PowerPointPrsentation

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Learning from Feed-in Tariffs Dr. Axel
Bree "Data Gathering on Renewable Energies for
the New Member States and Candidate
Countries" 11-12th November 2008, Prague
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Structure of Presentation

• Introduction
• Design of Feed-in Tariffs
• Tariff
• Purchase Obligation
• Burden Sharing
• Grid Connection
• Conclusion

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The World Future Council

• The World Future Council
• consists of fifty highly respected figures
  represented in governments, civil society,
  business, science, education and the arts
  from all five continents
• is an integrated global forum based on mutual
  ethical values, highlighting our
  responsibilities as citizens of the earth
• strives to mobilise moral energy and political
  will to protect the rights of future
  generations

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Check out www.onlinepact.org and
www.AllianceforRenewableEnergy.org
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Performance, Targets and Potential of Selected
Eastern European Countries
Share of RE in total electricity generation
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Market Barriers

• distortion from subsidies for competing fuels
  (NEF Report 2004 US 235 bn/a)
• fluctuation of oil and gas prices
• environmental externalities
• planning restrictions
• grid access
• new technologies

RE support schemes are imperative
Source BEE, Lackmann, 2005
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Pieces of the FIT Puzzle
Purchase Obligation
Tariff level
Burden sharing
Grid Connection
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Calculation of Feed-in Tariff

• Generation Costs
• investment cost operating cost
• ./. expected production over service life
• compensation per kWh
• lt-gt avoided external costs

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Design of Tariff Levels Stepped Tariffs

• All FIT tariffs differentiate between different
  technologies (high PV low hydro)
• Other differentiation criteria Location, wind
  yield, plant size, fuel type, repowering
• Ratio - no overcompensation
• stronger support for young technologies with
  potential
• Balance of incentives to exploit all, but most
  favourable conditions first

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Tariff Degression and Experience Curve

• Tariffs are guaranteed for long time periods
• Experience curve price for power plants and
  installation decrease
• Ways to reflect decrease in compensation scheme

• Tariff degression (D,F, I)
• Tariff level falls each year based on ex-ante
  progress ratios for technology
• investment security, transparency, incentive to
  built early
• Not flexible in case of structural changes

• Tariff revision (N, PT, CZ)
• Tariff is revised periodically (1-3 y.) or
  capacity-related within certain limits
• can apply to new or and old plants
• avoid over- or under compensation
• - Less investment security

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Premium Tariff vs. Fixed Tariff

• Premium on top of market price (ESP, CZ, SI, NL,
  DK)
• Higher oil gas prices lead to higher cost per
  kWh RES-E
• higher comparability with liberalised energy
  markets
• Higher risk for producer (no purchase
  obligation)
• gtCompromise could be a top or bottom limit (as in
  DK)

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Purchase Obligation

• Electricity grid operators, energy supply
  companies and consumers are obliged to buy RES
  electricity

• Integral part of fixed FIT-system
• Guarantees investment security
• No purchase obligation with premium tariff system

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Burden Sharing

• Compensation for energy intensive industries
• AU households pay lump charge of 15 /a,
  industries up to 15.000 /a electricity traders
  have to pay fixed tariff
• DK reduction of 37-39 for consumption gt100
  GWh/a
• DE gt10 GWh energy costs gt15 gross value
  added track railways tariff is limited to 0.05
  ct./kWh

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Costs of Grid Connection
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Conclusion
Focus should be on long term planning and
investment security, because it is best incentive
to invest and keep costs low -gt long term fixed
tariff -gt priority purchase obligation -gt
reviews only in a restricted frame Regulation
must be well-balanced to give enough incentive
but to avoid windfall gains -gt stepped tariffs -gt
degressive tariffs -gt shallow connection charging
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Thank you for your attention.
www.worldfuturecouncil.org