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Christian Schneller E.ON Netz GmbH, Bayreuth / Germany

The German Wind Power Experience – Integrating large Intermittent Generation Capacities in the Electricity Market. Christian Schneller E.ON Netz GmbH, Bayreuth / Germany. Agenda. Facts & Figures Operational Challenges Economic & Legal Challenges Conclusions. Wind Power Capacity. 180,000.

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Christian Schneller E.ON Netz GmbH, Bayreuth / Germany

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  1. The German Wind Power Experience – Integrating large Intermittent Generation Capacities in theElectricity Market Christian Schneller E.ON Netz GmbH, Bayreuth / Germany

  2. Agenda • Facts & Figures • Operational Challenges • Economic & Legal Challenges • Conclusions Wind Power Integration Christian Schneller, E.ON Netz GmbH

  3. Wind Power Capacity 180,000 inst. cap. [in MW] 70,000 offshore 75,000 onshore 10,000 57,000 48,000 30,000 22,096 2007 2020 2006 2010 2010 2020 Germany Europe Sources: dena, EWEA Wind Power Integration Christian Schneller, E.ON Netz GmbH

  4. D Wind Power Geography as of Dec 31, 2007 EU 27 56,535 MW Germany 22,096 MW E.ON Netz 8,687 MW 40 % 17 % Sources: EWEA, ISET Wind Power Integration Christian Schneller, E.ON Netz GmbH

  5. E.ON Netz`s Perspective In 2007 renewables accounted for… • 70% of E.ON Netz`s „revenues“ • > 150.000 generators in E.ON`s grid zone • 20% of gross power consumption within E.ON`s grid zone • > 500 km new eHV lines currently in authorization procedures Renewables have become a significant operational and economic factor. 380 kV-Lines Wind Power Integration Christian Schneller, E.ON Netz GmbH

  6. Agenda • Facts & Figures • Operational Challenges • Economic & Legal Challenges • Conclusions Wind Power Integration Christian Schneller, E.ON Netz GmbH

  7. The wind blows wherever it pleases. You hear its sound, but you cannot tell where it comes from or where it is going. John 3,8 Wind Power Integration Christian Schneller, E.ON Netz GmbH

  8. June Sept Jan Feb Mar April July Dec May Aug Nov Oct 1st Challenge: Limited Availability… The wind blows when it wants. Back-up Capacity + “Wind Refinement“ Wind Power Integration Christian Schneller, E.ON Netz GmbH

  9. … requires sufficient Back-up Generation. Back-up Capacity • Wind power feed-in 2007 in E.ON grid: 26 MW - 7569 MW • „Capacity credit“ of German wind turbines: 8 % (2006) -> 5 % (2020) • Sufficient incentives for back-up generation? • From NIMBY to BANANA? “Refinement” • Who is responsible for “refinement”? Wind Power Integration Christian Schneller, E.ON Netz GmbH

  10. 3500 3000 forecast 2500 + 2130 MW 2000 1500 feed-in [MW] 1000 wind energy feed-in 500 0 00:00 h 03:00 h 06:00 h 09:00 h 12:00 h 15:00 h 18:00 h 21:00 h 00:00 h 2nd Challenge: Limited Predictability… It is hard to tell when the wind will be blowing Forecast Tools + Balancing Power Wind Power Integration Christian Schneller, E.ON Netz GmbH Example E.ON control area

  11. E.ON Netz … requires reliable Forecast Tools & Balancing Power. Backup Forecast of Wind Speed & Direction P1 (t) Transformation Pges= ΣaiPi + biPi2 + ... P(t) Pn(t) • Forecast error and gradients rise with capacity • Will there be sufficient fast reacting generation units? Balancing Power Wind Power Integration Christian Schneller, E.ON Netz GmbH

  12. < 4 m/s 4 – 5 m/s > 5 m/s 3rd Challenge: Different Location of Wind & Demand… The wind blows where it wants “Traffic Regulation” + Grid Expansion Wind Power Integration Christian Schneller, E.ON Netz GmbH

  13. …requires „traffic regulation“… • Priority Rules 1. RES-E 2. CHP-E 3. New conventional plants 4. „The rest“ • Generation Management Tempory feed-in restrictions in case of 100% RES-E • Locational Signals Generators in Germany enjoy free access to the grid. RES-E producers get compensation payments for feed-in restrictions !!! • Technology Solutions Temperature Monitoring & „hot cables“ Wind Power Integration Christian Schneller, E.ON Netz GmbH

  14. … and Grid Expansion. • Up to 2.700 km new/enforced eHV lines needed by 2020 • 8 years for authorization on average! Overhead Lines or Underground Cables? How to synchronize RES & Infrastructure Development? Source: dena grid study 2005 Wind Power Integration Christian Schneller, E.ON Netz GmbH

  15. Agenda • Facts & Figures • Operational Challenges • Economic & Legal Challenges • Conclusions Wind Power Integration Christian Schneller, E.ON Netz GmbH

  16. RES Promotion: Effectiveness vs. Efficiency I. Feed-in System:„take & pay“ (and refinement) obligation for grid operators – guaranteed demand & fixed price for the generator • High investment safety but RES-E generators stay immature II. Green Certificates:price & marketing (and refinement) risk for the generator • More efficiency oriented but risk premium increases RES-E subsidies III. Bonus System:marketing risk & refinement responsibility on the generator, limited price risk • Possible compromise solution / 1st step towards market integration Give Marketing & “Refinement” Responsibility to Generators Wind Power Integration Christian Schneller, E.ON Netz GmbH

  17. TIE LINES INERNAL ELEMENTS RES-E Integration is a European Task (I) operationally Wind Power Integration Christian Schneller, E.ON Netz GmbH

  18. RES-E Integration is a European Task (II) Norway 333 Finland 110 Estonia 58 Sweden 788 Latvia 27 economically Denmark 3.125 Lithuania 50 Netherlands 1.746 Ireland 805 UK 2.389 Poland 276 Germany 22.247 Belgium 287 Ukraine 89 Czech Rep. 116 Luxembourg 35 Wind Power in 2007 EU: 56.535 MW Total Europe: 57.136 MW Slovakia 6 Austria 982 Switzerland 12 Hungary 65 Romania 8 France 2.454 Croatia 17 Bulgaria 70 Italy 2.726 Portugal 2.150 Spain 15.145 Turkey 146 Greece 871 Source: EWEA Wind Power Integration Christian Schneller, E.ON Netz GmbH

  19. On March 13th, 2001 the ECJ ruled: The German renewables act hinders trade in electricity and discriminates against foreign market participants; it is yet compatible with the EC Treaty at the „current state of community law“. RES-E Integration is a European Task (III) legally What would be the Court`s position as of September 16th, 2008? Wind Power Integration Christian Schneller, E.ON Netz GmbH

  20. The 2nd Renewables Directive… Wind Power Integration Christian Schneller, E.ON Netz GmbH

  21. Agenda • Facts & Figures • Operational Challenges • Economic & Legal Challenges • Conclusions Wind Power Integration Christian Schneller, E.ON Netz GmbH

  22. Regulatory To-Do List • Accelerate approval procedures for new eHV lines & clear “traffic rules” to handle congestions • Ensure availability of sufficient back-up and balancing power • Marketing risk & refinement responsibility should be on the RES generators to allow for innovative solutions in system integration • Harmonize European RES promotion & coordinate system development among TSOs (ENTSO) Wind Power Integration Christian Schneller, E.ON Netz GmbH

  23. Keep the balance! Wind Power Integration Christian Schneller, E.ON Netz GmbH

  24. Back-up

  25. 100 % 75 % + 57% 50 % 25 % 0 % - 5,2 % -25 % - 25-40% - 50% -50 % -75 % -100 % - 80-95% 2050 2040 2030 1990 2010 2020 2000 CO2-Emissions in % compared to 1990 levels IEA / OECD Kyoto G8 IPCC Wind Power Integration Christian Schneller, E.ON Netz GmbH

  26. GDP 11 Carbon productivity = 10 GHG Emissions 9 8 7 6 5 4 3 2 1 2010 2020 2030 2040 2050 Reducing emissions and maintaining growth implies carbon productivity must increase by ten times Index: 2008 = 1 Carbon productivity growth required: 5.6 %/a Real World GDP Growth at Current Trends*: 3.1 %/a Emissions decrease to reach 20 GtCO2e by 2050: 2.4 %/a *Global insight GDP forecast to 2037, extrapolated to 2050 Source: MGI: The carbon productivity challenge Wind Power Integration Christian Schneller, E.ON Netz GmbH

  27. 10 8 6 4 2 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 How to make a revolution… ? Index: Year 0 = 1 Carbon productivity growth required 2008-50 US labor productivity growth 1830-1955 Years Wind Power Integration Christian Schneller, E.ON Netz GmbH Source: MGI: The carbon productivity challenge

  28. EU Draft RES Directive: Trading with guarantees of origin 1 MWh RES-energy • Promotion of „green power“ • RES-target fulfilment Every new built RES asset • Tradable by member states when fulfilling interim targets • Trading by companies, but: member states can limit import and export under specific conditions (if security of supply or environmental targets are threatened) • counts for the attainment of the national RES-target in country of payment Wind Power Integration Christian Schneller, E.ON Netz GmbH

  29. Solar Power Capacities in 2006 European Union1: 1246 MW Finland <0,1 Estonia <0,1 Sweden 0,7 Latvia <0,1 Denmark 0,2 Lithuania <0,1 Netherlands 0,5 UK 2,8 Poland 0,1 Germany 1153 Belgium 2,1 Czech Rep. 0,2 Austria 5 Slovenia 0,18 Italy 11,6 France² 6,5 • Estimation • Overseas departments • included • Source: Photon Portugal 0,5 Spain 60,5 Greece 1,3 Wind Power Integration Christian Schneller, E.ON Netz GmbH

  30. Regulatory Issues Micro – Regulation • (Technical) Grid connection rules safeguard stabilizing operational behaviour of wind farms („voltage funnel“) • Guaranteed right to grid access - execution requires not even a contract! • Building Code – preferential treatment for new RES installations • Priority Rule for connection, access & transportation of „green“ power Macro - Regulation • Market orientation of the support scheme • European Harmonization of RES support How can RES become an Integral Part of the Internal Electricity Market? Wind Power Integration Christian Schneller, E.ON Netz GmbH

  31. 11 584 18 16 6 250 123 Biomass Small Hydro Biomethane Biogas Solar 1,231 Current Renewables footprint: 1,4 GW Sweden • Wind • Biomethane 245 UK • Wind • Biomass Denmark • Wind Portugal • Wind USA • Wind Poland • Wind 228 Other Germany • Wind • Biomass • Biogas • Biomethane Spain • Wind • Biomass • Small Hydro Wind Q1/2008: 1,354 Installed renewables capacity as of March 31, 2008 [MW] (excluding large hydro) Wind Power Integration Christian Schneller, E.ON Netz GmbH

  32. Development of installed global and EU PV capacity Source: European Photovoltaic Industry Association Wind Power Integration Christian Schneller, E.ON Netz GmbH

  33. Wind power growth in Germany and EU 180,000 inst. cap. [in MW] 70,000 offshore 75,000 onshore 10,000 57,000 48,000 30,000 22,096 2007 2020 2006 2010 2010 2020 Germany Europe Sources: dena, EWEA Wind Power Integration Christian Schneller, E.ON Netz GmbH

  34. E.ON Netz Forecasting wind power is critical ! Backup Forecast of wind speed & direction for 39 reference locations • Day-ahead feed-in prognosis for E.ON grid control area P1 (t) Transformation Pges= ΣaiPi + biPi2 + ... P(t) Pn(t) Continual improvement through artificial neuronal networks Wind Power Integration Christian Schneller, E.ON Netz GmbH

  35. BACK-UP • Different dimensions • Three basic problems • Technical solutions • Regulatory aspects Wind Power Integration Christian Schneller, E.ON Netz GmbH

  36. Sufficient conventional generation remains indispensable Back-up capacity • Minimum feed-in 2007 in E.ON grid: 26 MW (max. feed-in: 7569 MW) • Calculative „capacity credit“ of German wind turbines: 8 % (2006) -> 5 % (2020) • Wind power hardly substitutes conventional capacity Balancing power • Forecast error rises with wind power capacity • Growing need for balancing power • More fast reacting generation units needed Wind Power Integration Christian Schneller, E.ON Netz GmbH

  37. Stochastic feed-in – conversion into supply profiles (I) “Wind energy refinement“ a) Day-ahead balancing between forecast and pre-defined supply profile wind power forecast Pre-defined supply profile „surplus“ „deficit“ day-ahead balancing power Wind Power Integration Christian Schneller, E.ON Netz GmbH

  38. Stochastic feed-in - conversion into supply profiles (II) “Wind energy refinement“ b) Intra-day balancing between prognosis and actual wind power generation wind power generationforecast actual wind power generation „surplus“ Intra-day balancing „deficit“ Wind Power Integration Christian Schneller, E.ON Netz GmbH

  39. B8 B8 B8 B8 B9 B9 B9 B9 Station Station Station Station A A A A C1 C1 C1 C2 C2 C2 C2 C1 T2 T2 T2 T2 123 T1 T1 T1 T1 123 B1 B1 B1 B1 B2 B2 B2 B2 B7 B7 B7 B7 Critical load level 123 B3 B3 B3 B3 B4 B4 B4 B4 B5 B5 B5 B5 B6 B6 B6 B6 C7 C7 C7 C7 123 123 123 123 123 1252 123 123 123 123 123 123 123 123 123 123 123 123 123 123 123 Reduction signal Control center Signal: feed-in restriction lifted again Bottleneck Management: Generation Management - an Interim Solution To avoid critical overload wind farms receive electronic signals to reduce feed-in power Once sufficient capacities are available again operators resume unrestricted feed-in Wind Power Integration Christian Schneller, E.ON Netz GmbH

  40. BACK-UP • Different dimensions • Three basic problems • Technical solutions • Regulatory aspects Wind Power Integration Christian Schneller, E.ON Netz GmbH

  41. Key elements of the draft european renewables directive Ambitioned development goals National support systems and flexibility in target fulfilment through GoO trading Licenses In Europe 20% renewables until 2020 Grid access EC&R - June 2008

  42. Key Points of the RES-Directive EU - RES directive E.ON`s Position • 20% overall RES target and burden sharing between member states (based on economic capability, not potentials) • Effort sharing not based on geographical RES potential, but on flatrate and GDP • Introduce limited flexibility via GoO-trade with restricted participation by companies • Targets provide long-term framework to establish RES in energy mix • Very ambitious targets require efficient use of renewables (boutique to industry) • E.ON supports targets by own activities • Flexiblity in target fulfillment of member states required • GoO-trade appropriate tool • RES trade key for cost-efficient EU-wide RES expansion • 1st step into right direction, further steps would be full opening of GoO-trade Wind Power Integration Christian Schneller, E.ON Netz GmbH

  43. The flow and transfer of guarantees of origin Governments and others can resell in a secondary market Insurance Producers of renewable energy are entitled to GOs GOs are sold with electricity to TSOs in exchange for the feed-in tariff GOs are sold to TSOs in exchange for the feed-in premium GOs are sold as green certificates to electricity suppliers facing obligations GOs are sold to member state govern- ments GOs are sold to other interested parties (banks, suppliers, traders, NGOs) GOs transferred for tax benefits Transfer Cancellation GOs cancelled by independent body Wind Power Integration Christian Schneller, E.ON Netz GmbH

  44. Aktuelle Diskussion in EU-Parlament und EU-Rat Vorschläge von Turmes und DE/UK/PL E.ON`s Position • Herkunftsnachweise (GoOs) wie bisher nur für Vermarktungszwecke • Handel auf Unternehmensebene stark erschwert (Turmes) oder abgeschafft (DE/UK/PL) • Alternative Flexibilitätsmechanismen auf Ebene der Mitgliedsstaaten (statistische Zählung) • Beibehaltung des EU-KOM Vorschlags • Unternehmen kommt als Investoren und Händlern wichtige Rolle in der Realisierung des EE-Ausbaus zu, daher muss Handel auf Unternehmensebene zugelassen werden • Kein neues System erforderlich, da vorhandenes GoO-System bereits im internationalen Umfeld bewährt • Alternative Flexibilitätsmechanismen zu komplex für zeitnahe und rechtssichere Umsetzung Wind Power Integration Christian Schneller, E.ON Netz GmbH

  45. Gegenargumente gegen GoO-Handel tragen nicht Gegenargumente E.ON`s Position • Gefährdung der nationalen Zielerreichung“ • „Unterminierung der nationalen Fördersysteme“ • „Ausschluss neuer Technologien“ • „Erzeugung von Wind Fall Profits in Höhe von 30 Mrd. €“ • Schutzklauseln zur Steuerung des GoO-Handels geben ausreichende Kontrolle • Bestandsanlagen nicht einbezogen • Zusätzliche Technologieförderung möglich • Nationale Fördersysteme kein Selbstzweck • Neue Technologien nicht gefährdet • Teilnahme am GoO- Handel und zusätzliche Förderung möglich • Falsche Annahmen: Angaben zu 30 Mrd. € beruhen darauf, dass zu teure Technologien den Preis im GoO-Handel bestimmen • Zu hohe Windfall Profits gefährden EE-Förderung Wind Power Integration Christian Schneller, E.ON Netz GmbH

  46. Wichtige Argumente für einen GoO-Handel Argumente für GoO-Handel E.ON`s Position • Flexiblere Zielerfüllung führt zu erheblichen Kostenersparnissen • Studien belegen handfeste Kostenvorteile • „Ausschluss neuer Technologien“ • „Erzeugung von Wind Fall Profits von 30 Mrd. €“ • Folgekostenabschätzung KOM: GoO-Handel bewirkt Ersparnis von 8 Mrd. € • Pöyry-Studie für UK-Regierung: 7 Mrd. € • Schutzklauseln zur Steuerung des GoO-Handels geben ausreichende Kontrolle • Bestandsanlagen nicht einbezogen • Zusätzliche Technologieförderung möglich • Nationale Fördersysteme kein Selbstzweck • Neue Technologien können am GoO- Handel teilnehmen und zusätzliche Förderung erhalten • Falsche Annahmen: die angegebenen 30 Mrd € Windfall Profits beruhen darauf, dass zu teure Technologien den Preis im GoO-Handel bestimmen • GoO-Handel erzeugt Wettbewerbsdruck: Kosten für erneuerbare Energien sinken Wind Power Integration Christian Schneller, E.ON Netz GmbH

  47. Gegenargumente tragen nicht „Erzeugung von Wind Fall Profits von 30 Mrd. €“ • Folgekostenabschätzung KOM: GoO-Handel bewirkt Ersparnis von 8 Mrd. € • Falsche Annahmen: die angegebenen 30 Mrd € Windfall Profits beruhen darauf, dass zu teure Technologien den Preis im GoO-Handel bestimmen • GoO-Handel erzeugt Wettbewerbsdruck: Kosten für erneuerbare Energien sinken „Ausschluss neuer Technologien“ • Neue Technologien könnten am Handelssystem teilhaben und sollten zusätzlich gezielte strukturpolitische Förderung erhalten Wind Power Integration Christian Schneller, E.ON Netz GmbH

  48. Warum ein GoO-Handel erforderlich ist EU-weiter GoO-Handel bewirkt Wettbewerb und damit Kostenreduzierung • Nutzung der besten Potenziale • Schaffung von Wettbewerb im EE-Erzeugungsmarkt • Stärkeres Vorantreiben der technologischen Entwicklung Ziel sollte die Ausschöpfung aller Effizienzpotenziale und die Heranführung der erneuerbaren Energien an eigenständige Marktexistenz sein.

  49. Fazit • Die ambitionierten EU-Ziele für den Ausbau der erneuerbaren Energien in der EU erfordern einen effizienten Förderrahmen. • Der europäische Handel mit Herkunftsnachweisen stellt hierfür eine ausbaufähige Grundlage dar. • Industrie- und Strukturpolitik müssen mit anderen Instrumenten umgesetzt werden. Ein europäischer Handel wird langfristig Kostenvorteile für den Endverbraucher generieren. • In diesem Rahmen kann E.ON mit den umfangreichen Aktivitäten der E.ON Climate&Renewables einen wichtigen Beitrag zum Ausbau der erneuerbaren Energien leisten. KOM-Vorschlag für GoO-Handel gegenwärtig bester Lösungsansatz für diese Zielsetzungen Wind Power Integration Christian Schneller, E.ON Netz GmbH

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