EU experience on policy and financing mechanisms related to renewable EnergyFocus on small scale projects
Rechtsanwältin / lawyer Dr. Dörte Fouquet
Tunis, 04.10.2012
Az/Dok.-Nr.Seminarkürzel19.04.23
About us
BBH has been operating as a law firm since 1991 Today, BBH is one of the leading law firms for the energy and infrastructure
industry BBH is particularly known as „the“ law firm of public utilities Among BBH clients are decentralized utilities, the industry, investors,
intermediaries and political bodies, like the European Commission, the Federal Government, the Federal States and public corporations
Since 1999: Brussels: Secretariat General for EREF, the European voice for independent Power producers from renewable sources, representing more than 47.000 MW installed in the EU
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Dr. Dörte Fouquet, Rechtsanwältin / lawyer
Born in Recklinghausen in 1957 Married, 1 child Studies of Law at the Universities of Marburg and Hamburg 1982 Academic and Research Associate, Junior Lecturer at the University
of Hamburg, Law Faculty 1988 Civil servant of the State of Hamburg, Ministry for the Environ-
ment and Energy 1991 Civil servant in liason office of Hamburg and Schleswig-Holstein to
the European Commission in Brussels 1993 Partner in law firm Kuhbier, Brussels, specialising in European and
International law and consulting on European affairs in the fields of competition, energy, transport, environment
Since 2011 Partner in law firm BBH and head of the Brussels office of BBH
Memberships: Admittance to the German Bar of Berlin and to the Brussels Bar Green Budget Europe, FÖS Eurosolar BWE (German Wind Energy Association) Deutscher Juristinnenbund (German Female Lawyer‘s Association)
Practice areas: infrastructure, energy, environmental and competition law
Dr. Dörte FouquetRechtsanwältin
Partner (since 2011)
Contact:[email protected].: +32 2 204 44-12
Dr. Dörte FouquetRechtsanwältin
Partner (since 2011)
Contact:[email protected].: +32 2 204 44-12
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Table of Content
I. IntroductionII. Small-scale renewables and self-consumptionIII. Examples of support tools
I. Feed-In Tariffs and Feed-In Premiums II. QuotasIII. Net-MeteringIV. The very focused funding – grants, loans and other
programmesIV. Conclusion
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Introduction
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Some golden rules
Longevity and political dedication – cross partisan Binding targets- holisitc planning Socio-economic and environmental planning hand in hand with system change; Clarity of roles, authorities and limits of agencies involved ( who does what) ;
Regional cooperation and experience exchange on insitutionalised bases Clear budget function (no (respectively clear phasing-out) of cross subsidising of
the social needs from the energy bill) Immediate kick-off of green housing codes and programmes ( if your state is a
house, you would not put PV Panels on a leaking roof with inadequate walls and windows)
No international funding for RE electricity for countries who do not have green builidng programmes and laws established and functioning, especially also for existing building stock)
RE Electricity market starts on the local, regional and thus DSO level; TSO, Financing,... all have to learn the new world of this shift
Cooling/heating, efficiency and housing refurbishment have to go hand in hand with renewable electricity off-take
Mineraloil fuel replacement programme Storage and balancing system development Training, research and development, (especially in financing, project planning,
installation, engineering; storage capability)
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Introduction – EU Progress in RE target achievement
Only 3 out of the 27 Member States may reach or overachieve their binding national renewable energy target until 2020 (i.e. Sweden, Austria and Estonia), without any further policies or measures implemented.
Denmark, Germany and others probably able to reach or even overshoot their targets
But rather than stepping up their efforts, some Member States seem to draw back from renewables support!
Moratoria in 3 Member States and significant uncertainty about the future of support in 2 others
Report by the Commission expected in December 2012
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Introduction - Progress in RE target achievement
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Moratoria and uncertainty
Moratoria on support to new renewable energy plants: Latvia – no tender held since May 2011 and until (it is said) January
2013 Portugal – and significant cuts in support to existing plants Spain - and new tax proposed that would de facto reduce the Feed-In
support to existing plants
Uncertainty about the future of renewable energy support in general: Bulgaria –new legislation adopted in 2011: tariffs can be reduced
without involvement of the national parliament and regulator says that no new renewables capacity can be connected to the grid until June 2013
Czech Republic – new legislation adopted in 2011 and will apply for new plants starting 2013 – but implementing legislation still lacking and regulator has remarked that interruption of support may be possible
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Small-scale renewables and self-consumption
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Self-consumption
Small scale renewable energy projects can make an important contribution to energy change often they are run by „self-consumers“, meaning producing for own
consumption first „Self-consumers“ = natural or legal persons who primarily generate for
their own consumption, either to supplement or to entirely replace electricity bought on the market.
However, for small plants it is often particularly difficult to get financing and as they do not sell significant amounts of electricity, they might lack the incentives to install such a system Still: Self-consumption can significantly lower the electricity costs one
has to pay (including grid tariffs, taxes etc.) which can be an incentive by itself – epseically with falling technology prices and increasing electricity tariffs
However, additional incentives to promote self-consumption exist E.g. the premium for self-consumption in Germany or Italy
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Self-consumption
Self-consuming PV production is natural:
It corresponds to the PV production that a « prosumer » consumes in REAL TIME
Two main types of policy incentives:
•Direct: Self-consumption premium
•Indirect: German market integration model (Germany)
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Self-consumption
Source: EPIA
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Self-consumption – Case Study Italy
Conto Energia V (2012)
Self-consumption premium for 20 years
Premium between 0.05 ct/kWh and 0.18 ct/kWh
Excess generation fed into the grid and compensated at FiT level
Source: EPIA
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Examples of support tools
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Feed-In Tariffs and Feed-In Premiums
Feed-In Tariffs are the most frequently used support schemes in the EU 18 countries have them
Idea: Electricity generated from renewable energy sources will get a fixed
price when fed into the grid, independent from the market price and – normally – rather in function to the maturity of the respective technology
The price is set for a longer period of time (normally about 20 years) either by law or in long-term contracts
Incentive: As the price is set for a long time, investors have great security and will
know exactly what profits they can expect from the project
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Feed-In Tariffs and Feed-In Premiums
Feed-In Premiums are a variation of the Feed-In Tariff that was developed more recently in order to expose renewables to some market risks 8 EU Member States have such a system – sometimes in
combination/alternative with other support measures
Idea: Electricity generated from renewables have to sell on the market and
will get the market price – however, a certain premium is added to this, which constitutes the support
Incentive: In addition to the flexible market price a certain fixed premium is
guaranteed
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Quotas
Quota systems use tradable green certificates which develop their own market price and thus subject renewables producers to market fluctuations 6 EU Member States have them (sometimes in combination or as
alternative)
Idea: For a certain amount of renewable energy generated, the producer gets a certain amount of certificates Energy suppliers have to buy those certificates, as they have to meet a
certain renewable energy quota If they do not meet their obligation – they have to pay a fine
That way the certificates get a market value
Incentive: Market value may vary and certificates can loose almost all value –
high risk exposure Sometimes thus minimum prices are set, e.g. in Flanders, Belgium
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Net-Metering
Concept originally came from the United States, where almost all States have it Slower and only quite recently uptake in the EU
Netherlands, Belgium, Denmark, discussion also in Spain
Idea: „Two-ways“ meter that counts forwards, when the consumer is taking
electricity out of the grid, and backwards when he is feeding electricity into the grid
By the end of the month/year, the electricity fed in and taken out will be netted
Incentive The consumer has to pay less on his electricity bill:
Will not have to pay during the time he is directly using the electricity he is producing himself
Will get the amount of excess electricity he has produced and fed into the grid brought into reduction of his overall electricity bill
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Net Metering – How it works
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Net-Metering – How it works in Denmark
Since 1998 already for small PV plants Nowadays all technologies but geothermal are eligible
However: depending on the technology different capacity limits and requirements for eligibility
Procedure: small systems need not apply but are automatically registered all others need to apply for net-metering
net-metering then on hourly basis
Extra-Incentive: Exemption from the „Public Service Obligation“ of 18,2 øre/kWh
either from the entire PSO for small systems or from the part of the PSO that is for the support of renewable energy for all plants participating in net-metering (= reduced PSO of only 1,2 øre/kWh )
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Net Metering – Case Study Denmark
Net Metering for unlimited time
Compensation (= „netting“) period
< 6kW = yearly
> 6kW = hourly
Excess generation compensated at small FiT level
Full compensation (= netting of the electricity fed in against the electricity taken out) including grid costs, taxes etc.
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The very focussed funding – loans, grants and other programmes
In most EU Member States some form of direct investment aid is – additionally – available
Though there are various different designs
Idea: Investment aid
through either making financing available to „better than market“ conditions (loans);
often lower interest rates and/or for longer periods or through a direct contribution to the renewables project
(grants) normally a percentage of the eligible costs (e.g. the PV
Modules) or a fixed amount per installation
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Germany and its direct support programmes- small scale
Most ambitious energy-saving program in Europe, aiming for a 30 percent reduction in energy usage by 2020, and a 30-percent renewable energy share, consisting mainly of biomass, wind, and solar - Three pillars:
Legal framework and tight regulation at the national level, requiring energy efficiency upgrades to buildings and increased use of renewable energy sources among electricity providers;
Strong financial incentives through subsidies and loans to reduce energy consumption in the built environment
Information, promotion, and behavior change, working through regional and local bodies,
Since 2006, Germany has created nearly half a million new jobs in renewables, and over four years, around nearly 900,000 jobs in retrofitting homes and public buildings
By having taken these steps,on track to meet aggressive greenhouse gas reduction targets by 2020 and 2050.
(see e.g. Anne Power, Monika Zulauf; Cutting Carbon Costs: Learning from Germany’s Energy Saving Program, 2011)
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Three pillars as graph
Source: Anne Power, Monika Zulauf
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Examples of other funding in Germany
Further support is in general granted on regional or even municipal level.
So there are differences in efforts and results.
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Case Study: Brandenburg
German states play a vital role in the promotion of renewable energies due to the fact that implementation of EU and national policies takes place on state (and local) level
Example: Brandenburg Brandenburg has one of the top positions in the production of
renewable energies over the last years Despite the fact that it is one of the poorer German states (compared
to, e.g., Baden-Württemberg) Support instruments include co-financing of RD&D projects in the field
of renewable energies Up to 50% of the total investment Maximum of EUR 3 million per project
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Small glimpse in a very big world of local initiatives: Cooperative Starkenburg
Prize-winning Cooperative Starkenburg (State of Hessen) Achieves a regional energy system change by
operating six PV installations and one windturbine Serves 1.250 households Close cooperation with the local energy utility
(„Stadtwerk“) Citizens of the municipality hold share capital (no
financial support by the State) Citizen RE parks in combination with municipal
supplier and local bank are gaining a very strong momentum
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The content of the average household price for energy in Germany in 2012 . - biggest share is price for oil
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Need for Solar/RE imports?
Germany has more installed solar-energy capacity that any other country in the world , with some 25,000 megawatts of installed photovoltaic panels. In 2011, those panels produced 18 terawatt-hours of electricity.
Germany has an average need of 60 TWh, on week-ends down to around 45 TWh
Germany produces now more than 70 TWh, increasingly from RE, in a few years with further RE increase, numbers of around 120 TWh could be reached
Phasing out of the whole nuclear plants until 2021 will lower some of the increase, but it reamins above the needs
BUT: Certainly no need for a long time to import solar electrcitiy form the MENA region
And if: bottleneck France keeps Spain and Portugal as ENERGY islands, whereas both have strong electricity excess, due also to financial crises
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Conclusions
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Conclusions
Small renewable energy plants can make an important contribution to the energy system change Take off „pressure“ from the grid Raise awareness of actual energy consumption at the consumer side Help saving costs for infrastructure
Thus: many different ways developed on how to encourage private individuals, SMEs etc to become „self-consumers“ Information campaigns - Explaining to them that they will save money
on their electricity bill General renewable energy support systems – wherein small scale
plants get often higher support levels Extra incentives – self-consumption premiums, net metering , access
to funding and direct grants
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Conclusions
Important for all support: Clear and stable policy framework and dedication and commitment to
promote renewables
Therein a well-tailored support scheme, responding to the needs of the respective technologies and the specifics of the market Can have different components, combine e.g. Feed-In Tariffs with
loans, or offer alternatives between which producers can choose
Facilitation in the permitting and licensing processes for renewables and clear site allocations Planning security and no unnecessary administrative burdens
Thank you for your attention!
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