Dialogue on a Renewable Energy Sources (RES) Policy Framework for 2030 - Towards2030
Introduction
The aim of this proposed action is to facilitate and guide the Renewable Energy System (RES) policy dialogue for the period towards 2030. This strategic initiative aims for an intense stakeholder dialogue that establishes a European vision of a joint future RES policy framework.
The dialogue process will be coupled with in-depth and continuous analysis of relevant topics that include RES in all energy sectors but with more detailed analyses for renewable electricity. The work will be based on results from the IEE project beyond2020, where policy pathways with different degrees of harmonisation have been analysed for the post 2020 period. Towards2030-dialogue will directly build on these outcomes: complement, adapt and extend the assessment to the evolving policy process in Europe. The added value of Towards2030-dialogue includes the analysis of alternative policy pathways for 2030, such as the (partial) opening of national support schemes, the clustering of regional support schemes as well as options to coordinate and align national schemes. Additionally, this project offers also an impact assessment of different target setting options for 2030, discussing advanced concepts for related effort sharing.
Publications
The EU 2030 Framework for Renewables - Effective Effort Sharing Through Public Benchmarks
The ‘2030 Climate and Energy Policy Framework’ was adopted by the European Council on 23/24 October 2014. The centre pieces of this framework are a binding target of a 40% reduction of greenhouse gas emissions until 2030 compared to 1990, a 27% share of renewable energies in gross final energy demand and an indicative target of a 27% increase in energy efficiency compared to a ‘business‐as‐usual’ projection of the future energy demand. Contrary to the 2020 policy framework, the EU‐target for renewables will not be broken down into legally binding national targets. Instead, the EU‐target shall be reached by clear, self‐imposed commit‐ ments of each EU member state and guided by a solid governance framework as part of the Energy Union.To this end, the European Commission plans to develop indicators for evaluating national energy plans.
During the towards2030‐dialogue stakeholder workshop on ‘Implementing the EU 2030 climate and energy framework: a closer look at renewables’ held on 18 March 2015 at the premises of CEPS in Brussels, the ques‐ tion was raised how the EU will ensure that the sum of those self‐imposed commitments will be sufficient to reach the overall EU‐target. In the case of a top‐down allocation, individual targets sum up to the overall target of 27%, while the sum of individual pledges may fall short of the overall EU‐target. To close this gap, either a separate financing mechanism would be required or an iteration of pledges, until the gap is closed. As stated in a previous issue paper of the towards2030‐dialogue project,2 public benchmarks of how the EU‐ target could be broken down into individual contributions are a useful starting point for the pledging process. This way, the European Commission would provide guidance to encourage sufficiently ambitious pledges of EU member states and allow them to better assess the contribution needed by each member state for achieving the EU‐target. Such benchmarks could also be part of the set of indicators used by the European Commission to evaluate national energy plans as part of the Energy Union governance mechanism.
The aim of this paper is to present and assess various benchmark setting options. One option is to re‐use the allocation method of the Renewable Energy Directive (2009/28/EC), as discussed in the last issue paper. How‐ ever, it was sometimes critically remarked in the discussions on the adoption of the Directive that by following a flat‐rate and/or GDP‐based approach for defining national efforts, the potential availability of renewable resources and related costs are not taken into account. Therefore, such options are further explored in various combinations in this paper.
What Will be the Main Challenges for the Design of Renewable Electricity Policy in the EU?
Both EU and national policy makers face a difficult task: how to support renewable electricity deployment successfully (i.e. effectively and efficiently) in the short and medium terms and, in particular, in a 2030 horizon. Such main task is directly and negatively affected by certain factors or challenges which have to be dealt with. Some of these challenges which affect renewable electricity deployment might not be strictly circumscribed to the renewable energy realm or even to the functioning of electricity markets. For example, the economic crisis has put a greater pressure on governments around Europe to promote renewable electricity cost-effectively. There are challenges related to electricity markets and others are associated to external developments. Re- newable electricity policies may still be adopted to cope with some of those challenges. However, those challenges are not the focus of this Policy Issue and are addressed in other work packages of the Towards2030 project.
This Policy Issue focuses on the challenges related to policy design (choice of renewable electricity instrument and design element) for future (2030) renewable electricity policy in Europe. Renewable electricity policy chal- lenges are understood as those challenges which comply with two conditions. First, they are directly and indirectly related to factors which affect deployment in a 2030 timeframe in the EU. Since we are interested in those challenges which can be tackled by support policies, a second condition applies: the challenges can be influenced by renewable electricity policy. The challenges identified are of different types, and include technologically-related challenges, macroeconomic challenges, those associated to the current policy discussion, to administrative barriers and social ac- ceptance. More specifically, the following challenges have been initially considered:
- how to adapt support levels to trends in renewable energy technology costs and the uncertain evolu- tion of resource potentials,
- how to appropriately combine R&D support and deployment support for less mature technologies,
- how to cope with lower budgets for renewable electricity support,
- problems in accessing finance (credit restrictions),
- institutional challenges related to the implementation of market-based instruments (MBIs) in general and auctions in particular,
- making auctions and other market-based instruments effective and efficient,
- challenges related to target setting (an EU target without MS targets and an EU target with MS tar- gets),
- merit order effect reducing wholesale prices and revenue for renewable energy technologies ,
- trade-offs between a greater stability and flexibility to adapt to new circumstances,
- delays in administrative procedures,
- trade-offs between NIMBY related to renewable electricity concentration and allocative efficiency,
- social rejection of high or escalating support costs and
- costs falling disproportionately on a given group of the population. This report proposes some policy measures to mitigate the problems associated to those challenges, focusing on instruments and design elements.
Many of these issues are rather complex, however, and, thus, have no simple solution. Therefore, a combination of interventions (in short, policy mixes) will be required. Future re- search and forthcoming reports within the Towards2030 project will further specify the type of policy measures and policy mixes required to meet those challenges effectively and cost-effectively.
Electricity Markets and RES Integration - Key Challenges and Possible Solutions
As the share of intermittent RES (such as wind turbines and solar PV) increases significantly, their deployment challenges the operation of power systems, and impacts the role played by electricity markets that have not been designed to handle the features of intermittent RES.
First of all, intermittent RES feature a variable output that depends on the availability of the resources they are based on (wind does not always blow and sun does not always shine). This variability is worsened by the low-marginal costs of intermittent RES. This means that intermittent RES are willing to generate whenever they can, but only when they can.
Second, this output is also difficult to predict accurately, as the output of intermittent RES depends on complex meteorological phenome- na.
Third, the best generation sites for intermittent RES such as wind turbines are often located far away from consumption centres, creating the need for significant investment in the transmission system. On the opposite, some resources like solar PV are mostly integrated at the distribution level, creating new kinds of flows from low-voltage level to high-voltage level.
Fourth, the development of intermittent RES is still driven by support mechanisms and isolated from most market-signals.
It is therefore clear that electricity market design must be revamped to integrate intermittent RES. On the one hand, electricity markets must cope with the changes in the operation of power systems that are created by the deployment of intermittent RES: new time-definitions must fit RES variability, the day-ahead horizon is not adapted to RES predictability, and existing zones do not reflect the congestion patterns corresponding to the location of intermittent RES. On the other hand, intermittent RES cannot remain at the margin of power sys- tems, and must be more closely integrated into electricity markets.
Report on Identification and qualitative analysis of target setting options
Even though a greenhouse gas (GHG) emissions reduction target for 2030 is not formally agreed upon by Member States yet, this analysis assumes that a future target structure for the EU will be built on at least a binding GHG target. Other target options always encompass a GHG target combined with some more detailed sub‐target(s).
In this section, a selection of target frameworks resulting from combination of the design elements in Fehler! Verweisquelle konnte nicht gefunden werden. will be described in more detail. The selection has been based on which target framework options have been or are currently relevant in the policy discussion. The focus here is on the target structure itself (blue design elements). In a second step, the selected target structures are assessed according to a number of criteria. Burden sharing options (red design elements) will be discussed in the next section.
The current European energy and climate policy framework centres on the “20-20-20” headline targets to be achieved by 2020 (European Commission 2014a): A reduction of GHG emissions by 20% compared to 1990 levels; a share of 20% RES in gross final energy consumption; and a 20% improvement in energy efficiency. This bundle of targets was agreed upon by the EU Member States in 2007 under the German council presidency (Geden & Fischer 2014). Recent political discussions have revolved mainly around the question of whether this framework ought to be continued or whether further RES and efficiency ‐ gets would be unnecessary for 2030. However, for the sake of a more comprehensive view, other possible target structures are explained here as well. The focus here is on the existence or non‐existence of a RES target. Possibilities for an efficiency target are discussed where they are directly linked to the RES target.
