Cr edi ts: Svevi nd
VIN D OG FOR N YB A R U TVIK LIN G I EU R OPA FR A M MOT 2 0 3 0 – HVA VIL SKJE I NORDEN?
Michel Mar t in, Pöyr y Management Consult ing
June 2018
PÖYRY MA N A GEMEN T C ON SU LTIN G
Market analysis and design
• Market modelling
• P r o j e c ti o n s a n d v a l u a ti o n s
Tr a n s a c t i o n s a n d S t r a t e g y
• Tr a n s a c t i o n s a n d D u e D i l i g e n c e
• S tr a te g i c a d v i c e
Gr i d a n d d i g i t a l i s a t i o n
• Distribution grid regulation in Norway
• Challenges and opportunities
MIDDLE EAST | ASIA
AMERICA | EUROPE
Osl o offi ce Gl obal pr esence
Le a di ng-edge consul t i ng and advi sor y ser vi ces al ong t he w hol e com m er ci al val ue chai n of t he ener gy sect or, w i t h 200 m anagem ent consul t ant s i n 12 count r i es
De c a r b o n i s a t i o n Ec o n o m i c s
Get rid of thermal plants, replace them by re n e w a b l e s o u rc e s i n o rd e r t o re d u c e C O 2 em i s s i ons
Pöyry Full Energy Decarbonisation Scenarios multic lient s tudy
Inv es t i n w i nd and s ol ar bec aus e they m ak e sense as commercial investments based on wholesale prices alone
Pöyry ‘Tipping Points’ multiclient study
WH Y MOR E R E N E WA B L E S ?
Tw o m a i n d r i v e r s : d e c a r b o n i s a t i o n a n d e c o n o m i c s
AGENDA
• RES pushed by decarbonisation objectives
• R ES pushed by econom i cs
• C oncl usi on
EU R OPE SET FOR D EC A R B ON ISATION
Wi t h r a t i f i c a t i o n o f t h e P a r i s a g r e e m e n t , t h e E u r o p e a n e c o n o m y w i l l b e r e q u i r e d t o cut gr eenhouse gas em i ssi ons t o m eet t he am bi t i on of 1. 5º C t em per at ur e l i m i t
1 952
1 952
288 3 810
Re sid ua le mis sio ns 3,810
(-100% )
No n-e ne rg yd ec arb .
Ba se lin e(1 99 0)
En erg yd ec arb .
1,664 (-85% )
Ta r g et ( 2 05 0) 5,762
-95%
Ta r g e t
Energy sector Other sectors
https://ti n y u r l .c o m/P OY R Y-POV-FE D S
POWER D EMA N D WILL IN C R EA SE IN A LL D EC A R B . PATH WAYS
• Tw o m a i n p a t h w a y s o n d i f f e r e n t w a y s t o m e e t zer o em ission goal in Elect r icit y/ Heat / Tr anspor t
– Al l-el ect r i c: it is a possible but costly way to dec ar bonis e
– Ze r o c a r bon ga s: access to other technologies (hydrogen, CCS, biogas) pot ent ially r educ es t he c os t of
dec ar bonis at ion
• Po we r d e m a n d i s g o i n g t o i n c r e a s e , r e g a r d l e s s of t he dec ar bonis at ion pat hway, due t o heat and transport electrification
– +1800TWh in ‘zer o car bon gas’ pat hway – +3000TWh in ‘all elect r ic’ pat hway
The f ut ur e i s e l e c t r i c !
Power demand (TW h), EU28+
S ource: P öyry Ful l E nergy D ecarboni sati on study
RENEWABLES WILL REPRESENT 90% OF THE MIX BY 2050
• Wit h no em is s ions allowed in 2050, t he s y s t em relies heavily on renewables
• De m a n d s i d e r e s p o n s e i s a m a j o r r e q u i r e m e n t in balanc ing t he Eur opean s y s t em
– EV f l e x i b i l i t y – He a t i n g f l e x i b i l i t y
• Ve r y l i t t l e p r o d u c t i o n a n d u s e o f h y d r o g e n i n the power sector: hydrogen is f or heat and transport
The s y s t e m w i l l ne e d 9 0 % r e ne w a bl e s by 2 0 5 0 … a nd a l ot of f l e x i bi l i t y !
Power generation (TW h), EU28+,
‘Zero carbon gas’ pathw ay
S ource: P öyry Ful l E nergy D ecarboni sati on study Zero Gas pathw ay (i ncl . C C S , hydrogen, bi ogas)
50%
25%
15%
5%
5%
AGENDA
• R ES pushed by decar boni sati on obj ecti ves
• RES pushed by economics
• C oncl usi on
• A multi-client study, investigating the Ti p p i n g Points that are l i k el y to trans form E uropean Electricity Markets based on fal l i ng tec hnol ogy costs
• Detailed power mark et modelling, building
consistent scenarios across w holesale and retail mark ets
WH AT IF R E N E WA B L E A N D B AT T E RY C OS T S D R OP ?
2017
2040 2017
2040 2017
2040
-60%
-45%
-40%
2017
2040
-75%
Steering Group
Study members
Wher e does t he cur r ent t r end st op?
A S U M M E R W E E K I N C E N T R A L W E S T E U R O P E
Re t a i l g e n e r a t i o n m a y c o m e t o e x c e e d r e t a i l d e m a n d
Tra ns m i s si on de m an d
an dg en era tio n
Dis trib utio n de ma nd
an d ge ne ra tio n
Nucl ear
Fossi l fuel s
Behi nd-th e- me te r s o l a r Gr i d-sca l e b a tte ry
Gr i d-sca l e so l a r Wi n d
Resi denti al /commerci al demand
Behi nd-th e- me te r b a tte r i e s Gr i d-sca l e
battery
Im pac t of retai l bi l l reform on m i x (G W )
• Tw o s c e n a r i o s p r e s e n t e d h e r e
– ‘today’s r etail bill’: l arge s hare of ‘ per kW h’ charges, w hich can be avoided by behi nd-the-meter generation (free riding) – ‘r etail bill r efor m ’: m os t free-ri d i n g i s
av oi ded (e.g. ‘ per hous ehol d’ gri d charges), exposed to hourly w holesale pri c e
• In al l s c enari os m odel l ed, renew abl es re p re s e n t b e t w e e n 6 0 % a n d 7 0 % o f t h e
energy m i x by 2040 (C entral E urope, G B and Nordics)
– Solar up to 35% of GW, 15% of TW h – Wind up to 35% of G W, 40% of TW h
TH E R ETA IL B ILL STR U C TU R E MATTER S
La r ge s c a l e r e ne w a bl e s a r e pr of i t a bl e on w hol e s a l e pr i c e s a l one a nd w i t hout c a r bon pr i c e , be hi nd-the-met er gener at i on and st or age t akes advant age of ‘ f r ee r i di ng’
So u r c e : Pö y r y T i p p i n g Po i n t s mu l t i c l i e n t st udy
Build wind based on wholesale prices alone
Power price decrease price
vs. C ontinent
Build in te rc o n n e c to r Power price
in c re a s e s above cost of
wind
T H E N OR D IC W IN D T IP P IN G P OIN T
In a world with sufficiently high power prices, Nordic surplus could spi r al upw ar ds. Ho w s t a b l e i s t h i s c y c l e ? W h e r e d o e s i t s t o p ?
IF fuel prices
suf f icient ly high or wi n d s u f f i c i e n t l y c h e a p
Wi n d c o s t s e t s the N ordi c pow er pri c e Interc o. c os t
sets the price with Continent
Las t y ear: +11 . 4 TW h wind in NO-SE (b u i l t , u n d e r c o n s t ru c t i o n a n d FI D )
=1.4GW cable at full export
AGENDA
• R ES pushed by decar boni sati on obj ecti ves
• R ES pushed by econom i cs
• Conclusion
CONCLUSIONS
Le t ’s be a m bi t i ous , but pl a n f or a ha r m oni ous de v e l opm e nt of r e ne w a bl e s
We n e e d w i n d / s o l a r to m e e t th e Pa r i s a g r e e m e n ts
Wind/solar will happen anyway, w i n d i s p r o fi ta b l e w i th o u t su b si d y i n N o r w a y/Sw e d e n
We n e e d a p l a n a m b i ti o u s e n o u g h , ta ckl i n g g r i d i ssu e s
fa i r l y, to e n su r e h a r m o n i o u s d e ve l o p m e n t
Consulting. E ngineering. P rojects. Operations.
www.poyry.com
M i chel M ART IN
m i chel .m ar ti n@poyr y.com
+47 96 62 21 58
T W O P ÖY RY MU LT IC L IE N T STU D IES
Ti p p i n g P o i n t s Ful l E ne r gy-Sector Decarbonisation
Go a l Consequence of fal l i ng renewabl es and battery
co sts o n p o w e r ma rke ts
Decarboni sati on of enti re economy (el ectri ci ty, heat, transport) by 2050 to meet P ari s
agreement ambi ti on
Driving force of scenarios RES and battery costs Decarboni sati on
Decarbonisation BAU (70% by 2040 for pow er sector) 100% decarboni sati on of energy (transport, heat, industry & power) sector
Cost of renewables Very l ow Low
Timeframe 2017 to 2040 2017 to 2050
Ge o g r a p h y North West Europe + Nordi cs EU 28 + N orw ay/Sw i tzerl and
E lectricity sector Covered i n detai l Covered i n detai l
Transport sector Chargi ng of EVs onl y Covered i n detai l
Heat sector - Covered i n detai l
Im p a c t o f e le c t r ic it y r e t a il bill
on dispatch and investment Covered i n detai l Total system cost onl y
The f oc us of t he Ti ppi ng Poi nt s a nd Fut ur e Rol e of G a s s t udi e s di f f e r s , m e s s a ge s ar e di f f er ent but com pat i bl e
MOD E L L IN G OV E RV IE W – SYSTEM C OST A PPR OA C H
De c a r b o n i s i n g Tr a n s p o r t
Co u n t ry-by-co u n t ry evo l u t i o n o f t ran sp o rt tech n o l o g i es t o reach zero carb o n
De c a r b o n i s i n g He a t
Co u n t ry-by-co u n t ry evo l u t i o n o f h eat t ech n o l o g i es t o reach zero carb o n
Ho u r l y si m ul at i on of car bon-free ener gy sect or
Di sp at ch i n g al l p o w er p l an t s at h o u rl y reso l u t i o n b ased o n h i st o ri cal w eat h er patterns
De c a r b o n i s i n g P o w e r
Deci d i n g n ew p o w er p l an t s t o meet demand for power, electrified heat an d t ran sp o rt , an d el ect ro l ysi s
Au t o Bu i l d
Active Custom er s
Pö yry F u l l Decarb o n i sat i o n Su i t e
All Energy Hourly resolution Active customers Technology options Least cost
De c a r b o n i s i n g El e c t r i c i t y , He a t and Tr ans por t
Ho u r l y s u p p l y / d e ma n d wi t h intermittent technologies
Sma r t p a r t i c i p a t i o n o f cust omer s t o bal ance syst em
Ba t t e r i e s , wi n d , s o l a r , h y d r o g e n , Nu c l e a r , CCS, EVs , h e a t p u mp s
Op t i ma l dec ar boni s at i on including cost of grid
ME T H OD OL OGY IN A N U T S H E L L
Bu i l d i n g c o n s i s t e n t s c e n a r i o s a c r o s s t h e r e t a i l a n d w h o l e s a l e s e c t o r s
Wholes ale (least cost
syst em )
Re t a i l (least cost
eac h us er )
Te c h n o l o g y c o s t s Potential/build rate CO2 emissions cap
Inputs Au t o m a t i c
inv es t m ent dec is ions
Di s p a t c h
Te c h n o l o g y c o s t s Retail tariff design
Policy/grid costs E.V. deployment
Wind/solar Batteries
Conventional plants Interc onnec tors Decommissioning
Rooftop solar P V Retail batteries
Consistent dispatch Hourly power price
CO2 emissions Load fac tors
Profitability etc .
RETAIL EXPANSION
• Balances two objectives and two points of view
– Wholesale: minimises system cost – Retail: for each customer, minimises
re t a i l b i l l
• Fo r t h i s , w e m o d e l t h e b i l l o f s a m p l e customers w ith different combinations of equi pm ent(s ) (c om bi nati ons of E V, s ol ar and/or battery )
• Bill includes energy supply but also grid, pol i c y c os ts and tax
• Th e re t a i l c u s t o m e r d o e s a n e c o n o m i c as s es s m ent (‘ pay bac k peri od’ , or IR R ) bas ed on c apex v s . m oney s av ed
Resident ial elect r icit y bill ( 2040)
M oney saved by a bat t er y
M oney saved by a solar panel
Capacity mix (GW ) Energy mix (TW h)
EN ER GY VS. C A PA C ITY
So l a r c r e a t e s c h a o s , w i n d g e n e r a t e s r e n e w a b l e e n e r g y
So u r c e : Pö y r y T i p p i n g Po i n t s mu l t i c l i e n t st udy
Ze ro-carbon gas All-el ec tri c
F E D S S C E N A R IOS
50%
25%
15%
5%
5%
53%
15%
14%
18%
0%
2735T Wh
3350T Wh
18%
5%
14%
10%
31%
18%
5%
12%
10%
32%