1 / 25

Péter Kaderják Director, REKK Alternate member of the Board of Appeal, ACER

Moving away from the present fuel mix: regulatory tasks and dilemmas in supporting renewable electricity penetration. Péter Kaderják Director, REKK Alternate member of the Board of Appeal, ACER World Forum on Energy Regulation V Québec, May 15, 2012. Coal is still here.

media
Download Presentation

Péter Kaderják Director, REKK Alternate member of the Board of Appeal, ACER

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Moving away from the present fuel mix: regulatory tasks and dilemmas in supporting renewable electricity penetration Péter Kaderják Director, REKK Alternate member of the Board of Appeal, ACER World Forum on Energy Regulation V Québec, May 15, 2012

  2. Coal is still here Global primary energy demand growth between 2000 and 2010 Major role played by power generation in non-OECD countries Source: IEA WEO 2011

  3. Where do we go with the present fuel mix? Source: Varró L., IEA, 2012

  4. Is CCS deployment on track? Source: Varró L., IEA, 2012

  5. Nuclear: the dream that failed? (The Economist, March 2012) To reach its projected contribution to the 450 ppm policy, 100 projects would need to be under construction at any time until 2035 And one year project time overrun wipes out 30% of NPV Source: Varró L., IEA, 2012

  6. The rest of presentation • Major RES-E regulatory principles and tasks • Five RES-E related regulatory dilemmas • Transparency and support level: which is the more important promoter of RES-E?

  7. Questions • The regulatory environment is decisive for RES-E investments and growth • 3 recent studies by REKK • ‚Principles of Regulation to promote the development of Renewable Energy Sources (RES)’, the Black Sea Regional Regulatory Initiative, with NARUC • ‚Support Schemes for Electricity Produced from Renewable Energy Sources’ with ERRA • ‚Clean Energy Finance Solutions: Central & Eastern Europe’, with Cambridge Programme for Sustainability Leadership • What are the main regulatory principles, tasks and dilemmas with regard to RES-E regulation? • What do we know about the impact of regulatory characteristics on RES-E penetration?

  8. There are just a few general regulatory principles to follow • Effectiveness – to meet policy objectives • Cost efficiency – to provide least cost solutions for end customers • Transparency, consistency, credibility - to promote a proper RES-E investment climate and prevent corruption • A certain level of flexibility – to reserve regulatory ability to adjust support levels to changing technology costs • Easy and inexpensive authorisation – to promote easy entry

  9. Prominent RES-E related regulatory tasks • Contributing to the design of RES-E support schemes (production price support or quota obligation schemes) • Regulating grid access and integration for RES-E (balancing and settlement regime, grid connection rules, cost allocation rules for grid upgrade, remuneration for additional reserve needs, etc) • Licensing and monitoring of the RES-E market • RES-E certification • Promoting cross-border cooperation in RES-E utilization

  10. 1. Poor RES-E support design might create undesirable investment cycles • Stress on support budget • Excess demand for grid connection licenses • Might prompt an unplanned change of regulation that undermines credibility Growth of installed PV capacities in the Czech Republic Source: REKK analysis „Gold rush”: effectiveness without cost-efficiency

  11. Smart design is needed: e.g. learning curves and adjustment of feed-in tariffs Cost, prices MC geothermal MC wind MC solar FIT in period 1 t1 FIT in period 1 FIT in period 1 t2 FIT1 t1 t3 t1 FIT2 FIT in period 3 t2 FIT3 FIT in period 3 t3 t2 t3 FIT in period 3 Market price of electricity Q1 Q3 Total installed geo, MW Q1 Q3 Total installed wind MW Q1 Q3 Total installed solar, MW Transparency and flexibility: rate adjustment only for new projects

  12. 2. Asymmetric incentives for RES-E generation versus network to be balanced • RES-E generation: fast; sexy; simple incentives • Network upgrade: slow; complicated; counter-incentives • Queue management • Integrated resource and network planning • Sufficient incentives for transmission and distribution upgrade is key

  13. 3. Licensing: how to make it simple and cheap? • Limit on the time and cost of administrative procedures (e.g. Moldova) • One-stop-shop licensing (e.g. Germany, Denmark) • Reduced number of authorities involved in RES-E licensing (e.g. Georgia) • Reduction of corruptionopportunities

  14. 4. Electricity market integration process can boost RES-E • Electricity market integration promotes RES-E growth • Better spatial distribution of weather-dependent RES-E production • Common pool of reserves and storage capacities • RES-E should get a role when electricity market coupling rules are created • Harmonized green certification regimes might promote cross border trade in RES-E and thus promote investment

  15. 5. Regulatory governance, capacity building and policy feedback is needed • The promotion of RES-E is a relatively new competence for energy regulators • Considerable regulatory knowledge and human resources are still to be developed • A requisite organizational solution can also help the Regulator meet the new expectations in this regard • RES certification, licensing and market monitoring • Fast feedback of market information into the rulemaking process • Regular consultations with ministry and stakeholders

  16. 6. Is transparency or support level the more important promoter of RES-E? Survey results from ERRA

  17. Hypotheses • Hypothesis 1: Higher RES-E production support levels lead to higher RES-E penetration • Hypothesis 2: Good regulatory practices, including transparent, consistent and flexible regulation are preconditions for a faster RES-E penetration

  18. Production support levels, 2011 - German PV FIT level 2012

  19. Typical pattern: RES-E capacity shares versus support level - wind

  20. RES-E capacity shares versus support level – solar PV

  21. Indicators involved in regulatory characteristics analysis

  22. Transparency RES-E Capacity growth 2007 - 2010 Transparency Index

  23. Integrated effects – Regression analysis

  24. Lessons • ‚Good regulation’ (transparency, consistency and easy entry) and healthy general investment environment are important pre-conditions to RES-E capacity growth • No such a relationship can be detected between RES-E growth rate and the nominal level of support (FIT) • The main regulatory message here is that countries aiming to increase their RES-E shares should as first step design their regulatory environment carefully, while the level of Feed-in tariff or premium is less determining in achieving higher RES-E penetration levels

  25. THANK YOU FOR YOUR ATTENTION! pkaderjak@uni-corvinus.hu www.rekk.eu +36 1 482 7071

More Related