Tallinn, Estonia85.254.195.240/images/stories/energetika/2nd WEC Baltic Sea Round… · • Estonia...

© World Energy Council 2015

2nd WEC Baltic Sea Roundtable

Tallinn, Estonia10.09.2015


Agenda► Opening words by Margus Vals, Chairman of WEC-Estonia

► Opening words by Einari Kisel, Europe Regional Manager for WEC

► Session 1: Policy measures for regional and national energy security

► Break

► Session 2: Is the price of electricity hurting the competitiveness of Europe?

► Conclusion

© World Energy Council 2015 3

MARGUS VALSChairman, WEC-Estonia

Member of Management Board, Eesti Energia

Opening Words


EINARI KISELRegional Manager for Europe

World Energy Council

Opening Words


Policy measures for regional and

national energy security


ESTONIAPolicy measures for regional and national energy security


Estonian perspective

12% 12%26% 32%

49% 56% 63%78%

0%20%40%60%80%

100%

Energy dependence2013 (EuroStat)

Opportunities and strengths

• Estonia is the least dependent country from external energy

supplies in EU

• Interconnector capacities in electricity exceed peak demand

• Electricity market merged with Nordics

• On track to exceed its 2020 RES targets

• Great potential for renewables – both wind and biomass

thus good opportunity to start with cooperation mechanisms

• High share of district heating in heating sector

• Commercially feasible CHP potential mostly utilized

Threats and weaknesses

• Power generation struggling with low wholesale prices (with

capital costs often canalized off-market through various

support schemes)

• No new market based investments to power plants

• Generation aging, security of supply decomposing

• No common views on market design capable of tackling

abovementioned

• Regional cooperation can postpone the consequences not

posing ultimate solution

The discussions on future governance system

beyond 2020 for the Energy Union have started


LATVIAPolicy measures for regional and national energy security


Energy Sector and Primary Sources in Latvia,

2014

► Total energy demand: 188.1 PJ

Electricity import

4.4%

Natural gas

24.1%

Oil products

31.7%

Coal

1.3%Waste incineration

1.3%

Fuel wood

30.8%

Biogas

1.7%

Biofuel

0.5%

HPPs

3.8%

Wind

0.3%

RES37.1%


Primary energy consumption

10

0

5

10

15

20

25

30

35

40

0

50

100

150

200

250

300

350

%PJ

Renewable energy sources (RES) Fossil energy RES share


Primary energy consumption (cont.)

11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

320

340

360

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

PJ

Peat

Coal

Imported electricity

Wind energy

Hydro energy

Biogas and biofuel

Solid biomass

Natural gas

Oil products

Municipal wastes

RES share


Energy Sector in Latvia

► Total energy demand in 2014: 188.1 PJ (52.2 TWh)

• Electricity 7.5 TWh

• Heat energy 31.8 TWh

• Transport 12.9 TWh

► Distribution of energy

by energy sectors (2013)

Electricity

14.2%

Transport

fuel

26.2%

Decentralized

heating

46.3%

Centralized

heating

13.3%

RES

6,7%

Others

7,5%

RES

0,8%

Others

25,4%

RES

25,6%

Others

20,7%

RES

5,2%

Others

8,1%


Natural Gas, 2014

Natural Gas Sales

Million m³

Natural Gas Sales in

Latvia by Industries

%

Natural Gas Deliveries from

Incukalns UGS Million m³


Natural Gas, 2014► Expected to implement market rules in 2017

• Limited TPA till 2017

• Rules of the use of natural gas transmission system and Incukalns underground gas storage.

► Underground storage • up to 2.32 billion m³ ( > annual national demand)

• International importance (e.g., re-export to Russia)

• Possibility to increase to 3.2 billion m³ (for regional needs)

• Latvia has appropriate geological structure for total storage amount of 50 billion m³

► Gas transmission system • Enhancement of Latvia-Lithuania interconnection

(new pipeline with a length of 40 km and capacity of 12 million m³/day)

• Enhancement of Estonia-Latvia interconnection (upgrade of pipeline to 10 million m³/day)

► Possibility to use LNG (Lithuania)

14


Electricity, 2014► Installed capacity in Latvia 2.6 GW

► Base load capacity ~ 1 GW

► Peak load ~ 1.4 GW (January); minimum load ~ 0.5 GW (July)

► Strong tie-lines with neighbouring countries

► Different / diverse generation technologies, regional cooperation for

reserve capacity

► Capacity of connections to other

countries will exceed peak demand (~4.6 GW)

of Baltic Countries after 2015

► Third link to Estonia will reduce price differences


Topical issues for security of electricity supply in Latvia

1. Recently built new modern CCGT in Latvia (Riga CHP-2) serve as a significant improvement of

generation adequacy

2. Removing bottleneck causing price difference between Estonia and Latvia by adding the new

interconnection.

3. Interconnections (Estlink I & II, 1,000 MW, NordBalt, 700 MW, LitPol, 1,000 MW) increase power

security and continuation of tie-line development with Poland can lead to synchronous connection

with Central Europe in long-term

4. Desynchronization from IPS/UPS is possible through large investments for strengthening of

interconnections in the region

5. Uncertainty in market development and high subsidy burden leads to lack of incentives to build new

dispatchable capacities and postponing state support for new RES capacities till 2017

6. In above mentioned conditions the special attention should be paid to types of generators able to

participate in improving security of supply

16


Importance of CHPs► Provides security of supply (reserve capacity)

► Riga CHP-1 and CHP-2 (capacity 1 GWel) ensure indirect competition:

imported electricity vs electricity generated from natural gas

► CHP plants operates according to heat load and market demand

0

10

20

30

40

50

60

70

80

90

0

100

200

300

400

500

600

700

800

900

1000

1.ja

n.

2.ja

n.

3.ja

n.

4.ja

n.

5.ja

n.

6.ja

n.

8.ja

n.

9.ja

n.

10

.jan

.

11

.jan

.

12

.jan

.1

3.ja

n.

15

.jan

.

16

.jan

.

17

.jan

.

18

.jan

.

19

.jan

.2

0.ja

n.

22

.jan

.

23

.jan

.

24

.jan

.2

5.ja

n.

26

.jan

.

27

.jan

.

29

.jan

.

30

.jan

.

31

.jan

.

2015

Electrical power

Electricity price

P, MW Electricity price,EUR/MWh

23.01.2006

14.01.2015

0

200

400

600

800

1000

1200

1400

MW Euro/MWH

0

10

20

30

40

50

60

70

HESTEC

Tirgus cena, LatvijaSlodze

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

0

200

400

600

800

1000

1200

1400

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW

HES

TEC

Slodze


Local Renewables

► Using local resources reduces import

► Latvia – at the top of the World • RES are 37% of the total energy demand

► Local RES • Hydro resources 2 ... 4 TWh per year

• Fuel wood 16 TWh (in 2014)

• Biogas 0.9 TWh (in 2014)

• Waste incineration 0.7 TWh (in 2014)

► Biomass technologies are appropriate for decentralized heat systems

► Over usage of biomass for district heating and electricity production might force to shut down modern CHP plants thus reducing security of electricity supply

► There is potential for new wind farm development, incl. offshore


Sustainability

► Latvia has market economy

► Undisguised to international cooperation

► Appropriate legislation • (EU Third Package, Competition Act etc.)

• Measures to motivate energy saving

► Scientific long-term planning

► Promoting local RES resources

► Willingness to exploit regional opportunities • e.g., LNG in Lithuania

• HV DC links to Nordel grid

► Seamless renovation and upgrade of generating capacities

► Investments in both infrastructure and human resources


LITHUANIAPolicy measures for regional and national energy security


Lithuania

► Lithuania achieving its energy security with increasing biomass use and

decreasing consumption of natural gas for district heating and power.

Biomass is more than two and half time cheaper than natural gas domestic

energy source and helps in creation of jobs.

► Lithuanian LNG terminal in Klaipeda helps diversify natural gas supply for

country and secure market price for natural gas.


GERMANYPolicy measures for regional and national energy security


Energy Security

There is no pan-European definition of security of supply

Source: Prognos, Security of supply: a pan-European approach, June 2015, commissioned by Weltenergierat – Deutschland e.V.


The increasing share of renewables requires regional

approach to optimize residual load

Sum of national viewsPotential efficiency by

international harmonization

The sum of the individual load duration curves for all countries in a group of countries is

not equal to the (concurrent) load duration curve of the group as a whole.

or:

„On the load side, the whole is less than the sum of its parts.”



Load, feed-in from renewables, and residual load was analyzed for

15 European countries



Potential of European Integration: Reduction of the Annual Peak

Load


V1: “Slow Progress”; V3: “Green Transition”


Secured Capacity from Wind Energy


Ensuring generation adequacy by an international process


► With an integrated assessment for ensuring generation adequacy • residual load in peak hours will sink by 2 to 15 GW in the PLEF group of countries and by 15 to 50 GW in the

entire study domain until 2030,

• –the potential existing today will increase largely due to the expansion of renewable energy

• –the potential is increasing significantly when considering a larger study domain

► Wind power will be able to provide reliable available capacity of between at least 1,3 % in the PLEF and more than 4 % of installed wind capacity for the entire study domain • –We recommend a review of the process of evaluating guaranteed wind power capacity

► The residual load of the group of countries in the study domain would be negative for barely any hours per year in 2030, even considering a strong expansion of renewables • The lowest residual load for the entire study domain in case of a collective assessment scheme is up to 100

GW higher compared to the lowest residual load in case of a national assessment scheme

Conclusion (1)



► If the potential to reduce residual load could be realised, then less power plant capacity would have to be reserved and less storage capacities would be necessary • Both of these factors can result in cost reductions

► The following requirements are necessary to achieve this potential: • Cross-border methods of generation adequacy assessment need to be further developed

• Processes of ensuring generation adequacy need to be internationally harmonised

• Grid infrastructure has to be developed

• In doing so, obstacles as well as transaction and transformation costs - which can be difficult to quantify but important - need to be considered

► Potential benefits from synergies need to be compared with the costs required to realise this level of integration

► Regional cooperation (e.g. in the PLEF region) can achieve quick wins which would serve to realise some of the reported potential for harmonisation. This cooperation can then be incrementally extended to larger regions

Conclusion (2)



SWEDENPolicy measures for regional and national energy security

EU Energy Union outlines the EU energy policy programme

• The strong focus on the internal energy market highly appreciated,

• Market integration should be followed by policy harmonisation,

• Stronger EU energy policy needs stronger regulatory framework:

– Enforced cooperation of national energy regulators (ACER)

– Better regional cooperation of transmission operators to improve network

planning

• Decarbonisation through ambitious climate policy, energy efficiency and

renewable energy is an essential part

– EU ETS main driver for renewables and energy efficiency for the sectors covered

by the scheme

32

Investments in transmission are key to develop the European wholesale electricity market

• Development of the internal energy market needs to be in the centre:

– Larger markets enforce competition, more stable and competitive prices and a

better service level for the benefit of customers,

– Investments in transmission infrastructure are key to improving the market efficiency

and security of supply as well as integration of RES,

– Development of regional energy markets is the way towards a common energy

market

• The current energy only market model should be enhanced to handle more

intermittent renewable electricity with very low marginal costs:

– Energy only market model is the preferred model also in the future

– Clear EU framework needed if a Member States have to implement capacity

mechanisms, including rules for cross-border participation

– Renewable energy needs to be properly integrated in the energy market

33

Outstanding mix of generation in the Nordic;

More than half of the production is flexible hydro –need to get political support to understand the role and develop the hydro

Källa: ENTSO-E Statistical Factsheet 2013

34

Denmark Norway Sweden Finland Baltics

*) Normal yearly hydro production 200 TWh, variation +/- 40 TWh.

Elect production,

Total year 2013

23

86

TWh %

48

203

23

6

23

13

53

6

Nordic

383 TWh

Baltics

22 TWh

1

-

TWh %

16

4

1

5

-

72

18

5

Net export, Norden 2013: 0.4 TWh

Net import, Baltikum 2013: 4.8 TWh

Fossila bränslen

Nuclear

Biomass

Wind

Hydro *

23

86

%

48

203

23

6

23

13

53

6

1

-

TWh %

16

4

1

5

-

72

18

5


FINLANDPolicy measures for regional and national energy security


• Structural dependency on elecricity imports (20 % of total, mainly from the Nordic

countries)

• Dependent on ”imported” capacity during peak demand

• Finland is also very dependent on energy imports (no domestic coal, gas or oil

reserves)

• Current government will try to increase domestic energy use to 55 % of total

• Mainly by replacing oil with biofuels

• Share of biomass (including peat) will likely increase in the heat and power sectors

• Drive for more domestic electricity generation

• Energy security also reflected on ownership issues of projects (e.g. Fennovoima

nuclear power plant)

Policy measures for regional and national energy security

Finland’s perspective


Discussion and questions

► Common definition for energy security

► Cross-border methods of generation adequacy assessment

► Harmonized capacity mechanisms

► Natural gas: regional LNG terminal, regional market


Conclusions

► Harmonize regulation (definitions, capacity markets)

► Implement technology neutral policies (energy security)

► Promote regional cooperation (LNG terminal, gas storage)


Is the price of electricity hurting the

competitiveness of Europe?


FINLANDIs the price of electricity hurting the competitiveness of Europe?


SWEDENIs the price of electricity hurting the competitiveness of Europe?

Cost Competitiveness from a Swedish Perspective

• From a customer perspective:

– Focus on total cost for energy

• Market price

• Transmission and distribution cost

• Policy costs, such as subsidies

• Taxes such as electricity tax, carbon tax

– On the agenda

• Raised ambitions in the green certificate scheme (not payed by energy intensive companies)

• Revision of electricity tax for the business sector

• EU ETS and indirect effects (that Sweden does not compensate)

• New support scheme for of-shore wind power under discussion

• Revision of tariff structure for distribution (both gas and electricity)

• Raised carbon tax for fossile fuels used by industries outside EU ETS - from 64

Euro/tonCO2 to 105 Euro/ton CO2 proposed starting from Jan 1, 2016

42

Solar is becoming to compete with fossils in part of Europe, but present prices are toolow for investments for all sources without subsidies

The levelised cost shows the achieved electricity price required for an investment to break even over the lifetime of the project.

Disclaimer: The presented figures do not represent Fortum’s own view on the levelised costs of electricity. The figures are based on recent external publications. Key assumptions: real discount rate 5%, corporate tax 20% . Overnight costs, €/kW 5400 for nuclear, 747 for gas, 2304 for coal, 1269

for onshore wind, 3400 offshore wind, 2700 for hydro, 975 for ground mounted solar. Peak load factor for ground mounted solar 19%; for onshore wind 27%; for offshore wind 34%, for

large hydro 40%, for nuclear, gas and coal 91%. Economical lifetime: 30 years for solar, 40 years for nuclear and hydro, 25 years for others. Fuel prices are the market forward prices as of

August 2015 extended by applying inflation of 2%. Note, there are large variations in cost of hydro, wind and solar depending on location and conditions.

Sources:

1. World energy council 2013, Cost of energy technologies

2. European PV Tehcnology Platform Streering Committee, PV LCOE working Group: PV LCOE in Europe 2014-30, Final report

3. IRENA: Renewable power generation costs in 2014

4. Fraunhofer: Levelised cost of electricity, Edition November 2013

5. Lazard's Levelized Cost of Energy Analysis - Version 8.0. 2014

0

20

40

60

80

100

120

140

Nuclear Gas Coal Solar PV inSpain

Onshorewind

Offshorewind

Largehydro

€/MWh

Average levelised costs of new electricity generation(including 20% corporate tax)

LCOE (fuel prices based on futures as ofAugust, 2015)

Nordic SYS futures for 2020 (as of 12August, 2015)

German futures for 2020 (as of 12 August,2015)


GERMANYIs the price of electricity hurting the competitiveness of Europe?


Power prices for large companies (>>1 GWh)

Source: Fraunhofer ISI, Ecofys, Stromkosten der energieintensiven Industrie, Juli 2015 für BMWi


Power prices for small companies (<1 GWh)

Source: Fraunhofer ISI, Ecofys, Stromkosten der energieintensiven Industrie, Juli 2015 für BMWi


LITHUANIAIs the price of electricity hurting the competitiveness of Europe?


Lithuania

► Support schemes for wind and solar power producers existing in Lithuania and some European countries distorts competition and lays with additional burden increasing electricity price for final consumers. Electricity generated by solar and wind power producers are purchased at a higher than market price and the difference has to be covered by other electricity consumers. Less distortion would be created in the market by subsidizing investment in generation capacities.

► Implementation of network codes requires huge resources from Baltic States comparing with its small electricity consumption only 1% of EU electricity consumption. Implementation of network codes foresee not only economic, but also technical issues to solve for NRAs, and that is why it might not ensure the appropriate protection of interests of market participants and consumers. Network codes’ implementation process may decrease the overall market coupling benefit, taking into account the above mentioned issues. All these issues could be resolved if decision are taken in institutional EU level.


LATVIAIs the price of electricity hurting the competitiveness of Europe?


Market

Fundamental problem:

long-term investments vs short-term marginal cost market

► Competition in electricity market in Latvia

• Nord Pool (national generators, import)

• Retailers

► Further efficiency increase by market integration

• Fair competition with import suppliers

• Primary resources influence on electricity generation

► Market distortion elimination ?• Large amount of feed-in tariff is not compatible with spot-market


EU Requirements and Challenges

1) Energy efficiency Directive 2012/27/EU implementation:

3) Requirements of ENTSO-E Network codes:

According to analysis results - new Network codes requirements cannot be fully executed at existing

Latvenergo power plants. Analysis should be continued through cooperation with firms and

equipment manufactures.

Total saving of 9,896 GWh

Included

in EEOS

Heat

Natural gas

Electricity

2) RES target: + 40 % until 2020

Electricity

Transport

Heat

?

?6,44

3,44

EEOS (65%),TWh

Alternativemeasures (35%),TWh


600MW

1000MW

1400MW

800MW

1200MW

Power Plants

► All national demand and

generation is sold via pool

(Nord Pool Spot)

► Majority of power plants receive

some kind of support

NPP

Fossil fuels

HPP

WPP & other RES

Largest Production Units MWel MWth

Pļaviņas HPP 894 –

Ķegums HPP 240 –

Rīga HPP 402 –

Rīga CHP-1 144 493

Rīga CHP-2 832 1,124


Effect of Subsidies ► 368 power plants receive some kind of subsidy

► The proportion of the subsidies varies (e.g., among technologies)

► The value of subsidies is assembled from electricity

end users resulting in higher electricity prices • Additional component of 2.68 ¢/kWh (2013)

0

50

100

150

200

CHP, > 4 MW Wind CHP, < 4 MWBiomass Small HPP Biogas

€/MWh

Average purchasing tariff (2011 ... 2013) Latvia Nord Pool Spot prices

(32.22 EUR/MWh in March, 2015)


Effect of Subsidies (cont.)► Unfair competition among generators

• Some generators receive subsidy together with assured sale to wholesaler authority

► Electricity-to-heat ratio: • A typical wood chip plant from 1 : 4 to 1 : 5

• Riga CHP-2 from 1 : 1 to 1.5 : 1

• Biomass CHP plants generate less electricity than natural gas plants at the same

heat amount produced

• By developing biomass

technologies to substitute

natural gas CHPs, Latvia

will increase electricity

import dependence


Summer

Riga CHP ir working

Com

puls

ary

purc

hase

HPPRiga CHPImport

Elektrėnai

unit 9

Old

units o

f

Ele

ktr

ėnai

Night Day Peak

Price

Demand

Night

DayPeak

July 20 (Sunday)

CHP -2 stand by

July 21 (Monday)

TEC-2 is running

CHP influence

on prices

in Latvia

Electricity price formation in Latvia


Power Plant Challenges in MarketFossil fuel prices fluctuation: HOBs are going to be more in operation than CCGT

Electricity price fluctuations in NPS market: changes in CCGT operation

0

10

20

30

40

50

60

70

80

90

0

100

200

300

400

500

600

700

800

900

1000

1.ja

n.

2.ja

n.

4.ja

n.

6.ja

n.

7.ja

n.

9.ja

n.

11

.jan

.

12

.jan

.

14

.jan

.

16

.jan

.

17

.jan

.

19

.jan

.

21

.jan

.

22

.jan

.

24

.jan

.

26

.jan

.

27

.jan

.

29

.jan

.

31

.jan

.

2013Electrical power

Electricity price

Electricity price, EUR/MWh

P, MW

0

10

20

30

40

50

60

70

80

90

0

100

200

300

400

500

600

700

800

900

1000

1.ja

n.

2.ja

n.

4.ja

n.

5.ja

n.

7.ja

n.

8.ja

n.

10

.jan

.

12

.jan

.

13

.jan

.

15

.jan

.

16

.jan

.

18

.jan

.

20

.jan

.

21

.jan

.

23

.jan

.

24

.jan

.

26

.jan

.

27

.jan

.

29

.jan

.

31

.jan

.

2015Electrical powerElectricity price

P, MW Electricity price,EUR/MWh


Setting of CO2 Prices

► Uncertainty

► Price fluctuation from 0 to 30 €/t

► Too low to stimulate RES development but raises the price of

electricity for end users • CO2 price increase by 1 € means electricity

price increase by 0.67 € in Baltics and

0.55 € in Scandinavia

► Unfair competition as generation

partly depends on political

conditions


Setting of CO2

Prices

► CO2 price mounting will • Shift plant merit order

• Decrease awareness of future investments

► Price increase should be significant

to attract investments into carbon-

free technologies

0

10

20

30

40

50

60

70

80

90

100

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Pri

ce, E

UR

/MW

h

Capacity, MW

CO2 7.5 EUR/t

Win

dB

iom

ass

Sola

r

Hydro

Oil shale

RU

-LT

SE-L

T

FI-E

E

Larg

esc

ale

CH

P

Small scale CHP

PL-

LT

Hyd

ro p

um

p s

tora

ge Gas Condensing

0

10

20

30

40

50

60

70

80

90

100

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Pri

ce, E

UR

/MW

h

Capacity, MW

CO2 20 EUR/t

Hydro

RU

-LT

SE-L

T

Larg

esc

ale

CH

P

FI-E

E

Small scale CHP

Oil shale

Hyd

ro p

um

p s

tora

ge

PL-

LT

Gas Condensing

0

10

20

30

40

50

60

70

80

90

100

0 1000 2000 3000 4000 5000 6000 7000 8000 9000

Pri

ce, E

UR

/MW

h

Capacity, MW

CO2 60 EUR/t

Win

dB

iom

ass

Sola

r

Hydro

RU

-LT

Hyd

ro p

um

p s

tora

ge

Larg

esc

ale

CH

P

Small scale CHP

SE-L

T

FI-E

E

PL-

LT

Gas Condensing

Oil shale

Baltic merid order,

2017


Effect on Economy

► Some businesses are very sensitive to

electricity prices • Large metal processing plants, e.g., Liepajas metalurgs

• Public electrical transport

• Railway electrification in Latvia in future (consumption increase from 40 GWh to ca 500

GWh in 2030)

► People generally dislike utility bill increase

► Forecast of required financing for compensation

2015 2016 2017 2018

68.6 M€ 97 M€ 109 M€


ESTONIAIs the price of electricity hurting the competitiveness of Europe?


Urgent need to focus on competitiveness

7167 66 65 66

22 21 21 23 25

13 1519

2327

2008 2009 2010 2011 2012

Energy Grid Taxes

EU

R/M

Wh

-10%

+19%

+109%

Number of big

consumers

Change in grid

tariffs

-50 +12%

-20 +5%

-5 +1%

+5 -1%

+20 -4%

+50 -10%

Estonia needs to reduce the cost of electricity 11…24 EUR/MWh to be

competitive with neighbouring countries, even more compared to US.


Questions, discussion

► What is the future of new technologies?

► Do we even need new conventional power plants?

► Will the grid survive?

► Will we manage to have harmonized policies for renewables?

► Will there ever be a single European market?

© World Energy Council 2015© World Energy Council 2013

www.worldenergy.org

@WECouncil

WEC-Estonia

[email protected]

Thank you for coming!

Date post:	20-Jul-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

Tallinn, Estonia85.254.195.240/images/stories/energetika/2nd WEC Baltic Sea Round… · • Estonia...

Documents