The challenge of running 100% renewable energy scenarios M ethodological issues

1. The challenge of running 100% renewable energy scenarios • Methodological issues • 2nd Ghent Summer School • August 28, 2014 D. Devogelaer, FPB

2. 100% what? • Mission from 4 energy ministers in 2011: 1 federal, 3 regional ministers of Energy Concerns on climate, economy and SoS • Time frame, target and consortium fixed: 2050 - 100% - FPB (fed), VITO (Fl), ICEDD (Wl) manoeuver within that framework

3. How can we answer a question like this? “You say you want a [renewable] revolution… We'd all love to see the plan” The Beatles, White Album, 1968 Relatively easy to calculate number of windmills, solar panels, ... required, less straightforward to have them all available when needed (V)LT model  Scenario analysis Which input? Which model? Which output? Which scenarios?

4. The model

5. Model: What(’s in a name)? « En économie, un modèle est une représentation simplifiée de la réalité économique ou d'une partie de celle-ci. Comme dans les autres disciplines scientifiques, les modèles économiques utilisent le formalisme mathématique qui permet de représenter le modèle sous forme d'équations. Outre ces équations, les modèles empiriques sont constitués d’une banque de données propre et généralement d’un jeu de paramètres. «  Source: FPB. • a description of a system using mathematical concepts and language • used not only in natural sciences (e.g. physics) and engineering disciplines (e.g. computer science, artificial intelligence), but also in social sciences (e.g. economics) • may help to explain a system and to study the effects of different components, but also to make projections about future behaviour • basically, a set of interrelated equations that can assign results either to a variable or to a dimension value

6. How do you define the choice of the model? • What is your research question? • Which models are apt to answer the question? 100% study: Model TIMES National energy system VITO partner in project Quick feedback loops Experience with time horizon 2050

7. Basic principles of TIMES model • Partial equilibrium (energy) model • Bottom-up optimisation model of the national energy system • Detailed representation of energy-material flows and technologies (broad sense) • Various alternative technological choices • Up to 2050 • Driving factor: fulfilment of energy service demand(≠ energy demand)

8. Challenge: Dealing with variable renewable sources  daily and seasonal fluctuations Source: Elia.

9. Major model improvements for dealing with variable character of renewable energy • Cope with uncertainty of power supply Extending the temporal resolution to 78 periods in one year = 26 periods of two weeks x 3 periods a day Reserve capacity requirement (sum of nominal power of biomass plants, geothermal and storage facilities) Constraint to assure that BE can be self sustained for 14 consecutive days without counting on wind and solar • Day-night and seasonal electricity storage options • Alternative solutions to increase system’s flexibility Overproduction - grid disconnection  curtailment Endogenous steel production timing (not ‘just in time’) • Endogenous transmission and distribution network

10. The input

11. Define assumptions How do you go about? • Literature review: problem of finding exactly what you need Geographical scope Time frame “Old” data Coherence … • Stakeholders: want to have their say, can deliver valuable input, but Often not familiar with model specificities Often not aware of time lags of model One model cannot solve all • Expert judgment: more difficult for references/objectivity

12. Define assumptions (II) You will get attacked on your assumptions… always! Because it is no exact science e.g. oil price projections Because by the time your study gets published, assumptions can be out-dated -> the curse of the modeller By pressure groups, lobbyists, but also peers Solution: Perform sensitivity analyses to test robustness of results Often the definition of assumptions is an exercise on its own and can give rise to new studies!

13. Background information Surface: 30.000 km2 Population: 11 million (330p/km2) GDP: 350 billion € Final energy consumption: 1800 PJ Per capita final energy consumption: 150% EU27 average or 75% US Hydro: limited to 120 MW Domestic fossil energy supply = 0

14. Assumptions • Belgian GDP: increases at an AAGR of 1.8% in 2010-2050 • Fuel prices: Energy roadmap 2050, CPI, crude oil to some 127 $’08/bbl in 2050 • Carbon price: Energy roadmap 2050, CPI, 15 €/tCO2 in 2020, 51 €/tCO2 in 2050 • CCS technologies: not allowed • Coal: no investments in new coal fired PP’s • Nuclear: current legislation on the phasing out of nuclear PP’s • Electricity imports: limited to 5.8 TWh (average Belgian net imports 2003-2010)

15. Assumptions on renewable costs

16. Assumptions on electricity storage costs

17. The scenarios

18. Definition of scenarios REF Fossil Benchmark scenario Fossil Benchmark Scenario

19. The output

20. Results for REF

21. Analysis of results While presenting the results to the stakeholder committee, they noticed that costs for REF were relatively low -> in the search for an answer, it came about that investments in coal fired power plants were still allowed Relatively low prices in 2050 due to lack of oil indexation No GHG target so not penalised Changed that, so no new coal investments in power generation

22. Results for REN scenarios

23. Analysis of results • Model has tendency to postpone investments: bulk of investments during the final decade • Makes economical sense, but from a societal point of view non-sense • Imposition of targets: 35% of primary energy in 2030, 65% in 2040, 100% in 2050

24. Energy mix: Primary energy, 2050 Source: TIMES.

25. Energy mix: Final energy, 2050 Source: TIMES.

26. Energy mix: Power generation, 2050 Source: TIMES.

27. Energy mix: Power generation capacities (MW), 2020-2050 BIO PV WIND DEM GRID

28. Storage capacities: Electricity (GWh), 2020-2050 BIO PV DEM WIND GRID

29. Energy mix: Energy flows in PV scenario (PJ), 2050 Source: http://www.emis.vito.be/artikel/naar-100-hernieuwbare-energie-belgi%C3%AB-tegen-2050-video

30. Costs: Energy system costs (M€2005), 2050 Source: TIMES.

31. Costs: Additional cost wrt REF (% of GDP), 2050 Source: TIMES.

32. Costs: Additional cost incl. avoided GHG damage cost (M€2005), 2050 • Total annual add. cost wrt REF, when (global) benefit of avoided GHG in 2050 is included • Lord Stern@Davos: ‘I got it wrong on climate change – it's far, far worse’ The Observer, Jan 26, 2013 No longer a cost... ... but a benefit

33. Costs: Additional investments wrt REF (M€2005) Cumulative for 2013-2050 Investments in 2050

34. Costs: Cumulative additional investment expenditures in the electricity sector (M€2005) Cumulative for 2013-2050 Source: TIMES.

35. Some things ‘outside’ the model

36. Some things outside the model • Part of the assignment was to look at the socio-economical impact of the transformation • Problem: not within modelling environment • So you start again with a literature overview looking for an adequate model or instrument defining your data analysing your results …

37. Employment • Article of Wei et al. (2010) • Look at ways to adapt to Belgian situation Capacity factors Lifetime Domestic production … • Gather data: define the input that you need and find sources Sources have to be as coherent as possible with each other and with the previous exercise • Make spreadsheet model • Run the model

38. Employment: Some estimations Annual job-years generated over REF due to the RES trajectories, 2020-2030 Total FTE’s • The RES trajectories all create more job-years or FTE’s than REF • REF already integrates a lot of renewables • PV creates the most FTE’s in any given year • BIO and DEM are the second highest job generating scenarios Source: Wei et al. (2010), Federal Planning Bureau (2013).

39. Employment: Some estimations (II) • Going from average to min-max ranges • Going from alljobs to types of jobs • Results in ranges of CIM and O&M and fuel processing jobs for the years 2020 and 2030 Source: Federal Planning Bureau (2013).

40. Employment: Some estimations (III) • National macrosectoral model: HERMES<FPB • WIND scenario • Results in % wrt REF Confidential Source: Federal Planning Bureau (2014).

41. Other things ‘outside’ the model

42. PAMs • 6 critical areas of government action/intervention 1. Defining a clear institutional framework 2. Improving energy efficiency 3. Supporting renewable energy production 4. Improving energy infrastructure 5. Supporting research and development 6. Facilitating the electrification of the society • Principles for designing policies Cost effectiveness Fairness Competitiveness

43. Conclusions (1/2) Technically, a 100% renewable energy system is feasible without having to change the economic paradigm. However, such a radical society transformation implies that: • A highly ambitious renewable target goes hand in hand with a trend towards electrification: a doubling/tripling of power production is noted, curtailment is necessary • Energy imports strongly diminish but remain important: imports tumble from 83% (REF) to [42%-15%] depending on the scenario • Society shifts from a fuel intensive to a capital intensive society • It seems cost efficient to maintain overcapacities, both in industry and power generation  new paradigm in energy perception

44. Conclusions (2/2) • This comes at a significant cost: in 2050, energy system costs increase by 20% wrt REF, BUT… • When including disutility costs, the total add. cost is even higher (30%) • With disutility + GHG damage  net positive effect of some scenarios +/- 10 B€/year (highly dependent on GHG damage cost assumptions) • 300 to 400 billion € of additional investments are needed • Sensitivity to fuel prices and PV costs • PV costs from 371 – 1000 €05/kWp => variation of 0.5% of GDP2050 • Variant of REF scenario with higher oil prices (250 $08/boe in 2050)  additional costs decrease • Creation of additional employment • 20 000 to 60 000 additional full-time jobs in 2030 • Cost efficiency of adapting to energy flow variability • Further research is certainly needed

45. Follow up • Presentations National International • TED conference • Summer school (1&2) • Other studies Central Economic Council: Construction of a model capable of analysing the socio-economical impacts of ‘quelconque’ energy policy Climact, VITO: Scenarios for a low carbon Belgium by 2050 ICEDD: Le coût d’une transition énergétique postposée en Wallonie … • Political First Common Commission on Energy in 2013 Flemish Government’s demand to study 2030 implications

46. Thankyou! Contact: Danielle Devogelaer,dd@plan.be Dominique Gusbin,dg@plan.be Jan Duerinck,jan.duerinck@vito.be Wouter Nijs,wouter.nijs@vito.be Yves Marenne,yves.marenne@icedd.be Marco Orsini,marco.orsini@icedd.be

47. Results Space requirements: Surface (km2), 2050

48. External fuel bill Total energy import costs, Reference scenario (M€2005) +53% Source: TIMES.