IEA-RETD REMOTE PROSUMERS 20150624

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  1. 1. Remote Prosumers Preparing for deployment Kristian Petrick IEA-RETD Operating Agent IRENA Conference: Island Energy Transitions Martinique, 22-24 June 2015
  2. 2. www.iea-retd.org 2 IEA-RETD is part of the IEAs Energy Technology Network RETD stands for Renewable Energy Technology Deployment. IEA-RETD is a policy-focused, technology cross-cutting platform (Implementing Agreement) under the legal framework of the International Energy Agency 9 members: CA, DE, DK, FR, IE, JP, NO, UK + European Commission Background IEA-RETD
  3. 3. www.iea-retd.org 3 The mission of IEA-RETD is to accelerate the large-scale deployment of renewable energies Created in 2005, currently 8 member countries: Canada, Denmark, France, Germany, Ireland, Japan, Norway, UK. European Commission to join in 2015. IEA-RETD commissions annually 5-7 studies bringing together the experience of some of the worlds leading countries in RE with the expertise of renowned consulting firms and academia. Reports and handbooks are freely available at www.iea-retd.org. IEA-RETD organizes workshops and presents at international events. Background IEA-RETD
  4. 4. www.iea-retd.org 4 Remote Prosumers: Preparing the grounds for deployment IEA-RETD Study Objective Providing guidance to policy makers on the drivers, opportunities, challenges and implementation strategies of prosumer policies Approach Framework and methodology of the IEA-RETD studies RE- PROSUMERS (2014) and REMOTE (2012) to the special unique situation of prosumers in remote areas and islands PSG Georgina Grenon (FR, chair), Sarah Evangelista (CA), Michael Paunescu (CA), Rune Holmen (Norway) IB Kristian Petrick (IEA-RETD Operating Agent), Wilson Rickerson (MCG), Toby Couture (3EAnalytics) Published http://iea-retd.org/archives/publications/remote-prosumers- report Timeframe May to June 2015
  5. 5. www.iea-retd.org 5 Agenda Three major opportunities for prosumers in islands Key drivers suggest quick prosumer uptake Main challenges are upon utilities Strategic framework for prosumers help islands in the transition
  6. 6. www.iea-retd.org 6 Prosumers = Producers + Consumers of electricity Introduction Prosumers with roof-top PV Grid Consume Produce Self-consume with / without storage Why are prosumers relevant for islands?
  7. 7. www.iea-retd.org 7 Reducing generation Costs: PV can be cheaper than diesel Prosumer Opportunities 1/3 Mainland countries Gen. Costs (mix) PV Gen. Costs Grid costs Taxes Gen. Costs (diesel) PV Gen. Costs Grid costs Taxes Remote Areas / Islands (RAI) Int. Costs PV below retail rate but above generation costs of power mix PV below retail rate and below diesel generation costs Gross savings Net sav. Integration Cost: Upgrades for grids and motors, automation, storage, etc. Retail rate Retail rate
  8. 8. www.iea-retd.org 8 Exploiting available space to tap full RE potential: Roof-top PV can supply substantial share of islands electricity demand Prosumer Opportunities 2/3 Mainland countries: Based on data from RE-COM-PROSUMERS, Denholm & Margolis, BMWi, ADEME Islands: Calculation assuming average 1kW/inhabitant
  9. 9. www.iea-retd.org 9 On many islands, roof-top PV may be the best (or only) viable RE alternative Prosumer Opportunities 2/3 Saba, Caribbean
  10. 10. www.iea-retd.org 10 Supporting the energy system: Prosumers are best positioned to absorb the midday PV peak through load shifting Prosumer Opportunities 3/3 Over- supply PV Supply Demand Peak shaving through storage noonmorning evening Demand response / change of behaviour
  11. 11. www.iea-retd.org 11 Encouraging roof-top PV generation and self-consumption to reach RE targets and capture the opportunities Consequences Avoid curtailment Encourage self-consumption and storage (on-site and central) If roof-top PV is necessary to reach RE targets Make best use of m2 available and kWh produced Avoid grid defections Provide fair compensation for injected kWh or system services
  12. 12. www.iea-retd.org 12 Drivers in islands are rather in favour of prosumer, so uptake may be quicker than in mainland countries Drivers of Prosumer Uptake Economic drivers Beha- vior Techno- logy Nat. cond. Enable prosumersConstrain prosumers Case of Un- subsidized electricity Line of normalised value of mainland countries PV system costs Electricity prices Self-consumption ratio Insolation Batteries Electric vehicles Awareness, pro-activeness Roof space, energy demand PV technology
  13. 13. www.iea-retd.org 13 Stakeholders position in RAI to prosumers is in general similar to mainland countries Stakeholders in prosumer uptake Stakeholders Line of normalised value of mainland countries Utilities Governments Non-prosumers Technology providers Enable prosumersConstrain prosumers
  14. 14. www.iea-retd.org 14 Island utilities may lose business to prosumers but may be able to increase margins by buying cheaper energy from prosumers Challenges Similar business - trading power Traditional business Lost business (like EE measures) - but also reduced fuel costs New business - investment required Schematic illustration of RAI power market from utility view point; assumed full roof-top PV potential utilised (~40%)
  15. 15. www.iea-retd.org 15 To define a prosumer policy strategy, governments need to assess all drivers and balance opportunities and risks 1. Evaluate drivers and conditions Are the conditions in place to support non- incentivised consumer scale-up? 2. Balance opportunities and risks Given the trade offs, is support for prosumers a national policy objective? 3. Define policy strategy Potential Strategies Going ForwardPotential Strategies Going Forward
  16. 16. www.iea-retd.org 16 Like mainland countries, policy makers in islands have three strategy choices New regulatory and policy approaches / paradigms for utility regulation and grid management Prosumer Strategy Choices Restrictive policies to avoid structural changes to utility business and regulatory paradigms Enabling policies like compensation for surplus production and transparent interconnection rules Incremental Structural 1. Constrain prosumers 2. Enable prosumers 3. Transition to prosumers A B Potential Strategies Going Forward
  17. 17. www.iea-retd.org 17 Transitioning to prosumers entails structural changes especially in two areas Supporting utilities in redefining their business model: Investing in roof-top PV or providing financing Trading power: Buying from prosumers and selling to consumers Coordinating between the increasing number of players. Regulators to explore approaches like decoupling of energy sales from revenues Reconceptualising how energy infrastructure is financed and shared. Lenders may need to modify lending protocols to support distributed RE Allow re-financing through future fuel cost savings / reduced subsidies. Develop micro-finance schemes, on-bill financing, etc. Prosumers can contribute to finance RE systems Leverage their position as a test beds for attracting capital Consider (partially) tax-financed energy infrastructure Potential Strategies Going Forward Transition to prosumers
  18. 18. www.iea-retd.org 18 Policies for Transitioning to Prosumers Potential Strategies Going Forward 3.A Incremental Transition to prosumers Incremental approach Examples Prosumer compensation mechanisms Buy-all/sell-all arrangements or hybrids with net metering Net excess generation purchased at full retail rate, or (in islands) at, or near, the avoided cost rate Rate Design Time-varying prices (this could be positive or negative, depending on the jurisdiction and level of PV penetration) Low fixed charges No special tariff Ratemaking Decoupling utility revenues from power sales Lost revenue adjustment mechanisms or performance-based incentives Market Reforms Encouraging new, prosumer-friendly business models Allowing peer-to-peer power sharing Tax Reforms Shift electricity sales tax to other income sources Tax incentives or credits for solar system components, or investments
  19. 19. www.iea-retd.org 19 Main challenges are upon utilities but new approaches are being developed Policies for Transitioning to Prosumers 3.B Structural Transition to prosumers Structural approach Examples Innovative business models Utilities become brokers of new customer relationships, partners with prosumer service providers, or even financiers of prosumer infrastructure New product and service offerings Selling specific services such as light, heat, or load management Instead of selling electricity as a universal bulk commodity, utilities could make differentiated offerings based on individual requirements. New operational models Strengthened and more sophisticated grid operations Distribution grids to adapt management mechanisms of transmission grids, e.g. locational pricing , forecasting, and real time visibility Emerging technologies Smart grid infrastructure to be more integrated, interactive, and price responsive. More visibility and control at the distribution level, customers more opportunities to react to electricity market
  20. 20. www.iea-retd.org 20 Prosumers have the potential to be an integral part of islands energy systems Roof-top PV prosumers can help reduce generation costs tap the full RE potential support the energy system Key drivers suggest faster prosumer uptake in islands than in mainland countries Strategic prosumers framework can support policy makers and utilities to structure the debate and manage the transition Conclusions Islands will likely be at the forefront of the transition towards prosumers.
  21. 21. www.iea-retd.org 21 IEA-Reports on prosumers and remote areas and islands are freely available at www.iea-retd.org IEA-RETD Publications
  22. 22. For additional information on RETD Online: www.iea-retd.org Contact: [email protected]