some remarks on future electricity generation in europe

Some Remarks on Future Electricity Generation in Europe

CenSES Annual Conference

Andreas Schröder, Supervision Prof. C. von Hirschhausen

Oslo, 30 November 2012

Road Map

European Investment-

Dispatch Model

Investment and Grid Congestion

in Central Europe

What is not part of the

future power mix!

1

2

3


Model #1

Integrated Investment-Dispatch

Model for Europe


Capacity evolution of conventional power plants

EMELIE-ESY PRIMES


Power Generation Mix under a 40% target in 2050

2020 2050


Model #2

Grid Congestion and power plant

investment


Grid Development Plan

1. Three BNetzA scenarios

2. 4 HVDC-corridors (28 GW, 3100 km)

3. Additonal measures in the AC-Grid (3100 km retrofit,

1600 km newly constructed, 1100 km adding lines)


Data

Geographical Coverage

Central Europe 41 nodes (18 of which lie in Germany) with aggregated zones

Temporal Coverage

2030 Uses time series from 2011 8760 hours optimized

Generation

7 conventional technologies + wind, solar, hydro, biomass PLATTS European Power Plant Database & dena zones German capacities aligned to Scenario B 2032 (2012) Fuel & carbon prices from NEP (2012) RES feed-in scaled to 2030 EcoFys projections (NREAP basis) No CHP constraints

Demand German net demand set at 535 TWh/a (NEP, 2012 incl. industry) European demand 9% growth over 2011

Storage & DSM

3 types of storage (compressed air storage, pump hydro, battery) DSM accounts for consumer heterogeneity

Grid Recent plans from German TSOs & TYNDP (Boldt et al. 2012) 41 nodes, 263 AC lines, up to 50 DC lines


Investments in gas-fired power

plants in Germany (5.3 GW)

Scenario without HVDC

Maurer et al. (2012): 19 GW

4 Results


New CCGTs in

EU (23-32 GW)

IEA WEO (2011):

139 Coal+67 Gas

4 Results


Congestion on German HVDC lines in the reference scenario

4 Results


Participation in

the policy debate

Oei et al. (2012)

Schröder et al. (2012)

4 Results


Part #3

What is not part of future back-up

capacity


What is NOT Part of the Future Backup Capacity:

Nuclear in Europe: Uncertainty Beyond Spring 2013

►“The obligation to have

insurance cover will lead

to costs that will be

reflected in the costs to

the consumer of buying

electricity. Certainly this

will not lead to nuclear

energy becoming more

competitive” – G. Öttinger

Source: Schröder et al. (2012) Source: FT.com (2012)

Countries Having Recently Opted for

Nuclear Phase-Out (more or less binding)

What is NOT Part of the Future Backup Capacity:

Carbon Capture, Transportation and Storage (CCTS)?

“Wishful Thinking”: Expected Investment Volumes for CCTS

Additional investment needs for CCTS over the next ten years. IEA, 2009

Global CO2 pipeline development 2010-50. IEA, 2009

►The next 10 years are a critical period for CCTS (IEA, 2009).

►Among the 62 announced CO2 capture projects, only 7 pilot projects are operating on the pilot scale.

►Assuming that all of the announced projects are realized by 2050 there still remains a gap of 40 projects to reach the IAE blue map scenario.

►This gap is higher with respect to regional projections. Only Europe could reach the IEA forecast by 2020 given 37 announced CCTS projects.

IEA., 2009

IEA., 2009

Source: IEA (2009)

CCTS in Europe:

no successful demonstration project to date

Source: BOLESTA (2009)

Status of EERP (2008) and NER 300 Projects

(MIT 2012, Global CCS Institute 2011)

Project Jänsch

walde

Porto-

Tolle

Maasvl

akte

(Rotter

dam)

Belchat

ow

Compo

stilla

Don

Valley

Power

Project1

UK Oxy

CCS

Demon

stratio

n

Project

C.GEN,

Killing

holme,

Yorkshi

re

Peel

Energy

CCS

Project2

Longan

net

Project

Peterhe

ad Gas

CCS

Project

Eston

Grange

CCS

Plant

Getica

CCS

Demon

stratio

n

Project

ULCOS

– Blast

Furnac

e

Green

Hydrog

en

Countr

y DE IT NL PL ESP UK UK UK UK UK UK UK RO FR NL

Techno

logy Oxyfuel

Post-

Combus

tion

Post-

Combus

tion

Post-

Combus

tion

Oxyfuel

Pre-

Combus

tion

Oxyfuel

Pre-

Combus

tion

Post-

Combus

tion

Post-

Combus

tion

Post-

Combus

tion

Pre-

Combus

tion

Post-

Combus

tion

Post-

Combus

tion

Pre-

combust

ion

Storage Aquifer

onshore

Aquifer

offshore

Enhan.

Gas

Recov.

offshore

Aquifer

onshore

Aquifer

onshore

Enhan.

Oil

Recov.

offshore

Aquifer

offshore

Aquifer

offshore

Oil and

gas

fields

Enhan.

Oil

Recov.

offshore

Oil and

gas field

Aquifer

offshore

Aquifer

onshore

Aquifer

onshore

Enhan.

Gas

Recov.

offshore

Size 250 MW 660

MW 250 MW 260 MW 323 MW

900

MW 426 MW 450 MW

1.600

MW 330 MW

400

MW

400

MW 250 MW

Industry

(steel)

Industry

(hydro.)

NER300

Applica

tion

Yes Yes No Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Further

Fundin

g

180 M€

(EEPR)

100 M€

(EEPR)

180 M€

(EEPR)

150 M€

(NL)

180 M€

(EEPR)

137 M€

(NOR)

180 M€

(EEPR)

180 M€

(EEPR) - - - - - - - - -

Year of

Operati

on

2011

cancel.

2011

stopped 2015 unclear unclear

2010

stopped

announ.

(2016)

announ.

(2016)

announ.

(2016)

2011

cancel.

announ.

(2016)

announ.

(2016)

announ.

(2015)

announ.

(2016)

announ.

(2016)

1formerly Hatfield 2formerly Hunterston

Source: MIT 2012, Global CCS Institute 2011

What is NOT Part of the Future Backup

Capacity: Lignite

► Inputs

► Data + trend over time

Electricity Price Base

CO2 –Certificate-price

Fuelprice

Efficiency

CO2-Emissions

Full load hours

Installed capacity

Specific investment cost

Fix O&M Cost

Variable O&M Cost

Equity capital rate

Market interest rate

Internal Interest rate

Cash conversion cycle

Investment criteria

Financial data

Power plant data

Market data

Outputs

Cost of electricity

Cash Flows

Net present Value

Internal rate of return

Static payback period

Dynamic payback period

Investment appraisal as a basis for an analysis of profitability

Quantitative assumptions Input Value Trend per year [in %]

Average electricity price 51 €/MWh –

CO2-Certificate price 8 €/t CO2 + 9,25

Fuelprice 1,4 €/MWhthermisch –

Full load hours 7500 h - 2,5

Installed capacity 1100 MW –

Fix O&M cost 30 €/kW/a + 0,33

Equity capital rate 40 % –

Market interest rate 6 % –

Internal interest rate 9 % –

Cash conversion cycle 20 a –

period under review 40 a –

Efficiency 43 % 0 %

CO2-Emissions 0,950 t CO2/MWh

0 %

Specific investment cost 1700 €/kW

Variable O&M cost 6 €/MWh 0 %

Investment not profitable: NPV = -298 m€

Result: New Investments in lignite unlikely, too

24,20 29,98

37,04

45,66

-600 €

-500 €

-400 €

-300 €

-200 €

-100 €

0 €

100 €

200 €

300 €

400 €

2830

3127

3453

3811

420

5

46

36

510

9

5628

619

6

68

19

750

0

CO2-Price 2032

NPV M

illi

on

Full load hours 2032

Result: New Investments in lignite unlikely, too

1 2,2

3,4 4,6

-1,000 €

-800 €

-600 €

-400 €

-200 €

0 €

2830

3127

3453

3811

420

5

46

36

510

9

5628

619

6

68

19

750

0

Fuelprice (€/MWhth)

NPV M

illi

on

Full load hours 2032

Investment not profitable: NPV = -298 m€

Conclusion


1. Our calculations show that private investors are unlikely to

invest in huge amounts of capacity under the current

market design

2. CCTS and Nuclear Power are more expensive than most

studies assume

3. There is little to no future for CCTS, lignite & nuclear

Conclusion


Thank you very much for your kind attention.

DIW Berlin — German Institute for Economic Research TU Berlin – Technische Universität Berlin

Mohrenstraße 58, 10117 Berlin Workgroup for Economic and Infrastructure Policy

www.diw.de Str. des 17. Juni 135, 10623 Berlin

www.wip.tu-berlin.de

some remarks on future electricity generation in europe

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