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What changes to the present law does the renewable energy sector expect?

Michal Cwil Polish Economic Chamber of Renewable energy ul. Gotarda 9, 02-683 Warszawa Tel. +48 22 548 49 99, Fax +48 22 548 49 00 pigeo@pigeo.pl www.pigeo.org.pl. What changes to the present law does the renewable energy sector expect?.

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What changes to the present law does the renewable energy sector expect?

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  1. MichalCwilPolish EconomicChamberofRenewableenergy ul. Gotarda 9, 02-683 Warszawa Tel. +48 22 548 49 99, Fax +48 22 548 49 00 pigeo@pigeo.pl www.pigeo.org.pl What changes to the present law does the renewable energy sector expect? Seminar of Clifford Chance “Renewable energy development” 7th March 2012

  2. Polish Economic Chamber of Renewable Energy • Law - lobbing • Policyadvising • Education • Promotion • Integration

  3. Why do we develop renewable sources? • growing energy needs • population grows • fossil fuels are reducing • rising costs of energy production from fossil fuels • we want to reduce dependence on energy imports from outside the EU and Poland • we want to realize EU energy policies based on low-or zero emissions.

  4. The increase in global energy consumption, 1900-2002inmilliontonsofoilequivalent, Mtoe source: International Energy Agency (IEA) 1 TWh = 11,63 * 1 Mtoe

  5. Global population, 1950 – 2100inbillionpersons source: L. David Roper

  6. The estimated increase in energy consumption, 1975-230010^15 british thermal unit, PBTU source: L. David Roper 1.000 m3 of natural gas = 1 MBtu

  7. Current energy consumption per capitainmillionbritishtermalunitpercapitaperyear, MBTU/percapita/year USA: 350 Industrialized countries: 200 Developing countries: 35 World: 75 UE27: 162 POLAND: 103

  8. Non-renewable resources - the peak of yieldoil production in thousands. ek barrels / day. The price of oil rose from $ 11 a (1998) to $ 147 (2008) Denmark Norway United Kingdom Italy Romania Peak production is over

  9. Why is the law on renewable energy sources? 2009/28/WE Directive => National Renewable Energy Action Plan according to Art. 4 of the Directive each member member prepare a plan. On its basis the target in 2020 is realized. The Polish Government provided to the EC the strategy on 9th of Dec 2010 and announced that the targets for renewable energy sources will be achieved based on the new regulations which are adopted in the new law on renewable energy sources.

  10. Timetable for the adoption of the Directive • 25 June2009: Directive entered into force • 30 June2009: Publication by the EC a template for Action plans • Dec. 2009: Commission reports on biomass sustainability criteria and aspects of biofuels sustainability criteria • Dec. 2009:Member States “forecast documents” of scope for making or receiving transfers of renewable energy under the cooperation mechanisms • 30June 2010: Member States present National Action Plans – Poland „filled” just by 9ofDec. 2010. • 5Dec. 2010: Full implementation of the Directive on a national level with all Acts, regulations

  11. The scope of the legal changes requested • The regulations of • administrative procedures, regulations and codes (art. 13) • information and training(art. 14) • access to and operation of the grids(art. 16) • sustainability scheme of biofuels (art. 17-21) • Support schemes for renewables in electricity, heating and cooling and transport • Specific measures concerning biomass and its mobilisation • Planned use of cooperation mechanisms – statistical transfers and joint projects • Preparation and follow-up of the implementation of the action plan

  12. It is needed to provide proper obligations for the steady increase of RES in energy production in the years 2012 - 2020 to achieve the objectives • ensuring the development of all technologies • investor interest in new investments to promote the fulfillment of the objectives • lack of ”transfer" of biomass markets across sectors • avoid the phenomenon of saturation of green energy market in the mid-term achievement of the target Responsibilities should be made to ensure the continued growth of the shares of energy from renewable sources in all sectors. At the same time achieving the goals should be based on new and efficient sources. Such an approach would greatly facilitate the implementation of new targets drawn by the EU for 2030 and 2050.

  13. What is the share of energy from renewable sources in gross final consumption? Final consumtion: ca. 65 000 ktoe (750 TWh), (2700 PJ) 2010 2020 Source: PIGEO 23% 21% electricity 19% (ca. 32.4 TWh) 7% (ca. 10.6 TWh) 57% 50% heat & cooling investments  17% 12.0% 6% 10% 29% 20% transport In Total 15.5% In Total 9.5%

  14. Which RES are working for the target? 2010 Source: PIGEO co-firing large hydro 50% Green certificatessupported electricity 25% 7% heat & cooling frombiomass off-grid 95% 12.0% 1st generation of biofuels 100% 6% transport In Total 9.5%

  15. The scenarios of RES Poland vsUE 2010 vs 2020 RES (allsectors) vs RES electricity dane: PIGEO na podstawie MG, KPD, REN21 RES EN RES-electr EN %

  16. The scenarios of RES Polandvs UE 2010 vs 2020 RES (allsectors) vs RES electricity dane: PIGEO na podstawie MG, KPD, REN21 RES PL RES-electr PL %

  17. The scenarios of RES PolandvsUE 2010 vs 2020 RES (allsectors) vs RES electricity Source: PIGEO based on MG, NREAP, REN21 %

  18. An example of wrong design of obligations in the draft regulation - here are the net values The level of obligation in each year for energy companies, below: There is a different methodology for calculating the share in comparison to the Directive and NREAP In regulation we have: RES gross / Total net In Directive we have: RES gross / Total gross That is why the 19 from NREAP corresponds to 25% and not to 20% !!!

  19. Can Poland develop renewables in electricity sector without any significant impact on consumer energy bills?

  20. What is the level of subsidizes to the development of RES in Poland at present? What final customer of energy pays for?Typicalhousehold, G11 tariffin 2011, annualconsumption 3000 kWh Source: PIGEO based on bill for G11 from PGE company In total: 153 PLN / month 612 PLN / MWh VAT = 115 PLN/MWh (18.7%) Subscription fee = 4 PLN/MWh (0.7%) Allfeesandtaxes 91 PLN/month Fixed fee for the transmission = 12 PLN/MWh (2%) Interim payment fee = 18 PLN/MWh (3%) Network fee = 186 PLN / MWh (30.3%) Qualitative component = 7 PLN/MWh (1.1%) Excise tax = 20 PLN/MWh (3.3%) Product 62 PLN/month Electricity net = 250 PLN/MWh(40.9%) Green certificates = 28 PLN/MWh (4.5%) 7 PLN/month

  21. What isrealimpactofnew RES forsuch a consumer? Source: PIGEO based on bill for G11 from PGE company • ifthefollowing RES areexcluded form support: • biomasscofired • large hydro 28 PLN/MWh 4,5% ofthebill 7 PLN permonth 7 PLN/MWh 1,1% ofthebill 1,75 PLN permonth

  22. Theincreaseof electricity priceinthe period of 2005-2010the maximum possible due to RESvsrealaveragedone by energycompanies source: PIGEO based on ARE & URE gr / kWh 50% of energy price in 2010 2.8 gr / kWh 10% of energy price in 2010 Green certificates do not represent the main reason of increase the electricity prices for end users!

  23. Recommendation To introduce in the Law on Renewables a stable support schemes • Green certificates with poorly designed sizes of reference do not provide the level of income replacement fee. • Support should be fixed for a specified period from the day the unit to be used (typically 15-20 years), which for the implementation of the Directive is to support the functioning of at least 2035 to 2040 • The introduction of support for all sectors to increase the competitiveness of the renewable energy market. • Any changes to the support system can not change the terms of the generators operating on the market.

  24. Is it possible to predict income based on renewable energy draft Act? Source: PIGEO based on draft Act on RES PV, k=2 biogas, k=1.4 hydro, k=1.05 (Ozj-Oze)*k + Oze Unitary revenue (PLN/MWh) wind, k=0.75 There should not be certificates with negative prices ‘old’ hydro, k=0 (no support) Oze, average annual market price of electricity (PLN/MWh)

  25. Summary • Investors expect the introduction of regulations that reflect the energy strategies that are adopted: • Polish Energy Policy • National Renewable Energy Action Plan

  26. Thank you for your attention Polish Economic Chamber of Renewable Energy ul. Gotarda 9, 02-683 Warszawa Tel. +48 22 548 49 99, Fax +48 22 548 49 00 pigeo@pigeo.pl www.pigeo.org.pl

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