Emerging Challenges and Opportunities in Drug Registration and Regulation in Developing Countries
Course on Regulation and Sustainable Energy in Developing Countries - Session 3
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Transcript of Course on Regulation and Sustainable Energy in Developing Countries - Session 3
Feed-in tariffs – diffusion, design consideration and implementation in developing countries
Leonardo Webinar 12 January 2012
Dr. des. David Jacobs
Director Renewable Energy, IFOK GmbH
Course on Regulation and Sustainable Energy in Developing Countries – Session 3
www.leonardo-energy.org/course-regulation-and-sustainable-energy-developing-countries
Countries with renewable energy targets
Countries without targets
Countries with targets
From 45 in 2005 to 85 in 2010
3
FIT Countries 1995
Countries with state FIT policy
Countries with national FIT policy
Source: REN21, Renewables 2010 Global Status Report
4
FIT Countries 2000
Countries with state FIT policy
Countries with national FIT policy
Source: REN21, Renewables 2010 Global Status Report
5
FIT Countries 2010
Countries with state FIT policy
Countries with national FIT policy
Source: REN21, Renewables 2010 Global Status Report
World-wide installed capacity by incentive type (%)
Source: Bloomberg New Energy Finance
Wind Solar
Feed-in tariff64%
Tax incentive
23%
Trade & quota
9%
Market based
3%
Tendering1%
194GWFeed-in
tariff87%
Tax incentive
6%
Market based/off
-grid7%
43GW
Countries with FiTs
• 23 of 27 EU countries have FITs
• Feed-in tariffs in the EU have triggered considerable share of investment:
• 100% PV
• 86% wind
• 68% biomass
FITs in Europe
Source: Klein et al. 2010
Basic feed-in tariff design
• Purchase obligation
• “Independent” from power demand
• Fixed tariff payment based on the actual power generation costs
• Price setting will be discussed in session 4
• Long duration of tariff payment
Tariff payment duration
• Formerly: short periods (logic of conventional electricity sector)
• Nowadays: long payment durations (usually 15-25 years ~ lifetime of power plant)
• Necessary because of special investment structure
Eligible RE Sources/Technology
• Definition of eligible producers (technologies?) • Assessment of resource availability• Start with a handful of technologies, for instance:
Wind Biomass Small hydropower Solar PV
Plant size (maximum?)
Territory (offshore?)
Eligible RE Sources/Technology
Assessment of other resource needed!
Wind offshore? Tidal? Geothermal?
Number of eligible technologies
Source: Jacobs 2012
More “advanced” FIT design
• Advanced feed-in tariff design options are primarily for countries who have already supported renewable electricity technologies for a number of years
• Advanced FIT design is taken into account by more and more developing countries
• Objectives:
• Reduce windfall profits through differentiated tariffs
• Facilitate system integration
Pro and cons of tariff differentiation
• Advantages of tariff differentiation:
• Avoid windfall profits;
• efficiency of system can be increased,
• Additional costs for final consumer can be limited
• Disadvantages of tariff differentiation:
• High degree of complexity (reduced transparency)
• Overall efficiency might be reduced (e.g. better to construct two small plant)
→ Increase complexity over time (e.g. Germany: 1990: 4§; 2000: 13§; 2004: 22§; 2009: 65§)
Technology specific support
• Technology specific support to avoid windfall profits for producers of mature technologies
• Size specific support
• Location specific support Cost
Quantity
C
B
A
WP
MP
PFITA
PFITB
PFITC
Source: Jacobs 2005
Source: David Jacobs
Number of tariffs
Source: Jacobs 2012
Size specific tariff payment
Size specific tariffs
• Tariff differentiation according to size
• Economies of scale
• Market entrance for small producers
• According to typical installation sizes, e.g.
0 kW < Tariff/Price ≤ 30 kW30 kW < Tariff/Price ≤ 100 kW100 kW < Tariff/Price < 2 MW2 MW and above
Location specific tariff payment
Location specific tariffs
• Mostly applied for wind energy (Germany and France)
• Reduce accumulation of wind power plants in coastal areas (increases public acceptance); visual impact
• Location specific tariffs in Germany depend on wind speed at a given location (measured during the first 10 years of operation)
• First 10 years: flat rate
• Final 5 years: depending on “quality” of site
Location specific tariffs - Germany
Source: Klein et al. 2008
Location specific tariffs - Germany
Source: Klein et al. 2008
Location specific tariffs - Germany
Location specific tariffs
• New French FIT for solar also includes location specific tariffs
Source: http://re.jrc.ec.europa.eu/pvgis/countries/europe.htm
Tariff degression
Tariff degression
• Tariff degression (automatic, annual reduction); because of technological learning, economies of scale, rationalization, innovation pressure
• Effects only new capacity, i.e. tariff for “old” plants remains stable over long period of time
• Most countries only use it for solar PV (Italy, Spain)
Source: Klein et al. 2008
Tariff evolution solar PV in Germany
Source: Fulton et al. 2011
110 110 139
670951 843
1,271
1,809
3,806
7,407
0.510.48
0.46
0.620.60
0.56
0.53 0.52
0.43
0.39
0.510.48
0.46 0.460.43
0.41
0.38
0.35
0.32
0.24
0
1000
2000
3000
4000
5000
6000
7000
8000
2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Added MWUpper BoundLower Bound
Tariff degression
• Tariff degression (automatic, annual reduction); because of technological learning, economies of scale, rationalization, innovation pressure
Source: MBIPV 2010
Tariff degression - Germany
• Germany implemented tariff degression for all technologies
• Tariff degression rates in Germany (2009)
Renewable energy technology Annual degression rate
Hydropower (more than 5 MW) 1 percent
Landfill gas 1.5 percent
Sewage treatment gas 1.5 percent
Mine gas 1.5 percent
Biomass 1 percent
Geothermal 1 percent
Wind power offshore 5 percent (from 2015 onwards)
Wind power onshore 1 percent
Solar PV 8-10 percent
Inflation indexation
Inflation indexation
• Feed-in tariff schemes guarantee tariff payment for a long period of time (15-25 years)
• Indexation applies to existing and new power plants!
• Full or partial indexation (Spain)
• Indexation to other economic indicators (France: cost of labor)
Inflation indexation
• Some European countries do not explicitly index tariffs (e.g. Germany)
• However, these countries have relatively modest and predictable price increased which can be taken into account when calculating feed-in tariffs
• In the case of countries with high inflation rated, tariff payment for existing plants should be inflation indexed
Demand oriented tariff payment
Demand-oriented tariff payment
• Higher tariffs during peak demand
• Lower tariff during off-peak periods
• Should only apply to “non-fluctuating” technologies (e.g. not wind and solar)
• Differentiation: day or time of year
Demand-oriented tariff payment
Source: Optres Final report 2007
Time-differentiated tariffs – hydro, France
Single-component tariffNo differentiation 6.07 €cent/kWh
Two-component tariff Summer 8.38 €cent/kWh
Winter 4.43 €cent/kWh
Four-component tariff Winter, normal demand 10.19 €cent/kWh
Winter, off-peak demand 5.95 €cent/kWh
Summer, normal demand 4.55 €cent/kWh
Summer, off-peak demand 4.25 €cent/kWh
Five-component tariff Winter, peak demand 17.72 €cent/kWh
Winter, normal demand 8.92 €cent/kWh
Winter, off-peak demand 5.95 €cent/kWh
Summer, normal demand 4.55 €cent/kWh
Summer, off-peak demand 4.25 €cent/kWh
Source: Author based on J.O. (2007a)
Assessment report
Assessment report and amendments
• Frequently review the FIT scheme and amend it, if necessary
• Germany and Spain: Review every 3 or 4 years
• New FIT countries: 1 or 2 years after first implementation, from there on every four years
Source: Meister Consultants Group, DBCCA Analysis, 2011.
Assessment report and amendments
• Assessment report should include:
• analysis of growth rates and average production costs of the eligible
technologies
• progress towards the achievement of targets
• economic, social and environmental benefits of the law (such as the
amount of investment and export trade, the number of jobs created and
the amount of carbon dioxide emissions avoided)
• additional costs for the consumer
Source: David Jacobs
Conclusion
Advantages of Feed-in tariffs
High level of investment security
New actors are entering the power market (competition)
PV price reduction and innovation triggered by degressive feed-in tariffs
> Investments are not postponed
Allows for technology specific support
Source: David Jacobs
Disadvantages of Feed-in tariffs
„uncontrolled“ market growth in case of tariffs that are too high (flexible degression)
The costs are growing continuously until the payment period of thefirst plants ends
Difficulty to anticipate technological development (progress reportsand monitoring necessary)
Source: David Jacobs
Preview of session 4 – Case studies on feed-in tariff implementation
More detailed case studies from developed and developingcountries (implementation steps, effectiveness and efficiency, critical path issues, etc).
Assessment of costs related to feed-in tariff mechanisms and design for cost control
Assessment of tariff calculation methodologies (how to get the tarifflevel right)
Further reading
Mendonça, M., Jacobs, D.; Sovacool, B. 2009b. Powering the green economy – The feed-in tariff handbook. Earthscan: London. http://www.earthscan.co.uk/?tabid=92822
Klein, A., Pfluger, B., Held, A., Ragwitz, M., Resch, G., Faber, T. 2008. Evaluation of different feed-in tariffdesign options – Best practise paper for the international Feed-in Cooperation, Second edition, October 2008. Available from http://www.feed-in-cooperation.org/images/files/best_practice_paper_2nd_edition_final.pdf
Couture, T., Cory, K., Kreycik, C., Williams, E., 2010. Policymakers’ Guide to Feed-in Tariff Policy Design. NREL, Technical Report, July 2010. Golden (CO): National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy10osti/44849.pdf
Further reading
DB Climate Change Advisors 2009. Paying for renewable energy: TLC at the right price - Achieving scalethrough efficient policy design. New York, NY: The Deutsche Bank Group. http://www.dbcca.com/dbcca/EN/investment_research.jsp
EU Commission 2008a.The support of electricity from renewable energy sources, Commission staff working document, accompanying document to the proposal for directive of the European Parliament and of the Council on the promotion of the use energy from renewable sources, SEC(2008) 57, 23 January 2008, Brussels. http://ec.europa.eu/energy/climate_actions/doc/2008_res_working_document_en.pdf
Jacobs, D. and Kiene A. 2009. Renewable energy policies for sustainable African development, World Future Council, April 2009. http://www.worldfuturecouncil.org/fileadmin/user_upload/PDF/World_Future_Council_Renewable_Energy_Policy_Africa_June09.pdf
Thank you for your attention!!!
Dr. des. David Jacobs I Director Renewable Energy IFOK GmbH
Reinhardtstraße 58
10117 Berlin
Tel.: +49 30 536077-27
E-Mail: [email protected]
www.ifok.de
© 2010, IFOK GmbHIFOK behält sich alle Urheber-, Marken-, Leistungsschutz- sowie sonstigen Rechte an den Inhalten der Präsentation vor. Ohne schriftliche Einwilligung durch IFOK dürfen diese Inhalte oder Teile davon weder bearbeitet oder verwertet noch Dritten zugänglich gemacht werden.
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