the clean energy package and the role of renewables

CLEAN ENERGY FOR ALL EUROPEANS

Spring Seminar The Clean Energy Package and the

Role of Renewables

Sofia Pinto BarbosaUnit Renewable Energy and CCS Policy, DG ENERGY

European Commission

Madrid, March 23rd. 2017


The Clean Energy Packageand the Role of Renewables

Madrid, 23rd March 2017 Sofia Pinto Barbosa European Commission – DG ENERGYUnit C1 – Renewables


1. Clean Energy for All Europeans

2. Revised Renewables Directive for the Period after 2020

3

AGENDA


GOALS OF THE CLEAN ENERGY FOR ALL EUROPEANS PACKAGE

LEADING THE ENERGY TRANSITION - CREATING VALUE FOR CITIZENS AND BUSINESS

Demonstrating global leadership

in renewables

Delivering a fair deal for consumers

Putting energy efficiency first


New Electricity Market Design(including Risk Preparedness)

HOW DO WE GET THERE ?

THE RIGHT REGULATORY FRAMEWORK FOR POST – 2020

Energy Union Governance

" In essence the new package is about tapping our green growth potential across the board"Commissioner Miguel Arias Cañete (2016)

Energy

5


HOW DO WE GET THERE?

THE RIGHT ENABLING ENVIRONMENT FOR POST – 2020

Setting the right incentives for investment in the energy transition and maximising the use of public funds

Delivering on social concerns and job training to ensure a socially fair energy transition

Driving digitalization forward to enable new energy technologies

Delivering on key energy infrastructure projects

Accelerating research and innovation to support leadership in advanced RES

Ensuring regional cooperation: Making the energy transition a multi-level government and stakeholder project

External dimension: Fostering security of supply and promoting clean energy measures abroad

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The package presents a dual opportunity to

speed up decarbonisation and to speed up growth and job

creation.

WHAT CAN WE EXPECT IN TERMS OF RESULTS?

Economic growth*:• 1% increase in GDP• 190bn EUR into the economy • 900,000 new jobs

*Upper end of estimates

2016 2030

Investment: • extra 177bn EUR euros per year

of investment from 2021 to meet 2030 climate & energy targets

• Crucial role for EFSI

Decarbonisation:• Carbon intensity of the economy

57% lower in 2030 than in 2015• 72% share of non-fossil fuels in

electricity generation in 2030

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HOW DOES IT LOOK LIKE?


THE REVISED RES DIRECTIVE POST-2020 - CONTEXT

More than 1 million people work in the renewable energy sector, with potentially 3 million more jobs by 2020

With an estimated renewable energy share of 17% of gross final energy consumption in 2015 the EU is on track to meet the 2020 target

Reduced dependence on fossil fuels and energy imports: cut fossil fuels use by the equivalent of Poland's entire annual energy consumption

Renewables are becoming affordable: 80% decrease of PV panel prices in 5 years, offshore wind already met targets for 2020

European leadership: in 2016 173 countries have renewable energy targets


PROGRESS TOWARDS NATIONAL RES TARGETS


Investment certainty

Cost-effective

deployment

Collective target

achievementStrengtheni

ng bioenergy

sustainability

Promoting innovation

in transport

Tapping heating and

cooling potential

Contributing to the EU political priority of becoming world

number 1 in renewables

&

Achieving the at least 27 %

EU-level binding renewables target cost-effectively

THE REVISED RES DIRECTIVE POST-2020 – KEY OBJECTIVES


Various measures can ensure a more even and more cost-effective

deployment of RES across the EU

e.g. Financial instruments tackling cost of capital, no retroactive changes, open up

support schemes…

A MORE EVEN DEPLOYMENT ACROSS MEMBER STATES IS CRUCIAL

Investments are increasingly concentrated in a few Member States with low cost of capital and

policy frameworks perceived as more stable

UK and Germany alone represented over 2/3 of all

investments over 2013-2015

Baseline EUCO27RES share in 2030 27% 27%Assumptions National support;

diverging cost of capital

EU-wide support; same cost of capital

RES investmentsrequired (2021-2030)

€ 404 bn € 240 bn

Share of top 3 MS in total investments

67% 47%


ENSURING A HOLISTIC APPROACH ACROSS THE PACKAGE

RED II

Electricity Reg.• Balancing responsibility (art 4)• Balancing market rules (art 5)• DA and ID market rules (art 6-7)• Priority dispatch (art 11)• Priority access / curtailment (art 12)• Network planning (art 12)• T&D network tariffs (art 16)• ENTSO-E tasks (art 25)• Network codes on curtailment + grid tariffs (incl.

connection charges) + ancillary services (art 55)

Electricity Dir.• Entitlement to a dynamic price contract (art 11)• Aggregators (art 13, art 17)• Active / self-consumers' rights (art 15)• Local energy communities' rights (art 16)• Smart metering (art 19-21)• Ancillary services by DSOs (art 31) and TSOs (art 40)• Integration of electro-mobility in networks (art 33)• Gos mandatory for RES-e disclosure (Annex II)

EPBD• Definition of technical building systems (art 2)• Long term renovation strategies (art 2)• Smart finance for smart buildings (art 2)• Charging points / pre-cabling requirements (art 8)• Calculation of EPBD (Annex 1.2)

Governance Reg.• Integrated national energy and climate plans (art 3, art 13)• Integrated national energy and climate reports (art 15, art 18)• Assessment of progress (art 25)• Response to insufficient ambition and progress (art 27)• Commission recommendations (art 28)• Template for national plans (Annex I)• MS reporting obligations for RES (Annex VII)

EED• Energy savings obligation (art 7)• Metering obligations for H&C (art 9a)• Billing and consumption information (art 10,

Annex VII)• Update of the PEF (Annex IV)• Common method for calculating energy

savings (Annex V)


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DELIVERING A SET OF WELL-BALANCED MEASURES ACROSS SECTORS

Reaching >27% RES

in 2030


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2005 2015 2020 2030 20500

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Other electricityRES-E

RES-E: Where are we and where do we need to go?

RES-E share of total electricity

66%

49%36%

28%15%

247

142

10379

42

Ktoe

Ref16 Euco30 Euco30

+13pp+39 Mtoe

+17pp+105 Mtoe

79

1/3 1/2 2/31/4


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PROMOTING A STABLE FRAMEWORK FOR RENEWABLE ELECTRICITY

STATE AID RULES

1. Guidelines2. Case by case notifications to and

assessment by DG COMP

Support to be market-

responsive and cost effective

Visibility for investors (3-year cycle)

Gradual and partial

opening to cross-border participation

Stability of financial

support (no retroactive changes)

Support schemes

One-stop shops Time limits

Simple notification for small-scale

Simple notification for repowering

Administrative barriers

Article 4 Art 15(3)

Article 5 Article 6

Article 16 Art 16, 17

Article 17 Article 16


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Unlocking the Potential of Consumer Engagement

Consumer Mobilise private capital

Increase local acceptance

Inform consumer choices

Drives 50% of rooftop

PV

Good sites are getting

scarcer

Ready to pay a

premium for RES?


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EMPOWERING CITIZENS AND COMMUNITIES

Renewable self-consumers to be allowed to generate, store, sell and consume their own electricity (linked to art. 15 Electricity Directive)

Renewable self-consumers in multifamily houses to be allowed to generate, store, sell and consume their electricity jointly

No disproportionate procedures and charges that are not reflective

Specific provisions for energy communities (linked to art. 15 Electricity Directive)

Improved Guarantees of Origin for better consumer information (art. 19)


RES-H&C – What Is At Stake?

Why act at EU-level ?

• 50% energy consumption• 18% RES today => 27% in 2030• 68% of the EU's gas imports• Risk of missing target if no action

Primary energy demand for heating and cooling in the EU

Essential yet fragmented sector


ADDRESSING THE UNTAPPED POTENTIAL OF HEATING & COOLING

Article 23• MS "shall endeavour to increase" the

share of RES-HC by 1pp/year• Flexibility on the measures• Flexibility on implementing entities• Possible combination with EED Art 7

Article 24• Consumers' information on DHC

energy performance and RES share• Consumers can disconnect, if they

can achieve a higher performance, or switch within the DHC system to RES/waste heat suppliers

• Opens DHC for RES/waste energy suppliers

Article 2 (definitions)introduction of ambient heat and

waste heat

Article 15 (reg. and codes)• Reinforcement of RES-HC in

planning & building• Minimum levels of RES in

buildings + link with EPBD• Easier technical requirements

Article 26 to 28bioenergy sustainabitility criteria

Article 20 (grid operation)DHC deployment, RES integration

New Articles Revisions


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23%

56%

15%

0%5%

1%

Gasoline

Diesel

Kerosene

Gas

Biofuel

Electricity

• 32% of final energy consumption

• Relies on oil for 94% of its energy needs.

• Increasing share of total GHG emissions (23% in 2014)

• GHG emissions remain higher than in 1990.

Source: Primes, 2015 shares in transport energy consumption

RES in Transport – Key Figures


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PROMOTING INNOVATION IN TRANSPORT


BIOENERGY – THE ISSUES

Focus on solid biomass/biogas for heat and power – major role for the EU climate & energy objectives.

Clear benefits in terms of energy security, growth and jobs, technology innovation, and climate action.

Emerging risks : Climate performance of forest biomass

depending on future trends on forest management practices

Environmental impacts (e.g. biodiversity, soil and air quality)

Potential competition for biomass resources and biomass availability

Fragmentation of the internal market resulting from diverging national sustainability schemes


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agriculture biomass – kept/streamlined existing sustainability criteria (e.g. no-go areas) (full harmonization)

biofuels/bioliquid - GHG savings increased to 70% for new installations

heat and electricity from biomass (20 MWfuel) and biogas (0.5 MWel) - new GHG saving requirement: 80% for new plants in 2021 (85% in 2026)

Sust

aina

bilit

y cr

iter

ia

forest biomass – new risk-based criteria on biodiversity and carbon management (minimum requirement, Member States can go beyond)

End-

use

perf

orm

ance

cri

teri

a

Cogeneration requirement for all new bioelectricity plants (20 MWfuel), 3-year transition period + exceptions for security of supply.

EU BIOENERGY SUSTAINABILITY FRAMEWORK

GH

Geffi

cien

cyag

rifo

rest

• Sustainability criteria for same feedstock independent of final use• End use performance criteria for biofuels, biomass and biogas


HOW TO MAKE IT HAPPEN: ACHIEVING AT LEAST 27 % RES EU-WIDE

2030202320212019

Governance(reporting & monitoring)

Sector specific measures(transport, H&C, support schemes, self-consumers…)

Flexible Gap fillerIf gap, MS decide on measures incl.

voluntary contribution to financing platform

Enabling framework incl. enhanced use of funds

Planning, reporting and monitoring

2020 targets as the baseline

Governance

RED I I


26 #EnergyUnion


Back up Slides


• Renewables (2/3)• Recast of the Electricity Regulation


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Priority dispatch


30

Priority access / curtailment


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Market-based where possible

• Voluntary offers for being curtailed come first• Market-based compensation• But not always possible/sufficient

Clear curtailment order• When non-market based• First conventional, then CHP, then RES, then self-consumption (no export to

the grid)• Deviation if disproportionate costs or security issues

Compensation

• At least 90 % of lost net revenues (including subsidies) or additional costs, whatever higher

Reporting & planning & countermeasures

• Yearly report by TSO on RES & CHP curtailment & redispatch• Obligation to aim for minimum curtailment & redispatch• Right to integrate 5 % curtailment in network planning where more efficient

Priority access / curtailment


32

Balancing responsibility


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What does that mean for investors?

• Full protection of legitimate expectations / grandfathering• Priority dispatch has little impact on solar and wind running hours due to their position in the merit order (but can have

impact on high marginal cost RES)• Curtailment rules provide clarity and legal certainty, strongly protecting RES and CHP• Balancing responsibility provides incentives for aggregation and liquid short-term markets• Stronger intraday & day-ahead markets help renewables to hedge• RES can capture higher prices when the system is tight, can participate in system services and will be curtailed as a last

resort• Level playing field and strict rules on capacity mechanisms reduce risk for new distortions in favour of conventional

generation

Impact for investors


• Renewables (3/3)• Governance Regulation


FOR ACHIEVEMENT OF ENERGY UNION OBJECTIVES AND 2030 TARGETS

Draft National Plans (and their updates)

Implementation of National Plans (Progress Reports)

Final National Plans (and their updates)

Recommendations (2018 and 2023)

MS

COM

Recommendations (2021-2030)

Union measures (2019 and 2024)

Union measures (2021-2030)

National measures for RES (2024)

Closing "Delivery gap"Closing "Ambition gap"

Achieving the at least 27% target