Renewable energy developments in Spain

Transcription

1 Renewable energy developments in Spain Carlos Batlle*, Pedro Linares * <CBatlle@mit.edu>, Assoc. Institute for Research in Technology, Comillas University Visiting MIT Energy Initiative

2 0 The well designed and functioning but squeezed market

3 Iberian market design and functioning The market design and functioning in Spain (& Portugal) cannot be criticized much Day ahead market full market splitting Single market operator Properly designed reserves markets Able to succesfully cope with a huge increase in RES generation Rather competitive structure The problems have to do with the surroundings 3

4 The picture as for 2008 Evolution of electricity demand 4

5 The picture as for now Evolution of electricity demand (ii) 5

6 Installed capacity 6

7 The (more than )over capacity 7

8 1 RE policy in Spain Going full circle

9 From the sunny days Renewables in Spain, circa 2008 Obama Visits Ohio Factory to Boost Clean Energy Economy BEDFORD HEIGHTS, Ohio, Jan. 16, 2009 (ENS) - President-elect Barack Obama today visited a factory in Bedford Heights, Ohio that is the largest manufacturer in the United States of the giant bolts used to construct wind turbines (.) Obama pointed to Spain, Germany and Japan, where, he said "they're making real investments in renewable energy" and "surging ahead of us, poised to take the lead in these new industries. "This isn't because they're smarter than us, or work harder than us, or are more innovative than we are," he said. "It's because their governments have harnessed their people's hard work and ingenuity with bold investments - investments that are paying off in good, high-wage jobs - jobs they won't lose to other countries." 9

10 to the shadows Renewables in Spain, nowadays 10

11 RES E policy in Spain Going full circle 1994: Feed in tariff (FIT), indexed to retail price, obligation to buy 1998: Feed in premium (FIP) or FIT, possibility for market bidding 2004: Incentive for market bidding, balancing payments, increase of maximum PV plant size, priority of dispatch 2007: Cap and floor for wind FIPs : Cost containment efforts, thermo solar expansion 2012: Moratorium on RE support, new taxes on RE 2013: Electricity sector reform Regulated rate of return for RE Net metering patch: back up fee 11

12 RES E policy in Spain Capacity additions and regulation 12

13 RES E installed capacity evolution 13

14 RES E institutional architecture National regional coordination National govt. gives the money Regional govt. gives licences Rush for developments (not necessarily in best places) Rent extraction (for industrial policy, among others) Difficulties in planning (incl. network) and controlling Plus: 17 different regulations 14

15 2 Impact of RES E in the wholesale market

16 Impact on wholesale market prices Wind and solar in Spain 16

17 Impact on wholesale market prices Wind and solar in Spain (ii) 17

18 3 The key to it all: the close cake The electricity tariff

19 Cost and deficit Breakdown of the electricity tariff of a standard consumer Domestic customer 5.5 KW 3300 KWh/yr. 19

20 Evolution of income and regulated costs (source: Ministry of Industry) 20

21 Subsidies for RES E in Spain RES-electricity support per unit of final energy consumed ( /MWh) Czech Republic Italy Germany Spain Portugal* 10 Belgium Hungary Austria 5 France Estonia Sweden Lux UK Romania Slovenia Netherlands 0Norway Finland 0% 5% 10% 15% 20% 25% 30% Germany Spain Italy France UK Portugal Belgium Netherlands Czech Republic Sweden Austria Hungary Estonia Romania Slovenia Finland Norway Luxembourg Share of final electricity consumption receiving RES support Size of bubble = total Euro value (Spain=EUR 5,4 bn) 21 Fuente:Status Review of Renewable and Energy Efficiency Support Schemes in Europe. Ref: C12-SDE December 2012.

22 Costs Evolution per technology Support for renewables (on top of energy market income) 7000 Waste Biomass Small hydro Wind Solar PV Solar TE (million Euro)

23 Costs Total system costs and share of electricity supply In 2012, costs of support for renewables were around 6,700 M Euros, around 30% of total costs of the system Waste Biomass Small hydro Wind Solar PV Solar TE (million Euro) Shares [2012] Total system costs Electricity demand Solar Thermal 1% 0.7% Solar PV 7% 2.7% Wind 5% 15.6% Small hydro 1% 2.0% Biomass 1% 1.4%

24 4 Net metering

25 Ill designed network charges Grid disparity In the majority of cases, network charges are to a large part recovered via energy related tariffs Volumetric charges: grid users pay according to the amount of energy taken or fed into the system ( /kwh) Net metering: prosumers pay for the net energy fed or taken The combination of both is worse than a hidden subsidy, it is an unsustainable cross subsidy between consumers Solar PV prosumers free riding They equally use the network but avoid paying for it The rest of consumers (or eventually the distributor) bear the burden The later the flaw is fixed, the worse Removing a hidden subsidy means implementing a hidden retroactive regulatory measure 25

26 Ill designed network charges An illustration: the MIT Future of Solar study Network Reference Model analysis 26

27 Ill designed network charges An illustration: the MIT Future of Solar study (ii) Network Reference Model analysis Preliminary results 27

28 28 Ill designed network charges The case of Spain In 2009 the National Energy Commission proposes a tariff design methodology to avoid the problem Redesign of the capacity charge to really cover the network and regulated costs Assigning the capacity charge to the hours of higher demand Allocating RES E subsidies among all energy consumers, not just electricity Batlle, C., A Method for Allocating Renewable Energy Source Subsidies among Final Energy Consumers. Energy Policy, vol. 35, iss. 5. The Government discards the alternative Aversion to transparent tariff design methodologies (common EU disease) Fear to modify consumers tariff pattern in force In 2013, pushed by the need to reduce the tariff deficit, adds a new patch to the regulation A support levy supposedly aimed to correct the flaw (6c /kwh) Pro: It can be done much better, but it would be worse to do nothing Con (major one): Again another retroactive measure

29 5 Some thoughts to conclude

30 A cautionary tale Thesystemworkedwellforwind But the PV bubble had large consequences And a bad timing Feed in tariffs were good for some technologies Control systems do not work if there is no coordination Reliability was not an issue for the wrong reasons Support for RES E policy is strong only if the economics make sense The feed in tariff never guaranteed the development of domestic technology or industry Solar PV industry has disappeared Most of PV panels installed during the boom were imported Technological breakthroughs come from other regions (US) 30

31 Thank you very much and excuses Comillas University Massachusetts Institute of Technology Electricity Systems (COMITES) Program For more information on COMITES or to explore how you can help support it, please contact: Rob Stoner Executive Director MIT Energy Initiative Ignacio J. Pérez Arriaga Engineering Systems Division, MIT & MIT Energy Initiative Carlos Batlle Comillas Pontifical University & MIT Energy Initiative