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Renewable Energy for DevelopmentSTOCKHOLM ENVIRONMENT INSTITUTE – NEWSLETTER OF THE CLIMATE AND ENERGY PROGRAMME

SEI • May 2007 Vol. 20 No. 1 ISSN 1101-8267

SPECIAL THEME ISSUE: RENEWABLE ENERGY IN THE EU

As the European Union celebrates its fiftieth birthday, theoccasion seems appropriate for devoting an edition of thisnewsletter to an overview of renewable energy in the EU.When the European Economic Community was formed in 1957,energy was among its core concerns. Its predecessor, the Coaland Steel Union, was focused on Europe’s major energy sourceand its major industrial energy consumer. The creation of theEuropean Atomic Energy Community (EURATOM) alongsidethe EEC in 1957 was based on the assumption that the peace-ful use of nuclear energy was a key priority for Europeandevelopment. Fifty years later, the EU is facing a rather different energychallenge, in the form of climate change, the return of energysecurity issues, and the goal of a competitive and sustain-able energy system for the Community. The policies and in-stitutions established in recent years are aimed not only at a

In this issue:

Overview of Renewable Energy in the EU 2Ireland and UK ............................................ 4Nordic Countries ......................................... 5Baltic Countries ........................................... 7Poland ............................................................ 8Central Europe ............................................. 9Austria ............................................................ 9Germany ......................................................... 10Benelux Countries ........................................ 11France ............................................................ 12The Iberian Peninsula ................................. 12Mediterranean Countries ........................... 14Romania and Bulgaria ................................ 16

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rapid expansion of renewables in the EU, but at the crea-tion of broad international platforms for technology trans-fer and deployment. National and regional approaches areno longer sufficient in a global economy. The EU has emerged as the world leader on climate policyand sustainable energy in recent years through several si-multaneously occurring institutional processes, particularlythe integration of energy markets, the drive to approve andimplement the Kyoto Protocol, and the establishment of am-bitious targets for renewable energy. Focusing on electricpower (and heat) production, this issue of the newslettersummarises the variety of renewable technology deploymentplatforms, policy options and national/regional innovationsystems used across the EU and its 27 Member States. It isthis wealth of options and platforms that makes the EU atesting ground for a global sustainable energy future.

The Europa tram

A Testing Ground for a Global Sustainable Energy Future

2 Stockholm Environment Institute

Managing Editor: Anders ArvidsonEditor: Francis X. JohnsonPublisher: Arno RosemarinLayout: SEI/Solveig NilssonPrinter: Elanders Gotab

ISSN 1101-8267Printed on chlorine-free, 100 % recycled paper

Kräftriket 2BSE-106 91 Stockholm, SwedenTel +46 8 674 7070,Fax +46 8 674 7020E-mail [email protected]

The Stockholm Environment Institute (SEI) is aninternational research institute focusing on sustainabledevelopment. The Institute works through an interna-tional network of centres, associates, and field staffaround the world.

The Climate and Energy Resources Programme isconcerned with improving access to environmentallyfriendly energy services, promoting renewable energyand energy efficiency, and advancing global cooperationon climate change.

This newsletter is supported by the Swedish In-ternational Development Cooperation Agency(Sida). The newsletter is distributed free of charge and

is also available through the SEI website.The views expressed in the articles in this newsletter

are those of the authors and not necessarily those of SEInor of Sida.

For further information contact Solveig Nilsson,SEI. [email protected]

Figure 1: Electric power generation in the EU-25 by source (TWh);(Source: EUROSTAT)

Energy and Climate policy in the Euro-pean Union centres on the need to rec-oncile three fundamental goals:sustainability, competitiveness and en-ergy security. The growing concernover climate change, along with themarket opening in the power sector,have contributed to a number of recentshifts in the sources of supply. Until thepast 5-10 years, wind capacity was in-significant, but as of 2004 it representedabout 5% of total capacity. The capac-ity of thermal, hydro, and nuclear -which had long provided the founda-tion for EU power supply - all decreasedin share.

The supply mix has become morediverse; in 1990, two sources - coal andnuclear - accounted for 70% of powergeneration, whereas by 2004, these twosources supplied only 60%. Natural gashas become the main fuel of choice atthe margin; the share of natural gas inpower production increased from 8%

to 20% between 1990 and 2004. Due torobust electricity demand during muchof this period, all fuels except oil regis-tered an absolute increase; the use of oilfor power generation has been disappear-ing gradually ever since the oil crises ofthe 1970s (Figure 1).

In spite of the many advances in re-newable markets, the current energystructure within the EU remains heavilydependent on fossil fuels, including asignificant amount of imported oil andgas. A reduction in the reliance on im-ported fossil fuels is a vital element inthe transition to a sustainable and secureenergy system; this transition is alreadyreflected in the policy instruments andpatterns of investment of recent years,with the strong emphasis on low car-bon energy sources, particularly naturalgas, biomass, and wind. Another impor-tant area of deployment is cogenerationof heat and power, which greatly im-proves the efficiency of biomass plants

as well as non-renewable sources (seeFigure 3).

Before the 1990s, the overwhelmingmajority of renewable energy in the powersector was hydro-based; large hydro-power plants that were built several de-cades ago provided the only major con-tribution to electricity generation. Somecountries had initiated bioenergy pro-grammes in the 1980s, but their totalcontribution remained small. In the1990s, several renewable technologieswere mature and policy support mecha-nisms had evolved sufficiently that ma-jor commercial investment accelerated

Overview of Renewable Energy in the EU

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Maarten J. ArentsenAdam BuchhornDanae DiakoulakiRocio A. Diaz-ChavezDaniele GuidiPaula KivimaaBenigna KissKatarina KorytarovaVolkmar LauberJean-Christian MarcelGergana MiladinovaMartynas NageviciusMiles PerryDiana Urge-VorsatzAviel VerbruggenMalta Energy Efficiency andRenewable Energies Association

Acknowledgements

This special edition of the newslet-ter was assembled, written and ed-ited by Francis X. Johnson andFiona Zuzarte. Thanks are extendedto the following persons andorganisations that made valuable con-tributions to this newsletter:

References that were cited in this is-sue can be found at:http://www.sei.se/red/red-vol20-no1-references.html

Renewable Energy for Development, May 2007, Vol. 20, No. 1 3

Figure 2: Experience curves for energy power technology in the EU,1980-1995; (Source: IEA, 2000)

considerably. A renewables revolutionwas launched in the EU, with wind andbiomass leading the way. Power genera-tion from hydro sources was relativelystable from 1990 to 2004. The “new”

renewables,on the otherhand, morethan tripledfrom 1990 to2004.

In orderfor renew-ables to be-come fullycompetitive,c o n t i n u e dmarket ex-pansion isneeded to in-

duce learning effects and bring downcosts, as occurred from 1980-95 (Fig-ure 2). Further innovation in technol-ogy development and deployment isneeded. The Renewables Directive

sets a target of 21% of gross electricityconsumption in 2010 to come from re-newable energy sources in the EU (Di-rective 2001/77/EC). Indicative targets formember States are specified in the Direc-tive, and Member States must report onprogress achieved each year. The targetsvary considerably, based on current sharesof renewable energy consumption alongwith the physical reality of wide variationsin the natural endowments - and thus theultimate potential of - renewable resourcesin different countries (see Figure 4).

In conjunction with renewable energydirectives and policies, legislation was de-veloped to allow exemptions in the taxa-tion of energy sources (Directive 2003/96/EC). The Directive allows MemberStates to apply exemptions or reductionsin the level of taxation on renewable en-ergy sources, including solar, wind, tidal,geothermal, biomass, and waste. Thesetax concessions are considered state aids,which may not be implemented withoutprior EC Commission authorisation, in or-der to avoid undue distortion of competi-tion and over-compensation.

Rapid movement along the technologylearning curve has resulted in near-com-petitive generation costs for wind and bio-mass, even without considering environ-mental impacts. The use of indigenous re-newable resources stimulates innovation,creates jobs, contributes to Kyoto com-mitments, and reduces the need for en-ergy imports. Short-term imports from de-veloping countries, which have a tremen-dous resource and potential for biofuels,could be considered a stimulus for the bio-mass fuel market in these regions, whilecontributing to global sustainable devel-opment. Within the EU, the number andquality of the businesses and jobs createdis generally much greater for small-to-me-dium scale renewable sources than forcapital-intensive large-scale options (i.e.hydro, coal and nuclear). Renewable en-ergy is thus recognised as being funda-mental to the goals of competitiveness,sustainability, and security.

Figure 3: CHP plant fuel input, EU-25, 2002 (%)

The European Commission target wasto increase the share of CHP electric-ity in the EU from 9% in 1994 to 18%in 2010. CHP has great potential forenergy savings and reductions ingreenhouse gas emissions, having theadvantage of thermal efficiency. Theconversion of the fuel to useful energycan be as high as 80-90% compared toconventional electricity generation of25-45%. Of the fuels used at the 2002EU level, natural gas provided the mainshare (41%), while renewables con-tributed 10% .

Combined Heat and Power (CHP) generation

Figure 4: Ratio of electricity from renewable energy to gross electricity consumption(and indicative targets); (Source: EUROSTAT)

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IrelandThe Irish energy system is characterisedby import dependence on oil and relianceon fossil-fuel generated electricity, domi-nated by oil, coal and gas. There is a smallamount of hydro and biomass and agrowing market in wind power. Demandfor energy has been increasing rapidly inrecent years due to the surge of economicgrowth that earned Ireland the nickname“Celtic Tiger”.

The Irish electricity market is very dif-ferent from electricity markets elsewherein the EU, due to the small size of themarket and its lack of integration into thewider EU market. Ireland has a concen-tration of load in the east with extensiverural lines in the west and a special geo-graphical position at the end of WesternEurope’s gas supply. There will be a con-tinuing need for new capacity over thecoming decade. In the 1960s, the limitedhydro resources provided much of theelectricity demand. But with rising de-mand and partly due to forecasting er-rors, a large amount of capacity wasbuilt in the 1970s, including coal-firedpower stations to reduce the dependenceof the economy on oil. Peat has been oneof the few domestic fuels available, butis now declining and ceasing to be a vi-able option due to socio-economic andenvironmental concerns.

Security of supply has been improvedwith connections to Northern Ireland,which in turn is connected to the UK.Further transformation is expected witha planned Ireland-Wales inter-connector.Ireland currently generates about 5% ofits electricity from renewable sources,mostly from hydro with smaller contri-butions from wind and landfill gas. Ire-land is estimated to have the highest percapita potential of wind power of anyEuropean country and installed capacityis expected to exceed 700 MW in 2007.Other relevant renewable sources of en-ergy include biomass and solar.

United KingdomThe UK energy sector has undergoneconsiderable restructuring since the oilcrises of the 1970s, switching from de-pendence on coal to natural gas andnuclear. More recently, the UK has gonefrom being a net exporter to a net im-porter of primary energy. Goals of re-ducing CO2 emissions, ensuring secu-rity of supply and improving long-termcompetitiveness of the economy haveincreased support for demand side en-ergy efficiency and renewable energy.

The electricity and heat markets in theUK are highly centralised. The high volt-age national grid transmits electricityfrom large power stations, located farfrom demand sources. The governmentis exploring ways to increase the use ofdistributed energy so as to reduce trans-mission losses and vulnerability of thesystem to large disruptions.

The 1990 liberalisation of power mar-kets created the legal framework to usegas as a fuel in electricity generation.Advances in technology and abundantNorth Sea gas were the factors that ledto the rapid deployment of gas poweredstations, the so-called “dash-for-gas”. Asecond important feature of liberalisationwas the reform of electricity trading andbalancing measures to ensure that sup-ply matches demand. Initially, electric-ity prices fell, but have recently risendue to reliance on imported natural gas.

Renewable energy remains small, al-though there has been more investmentin wind power and biomass in recentyears.

Energy policyIn order to improve its competitive po-sition, reduce reliance on imported en-ergy, and meet its Kyoto commitments,several key policy instruments have beenused to facilitate increased investmentin renewables and energy efficiency.1. The climate change Levy (CCL): Thisis a surcharge levied on each unit of en-ergy used in the commercial, industrialand public sectors. Companies can avoidpaying the CCL by consuming electric-ity that comes from eligible renewablesources or CHP schemes and increas-ing customer’s willingness to pay for thisenergy. A number of climate changeagreements have been negotiated withindustry bodies, requiring exchanging eli-gible energy, efficiency or emissions tar-gets in return for an 80% discount onthe CCL.2. The European Emissions TradingScheme (EU-ETS): The ETS is the Eu-rope-wide greenhouse gas emissionstrading scheme that creates a Europeancarbon price and payment or incometraded if industry emissions vary fromtheir awarded allowances. Overall, theUK National Allocation Plan required an

Use of renewable technologies in Dublin, Ireland

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nuclear power as a low-carbon genera-tor of electricity. The risks and benefitsof increased investment are beingweighed by the private sector actors.

Given the UK’s continued substantialgeneration of electricity from coal, co-firing with biomass is one of the sim-plest and most commercially viable formsof renewable electricity. The RO eligibil-ity of co-firing is strictly capped at 10%in order not to create major competitionwith other renewable energy sources.However favourable treatment is givento energy crops, which can be co-firedwithout restriction.

Nordic CountriesDenmark, Sweden and Finland enjoy re-liable power with a diverse mix ofsources and an integrated and liberalisedmarket that allows consumer choice. TheNordic Power exchange, or Nordpool,was the first international commodity ex-change for electric power. Due to sea-sonal and annual fluctuations in hydropower availability, trade of electricity isimportant to the markets of Sweden andNorway; their markets are connectedwith those of Denmark and Finland, bothof which have a significant amount ofthermal capacity.

The current energy systems have beenevolving to address energy security, com-petitiveness and sustainability concerns.Demand-side energy efficiency, support

of renewable energy technology, climatemitigation and market liberalisation arekey components of energy policy-mak-ing in the Nordic Countries.

DenmarkDiscovery of oil and natural gas in theNorth Sea in the early 1980s helped toturn Denmark from an energy importerto an energy exporter; it has also re-sulted in substitution of coal with natu-ral gas. Gas and biomass have contrib-uted to a major expansion of CHP anddistrict heating, resulting in significantimprovements in the efficiency of de-livering heat and hot water. Major de-velopments in the technical and com-mercial development of wind turbineshave made Denmark a world leader.Furthermore, significant investments inrenewable energy and efficiency haveimproved the energy and carbon inten-sity of the Danish economy; Denmarkhas the lowest energy intensity in theentire EU.

The electric power sector has beendiversified in the last 15 years, includ-ing a 1997 ban on expansion of oil andcoal-based power production. The shareof coal has halved to 46%, with naturalgas contributing 25%, and renewablesincreasing from 3% to 25%. Natural gasuse for heating is also increasing in thedomestic sector.

Denmark was one of the first coun-tries in the world to introduce CO2 quo-

Off shore wind turbines, Denmark

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8% cut in emissions from 2005-2007,although a 28% cut was required fromlarge power stations.3. The Non-Fossil Fuel Obligation(NFFO): The NFFO combined a FossilFuel Levy paid on all electricity bills witha feed-in tariff system that awards a pre-mium price to generators of renewableelectricity.4. The Renewables Obligation (RO): TheRO is the long-term replacement for theNFFO. It is an obligation that requireselectricity suppliers to provide a mini-mum percentage of their supply from eli-gible renewable sources. A market in trad-able Renewable Obligation Certificates iscreated.

In addition, a government-funded in-dependent company, The Carbon Trust,aims to create partnerships between thepublic and business sectors, stimulatinginnovation in favour of a transition to-wards a low carbon economy.

Future technologiesThe Large Combustion Plants Directiveaims to close coal plants with capacityof about 8GW. The speed at which cleancoal technology and carbon capture andstorage can be commercialised will havea major impact on the future of coal inthe UK.

UK’s nuclear power is scheduled toclose over the next 20 years. However,there is increasing acknowledgement of


tas to limit emissions by the industrial andenergy producing sectors. The tax pro-ceeds are reinvested in energy-efficientprojects.

Like other western countries, Denmarkhas experienced major shifts in the de-mand for energy due to increased eco-nomic growth, mobilisation and demandfor products and services. Energy-in-tensive fuel extraction activity in theNorth Sea has increased energy consump-tion. Despite this, it is remarkable thatthe total demand has remained relativelystable, largely due to aggressive Danishenergy conservation policy instruments.These include energy taxes, easy avail-ability of information on energy con-sumption, building standards and energyguidelines.

SwedenSweden is endowed with significant wa-ter and biomass resources. The powersector underwent significant changes dur-ing the mid-1990s with three processesoccurring at approximately the same timethat improved overall system efficiency:deregulation, integration of Nordpool andSweden’s entry into the EU. In the past20 years, installed capacity has beendominated by hydro and nuclear power(90% of electricity). The remaining shareis primarily biomass-produced power,with small amounts from oil, gas andwind.

Nuclear power has come almost fullcircle in public opinion in the past fewdecades. Initially, nuclear was viewedas a “clean” alternative to fossil fuels.There was a downturn in public opin-ion after the Three-Mile Island accident.Now with climate change concerns, se-curity of supply and the higher cost ofelectricity, its popularity has somewhatreturned, in spite of some concernsabout safety and reliability.

Since the 1980s, environmental con-cerns have halted expansion of hydro-power. Bioenergy is primarily used inthe thermal plants, in district heating, in-dustrial and household applications.Since the early 1990s, efforts on windpower have moved from RD&D to in-creased investment in installations,growing capacity 10-fold to 452 MW.

The Renewable Energy Certificatescheme has been promoting renewableenergy; however it is not clear if it pro-vides sufficient incentives for the large-scale investments needed to replacenuclear capacity if the 2010 nuclearphase-out were to be implemented. Thescheme is currently undergoing modifi-cations.

The previous government stated goalto become “independent” of fossil fuelsby 2020 has led to strategies to phase-out oil in the transport sector and tophase in biofuels. In Sweden, biofuel usehas progressed in privately owned ve-hicles and transport fleets. In fact, Swe-

den appears to be on track for meetingthe 5.75% EU biofuels target for 2010.

Efficiency has received high priorityin Swedish energy policy. There havebeen extensive efforts in improving en-ergy efficiency and conservation in heat-ing homes, lighting, and use of efficientappliances. The existence of several stra-tegic export-driven energy-intensive in-dustries has led to a number of incentivescheme, for energy efficiency invest-ments in these key industries.

FinlandFinland has large resources of peat andwood, which are reflected in its powergeneration mix. Biomass plays a key rolein the energy structure with strong tiesto the development of the Finnish forestsector.

Finland is a net importer of electric-ity, with large thermal capacity plants thatrely on nuclear, coal, biomass, naturalgas and peat. Nuclear power is seen assupportive of key elements of nationalenergy policy, including price stability,security and supply, and low environ-mental impacts. A fifth reactor is underconstruction in Olkiluoto. Renewable en-ergy contributes 25% of total electricityuse, mainly from hydro, biomass andsome wind. The EU Emissions TradingScheme (ETS) has created incentives forrenewables and nuclear power. CHPplants, especially from biomass, providea significant majority of the heat require-ments in Finland, both for district heat-ing and production processes.

Like Norway and Sweden, Finland hassignificant hydro resources, whose ex-pansion is regulated for conservation rea-sons. The share of wind power is quitesmall due to high connection and trans-mission costs and land use concerns.The recent Finnish Action Plan for Re-newable energy has focussed on biom-ass. Support for development andcommercialisation of new technology,energy taxation, information dissemina-tion and the EU-ETS have been key policyinstruments that have influenced the en-ergy markets and renewable energy support.

Biomass harvesting near Jönköping, Sweden

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Kruonis pumped hydro storage plant, Lithuania

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Baltic CountriesFinal energy demand in these countriesis similar in that it is dominated by thehousehold and transport sector while theindustry and service sectors dominate theelectricity consumption. There is a heavydependence on oil and gas for primaryenergy. During the economic transitionin the early 1990s, energy demand fellbut has since rebounded, and new ef-forts are underway to reduce energy in-tensity and/or efficiency.

Current energy use

EstoniaEnergy is in fact the main industrial sec-tor in Estonia; both the energy transfor-mation sectors and the chemical sectorare based mainly on domestically avail-able oil shale, along with some peat andwood. Estonia has the highest per capitaGHG emissions in Europe, due to its re-liance on fossil fuels. Currently biomassis used for household heating and dis-trict heating systems. The possibility ofco-firing biomass in CHP systems andincreasing international trade will expandthe end-uses and improve the future mar-ket options.

LatviaThe Latvian energy system is based pri-marily on hydropower and natural gasfor electric power production, petroleumproducts for transport, and biomass andnatural gas for households and districtheating. In the electric power sector hy-dro (1500 MW), thermal power (600MW), and small amounts of wind (25MW) make up the balance. The heavyreliance on hydro electricity requires bal-ancing during dry years and to make upfor seasonal fluctuations; imported elec-tricity from Estonia and Russia has beenused to fill the gap. The thermal plants(CHP) run primarily on natural gas, withsupplementary biomass fuel, coal and oil.

LithuaniaLithuania depends significantly on im-ported oil and gas from Russia, as wellas uranium for its nuclear power plant.

Like its Nordic neighbours, Lithuania hasa high level of cogeneration and districtheating with over 60 district heating com-panies operating.

The Lithuanian power system is con-nected with Latvia, Belarus and the Rus-sian Kaliningrad regions, and a specificfeature has been a considerable surplusof power generation. The amount of elec-tricity exported in 2004 was nearly equalto the amount used in domestic final con-sumption. The closure of existing nuclearpower units to meet EU conditions willhave significant impact on electricity sup-ply in the region. The decommissioningof the second unit of the Ignalina NuclearPower Plant in 2009 would most likelyresult in a major reduction of electricityexports and/or a large increase in genera-tion from fossil fuel power plants. Thepossibility for installing a new nuclearplant is among the key issues currentlybeing debated and this decision is clearlya strategic one for Lithuania and for thewhole Baltic region.

Renewable energyThe Baltic countries are strongly com-mitted to the EU renewables directive toincrease their respective shares of renew-able electricity by 2010.

Estonia’s target for renewable electric-ity in 2010 is 5.1%, up from 1%. The

Long Term Development Plan sets tar-gets to increase the share of renewablesand peat in the primary energy supply,mainly from wind and biomass. Estoniahas good wind resources as mapped byTartu University, with higher potential inEstonia’s coastal zone than in other Bal-tic countries. Installed wind capacity wasnearly 50 MW by late 2006. Several windprojects are under construction, and off-shore wind farms are in the design phase.In this geographical region, hydro andsolar have limited potential.

The Latvian government has an indica-tive target of 75% renewable share in elec-tricity generation by 2010, up from 68%in 2004. This is expected to come frombiomass, as wind and solar are limited.

Lithuania committed to double theamount of electricity generated from re-newable energy sources in the balanceof consumed electricity, from 3.3% in1999 to 7% in 2010. Bioenergy contrib-utes to household heating and is expectedto contribute to the transport sector.There is also a hydro pumped storagepower plant with installed capacity of 900MW. Incentives are being applied viafeed-in tariffs and discounts on grid con-nection for small hydropower plants,wind and biomass power plants.


Energy plantation, Pécs, Hungary

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PolandThe energy sectorThe Polish energy sector is the largest inCentral and Eastern Europe (CEE). It hastraditionally been heavily dependent onits domestic coal sources, causing sig-nificant environmental degradation insome areas. Now the government is look-ing towards diversification of the fuel mixby increasing the share of renewable en-ergy sources, improving reliability of natu-ral gas and oil imports, and possible in-troduction of nuclear power. Coal ac-counted for 92% of electricity genera-tion in 2004, a decrease from the 1990level of 96%; a small amount of naturalgas and biomass generation capacity hasbeen added since 1990. The remainingcapacity is hydro and a very small amountof wind. Final energy consumption isdominated by industry and households,adding up to nearly 60%, whose relianceon coal overshadows the transport shareat 18%.

Following EU accession, Poland hasto comply with the EU Directives on theliberalisation of energy markets. Polandis a member of CENTREL, which is aregional group of transmission systemoperators in Poland, Hungary, Slovakiaand the Czech Republic, now membersof the Union for the Co-ordination ofTransmission of Electricity (UCTE). Thegroup is a net exporter of electricity, withPoland a major contributor.

Poland has considerable reserves ofhigh quality coal and is among the world’smajor exporters; reserves of hard coal areestimated at over 32 billion short tons, andlignite/subbituminous coal estimated atover 14 billion short tons. The future ofcoal in Poland will depend mainly on itsenvironmental impacts. With the introduc-tion of desulphurisation, low NOx tech-nologies and the use of low sulphur coal,the situation has improved significantly inthe region between Poland, East Germanyand the Czech republic, notoriously knownas “the Black Triangle”. Most of Poland’snatural gas and oil is imported, with ex-pected increases. This has led the gov-ernment to seek possibilities for supplydiversification, including “Naftoport” oilterminal at Gdansk, which was con-structed in the 1990s.

The aging infrastructure of installedcoal plants, concern for GHG emissions,and long-term sustainability have led toplans for further diversification in elec-tric power generation, including nuclearpower. The government’s strategy docu-ment Energy Policy until 2025 includesthree key options for achieving a moresustainable energy system: energy effi-ciency improvements, increase of renew-able energy sources, and nuclear power.The strategies considered include the in-troduction of four nuclear power units of1000MW each, although there are no con-crete plans yet.

Renewable energy and energyefficiencyRenewable energy sources currentlyhave a low contribution to the Polishenergy mix. To increase their share, thePolish government adopted first prefer-ential feed-in tariffs, which were laterreplaced by a quota obligation and an-nual targets until 2014. A FORRES studyshowed that the potential for renewablesby 2020 is about 50 TWh. Identified re-newable sources with the most poten-tial are: wind and hydro for electricitygeneration, geothermal energy for heatgeneration, and biomass for electricityand heat generation.

Hydro is the dominant renewable en-ergy source in Poland. Although newunits are still being commissioned, thepotential for large-scale plants is limited.There remains the possibility of increas-ing output up to 30% with efficiency im-provements in existing plants.

Biomass is a promising renewable en-ergy source because of the potential ofco-firing with coal, plentiful land avail-able and different options: biogas fromlandfills and municipal waste, energycrops, firewood, and waste residuesfrom agriculture, industry and forestry.Biomass electricity generation increasedfour-fold between 2000 and 2004 - from221 GWh to 850 GWh - although evenafter this increase, it still only represents1% of the total.

Wind capacity reached 65 MW in2004, with electric output of 142 GWhin 2004, which is only 0.1% of the total.The wind potential in Poland and aroundthe southern mountains and Baltic coastcreate some of the most promising windenergy markets in Europe.

As with its neighbouring Eastern Eu-ropean countries, the transition to a mar-ket economy resulted in a dramatic re-duction in final energy consumption. Theoverall energy intensity remains aboveaverage and there are still many “low-hanging fruits” in terms of possibilitiesfor energy efficiency improvements.Rough estimations identify the potentialas between 15-25% on average, and cov-ering all sectors of the economy.


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Slovakia aims to increase the share ofrenewables with an ambitious 31% re-newable electricity share in 2010. Poten-tial sources are biomass in CHP systemsand small hydro, geothermal, and lim-ited wind. Complicated licensing, per-mits and limited guarantees continue tobe barriers to the expansion of renewables.

In Hungary, renewable energy has his-torically been quite small, with less than1% of electricity generation in 2003,mostly from hydro. The potential for bio-mass is the largest among all renewableoptions in Hungary, followed by geother-mal energy for its heat. Investments overthe past few years, particularly in bio-mass, have greatly accelerated the mar-ket share for renewables.

Hydro represents one-third of installedpower in Slovenia, and has the most sig-nificant potential for expansion. Althoughbiomass is another important potentialcontributor, it faces competition for useby wood panel and furniture manufac-turers. Wind and solar are limited due togeography and climate conditions. Thehigh geothermal electricity production iscurrently limited by the cost of develop-ment, knowledge and demonstrationprojects.

AustriaAustria relies significantly on domesticresources in the form of hydropower andbiomass. There is also some domesticproduction of natural gas and oil, althoughthe majority is imported. Primary energysupply for buildings and transport isdominated by petroleum products. Theuse of gas and coal has also increased in

recent years. The share of renewablesother than hydro remains small, but ex-pansion is continuing, particularly forbiomass.

In 2004 hydropower accounted for60% of electricity generation, gas 20%,and the remaining contribution from bio-mass and other sources. The primarygoal used to be independence in the elec-tricity sector. Now this is less em-phasised with market liberalisation thathas reduced reserve capacities, but in-creased the resource base of the sys-tem. There is a regular flow of peakpower from Austrian pumped hydrostorage plants in the Alps to German in-dustrial areas, balanced by a flow in theopposite direction at times of low de-mand from German thermal powerplants.

A 2002 law setting feed-in tariffs forrenewable electricity resulted in manysmaller decentralised plants based onwind, biomass, and even solar photo-voltaic. A revision of the law in 2006greatly reduced feed-in tariffs. Supportfor renewables will need to be increasedagain in order for Austria to reach itsindicative target of 78% under the re-newable electricity directive.

Biomass is the second biggest renew-able energy source in Austria. The liq-uid waste from paper production (lig-nin) is used for process heat and elec-tricity generation. The use of woodchips, straw, and biogas has been ex-panding considerably. Austria has pio-neered the efficient production of woodpellets for domestic heating, CHP and/or district heating plants.

Energy efficiency and environmentalregulations on energy use in industry andhouseholds were tightened considerablyin the 1980s. New building codes, spaceheating and hot water are expected tostabilise or decrease household demand.

The Austrian opposition to nuclearpower has impacted neighbouring coun-tries, with respect to facilities locatednear the border. However, differing na-tional priorities are putting pressure againin favour of nuclear expansion in the re-gion.

Central Europe: CzechRepublic, Slovakia, Hun-gary, Slovenia

This region is characterised by its de-pendence on fossil fuels in the primaryenergy sector, most of which are im-ported, although the Czech Republic hasabundant coal reserves. Nuclear and coalthermal power plants provide most of theelectrical power, with some share com-ing from hydro and biomass. Natural gasis becoming a key fuel within the newenergy system. As with other transitioncountries in Central and Eastern Europe,economic transformation has been ac-companied by changes in the energy sys-tem and restructuring of energy-inten-sive industries, to meet EC Directives,to improve overall competitiveness, ef-ficiency and meet environmental stan-dards.

On the demand side, energy consump-tion has decreased due to structuralchanges and reduced industrial energyintensity in the 1990s, but in some of thecountries, it is on the rise since 2000 withthe continued importance of a numberof energy-intensive industries in the re-gion. Energy efficiency has been identi-fied as a key priority for Energy Policyto defray the need of investment in addi-tional energy supply and reduce importlevels. The support schemes for renew-able-generated electricity have evolvedwith incentives such as feed-in-tariffs,and purchase obligations.

The Czech Republic is a major EU elec-tricity exporter; however, transmissioncapacity of the Czech grid somewhatconstrains the exports. Hydro and gasmake up 10% of the power generationwith a small amount of biomass, wind,and waste-to-energy power generation.The Czech indicative renewable electric-ity target for 2010 is 8%. The most prom-ising renewable energy sources to meetthe target include biomass, a smallamount of wind, and waste-to-energy.Hydro potential is largely utilised or is lim-ited for environmental reasons. Similarto Slovakia, wind power is limited dueto landscape and nature protection.


Renewable energy schemes in Germany

Figure 5: Contribution of renewable energy sources to electricity generation inGermany (GWh). Source: Federal Environment Ministry, Germany

Energy security has historically been amajor issue in Germany due to lack of oilreserves and the rapid pace of industri-alization before and after the war. Im-ported gas and oil have renewed energysecurity concerns. Germany is not par-ticularly privileged with renewablesources. Hydropower furnishes onlyabout 3.5% of electricity demand. How-ever, the development of new renewablesources is among the most advanced inEurope, due in part to the favourableframework for renewable energy via thefeed-in tariff of the Renewable Energy Act. The German feed-in tariff system ap-pears to have achieved the goals of ad-vancing renewable energy at a rathermodest cost, and has led to one of the high-est global rates of deployment of existingpotential in the case of wind power. Asonshore sites decline, offshore wind willoffer a capacity which is several times

greater. Other Technology R&D is alsoencouraged: From 1995-2004, photo-voltaic power production received thehighest national level of fundingamongst the renewable energy tech-nologies with 42% of the RD&D budget. The emphasis on renewables ad-dresses both energy security concernsand climate concerns. Energy efficiencyhas also been promoted as a “domes-tic” resource. An ecological tax reformprogram (1998-2003) increased pricesfor most energy sources while using rev-enues to finance social expenditures.This helped reduce energy demand,shifted public investments from roads tothe rail sector for several years andfunded new energy efficiency programs(subsidisation of more efficient boilers,better insulation, solar thermal, biomassheating, and building energy stand-ards).

GermanyIn recent years, the German energy sys-tem has been shifting from a reliance oncoal and nuclear towards a more diversi-fied power system with significant con-tributions from renewables and naturalgas. On the demand side, Germany hasexperienced slow growth in energy con-sumption during the past three decades,following a long period of steady growth.The reunification of Germany in 1990 andthe resulting industrial restructuring wasa key factor in reducing industrial sectorenergy demand. Energy taxation hasstimulated energy efficiency in the build-ings and transport sectors, contributing

to an overall energy intensity that is be-low the EU average. Germany has alsoemerged as a world leader in the pro-duction and use of biodiesel as a trans-port fuel.

Energy systemEU electricity liberalisation was trans-posed into German law in 1998 and theopening of EU markets facilitated a se-ries of mergers and acquisitions that re-sulted in a few German companies be-ing among the biggest utilities world-wide. The German energy system cur-rently relies on fossil fuels and nuclearpower for about 95% of its primary en-

ergy supply.Heavy dependence on fossil fuels, es-

pecially coal have raised a variety of en-vironmental concerns in the past threedecades, including acid rain and carbonemissions, reflected in legislation andshifts in the primary energy structure.More recently, expanded heat productionfrom biomass and geothermal plants, hasreceived support as a way of improvingthe overall efficiency of energy produc-tion as well as increasing the share ofrenewables.

About 28% of power in 2004 was pro-duced in nuclear plants. An agreementreached in 1999-2000 resulted in legisla-tion aimed at phasing out the remaining17 nuclear power plants by 2020. As withthe planned nuclear phase-out in Swe-den, industry leaders continue to expressconcern with respect to the impacts ofthe phase-out on competitiveness andcarbon emissions reductions. Productionfrom natural gas has increased consid-erably since 1990, and provides muchof the peak power demand.

Renewable energyPerhaps the most remarkable of the en-ergy transitions that have been takingplace in Germany is the rise of windpower. Germany now has the highest in-stalled wind turbine capacity in theworld, with 21 GW in 2006. The installedcapacity of wind is now more than doublethat of hydropower, and provides sig-nificantly more electricity than hydro.The fact that an increasing share of powercomes from intermittent sources such aswind has been balanced by the expan-sion of non-intermittent renewables,namely biomass and by more analysis ofenergy storage options.

Photovoltaics have also grown at arapid rate. A so-called “100,000 roofsprogramme” (with subsidies) followedby the introduction of a rate that made iteconomically attractive for private inves-tors led to an acceleration of marketgrowth.

Germany has become the world leaderin production and use of biodiesel, ac-counting for nearly half of the world to-

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tal in 2005. An aggressive supportscheme has been in place in Germanyand in several other EU countries for bio-diesel made from rapeseed, increasingproduction more than five-fold during2000-2005. Nevertheless, biodiesel stillaccounts for only 2% of total transportfuels used in Germany; production willhave to increase at a similar pace in or-der to meet the EU target of 5.75% by2010. Bioethanol has also been producedand used, although at a much smallerscale.

Renewable energy is also supportedoutside the electricity sector, especiallyfor biodiesel (as mentioned above) andalso for space heating purposes. In 2005,Germany had about 7.1 square kilometresof solar thermal collectors, and had thelargest collector market in the EU. Wood-based heating systems were also sup-ported, with the high oil prices of the lasttwo years leading to a veritable boom ofsolid biomass-based systems.

Benelux CountriesThere is a heavy reliance on imported fos-sil fuels in Belgium and Luxembourg,while the Netherlands has indigenousfuels, particularly gas. Climate changegoals are receiving highest priority in en-ergy policy. Consequently, renewablesand demand side efficiency have becomeimportant and even the nuclear option isbeing debated. Energy-intensive indus-tries, economic growth and increasingdemand for fuels in transportation are fac-tors contributing to high energy inten-sity in these countries.

BelgiumPrimary energy is predominantly pro-vided by fossil fuels and nuclear power.The complexity of the country’s politicshas made policy co-ordination and im-provement of energy systems challeng-ing. The national system gives autonomyto three regions (Flanders, Walloon andBrussels) and along with the federal gov-ernment, each has its own regulatory in-stitutions and activities in the energy sec-tor. As a result, there has been regionalimplementation of the EU directives onthe power market.

Nuclear power continues to dominatethe power sector, with its share chang-ing from 60% to 55%. between 1990 and2004. Over the same time, gas has in-creased its share to 28% and coal de-creased to 12%. A small amount of re-newable energy in the form of biomassand hydro contributes to the mix of powergeneration sources.

Investments in wind power and bio-mass have increased. There is a large po-tential for off-shore wind power underthe federal government’s jurisdiction. Thefederal and regional authorities are devel-oping initiatives to promote energy sav-ings and renewable power generation, tomeet Kyoto targets. More co-ordinationand integration between the authoritieswould improve efficiency and effective-ness.

The NetherlandsThe Netherlands high population densityin combination with the country’s small-scale, low-lying geography, and intensityof economic activity has led to an en-ergy system that is highly concentratedand technically well-developed. The

country has well developed access toelectricity and natural gas via a high-den-sity energy infrastructure.

Gas continues to dominate the energysupply for electricity, heating and appli-ance use, but coal is imported for use inthe electricity system. Nuclear power pro-vides a small share of power. The flatlandscape provides no hydropower op-portunity, but major renewable optionsare wind and biomass. The grid is well-integrated, with connections to Germany,Belgium and Norway, positioning thecountry strategically in overall trade.

The Dutch energy system has under-gone significant changes since the mid-1980s, with efficiency improvements onboth the demand and supply sides as coredrivers. The current fossil-based Dutchenergy system is inconsistent with thelong-term objectives of sustainability andenergy security.

LuxembourgIn Luxembourg, the only domestic re-sources that are used include hydro-power and biomass, although a smallamount of wind power - 35 MW - hasbeen installed in recent years.

Restructuring of the steel industry withsome closures and replacement of blastfurnaces with electric arc furnaces hassignificantly reduced Luxembourg’s coalconsumption, but increased electricityuse. The government has been promot-ing the use of natural gas in order to di-versify energy supply which is used inCHP units, industry and domestic sec-tors. About 76% of domestic power wasgenerated in gas-fired plants and about21% in hydro plants. The remainder issupplied from biomass and wind andsome is imported from Germany and Bel-gium.

The government has provided incen-tive mechanisms (investment and pro-duction subsidies) to increase renewableenergy production, with significant im-pacts such as 60% growth in photovol-taics between 2003 and 2004. The shareof renewables in domestic electricity pro-duction in 2004 was about 24%, con-sisting mainly of hydro, with 21%, and asmall amount of wind and biomass.


Concentrating solar power, Font Romeu, France

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FranceThe energy system in France hasevolved based on the principles of en-ergy access for all citizens, price-com-petitiveness, environmental protection,and security of supply. As there are veryfew indigenous fossil fuel resources,electricity is predominantly generated bynuclear power. There are increasing in-vestments in renewable energy, includ-ing biomass, hydro power, wind powerand solar thermal systems. The EnergyAct of 2005 laid down new goals foradvancing renewable energy and im-proving energy efficiency, as well as re-affirming the long held energy policyprinciples of energy independence andenvironmental sustainability.

Outside of the transport sector,France is not heavily dependent on fos-sil fuels, largely due to the dominationof nuclear power in the energy mix, ac-counting for 78% of production in 2004.Hydro-electricity’s contribution has var-ied between 10-15% during 1990-2004.France is a major exporter with up to12% of its total electricity generation ex-ported. Unlike many other EU countries,gas supplies are diverted to non-elec-tric uses due to predominance of nuclearpower and emphasis on renewable en-ergy and environmental sustainability.

Household and service sectors ac-count for 65% of electricity demand inFrance. The energy demand has beenincreasing steadily due to economic andpopulation growth and growing electric-ity use in the domestic and industrial sec-tor. Electricity use has grown at a fasterpace with increased use of air condi-tioners and other appliances. Effortshave been made to reduce energy in-tensity, and recent legislation has pro-

vided a tax credit for energy savings anduse of renewable energy sources, includ-ing heat pumps, condensing boilers andinsulation materials. Similar to Italy, anenergy saving certificate scheme (WhiteCertificates) obliges energy sellers to gen-erate energy savings over a given period.

Energy policyThe French energy policy has been reor-ganized to ensure four major energypolicy objectives.• Independence and security of sup-ply: With limited energy reserves, Franceseeks to reduce exposure of the econ-omy to fluctuations in energy prices andavailability. The aim is to ensure avail-ability of sufficient capacity to cope withproblems of shortages of electricity, gasand oil.• Competitive energy prices: A guar-antee of competitive energy prices,coupled with high quality and availabilityto businesses, aims to enhance France’sattractiveness and employment.• Environment: Risk to human healthvia management of the nuclear sector;risk and mitigation of climate change.• Energy access for all: Provision ofaffordable, high quality energy guaran-tees social and territorial cohesion.The principle areas of action to achievethese objectives are; • To control energy demand, through aseries of incentives and programmes (en-ergy saving certificate scheme, standardsand regulations, tax incentives) • To diversify sources of energy, (in-creasing the use of renewable energies,keeping nuclear options open, develop-ing a high-performance energy produc-tion infrastructure) • To increase energy research, in key

areas for the future (bioenergy, fuel cells,clean vehicles, energy-efficient buildings,solar energy, carbon capture and under-ground storage of CO2, 4th-generationnuclear power) • To provide methods of transportingand storing energy, adapted to require-ments to guarantee the quality of the elec-tricity supply, reinforce the security ofthe gas and electricity grids and improvethe safety of France’s energy supply.

As a result, clear targets for action areset by the French Energy Act in the fol-lowing: quartering of CO2 emissions by2050; reduction of final energy intensityof 2% a year and increasing to 2.5% in2015; 10% power from renewable en-ergy by 2010; incorporation of 2% re-newable fuels by 2006 and increasing to5.75% in 2008 and 7% in 2010. This lasttarget is above the EU Directive target of5.75% by 2010.

The Iberian Peninsula

Portugal and SpainSpain and Portugal depend significantlyon imported fossil fuels for primary en-ergy needs, although Spain has a smallershare due to the contribution fromnuclear power. Investment and infra-structure policies have been driven by theneed for source diversification and se-curity of supply. This has been facili-tated by market liberalisation in 2003-2004. The focus of renewable energy de-velopment in energy policies has in-creased to address the challenges of en-ergy security and climate change mitiga-tion.


Portugal wave energy - research and development

Although wave power technology has been around for thirtyyears, there has been slow progress to commercialisation,due to technological setbacks. Oceans are an untappedresource of power for generating useful energy. Commercialtechnology for conversion of energy from tides, marinecurrents, thermal gradients or ocean waves is still in itsinfancy. Ocean energy systems must be able to endure harshenvironments of mooring, saltwater corrosion and stormdamage while fulfilling environmental require-ments at aneconomical price. Concerted efforts in research and devel-opment are required to move past the technical and commerc-ialisation barriers. With climate change concerns andinvestments in renewable energy, there has been recent focusin wave resource utilisation. Since 1978 Portugal has played a significant role in Wave energy research and development,particularly Oscillating or Assisted Water Columns (OWC). The principle of the OWC used in this case lies in its ability toconvert the wave action into a motion that pumps high pressure fluid through a hydraulic motor. This in turn drives anelectrical generator. In 2000-2001, a 400 kWe shoreline OWC was developed on the island of Pico in the Azores, supplying8-9% of the island’s electricity demand. The world’s first commercial wave power generators off the coast of Povoa de Varzimwill begin operation in 2006-2007.

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Pelamis wave machine, Portugal

Current energy mixIn Portugal there has been a significant in-crease in the installed capacity for hydro-power and thermal energy from natural gas.Improvements in the import infrastructurehave made possible the increase in use ofLNG and like Spain, the country has diver-sified its supply to improve its security.Spain has a fairly diversified mix of sourcesof energy compared to other EU countries.Coal and nuclear power provide a largeshare, while the natural gas market is oneof the fastest growing in the world.

Renewable energyUnder the Renewable Electricity Directive,Portugal has indicated a target of 39% withsignificant increases in investment in alter-native sources. A tariff regime awardshigher rates per kilo-watt hours dependingon the type of technology and the monthlyusage. Spain’s General Electricity Law in-cluded the goal of 12% of primary energyconsumption from renewable sources by2010. It has successfully implemented a di-verse and dispersed range of renewable en-ergy technologies, which accounted for19% of power generation in 2004.

HydroHydropower is the main renewable energyin Portugal and between 1990 and 2004,installed capacity grew by 45%. In Spain,hydropower accounts for 26% of installed

capacity. 2.6% of total hydro is smallscale capacity.

Wind and SolarPortugal’s Atlantic archipelago islandsof Azores and Madeira have had sev-eral wind project sites developed sincethe late 1980s, leading to a 2004 ca-pacity of 553 MW. A 10-fold increaseis expected with a target of 5100 MWby 2010. The expansion of windpowerin Spain is second only to Germany,with some 8 220 MW of installedwind capacity, and an additional 57 000MW planned.

The solar energy resource availablein the region has been targeted withrecent investments. An 11 MW solarPV installation, covering 60 hectaresoutside Portugal’s capital Lisbon, isexpected to provide electricity for 8000homes in 2007. In Spain, guaranteedprices for grid connected solar pho-tovoltaic systems, coupled with costreductions have allowed the installedPV capacity to increase to 37 MW in2004.

BioenergyBioenergy accounts for 11% of pri-mary Portuguese energy supply. A fur-ther increase of 100 MW installed ca-pacity of forestry-based biomass ther-mal power stations is expected due togovernment policies. Industry is the

primary consumer of this source of en-ergy, followed by household and ther-mal power plants. Portugal has increasedits efforts in the biofuels sector, and re-cent laws have been passed that pro-mote the use of biofuel quotas in publictransport fleets and provide partial ex-emption from excise duties.

With subsidies for the constructionof distilleries and promotion of ethanolSpain has become the largest producerof fuel ethanol in the EU, for the trans-port sector. National and regional gov-ernments provide subsidies and tax ex-emptions for biofuel producers and sup-port for promoting ethanol use.

Energy efficiencyThe Mediterranean climate has resultedin an increased electricity demand forcooling. New regulations aimed at re-ducing energy intensity. The National Cli-mate Change Program (2008-2012) inPortugal aims to ensure Portugal’s com-pliance with the Kyoto Protocol and putsforward measures and policies to ad-dress sectors not covered by the EUEmissions Trading Scheme (ETS). Thehigh economic growth and rapid indus-trialisation has increased Spain’s energyconsumption and the Strategy for En-ergy Saving and Efficiency in Spain2004-2012 aims to reduce the high de-pendence on imported energy.


The first geothermal generated elec-tricity was in Larderello, Italy in 1904and was commercially generated afew years later. It is a resource thatcan be used directly for heat or indi-rectly for electricity, on large or smallscales. A concentration of geothermal en-ergy potential in the country has al-lowed Italy to take leadership in thistechnology, with over 642 MW of in-stalled capacity (39% of renewables)in 2004.

Geothermal power plant, Italy

Mediterranean Countries

ItalyLack of domestic fossil fuels and a de-pendence on imports are of strategic sig-nificance for Italy’s economy. Invest-ment and infrastructure policies havebeen driven by the need for source di-versification, increased competitivenessand security of supply. This has been fa-cilitated by market liberalisation and in-creasing the new players in the electric-ity sector.

The overwhelming share of the pri-mary energy system is dominated byfossil fuels (95%). Nuclear power hasbeen subject to a moratorium in Italy. In-creasing concerns over carbon emissionsand environmental impacts of coal usehave aimed current R&D efforts to im-proving its efficiency. In the natural gasmarket, there is a need for investment innew gas pipeline infrastructure andstrengthening of existing lines. This re-quires actions from the surrounding re-gions with a priority on imports fromRussia, North Africa and the Middle East.With all of the planned infrastructure in-vestments, Italy is emerging as a Euro-Mediterranean “hub” for the gas market.

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ReformsThe Decree 79/1999 initiated power sec-tor reform that allowed continued evo-lution of a plurality of suppliers and agradual liberalisation on the demandside. The reforms have also increasedthe shares of renewable energy, whichaccounts for 7% of Italy’s energy con-sumption in 2004. The decree intro-duced an obligation for power suppli-ers to use renewable sources (exceptlarge hydro) for production of 2% ofannual electricity. The quota increasesover time. With a market trade mecha-nism in place, power suppliers canchoose to generate renewable electric-ity or purchase it via Green Certificates.

Constitutional reform in Italy’s en-ergy policy and planning has clarifiedthe role of the central and regional gov-ernments in the energy sector, givingItalian regions new authority and re-sponsibility. This has been an impor-tant element in the electricity infrastruc-ture planning choices of 2003-2005. Ad-aptation in 2005 of the EU Directive2002/91/EC for energy efficiency nowdelegates regions to draft local plans andregulations on new buildings and res-toration of old ones.

Renewable energyHydro electricity is the largest contribu-tor to renewable energy, followed bysmaller shares of geothermal, wind andbiomass energy. About 75% of renew-able electricity is generated by hydroplants of which 17% are small-scaleplants. Bioenergy has a high potentialin the country and currently under-ex-ploited. In the production of heat, therehas been a growing use of wood, pel-lets and wood-chips.

Efforts to invest in structural andtechnological innovations in energy-ef-ficient industrial systems have beendriven by reliance on imported energysources, but also by the shift to a ser-vice sector economy with the growingdemand for electricity for air condition-ing and other uses. There is also an in-creasing use of co-generation; about28% of national electricity productionis based on co-generation, mainly usingcombined cycle technologies. This trendis supported by the energy efficiencyMinisterial Decrees obliging distributorsto obtain demand-side energy savingsof 2.9 Mtoe. As in the power genera-tion sector, a flexible market mechanismallows the distributors to implement theirown energy efficient projects or pur-chase third party energy saving projectsvia White Certificates.

GreeceIn recent years, Greece has been re-structuring its energy system to improvesustainability, security and competitive-ness, as per the policy goals of EU di-rectives. The Greek energy system has


Thissavros dam, Greece

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historically been characterised by con-tinuous growth, relatively high energy in-tensities, and a continuing attachment toconventional fuels. Primary consumptionis dominated by oil and coal. Natural gaswas added to the energy mix in 1998 andefforts are underway to exploit the abun-dantly available solar and wind potential.Construction of trans-European andtrans-continental networks is helpingtransform Greece into a key energy linkbetween Europe and Asia.

With intensive exploitation of lignite,coal and imported oil have been majorfuels for the thermal plants. The continu-ing dependence on coal, the growingelectricity demand, and the low averageefficiency of thermal power plants rep-resent an environmental liability, as thepower sector is responsible for over 50%of CO2 emissions in Greece. The powernetwork consists of the interconnectedgrid on the mainland along with severalautonomous systems in the islands.Planned sub-sea interconnections aim todrop the cost of small autonomous units,balance load and enhance the capacityof the islands to exploit intermittent re-newable sources. Trade with neigh-bouring countries amounts to 3-5% oftotal electricity consumption.

Since liberalisation of the Greek elec-tricity market in 1999, government own-

ership in public power systems has beenreduced. One technical barrier has beenthe need to expand and/or improve gridcapacity for connection to places of highwind potential and the demands of a rap-idly growing peak load in the summer. Anew law in compliance with the EU elec-tricity directive of 2003 is aimed at re-moving technical and institutional barri-ers to the full market opening.

Despite considerable natural endow-ments, the degree of renewable energyexploitation remains small and confinedto commercially mature technologies:large hydro contributing 9% of powergeneration. With initial tax incentives andadvertising campaigns in the 1980s,Greece attained the second highest de-gree of solar collector penetration in Eu-rope (270 m2/1000 inhabitants) forhousehold water heating purposes, andis also an exporter of this technology.The systems have been effectively com-bined with absorption units in order tocover the steadily increasing cooling de-mand. The challenge now is to shift theapplication to the commercial sector.

Cyprus and MaltaThe energy systems on these two islandsare based almost exclusively on oil andimported petroleum products. The elec-tricity generated is primarily from ther-

mal power plants operating on fossil fu-els. EU directives pertaining to energyand environment have been reflected innational legislation. Energy strategies aretherefore focused on improving energyefficiency, diversifying the sources ofsupply, and developing renewable en-ergy sources. The typical warm Medi-terranean marine climate contributes tothe increasing demand for summertimecooling.

The energy demand in Cyprus hasbeen increasingly steady due to continu-ous economic growth in the tourism andfinancial sectors. Solar thermal energyis the main renewable energy form inCyprus today, like Greece, and is usedfor hot water heating. It is important totake advantage of the significant poten-tial of wind, biomass, and solar energyto help diversify the energy mix, takeadvantage of the sunny climate andachieve the 10% target for renewableelectricity by 2010.

Malta currently fulfils the EU powersystem definitions of a “small isolatedsystem”, because of its geography, sizeand isolation as well as the level of elec-tricity generation (below 2500 GWh).This may change with the proposed DCcable link to Sicily, Italy and plans forinstalling an additional 100 MW gener-ating capacity.

Renewable energy targets for 2010in Malta are focused on photovoltaics,wind and energy production fromwaste. Currently, small grid-connectedPV systems have been installed, andgovernment subsidies are provided forsmall domestic PV and wind systems.There is considerable potential for large-scale offshore wind generation esti-mated to reach 10% of the total gen-eration capacity. The first waste-to-en-ergy pilot plant will come on line in2008. The fastest growing market hasbeen domestic solar water heating sys-tems, assisted with government supportmechanisms. Recent building regula-tions, yet to be implemented, set mini-mum standards of energy performancefor building components and water con-servation.


Table 1: Key energy/climate indicators 2004

Source: http//ec.europa.eu/energy/energy_policy/facts_en.htmNote: toe = tonnes of oil equivalent; kgoe = kg of oil equivalent

New Member States:Romania and BulgariaSome eighteen years after the fall of com-munism, Romania and Bulgaria joined theEuropean Union (EU) on January 1, 2007.The transition of the heavily centralisedand subsidised backbone of the commu-nist economy to a market-based one hasbeen a slow and demanding process, pos-ing huge challenges to the energy sector.Significant progress has been made butfurther measures are needed to createfunctioning energy markets, to tackle highenergy intensities and to improve environ-mental performance of the sector.

Both countries have high energy inten-sity due in part to the communist legacy.However, their CO2 intensity is onlyslightly above the EU-27 average, due tothe presence of low-carbon sources intheir power sectors, primarily hydro andnuclear. Bulgaria has not yet tapped itsrenewables potential to any significantextent; Romania has exploited a consid-erable amount of its large-scale hydro,while small-hydro and other renewablescontinue to have room for major expan-sion. The EU RES-E directive calls for11% renewable electricity share in Bul-garia in 2010 and 33% in Romania, whichalready meets nearly 30% of its electric-ity needs through hydroelectric power.

Indicator Units Romania Bulgaria EU-27

Energy per capita kgoe/cap 1826 2425 3689Energy intensity toe/MEUR 774 1142 185Energy import dependency share of primary supply 30% 49% 50%CO2 intensity tCO2/toe 2.5 2.3 2.2CO2 per capita kg/cap 4505 5671 8180Renewable energy share of primary supply 12% 5% 6%Renewable electricity share of gross consumption 29% 8% 14%

RomaniaRomania is a significant producer of gas,oil and solid fuels. Domestic productioncovers a large percentage of energyneeds, and thus its import dependenceat 30% is far below the EU-27 average.There is a small but growing contribu-tion from nuclear energy, while coal stillprovides the largest share of electricityproduction, at about 38% in 2004. Bio-mass is used widely for heating and otherdirect uses in Romania, and accounts for11% of primary energy supply. Most ofthe biomass use occurs in households,with the remainder used in industries,heating plants and small businesses.

Provision of public support for re-newable energy projects has been initi-ated via tradable green certificates(TGCs) and mandatory dispatch andtrade of electricity from such sources.TGCs are issued to electricity produc-tion from wind, solar, biomass or hy-dropower generated in plants with lessthan 10 MW capacity. The Industry sec-tor accounts for nearly half of the en-ergy demand, and will be a key focus ofenergy efficiency efforts in the comingyears. Measures in recent national strat-egies are set to identify and increase en-ergy efficiency.

BulgariaThe fuel mix in electricity generation isdominated by thermal power plants op-erating on fossil fuels and nuclear. In Bul-garia, there is significant reserve in thesystem, making it a net exporter ofpower. Technological concerns related

to the design of the nuclear power plantin Kozloduy, Bulgaria led the EuropeanCommission to insist on their partial clo-sure. This has led to political discus-sions, news headlines and a completechange of public opinion in support ofproposed second nuclear power plantat Belene island on the Danube river.

Until recently feed-in tariffs wereadopted only for wind and hydro,which led to rapid growth in the num-ber of installations, but there were verylimited developments for other renew-ables. Clearer rules on tariffs and pro-motion of renewables are proposed inthe latest policy initiatives. Most cur-rent renewable electricity is hydro (7%),while biomass and wind have consid-erable future potential. Sustainable useof biomass waste and forest resourcesare needed. Recent opposition by envi-ronmental NGOs to large wind farm de-velopment at the Black Sea was con-cern with Via Pontiaca – a major Euro-pean migratory bird-route.

Inefficient systems, poor fuel use andhigh transmission losses contribute tothe high energy intensity of the Bulgar-ian economy, which is the highest inthe EU-27. Households have high en-ergy use for heating and inefficient ap-pliances, while most of the buildingstock in Bulgaria is poorly insulated. Apositive legacy of the communist pastis centralised heating for whichmodernisation is needed. A mix of gov-ernment measures adopted in Bulgariahas had limited success in improvingoverall energy efficiency.

Energy efficiency improvements canbe more cost-effective than implement-ing renewable energy projects, espe-cially in countries like Romania andBulgaria.

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