems exist when looking for financing sources (especially for small systems).

Electricity production barriers

- Problems with concession of access and connection to transmission or distribution grid often

dEU to high saturated points -especially in low voltage grids-.

Source: PV LEGAL project (Collado and Dólera, 2011)

France – Medium and large-scale ground installations (4,5-12 MWp)

Site of selection barriers:

- Livestock Operation Permit (LOP) has to be modified in case of agricultural areas.

Administrative process barriers:

- Appeal by a 3rd

party against the building permit: it could be made within 2 months counting

from the notification of the building permit. In case of a 3rd

party appeal, the administrative

court is referred and the permit risks being annulled.

- Feed-in tariff is restricted to <12MWp installations.

Grid connection permit barriers:

- Technical constraints relative to grid reception capacity.

- The time required since the start of the project to its connection could range between 39-220

weeks. Grid management procedures are very time consuming, being one of the main reasons of

the delays.

Grid connection & operation barriers:

- Several difficulties in introducing the installation with respect to the grid. The metre point must

be on the edge of the property, the connection works between the PV installation and the metre

point are borne by the owner.

Source: PV LEGAL project (Roland, S. and Elamine, W., 2011)



4.2. Specific CSP constraints

Based on the CSP contribution to sustainable energy analysis conducted by EASAC(2011) ,

some of the barriers for this technology are:

Technology barriers:

- Higher R&D is need in the search of new materials. There is scarce implementation of

innovate mechanisms in certain fields as compressed gas as heat transfer fluid; molten salt

for storage for parabolic troughs, etc.

- The complexity and risk associated to the operation and maintenance of the plant is so high

that it is required that more than one company back up the contractual agreement of this

service.

- Sometimes it is argued that CSP (with or without storage) has little contribution to electric

system stabilization services, referred to regulation5 or non-spinning reserves

6 services

(Sioshansi and Denholm, 2010).

- Preferred locations for CSP plants are arid places due their high solar resource. On the other

side, CSP installations use a significant amount of water, due to their cooling system

requirements. Unfortunately, as water availability in arid locations is low, it is desirable to

reach an improvement in performance of air cooling systems in order to reduce water

consumption by CSP plants.

- Despite the rapid expansion of solar trough and more recently tower system, commercial

application of other technological options as Linear Fresnel and parabolic dishes has not

been reached yet.

Economic and market barriers

In general terms, one of the main challenges of CSP is to reach a significant reduction on costs

and, simultaneously, to do it in a short period of time. Half of this reduction is expected to come

from technology developments and half, from economies of scale and volume production. At

the same time it is necessary to set up mechanisms to control the true value of electricity to the

grid and the ensure transparency of cost data. Besides, appropriate design of funding schemes

could contribute to improve competitiveness of CSP. More specific issues are mentioned below:

5 The inherent storage in the steam generator is small and the inertia of other plant components

prevents a sufficiently fast response. 6 CSP plant will be running and delivering electricity, not keeping in reserve, or if shut-down may not

be able to be started up quickly enough.


- CSP costs are highly dependent on plant characteristics. In this sense, it is necessary to

collect site and plant specific data to conduct a profitability analysis:

Annual production depends on: technology; size of the plant; availability of solar

resource and storage capacity.

Engineering, Procurement and Construction (EPC) costs depends on: technology

choice; site conditions or land cost.

Operation and maintenance costs (O&M) depend on: technology; site or availability of

water.

Project development costs depend on: characteristics of the country; legal framework;

currency exchange risks and tax and customs duties.

- Solar field installation costs are relatively high.

- It is difficult to quantify some additional cost as impact on landscapes; specific

charges on water or displacement of agriculture.

- There is no consensus on the potential impact on costs reduction due to increases in

scaling plants.

- Related to profitability analysis of CSP plants data have to be collected at plant

level, but also at energy system level. With this regard, Nagl et al. 2011 have

shown, for example, that with current economic cost it is not worthy to invest on

storage system, at least in the short-medium term. This is due to opportunity cost of

storing energy instead of selling it during price peaks.

4.3. Grid constraints

As indicated by ENTSOE (2010) in their Network Development Plan 2010-2020, the main

investment needed in the South-West of Europe is the interconnection between France and

Spain. Currently, the Iberian Peninsula only has four tie-lines that are continually congested.

France and Spain have the goal to increase their transfer capacities: to 2800 MW in the short

term and 4000 MW in a long term.

On the other side, the ambitious renewable plans in Portugal and Spain need an important

investment in transmission infrastructure. Portugal and Spain have the goal to avoid current

congestions and improve the Iberian Electricity Market (MIBEL) increasing their Net Transfer

Capacity (NCT) up to 3000 MW.

This problem also applies outside the Iberian Peninsula. Some of the most important flues that

can be developed are: France-Italy (where most of the networks are congested); France-

England; France-Belgium. Germany has long energy flues from the North to the South. Also

there are interconnection flues between Germany and south countries (mainly Italy) that

contribute to improve the cross border capacity.


5. Deployment path for VoO for Solar in case study region

Based on the considerations above, the following steps have been identified to implement a case

study related to solar VoO:

i. Identification of host-user pair of countries.

In the context of the RES 4 Less project, and taking into account the strong status reached by

PV technology in a short period of time, it seems more innovative to explore those possibilities

linked to CSP deployment. In this sense, the case study will be focussed on Spain as the most

probable candidate to become a CSP host country (given the current deployment of the

technology). With regards to user countries identified in the section devoted to CSP VoO

(Figure 10), and focussing the attention on the long term (2020), Greece figures as one of the

main potential host countries. Nevertheless, taking into account the current difficulties of the

Greek economy, it seems convenient to focus the attention on an alternative country as

Netherlands. Consequently, the case study will analyze the potential attractiveness of RES

cooperation agreements between Netherlands and Spain.

ii – Identification of the institutions that will be engaged in negotiating process.

The following institutions should be involved: [i] a public department or agency that works in

the energy sector and [ii] an independent institution with the capacity to certify.

At this moment in time, these kinds of institutions have been identified for the case of Spain:

- National Institute of Diversifying and Saving Energy (IDAE) will act as the public agency

devoted to participate in the cooperation mechanisms negotiating process.

- National Commission of Energy (CNE) will be responsible of certifying the content of

final agreements.

iii – Determine which kind of cooperation mechanism will be used.

After discussing about the different cooperation mechanisms during the Stakeholder

Consultation Meeting in Madrid, representatives from the Spanish National Institute of

Diversifying and Saving Energy (IDEA) transmit that Spain is not interested on the

implementation of statistical transfer or joint support scheme. In this sense, joint projects stands

as the most probable option to implement cooperation mechanism in Spain. The pros and cons

of each cooperation mechanism should be deeply analyzed (Klessman, 2010) in the subsequent

case study that will be conducted in the next work package of the RES 4 Less project.

iv – Estimate the overall cost of the transaction.

In order to reach an agreement, the direct costs and all the associated or indirect costs will be

estimated. In the field of indirect costs, the potential environmental impact associated to more

carbon intensive energy mix for the user country stands out. Moreover, other indirect cost as

deterioration of energy security and not deploying local RES industry in the user country will be

analyzed. These kinds of externalities will be taken into account in the case study, both for user

and host country, in order to inform the potential negotiation process.

One additional challenge in all bilateral negotiations is the fact that most of those indirect costs

and benefits are often hard to identify, quantify and let alone monetize. Previous research shows

that there are various methodological approaches that can help policy makers in this endeavour.

With regards to environmental impact, depending on the pollutant: [i] GHG emissions can be


estimated through carbon markets, and [ii] other environmental externalities through the

"impact pathway approach" (EC, 2005). Finally, socio-economic impacts can be estimated

trough input-output analysis (Withley et al., 2004, Hillebrand et al., 2006, Caldés et al. 2009) or

similar approaches (Ragwitz et al., 2009). Additional aspects as, the cost of integrating RES in

the system requires two different estimations: [i] the cost of system operation, estimated

through the additional capacity needed to maintain system security and [ii] the grid

reinforcement cost, estimated through load flow simulations of national transmission and

distribution grids (Auer et al., 2006).

v – Analyze additional aspects.

Finally, other very relevant aspects (i.e. associated risk and technical requirements such as grid

capacity, etc.) will be carefully analyzed.


6. Conclusions

The analysis conducted in previous tasks 2.1 and 2.2 of WP2 shows that, based on insights from

NREAPs and given German´s PV and Spain´s CSP surplus potential, Germany and Spain stand

as potential donors of PV and CSP, respectively. When the scope of the analysis is broadened

by including cost data, it appears that the most cost-competitive countries for solar energy

production are located in South Europe and Germany. When comparing technologies, it could

be concluded that PV is more cost competitive than CSP and also it is expected to reach higher

cost reduction due to learning effects.

Summarizing, when taking into account total RES surplus in EU, the assessment shows that:

- By 2015, 11% of total EU surplus will come from solar sources. In regional terms, most of

PV solar surplus will be concentrated in Spain and France. In the case of CSP solar

surplus, all of it will come from Spain.

- By 2020, 22% of total EU surplus will be originated from solar sources. In regional terms,

most of PV solar surplus will be concentrated in Germany and France. In the case of CSP

solar surplus, Spain continue to be the leading country.

When the integration of cost data and Member States RES targets is taken into account in the

analysis to identifying potential Solar Valleys of Opportunity (that means to detect potential host

and user countries of RES targets), results indicate the following:

- Firstly, when conducting the pair wise analysis and focusing the attention on PV

technology, results show that by 2015, the main host countries are: (i) Spain - with

Belgium, Germany, Greece, Poland, Portugal and UK as potential user countries - and (ii)

France -with Germany as potential user country. When looking at 2020, the scene

changes, as Spain does not appear as potential host country for PV. By 2020 (i) Germany

emerges with a great surplus potential in 2020 - with UK and Netherlands as potential users

-, and (ii) France maintains its position as potential host country in 2020 - with UK, the

Netherlands, Poland, Germany and others as potential user countries.

- Secondly, by conducting the pair wise analysis and focusing the attention on CSP

technology, results highlight that both by 2015 and 2020, Spain stands out as the only host

country of CSP in EU. Potential user countries will change from 2015 - with Germany and

UK as main candidates -, to 2020 - in which Greece, the Netherlands and Poland appear as

main potential user countries.

- Thirdly, when conducting the global analysis and focusing the attention on solar

technologies, results highlight that by 2015 Spain and France stand out as main host

countries, both as PV producers. On the other side, Germany appears to be a user country

by reducing its own PV production. Morevoer, and similarly to the pair-wise analysis

results, by 2020, France and Germany stand as main host countries, both as PV producers

and Spain figures as a potential user country by reducing its CSP production.

After conducting this quantitative analysis, a more qualitative review has been conducted to

identify potential constraints for the development of solar technologies. Some legal;

administrative and grid barriers for PV and CSP have been identified in those countries with a

higher solar resource, i.e. Spain, France and Germany.

Finally, a first draft deployment path has been conducted in order to identify those countries,

authorities, type of mechanism, cost-benefits and additional aspects that should be taken into


account and more deeply analyzed within the case studies that will be implemented in the next

work package of the RES 4 Less project.


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