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Sustainable Energy Ireland Perspectives from Abroad Colloquia Series. 27 May 2003 – Glasnevin Renewable Energy Credits and Certificates of Origin Phil Moody (Development Director, Campbell Carr + Secretary General, RECS Association of Issuing Bodies). RECS Certificates Issued - by country.

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Sustainable Energy Ireland Perspectives from Abroad Colloquia Series


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    1. Sustainable Energy IrelandPerspectives from Abroad Colloquia Series 27 May 2003 – Glasnevin Renewable Energy Credits and Certificates of Origin Phil Moody (Development Director, Campbell Carr + Secretary General, RECS Association of Issuing Bodies)

    2. RECS Certificates Issued - by country • RECS – Market Activity

    3. Renewable Energy Credits and Certificates of Origin • Support schemes • Tradable certificates • Guarantees of origin & disclosure • RECS

    4. How to identify the source(s) of energy? How to prove this blend to end-consumers and government? Pool The fundamental challenge: how to trace the source of the energy

    5. Support schemes

    6. Types of support scheme • Investment • Good for emerging technologies • …but not so good at driving down price • Feed-in • Proved to be effective • …but transparency and international trade can be an issue • Auction • Good at getting low prices • …but planning permission can be a problem • Tradable certificates • Maintains price competition throughout project life • …but issues with international harmonisation • …and infrastructure more sophisticated Support schemes

    7. What support schemes, where?(1) Predominantly Feed-in • Germany + PV roofs scheme + Various regional support schemes • Spain + Direct grants, infrastructure finance, investment tax relief, R&D grants • France + Subsidies, low-interest loans, tax deductions, feasibility support • Portugal • Denmark + Subsidy – moving to tradable renewable certificates? Support schemes

    8. What support schemes, where?(2) Various • Finland + Investment aid + Tax rebate, tax reduction • Norway + Tax exemption, investment support + Support for running costs • Ireland + Competitive long term power purchase agreements • Northern Ireland + Competitive long term power purchase agreements + possible move to RO? Support schemes

    9. What support schemes, where?(3) Tradable Renewable Certificates • Austria (for small hydro, until relatively recently) • Belgium: + investment aid, fixed buy-back tariffs and extra tariff schemes • Italy: +direct support, investment support, feed-in • Netherlands: +tax rebates, tax reductions, reduced interest, subsidies • Sweden • UK: CCL and RO + investment support Support schemes

    10. Differences between RECS and ROCs Support schemes

    11. Tradable Renewable Certificates • Represent the benefit of renewable over non-renewable energy: • Environmental • Security of supply • Rural redevelopment … • Allow this to be traded separate to the energy • Also known as RECS, RPS etc • Note there are also certificate schemes for: • Emissions (SOx, NOx, CO2 … ) • Waste (Packaging, landfill, tyres … ) Support schemes

    12. Principles of certificate schemes

    13. certificate market electricity market IB: Issuing Transfer Redemption Certificate system Certificate System Principles Demand Supply

    14. no. xxx no. xxx Demand Supply Issuing / Registration / Redeeming Central monitoring office Verification / auditing Issuing Body Certificate System Principles

    15. Supply Demand nr. xxx nr. xxx x Central monitoring office Redeeming verification / auditing DK Issuing Body Supply x Demand nr. xxx nr. xxx Central monitoring office Supply Demand Redeeming nr. xxx x nr. xxx verification / auditing NL Issuing Body Central monitoring office Redeeming verification / auditing N Issuing Body No Harmonisation: Incompatible Systems Principles

    16. Basic Commitments (harmonisation / standardisation) Verification / Auditing Association of Issuing Bodies Supply Demand nr. xxx nr. xxx Central monitoring office Redeeming verification / auditing DK Issuing Body Supply Demand nr. xxx nr. xxx Central monitoring office Supply Demand Redeeming nr. xxx nr. xxx verification / auditing NL Issuing Body Central monitoring office Redeeming verification / auditing N Issuing Body Compatible Systems Principles

    17. How can this enable the various Support Schemes?

    18. certificate market electricity market IB: Issuing Transfer Redemption NL: Ecotax exemption After redeeming certificates “Voluntary" Green Tariff (NL) Application to Support Demand Supply

    19. Obligation: • Suppliers (UK) • Producers (Italy) • End users (DK) certificate market Government Redemption account Mandatory systems electricity market Application to Support Demand Supply IB: Issuing Transfer Redemption

    20. Supplier with green label e.g. Only Wind Only Wind Certificates Green labelling certificate market electricity market Application to Support Demand Supply IB: Issuing Transfer Redemption

    21. Grid company Germany Feed in Tariff certificate market Redemption account Grid company Feed-in systems Application to Support electricity market Demand Supply IB: Issuing Transfer Redemption

    22. NL: RECS certificates accepted by tax authorities in future Transfer of certificate Import / export RECS system or Governmental agreement certificate market electricity market Application to Support Demand Supply IB: Issuing Transfer Redemption

    23. Summary • Certificates can enable: • Voluntary green tariffs • Mandatory systems • Green labeling • Feed-in laws • International trade • Also: • Certificates of Origin (art. 5 RES Directive) Application to Support

    24. Guarantees of Origin & Disclosure • Requirement • Issues • National plans / status • Disclosure

    25. Requirements • Background: • Article 5 of the RES-Directive • Timetable: • By 27 October 2003, all Member States must ensure the origin for electricity from renewable sources can be guaranteed • Who can claim a GoO? • Consumers of electricity from renewable sources in all EU countries Guarantees of Origin

    26. Obligations on Member States • To designate competent supervisory bodies independent of generation and distribution activities • To implement a mechanism to ensure an accurate and reliable GoO system Guarantees of Origin

    27. Characteristics of national mechanisms • National GoO systems must: • be transparent, objective and non-discriminatory • enable mutual recognition • GoO must specify: • energy source • dates and places of production • capacity (hydroelectric installations) • Refusal must be justified, and can be overruled by the Commission Guarantees of Origin

    28. EU Monitoring • National mechanisms must be outlined to the Commission by 27 October 2003 • The Commission will publish its conclusions by 27 October 2004 • Every two years, the Commission will report on follow-up information from Member States • If necessary, the Commission can propose common rules Guarantees of Origin

    29. Issues • Size: standard? • Content? (apart from source, date, place & capacity) • Frequency of issue? • Information from generator to qualify / receive GoO? • Paper or internet? • Linkage with tradable certificate schemes? • International transfer of GoO: • Infrastructure? How managed? • Recognise / reject GoO from other member states? • Prevention of double sale? • Treatment of mixed fuel sources / mixed CVs? • Sanctions for non-compliance? • Revocation possible? • Must CoO always be joined to associated electricity? • How does a certificate “end its life”? Guarantees of Origin

    30. National plans • AT To link RECS and GoO • BE For Flanders, RECS basis of GoO • CH Not yet clear – may use RECS • DE No public draft for GoO, but probably default to RECS • DK Likely to use RECS • ES Deciding who will be IB and what standards • FI Preparing proposals - likely link to RECS • FR Government so far non-committal • IT Drafting legislation • NL Law before Parliament – favours RECS system • NO Preparing proposals – possible link with Sweden • PT TSO proposing to use of RECS. • SE Has promoted a bill. Will coordinate with RECS • SL Committed to joining EC, and will propose RECS • UK DTI consulting • EC “RECS complies with the requirements for GoO” Guarantees of Origin

    31. Disclosure • Europe has yet to rule definitively • To end-consumer • Based on annual supply • Energy source • Based on contracts, certificates or statistics

    32. Disclosure – the issues • Actions required • Legal & infrastructural, at European and Member State level • Policy makers, NGOs, suppliers, auditors & consumers • Verification of information on a label • Credibility: label information must be transparent, trustworthy, simple, accurate, efficient and watertight • Harmonisation across Europe • Different types possible (information, label design, monitoring…) • Interaction with existing policies & directives • Synergies with other policies & schemes to foster use of renewable energy and inform choice • Supporting policies • Need for other policies, to raise market relevance • Raising consumer awareness • Consumer awareness is key • Need for education, information campaigns, etc Disclosure

    33. Disclosure can be enabled by certificates • Clear and simple evidence of energy source • Easily verified • Fit with current practices • European standards exist (or are forming) • Possible to phase introduction • Support by statistical approach? Disclosure

    34. Double dipping • Support schemes are all about Government helping Renewables to be viable • Guarantees of Origin are all about consumer choice • It is therefore not “double-dipping” if a generator sells supported energy as renewable • (Government can always adjust the amount of support)

    35. Characteristics of Tradable Renewable Certificate Schemes

    36. Characteristics of Tradable Renewable Certificate schemes • Mandatory / voluntary • Coupled with obligation or fiscal incentive • Obligation on generator, importer, supplier, business consumer or domestic consumer • Lifetime: limited or immortal • Banking and borrowing: permitted? Limits? • Pricing: collar & cap values, tax exemption • Size (MWh) • Capacity restrictions • Fuel restrictions (e.g. co-firing rules) • Exclusions Characteristics

    37. General New or recent capacity Certificates must include all environmental value attributable to the generated electricity (inc. CO2, SO2, and NOx) Governmental Transfer registered with RECS or government Past and present government support declared by per MWh and investment ‘No objection’ by government Positive Environmental (Impact) Assessment Report Physical import of associated power Reciprocity Technical Description of production device, meters, technology & capacity Statement of grid operator that RES-E fed into local grid Calculation of line losses from source to destination Additional conditions for eligibility Characteristics

    38. Certificate systems: the challenges • The Mechanism • International Aspects

    39. Certificate systems- challenges: the mechanism • What types of renewable are “green”? • How to measure generation? • What to do with the carbon? • Certificate schemes - Issues

    40. Types of “green” • Certificate schemes - Issues

    41. 1 1 2 2 Generation measurement Onsite demand Auxiliaries System Transformer substation RES Generator • Certificate schemes - Issues Line losses Transformer losses Gross production Nett Production = -

    42. Carbon connections • NL wanted RECS certificates to include CO2 • IT wanted two separate markets • Compromise: • sellers of RECS certificates may not sell components of the RE benefit separately  • Debate is now whether the buyer: • Cannot sell component benefits separately; or • Can sell them, but the residue must be excluded from RECS; or • Ignore emissions products altogether…? • Certificate schemes - Issues

    43. Certificate systems- challenges: International aspects • Compatibility of vision • Same objectives (e.g. pro-European, pro-renewables) • Fungibility and reciprocity • Can you use UK ROCs in the Swedish market? • “If you get access to our market, can we have access to yours?” • Process and technology • Same definitions, same interfaces, same protocols • Subsidiarity • Vive la difference ….. but how much? • Certificate schemes - Issues

    44. RECS • History • Test phase • Present activities

    45. 1997/ 1998 1997/8 Dutch green label system Dutch green label system 1997/8 Dutch green label system Dutch green label system Mar 1999 Mar 1999 Foundation of RECS Foundation of RECS Mar 1999 Mar 1999 Foundation of RECS Foundation of RECS May 1999 May 1999 Test phase conceived to prove the concept Test phase conceived to prove the concept May 1999 May 1999 Test phase conceived to prove the concept Test phase conceived to prove the concept Mar 2000 Mar 2000 Preparation commences Preparation commences Mar 2000 Mar 2000 Preparation commences Preparation commences – – resolution of many detailed issues resolution of many detailed issues – – resolution of many detailed issues resolution of many detailed issues Apr 2001 Apr 2001 Basic Commitment agreed Basic Commitment agreed Apr 2001 Apr 2001 Basic Commitment agreed Basic Commitment agreed - - Drafting of domain protocols starts Drafting of domain protocols starts - - Drafting of domain protocols starts Drafting of domain protocols starts July 2001 July 2001 First certificates issued (Finland), national trade First certificates issued (Finland), national trade July 2001 July 2001 First certificates issued (Finland), national trade First certificates issued (Finland), national trade commences commences commences commences Feb 2002 Feb 2002 Registry interfaces agreed Registry interfaces agreed Feb 2002 Feb 2002 Registry interfaces agreed Registry interfaces agreed May 2002 May 2002 International trade commences / AIB founded International trade commences / AIB founded May 2002 May 2002 International trade commences / AIB founded International trade commences / AIB founded Dec 2002 Dec 2002 End of test phase / RECS International founded End of test phase / RECS International founded Dec 2002 Dec 2002 End of test phase / RECS International founded End of test phase / RECS International founded History of RECS – activities • RECS - History

    46. Achievements of the Test Phase • A well-functioning organisation • A set of practical agreements • Robust and operational systems & processes • A working market • RECS – Test Phase

    47. A well–functioningOrganisation • National • Domain teams • Agreements with service providers • International • RECS International (market participants) • Association of Issuing Bodies (market mechanisms) • Relations with other organisations • Traders …………..…… EFET • Regulators …….….…. CEER • System operators …. ETSO • RECS – Organisation

    48. RECS member countries Current members EC likely members Accession - 2004 Accession - 2007 Other • RECS – Organisation

    49. Task Forces Working groups Working groups Structure of RECS AIB RECS International Issuing Bodies Market players National teams Agents Generalmeeting General meeting • RECS – Organisation Secretariat Secretariat Board Board

    50. AIB members Transmission system operators Regulators Green labeller Standards body • RECS – Organisation Consultancies Specialists Not appointed