Evaluating the Development and Impact of Feed-In Tariffs
-
Upload
dirk-volkmann -
Category
Business
-
view
183 -
download
1
description
Transcript of Evaluating the Development and Impact of Feed-In Tariffs
Evalua&ngtheDevelopmentandImpactofFIT
2ndAnnualRenewableEnergyProjectFinanceLondon,12Febr2013
DirkVolkmann
30min.
whatwedo
• ConsulEngandInterimManagementServicesfortheRenewableEnergyIndustry
• ProjectManagement
• ProjectDevelopment
• ProjectFinanceandSales• StrategyDevelopment
• InternaEonalizaEon
recentprojects
• InterimHeadofProjectFinanceandSales,GermansolarPVEPCcompany(2010‐11for9months)
• InterimSegmentManagerUEliEes,Germancellandmoduleproducer/EPC(2011for10months)
• InterimHeadofO&M,internaEonalsolarPVEPCcompany(2011for8months)
Agenda
1. Feedintariffsaspartofrenewableenergyprogram
2. ImplementaEonandcosteffecEvenessoffeedintariffsinEurope
3. Theuseoffeedintariffsforcertaintechnologies4. AretherealternaEves?5. Howchangesinfeedintariffsinfluencethemarket
incertaincountries
• apolicymechanismdesignedtoaccelerateinvestmentinrenewableenergytechnologies.
• theworld’smostpopularrenewableenergypolicymechanism
• asetratefortheelectricityforproducers,usuallydifferenEatedaccordingtothetechnologyused(wind,solar,biomass,etc.)andthesizeoftheinstallaEon.
• PVsystemonahomeinGermany:theuElitybuysthepoweryouproduceatafixedFITrateforaperiodof20years.WhenyoubuypowerfromtheuElitytheretailpowerpriceislowerthantheFIT,thisallowsyoutogetastablereturnonyourinvestment.
WhatisanFIT?
1. FITconceptisprovenandaboveexpectaEonsinGermanyforthepast20years.2010target:12.5%shareofREinelectricgeneraEonin2000late2007:15.1%share
2.FIT’spayforthemselvesinlessthanoneyear:€9.2billionExpendituresin2008fortheGermanFITprogram.a.€7.8billionfromreducedamountsoffossilandnuclearfuelspurchased(oftotal€87billionspentin2011)b.€9.2billionsavedfromtheavoidanceofexternalcosts
whytoimplementanFITprogram(1)
• Externalcostsare:– damageresulEngfromclimatechange– healthrelatedcostsrelatedtoairpolluEonandtoxic
wastes– costsofcleanupofriversandotherbodiesofwater
asaresultofpolluEonetc.• Somecountriesignoreexternalcostsandthesearenotincludedinprojectortechnologyanalysis
• hugelong‐termnegaEveforthetaxpayerandwillresultinasignificantburdenforthetaxpayer(payingmanyEmesoverfortheproblem)
whytoimplementanFITprogram(2)
capexopexfuelcostcostofcerEficates(8$/toCO2)add.costat38€/toCO2min.backupcostadd.back‐upcost(max.)
lignite
coal
natural gas
nuclear
biomass
hydro
wind onshore 5.5 m/s
wind onshore 6.5 m/s
wind offshore 25 %
wind offshore 40 %
€/MWh
producEoncostofelectricityincomparison(takingintoconsideraEondifferentcostofCO2cerEficates,
newplants,commissioning2010orlater)
WorldsubsidiestofossilfuelconsumpEonvs.renewablesin2009(billionUSD)
• FITsdonotdependontaxpayercontribuEons(itisnotasubsidy)andnonewpublicdebtisneededtofundit.
• TheFIThasprovensuperiortoanyotherprogramcurrentlyinusearoundtheworld,suchassubsidieswithpublicmoney,tenderingmodelsandquotamodels.
• FITsencouragesprivateinvestment,whichresultsinmoretaxableincomefromnewcompaniesandjobsintheindustry.Thisisabasicfinancialconceptthatsomecountrieshavefailedtounderstand.
• FITsdramaEcallyreducesbureaucracyandmovetheprocessalongatamuchfasterandcheaperrate.TypicalpowerpurchaseagreementsintheU.S.areincrediblycomplexandrequireanarmyoflawyersandengineers—whichisbothEmelyandcostlyfordevelopers/owners.
benefitsofanFITprogram?(1)
• example:intheU.S.thetypicalagreementbetweenaproducerandauElityisaminimumof85to100pageslong,inGermanythecomparablecontractisonlytwotofourpages.
• FITs,byacceleraEngthedevelopmentoftherenewableenergyindustry,enhancenaEonalsecuritybylesseningdependenceonforeignoilandhelpingtodecreasethehugecashfrombuyingforeignoil.
benefitsofanFITprogram?(2)
disadvantages?
• TransmissionSystemOperator(TSO)hastointegratetherenewableenergyintothemarket
• REdoesnotreacttodemandfluctuaEonsorspotmarketprices(yet)– newdevelopmentofdirectmarkeEng– greenpowerprivilege(bonus)– remoteshut‐offbonus
2012SelectedIndicators
source:REN21Renewables2012GlobalStatusReport
2012Top5REcountries
source:REN21Renewables2012GlobalStatusReport
2012Top5countries
source:REN21Renewables2012GlobalStatusReport
esEmatedJobsinRenewableEnergyWorldwide,byIndustry
source:REN21Renewables2012GlobalStatusReport
EURen
ewableSharesofFinalEne
rgy,
2005
and
201
0,with
Targetsfo
r20
20(1
)
ImplementaEonandcosteffecEvenessoffeedintariffsinEurope
source:REN21Renewables2012GlobalStatusReport
source:REN21Renewables2012GlobalStatusReport
EURen
ewableSharesofFinalEne
rgy,
2005
and
201
0,with
Targetsfo
r20
20(2
)
ImplementaEonandcosteffecEvenessoffeedintariffsinEurope
MapofEUcountriesaccordingtotheirsupportmechanismsforRES‐E
AddedcapacityandROIvaluesforsomeEUmembercountries,1992‐2008
source:AssessingtheStrengthandEffecEvenessofRenewableElectricityFeed‐InTariffsinEuropeanUnionCountries,diw,Berlin2011
AddedcapacityandROIvaluesforsomeEUmembercountries,1992‐2008
source:AssessingtheStrengthandEffecEvenessofRenewableElectricityFeed‐InTariffsinEuropeanUnionCountries,diw,Berlin2011
rooftopinstallaEonsminus66%since2006
averagefinalcustomerpriceforturn‐keyrooftopinstalla&onsupto10kW(excl.VAT)
source:BSW‐Solar
FITpaym
entsfo
rarangeofre
newableEne
rgy
Techno
logies,selectedcoun
tries,201
1/20
12
Theuseoffeedintariffsforcertaintechnologies
source:REN21Renewables2012GlobalStatusReport
AlternaEvesforthepromoEonofRenewableEnergy
pricerule quotarule tender
Feed‐In‐Tariff(FIT)• fixedpriceperkWh• financedbypublicauthoriEesandprivatesector• insomecasesimplementedbynet‐metering
RenewableEnergyStandards(RES)/RO/RPS• uEliEesareobligedtogenerateafixedporEonwithrenewableenergy.• ImplementaEonwithgreencerEficatesandPPAs
Price‐Quota‐Mechanism• governmentorganizespublicbidforfixedamountofelectricity• thewinnergetsalimitedfeed‐inguaranteeforthepowerproduced
promo&onprogramsforRE
+NetMetering+PPAPowerPurchaseAgreements
Netmetering
source:Wikipedia
PowerPurchaseAgreement(PPA)
Buyer
strengths weaknesses countries
Feed‐In‐Tariff
• highTSS(transparency,stability,security)• guaranteespriceandvolume• ‘pullincenEve’
• burdenonconsumers/taxpayers• longtermcommitment(upto25years)• designofabalancedFITisdifficult
Germany,Spain,Italy,France,CzechRepublic,UK,India(statelevel)
RenewableEnergyStandard
• simplifiesthecompeEEonbetweenREtechnologies• Exacttargetachievement(theoreEcal)
• lowTSS• pricefluctuaEons• unfavorableforcertainREtechnologies• complexcontracts• bureaucraEc
Australia,USA,UK
Tender • combinaEonofmarketefficiencyandpriceguaranteeleadstocostefficientsoluEons(theoreEcal)
• hightransacEoncostfavorslargecompanies• inconsistenttendersleadtoincerEtude• longingforlowestbidholdsbackseriousbusinessmodels
• ArgenEna,Peru.India• offshorewind:France,Denmark
promoEonofRenewableEnergy–strengthsandweaknesses
developmentofFITandpricesforconvenEonalenergysources
©Bun
desverband
erneu
erbareEne
rgienfeed‐intarifffornewplants
produc&oncost
deliverycostpowerexchange
FITandgridparity
2011 2015
FITfor20yearsextramargin
powerprice
Howchangesinfeedintariffsinfluencethemarketincertaincountries
• forsolarPVFIT’schangemorefrequently,asjurisdicEonsadjusttheirtariffsfornewcontractstoreflectfallingpanelpricesandnaEonaltargets
• FIT’smajoropponentisthelocalelectricuElity.Theyaremonopolies—monopoliesdonotrespondtomarketforces.
• IfonelooksatFITresults,especiallyinanotherdevelopedcountrylikeGermany,thenumbersspeakforthemselves.
• FIT’sarefarmoremarket‐orientedthanmonopolies.
• LackofpoliEcalcouragetotrysomethingneworallowsomethingthatpowerfulstakeholders(uEliEes,fossilfuelcompanies)donotwanttojeopardizetheirbusinesses.
opposiEontoFIT’s:opposiEonistalk,FIT’sarefact
ExpecteddevelopmentoftheEEGcostfracEonunEl2030,dependingonthedevelopmentofelectricityprices
source:BriefAnalysisontheCurrentDebateaboutCostsandBenefitsofExpandingtheUseofRenewableEnergiesinElectricityGeneraEon,WuppertalInsEtute2011
ComparisonofEEGcostfor2008unEl2010andfor2030andsupportforenvironmentallydamagingacEviEesin2008
source:BriefAnalysisontheCurrentDebateaboutCostsandBenefitsofExpandingtheUseofRenewableEnergiesinElectricityGeneraEon,WuppertalInsEtute2011
conclusions
• FITisessenEalfortheintroducEonanddevelopmentofrenewableenergycapaciEesinacountry,unlessyoualreadyhavereachedgridparity• thelessinteresEngorfavorabletheIRRforinvestorsgets,themoreimportantthequalityandefficiencyoftheequipmentis(premiumbrandtechnology)
• withoutagrantedgridaccessthedevelopmentwillbeverylow
• FITsarenotonlyvitalforthedevelopmentofREcapaciEesbutalsoforthedevelopmentofanindustryandemploymentifwelldone
hrp://green.wiwo.de/solarindustrie‐warum‐sie‐in‐deutschland‐kaum‐eine‐zukuns‐hat/
Joachimstrasse 55 40547 Düsseldorf Germany T +49 – 172 – 24 23 240 e info @ volkmann-consult.de www.volkmann-consult.de