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RENEWABLE ENERGY FOR EUROPE - RESEARCH IN ACTION

MARIO RAGWITZ

Dr Mario Ragwitz studied at the

universities of Dsseldorf, Waterloo

and Heidelberg, and holds a PhD in

physics. He is head of renewableenergy at Fraunhofer ISI, responsible

for developing optimum promotional

strategies for renewable energy and

modelling energy systems withrenewable sources in the European

Union. Among other things he is

project coordinator of the official EU

project analysing renewable energydevelopment in the EU-25 member

states until 2020 (FORRES 2020).

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Potential of renewable energytechnologies

Mario Ragwitz*, Gustav Resch, Claus Huber, Thomas Faber

*Fraunhofer Institute Systems and Innovation ResearchDepartment: Energy Policy and Energy Systems

Energy Economics Group (EEG), Vienna University of Technology

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Potential of renewable energy

technologies

8 Current status and future potential of RES

9 in the electricity sector

9 in the heat sector

9 in the transport sector

8 Future potential of RES and general policy setting

8 Scenario on the evolution of RES in Europe up to 2020

based on the model Green-X

outcomes of the projects OPTRES & FORRES 2020

9 General assumptions & methodology

9 Key results

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Current status&

future potential of RES up to 2020

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1995 2000 2005 2010 2015

Historicaldeployment

Theoretical potential

E

lectricitygen

eration

Economic Potential

Technical potential R&D

2020

Definition of theDefinition of the (additional)(additional) realisablerealisable

midmid--term potentialterm potential(up to 2020)(up to 2020)Definition of potential terms

Theoretical potential ... based

on the determination of the

energy flow.

Technical potential based on

technical boundary conditions

(i.e. efficiencies of conversion

technologies, overall technical

limitations as e.g. the available

land area to install wind turbines)

Policy,

Society

additionaladditional

realisablerealisable

potentialpotential

for 2020for 2020

achievedachieved

potentialpotential

20042004 (2001)(2001)

Realisable potential Th

realisable potential represents thmaximal achievable potentia

assuming that all existing barrier

can be overcome and all drivin

forces are active.

Thereby, general parameters a

e.g. market growth rates, plannin

constraints are taken into accoun

in a dynamic context i.e. th

realisable potential has to refer t

a certain year.

Maximal time-

path for

penetration(Realisable

Potential)

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MidMid--term realisable potential for RESterm realisable potential for RES--E in EUE in EU--2727

Achieved Potential

at the end of2004

Additional Potential

up to 2020

Hydro large-scale 63,7%

(Solid)

Biomass

6,7%

Wind

onshore

14,2%

Hydro small-

scale

8,6%

Biogas

2,6%Wind

offshore

0,4% Biowaste

2,4%

Geotherma

electricity

1,2%

Photovoltaics0,2%

478.5 TWh

Hydro large-

scale 63,7%

(Solid)

Biomass

26,9%

Wind

onshore

18,8%

Hydro small-

scale

2,0%

Biogas

9,0%Wind

offshore

20,8%

Biowaste

2,3%

Geotherma

electricity

0,3%Tide & Wave

10,1%

Solar thermal

electricity

2,4%

Photovoltaics

2,6%

1237.3 TWh

4.8%

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0

50

100

150

200

250

300

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 BG RO

RES-E-

Elec

tricitygenera

tionpo

ten

tia

l[TWh]_

Achieved potential 2004

MidMid--term realisable potential for RESterm realisable potential for RES--E in EUE in EU--2727

EU 27:EU 27: achievedachieved potential 2004 478.5potential 2004 478.5 TWhTWh

Additional potential 2020

additional potential 2020 1237.3additional potential 2020 1237.3 TWhTWh

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MidMid--term realisable potential for RESterm realisable potential for RES--EEon country levelon country level

related to consumptionrelated to consumption

SE

FI

EE

LA

LT

NO

PL

CZSK

BL

ROHU

ATCH

DE

DK

UKIE

ESPT

IT

MTCY

GR TR

SI HR

BY

UA

FYBA

MK

MDFR

NL

BE

LU

RU

Share of total RES-E

potential on gross

electricity consumption

2020

(BAU scenario-Energyand Transport Outlook)

> 70%

60-70%

50-60 %

40-50%

30-40%

20-30%

10-20%

< 10%

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MidMid--term realisable potential for RESterm realisable potential for RES--H in EUH in EU--2727

Biomass heat

(grid) 38,7%

Geothermal heat

(grid) 1,2%

Biomass heat (non-grid)

58,2%

Heat pumps0,9% Solar collectors1,0%

51 Mtoe

Achieved Potential 2001

Biomass heat (grid)17,4%

Geothermal he

(grid) 2,2%

Biomass heat

(non-grid)27,5%

Heat pumps24,2%

Solar collectors

28,7%

133 Mtoe

Additional Potential 2020

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MidMid--term realisable potential for RESterm realisable potential for RES--H in EUH in EU--2727

EU 27:EU 27: achievedachieved potential 2001 51.3potential 2001 51.3 MtoeMtoe

additional potential 2020 133.2additional potential 2020 133.2 MtoeMtoe

0

5

10

15

20

25

30

35

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 BG RO

RES

-Hheatgene

rationpotential[Mtoe]


Achieved Potential 2001

Mid li bl i l f RES H

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MidMid--term realisable potential for RESterm realisable potential for RES--HHon country levelon country level


SE

FI

EE

LA

LT

NO

PL

CZSK

BL

ROHU

ATCH

DE

DK

UKIE

ESPT

IT

MTCY

GR TR

SI HR

BY

UA

FYBA

MK

MDFR

NL

BE

LU

RU

Share of total RES-H

potential on gross heat

consumption 2020

(BAU scenario-Energy

and Transport Outlook)

> 80%

70-80%

60-70 %

50-60%

40-50%

30-40%

20-30%

< 20%

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MidMid--term realisable potential for RESterm realisable potential for RES--T in EUT in EU--2727

EU 27:EU 27: achievedachieved potential 2003 1.6potential 2003 1.6 MtoeMtoeadditional potential 2020 48.0additional potential 2020 48.0 MtoeMtoe

0

2

4

6

8

10

12

AT

BE

DK

F

I

FR DE

GR IE

IT

LU NL

PT

ES

SE

UK

CY

CZ

EE

HU LA

LT

MT

PL

SK

S

I

RES-T

-Transport

fue

lpro

ductionpo

ten

tial[

Mtoe

]


Achieved potential 2003

MidMid t li bl t ti l f RESt li bl t ti l f RES TT

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MidMid--term realisable potential for RESterm realisable potential for RES--TTon country levelon country level


SE

FI

EE

LA

LT

NO

PL

CZSK

BL

ROHU

ATCH

DE

DK

UKIE

ESPT

IT

MTCY

GR TR

SI HR

BY

UA

FYBA

MK

MDFR

NL

BE

LU

RU

Share of total RES-T

potential on gross fuel

consumption 2020

(BAU scenario-Energy

and Transport Outlook)

> 40%

30-40%

25-30 %

20-25%

15-20%

10-15%

5-10%

< 5%

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RES potential and energy policy

Scenario on the evolution of RES up to 2020

based on the model Green-X

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RES potentials in the future are a function of time

as well as ofpast and present policies!

High future potentials can only be developed bypromoting a broad spectrum of technologies at

an early stage!

The dynamic efficiency of any RES policy depends

strongly on the diversity of the technologyportfolio promoted at an early stage (technologylearning)!

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The dynamic influence of the promotion schemeThe dynamic influence of the promotion scheme

Technology A

Technology B

Techno-

logy ATechno-

logy B

Technology A + BTechnology A + B

time time

MCA < MCB

Simultaneous promotion of

technologies A+B

Promotion of most cost efficienttechnologies

t t

RES-E

dep

loymen

t

RES-E

dep

loymen

t

Exploitation

of full potentialExploitation of full potential

El t i itEl t i it EUEU 2525Policy optimisationPolicy optimisation

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Business-as-usual(BAU)

Continuation of current

national policies

up to 2020

Improved national

policies

Efficient & effective

national policies

NO HARMONISATIONNO HARMONISATION HARMONISATION IN 2015

Technology-specific

support

Feed-in tariffs

- harmonised

Non technology-specific

support

Quota obligation based

on TGCs - harmonised

0%

15%

20%

25%

30%

35%

1990 1995 2000 2005 2010 2015 2020

RES-Edeployment[%]

Historical development

BAU-forecast

Indicative RES-E Target (2010)

Improved national policies

900 TWh(BAU)

1150 TWh(improved policies

Introduction of harmonised policies (2015)

Technology-specific

harmonised FIT scheme

Non technology-specific

harmonised TGC system

ElectricityElectricityEUEU--2525Policy optimisationPolicy optimisationversusversus

harmonisationharmonisation

Results ofGreen-X model

runs recently conducted

within the EIE project

Investigatedcases

& harmonisedpolicies)

El t i itEl t i it EUEU 2525

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ElectricityElectricityEUEU--2525

BAUBAU

scenarioscenario

Improved nationalImproved national

policies scenariopolicies scenario

0

200

400

600

800

1000

1200

2004

2006

2008

2010

2012

2014

2016

2018

E

lectricitygeneration[TWh/year]

0

200

400

600

800

1000

1200

2004

2006

2008

2010

2012

2014

2016

2018

2020

E

lectricitygeneration[TWh/year]

Wind offshore

Wind onshore

Tide & wave

Solar thermal electricity

Photovoltaics

Hydro large-scale

Hydro small-scale

Geothermal electricity

Biowaste

Solid biomass

Biogas

El t i itElectricit EUEU 2525

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(Average) financial support for new RES-E plant

Unit: /MWhRES

0

10

20

30

40

50

60

70

80

90

100

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Financialsupport

(prem

iumtopowerprice)

fornewRES-Egeneration[/MWhRES]_

Non-technology specificsupport (quota obligationbased on TGCs - harmonised

Technology-specific support(feed-in tariffs - harmonised)

Improved national policies(efficient & effective national

policies)

BAU (continuation of currentnational policies)


This indicator shows the dynamic development ofnecessary financial support for new RES-Einstallations (on average). The amount represents from an investors point-of-view theaverage additional premium on top of the power price guaranteed (for a period of 15

years) for a new RES-E installation in a certain year.

ElectricitElectricity EUEU 2525

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Transfer costs for consumer (due to the promotion of RES-E)

Unit: M/year or /MWhDEMAND

0

1

2

3

4

5

6

7

8

9

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

PremiumperMWhtotalde

mand_

-duetothe

promotionofR

ES-E_

[/MWhDEM]

Non-technology specific

support (quota obligationbased on TGCs - harmonised

Technology-specific support

(feed-in tariffs - harmonised)

Improved national policies

(efficient & effective nationalpolicies)

BAU (continuation of current

national policies)


Transfer costs for consumer / societyare defined as direct premium financial transfercosts from the consumer to the producer due to the RES-E policy compared to the case

that consumers would purchase conventional electricity from the power market.

C l i d I li tiC l i d I li ti

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Conclusions and ImplicationsConclusions and Implications (1)(1)

The results suggest that the most significant efficiency gains can

be achieved through an optimisation of national RES-Esupport measures already more than two thirds of thetotal cost reduction potential can be attributed to the

optimisation of national support schemes.

-> Optimise present Feed-in and Quota Systems first!

Further efficiency improvements at a considerably

lower level (at less than one third of the overall cost

reduction potential) are possible by an EU wide

harmonisation of support schemes provided that acommon European power market exists, which is

presently not the case!

On the way to an EU wide harmonisation the regional

coordination represents an essential step, half of theadditional cost benefits of an EU-wide harmonisation as

compared to the nationally optimised schemes can be tapped

through a regional coordination already.


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Technology specific Feed-in tariffs have proven to more

effective and efficient than non-technology Quota systems inthe past for the reason ofinvestment stabilityand lowerrisk

premium.

Technology specific instruments have also good prospects

for the future because of higher impacts on technologylearning and lower windfall profits (especially in case ofambitious targets)!

If a harmonised policy is pursued, a technology specific

support is superior to non-technology specific with respect to

cost minimisation.

Generally one should also consider that a premature EU-wide

harmonisation can hamper the national optimisation

process as well as the overcoming of non-economic barriersat Member State level and can lead to significant market

distortions if power markets are not fully liberalised.

Additional benefits can arise from the competition of non-harmonised

systems during some time as thepromotion schemes can learn

mutually from each other.


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1. Diminish the key barriers for RES-E development

in each Member State

2. Set long term targets on EU level

3. Set correct framework conditions for conventional

power markets (full liberalisation)

4. Set minimum design criteria for support schemes(generic and instrument specific)

5. Start regional coordination of RES-E markets

e.g. Nordic TGC market, Feed-in Cooperation

6. Full EU-wide harmonisation only after successful

completion of steps 1-5

On thepath towards an EU-wide harmonisationthe following steps are suggested by the present analysis:

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MidMid--term potentials will be significantlyterm potentials will be significantly

smaller if only the "low hanging fruits" willsmaller if only the "low hanging fruits" will

be harvested, i.e. if only the cheapestbe harvested, i.e. if only the cheapesttechnologies are supported!technologies are supported!

Thank You!

Comments:

[email protected]

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Thank You!

Comments:

[email protected]

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Annex

ElectricityElectricity EUEU--2525

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The model runs aim at considering the spread of possible RES-E policy deployment within the EUas follows:

No harmonisation, where national policies remain in place and determine the future developmenof RES-E. Thereby, two variants are investigated:

RES-E policies are applied as currently implemented (without any adaptation)

business as usual (BAU) forecast

An improvement of national RES-E policies with respect to their efficiency and effectiveness is

undertaken (improved national policies). These changes will become effective immediately

(2006), in order to meet the overall RES-E directive target in 2010. Thereby, it is assumed that

besides adapting financial support conditions also non-financial barriers (i.e. administrative deficits

etc.) will be removed in the future.

It is assumed that after a transition period a harmonisation of support schemes takes place, wherenew and improved harmonised policies are applied for new installations from 2015 on. To be able to

analyse the effect of different (harmonised) policies compared to non-harmonised conditions (improved

national policies) it is assumed that the same RES-E target as under non-harmonised conditions should

be reached by 2020 i.e. a RES-E generation of about 1150 TWh on EU-25 level. The following currentlymost promising policies are investigated under harmonised conditions:

A Feed-in tariff scheme as the most prominent representative of

technology-specific instruments.

A Quota obligation based on TGCs with international trade applied as a generic scheme where

no technology-specificsupport is set.

General scenario assumptionsGeneral scenario assumptions

ElectricityElectricityEUEU-2525

ElectricityElectricity EUEU--2525

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TOTAL transfer costs for consumer

(due to the promotion of RES-E)

Units: M or % (in comparison to a reference case)

Total or cumulated transfer costs for consumer in 2020 summarise both thecumulated consumer burden within the investigated period 2005 to 2020 as well asthe residual costs for the years after 2020. Its calculation is done as follows: The required

yearly consumer expenditure in the period 2005 to 2020 as well as the estimated residualexpenditures for the following years after 2020 are translated into their present value in 2020.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100

%

Improved national policies (efficient & effective national policies)

Technology-specific support (feed-in tariffs - harmonised)

Non-technology specific support (quota obligation based on TGCs

- harmonised)

BAU (continuation of current national policies)

Cumulative transfer costs for consumer due to the promotion of RES-E [% - compared to improved national policies case]

total transfer costs paid in the period 2005 to 2020 (estimated) residual transfer costs paid after 2020

ElectricityElectricityEUEU 2525

ragwitz

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