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Goran Granić, PhD

20th FORUM: THIRD PACKAGE AND OTHER ENERGY DIRECTIVES - What they do and do not bring, and what we can expect in the future. VISION OF ENERGY DEVELOPMENT, RELATIONSHIPS AND INFLUENCES IN THE PERIOD UNTIL YEAR 2050 IN CROATIA. Goran Granić, PhD. Zagreb, 18 November, 2011.

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Goran Granić, PhD

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  1. 20th FORUM: THIRD PACKAGE AND OTHER ENERGY DIRECTIVES - What they do and do not bring, and what we can expect in the future VISION OF ENERGY DEVELOPMENT, RELATIONSHIPS AND INFLUENCES IN THE PERIOD UNTIL YEAR 2050 IN CROATIA Goran Granić, PhD Zagreb, 18 November, 2011

  2. Presentation layout • Energy markets • Energy consumption and energy efficiency • Conventional sources of energy • Renewable sources of energy • Summary and proposals Energy day 2/28

  3. Introduction • In the near future, there is a huge social, political, economical and overall transition in ahead of Croatia – starting 1 July 2013 Croatia shall become a member of European Union. • The international community still hasn’t brought the global agreement on reducing greenhouse gas emissions to acceptable levels. This deal shall represent civilization lunge in the energy, technology and economy development. Regarding the financial crisis of the euro zone, and overall suspicion towards international economic, financial, development and social relations in the world, as well as towards institutions achievement of the agreement and its implementation will not be easy. • All relations in the energy sector are interlinked and it is not possible to build parallel programs without unambiguous links (energy markets, renewables, energy efficiency, climate changes). Unambiguous link is the price of energy, that includes all the elements of costs of the production, transmission, distribution and supply, as well as costs of environmental and climate protection, which itself drives economic interests in the development of new philosophy of energy management and new technology applications. • After the implementation of Third packet of EU directives into the Croatian legislation, there will be legal and institutional infrastructure that will enable development of an open energy market, but will not solve all the relationships in the development of energy system without establishment of new development platform. Energy day 3/28

  4. Security of supply • Security of energy supply can be defined as the ability to deliver the necessary amount of energy required for life needs and protection of the population, for the functioning of the necessary infrastructure and public services, institutions and business unites that require technological processes or are part of the security of supply’s system; and ability to secure strategic and operational reserves of energy necessary to maintain national readiness and defence in cases of serious disturbances and emergencies. The original causes of crises and disturbances are not important from the aspect of security of supply, but have important consequences on the population and business entities. • Experiences show that liberalisation of the electricity market has increased problem of the security of supply and it hasn’t been solved out in Europe yet. Energy day 4/28

  5. Energy markets - Electricity • The evolution of electricity markets will be influenced by economic development, increase of public and personal standard, technological development, increase of energy efficiency in all segments, especially in building sector and increase of energy efficiency through technological development. • Markets development will be affected by the treatment of production from renewables according to other production. Continued privileged status and increase of the production volume brings up the question of concept of electricity markets, and therefore results in the decrease of security of supply. • Today, exchange trading becomes dominant mechanism in determination of wholesale price of electrical energy. Because of the size of Croatian market, the biggest problem for the functioning of this market is liquidity. Energy day 5/28

  6. Energy markets - Oil • In Croatia, oil products take a very big share (almost 50% in final energy demand) • Specifics of the oil markets with respect to other energy sectors are reflected mainly in high level of competition, that mostly derives from different possibilites of products transport. Supply is not attached to “network”, as it is case with supply of natural gas, electricity or heat. • In the field of oil and oil products, European commission has established a system of reserve stocks that’s based on storage of oil and oil products, in a volume of a 90-day consumption of each member, as well as Croatia. Energy day 6/28

  7. Energy markets - Gas and liquefied petroleum gas (LPG) • Implementing the policies of radical decrease of emissions of CO2, as well as other greenhouse gas emissions, by increasing energy efficiency in buildings, equipment and appliances that use gas, will result in a reduction of specific gas consumption per residential or business unit. • According to the scenarios with the biggest decrease of CO2 emissions, it is possible that the gas consumption of the end customer will partly or completely disappear, and instead of that, gas will be used for the production of heat or coolant energy in the centralized units, or for the production of electrical energy, taking into the account also CO2 capture and storage. • In the last decade, significant moves towards the development of the PLG market in Croatia have been made, that reflects in the increase of consumption in a transport sector, as well as in a residential sector. Mainly, this is result of the liberalization of LPG price that now depends on the price movements in the Mediterranean, which lead to the increase of competition on the LPG market, and development of the infrastructure essential for the more significant growth of the number of LPG users. Energy day 7/28

  8. Energy markets – Heat • Heat energy market does not exist as a part of existing heat systems because there is no competition in the field of a heat production. • Increasing the efficiency in buildings will have as a consequence decrease of energy needed for heating of residential and business areas, but also opens the possibility for usage of heat energy in cooling. • Radical decrease of the CO2 emissions can lead to increase of heating and cooling using district heating, since the usage of appliances with direct combustion process will decrease. • District heating systems in Croatia should be developed in a direction of increasing the energy efficiency, reliability and security of a supply, using the modern technologies and increasing the share of renewables. Energy day 8/28

  9. Consumption and energy efficiency - Buildings I • Increase of energy efficiecny in the buildings is the first priority of all the measures in energy policy, and it is able to achieve using the combination of compulsions (legislation), incentives and real prices of energy. • Obligations of the EU directive on energy performance of buildings EPBDII bring into the legislative framework stricter requirements for energy performance of buildings and use of alternative and renewable energy systems in the buildings. • Energy certification of the buildings and national action plans for increase of the zero-energy buildings should direct building sector towards the higher energy classes and motivate the energy reconstruction of existing buildings. Energy day 9/28

  10. Consumption and energy efficiency - Buildings II • Assuming that 3% of total building’s area (5 mil. m2 respectively) is reconstructed each year, and specific annual consumption of heat energy is decreased from average 200-250 kWh/m2 to 25-50 kWh/m2, with the contribution of 10% new zero energy class buildings each year and stricter legislation, the savings of 20,60 PJ of final energy consumption in year2020 would be obtained, which is approaching to the national goal of 22,76 PJ of energy savings in year 2020. • Therefore, action plans have to include detail elaboration of financial mechanisms of icentives and bi directid towards: • Further development of regulation and promotion of building new zero-net-energy buildings • Systematic energy reconstruction of existing buildings fund Energy day 10/28

  11. Consumption and energy efficiency - Industry • Energy efficiency in industry is long-term connected with technological development and dynamics of production capacity reconstruction. Market opening and competition, as well as technological development will influence positively on continuous growth of energy efficiency in industry. • Share of industry consumption in total energy consumption in Croatia is around 20%.This sector records the biggest decrease in energy consumption, as a result of technological progress (improvement of energy efficiency), as well as reduced production activity. • Croatian industry is capable to offer exploitation equipment for biomass, biogas and bio fuel, solar energy, energy of wind and other renewables, therefore strategic development opportunity is offered here. Also, there are existing and future possibilities in manufacturing the conventional energy equipment. Therefore it is necessary to take that into account when considering national energy policies. Energy day 11/28

  12. Consumption and energy efficiency - Transportation • According to the recent report of European Comission from the beginning of 2011, alternative fuels have a potential to progressively replace fossil fuels until year 2050. • Future energy needs of a transport sector could completely be covered using the combination of electrical energy/hydrogen and biofuel (as a main substitute for petroleum products), synthetic fuels (as a technological bridge between fossil fuels and bio fuel), compressed natural gas/biogas (CNG) and liquefied petroleum gas (LPG) in addition. • Also, future strategic significance of batteries should be mentioned. Their price is still high, but with the massive implementation of electrical vehicles, batteries will take over the part that some other energy products have today. Energy day 12/28

  13. Consumption and energy efficiency - Services • There are several parallel processes in the services sector at the moment: increase of the energy efficiency, increase of a capacity, increase of a heat and coolant consumption and increase of the number of electric appliances. • From the energy sector point of view, services sector is ascendig due to the long-term trens of rapid energy consumption, that has been slowed only in the recent years. • Furthermore, services sector offers an opportunity for the development of energy services market, that are not presented enough in Croatia, and providing those services has already proved energy and economic results. • A prerequisite for such a development is a adequate legislative that would eliminate the current barriers towards implementing these projects, for which there are EU directives. Energy day 13/28

  14. Energy management- Smart grids • Demand management using smart grids represents new possibility in increasing the energy efficiency. • Expansion of information and communication technology opens possibilities in the development of energy markets and entrepreneurships, increase of energy efficiency, optimisation of the usage of appliances at the level of every household, implementation of the concept of energy infrastructure development, decrease of the costs etc. • Will the development of this concept to supply households, buildings, neighbourhoods and smaller cities have a significant impact on reducing the necessary construction of public networks, primarily electrical networks, or the network will continue to develop as this option does not exist, as a necessary backup, the further research shall show. Energy day 14/28

  15. Sources of energy–Gas • Natural gas participates in a total final energy consumption in Croatia with a share of around 25%. With development of gas transport and distribution systems in new areas, in a short term, we can expect an increase in the final gas consumption (distribution level), as well as in the gas consumption for electricity generation. • In a long term, demand for gas will have a period of growth, stagnation and, probably, decrease. In the first phase, the number of end customers will increase, and then it will decrease because the end users will stop using it, and it will be more used in larger facilities for electricity and heat generation. • In scenarios with a significant decrease of CO2 emissions, it is expected that gas consumption will reduce in 2050 approximately by 15% compared to present consumption. • To achieve this significant role of gas in the future, it is necessary to ensure a secure supply in terms of stronger interconnection of countries, construction of gas pipelines and LNG terminals, as well as gas storage. Energy day 15/28

  16. Sources of energy-Oil • Oil and oil products participate in a total final energy consumption in Croatia with a share of more than 40%. Therefore, there is the importance of oil as a primary energy source, but there is also its great impact on the environment due to emissions that occur during the combustion of oil products. • Because of its big share in the total final energy consumption, both in Croatia and abroad, the elimination of harmful emissions that occur during the combustion of oil products will represent one of the biggest challenges in achieving the goals regarding the environmental and climate protection. • Since around 70 % of oil products is consumed in transportation, and therefore this sector has the most significant impact in overall CO2 emissions, radical changes regarding oil in a transport sector will be necessary. Energy day 16/28

  17. Sources of energy- Coal • Coal participates in a total final energy consumption in Croatia with a share of around7%, where it is entirely imported since the domestic coal production stopped in 1999. • Like other fossil fuels, coal will continue to have a significant role in meeting the energy needs on the global market because of its price competitiveness compared to other forms of energy, but also because of its relatively large reserves. • In a context of the set goals on reducing greenhouse gas emissions, exploitation of coal will require the use of CCS technology, which price is assumed to become competitive with the price of emissions permits until year 2030. Energy day 17/28

  18. Sources of energy- Nuclear energy • Recent developments in Fukushima (Japan) have further burdened the perception of public towards the nuclear technology, even in the countries that are experienced in this field. The question of public security and confidence is crucial in future exploitation of nuclear energy in electricity generation. What will be crucial for the future of nuclear energy is development of fusion reactor, that cannot be predicted at this moment. • Since the construction of nuclear power plant is a rather large investment, especially for a small country like Croatia, today’s attention is directed towards small (<300 MW) and medium power (300-700 MW) reactors. • According to information provided by IAEA for year 2010, there are 4 small power reactors and 9 medium power reactors currently in construction in world (67 in total). These reactors are able to popularize nuclear energy in many developing countries with a small electricity network, inadequate infrastructure and limited investment capabilities. Energy day 18/28

  19. Sources of energy-Hydropower • Modern concept of economic development requires an integrated approach to water resources management, in which using water for the electricity generation is only one way of utilisation of water resources, including: protection from the harmful effects of the water, creating conditions for increasing food production by irrigation, drainage and fishery, infrastructure development, construction of water supply systems and transport routes, improving conditions for tourism, sport, recreation... • In Croatia, most of the prosperous locations for hydro power plants have already been exploited, and their construction in the future will be somewhat difficult considering more and more restrictions regarding environmental protection. A necessity of scientific approach and objectification of a problem is of a particular importance, as well as the evaluation of resources and contributions. Energy day 19/28

  20. Sources of energy- Wind • For year 2050, adopted goals are 735 GW of wind power installed in Europe (both onshore and offshore) and share of 50% in meeting total electricity needs. • The overall implementation of 89 MW in Croatia until the end of 2010 is modest compared to other European countries with similar potential. On the other hand, Croatian electric power system is relatively small and this is a limiting factor. Current Croatian Energy Strategy predicts 1200 MW until year 2020. • Achieving the objectives of the radical emissions reductions from energy sector will drive a further development in wind power sector even after year 2020. Energy day 20/28

  21. Sources of energy-Solar energy • Relatively high incentives for the electricity generation from solar power plants (photovoltaic systems) have recently launched a significant interest for the installation of such systems. • Drop in the price of photovoltaic systems, especially the price of photovoltaic modules as the most expensive part of the system, as well as further increase in electricity prices, on the favourable geographical locations in the near future we can expect equalization of production cost of electricity from photovoltaic systems to the market price. • Price of solar heating systems should not drop significantly in the future, but their use should increase, primarily due to increases in energy prices and due to the lack of other resources. • Utilisation is expected also in a public sector, especially in the objects that are in use throughout the whole year (hospitals, retirement homes) and hotel sector, where such systems are traditionally used. Energy day 21/28

  22. Sources of energy- Biomass • There is a big tradition in using wood in Croatia and still today 50% of households use wood for heating, but in a traditional manner and with small efficiency. In order to develop the modern use of biomass, it is necessary to direct the developed production towards domestic demand. • In 2010 around 62 400 t of pellets were produced, which represents about 6% of consumption of thermal energy from solid and gaseous biomass in the same year. • New generation of projects using biomass to generate electricity and heat based on modern technology are being implemented. Energy day 22/28

  23. Sources of energy - Biogas • Currently there is 64,18 MWel of projects registered for biogas production from agricultural biomass hence the potential stated in Croatian Energy Strategy (NN 130/09) is twice exceeded. • In the Law on bio fuels for transportation (NN 65/09, 145/10) and supported documentation, a system to stimulate the production of bio fuels from agricultural crops (oilseed rape and maize) is stimulated, while the definition of a system for the use of biogas in the transport hasn’t been done yet, although the Directive 2009/29/EK predicts double counting of bio fuels from the waste. • Developing the exploitation of bio fuel has introduced a component of sustainability, which in Croatia, within the existing legislative framework, makes it difficult to meet the goals set for the share of renewables in the transportation by year 2020. Energy day 23/28

  24. Sources of energy-Geothermal energy • Geothermal energy in Croatia is underused renewable energy resource, especially considering the relatively high potential in the northern part of country. Geothermal energy in Croatia is mainly used for balneological purposes. • By encouraging the use of geothermal energy with a positive impact on the environment, the share of renewables in the total energy consumption would increase. • The use of geothermal energy resources would also contribute to increasing the security of energy supply of the Croatian market. Energy day 24/28

  25. Summary I • New energy policy requires new development platform until year 2050, perhaps even for a longer period of time, since the restrictions of environment and climate protection, mutual influences and requirements for a long-term sustainability make it impossible to bring new solutions based on the former platform on the development of energy systems. • New energy policy is not possible to create and develop closed in upon itself, because it permeates all segments of society and should be recognized in all activities at national, regional and local levels. • Important segment of the energy policy is a mobilisation of the Croatian scientific and industrial potential. New development platform is scientific and industrial possibility of Croatia therefore establishment of a strong collaboration between the Government, science and economy sector is a prerequisite. • The basic component of a new energy platform is increasing the energy efficiency in all the segments of technological chain, from manufacturing, transportation/transmission, distribution and consumption of energy, as well as new technologies and using renewable energy resources. Energy day 25/28

  26. Summary II • In the long term, it is not possible to separate the energy generation on marked and incentive part, but to build a single market based on the real costs of climate and environment protection. Incentives should be focused primarily on increasing energy efficiency, mainly in buildings. • In the near future, and until year 2030, prices and expenses for the energy will increase due to including the costs of climate and environmental protection, as well as costs of development and application of new technologies. After this period, increase of expenses will be compensated by reducing the energy demand due to increasing in energy efficiency and the effects of new technologies. • Rast cijena i troškova za energiju ostvario bi se i bez nove razvojne platforme, zbog ograničenosti fosilnih goriva i sve većih potreba za energijom. Razlika je u konačnom rezultatu jer nova platforma rezultira povećanjem energetske učinkovitosti i primjenom novih tehnologija i obnovljivih izvora energije, a postojeća platforma rezultira povećanjem ugroženost klime i okoliša. • Croatian resources enable the establishment of new development platform using the new technologies, and its implementation is more of an organizational, institutional an economical issue, and not en energy issue. Energy day 26/28

  27. Proposals • In order to establish a new development platform, it is necessary to prepare a strategic document on energy development until year 2050, with a set goal of reducing greenhouse gas emissions by at least 50% compared to year 1990. • Furthermore, it is necessary to prepare action plans on all the levels of authority – national, regional and local, as well as in all the segment of society, especially in science and business sector. • Finally, it is necessary to establish the institutional framework for the implementation of new development platform together with all the measures and activities. Energy day 27/28

  28. Thank you for your attention! www.eihp.hr Energy day 28/28

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