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Renewable Energy Support in Europe The Swedish Experience Florence School of Regulators, April 29th, 2011
Renewable Energy Support in Europe The Swedish Experience Florence School of Regulators, April 29th, 2011
Renewable Energy Support in Europe
The Swedish Experience
Florence School of Regulators, April 29th, 2011
Karin Widegren
Director, International Affairs
Energy Markets Inspectorate, Sweden
Renewable energy targets for EU member states % 60 50 40 30 20 10 0

Renewable energy targets for EU member states

% 60 50 40 30 20 10 0 2005 2020 Austria Belgium Bulgaria Cyprus Czech
%
60
50
40
30
20
10
0
2005
2020
Austria
Belgium
Bulgaria
Cyprus
Czech
Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland Italy Luxembourg
Latvia
Lithuania
Malta Poland
Netherlands
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden UK

Source: European Commission

Lithuania Malta Poland Netherlands Portugal Romania Slovakia Slovenia Spain Sweden UK Source: European Commission
Swedish economic policy instruments to support renewable energy •   Electricity certificate trading system for

Swedish economic policy instruments to support renewable energy

economic policy instruments to support renewable energy •   Electricity certificate trading system for

Electricity certificate trading system for renewables

Launched 2003, Objective 25 TWh from 2002 –until 2020 Joint market with Norway planned from 1.1. 2012 Jointly increase production 2012-2020 26,4 TWh

Tax policy - energy and carbon taxes

Energy tax since 1950’s; CO 2 -tax since 1991 Green tax shift since 2001 – energy and CO 2 -tax shifted against tax on labor

Other economic policy instruments

Emissions trading (since 2005) within EU Support to electric and hybrid cars, biofuels for transports

The Swedish Green Certificate System •   Producers are granted one electricity certificate for every

The Swedish Green Certificate System

The Swedish Green Certificate System •   Producers are granted one electricity certificate for every MWh

Producers are granted one electricity certificate for every MWh renewable electricity generated

Power suppliers and in certain cases consumers are obliged to buy certificates – an annual quota, in proportion to their supply or consumption

Failure to comply with the quota is penalized

The certificates are tradeable - a market place has been established; the price is set to make offer meet demand

Price development for green certificates in Sweden

Price development for green certificates in Sweden

Price development for green certificates in Sweden

Why did Sweden choose green certificates?

Why did Sweden choose green certificates? •   Long term predictability for investors - moving costs
Why did Sweden choose green certificates? •   Long term predictability for investors - moving costs

Long term predictability for investors - moving costs to promote renewables from public financing to the market

Market-based support system - reducing costs through competition between different renewable energy sources and technical development

Achieving policy targets for renewable electricity production – controlling the volume through quotas

No immediate need to increase supply of electricity - develop trade first and domestic supply later

A comparison between support schemes FEED-IN TARIFFS •   Investment security •   Predictability of

A comparison between support schemes

FEED-IN TARIFFS

Investment security

Predictability of price (medium & long term)

Technology specific - Adjustable

according to policy goals

Unpredictable total costs of the support scheme

High risk of overfunding

TRADABLE CERTIFICATES WITH QUOTAS

Higher risk for investors

Predictability of reaching the targets

Technology neutral - competition between renewable sources

Risk of volatile price increase to

consumers

Limited risk of overfunding

Lessons learned and need for additional measures

Lessons learned and need for additional measures •   Equal access to price information and transparency
Lessons learned and need for additional measures •   Equal access to price information and transparency

Equal access to price information and transparency important to stimulate trade and liquidity

A surplus of certificates is important to balance supply and demand

The certificate system should be modified to give locational signals to new wind power plants

Transmission and distribution network need to be

enforced - Governmental support needed to at least partly cover future costs for grid investments

A joint certificate market between Sweden and Norway •   Common key principles for which

A joint certificate market between Sweden and Norway

A joint certificate market between Sweden and Norway •   Common key principles for which renewable

Common key principles for which renewable production units to include and the timeframe to receive green certificates

Similar control and support functions

Common platform for market information

Coordinated ambitions regarding quota levels

•   Coordinated ambitions regarding quota levels •   higher liquidity, lower price risk, cost efficiency

higher liquidity, lower price risk, cost efficiency

Renewable energy support in Europe - Future Challenges •   Large and unpredictable variations in

Renewable energy support in Europe - Future Challenges

Renewable energy support in Europe - Future Challenges •   Large and unpredictable variations in production

Large and unpredictable variations in production and flows

Need to secure effective utilization of the network and the “right” cross border capacity Support systems with locational signals will be needed

Large volumes of renewable production that do not respond to economic signals

Support schemes hides market signals, influence peak load, maximum and minimum prices etc.

Increased volatile prices and price spikes

Need for a capacity market?

Choice of policy instruments •   Support system design alone not decisive for effectiveness of

Choice of policy instruments

Choice of policy instruments •   Support system design alone not decisive for effectiveness of promoting

Support system design alone not decisive for effectiveness of promoting renewables

Other factors are often as important:

!- Domestic energy resources !- Priorities in national energy or fiscal policy !- Structure and function of domestic market !- Regional cooperation

Coordination of measures crucial

To find out more about us…. and … our work, please visit us at: •

To find out more about us….

and …

our work, please visit us at:

www.ei.se

www.nordicenergyregulators.org

THANK YOU FOR YOUR ATTENTION !