Activities and Prospects

1. Introduction
2. Recent and Current Research Activities
3. Recent and Current Projects
4. National Plans
5. National Activities
6. Market Developments
7. Benefits to the Environment
8. Employment Prospects for Europe
9.Benefits for European Industry
10. REFERENCES

6 Market Developments

6.1 Demand for Electrical Power (All Sources)

Demand for electricity and generating capacity throughout Europe is variable and very much depends on the size of individual countries and the types of industry and commercial development:

Country	Demand TWh/year	Installed Capacity GW	Comments
Belgium	80	15
Denmark
Finland
France
Germany	477	109.2
Greece
Ireland	18.6	4.5	[37], [38] & [39]
Italy
Netherlands
Poland		33
Spain
Sweden
UK	379.5	75.305 [40]	28% is from coal, 24.5% from nuclear, 38.5% from gas, 1.5% from oil, 4% is imported, 2.5% is from ‘other fuels’ (biofuel 81.1%, hydro 15.9%, wind 2.6%).

Growth trends vary throughout Europe, for example, Ireland observed a 48% increase in demand between 1990-1998, whereas the UK only had an 8% increase between 1995-1999

Ireland predicts a 24% increase between 1999-2005 and Germany predicts demand to be 532 TWh/year in 2010, with capacity projected to be 115.4 GW in 2010.

6.2 Demand for Power from Renewables

Green energy products can include electricity from the following renewable sources (depending on the definition):

· Photovoltaics

· Onshore wind power

· Offshore wind power

· Wave power

· Large scale hydro

· Small scale hydro

· Geothermal

· Biofuels:

· Landfill gas

· Sewage sludge digestion

· Industrial wood combustion

· Coppice

· Straw combustion

· Waste combustion

Of the biofuels, waste combustion and use of landfill gas do not qualify under the UK Renewable Energy Obligation.

In Poland local municipalities must include a contribution from RES in energy plans. The theoretical potential output from renewable energy is given below:

	Source	Energy [PJ]	Remarks
1.	Biomass
a. straw	160
b. wood	110	35 PJ- forest 15 PJ- afforestation 30 PJ-wood industry 30 PJ- recycling
c. biogas+waste	236	36 PJ- animal manure 100 PJ- waste 100 PJ- waste water treatment plants
d. biofuels	44
2.	Hydropower	40
3.	Wind energy	47	36 onshore + 11 offshore
4.	Solar energy	370
5.	Geothermal	200	main sources
	Total:	1 207

Source: 1a,1b- own calculations, 1c, 1d, 3- EC BREC, offshore- TERES, 2,5- various sources, 4- Hauff

In Germany, due to liberalisation of the energy market, there are several green energy products available on the market.

6.3 Current Demand and Trends

The Flemish region of Belgium issued a decree in July 2000 which requires 3% of the total electricity sold to the distribution grid to be from renewable energy sources produced within the region by 2004. A penalty of 0.12 EURO per kWhr will be imposed for the missing green kWhr. It is likely that the Walloon region will follow suit. Over 50% should be from wind energy, of which 50% is likely to be offshore.

In Denmark, the power market is fully liberalized. Regarding offshore wind energy, Energy 21, the current energy action plan, presupposes that up to year 2030 development of offshore wind turbines with a total of 4000 MW will take place. The production of electricity from wind power in 2030 is expected to contribute 40-50% to Danish electricity consumption.

Regarding renewable energy in general, it is expected from year 2003 that each consumer has to buy 20% of his electricity based on renewable energy sources. The ratio will be declared some years ahead and is expected to be increased in the coming years.

A green certificate market is expected to start up 2003 to cope with the demand for green electricity and by that establish a kind of liberalized green electricity market.

…

In Finland, the power market is fully liberalised, and there will only be commercial wind farms. The demand for green power is a prerequisite for wind energy installation. There is currently a small demand for green power, but several products are available

There is a national target of 5000MW of wind power by 2010 in France. The REFIT, Renewable Energy Feed-In Tariff, price is to be defined and a decree is to be published in March 2001.

Germany …

In Greece since 1994 a number of laws and regulations (Laws 2244/94, 2601/98, 2647/98) have been instituted aiming at the exploitation of the vast RE resources in Greece, mainly sun, wind, large/small-scale hydro and biomass. Together with the broad use of natural gas, the penetration of “clean energy technologies” in the public, industrial, agricultural and commercial sectors has risen considerably in the past decade.

The deregulation of the energy market in 2000 (Law 2773/99) followed vivid interest from private investors for installation & operation of RE plants. The central points of the present legislative and

environment for RES-installations are summarised as follows:

- Production and trading of electrical power from RES by independent producers

- Buy-off commitment of “green” energy by the PPC

- Attractive tariff policy for “green” energy production

- Long-term purchase agreements for “green” energy

- Financial incentives for RES-installations (subventions, tax exemptions etc)

Fig. 1 shows the approved RE plant installations per technology, petitioned after the deregulation of the energy market was placed into effect. The plants are implemented with the “build-own-operate” (BOO) scheme. A large part of the plants is meanwhile in operation, while the rest is nearing completion.

Fig. 1: Approved RES-plants after the deregulation of the energy market in Greece

Petitions are pending for farther plants, among which ~500 MW for offshore wind energy. The penetration of “green” technologies into the energy market is expected to reach the mark of 6% by 2008 (Fig. 2).

Fig. 2: Share of “green” power technologies in energy consumption by 2008

In February 2000, the electricity market in Ireland was partially liberalised. All large electricity consumers (>4GWh per annum) may choose their suppliers. In addition all customers (of any size) who wish to buy green electricity may choose their supplier. Green electricity suppliers are now targeting commercial customers who pay the highest tariff and are offering green electricity at 10% below what these customers pay the Public Electricity Supplier for brown electricity. To date, two windfarms (13 MW) have been built to sell directly to green commercial customers and a further 25MW of wind energy is imported from Northern Ireland to meet demand. It is uncertain what will happen to this market when the commercial customers can choose from brown electricity suppliers also in 2005 (probably at more competitive rates). The Government target for renewable energy is an additional 500MW by 2005, most of which is anticipated to come from wind energy

The Italian Government attributes strategic importance to renewable energy sources because of the contribution they can give to the guaranteeing of greater security of the energy supply system, the reduction of the relative environmental impact and the opportunities for protecting the territory and fostering social development. One aim of the Government in this sector, as stated in the Italian White Paper for the exploitation of renewable energies in August 1999, is to achieve the goal of doubling the contribution of renewables by 2010.

In 1999, for the whole electricity sector, Italy’s overall electricity demand was nearly 286 TWh (including transmission and distribution losses). Of this, about 42 TWh was imported from neighbouring countries. The net electric energy produced in Italy was 253 TWh.

Italy’s net production from renewable sources in 1999 including large and small hydro, geothermal, wind and photovoltaic plants, was as much as 22 % of total net production.

Installed net capacity totalled about 73.8 GW (of which 20.4 GW were hydro and 52.5 GW were thermal plants) as of the end of 1999.

Total wind power capacity in Italy at the end of august 2001 was 610 MW, with an average turbine size of 552 kW, whereas the total number of wind turbines was 1110.

National targets have been fixed for wind power capacity for three periods: 2002 = 700 MW, 2006 = 1,500 MW and 2008-2012 = 2,500 MW.

Given the growing rate of new wind installations registered in the last year, it is very likely that the first goal, 700 MW by 2002, will be exceeded.

As regards the likelihood of reaching the other targets after 2002, this will depend on the effect of the new legislative framework including the new market stimulation instruments for renewable energy sources.

Since the end of 1996, the CIP (Interministerial Committee for Prices) Provision no. 6/92 has shown itself to be the most successful instrument for the commercial implementation of wind energy in Italy. This system was based on buy-back prices mechanism.

Now, a new Legislative Decree (no. 79/99), which provides for the liberalization of the electricity market on the basis of the European Union Directive no. 96/92/EU, will change the system of stimulation and exploitation of renewable energy sources. This Decree was followed by a specific Decree regarding renewable energy sources, which introduces the new support system based on green certificate mechanism.

According to Article 11 of Decree 79/99, the transmission system operator (GRTN) must assure priority in dispatching to plants fed by renewable energy sources. In addition, starting from 1^st January 2002 onwards, there is an obligation to introduce into the public electricity network, or to acquire fully or partially, a given percentage of electric energy from renewable sources, for all the subjects producing or importing electric energy from conventional sources.

The above percentage is initially fixed at 2% of the conventional energy that exceeds a quantity of 100 GWh per year and must be exclusively assured through new or repowered plants entered in operation after 1^st April 1999 (as to repowered plants, only the energy produced by the added capacity can be taken into account).

Electricity produced by renewable energy sources is labelled with green certificates issued by the transmission system operator (GRTN) and having a value equal to or multiple of 100 MWh. Green certificates are tradable.

Another important aspect of green certificates concerns their compatibility with other incentives. In other words, for a green energy producer it will be possible to combine green certificates with any kind of subsidy, except the premium energy buy-back prices of CIP 6/92.

Regarding the economics, in 2000 the wind plant cost was around ITL 1.9 million per installed kilowatt; therefore in the same year the total invested capital on wind energy plants in Italy was about ITL 280 billion.

In regard to the energy cost, the selling price of electricity (net prices without taxes) varies, for typical domestic consumers, from ITL 100 to ITL 300/kWh, whilst, for industrial consumers, from ITL 100 to ITL 230/kWh.

For wind energy, in 2001 the buy-back prices fixed by CIP 6/92 are: ITL 239.6/kWh for the first eight years of the plant operation; and ITL 133.9/kWh for the remaining lifetime.

As already said above, in the next future, because of the new legislative framework, the support system will change through the introduction of the green certificate mechanism.

There are several green energy products available on the market in the Netherlands. Demand for green electricity has been significant and increased after the introduction of a green certificate scheme with imposed quota and penalties.

there are no green energy products are available on the market in Poland.

Policies for renewable energies in Spain are established in the “Plan de Fomento de las Energías Renovables” edited in December, 1999 by the Spanish Institute for the Energy Diversification and Saving (IDAE). This proposes a stable framework with direct price support for renewables, with a premium system similar to Germany’s.

Sweden currently produces 145 TWh/year. As the market is deregulated there are very different market prices depending on many parameters; precipation, winter temperature, long or short contracts etc. The present average price is about 0.15 SEK, about 0.018 EURO, which is very low in comparison with countries outside Scandinavia. More detailed information can be found on the website for Nordpool-the common Scandinavian powermarket..

Hydropower provides approximately half Sweden’s electrical power, with the remainder mainly from nuclear. The Parliament has decided to close nuclear power stations and replace them with power from renewables. The process started with the closure of the first of twelve reactors, Barsebäck 1, in December 1999. Barsebäck 2 will be closed in 2003. There is currently no programme for closure of the remainder. Because of nuclear plant closures, more interconnection with grids in other European countries, and taxation on fossil fuels to incentivise reduction of greenhouse gases, there will be a gradual increase of prices.

Sweden has many more electricity heated houses than in other European countries and has a very low dependency on oil and coal for electrical power production

A large number of utilities in the deregulated market offer “green electricity” and some offer “extra green” from wind power. The price for wind generated electricity is about 5 – 10 % more expensive than the standard product.

Most customers are companies looking to strengthen their green image and obtain favourable publicity or to be environmentally certified.

There are several green energy products in the United Kingdom.

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