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Incentive Schemes for Offshore Wind Development in Europe

Incentive Schemes for Offshore Wind Development in Europe. Presented by Bruce Hamilton | Navigant Session Title : Support Mechanisms Tuesday , February 5 , 14:00 - 15:30 . Agenda. Agenda. » Offshore W ind S upport S chemes » Support Schemes Currently U sed in Europe

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Incentive Schemes for Offshore Wind Development in Europe

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  1. Incentive Schemes for Offshore Wind Development in Europe • Presented by Bruce Hamilton | Navigant • Session Title:Support Mechanisms • Tuesday, February 5, 14:00 - 15:30

  2. Agenda • Agenda • » Offshore Wind Support Schemes • » Support Schemes Currently Used in Europe • » Evaluation of Support Schemes • » Conclusions

  3. Agenda • Agenda » • » Offshore Wind Support Schemes • » Support Schemes Currently Used in Europe • » Evaluation of Support Schemes • » Conclusions

  4. Offshore Wind Support Schemes » Policy Categories • A variety of potential policy options exist to support more rapid commercialisation of offshore wind.

  5. Offshore Wind Support Schemes » Feed-in Tariff • Feed-in Tariffs are the most popular incentive schemes used in Europe. Characteristics of Feed-in Tariffs

  6. Offshore Wind Support Schemes » Feed-in Premium • A Feed-in Premium has many of the advantages of the FiT but it results in less stable cash flows. Characteristics of Feed-in Premiums

  7. Offshore Wind Support Schemes » Green Certificates • Green Certificates can be used to spur competition between technologies, but they require investors to hold volume and price risk. Characteristics of Green Certificates

  8. Offshore Wind Support Schemes » Tendering • Tendering of long-term contracts promotes competition between developers but the price and delivery may not meet expectations. Characteristics of Tendering Schemes

  9. Agenda • Agenda » • » Offshore Wind Support Schemes • » Support Schemes Currently Used in Europe • » Evaluation of Support Schemes • » Conclusions

  10. Support Schemes Currently Used in Europe » Jurisdictions Where Used • The Feed-In Tariff is the primary offshore wind support policy used in Europe, with the exception of the U.K. which uses green certificates. Denmark’s FIT level is set by competitive tenders, currently in the 500-600 DKK/MWh ($13/MWh) range. Netherlands generators are paid the higher of the FIT and the market energy price. U.K. offshore generators receive 2 Renewable Obligation Certificates (ROCs) per MWh, which have traded as high as £47/ROC (~$70). The offshore rate will be reduced to 1.9 ROC/MWh and to 1.8 ROC/MWh if built in 2015 and 2016 respectively, and from 1 April 2027 to 2037 the Government will move to a ‘fixed ROC’ system (a FIT program). Ontario, Canada, has an offshore FIT at $19/MWh; however, it is on hold pending further study. The European Investment Bank (EIB) also borrows funds on the capital markets, which it lends on favorable terms to renewable energy developers directly or via commercial banks.

  11. Evaluation of Support Schemes » Offshore Wind Capacity • Offshore wind capacity in Europe has been installed and is being developed under various support schemes. Offshore Wind Capacity in Europe as of Year-end 2011

  12. Agenda • Agenda » • » Offshore Wind Support Schemes • » Support Schemes Currently Used in Europe • » Evaluation of Support Schemes • » Conclusions

  13. Evaluation of Support Schemes » Effort and Results Scoring • Each policy option is evaluated according to its cost and effort required and its proven and expected effectiveness.

  14. Evaluation of Support Schemes » Efficient Policies • The policy/program options should be considered within the context of a formal portfolio analysis. Higher priority (“short list”) Higher (Score = 1) Relative Results Lower (Score = 0) Higher (Score = 0) Lower (Score = 1) Relative Effort

  15. Agenda • Agenda » • » Offshore Wind Support Schemes • » Support Schemes Currently Used in Europe • » Evaluation of Support Schemes • » Conclusions

  16. Conclusions • Conclusions A variety of potential policy options exist to support more rapid commercialisationof offshore wind. Various countries throughout Europe have chosen different incentive schemes as a means to level the playing field. Tax breaks are the most popular investment support schemes used in Europe. The Feed-In Tariff is the primary operating support policy used in Europe, with the exception of the U.K. which uses green certificates. The following policy/program options have the most attractive combination of low cost and effort and high effectiveness:

  17. Bruce Hamilton| Director | Energy Navigant +1.503.476.2711 bruce.hamilton@navigant.com

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