WASHINGTON, D.C. -- In integrating renewable energy to the electric grid, the United States has a unique opportunity to assess lessons learned in Europe and not replicate the disequilibrium that has occurred overseas to consumers, power producers and capital markets, according to Jeffrey Altman, senior advisor, Finadvice GmbH.
“A new transparent, ubiquitous, reliable regulatory framework needs to be established in order to correctly build and support the nation’s developing renewable power portfolio, which ensures a long-term responsibility for the whole power system, as well as the appropriate pricing to the American consumer,” he said during a Feb. 10 panel as part of the National Association of Regulatory Utility Commissioners (NARUC) Winter Committee Meetings in Washington, D.C. “The net impact to the U.S. economy and its future strategic competitiveness can be significant. The U.S., therefore, needs to appropriately restructure its regulatory framework and prioritize this effort now, or face similar challenges as Europe in the future.”
Altman noted that there are several benefits of having high penetration levels of renewable energy on the grid, including the diversification of the power portfolio and lower wholesale prices.
Speaking of the European experience, he noted that due to massively subsidized feed-in tariffs, new additional capacity is driving down wholesale prices of power as renewables with lower marginal production costs than thermal plants get dispatched first.
Other benefits include reductions of greenhouse gas emissions, he said, noting that the European Union (EU) has set a target of a 20 percent reduction of greenhouse gases from 1990 levels, with a 20 percent renewable target and a 20 percent increase in energy efficiency for 2020. So far, he said, the EU is on target with most of its members.
Also a benefit is energy independence, which is critical for every country, Altman said. Employment gains, the development of more efficient renewable technologies and greater efficiency in scale and scope are also benefits stemming from higher levels of renewable energy, he said.
Unintended Consequences in Europe
Despite the benefits, there have been unintended consequences in Europe as it pertains to advancing renewable energy, including a misunderstanding of required subsidies and appropriate regulation, he said, adding that European regulators grossly underestimated the cost of subsidies and the necessary build-out requirements.
Some estimate that Germany’s feed-in tariff subsidy program, for instance, could exceed $1.3bn by the time it expires.
Many European regulatory regimes were inappropriately structured and there have been efforts to correct those by, for instance, initiating retroactive taxes or new regimes that resulted in significant value destruction to various renewable companies.
“This continued regulatory uncertainty across Europe is increasing the cost of capital for European renewable companies, which Fitch, the rating agency, recently highlighted as the most likely sector in the European energy markets to receive a downgrade in 2014,” Altman said.
The enormous amount of subsidies and the speed of build-up have created disruption to the power markets, he said, adding, “As the EU is a liberalized market, government actions regarding subsidies are currently being allowed by international law in favor of the perceived requirements of the consumer and the environment.”
For instance, wholesale prices in Germany have fallen from €90/MW to €95/MW in 2008 to €37/MW in 2013.
Altman also noted that the EU will be required to pay subsidies for the build-out and enhancements of power networks to manage the dynamic flows. Germany, he said, is planning to spend some €40bn, or around US$60bn, to reinforce the grid from where it was in 2012 to where it will be in 2023.
“You’re effectively taking all of the power … from the north and bringing it down to the south,” he said. “[That is] a huge effort and no one was ever considering those costs early on.”
In addition to that, the German government is also now — as others are starting to do — looking at ensuring capacity payments for thermal power stations that are being closed down to ensure the reliability of the grid and prevent blackouts and brownouts, he said.
Another challenge is that many European utilities underestimated the growth of renewables as well as the impact to wholesale prices in the entire system, leading to the continued build-out of thermal plants over the last decade, many of which were made obsolete, particularly with respect to natural gas-fired plants, by the end of the decade.
“As a result, the utilities had to shore up their balance sheets by undertaking large divestitures of some of their holdings, as well as reducing their operating costs,” Altman said.
Europe’s top 20 utilities that were worth around €1tr in 2008 are now less than half that amount due to the global financial crisis and other factors, including those involving renewable energy development, he said.
Another important matter that has occurred is that prices to energy users have increased significantly, as has the backlash against energy companies, he said.
In Germany, household prices have more than doubled from 18 cents/kWh in 2000 to more than 37 cents/kWh. In the United Kingdom, there has been a call to freeze prices for up to 20 months, Altman added.
Well-meaning European governments and regulators embarked upon an effort to reduce carbon emissions and “unintentional consequences resulted from those policies that were not ultimately fully vetted by industry [including] renewable companies and utilities and other stakeholders,” he said. “The results of these policies have required enormous subsidies, which have created disequilibrium and value destruction to both renewable companies and utilities via regulatory interventions.”
It is now envisioned that further subsidies will be required for emission targets, the support of thermal plants and storage, via capacity payments and a build-out of grids.
Accordingly, Altman added, those policies, combined with large subsidies “are destroying what was essentially a free market and, as such, the influence of government in the power sector will ultimately have no real market correction mechanisms as European governments capriciously determine the fuel mix, technology choice and capacity price levels with detrimental effect to the efficiency, investment and, most importantly, prices to consumers.”
Lessons Learned as the U.S. Moves Forward
In the U.S., Altman said, “now is the time to fully assess the implications of transitioning to a partial renewable portfolio and structure the appropriate regulation.”
The current U.S. net metering and regulation, which has allowed for renewables to come on the grid, does not take into consideration the future requirements of grid enhancements as well as what will be required to maintain a reliable power system, he said.
“There needs to be a well-coordinated assessment between federal and state regulators, regulated and non-regulated power producers, renewable companies, consumers and other important stakeholders to develop ubiquitous regulation,” he said. “Otherwise, the U.S. will ultimately face an analogous situation relative to Europe with balkanized energy markets.”
On whether regulators should wait for there to be overcapacity and strains on the systems to set new regulations, he said, “I suggest what we have learned from Europe, this would indeed be imprudent.”
Regulators should consider creating a new framework whereby a structure be agreed upon as to how much capacity will be allowed in each state/region over a 20-year period, looking into five-year increments with review every two years, he said. In parallel, there should also be an agreement as to how much thermal capacity will be retired during that time, whereby, collectively, an assessment will be made with respect to the mix of power production, the network upgrade costs, the overall reliability of the network and the ultimate price to consumers, he said.
Special attention should be paid to require flexibility in storage. Upon this analysis, he added, all new generation coming online should be bid at an auction to meet the lowest economic costs, highest reliability standards, as well as environmental standards, Altman said.
This article was originally published on GenerationHub and was republished with permission.
View the original article here
Showing posts with label Follow. Show all posts
Showing posts with label Follow. Show all posts
Monday, February 17, 2014
U.S. heed lessons from Europe should renewable integration or follow the face, says NARUC expert
Monday, February 17, 2014Ярлыки: Europe, expert, Follow, integration, lessons, NARUC, renewable, should 0 коммент.
Monday, November 11, 2013
European Commission To Member States: Follow Our Lead for Renewable Energy Policy
Monday, November 11, 2013
New Hampshire, USA -- The European Commission has offered up some new guidelines about managing electricity markets among its Member States, offering direction for design and support schemes for renewable energy, managing capacity, and addressing demand at the consumer level to mitigate new generation investments -- which, while technically not binding, likely will inform future regional environmental and aid policies.
Renewable power generation is fast approaching parity with non-renewables, though in general any new generation type is more costly than market prices for electricity, according to recent analysis from the International Energy Agency. But those IEA studies are "not comparable [nor] fully applicable" to future energy policy directions, says the EC, so it is undertaking its own analysis of cost comparisons and subsidies of various technologies, pledging to issue its report next June.
While supportive of Member States' efforts to establish an internal electricity market for Europe by 2014, the EC underscores the needs to adhere to European Union policies about secure and competitively priced supplies, renewable energy and climate change objectives, and energy efficiency improvements. Thus, it is stepping forward to "define the role, level and nature of public intervention, in line with the principle of subsidiarity, at Union, regional, national or local level." (Here's the PDF of the EC's proposals and explanations.)
Specifically for renewable energy (admittedly focused on solar and wind), the EC suggests adapting policies and rules for state intervention to recognize future market needs. That means letting the market dictate investment and production decisions, and thus gradually phasing out feed-in tariffs (FIT) and moving towards other "supportive instruments" more tied to market pricing, such as auctions and tenders, feed-in premiums, and quota obligations. (Other types of support such as domestic content requirements, the EC advises, "might not be in line with the EU acquis.") Cooperation mechanisms also should be pursued, seeking to leverage renewable energy opportunities across Member State borders, including joint projects and support schemes. Unannounced or retroactive scheme changes should be avoided to preserve investor confidence, says the EC -- quite likely a memo to Spain about its recent legislative about-face. Renewable energy support and goals ought to align more closely with Europe's carbon emissions trading schemes, says the EC, and these principles and directions it is laying out for public intervention in electricity markets could also be applied in other sectors, such as heating and transportation. All the EC's recommendations and discussions, including examples of standardized forms, are listed here within individual working documents.
While the EC acknowledges all these guidelines and recommendations are not legally binding to Member States, it urges that they will be applied when the EC assesses state interventions into renewable energy support schemes or capacity mechanisms, and will "guide the future enforcement of EU state aid rules and future proposals for EU energy legislation." The EC is currently prepping a draft for guidelines due next year on environmental and energy aid for 2014-2020.
Broadly speaking the EC's proposals are well-timed, encouraging Member States to take the lead on deployment of renewable energy while raising broader issues of generation, availability to the EC's level, notes the European Photovoltaic Industry Association (EPIA). However, many of the EC's recommendations such as "competitive allocation mechanisms" and auction processes emphasize factors relevant to large-scale renewable energy efforts, and would tend to ignore or lock out smaller distributed-generation efforts and self-consumption, the EPIA notes. And adjusting renewable energy support schemes to be more market-based wrongly assumes that there's a level playing field in the market to begin with; "requesting market responsiveness from renewables would be putting the cart before the horse," says EPIA policy director Frauke Thies.
The EC also calls for Member States to assess and address "generation inadequacy" and whether and how to incorporate ancillary services into the equation particularly to balance renewable energy. This is especially important and needs to be "harmonized" across Europe as a whole, notes the EPIA, adding that the EC should emphasize it even more, particularly development of aggregation strategies. The group also thinks the EC must offer more direction in flexibility requirements such as demand response and energy storage, and rewarding more flexible generation assets.
View the original article here
Renewable power generation is fast approaching parity with non-renewables, though in general any new generation type is more costly than market prices for electricity, according to recent analysis from the International Energy Agency. But those IEA studies are "not comparable [nor] fully applicable" to future energy policy directions, says the EC, so it is undertaking its own analysis of cost comparisons and subsidies of various technologies, pledging to issue its report next June.
While supportive of Member States' efforts to establish an internal electricity market for Europe by 2014, the EC underscores the needs to adhere to European Union policies about secure and competitively priced supplies, renewable energy and climate change objectives, and energy efficiency improvements. Thus, it is stepping forward to "define the role, level and nature of public intervention, in line with the principle of subsidiarity, at Union, regional, national or local level." (Here's the PDF of the EC's proposals and explanations.)
Specifically for renewable energy (admittedly focused on solar and wind), the EC suggests adapting policies and rules for state intervention to recognize future market needs. That means letting the market dictate investment and production decisions, and thus gradually phasing out feed-in tariffs (FIT) and moving towards other "supportive instruments" more tied to market pricing, such as auctions and tenders, feed-in premiums, and quota obligations. (Other types of support such as domestic content requirements, the EC advises, "might not be in line with the EU acquis.") Cooperation mechanisms also should be pursued, seeking to leverage renewable energy opportunities across Member State borders, including joint projects and support schemes. Unannounced or retroactive scheme changes should be avoided to preserve investor confidence, says the EC -- quite likely a memo to Spain about its recent legislative about-face. Renewable energy support and goals ought to align more closely with Europe's carbon emissions trading schemes, says the EC, and these principles and directions it is laying out for public intervention in electricity markets could also be applied in other sectors, such as heating and transportation. All the EC's recommendations and discussions, including examples of standardized forms, are listed here within individual working documents.
While the EC acknowledges all these guidelines and recommendations are not legally binding to Member States, it urges that they will be applied when the EC assesses state interventions into renewable energy support schemes or capacity mechanisms, and will "guide the future enforcement of EU state aid rules and future proposals for EU energy legislation." The EC is currently prepping a draft for guidelines due next year on environmental and energy aid for 2014-2020.
Broadly speaking the EC's proposals are well-timed, encouraging Member States to take the lead on deployment of renewable energy while raising broader issues of generation, availability to the EC's level, notes the European Photovoltaic Industry Association (EPIA). However, many of the EC's recommendations such as "competitive allocation mechanisms" and auction processes emphasize factors relevant to large-scale renewable energy efforts, and would tend to ignore or lock out smaller distributed-generation efforts and self-consumption, the EPIA notes. And adjusting renewable energy support schemes to be more market-based wrongly assumes that there's a level playing field in the market to begin with; "requesting market responsiveness from renewables would be putting the cart before the horse," says EPIA policy director Frauke Thies.
The EC also calls for Member States to assess and address "generation inadequacy" and whether and how to incorporate ancillary services into the equation particularly to balance renewable energy. This is especially important and needs to be "harmonized" across Europe as a whole, notes the EPIA, adding that the EC should emphasize it even more, particularly development of aggregation strategies. The group also thinks the EC must offer more direction in flexibility requirements such as demand response and energy storage, and rewarding more flexible generation assets.
View the original article here
Ярлыки: Commission, Energy, european, Follow, Member, policy, renewable, States 0 коммент.
Wednesday, August 15, 2012
Follow Germany: streamlined for beautiful
Wednesday, August 15, 2012
Germany, a leader in renewable energy, recently set a world record when it produced 22 GW of power on May 26th, 2012. At that point in time, half of the country's electricity was generated from solar. Germany's current capacity for solar energy reaches about 28 GW and the country aims to reach 66GW by 2030.
By the end of 2011, Germany had about 21.6 times more solar power installations per capita than the United States.
Why is it that Germany, which has a much lower level of solar radiation than the United States, proportionally dwarfs the U.S. when it comes to solar installations?
What is Germany Doing Differently?
In addition to creating rewarding financial incentives for residential solar, such as their well-known Feed-in Tariff, the streamlined permitting process in Germany has given way to widespread adoption of solar energy.
Germany has successfully scaled basic design and installation processes, driving down the cost and wait-time associated with residential solar. Moreover, the country has actually eliminated permitting for standard residential solar, which is part of the reason residential solar is so prominent in the country.
Standardizing permitting and installation procedures to streamline these processes has helped make Germany a world leader in solar energy. In Germany, it's not uncommon for a person to contact a solar company and have a system on their roof in less than a week- sometimes in a few days.
Meanwhile, in the United States, customers frequently find themselves forking over hundreds, if not thousands of dollars in fees, undergoing a series of unnecessary inspections, and waiting weeks to have standard photovoltaic systems installed on their homes.
The United States needs to follow Germany's lead by streamlining the permitting process for standard residential solar applications. This would make residential solar considerably easier, cheaper, and more convenient for consumers in the United States.
Permitting in the United States:
Though the price of solar products is decreasing and solar adoption is steadily increasing in the United States, the costly, inefficient permitting processes are a burden to the buyer and impede progress of the solar industry at large.
Before installing a residential solar system, a permit must be obtained from the local Authority Having Jurisdiction, also known as an AHJ. Typically, permit applications for standard residential solar installations must be submitted to the AHJ in person. SunRun recommends a standard online application for solar permitting, which would drastically simplify the process. It would be much more efficient if all AHJs utilized a standard web-based application to streamline this process.
The permitting process varies too much across geographical location. This inconsistency between AHJs breeds a series of avoidable obstacles that are holding back solar adoption in the United States.
With so many permitting authorities sprinkled across the country, the discrepancy between standards produces hoops to jump through. It seems that every city or Authority Having Jurisdiction has a different interpretation of codes and standards. Some even craft their own legislation.
Applications often undergo a succession of reviews by multiple departments, which commonly conduct their own inspections. Permit applications are then subjected to various municipal inspections that are neither necessary nor efficient. In an admirable attempt to guarantee safety, local municipalities frequently include extensive fire inspections and components to the system (i.e. disconnects) that are not needed, further complicating the process.
Unnecessary inspections in conjunction with other soft costs associated with residential solar create a barrier to adoption for potential customers. Some municipalities are able to process a permit for less than $300, while others call for thousands. Part of the problem is that all these AHJs have different fees that are often based on their own set of criteria, including those unnecessary inspections.
More often than not, the sum of these fees is too high because they are not in line with the actual processing cost to the Authority Having Jurisdiction. SunRun reports that customers incur an average cost of $2,516 for permitting and inspection of a residential solar system. [i] Most of these soft costs are not necessary for standard residential solar systems.
While an applicant for a residential system in Germany may only wait four days to have a system installed, this process takes weeks in the United States. Sometimes months.
This inconsistency between jurisdictions creates difficulties for buyers, installers, and AHJs.
Installers have more important things to do than deal with municipalities that aren't knowledgeable about photovoltaic installations. Cities have enough on their plates to try to come up with their own filing systems, codes, and protocol. Customers need a convenient, cost-effective system of permitting that will get the solar system on their roof as soon as possible.
The entire solar industry suffers due to the lack of structural coherence in the permitting processes in the United States. With a standardized system in the United States, AHJs will operate more efficiently, saving everyone valuable time and resources.
What the United States needs to do:
Systemic changes need to be made to encourage the adoption of renewable energy. These systemic changes can and must come from the Department of Energy. The Department of Energy has already established a plan to streamline permitting through the Solar America Board for Codes and Standards, also known as the Solar ABCs.
According to the New York Times, the Solar ABCs "links policy makers, solar panel manufacturers, installers and consumers to create a central clearinghouse for information on solar building codes and best practices."
Standard residential solar systems are the same whether you're in California or Montana, so why doesn't the Department of Energy incentivize municipalities to adopt standardized codes and protocol set forth by the Solar ABCs? Eliminating the added inspections by local AHJs and streamlining the whole process will make solar adoption more workable for everyone.
If the permitting protocol was homogeneous across the country, reducing the soft costs and wait time for standard residential systems, solar energy would be able to reach an extensively broader demographic. This can only be possible with a cooperative effort on the part of policy makers and industry leaders, changing this dynamic from a conflict to a united course of action.
The BIG Picture:
Grid parity is the point at which the levelized cost of solar electricity is less than or equal to the cost of grid electricity.
The structural inefficiency of solar permitting raises the overall cost of solar installation for consumers, pushing grid parity further into the future.
Grid parity should be a priority for our society, yet the structural barriers encountered in the permitting processes across the nation do not reflect that grid parity is of much concern. Just as the wait time for the individual's installation is dragged out, the timeframe between now and grid parity is extended.
By implementing an expedited permitting process nationwide, we can tear down many of the existing barriers to solar adoption in the United States.
View the original article here
By the end of 2011, Germany had about 21.6 times more solar power installations per capita than the United States.
Why is it that Germany, which has a much lower level of solar radiation than the United States, proportionally dwarfs the U.S. when it comes to solar installations?
What is Germany Doing Differently?
In addition to creating rewarding financial incentives for residential solar, such as their well-known Feed-in Tariff, the streamlined permitting process in Germany has given way to widespread adoption of solar energy.
Germany has successfully scaled basic design and installation processes, driving down the cost and wait-time associated with residential solar. Moreover, the country has actually eliminated permitting for standard residential solar, which is part of the reason residential solar is so prominent in the country.
Standardizing permitting and installation procedures to streamline these processes has helped make Germany a world leader in solar energy. In Germany, it's not uncommon for a person to contact a solar company and have a system on their roof in less than a week- sometimes in a few days.
Meanwhile, in the United States, customers frequently find themselves forking over hundreds, if not thousands of dollars in fees, undergoing a series of unnecessary inspections, and waiting weeks to have standard photovoltaic systems installed on their homes.
The United States needs to follow Germany's lead by streamlining the permitting process for standard residential solar applications. This would make residential solar considerably easier, cheaper, and more convenient for consumers in the United States.
Permitting in the United States:
Though the price of solar products is decreasing and solar adoption is steadily increasing in the United States, the costly, inefficient permitting processes are a burden to the buyer and impede progress of the solar industry at large.
Before installing a residential solar system, a permit must be obtained from the local Authority Having Jurisdiction, also known as an AHJ. Typically, permit applications for standard residential solar installations must be submitted to the AHJ in person. SunRun recommends a standard online application for solar permitting, which would drastically simplify the process. It would be much more efficient if all AHJs utilized a standard web-based application to streamline this process.
The permitting process varies too much across geographical location. This inconsistency between AHJs breeds a series of avoidable obstacles that are holding back solar adoption in the United States.
With so many permitting authorities sprinkled across the country, the discrepancy between standards produces hoops to jump through. It seems that every city or Authority Having Jurisdiction has a different interpretation of codes and standards. Some even craft their own legislation.
Applications often undergo a succession of reviews by multiple departments, which commonly conduct their own inspections. Permit applications are then subjected to various municipal inspections that are neither necessary nor efficient. In an admirable attempt to guarantee safety, local municipalities frequently include extensive fire inspections and components to the system (i.e. disconnects) that are not needed, further complicating the process.
Unnecessary inspections in conjunction with other soft costs associated with residential solar create a barrier to adoption for potential customers. Some municipalities are able to process a permit for less than $300, while others call for thousands. Part of the problem is that all these AHJs have different fees that are often based on their own set of criteria, including those unnecessary inspections.
More often than not, the sum of these fees is too high because they are not in line with the actual processing cost to the Authority Having Jurisdiction. SunRun reports that customers incur an average cost of $2,516 for permitting and inspection of a residential solar system. [i] Most of these soft costs are not necessary for standard residential solar systems.
While an applicant for a residential system in Germany may only wait four days to have a system installed, this process takes weeks in the United States. Sometimes months.
This inconsistency between jurisdictions creates difficulties for buyers, installers, and AHJs.
Installers have more important things to do than deal with municipalities that aren't knowledgeable about photovoltaic installations. Cities have enough on their plates to try to come up with their own filing systems, codes, and protocol. Customers need a convenient, cost-effective system of permitting that will get the solar system on their roof as soon as possible.
The entire solar industry suffers due to the lack of structural coherence in the permitting processes in the United States. With a standardized system in the United States, AHJs will operate more efficiently, saving everyone valuable time and resources.
What the United States needs to do:
Systemic changes need to be made to encourage the adoption of renewable energy. These systemic changes can and must come from the Department of Energy. The Department of Energy has already established a plan to streamline permitting through the Solar America Board for Codes and Standards, also known as the Solar ABCs.
According to the New York Times, the Solar ABCs "links policy makers, solar panel manufacturers, installers and consumers to create a central clearinghouse for information on solar building codes and best practices."
Standard residential solar systems are the same whether you're in California or Montana, so why doesn't the Department of Energy incentivize municipalities to adopt standardized codes and protocol set forth by the Solar ABCs? Eliminating the added inspections by local AHJs and streamlining the whole process will make solar adoption more workable for everyone.
If the permitting protocol was homogeneous across the country, reducing the soft costs and wait time for standard residential systems, solar energy would be able to reach an extensively broader demographic. This can only be possible with a cooperative effort on the part of policy makers and industry leaders, changing this dynamic from a conflict to a united course of action.
The BIG Picture:
Grid parity is the point at which the levelized cost of solar electricity is less than or equal to the cost of grid electricity.
The structural inefficiency of solar permitting raises the overall cost of solar installation for consumers, pushing grid parity further into the future.
Grid parity should be a priority for our society, yet the structural barriers encountered in the permitting processes across the nation do not reflect that grid parity is of much concern. Just as the wait time for the individual's installation is dragged out, the timeframe between now and grid parity is extended.
By implementing an expedited permitting process nationwide, we can tear down many of the existing barriers to solar adoption in the United States.
View the original article here
Ярлыки: beautiful, Follow, Germany, streamlined 0 коммент.
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