Harmonization of feed-in law s in the European Union Harmonization of feed-in laws in the European Union Miquel Muñoz Cabré Institut de Ciència i Tecnologia Ambientals Universitat Autònoma de Barcelona miquel.munoz@uab.es Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union Article accepted for publication at: Authors: Miquel Muñoz Cabré Volker Oschmann Joan David Tàbara Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union Harmonized methodology: 1 - premium system 2 - flexibility mechanisms 3 - complementary considerations Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 1- premium system revenue = market price + modular premium ( σ ) investment costs national priorities grid services political incentive 6 4 4 4 4 4 4 7 4 4 4 4 4 4 8 Harmonized σ = σ + σ + σ + σ { { { { RoI Grid EU Nat Investment Grid Services E U Political Incentive National _ _ _ Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 1.1 - premium σ RoI : objective: to provide reasonable expectation of cost recovery for investment reflects: technology costs cost of financing expected revenues from electricity sales Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 1.2 - premium σ Grid : objective: to compensate for grid services which are not explicitly reflected in electricity prices examples: grid stability, distributed generation, resilience, sustaining tension gaps. in the long run will be integrated into the pricing system for electricity Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 1.3 - premium σ EU : refects EU-willingness to reach targets linked to the EU stated targets same across Member States for all renewable electricity generators of the same kind gives “teeth” to EU targets, by linking them to a financial instrument Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 1.4 - premium σ Nat : objective: to allow national priorities (which may include regional priorities) σ = σ + σ + σ + σ − − − − 1 4 2 4 3 1 4 2 4 3 1 4 2 4 3 NAT NAT soc NAT env NAT reg NAT ext 1 4 2 4 3 social benefits environmen tal benefits other externalit ies regional distributi on _ _ _ _ optional σ nat can be used as transition mechanism from previous support schemes Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 2- flexibility mechanisms: profitability threshold semi-linear step function target revison trigger allow to reflect: facilitate: • technology innovation • fulfilment of targets • changes in economics of • fair distribution of costs the energy sector • stable investment framework Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 2.1 - profitability threshold specifies the overall remuneration that would make a technology competitive at the time of deployment defined at the same time as the premium, locked for each installation for the 20-year duration of the support scheme affects σ RoI , and σ EU but not σ Grid Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 2.2 - semi-linear step function Innovation Rent = Area A + Area B Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 2.3 - target revison trigger objective: to avoid policy gaps when a technology is nearing its goal (e.g. 50%) a revision of established goals would be mandated Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 3 - complementary considerations grid access funding definitions and standards, ownership of rights derived from renewable electricity exceptions for small non-commercial producers and energy intensive industries. Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union grid access explicit provisions to guarantee connection and transmission technical requirements for connection and delivery allocation of costs for connection and grid upgrading deviations allowed for intermittent renewable sources length of bidding window Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union funding premiums paid at the national level by national consumers σ EU , can be shifted to the European electricity consumer σ NAT can be differently funded Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union definitions and standards Agreement on: definitions on what constitutes a renewable energy source what technologies qualify for support technical standards Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union ownership of rights derived from renewable electricity ownership falls on the TSO revenue used: (1) to offset premium costs (2) to offset grid upgrading costs (3) for environmental measures related to the grid if producer forfeits premiums then he/she retains ownership of tradable assets + grid-access provisions Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union small non-commercial producers Simplified systems non-commercial feed-in tariff aggregation system specific taxation and accounting provisions Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union energy intensive industries. Special consideration regarding their obligation to fund the premium , renewable electricity can actually reduce the overall costs of electricity (Martin 2004, Bode 2006, Neubarth et al. 2006, Ragwitz et al. 2006a) based on actual electricity price increases Miquel Muñoz Cabré Madrid 23 November 2006
Harmonization of feed-in law s in the European Union 4 - conclusions It is in principle possible to harmonize feed-in laws The proposed scheme builds on the strengths of feed-in laws and proposes mechanisms to address their shortfalls The proposed scheme incorporates its own obsolescence: σ RoI – profitability threshold and revision σ EU – achievement of targets σ Grid – integrated into pricing Miquel Muñoz Cabré Madrid 23 November 2006
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