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MARKAL Model for MacedoniaMARKAL Model for Macedonia
Macedonian Academy of Sciences and Arts (MANU)
Skopje, March 1, 2011
Organization Chart for Strategic Organization Chart for Strategic Planning ActivityPlanning Activity
USAID Ministry of Economy
IRG/CRES Consultant Team
Planning Team
Ministry Coordinators
MANU
Planning TeamPlanning Team Key organizations involved in model development
– Ministry of Economy (MoE)– Research Center for Energy, Informatics and Materials - Macedonian
Academy of Sciences and Arts (ICEIM - MANU) Composition of the Planning Team
Ministry Coordinators:Elena KolevskaViktor Andonov (Core Group Member)
Support Team:Acad Jordan Pop-JordanovAcad Gligor Kanevce (Core Group Leader)Acad Tome BosevskiProf. Anton CausevskiProf. Natasa MarkovskaVerica Taseska (Core Group Member)Nikola Bitrak (Core Group Member)
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4
Introduction to MARKALIntroduction to MARKAL
Key Aspects of MARKALKey Aspects of MARKAL Encompasses an entire energy system from resource extraction
through to end-use demands as represented by a Reference Energy System (RES) network
Employs least-cost optimization Identifies the most cost-effective pattern of resource use and
technology deployment over time Provides a framework for the evaluation of mid-to-long-term
policies and programs that can impact the evolution of the energy system
Quantifies the costs and technology choices that result from imposition of the policies and programs
Identifies the benefits arising for various policies and programs (e.g., increase energy security and economic competitiveness, reduced emissions)
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MARKAL Reference Energy SystemMARKAL Reference Energy System
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Uranium
Natural Gas
Oil
Oil
Refining
Coal
Renewables
Electricity Generation
Industry
Industry
Commercial
Residential
Automobiles
Uranium
Natural Gas
Oil
Oil
Refining
Coal
Renewables
Electricity Generation
Industry
Industry
Commercial
Residential
Automobiles
What types of policy questions is it What types of policy questions is it good at answering?good at answering?
Impacts of technology development programs Mandatory micro-measures in each sector: building code,
building retrofit programs, modal-split incentives in freight and passenger transports, energy efficiency programs, etc. vehicle standards
Energy taxes, investment subsidies (e.g., green and white certificates, clean/efficient technologies)
Renewable portfolio or performance standards Energy security evaluation (oil/gas/nuclear fuel imports energy
options evaluation) Emission targets and mechanisms (e.g., cap and trade, taxes,
sector intensity) Merits of education, information dissemination Impact of social constraints, e.g. nuclear
Key InputsKey Inputs Current Energy Balance and characterization of the associated
stock of existing technologies Resource supply (step) curves, and cumulative resource limits The characterization of future technology options
– Fuels in/out, efficiency, availability, technical life duration– Investment, fixed and variable O&M costs, and “hurdle” rates– Emission rates– Limits on technical potential– Performance degradation (e.g., efficiency, maintenance costs)
Demand breakdown by end-use– Demand for useful energy– Own price (and income) elasticities {optional}– “Simplified” load curve
Discount rate, reserve margin
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Key IndicatorsKey Indicators Total cost of the energy system
– Investment and operating costs for power plants and demand devices– Expenditure on fuels– Other annual expenditures
Total primary energy– Domestic production and imports by fuel
Fuel consumption levels– Electricity generation fuel mix– Fuel choice and levels for each service demand– Electricity timing and level (peak) by season/time-of-day
Investments requirements for new supply and demand technologies – Nature and timing of power plant builds, and refurbishment– Device (and fuel) choice
Energy (marginal) prices– Fuel to each demand sector (with/without subsidies) – Electricity by time-of-use
Emission – Sources and levels– (Marginal) cost of carbon
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Activities UndertakenActivities Undertaken Development of Reference scenario, reflecting current
knowledge of energy system evolution and probable future options (planning period 2006 - 2030)
Key areas of analysis– Renewable Target analysis, based on EC analysis of RE
contribution, and in support of domestic RE Implementation Plan.
– Energy Efficiency (EE) analysis, allowing for greater uptake of efficient technologies, implying appliance standards, for example. In addition, combined analysis with RE target.
– Sensitivity analyses: postponed investment in electricity generation capacity, higher RE Targets, CO2 tax, CO2 cap
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Reference (Business-as-usual) Reference (Business-as-usual) Scenario AssumptionsScenario Assumptions
Calibrated to 2006 Energy Balance National assumptions of economic growth and demographics,
and their relationship to future demand for energy services Generally aligned with Strategy for Energy Development of the
Republic of Macedonia until 2030 Base year energy prices from Macedonian sources,
international energy price for projections from IEA-WEO 2009 Firm power plant builds (and retirements) Continued use of conventional fuels and technologies Limited introduction of conservation or demand management
measures Known national policies (e.g. Feed-in Tariffs (FIT) for
wind/solar)
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Renewable Energy Analysis: Renewable Energy Analysis: Defining the Target & GoalDefining the Target & Goal
Renewable Energy (RE) share in base year (2005)– Based on national data sources, cross-checked with IEA and other public statistics– US EIA data used to inform ‘normalised’ hydro levels
Flat rate increase of 5.5% on base year RE share– Figure based on EU 27 equally sharing half of their total ambition
Additional requirement based on relative level of GDP per capita in 2005
– Assumes additional effort per capita adjusted to account for relative GDP level – Percentage increase calculated as additional effort divided by forecast final energy in 2020
Determine the optimal mix of power sector and demand shift to renewable sources, and what it displaces and costs
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Energy Efficiency Potential Analysis Energy Efficiency Potential Analysis DescriptionDescription
Reference scenario assumption is that mainly conventional demand devices are chosen and limited conservation is the norm
Use level of improved demand technology options for each demand service allowed them to reach up to 50% of the market share for new device purchases in 2030
Reflects policies to set appliance and building standards and limit the use of inefficient devices (e.g. prohibiting incandescent bulbs)
Determine the economic optimal penetration level of the efficient and conservation options, and the resulting energy savings and costs
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Renewable scenario is slightly more expensive (~0.42% or €62 million NPV (2006)) compared to the Reference Case, reflecting the high cost of the renewable technologies
Higher penetration of energy efficiency technologies can lead to significant reductions in system costs (-2.3%), due mainly to savings on fuel (-6.3%), even when RE Targets are imposed
Impact on the Overall Cost of the Impact on the Overall Cost of the Energy System (% change)Energy System (% change)
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
RE Target Energy Efficiency
RE Target + Efficiency
Change in Total System Cost
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Difference in Annual Energy Difference in Annual Energy System CostsSystem Costs
Annual costs (relative to Reference) increase under the RE target case once target implemented in 2021, rising up to €29 million by 2021 and stabilizing
Promoting Energy Efficiency can lead to significant annual savings in fuel supply of around 6.3% in 2030 without RE Target and 7.9% when there is an RE Target in place
-250
-200
-150
-100
-50
0
50
100
150
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
RE Target Energy Efficiency RE Target + Efficiency2006
MEu
ro
Change in Annual System Costs
Annualized Investment (Power)Annualized Investment (Demand)O&M and Deliv Costs (Power)O&M and Deliv Costs (Demand)O&M and Deliv Costs (All)Fuel Supply Costs
Net
Changes in Total Primary EnergyChanges in Total Primary Energy In all three scenarios - large reduction of imported gas In the EE cases - important reduction in oil imports (transport sector not
included) In the RE cases - significant displacement of fossil fuels (as expected) totalling
1246 ktoe over the planning horizon
16-350
-300
-250
-200
-150
-100
-50
0
50
100
150
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
RE Target Energy Efficiency RE Target + Efficiencyktoe
Difference in Primary Energy
Renewables
Oil
Natural gas
LPG
Electricity Imports
Coal
Biomass
Electric Generation and Imports – Electric Generation and Imports – (change from Ref.)(change from Ref.)
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Under RE Target case: Increased generation from hydro plant (2021-27) and wind (in 2030); Reductions in coal and gas generation and electricity imports
Under EE and RE+EE case reductions in gas-fired generation and more hydro generation in RE+EE case
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
2006
2009
2012
2015
2018
2021
2024
2027
2030
RE Target Energy Efficiency RE Target + Efficiency
GW
h
Difference in electricity generation
Renewable and Other power plants
Oil-fired power plants
Hydroelectric power plants
Gas-fired power plants
Electricity imports
Coal-fired power plants
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Decrease in Final Energy Decrease in Final Energy Consumption by SectorConsumption by Sector
Under the energy efficiency cases overall reduction in final energy consumption reaches 5% in 2030, mainly from electricity and oil
More efficient appliances for lighting, cooling and heating in buildings, and in iron & steel and non-metallic minerals industry (advanced technologies mainly using electricity and biomass).
-13%
-12%
-11%
-10%
-9%
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
-130
-120
-110
-100
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
200620092012201520182021202420272030 200620092012201520182021202420272030
Energy Efficiency RE Target + Efficiency
ktoe
Change in Final Energy Consumption by sector
Residential
Industrial
Commercial
Agriculture
Total %
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Under RE Target case fossil fuels generation (coal- and gas-fired) is displaced by hydro, resulting in cumulative CO2 emissions reduction of 1.5%
Under EE case lower demand of electricity reduces the gas-fired generation, leading to cumulative emissions reductions of around 3%
The combination of both, lower demand and displacing fossil fuel generation with renewables under RE+EE case, reduces the CO2 emissions by ~4 %.
Cumulative difference in COCumulative difference in CO22 EmissionsEmissions
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
RE Target Energy Efficiency RE Target + Efficiency
CO2 Cumulative Difference from Reference
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ConclusionsConclusions – RE Target – RE Target
Renewable targets are achievable at modest additional cost (result of significant investment levels in renewable generation as part of the current energy strategy)
The most cost-effective technologies are hydro and wind generation to the limits of their availability (incentives must be in place to ensure the required investment levels)
A higher RE target can achieve important co-benefits of enhancing energy security and lowering carbon emissions.
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ConclusionsConclusions – Promoting Energy – Promoting Energy EfficiencyEfficiency
Economic benefits could be significant due to availability of negative cost options.
A wider economic assessment of the barriers to uptake and appropriate policy mechanisms should be undertaken.
Model results should be used as a starting point to identify the most economically attractive technologies.
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Conclusions - Conclusions - Synergies RE and EESynergies RE and EE
Energy efficiency plays a key roll for achieving renewable target, energy security, and climate change mitigation goals
Both renewable and energy efficiency strategies have strong synergies with low carbon objectives
The analytic framework provides an important ability to assess a wide range of energy policy issues, and to advise the formulation of comprehensive strategies to guide the development of the Macedonian energy system
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