Wind and Ocean 2008 Final

Energy from Wind and Ocean a European Market Study
October 2008
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ENERGY FROM WIND AND OCEAN
A EUROPEAN MARKET STUDY 2008

Innovation Norway
Coordinated by: Pernille Holtedahl Innovation Norway London
October 2008
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FOREWORD
Innovation Norway is proud to present the second edition of our report on market conditions for windand ocean- based renewable energy in Europe. Like last years version, this report aims to give Norwegian companies - offering products and services in the value chain of renewable energy - an overview of market possibilities and limitations in the most relevant markets in Europe. We hope you will find the report a helpful tool in choosing the right market for your company. Again our colleagues in Innovation Norway's offices in Europe have invested a substantial amount of time and effort in putting together this report -under the excellent supervision of Dr. Pernille Holtedahl in IN London, who has been in charge of receiving, adjusting and compiling the material. Thank you! Energetic regards,
Line Amlund Hagen Sector responsible Energy & Environment
Bergny Irene Dahl Coordinator Wind&Ocean Multiclient programme
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Innovation Norway contributors to the report

(by order of chapter) Peder W. Olstad Adviser, Denmark peols@innovationnorway.no Tina Nordlander Country manager, Sweden Tina.nordlander@innovationnorway.no
Madis Rausi Senior Adviser, Estonia marau@innovationnorway.no
Iris Stempfle Consultant, Germany: irste@innovationnorway.no
Pernille Holtedahl Senior Advisor, UK Pernille.holtedahl@innovationnorway.no
Patrick Daly Consultant, Ireland Patrick.daly@innovationnorway.no
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Oleg Kosine Consultant, France olkos@innovationnorway.no
Elisabeth S. Meyer Country Manager, Italy elmey@innovationnorway.no And Emanuela Teani, Consultant, Italy
Rodrigo Ballesteros-Cruz Senior adviser, Spain rodrigo.ballesteros@innovationnorway.no
Rita Abecasis Commercial Manager, Portugal rita.abecasis@innovationnorway.no
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ACRONYMS
CCS - Carbon capture and storage JI Joint Implementation. One of the Flexible Mechanisms of the Kyoto Protocol, whereby renewable energy projects can earn income from CO2 credits NEF - New Energy Finance PE Private Equity
R&D - Research and Development R,D & D Research, Demonstration and Development RE Renewable Energy
RES - Renewable Energy Sources RES -E - Renewable Energy Sources - electricity VC Venture Capital
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Table of Contents
Table of Contents ....................................................................................................... 6 0. Summary ............................................................................................................. 9 0.1 Wind Energy in the World........................................................................... 10 0.2 Wave and Tidal Power in the World ........................................................... 11 0.3 Renewable energy in Europe - Wind.......................................................... 11 0.4 Renewable energy in Europe - Wave and Tidal ......................................... 15 0.5 Country-by-Country Snapshots .................................................................. 17 1. Denmark............................................................................................................ 20 1.1 Energy supply and demand........................................................................ 20 1.2 Wind status and future potential .............................................................. 21 1.3 Wave status now and future potential ..................................................... 24 1.4 Price ........................................................................................................... 24 1.5 Relevant locations for offshore wind energy............................................... 25 1.6 Political climate for renewable energy from wind and ocean...................... 27 1.7 Incentives for developing / utilising new technology ................................... 27 1.8 Key players ................................................................................................ 29 1.9 Market Entry ............................................................................................... 29 2. Sweden ............................................................................................................. 31 2.1 Energy demand and supply........................................................................ 31 2.2 Wind status now and future potential ...................................................... 32 2.3 Wave and Tidal status now and future potential...................................... 34 2.4 Price ........................................................................................................... 35 2.5 Relevant locations for wind and ocean based renewable energy............... 36 2.6 Political climate for renewable energy from wind and ocean...................... 37 2.7 Incentives for developing / utilising new technology ................................... 37 2.8 Key Players ................................................................................................ 39 2.9 Market entry ............................................................................................... 41 3. Lithuania............................................................................................................ 42 3.1 Energy demand and supply........................................................................ 42 3.2 Wind status now and future potential ...................................................... 44 3.3 Price ........................................................................................................... 47 3.4 Relevant locations for wind-based renewable energy ................................ 48 3.5 Political climate for renewable energy from wind........................................ 50 3.6 Incentives for developing / utilising new technology ................................... 50 3.7 Key Players ................................................................................................ 51 3.8 Market Entry ............................................................................................... 52 4. Latvia................................................................................................................. 54 4.1 Energy demand and supply........................................................................ 54 4.2 Wind - status now and future potential ...................................................... 55 4.3 Price .......................................................................................................... 58 4.4 Relevant locations for wind and ocean based renewable energy.............. 58 4.5 Political climate for renewable energy from wind and ocean...................... 61 4.6 Incentives for developing / utilising new technology ................................... 61 4.7 Key Players ............................................................................................... 62 4.8 Market entry ............................................................................................... 63 5. Estonia .............................................................................................................. 65 5.1 Energy demand and supply........................................................................ 65 5.2 Wind status now and future potential ...................................................... 66
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5.3 Price ........................................................................................................... 67 5.4 Relevant locations for wind based renewable energy ................................ 68 5.5 Political climate for renewable energy from wind........................................ 71 5.6 Incentives for developing / utilising new technology ................................... 72 5.7 Key players ................................................................................................ 73 5.8 Market entry ............................................................................................... 74 6. Netherlands ....................................................................................................... 75 6.1 Energy demand and supply........................................................................ 75 6.2 Wind status now and future potential energy .......................................... 76 6.3 Wave and Tidal status now and future potential...................................... 77 6.4 Price ........................................................................................................... 77 6.5 Relevant locations for wind energy............................................................. 77 6.6 Political climate for renewable energy from wind and ocean...................... 79 6.7 Incentives for developing / utilising new technology ................................... 79 6.8 Key Players ................................................................................................ 80 6.9 Market entry ............................................................................................... 81 7. Germany............................................................................................................ 83 7.1 Energy demand and supply........................................................................ 83 7.2 Wind status now and future potential ...................................................... 84 7.3 Wave and Tidal status now and future potential...................................... 88 7.4 Price ........................................................................................................... 89 7.5 Relevant locations for wind and ocean based renewable energy............... 90 7.6 Political climate for renewable energy from wind and ocean...................... 92 7.7 Incentives for developing/ utilising new technology .................................... 93 7.8 Key players ................................................................................................ 95 7.9 Market entry ............................................................................................... 96 8. United Kingdom ................................................................................................. 97 8.1 Energy demand and supply........................................................................ 97 8.2 Wind status now and future potential .....................................................100 8.3 Wave status now and future potential .....................................................101 8.4 Tidal status now and future potential......................................................101 8.5 Price ..........................................................................................................102 8.5 Relevant locations for wind and ocean based renewable energy..............103 8.6 Political climate for renewable energy from wind and ocean.....................105 8.7 Incentives for developing / utilising new technology ..................................106 8.8 Key Players ...............................................................................................108 8.9 Market entry ..............................................................................................110 9. Ireland ..............................................................................................................112 9.1 Energy Demand and Supply .....................................................................112 9.2 Wind-Current Status and potential. ...........................................................114 9.3 Wave and TidalCurrent Status and potential .........................................114 9.4 Price of Electricity Generated from renewable sources.............................117 9.5 Relevant Locations for wind and ocean based renewable energy ............117 9.6 Political climate for renewable energy from wind and ocean.....................118 9.7 Incentives for developing /utilising new technology ...................................118 9.8 Key Players ...............................................................................................121 9.9 Market entry ..............................................................................................123 10. France ............................................................................................................125 10.1 Energy demand and supply.......................................................................125 10.2 Wind status now and future potential .....................................................125
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10.3 Wave and Tidal status now and future potential.....................................128 10.4 Prices ........................................................................................................129 10.5 Relevant locations for wind and ocean based renewable energy..............129 10.6 Political climate for renewable energy from wind and ocean.....................131 10.7 Incentives for developing / utilising new technology ..................................131 10.8 Key Players ...............................................................................................132 10.9 Market entry ..............................................................................................133 11. Italy .................................................................................................................134 11.1 Energy demand and supply.......................................................................134 11.2 Wind: Status now and future potential.......................................................136 11.3 Wave and Tidal current status and potential ..........................................138 11.4 Price ..........................................................................................................140 11.5 Relevant Locations for Wind Projects........................................................141 11.6 Political climate for wind energy ................................................................143 11.7 Incentives for developing/utilising new technologies .................................143 11.8 Key Players ...............................................................................................146 11.9 Market Entry ..............................................................................................147 12. Spain ..............................................................................................................149 12.1 Energy demand and supply.......................................................................149 12.2 Wind status now and future potential .....................................................149 12.3 Wave and Tidal status now and future potential.....................................153 12.5 Relevant locations for wind and ocean based renewable energy..............156 12.6 Political climate for renewable energy from wind and ocean.....................158 12.7 Incentives for developing / utilising new technology ..................................158 12.8 Key Players ...............................................................................................160 12.9 Market entry ..............................................................................................161 13. Portugal ..........................................................................................................163 13.1 Energy demand and supply.......................................................................163 13.2 Wind status now and future potential ....................................................165 13.3 Wave status now and future potential ....................................................167 13.4 Price ..........................................................................................................168 13.5 Relevant locations for wind and ocean based renewable energy..............169 13.6 Political climate for renewable energy from wind and ocean.....................173 13.7 Incentives for developing / utilising new technology ..................................173 13.8 Key Players ...............................................................................................175 13.9 Market entry ..............................................................................................176
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0.
Summary
In spite of the ongoing financial crisis and a global economic slowdown, interest in renewable energy has remained strong. In fact, Global Trends in Sustainable Energy Investment 2008 (UNEP) reports that $148.4 billion was invested in sustainable energy in 2007, up 60% from 2006. And although this figure will be lower for 2008, due to the drying-up of credit, long-term prospects for the sector are still relatively good. For investments, forces are currently pulling in different directions: on the one hand, the credit crunch and financial turmoil are making capital more difficult to come by. On the other hand, high oil prices have been making investments in renewables more attractive. And the underlying pressure towards reducing CO2 emission continues to give momentum to the sector, irrespective of day-to-day developments. Figure 1 shows how NEX the WilderHill NewEnergy Global Innovation Index. closely follows the AMEX oil index, and how this last years drop follows a spectacularly positive development since 2002. Figure 1: New energy investments
Source: New Energy Finance, Sep. 23 2008
New investments have varied greatly from one technology to another: According to New Energy Finance (NEF) 1, wind, solar and biofuels attracted 75% of VC/PE investments in Q2 2008. Wave and tidal energy are at a very different stage of development, but are attracting seed- and other types of capital and will be a very interesting space to watch in the years to come. Over the next few decades, European countries will need to substantially invest in renewable energy resources. This is due to several factors: Efforts to combat climate change imply that some fossil-fired power plants are closed at the end of their cycled and replaced by cleaner sources The EU RES directive dictates that member countries on average should have 20% of their electricity from renewable sources by 2020. Concerns over energy security and dependence on other countries supply of fossil fuels is a third reason for promoting local, renewable sources
Source: Monthly Briefing, July 2008
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0.1 Wind Energy in the World This is a study of market conditions for wind, wave and tidal energy in a subset of European countries. However, to place our countries in a larger context we will briefly look at some global trends for wind, by far the most developed renewable source for power. Figure 2 and Figure 3 show global installed wind capacity and the largest wind market additions respectively. They show a distinct positive trend that took off in the mid-1990s in Denmark and Germany, and that since continued in the new markets of Spain, the US, and now China and India. The market for wind is highly concentrated: the top 10 markets cover 85% of the total market for wind. Figure 2: Installed wind power in the world
Source: GWEC
Figure 3: Top ten capacity installers (MW in 2007)
Source: GWEC
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0.2
Wave and Tidal Power in the World
Figure 4: Global potential for wave and tidal power 2
Source: IEA
Marine renewables differ radically from wind in that they are relatively new and immature technologies. Where wind is near commercial, wave and tidal are at the testing stage. Thus, the challenges and uncertainties facing this sub-industry are greater, but the opportunities and rewards are potentially great. Figure 4 shows the potential for wave (in red) and tidal (in blue) power worldwide. The global wave and tidal resources are theoretically immense. The International Energy Agency 3 estimates that tidal power could produce 200 TWh per year while wave power could contribute between 8000 and 80,000 TWh per year. Estimates differ widely depending on what assumptions are made. What is certain, however, is that it will take technological advancements, political commitment and considerable and predictable financial support and in order for the potential to be unleashed. The UK and Portugal are the most advanced of the European nations in the exploration of wave and tidal energy. 0.3 Renewable energy in Europe - Wind Europe has historically been the worlds strongest market for wind energy - Figure 5 shows wind power penetration in EU-27 countries. Deployment continues at a high pace but countries outside Europe, such as China and the US, are the biggest growth markets.
2 3
Source: Renewable Energy R&D priorities, IEA 2006 /(Fornybar Energi 2007NVE, Enova, IN, NRC) Renewable Energy: R&D priorities, IEA 2006
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Figure 5: Wind Capacity per capita in 2007 (KW/1,000 pop.)
Source: EurObserER 2008
Figure 6, although being an aggregated map, gives a good overall idea of wind resources in Europe. Clearly, the North Sea surrounding Scandinavia, the UK and Ireland, the Atlantic Coast of the continent, parts of the Baltic Sea and areas inland adjacent to these offer the best conditions. In addition there are some pockets in the Mediterranean region. Figure 6: Windy Europe
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However, sometimes support mechanisms can make up for a lack of natural resources. That is the case for Italy, where much development is taking place, in spite of only moderate wind strengths. Table 1 shows the total wind price and incentive levels per MWh in each of the countries studied in this report 4. It is clear that in this regard Italy, the UK and Portugal offer developers a good return on their investments with support to onshore wind in the UK at 66/MWh on top of the wholesale price as an example. Table 1: Wind tariff levels by country
Country / MWh total income onshore wind 197 120 92* 82 75 73-74 28-88 < 100 87 74 77 56 57 Incentive 138 66 /MWh total income offshore wind 217 153 150 130 < 170 Incentive
Italy UK Germany France Portugal Spain Netherlands Latvia Lithuania Estonia** Denmark*** Sweden Ireland
152 99
35
< 87
(54) 37 24
i) 56 140
24
Compiled by Innovation Norway, based on the best available information at that moment (2008 or most recent figures). Data on incentive levels were not always possible to obtain - depending on whether feed-in tariffs or a green certificates system were used. Tariff systems are not always directly comparable. Individual chapters should be consulted for fuller details on each countrys system. *Tariff applies to first year, then decreasing 1% per year **Two systems exist, the 74 figure is the feed-in tariff ***Assume wholesale power price in Denmark of 40/MWh i) Public tender: lowest price
Tariff structures, natural resources and government commitment are among the factors influencing the Ernst &Young Renewable Attractiveness indices. Table 2 and Table 3 show how the countries included in this report perform in the onshore and offshore wind sectors.
Data on incentive levels were not always possible to obtain - depending on whether feed-in tariffs or a green certificates system were used.
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Table 2 Onshore Wind Attractiveness 5

Country USA India China Spain Canada Germany UK Italy Greece Portugal France Ireland Sweden Netherlands Norway Denmark Onshore wind score 77 76 72 70 67 67 64 64 63 63 60 60 52 51 50 49
According to Ernst&Youngs ranking, the most attractive European onshore wind market is Spain, followed by Germany. The UK and Italy follow in third place. The Baltic countries are not ranked by E&Y. However, in a similar ranking carried out by Emerging Energy Research last year 6, Estonia ranks as number 16, Lithuania 22 and Latvia 30 (bottom of European ranking), all well below the countries ranked in Table 2. As tariff levels have increased in the Baltic states, the low ranking may have improved some since then.
Adapted from Ernst&Young Energy Onshore Wind Attractiveness Index, Q2 2008. A note on the E&Y indeces: Max. possible score is 100 and is a weighted average of various factors, such as planning and grid connection issues, tariff incentives, resource quality, access to finance, etc. For more detail, see http://www.ey.com/GLOBAL/content.nsf/International/Oil_Gas_Renewable_Energy_Attractiveness_Indices. 6 http://www.emerging-energy.com/
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Table 3 Offshore Wind Attractiveness 7

Country UK Germany Denmark Ireland China Belgium US France Sweden Norway Netherlands Spain Italy Portugal Offshore wind score 71 70 60 59 59 57 56 54 52 50 50 50 46 46
According to Table 3, the UK and Germany are the best places in Europe to build offshore wind projects. The two countries have large and unexploited wind resources, which coupled with a generous tariff system and strong offshore regimes make them likely to be at the forefront of offshore development in the years to come. 0.4 Renewable energy in Europe - Wave and Tidal It was France that in the late 1960s installed the worlds first industrial-scale tidal barrage, but it is the UK that is currently at the forefront of developments. That is partly a result of a conscious decision by the Government not to lose out the leadership in this sector to another country (reference is often made to having missed out on wind to Denmark and Germany). The UKs access to resources, combined with the Governments commitment to renewables deployment and CO2 reduction, make it the leader in the field of marine renewables. But this is a race that can equally well be won by other countries with a more dynamic can-do attitude, such as Ireland and Portugal. In fact, the first and so far only commercial offshore wave installation is installed off the coast of Portugal. Figure 7 shows the distribution of wave and tidal projects by type of project: there is a lot of activity in the wave and tidal current sectors, and part-scale testing projects dominate.
Adapted from Ernst&Young Energy Offshore Wind Attractiveness Index, Q2 2008
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Figure 7 Distribution of wave projects by type
Source: IEA- Ocean Energy Systems, 2008
As for the geographical distribution of technology development, the UK dominates by far, followed by the US see Figure 8 Figure 8: Geographical distribution of projects
Source: IEA- Ocean Energy Systems, 2008
Some countries have already determined a support level for wave and tidal energy: Italy has the highest tariff, but since projects are virtually non-existent, it is not of much relevance. Portugal currently gives 250/MWh (for the first 5MW), with Ireland following closely after legislation was passed this year that ensured 220/MWh. The UK is likely to decide in favour of giving wave and tidal projects 2 renewable obligation certificates (ROCs) which brings remuneration to approximately
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186/MWh, while Scotland has proposed 5 and 3 ROCs for wave and tidal respectively, which would make it the highest-paying environment by far. Table 4: Countries with special tariffs for wave and tidal energy
Country /MWh wave and tidal
Italy 340 Portugal 250 UK 186 (235/340*) Ireland 220 Denmark 80** France 72-107 *proposed Scotland **First 10 years, then 40 for following 10 years
0.5 Country-by-Country Snapshots Almost all the countries surveyed in this study face at least three obstacles in the development of renewable energy. One is insufficient grid capacity, or coverage, to incorporate new sources of supply. The second are complicated and time-consuming permitting processes. Thirdly, projects face increasing capital costs and supply chain shortages of for instance turbines. The price of steel, energy and capital are contributing to this. Nevertheless, the medium- to long-term outlook for the deployment of renewables remains positive, largely because of the need for new and cleaner sources of energy and the lack of alternatives. All the countries reviewed in this study offer potential for windand ocean-based technologies, in one way or another, as the remainder of this section highlights. Denmark Electricity production based on renewable sources is an important pillar of Danish energy supply, with wind power alone accounting for 20 %. The country is perceived as one of the pioneers of wind energy developments, although recently its leading position has been threatened by better opportunities elsewhere. Onshore wind opportunities are limited and its offshore regime still falls short of that of Germany and the UK. Wave energy is on the rise in Denmark, but is still a very small market. Independently of pricing mechanisms, technology providers and developers may find the Danish market interesting, as it can offer access to a complete value chain of sub-suppliers and professional services and research sites, based on decades of experience. Estonia, Latvia and Lithuania The three Baltic States, although different in some respects, have a lot in common when it comes to natural resources and tariff levels, and as such are treated together in this summary. Compared to other countries reviewed in this study, they score relatively low on wind attractiveness (see section 3), although offshore offers some hope. They generally score low because of moderate-only resources and low prices, although there is income potential from CO2 credits (JI). Furthermore, most of the planned concessions until 2010 have already been given (Lithuania and Estonia). Norwegian companies may find it easier to enter the Baltic markets than other European countries due to a certain geographic kinship and the current involvement of Norwegian actors.
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France Frances wind and ocean-based natural resource potential is very good and remains relatively unexploited. The country has been a latecomer to the wind scene, but the country is now ranked 3rd in installed capacity in Europe, and offshore sites are being explored. The worlds oldest tidal power plant is located in French waters it was built in 1966 and has a capacity of 240 MW, and three new tidal projects are now under consideration. The largest obstacle to entering the French market remains the established national champions and strong national interests, making partnering with a local player a necessary strategy for foreign companies. Germany Germany is one of the world leaders in renewable energy development. Due to a generous support scheme and a subsequent rapid development of onshore wind energy, suitable wind onshore sites for green-field development are nearly exhausted. However, offshore wind developments are taking off and the new tariff of 150/MWh is likely to trigger rapid growth. The market will see six 5 MW turbines commissioned in 2008 as part of the first phase of Alpha Ventus, the markets first commercial offshore wind plant and by year-end 2020, the total installed base in German waters is expected to be over 6 GW. Germany is also important as the home to an important manufacturing sector: German wind turbine producers control 22% of the global market 8.Concerning wave and tidal, Germany cannot offer profitable sites but can contribute with suppliers and sub-contractors. Ireland Ireland is a small open economy with a largely underdeveloped renewable energy sector. Both onshore and offshore wind projects are in the pipeline for approval and Ireland is viewed by many developers as a promising new market. Wind and wave resources are among the best in Europe, and price supports have been significantly increased in the past year. Testing opportunities for marine devices exist and earlier this year a tidal device was connected to the grid in Strangford Lough. Italy The Italian potential for electricity from wind energy is estimated to 10 GW, which equals 1/5 of the total electrical demand. The resources are concentrated in the Southern part of the country and only a fraction of the potential has been developed. In 2007, Italys installed capacity increased by 30% to 2,700 MW, and the prospects for 2008 are even higher. These positive developments are largely due to a generous tariff scheme and take place in spite of cumbersome licensing procedures and local opposition to projects in some regions. Wave and tidal energy are deemed not to have a great potential in Italian Waters. Netherlands The Dutch market for wind is relatively small, and given the (small) countrys competing demands on land, onshore developments are limited. Offshore potential is promising, but hopes for this sector were dashed this year as the Government failed to increase the tariff. Lastly, some tidal and wave devices have been tested in Dutch waters, but the activity level in this sector is currently low. The Government has traditionally been very supportive of renewable energy, but unless the support regime changes, project developers are likely to focus on other markets. Portugal Portugal has experienced a great expansion in wind energy over the past five years, and is now the 4th largest wind market in Europe on a per-capita basis. Offshore wind remains unexploited, although the potential is relatively good, as is the potential for wave power. In fact, the worlds only existing commercial wave farm is situated in Portuguese waters, and the tariff level for this technology is the highest in Europe. In summary, the Portuguese market is characterised by very good resource potential, ambitious Government goals for the sector, and a relatively generous support system.
GWEC, Sep.2008
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Spain Spain is one of the European Champions of wind energy and had the strongest European growth market in 2007. It is ranked as the most attractive onshore wind market in Europe by Ernst&Young. This qualification is the result of good wind resources, but above all a very positive political and business climate that has endorsed a massive deployment of wind farms throughout the country. This growth has led to important industrial developments as demonstrated by the fact that the two largest wind farm operators in the world are Spanish (Iberdrola and Acciona). There has been less interest in offshore development, partly because of legal constraints but these have now been removed. Similarly, wave and tidal power remain largely unexploited although test centres are being built on the northern coast. Sweden Interest in wind projects in Sweden is on the increase - in fact, the Government in 2008 proposed a new planning target of 30 TWh wind power by 2020, of which 10 TWh are to be offshore. However, the target is likely to remain a target only unless incentives are improved, as the tariff level is low compared to many other European countries. In the long term, both wave and offshore wind hold potential and a large research programme has been set up by the Swedish Energy Agency to support technical developments. Statkrafts increasing involvement in the market combined with cultural/linguistic advantages could make Sweden an interesting market for Norwegian technology developers. UK The United Kingdom has among the best wind and marine resources in the world. In addition, it has a stable and positive regulatory environment, generous tariff structure and several large research programmes for new technologies. Another important driver of UK renewable energy is the concern over energy security and the need for new production capacity with low CO2 emissions. The UK offshore wind market and wave and tidal developments in Scotland make this one of the most relevant and important markets for Norwegian players.
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1.
Denmark
1.1 Energy supply and demand Over the past decade, Denmark has changed from a net energy importer to a net energy exporter: the country's total energy production now exceeds its consumption by more than 30%. In 2005, Denmark was the only EU Member State self-sufficient in energy. This is the result of thirty years of focused energy policy, implemented after the 1973 oil crisis. The change has primarily been caused by the exploitation of oil and gas deposits in the North Sea coastal areas. Energy production based on renewable energy sources is an important pillar in the Danish energy supply and a central element in fulfilling the government's long-term vision of making Denmark completely independent of fossil fuels. The share of renewable energy in overall energy consumption has sharply increased since 1980. In 1980 the share of renewable energy was 3%, in 1990 it was 6% and preliminary figures for 2007 show a 16% share. 9 As shown in Figure 9 the contribution of renewable energy to overall energy consumption comprises several forms of renewable energy, and to which various forms of biomass constitute the largest share. Figure 9: Contribution of renewable energy to overall energy consumption
Renewable energy accounts for about 28% of domestic electricity generated. Renewable energy in Denmark includes wind, waste, biomass, biogas, heat pumps, solar and geothermal energy 10. In 2007, wind-power production accounted for 19.7% of domestic electricity supply against 16.8% the previous year; this is due to better wind conditions. Figure 10 illustrates the electricity production by fuels and Figure 3 illustrates wind power capacity and percentage share of electricity supply from 1980-2006.
10
http://www.cop15.dk/en/menu/About-Denmark/The-Danish-Example/ http://www.ambottawa.um.dk/NR/rdonlyres/8A89D4E5-1E40-4042-BA20-1B983B0EB40B/0/renewable.pdf
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Figure 10: Electricity production by fuels
Figure 11: Wind capacity and share of electricity supply 11
1.2
Wind status and future potential
Denmark has a long tradition of exploiting wind power and has been at the forefront of wind energy development. With over 20,000 people employed in the wind sector, a combined turnover of 3 billion for the manufactures, and companies occupying more than 40% of the world market for wind turbines, Denmark is perceived as the worlds leading wind energy cluster and one of the global knowledge centres for wind-technology development. Thus, there is access to a complete value chain of subsuppliers and professional services. Most of the turbines manufactured in Denmark are exported. The total installed power and the number of turbines in Denmark had a continuous increase until 2002. In the period from 2001 to 2003 a replacement agreement was carried out, whereby smaller and badly placed turbines were replaced with bigger turbines. 1,300 old turbines with a capacity of about 100 MW were replaced by 300 new turbines with a capacity of 300 MW. In 2004 a new replacement agreement running to 2009 was introduced. The agreement involves replacing old 175 MW turbines with 350 MW turbines. However, the agreement has until now had a limited effect. In 2006, only 8
11
Danish Energy Authority
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MW of net new capacities was installed. Figure 4 shows the number of windturbines and the wind capacity in Denmark. By the end of January 2007 there was 5.267 turbines installed in Denmark with a total power of 3.135 MW. Figure 12: Wind power installed capacity
Wind-power production in Denmark had a steady increase until 2005. In 2006, the output from wind installations decreased, due to wind conditions. Figures from 2007 show a significantly better year for wind than 2006. In 2007, wind turbines produced 7,173 GWh or 17.4 per cent more than in 2006. 12 The majority of the wind farms onshore are located in Jutland. This is mainly due to the areas excellent wind resources. Figure 13: Location of onshore wind farms and wind farm density, Denmark
12
http://www.energistyrelsen.dk/sw67789.asp
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Offshore Wind Looking at the offshore market 13, Denmark is a major player as well. Of the total capacity installed offshore globally, Denmark hosts roughly half, but has recently been overtaken by the UK. The first offshore wind farm in the world was constructed (Vindeby) in Denmark 1991. Today 215 turbines are placed offshore. This is equal to approximately 4 % of all installed turbines in Denmark and 13 % of total wind power production. 14 Permits for the establishment of new offshore wind farms are subject to decision by the Minister of Transport and Energy after tendering or application 15 Figure 14 outlines current offshore wind farms in Denmark along with information concerning the separate plants including wind turbines, the nominal capacity and the production year. Farms 9 and 10 respectively are two new offshore farms, each of 200 MW, which recently have been approved: The Horns Rev II and Rdsand II. The Horns Rev II will have 95 wind turbines; Rdsand II will have 92 wind turbines. These farms are expected to be connected to the grid in 2009-2010. Additionally and not shown in figure 6, the Danish Parliament approved in August 2008 the construction of Denmarks largest offshore wind turbine park, which will be placed in Djursland-Anholt in the Kattegat strait of the North Sea and with a capacity of 400 MW. It is expected to be in operation in 2012. Figure 14: Offshore Windfarms in Denmark
Note the difference between shallow water offshore (10-40 m.) and deep water offshore. This paragraph refers to developments in shallow waters. 14 http://www.windpower.org/composite-1171.htm 15 http://www.ens.dk/sw23781.asp
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The Danish Energy Authority has prepared projections to 2025 in the report Future Offshore Wind Power Sites 2025, and gives an estimate of the offshore potential of some 4,600 MW. This capacity could generate approximately 18 TWh, which correspond to approximately 60 % of domestic electricity consumption or just over 8 % of total energy consumption in 2025. Figure 7 shows high and low scenarios for possible wind-power development in Denmark. When offshore turbines at Horns Rev II and Rdsand II are installed in 2009-10, it is expected that wind power will account for 25 % of total electricity consumption. The bars show possible wind power developments and the lines show possible electricity consumption. 1.3 Wave status now and future potential
Wave energy is on the rise in Denmark, but is still a very small market, compared to the oil & gas and offshore wind markets. According to the Danish Energy Authority, wave power is perceived as a promising technology, but for the time being not commercially competitive. However, Denmark strives to develop a position in wave energy similar to the world-leading position it has in wind energy. The annual wave energy potential in Danish waters is estimated to approximately 30 TWh. 16 Of the two categories of wave plants onshore and offshore the relatively flat coast in Denmark means that only offshore installations are interesting. Denmark has been conducting research on wave energy since the 70s and there was a large statesupported research programme carried out from 1997 2002. This spawned about 50 ideas for new devices, making Denmark the most active region within development of wave energy, and stimulated entrepreneurial developments in the years to follow. Several promising new devices developed in Denmark are now aiming for commercialization, among others Wave Star and Wave Dragon. Wave Star is designed to cut into the wave and exploit the entire length of waves. A test plant in scale 1:10 is today placed in Nissum Bedding. It is expected is to be installed at Horns Rev in scale 1:2 at a water depth of 9 meters and grid connected in 2010. This model is estimated to have an output of 500 KW. In July 2008, Wave Star Energy, the company that has developed Wave Star, was granted DKK 20 million (approximately 2.7 million) through the public EUPD programme (Programme for Energy, technology Development and Demonstration). www.wavestarenergy.com/ Wave Dragon is an offshore floating device that captures ocean waves in an elevated reservoir, then converts that reservoir's stored energy into electricity by running the water through a hydroelectric turbine as it is returned to the ocean. According to the company Wave Dragon, British and Portuguese investors are willing to invest approximately 150m in the companys energy device over a two- to three years period. Wave Dragon intents to deploy its 7MW devise, which will be the world largest full-scale plant, off Welsh waters in August 2009. If this is successful, 10 plants are planned built and established in Portugal. For more information see: http://www.wavedragon.net 1.4 Price The Danish electricity market was liberalised in accordance with a decision of the Parliament at the end of the 1990s. Production and trading in electricity is thus subject to competition. The electricity
16
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V4S-4MJJC291&_user=634332&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_version=1&_urlVersion=0&_userid=63 4332&md5=dfd42365a64a50685bd8568646c994a0
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grid and its operation are subject to public price regulation, and all users of the system may make use of this infrastructure. Electricity from Danish electricity producers is sold on market conditions either via bilateral agreements, via Nord Pool (the Nordic power exchange) or other power exchanges. The market price for electricity in Denmark is defined as the spot market price at Nord Pool in the area where the generator is connected to the grid. As of February 2008, new wind turbines on land will in addition to the market price, get an environmental fixed premium of 0.25 DKK/kWh (0.034 EUR) for 22,000 peak load hours + 0.023 DKK/kWh (0.003 EUR) in balancing costs, bringing the total subsidy to approximately c3.7/kWh 17 This is an increase from the foregoing years. The new subsidy is valid for projects built in 2008-11. Note that subsidies for wind depend on when the turbine is connected to the grid and its age. 18 Details of the subsidy rules, for existing plants and wind mills, accordingly to grid connection date and age, can be found at http://www.ens.dk/sw23781.asp As for offshore wind, Denmark operates a system based on a public tender where the feed-in price is part of the tendering process. Thus the projects are subsidised according to separate rules and the subsidy depends on what was requested by the interested parties. 19 On the basis of an assessment of applicants financial, legal and technical qualifications, a number of pre-qualified applicants are asked to submit tenders to the Danish Energy Authority. The principal criterion determining who goes ahead in the tendering is the level of subsidy requested by the applicant. 20 For wave power, new plants are eligible for a subsidy that together with the market price will ensure a tariff of 60 re/kWh (0.08 EUR) for 10 years and 40 re/kWh (0.054 EUR) for the following 10 years. 1.5 Relevant locations for offshore wind energy The Danish government intends for new wind energy capacity, both onshore and offshore, to continue to be established in an economically viable way. However, since most of the onshore potential has been exploited, future large-scale additions are likely to be offshore. In the report Future Offshore Wind Power Sites 2025, which was published in April 2007, the Danish Energy Authority charts a number of possible offshore areas where offshore wind power could be build to an overall capacity of some 4,600 MW. The basis for selecting these areas has changed significantly during the last decade due to a number of new nature protected areas in Danish waters, the rise in shipping traffic and the fact that todays turbines are significantly higher and have a greater visual impact. The report examined in detail 23 specific possible sites each of 44 square kilometres to an overall area of 1012 square kilometres divided between 7 offshore areas. It calls for a strategic planning at sea and that any forthcoming expansion of offshore wind farm should take place in a prioritized order. Figure 15 shows proposed offshore sites in pink. Figure 15: Possible offshore sites for wind power in Denmark. 21
17
http://www.ens.dk/graphics/UK_Energy_Policy/Danish_energy_policy/Political_agreements/21Feb2008%20A greement/Agreement-21022008-final%28ENG%29.pdf 18 http://www.ens.dk/sw23781.asp 19 http://www.ens.dk/sw23777.asp 20 http://www.folketinget.dk/samling/20051/almdel/EPU/Bilag/37/213664.PDF 21 Future Offshore Wind Power Sites - 2025
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As shown in Table 5, it is recommended that the first farms should be constructed at Djursland-Anholt in the Kattegat and Horns Rev in the North Sea. As written above, the wind farm at Djursland-Anholt was approved in Parlament in August 2008. The prioritisation of Horns Rev depends on the closer evaluation of the nature conservation interests. From an economic standpoint, an expansion in Jammerbugten off the coast at Ringkbing in the North Sea would be almost identical. Finally, the report recommends sites at Store Middelgrund in the Kattegat and Kriegers Flak and Rnne Banke in the Baltic Sea. Assuming complete construction of all the recommended farms, the analysis shows an overall investment level for the areas of between 2.15 and 3 million per installed MW including grid connection and grid reinforcement onshore, of which investment in the actual installations amounts to 1.7-2.4 million per MW for water depths between 10 and 40 metres. Table 5: List of potential offshore sites
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1.6 Political climate for renewable energy from wind and ocean Since the first oil crisis in 1973, energy policy has occupied a relatively significant position in the political debate in Denmark. With international sustainability targets, such as the reduction of CO2 emissions, this has further been emphasized. The tools of Denmarks energy policy have included subsidies for energy savings, green energy taxes, liberalization of the electricity and gas markets, and introduction of CO2 quotas. Over the last 25 years, Denmarks economy has grown by around 75% - with nearly stable energy consumption. Experience from Denmark shows that with a persistent and active energy policy focused on increasing energy efficiency it is possible to maintain high economic growth while at the same time reducing the dependency on fossil fuels and safeguarding the environment. At the same time, the composition of the energy consumption has changed significantly as a result of a political effort to promote the use of renewable energy. The Government expects significant increases in the use of renewable energy in the years to come primarily from offshore wind turbines in addition to the replacement of the onshore wind turbines and potentially wave energy. However, there is some local opposition, in particular related to the onshore replacement agreement and the location of offshore wind farms. In January 2007, the Danish Government presented a new long-term strategy entitled A visionary Danish energy policy 2025 - with the overall vision that Denmark in the long term should become entirely independent of fossil fuels (coal, oil and natural gas) and replace this by the use of renewable energy. Additionally, The Government will counteract rises in the overall energy consumption; which has been kept almost static since 1972. Targets for 2025 outlined in the report include doubling the share of renewable energy in the energy mix, so that more than half of the electricity consumed will be supplied by renewable energy. Today renewable energy in total covers over 28 % of the electricity generated; witch is the highest contribution to electricity from new renewable in EU. In February 2008, the Danish government and a large majority in Parliament entered into an agreement on Danish energy policy for the years 2008-11. The agreement establishes a number of initiatives aimed to lower Denmark's dependence on fossil fuels (coal, oil and gas) through energy savings and renewable energy targets, with the objective of 20% gross energy consumption from renewable energy sources by 2011 22. The governments goal is that renewable energy should comprise at least 30% of gross energy consumption in 2025, i.e., twice as much as today. 1.7 Incentives for developing / utilising new technology In order to meet its RE targets outlined in A visionary Danish energy policy, the Government will provide incentives for further research. In January 2008, the Energy Research Programme was replaced by EUDP (Programme for Energy, Technology Development and Demonstration). 23 The new programme will focus on demonstrating energy technology on a larger scale and the government has decided to double public funding for research, development and demonstration of energy technology so that from 2010 an annual total of DKK 1 bn. will be earmarked for this purpose. 24 EUDP grants funding twice a year and in 2008 approximately DKK 140 million will be granted. 25 Foreign companies located in Denmark are eligible for financial support through EUDP. 26 Additionally,
The full agreement can be found at www.ens.dk A fact sheet can be found at http://ens.dk/graphics/UK_Energy_Policy/Danish_energy_policy/Political_agreements/21Feb2008%20Agreeme nt/Factsheet_RE_UK_21022008.pdf 23 For more information see http://www.ens.dk/sw64890.asp 24 http://www2.mst.dk/common/Udgivramme/Frame.asp?pg=http://www2.mst.dk/Udgiv/publikationer/2007/97887-7052-490-2/html/sum.htm and http://www.ens.dk/sw64890.asp 25 http://www.ens.dk/graphics/Energipolitik/forskning_udvikling/tilskud/EFP/Skemaer_og_regler/2008/08%2006 %2027%20PM%20tilsagn.doc 26 For additional information and guidance on how to apply see: http://www.ens.dk/sw43941.asp
22
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national research councils and the newly established High Technology (http://www.hoejteknologifonden.dk ) may also provide funds for energy research.
Foundation
The development of wind power in Denmark has been characterized by a close collaboration between publicly financed research and industry in key areas such as research and development, certification, testing, and the preparation of standards. In line with this, there is a long tradition in the wind energy field for public-private sector cooperation for a partnership to build on, for example the Danish Research Consortium for Wind Energy. 27 Wind Turbine Certification Scheme Wind turbines installed in Denmark must fulfil the Danish Wind Turbine Certification Scheme witch is administrated by the Danish Energy Authority. All documents related to the certification scheme can be found on www.wt-certification.dk Test Facilities Located in Hurup Thy, Nordic Folkecenter for Renewable Energy, runs the only test station for wave energy in Denmark. The test station can be rented by inventors, who wish to test their wave power models. http://www.folkecenter.dk/en/ Capital Financial institutions compete efficiently on the wind energy market, and different financial packages have been developed. However, regarding the development of wave projects, the main obstacle is private risk capital, especially for demonstration projects. Support Guidance, Consulting services The Danish Energy Authority is an Authority under the Ministry of Transport and Energy. The Danish Energy Authority carries out tasks, nationally and internationally, in relation to the production, supply and consumption of energy. This means that the Authority is responsible for the whole chain of tasks linked to the production of energy and its transportation through pipelines to the stage where oil, natural gas, heat, electricity etc. are utilised for energy services by the consumer. www.ens.dk Energinet.dk is the owner of the overall infrastructure, maintains the security of supply and ensures the smooth operation of the market for electricity and gas in Denmark. Energinet.dk owns the gas transmission grid and the 400 kV electricity transmission grids and is a co-owner of the international connections between Denmark and the Nordic countries and Germany. Furthermore, the company has at its disposal the 132 kV and 150 kV electricity grids and has access to natural gas storage facilities. The Danish Council for Strategic Research funds research within politically prioritised research areas. The Council helps strengthen the interaction between public and private-sector research. The Programme Commission on Sustainable Energy and Environment is part of the Danish Council for Strategic Research, responsible for allocating funding to: systematised renewable energy, energy and environment and environmental technology. 28 Ris National Laboratory and its Wind Energy Department is the largest research institution for wind energy in Denmark. Ris has formed a consortium with the Technical University of Denmark (DTU),
27
http://www.risoe.dk/rispubl/art/2007_183_paper.pdf For more information see: http://fi.dk/site/english/councils-commissions-committees/the-danish-council-forstrategic-research

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Aalborg University (AAU), and the Danish Hydraulic Institute (DHI). The cross-disciplinary consortium is intended to improve the network and coordination among research, education, and industry. www.risoe.dk Invest in Denmark assists foreign companies who consider establishing business activities in Denmark. Renewable energy is a key area. Their services are free of charge. www.investindk.com Danish Wind Turbine Owners Association represents the owners www.dkvind.dk Danish Wind Industry Association represents the manufactures www.windpower.org Blgekraftforeningen An association for promoting Danish wave energy projects. www.waveenergy.dk
1.8
Key players
Manufactures The major Denmark-based manufacturers of large commercial wind turbines are Siemens Wind Power AS and Vestas Wind Systems AS. The sales by these two wind turbine manufactures were 2,290 MW in 2004 and with a world marked share of more than 40 per cent. Gaia Wind Energy AS is a company that produces wind turbines for households. The most important suppliers of major components for wind turbines are LM Glasfiber A/S, a leading producer of composite blades for wind turbines; Mita Teknik A/S, which produces controller and communication systems; and Svendborg Brakes A/S, a leading vendor of mechanical braking systems. Utilities Dong Energy is a leading Nordic utility company headquartered in Denmark. The company is the result of the merger between DONG, Elsam, ENERGI E2, Frederiksberg Forsyning and the electrical department of Kbenhavns Energi. DONG was the 12th largest wind operator in the world in 2006. 1.9 Market Entry As outlined in this study, Denmark is at the forefront of the development of renewable energy resources, and every year renewable energy accounts for an increasing part of domestic energy consumption. The new initiatives aiming to fulfil the Energy Strategy 2025 will strengthen renewable energy R, D&D in Denmark. It is expected that focus will be on increased demonstration of new technologies. Development of future offshore wind will depend strongly on political decisions, mainly regarding location and size of the wind farms. The Danish renewable market strengths can be summarized as follows: Danish companies possess 40 % of the worlds wind power market with a combined turnover of 3 bn. for manufactures. Renewable energy is a top priority for the government, who has, in order to achieve its ambitious goals, outlined a favourable political framework. Extraordinarily strong acceptance and motivation to buy renewable energy in the Danish society. Access to a complete value chain of sub-suppliers and professional services as well as highly qualified employees and research sites. Strong research activities including public-private cooperation.
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The most significant weakness of the Danish RE market at present is the low tariff paid to producers, in particular in wave energy. For Norwegian companies interested in the Danish wind power market, the best initial approach would be a market visit. It is important to meet relevant key actors in Denmark, private companies as well as science parks, authorities, etc. As Denmark is one of the market wind industry leader, the IN office in Copenhagen can organise programs for exchange of know-how between the two countries. We believe that there might be a potential market for Norwegian sub-contractors in Denmark. In December 2009, the Danish government will host the 15th UN Climate Summit (COP15) with the goal of achieving a post-Kyoto agreement. As a frontrunner in renewable energy and effective energy production, and a host to a milestone Summit, all eyes will be turned on the Nordic countries. During the period up to the UN Climate Summit, there will be several profiling possibilities for Norwegian companies in Copenhagen see the list in Table 6 Table 6: List of conferences and exhibitions in Denmark Date: 25. 26.11.2008 24.05 26.05.2009 September 2009 30.11 11.12.2009 05. 06.12.2009 Arrangement Nordic Climate Solutions, Bella Center World Business Summit on Climate Change Nordic Climate Solutions, Bella Center COP15 Kbenhavn Bright Green, Dansk Industri, Parken More info www.nordicclimatesolutions.com www.copenhagenclimatecouncil.com www.nordicclimatesolutions.com www.cop15.dk www.di.dk
For further information: The Danish Wind Industry Association www.windpower.org Danish Energy Authority www.ens.dk Energy Policy Statement 2006 Offshore Center Denmark, http://www.offshorecenter.dk/ Energy Center Denmark, Fakta om Blgeenergi http://www.windpower.org/composite-1461.htm http://www.offshorecenter.dk/underside.asp?h_id=11&u_id=33 http://www.folkecenter.net/gb/ http://www.waveenergy.dk/
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2.
2.1
Sweden
Energy demand and supply
Sweden has set an objective of increasing the production of electricity from renewable energy sources by 17 TWh by 2016 relative to the production level in 2002. This objective is part of the countrys overall objective of moving Sweden towards a more ecologically sustainable energy system. However a new call from the EU for member states to increase their proportion of renewable energy has given Sweden a new requirement of 49% renewable energy consumption by 2020. Sweden is already one of the EU's best performers in renewable energy, due to its hydropower assets. But now there is a need to increase activities further in order to realise these ambitious requirements. Figure 16 Total Energy supply in Sweden, 19702007, excluding net electricity export 29.
700 600 500 400 300 200 100 0 1970 Nuclear power2 Hydro power, gross1 Heat pumps in district heating Biofuels, peat Coal and coke Natural gas, gasworks gas Crude oil and oil products
1975
1980
1985
1990
1995
2000
2005
Note: 1) Includes wind power up to and including 1996 2) Calculated in accordance with the UN/ECE method for energy supply from nuclear power.
Total electricity use in Sweden in 2006 30 was 146,1 TWh, which, given Swedens small population is high in an international comparison (a per capita usage of almost 17 000 kWh). Nuclear power supplied 46% of the countrys electricity; hydro power supplied about 44% and the remaining 10 % was made up of fossil-fuelled and biofuel-based production and wind power.
29 30
Energy Agency: Energy in Sweden 2006 Energy Agency: Energy in Sweden 2007 :
http://www.swedishenergyagency.se/web/biblshop_eng.nsf/frameset.main?ReadForm&Doc=
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Figure 17: Supply of electricity from renewable sources 31 2003

Approved Plants [pieces]1) Hydro Power Wind Power Biofuels Solar Power Installed effekt [MW]2) Hydro Power Wind Power Biofuels Solar Power
1 2
2004
1 759 1 040 613 105 1 4 161 504 472 3 185 0,008
2005
1 848 1 060 668 118 2 4 471 517 530 3 424 0,011
2006
1 909 1 075 706 125 3 4 765 540 583 3 643 0,036
2007
2 088 1 094 8593) 131 4 5 066 558 831 3 676 0,043
1 597 966 543 87 1 4 049 491 401 3 157 0,008
) Number of plants that has received more than 0 certificate during respective year ) Based on the plants that has received more than 0 certificate 3 ) The total 859 plants contains 1003 units Source: Svenska Kraftnts certificate system, Cesar
According to production statistics, the total electricity production from wind power 2007 was 1 432 GWh 32. 2.2 Wind status now and future potential
Status Wind power production is steadily increasing its proportion in the energy mix and will have to play a key role if Sweden is to increase its proportion of renewable electricity. In 2005 the production was less than 1 %, or 988 GWh. Statistics of 2008 shows that 999 GWh already was produced during the first half year and the forecast indicates a production around 2 TWh for 2008. Annual reports on wind power plants in operation as well as monthly reports with operational statistics for registered plants are available at www.vindenergi.org. The Swedish Energy Agency has during spring 2008 proposed a new planning target of 30 TWh wind power in Sweden by 2020. Of this, 20 TWh relates to onshore wind power. Half should be planned for 2010 at the latest, and the remainder for 2012. When it comes to offshore wind power, approximately 10 TWh is already planned. The Swedish parliament is due to take decision to this proposal in late 2008. The Swedish Energy Agency has transformed the national targets into regional targets, taking wind energy resources and regional electricity consumption into account. The purpose of the target is to clarify wind power installations on regional and local planning levels and to reduce planning and permitting obstacles. However the current support system is not likely to be good enough to realise the proposed targets. In fact, it is estimated that wind energy will contribute approximately 7 to 8 TWh in 2015. Without a change in quotas in the electricity certificate system, further expansion by 2020 will be marginal. Potential A research study on the physical potential for wind power in Sweden 33 was released in 2007. The
31 32
Energy Agency: Energy in Sweden 2006 Vindforsk, Annual report 2007: http://www.vindenergi.org/driftuppfolj.htm
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results, based on a GIS-analysis, show that the total technical potential for wind power is 510 TWh per year on land and 46 TWh per year at sea. The calculated technical potential is, however, theoretical since the number of MW per square kilometre may be considered to be relatively high. This case still shows a quite large available potential, considerably larger than what can be built by 2020. Much of the expected growth in wind energy deployment will be in forest areas and in the northern parts of Sweden in the low-fjlls The interest in those regions is caused by the rather good wind potential estimated by the Swedish wind mapping. It is interesting to note that the technical potential for wind power in forest areas have resulted in a number of new joint ventures. Best known perhaps is the one between Statkraft and the forest company SCA where the goal is to exploit wind power in northern Sweden Planned projects Historically, the wind business has been dominated by small companies and co-operative ownership arrangements. This is now rapidly changing as investments are increasing, giving more space to more diverse stakeholders such as utilities, real estate companies, forest owners etc. The average size of wind plants in 2007 was around 2-3 MW 34 but the trend in the market is toward investment in bigger plants and there are a number of big projects available in late planning stages Some interesting projects to highlight are: Stora Middelgrund: Universal Wind Offshore http://www.universalwindoffshore.se/ The Swedish government has in June 2008 approved a 860 MW wind farm off the country's southwestern coast, but has attached a number of environmental conditions that have to be fulfilled before construction can go ahead. The construction amounts 108 wind turbines for an area covering 60 square kilometres. The plant will be able to produce 3 TWh per year, doubling the country's current wind power output. Kriegers Flak: Vattenfall http://www.vattenfall.se/kriegersflak, has applied for a permit to build one of Northern Europes largest offshore wind farms, located between Germany and Sweden. Fully developed, the farm will involve 128 wind turbines of 5 MW each with a combined yearly generation capacity of about 2.1 TWh . The E.ON offshore wind farm Utgrunden II, which was planned to be built with support from the market introduction program, has been postponed. All necessary permits were in place, and construction was planned to start in 2007. However, E.ON concluded that the costs for building the park were too high considering their calculated revenue 35. Vindpark Vnern: will be built in the lake of Vnern, the largest lake in Sweden. The park is given financial support from the Swedish Energy Agency with 40 million SEK (3.7 million). Five of the ten turbines will be in operation in 2008 and the final five during 2009.
33 Vindkraft i framtiden Mjlig utveckling i Sverige till 2020: Elforsk rapport 08:17 34 Med Vindkraft I tankarna Vindkraft I Sverige 2020: Svensk Vindenergi
35
IEA Wind Energy 2006 Annual Report, Sweden
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Figure 18: List of wind power projects > 20 MW in late planning stages
In production Under construction Have necessary permits
Facts on the Lillegrund Wind farm: In June 2008 the Lillgrund offshore wind farm in resund was put in production by Vattenfall. Lillegrund increases Swedens wind production by 30 %. The wind farm consists of 48 units and has a joint capacity of 110 MW, corresponding to approx. 0.3 TWh per annum. The wind farm was built with financial assistance from the state by the special funding program for technical development in coordination with market introduction for large-scale plants offshore and in arctic areas.
2.3
Wave and Tidal status now and future potential
Status Ocean energy is still in the early stages of development in Sweden and there are so far no plants in commercial use. Most of the wave activities so far have been focused around the University of Uppsala where professor Mats Lejon, is actively engaged in R&D and pilots of both wave and tidal power. Mats Lejon is also one of the owners of the companies Seabased and Current Power which both are spin-offs from research from the University of Uppsala. There are a couple of research projects ongoing, the best known being the Islandsberg project 36 in the Lysekils area. The project is co-financed by the Swedish Energy Agency, Vattenfall, Goteborgs Energi, Frankenbergs Energi and developed in cooperation with Uppsala University. The technology concept is based on a permanent magnet linear generator driven by a buoy at the sea surface. The first phase showed promising results and the theoretical calculations of power output have been confirmed. The project just received phase 2-financing for a period of 5 years, for a bigger scale test. Although the results have been promising, industry representatives think that it will take some years before the technology can be brought into full commercial use.
36
http://www.el.angstrom.uu.se/frameset.html?/forskningsprojekt/Islandsberg_E.html
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Vattenfall, the Swedish Energy Agency and the Seabased Industry AB Company are performing a localization study aiming at constructing a wave power plant of 1015 MW in a wave energy park. The wave energy park the Bohus project will consist of buoy clusters and will produce approximately 50 GWh annually. The project will start during 2008, and will be fully developed 2010. In mid 2008 the investment company Midroc New Technolgy, together with Saab and Verdane Capital invested in the Gothenburg-based company Minesto AB www.minesto.com. They have a new tidal concept called Deep Green: it is a marine power plant that extracts electricity from slow oceanic currents at great depths To further increase research in Ocean energy, Statkraft invested 90 MSEK in a Nordic Research network in the wave area involving the Universities in Trondheim, Uppsala and Copenhagen. This network is likely to bring about new possibilities for cross-border research and is expected to speed up development in this area. Potential There is no official evaluation done on the wave potential, possible because this technology is in an early development phase. However in the industry there are a lot of different opinions of the future potential. Vattenfall estimates the annual wave energy potential to be 1520 TWh around the coasts of Sweden 37. Other numbers have been arrived at by Energiledargruppen: They calculate that the Baltic Sea has a potential of 8 TWh and 2 TWh on the west coast 38. It should be noted that most economic estimates to date presume that wave energy plants with a power of less than 20 kW per unit would not be economically viable. Calculations show that the solution with buoy and a linear generator is economical also for units down to 10 kW if they are grouped in plants giving an aggregate of 10 MW in total output 39. The generators best suited for Swedish waters are probably those with a capacity of about 10 KW. 40 2.4 Price Sweden introduced an Electricity Certificate system in 2003. Its objective was to increase the use of electricity from renewable energy sources by 17 TWh/year in 2016 compared with 2002. The system is intended to support the development of new production in the long term by creating competition between different types of renewable electricity production 41. Electricity producers receive one certificate for each MWh of renewable electricity that they produce. However a new production unit can only receive certificates for a period of 15 years. The demand for certificates is created by requirements under The Electricity Certificates Act that all electricity suppliers and certain electricity users are required to purchase certificate equivalent to a certain proportion of their electricity sales or use, known as their quota obligation. The size of this obligation increases from year to year. As the certificate system increases the cost of electricity to users, there is an exception for energy-intensive industry. 42. The Swedish electricity certificate system applies today only to electricity produced in Sweden. A review in 2012 will consider the opportunities for an international market. The existing scheme is valid to 2030.
37 38
Vattenfall forskning och utveckling 2006 Frnybar Energi http://www.energiledargruppen.com/?goto=visa_referat&id=65 39 http://www.seabased.com/engelsk/

40 41
http://www.energimyndigheten.se/web/biblshop_eng.nsf/FilAtkomst/ET2007_23.pdf/$FILE/ET2007_23.pdf?OpenElement
Qualifying renewables are electricity from: wind power, solar energy, geothermal energy, certain biofuels, wave energy, certain hydropower and peat in cogeneration plants. 42 A Electricity Intense Company is defined as one that use at least 40 MwH of electricity for each MSEK of sales value of companys output per year
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The price of the certificate is determined by supply and demand, and can vary from one transaction to another. The average certificate price for 2007 was approximately 21. Between January and June 2008 it was approximately 24. 43 Figure 19: Breakdown of total revenue (56 /MWh average) for a plant owner in 2007
To be able to reach the new ambitious target for 2020 Sweden needs to realise a bigger portion offshore wind. This has led the government to indicate that it will soon propose a subsidy regime for offshore, and it has hinted that this will be in the form of a feed-in tariff. A proposal is expected in the autumn of 2008. 2.5 Relevant locations for wind and ocean based renewable energy
In 2004, 49 geographical areas in 13 Swedish counties were identified as areas of national interest for electricity production from wind energy 44. However, new research connected to wind mapping, done by scientist in Uppsala according to the MIUU-model 45 showed that the conditions in the interior of Sweden were more favourable for wind power than previously thought. Large areas of the interior of the north of Sweden, together with the southern Swedish highlands, have been identified as such areas. 46 In the light of these results, the Swedish Energy Agency will shortly review and indicate new areas suitable for wind energy. There has so far not yet been carried out any official mapping of suitable locations for wave power. Issues related to the location of projects The permitting process is seen as the main obstacle to a fast development of wind power in Sweden. For small projects, there is no approval procedure. The only requirement is to register the plant and have the building permit approved by the municipality. For projects over 25 MW, the approval procedure is handled by the County Administration if it is an onshore permit and in the Environmental Courts if it is an offshore permit. Approval includes application procedures related to both the Environmental Act and the Planning and Building Act. A comprehensive guideline on the framework and relevant procedures is to be found at Swedish Energy Agency site 47:
https://elcertifikat.svk.se/ IEA Wind Energy 2006 Annual Report, Sweden 45 Swedish Energy Agency: Http://www.energimyndigheten.se/WEB/STEMEx01Swe.nsf/F_PreGen01?ReadForm&MenuSelect=05CEC0C7 711739A1C1257299003D2B01 46 Swedish Energy Research 2006:
44 43
http://www.energimyndigheten.se/web/biblshop_eng.nsf/FilAtkomst/ET2007_23.pdf/$FILE/ET2007_23.pdf?OpenElement
47
www.energimyndigheten.se/sv/Om-oss/Var-verksamhet/Framjande-av-vindkraft1/Bygga-vindkraftverk-/
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To facilitate the expansion further the government has given the Swedish Energy Agency the task of proposing new activities and changes that could help speed up the formal procedure in the planning end permitting procedure. These proposed changes are possible being reviewed in the autumn of 2008. There has been an ongoing debate whether the grid in some cases could be a limiting factor to a fast expansion of wind power. In a report from June 2008, Svenska Kraftnt: www.svk.se stated that they do not forecast any capacity problems up to a level of 10 TWh. Another inquiry for the net-connection for renewables recently put forward a suggestion to change the legislation and procedures coupled with the electricity act. The inquiry found that there is a need to solve certain bottlenecks in the electricity network to make it easier to expand the network in an economically sound way. Specifically, the issue of step-costs occurring in the financing for upgrading networks needs to be addressed. Also here, formal decisions are expected in late 2008 There is also an ongoing discussion and planning for an investment in high voltage connection to Norway in order to handle a possible long term export of clean electricity to Europe from the Nordic area. Most land in Sweden is privately owned and leasing of land to onshore wind power plants is often a welcome income supplement for land owners. As for offshore, the government owns most of the seabed. 2.6 Political climate for renewable energy from wind and ocean The Swedish Government is strongly committed to expanding wind power production. One of the Governments planning objectives is that local authorities must have agreed plans for 10 TWh of wind power production by 2015. However, as mentioned earlier, progress toward a rapid expansion of wind electricity is hindered by a slow permitting process and low tariff levels. As for local opposition to wind projects, there exist groups in Sweden, as in other European countries, that are against new plants. However a widely held view is that, as the number of plants increases, public opinion will gradually become more used to them. 2.7 Incentives for developing / utilising new technology
Financial Incentives There are currently three main incentive programs for the promotion of wind power: The Electricity Certificates, production support (the so called environmental bonus) and support for technical development in co-ordination with market introduction for large-scale plants offshore and in arctic. Note that the environmental bonus will be phased out in 2009. One important ongoing inquiry regards the economic aspects of grid connection 48. There have been suggestions from the industry that this investigation will produce a recommendation on a scheme that would drastically lower the cost of connecting to the grid. Discussions here are along the lines that the connections of bigger offshore wind farms to the grid should be seen as part of the national grid and financed by Svenska Kraftnt, as the grid owner. Incentives for Research /market introduction In 2003, the Swedish Energy Agency launched a program to support technical developments in coordination with market introduction, for large-scale plants offshore and plants in arctic areas. The aim is to stimulate the market, achieve cost reduction, and gain knowledge about environmental effects from wind power offshore and in the arctic areas. For the years 2003 through 2007, the budget
48
http://www.svenskenergi.se/sv/Aktuellt/Nyheter/Lennart-Soder-utreder/
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is 350 MSEK (around 38 million). The Swedish Energy Agency has received the responsibility for administrating the entire programme from financing of fundamental research to measures intended to assist in the market introduction of new energy technology. The programme has so far supported six big projects, Lillegrund ( 23 million), Utgrunden 2 ( 7.6 million), Kriegers Flak ( 1 million), Vindval ( 3.8 million), Uljabuouda ( 3.8 million) and Vindpark Vnern ( 4.3 million). The Swedish government has decided that the programme will continue during 2008-2012 and will receive an additional 350 MSEK (around 38 million) 49. Large-scale projects can apply for money, as long as the average wind speed in the planned area is at least 6.5 m/s at an altitude of 71 metres. Vindval 50 is a small part of the market introduction programme. It is managed by The Swedish Environmental Protection Agency (Naturvrdsverket). The programme collects and spreads information about wind energy on topics such as the maritime environment, people, animals, plants and the landscape. Vindval also aims to provide a basis for more reliable assessments of how wind power affects the landscape, the way in which it impacts on those living in the immediate vicinity, and peoples experiences of wind power. Vindforsk II: http://www.vindenergi.org/ is managed by Elforsk (the Swedish Electricity Utilities` R&D Company) and has a total budget of 5 million. Some of their research areas are: public acceptance, technical issues concerning building and maintenance, standardisation and grid integration. To improve market competition and to help development of turbines that can lower the costs of electricity, the Swedish Energy Agency is also funding a demonstration project of a 3.5 MW turbine with a new direct driven generator. The project was initially expected to be closed by mid-2009, but is now scheduled to be finalized in mid 2010. The turbines are manufactured by Scanwind/Morphic and the engineering company VG Power is the developer.. Capital available for investing The access to venture capital is good in comparison to other OECD countries. Initially it was mostly foreign players that invested, as the project base was good and competition with other investors relative low. 51 Recently, however, a number of new Swedish investors are entering the wind power market. They include Stena Renewable Energy AB, http://www.stenarenewable.com/, Lennart Wallenstam Byggnads AB, http://www.wallenstam.se/ and Vindin, http://www.vindin.se/. Wallenstam is planning to invest SEK 1-1.5 billion (around 109 million) in wind energy during a three year period 52 Vindin is owned by a group of electricity-intensive industries in Sweden and intends to build projects to produce 1 TWh/year by using land owned by companies in the group. 53 A report on Cleantech funding in Sweden was produced in 2006 by Energimyndigheten: the report gives a good overall picture on the Swedish funding system and on relevant venture players for different project areas and phases. The report is available from: http://www.energimyndigheten.se/web/biblshop.nsf/FilAtkomst/ET2007_04.pdf/$FILE/ET2007_04.p df?OpenElement Test facilities for new technology There are two test facilities for wave and wind technologies in Sweden:
49
http://www.energimyndigheten.se/WEB/STEMEx01Swe.nsf/F_PreGen01?ReadForm&MenuSelect=2640BC1 A1F5DB326C1257299003EA40E 50 http://192.36.189.41/sv/Verksamheter-med-miljopaverkan/Pagaende-forskning/Vindval/

51
Investera i CleanTech- Marknadslget fr riskkapital inom energiomrdet Utdrag ur rapporten ER 2006:38 http://www.avanza.se/aza/press/news.jsp?n=530187 53 IEA Wind Energy 2006 Annual Report, Sweden
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Islandsbergs project 54 is a test facility for environmental field trials in Lyselkil on the outside off the Swedish west coast. The field trials include basic marine ecological research as well as life cycle and specific effect analysis of wave parks. Utblicken 55- Utblicken is an offshore research station where E.ON and a couple of Universities research topics such as wave measures and how sound is spread over the sea.
Support, Guidance and Consulting Services There is a lot of information and material on Swedish wind power available, mainly through the Swedish Energy Agency: http://www.energimyndigheten.se/vindkraft The government has also funded the work of four regional wind power coordinators (vindkraftsamordnare), to facilitate the cooperation between, developers, authorities and other players on a central, regional and local level. A key organisation for wind power is the recently formed umbrella organization Svensk Vindenenrgi: http://www.svenskvindenergi.org : Svensk VindEnergis members include wind energy investors, developers, utilities, real estate companies, consulting firms and financial investors as well as technical suppliers of wind farms are members. The organisation works as a centre of expertise and a network facilitator. Between 8-10 of October 2008, SvenskVindenergi are hosting a wind power conference with focus on the development in the Nordic Countries Another leading player is Vattenfall Power Consultant: www.vattenfall.se/powerconsultant. They work as an independent consultancy company, providing services for the whole energy sector. Vattenfall Power Consultant is often also engaged in research programmes funded by the Government. When it comes to development, Vindkompaniet: http://www.vindkompaniet.se is yet another key player. This company has built almost one in four of Swedens wind parks. A complete list of wind power-related organisations together with updated details on their activities and mandate is found on website of Svensk Vindenergi: http://www.svenskvindenergi.org For wave energy, Seabased AB: http://www.seabased.com/ is the dominant player. 2.8 Key Players The Swedish market for wind developments has so far been characterised by two big companies;, Vattenfall and E.ON, and a number of smaller actors with projects at different stages of maturity. Vattenfall is by far the most active wind power player with 100 operating wind farms, producing in total 0.440 TWh in mid 2008. Vattenfall is also actively searching for more onshore opportunities and has a number of projects in different development phases. EON has 9 operating wind farms and 3 big offshore projects in the planning phase. Vattenfall and E.ON have been the leading utilities for offshore wind energy development in Sweden together with smaller utilities like Falkenberg Energi, Gteborg Energi, and Skellefte Kraft. It is very common for investors to team up with local utilities. Historically, many of the wind power plants in Sweden have a co-operative ownership structure i.e. are owned by economic associations, where private investors or local companies invest together in a shared wind park. Companies like Vindkompaniet have done a lot of development projects toward this segment. Almost 50 % of the owners are small companies that have started with the purpose of owning a wind power plant.
54 55
http://www.el.angstrom.uu.se/frameset.html?/forskningsprojekt/Islandsberg.html http://www.eon.se/templates/InformationPage.aspx?id=45068
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Vindkompaniet AB: http://www.vindkompaniet.se is a privately owned independent development company. The company has during the last 10 years been engaged in the development of 200 wind power plants, where 10 have been offshore. Vindkompaniet has a strategy together with a number of developers like WPD Scandinavia, http://www.wpd.de/se/om-wpd-scandinavia, and RES Scandinavia, http://www.res-group.com/wind-farms/wf-scandinavia.htm , of selling the projects they develop either in their entirety or a part of them- to other investors When the wind potential in the northern part of Sweden within forestry areas was discovered, a number of new industrial alliances were formed between utilities and Swedish forestry companies. Best known of these perhaps is the joint venture between SCA and Statkraft formed at the end of 2007. Their ambition is undertake major investments in wind power in northern Sweden. The plans involve the production of 2.8 TWh of wind power electricity per year in seven wind farms on forest land in Vsternorrland and Jmtland. The sites are located in the municipalities of Sollefte, Ragunda, Strmsund and Brcke. The plans will now be subject to environmental assessments and planning. The investment is estimated to be of around SEK 16 billion (around 1740 million). Statkraft will provide financing while SCA provides land for the wind farms. At the end of 2007 a similar alliances was formed between Vattenfall and Sveaskog. The potential for this type of cooperation is very good, according to Vattenfall, who indicates discussions on 550 plants with a total of 1 500 MW. There is growing interest from yet another type of stakeholder - the Swedish Real Estate Company Wallenstam http://www.wallenstam.se/ The company has the ambition of being self sufficient in renewable energy. By mid-year 2008, 4 plants were in operation, 18 were in the development phase and additional 5 under planning, of which one is as a partnership in the big offshore project Taggen in Hanbukten. Other new stakeholders that take position is Stena Renewable (part of the Stena Shipping Group) and Triventus AB. A detailed list of developers and owners of all operational projects as of end 2007 is found at: http://www.vindenergi.org/vindstatistik/arsrapp2007.pdf Technical Suppliers Of the erected 217 MW in 2008, Siemens obtained a market share of around 50% with the Lillgrund park. Vestas and Enercon each had a share of around 23%, and WinWinD had a share of around 3% 56. On the component side, the market consists of subcontractors as SKF (roller bearing and monitoring systems), ABB (electrical components and cable), Vestas Castings and EWP Windpower Production. Other companies worth mentioning are Oiltech (hydraulic systems and coolers), Nexans (Cables) and ESAB (Welding Equipment) 57. The Morphic Group are actively increasing their position in windpower. Morphic bought 80 % of the Norwegian company ScanWind in mid 2008 and thereby formed a strategically alliance with the Norwegian Wind power industry. Morphic is also through Dynawind, a company in the group, manufacturing towers for the Finnish turbine manufacturer WinWinD and they market the WinWinD turbines in Sweden. Wave Wave energy is still in an early stage of development in Sweden. So there are a very limited number of players in this market. Professor Mats Lejon at Uppsala is a very important person for the
56 57
IEA Wind Energy 2007 Annual Report , Sweden IEA Wind Energy 2006 Annual Report, Sweden
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development in the sector. He has an investment company called Energy Potential that is investing in early stages in new technologies. EnergyPower has invested in companies like Seabased (described earlier), Current Power and Vertical Vind (new vertical windtower) The trend however is that big Utilities like Vattenfall and Fortum are getting more engaged with new technologies such as wave. Vattenfall is actively engaged as a co-financer in the Lysekil project run by Seabased. Fortum has placed an order of 2 units from Seabased and is officially backing the technology. 2.9 Market entry 2007 marked an important year for the Swedish wind industry and many new developments took place. For Norwegian companies interested in the Swedish wind power market, our suggestion would be to initially come on a market visit. It is important to meet relevant key actors like Svensk Vindkraft and The Energy Agency and discuss opportunities and financing in some detail before evaluating a next step and possible partners. In the area of wave energy, there are a number of possible joint research /development and pilot project opportunities. For interested parties we suggest a market visit to Sweden where IN-Stockholm could arrange meetings with Seabased AB in Uppsala where Mats Lejon acts as a researcher and as a key person in the wavepower business in Sweden.
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3.
Lithuania
3.1 Energy demand and supply The energy sector in Lithuania is characterised by lower-than-EU average energy consumption levels per capita (2.66 vs. 4.01 toe / capita of total primary energy consumption) and by overcapacity, with supply significantly exceeding demand. Table 7 gives an overview of demand and supply of electricity. Table 7: Demand and Supply of electricity
2006/07 Generating capacity Daily demand Peak demand Production Consumption Exports 5000 MW 1880 MW 2100 MW 11.72 TWh 11.00 TWh 0.72 TWh 2010 (forecast) 3630 MW 2370 MW 2450 MW 12.36 TWh
Lithuania imports oil and natural gas from Russia and internally produces energy from nuclear and renewable sources. Its import dependency is close to the EU average (48 % while 50 % in EU). Nuclear energy presently accounts for the largest share in primary energy supply and a large percentage of the electricity generated - nearly 70 %. The share of renewable sources amount to 15 %, which is above the EU-27 average of 12 %. However, this situation will change, as a second nuclear reactor will be closed in 2009 (see Figure 20), although a new reactor is projected to be built in some years (expected in 20152018: feasibility studies are currently underway and the company LEO LT has been established for the development and implementation of the project). Figure 20: Forecasted changes of electricity production methods and needs (MW)
Information source: source: www.eksponente.lt
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The Lithuanian national energy strategy until 2025 was passed in 2006. It presents different visions of how to cover the demand for electricity under different electricity production conditions. According to the Energy Strategy, the new program for wind power development will be worked out by 2010. Thus, there is still some time available for investigation of possibilities and for choosing the most appropriate technologies for offshore wind parks and their connections to power grids. The potential for wind energy still remains largely unexploited see Figure 21. Biomass remains the most important form of renewable energy in Lithuania - mainly in the form of wood used for district heating Figure 21: Use and potential of renewable sources
USE OF RENEWABLE ENERGY RESOURCES, TWh (Gross inland consumption in 2005 101,6 TWh)
9 8 Production +import -export in 2005 7 6
Twh 8, 24
Possible production using the remaining potential

I Wood II Agriculture waste III Municipal waste IV Biogas V Geothermal VI Hydropower VII Solar VIII Wind IX Biofuel for transport
5 4 3 2 1
0, 03 1, 56 0, 8 0 3, 56
2, 21 1, 05 0, 45 0, 02 0* 1, 3 0, 85 0** 0, 04
0, 78 0, 02 0, 38
0 I II III IV V VI Type of energy resources VII VIII IX
*Solar energy usage by small-scale demo sites **wind energy production 0, 0012 TWh in 2004, 0, 0018 TWh in 2005 Information source: Lithuanian Energy Agency
In accordance with the EU Renewable Directive, 7 % of the countrys electricity is to be generated from renewable sources by 2010 and 10 % by 2025 58. Most of this increase will come from wind see Figure 22
See National Energy strategy 2007: http://www3.lrs.lt/pls/inter3/dokpaieska.showdoc_l?p_id=292522 and http://www.ukmin.lt/en/energy/renew/doc/report_77ec.pdf
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Figure 22: Renewable energy predictions (TWh/year)

2 ,0 1 ,8 1 ,6 1 ,4 1 ,2 TWh 1 ,0 0 ,8 0 ,4 6 (4 % ) 0 ,6 0 ,4 0 ,2 0 ,0 2005
b io m a s s m u n ic ip a l w a s t e w in d h y d ro p o w e r
1 .7 5 (1 0 .3 % )
1 .0 (7 .7 % )
2010 y e a rs
2015
2020
Information source: Lithuanian Energy Agency
3.2 Wind status now and future potential Lithuania has reasonable wind energy potential (4-6 m/s), estimated to be of the order of 500MW, according to a study completed by the European Bank of Reconstruction and Development. The first wind power plants were constructed in 2004, and at the end of 2007 there were 36 turbines installed, with a combined capacity of 52.3 MW (0.5% of electricity consumption). The planned aggregated capacity to be constructed by 2010 is 200 MW. This will amount to 2.5 % of the overall electricity supply 59. 300 MW are forecasted to be online in 2015. The first two wind farms (Benaiciai and Rudaiciai) were developed as JI projects 60, between Lithuania and the investor countries and companies of the Baltic Sea Region Testing Ground Facility (TGF Iceland, Norway, Sweden, Denmark, Finland and Germany, DONG Naturgas, Fortum, Kymppivoima, Keravan Energia, Gasum, Outukumpu Vapo and Vattenfall). The JI project was prepared by NEFCO on behalf of TGF (in its capacity as Fund Manager to the Facility). The project developer and owner is the privately owned company, USB Schema Hydrostats. The Benaiciai project has a capacity of 16 MW and expects to generate 40 GWh per year. Of particular interest for this report is the Sudenai / Lendimai wind park: Vardar Eurus AS and Freenergy AS acquired this project in September 2006. The planned capacity is 14 MW in total, which is divided between two companies, UAB Vejo Elektra (6 MW) and UAB Lariteksas (8 MW). Vardar Eurus AS is owned by Vardar AS (70%) and the Nordic Environmental Finance Corporation (Nefco) (30%). All tenders for the capacity of 200 MW to be installed until 2010 have been completed and the projects are currently underway. Table 8 gives the details. Thus, according to the state strategy (limit capacity of 200 MW until the 2010), there is no potential market for wind projects of the capacity mentioned above on land in Lithuania until 2010. A new strategy for wind energy development should be ready in 2010. However there is an increasing interest for low-capacity wind farms (250 kw) and for such projects, no tender is required. Note that there is no list of projects in the pipeline for future wind farms investments since municipalities are not ready with the district general plans for their territories. Independent cases of construction of wind farms of lower capacity may be released by initiative of the landowners or other private entities in the near future. Table 8: Development of wind farms until 2010
Zone
59 60
Total
Zone location
Status
See http://www.ukmin.lt/en/energy/renew/doc/report_77ec.pdf Joint Implementation one of the flexible mechanisms of the Kyoto Protocol, providing developers with an opportunity to gain credits (and income) from avoided CO2 emissions.
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number 1 2 3 4 5 6
capacity, MW 30 40 45 30 35 20 15.7 MW awarded in April, 2005 14.3 MW awarded in March, 2006 110 kV OTL Klaipeda - 40 MW awarded in December, Pagegiai 2005 30 MW awarded in June, 2004 110 kV OTL Klaipeda 15 MW tender announced in March, Palanga - Sventoji 2006 110 kV OTL Sventoji 30 MW awarded in June, 2004 Zidikai 110 kV OTL Klaipeda 35 MW awarded in February, 2006 Rietavas 20 MW tender announced in Transmission network September, 2006, awarded. Distribution network
Total 200MW Information source: Lithuanian Energy Association
Offshore wind potential in Baltic Sea It is expected that the potential for onshore wind energy will be utilised by 2020. After 2020, a reasonable amount of offshore wind developments are expected to take place. The Lithuanian area of the Baltic Sea comprises 6540 km2 and the depths are as follows: 0-20m 20-30m 30-40m 40-50m >50m - 5.7% - 9.6% - 14.2% - 16.9% - 53.6%
According to expert opinion, the seabed characteristics and distribution of depth make offshore wind projects most likely in areas of 20 - 50 m. and using traditional sea bottom-grounded technologies. However, the possible use of wind turbines on floating platforms opens up for larger project possibilities in waters with greater than 50 m. depth Generally the potential for offshore wind is still at the investigation level in Lithuania. The EU INTERREG IIIa project Perspectives of off-shore wind power development in marine areas of Lithuania, Russia (Kaliningrad region) and Poland defended possibilities to construct more than 1GW capacity wind power parks 61. 11 plots in 3 countries have been identified 62. The INTERREG IIIa project focused on studies leading to the delimitation of areas fulfilling environmental and technical requirements of wind farm construction (bathymetry, geological and hydro-meteorological conditions), possible connections to existing power network systems, economic feasibility study. The direct products of this study - reports, maps and economic calculations can be found at http://www.corpi.ku.lt/power/results.htm. Some of maps are presented bellow. See Figure 23 and Figure 25. The Lithuanian participants in the project are as follows: The Self Management Institute, the Costal Research and Planning Institute of Klaipeda University and Klaipeda County Administration.
61 62
http://www.corpi.ku.lt/power/results.htm http://www.corpi.ku.lt/power/results.htm
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Figure 23 : Potential Lithuanian areas for wind in the Baltic Sea
Source: POWER, Strategic Self-Management Institute, www.eskponente.lt/ssi
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Figure 24: Potential for wind farms offshore
Information source: http://www.corpi.ku.lt/power/results.htm
According to the opinion of experts from the Coastal Research and Planning Institute, the indicated project areas are characterised by favourable wind conditions; enough place in suitable depths, they are economically feasible and have a low danger of environmental conflicts. 3 scenarios of interconnection models are presented and growing interest by investors is evident. Another important development for offshore wind in Lithuania was the establishment of the Baltic Offshore Energy Cluster (BOSEC www.bosec.lt) in July 2007 by the Lithuanian Wind Energy Associations and energy project developers of Latvia, Lithuania, Estonia and Poland. The main strategic target of BOSEC is the development of Baltic off-shore energy potential using large-scale technologies, in accordance with strategic EU plans and principles of sustainable development. Currently, an environmental impact assessment program of the 5 proposed Baltic Sea wind farms is being coordinated. The plan has to be approved not only by four coastal municipalities, but also by environmentalists. The Territorial Planning Committee of Klaipeda Municipality approved the environmental impact assessment program in August 2008. The wind farms will be located several dozen kilometres from the coastline. The capacity of one park could reach 100-600 megawatts (MW), and the total capacity of the five parks could be 1000 MW. If all permitting and planning run according to plan, the first project will only come on-line after 2015. There is no financing support yet foreseen from EU funds for the period of 2007 2013 for this project and investors are expected to participate on their own initiative. 3.3 Price The feed-in-tariff scheme for green power production in Lithuania is established by the Regulation on Promotion of Electric Power Produced from Renewable Energy Sources, approved by the Lithuanian governments decision. The regulation obliges the grid operator to purchase all green power from licensed grid connected producers at feed-in-tariffs set by the decision. The regulation envisages that the feed-in-tariff scheme will be replaced by green certificate scheme in 2021; hence the feed-in-tariffs are valid until 2021.
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A new and higher tariff of 0.30Lt./kWh (0.087/kWh) was confirmed in February 2008, and is scheduled to come into force on January 1st 2009 63. 3.4 Relevant locations for wind-based renewable energy
In addition to the locations for offshore wind projects discussed in the previous section, the Lithuania Energy Institute has undertaken a zoning exercise identifying 6 regional zones from low to high potential for wind energy. The highest wind speeds are on the Baltic coast.
Figure 25: Wind atlas of Lithuania
Source: Lithuanian Wind Energy Association. www.lwea.eu
Wind farms are built according to the plans of the municipal district in which they are located. In order to build a wind farm, a project developer must win a tender in one of the 6 zones. Each zone has a limit for installed power capacity. Issues related to the location of projects In general roads in Lithuania are well developed for transportation of wind power station equipment, especially in the western part where the seaport of Klaipeda is located. When choosing a site, importance should be given to the distance from the large capacity power grid or power substation see Figure 26.
63
The old tariff was 0,22 Lt/kWh (0,064 /kWh) and has been in force since 2002
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Figure 26: Lithuanian transmission grid
Source: AB Lietuvos energija. www.le.lt Source: AB VST, www.vst.lt
To get more information about the specific region, see http://www.lietuvosenergija.lt/en/main/system/network Regarding interconnection with neighbouring countries, a new one is planned with Poland and another one with Sweden. See Figure 27. Figure 27: Baltic grid interconnections
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Information source: Lithuanian Wind Energy Association
The characteristics of the Baltic grid can be summarised as follows: Baltic States are technically strongly connected to Russian power market Baltic States have strong cross boarder interconnections Estonian network allows to import all power needed Baltic States have no connections to other EU countries Only at end of 2006 construction of Estlink enabled to connect Baltic power grids to Scandinavian power market Polish and Lithuanian inland interconnection of power grids expected to be implemented till 2015 Lithuanian and Swedish submarine interconnection possibilities are under investigation now and could be realised in 2015 Relating to offshore wind power developments, there are two main alternatives for connection of into the national grid: 1. Disintegrated variant - Separate connection of separated offshore parks (plots L1-L5) to the onshore 110 kV grids along seacoast. 2. Integrated variant Taking into account overall factors related to offshore wind energy, European Communitys strategy and Lithuanian plans to interconnect power grids with Swedish power nets. More detailed information about connection scenarios to grids available on the web page http://www.corpi.ku.lt/power/results.htm 3.5 Political climate for renewable energy from wind Increasing energy prices and a high dependency on energy imports are important political issues in Lithuania. There is also a tension between promotion of new nuclear power plant construction and promotion of wind and other resources. Lithuania relies on gas imports, and the closure of the Ignalina nuclear power plant will increase this dependency. Overall, the political climate for wind energy in Lithuania is good, although the onshore potential is limited, especially in the near term. However, there is considerable interest in developing offshore wind and new developments are likely to take place over the next few years. 3.6 Incentives for developing / utilising new technology
Financial Incentives: EU Structural Funds provide support for investments in the construction of power plants using renewable energy sources. However, the funds are available for new co-generation power plants only not for wind power projects. The Lithuanian Environmental Investment Fund (LEIF - www.laaif.lt) provides soft loans for the financing of environmental projects and subsidies for the financing of renewable energy projects. The main fund source of the LEIF is pollution charge paid to LEIF. The maximum amount of the loan extended by the LEIF is 430,000 for one project. During the period 2000-2005, the LEIF has financed 7 projects which provide for generation of electricity from renewables: 5 of these were hydro power plants, one wind power plant and one biomass power plant. Renewable energy projects can also receive indirect support from the Government-supported Small and Medium-size Business Development Programme: http://www.ilo.org/public/english/employment/skills/hrdr/init/lit_2.htm
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The Special Rural Development Programme supports small wind power plants of the capacity of 250 kW in the period 2007-2013. See Ministry of Agriculture for more detail: www.zum.lt. There is also a Rural Credit Guarantee Fund. See www.garfondas.lt Finally, renewable energy power plants are subject to a 40% discount for the connection to the network. See http://www.ukmin.lt/en/energy/renew/doc/report_77ec.pdf Capital available for investment NEFCO, the Nordic Environment Finance Corporation, is a multilateral risk capital institution financing environmental projects in Central and Eastern Europe. The Baltic Sea Region Testing Ground Facility (TGF) was established at the end of December 2003, to provide financial assistance to projects by purchasing emission reduction credits. The TGF was initially set up by the governments of Denmark, Finland, Germany, Iceland, Norway and Sweden. The TGF is now a Public Private Partnership which acts as a compliance vehicle for its investors' Kyoto commitments. The TGF is managed by NEFCO and is currently capitalised at 35 million. Freenenergy AS is an Estonian investment fund that invests in renewable energy projects. It is administered by AS United Partners, the Baltic investment bank (see http://www.upartners.net/) Vardar Eurus AS is part of Vardar, a Norwegian holding company that invests in renewable energy and real estate. Vardar Eurus AS and Freenergy AS jointly own the Sudenai/Lendimai wind farm. Lithuania's Achema Group has invested 28.4 million in the Benaiciai wind farm in the district of Kretinga, in western Lithuania. http://www.achemagroup.com/index-en.html In terms of banks, Hansabankas provides loans to the wind energy sector http://www.hansa.lt/en/index.html. Test Facilities None defined. Support, Guidance and Consulting Services: A number of institutions can be of assistance in the process of investing in renewable energy projects in Lithuania. They include: Innovations company Eksponente www.eksponente.lt Strategic Self-Management Institute www.eksponente.lt/ssi Coastal Research and Planning Institute www.corpi.ku.lt Lithuanian Energy institute www.lei.lt Kaunas Technology University www.ktu.lt Lithuanian wind energy association www.lwea.eu Innovations company Eksponente www.eksponente.lt Baltic Off-shore Energy cluster: www.bosec.lt In general, calls for invitation for different business projects can be monitored from the web page of Ministry of National economy http://www.ukmin.lt/lt/pramone_ir_verslas/Paramosteikimas/kvietimai/index.php 3.7 Key Players
Main developers: UAB Achema hidrostotys (Developer of Benaiciai 16 MW Wind Power farm, 28.4 million investments)
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UAB Veju Spektras (30 MW wind park in Rudaiciai, Nefco, TDF) UAB Veju elektra (Norwegian Investments, Developer of Sudenai 8 MW wind power plant) UAB Lariteksas (Norwegian investments, Developer of Lendimai 6 MW, Nefco TGF) 4Energy (Estonian company active in Baltic countries) UAB BNE (Danish company 6 wind mills are build but not in operation yet)
Main equipment: Enercon and Vestas dominate in the market. Figure 28: Supply of turbines
Norwegian experience and input: Project: Wind Power in Lithuania evaluation of weather conditions for wind power in Lithuania in 1993. Participants: Norwegian Research, Norwegian Energy Technical Institute, Nord-Trndelag electricity. Supply: projection works, wind measurement equipment and financing Butting 6x600kW wind farm pre-engineering studio. 92% of investment (50 000 USED) was arranged from Scandinavian bank and direct support of Danish Government. The project was presented to the Lithuanian Government in 1997. Result: Two scientific conferences were arranged in 1999 and 2002. Lithuanian Wind Energy Association was established in 2002. Development of 14 MW wind park Sudenai /Lendimai, Vardar AS Investments Information source: Lithuanian Wind Energy Association
3.8 Market Entry Lithuania has committed itself to increasing the share of renewable electricity from the current level of 3.5% to 7% by 2010. To comply with this, Lithuania will need to achieve approximately 480 GWh electricity production only from wind energy equivalent to approximately 200 MW of installed wind power capacity. Lithuania has reasonable wind energy potential (4-6 m/s), estimated to be of the order of 500MW. Furthermore, the potential for offshore is at the investigation level, but projected to be quite significant. Since the national energy strategy of 2006 limits the development of wind power in Lithuania to 200 MW until 2010, and no new tenders will take place until the new wind power development program is prepared, we recommend that Norwegian companies follow the developments for post-2010 onshore, while in the short term focusing on the regions offshore potential.
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Some of the investment barriers companies face in the wind energy sector are: The energy sector remains politically sensitive, and wind power is in the early stage of development in Lithuania. There is a lack of information about the wind power market and a lack of municipal district plans which show the future investment priorities in the territory of the county. The procedure for obtaining a permit is complicated. The price of land has increased very much during the past years and for the project developer it is quite difficult to buy or lease a land in these regions at a reasonable price. Limited financing possibilities: There is no investment subsidy per se and the feed-in tariff available for wind is insufficient. Limited know-how on wind power available in Lithuania requires additional training and education for staff during the management and operation processes as well Technical service should be provided. Companies interested in the wind industry in Lithuania should make a visit to the country and meet with at least the following institutions: Ministry of Economy policy and permissions www.ukmin.lt Lithuanian Energy Agency formal responsible for renewable energy promotion www.lea.lt AB Lietuvos energija technical conditioning and permissions to connect to transferring net www.le.lt AB VST - technical conditioning and permissions to connect to West distribution grids www.vst.lt AB RST - technical conditioning and permissions to connect to East distribution grids www.rst.lt Lithuanian Wind Energy Association www.lwea.eu Eksponente www.eksponente.lt Bosec for offshore www.bosec.lt
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4.
Latvia
4.1 Energy demand and supply Latvia is partially dependant on imported energy resources mainly natural gas and oil for heat and electricity. The most significant local energy sources are wood, peat and hydropower. Annual consumption of electricity in Latvia is 7.4 TWh 64 with an annual growth of about 4 %. Self sufficiency is about 60 70%, while the planned target for self-sufficiency is 80% by 2012 and 100% by 2016. Figure 1 shows the composition of supply in 2006.
Figure 29: Electricity supply in Latvia, 2006
5.6%
0.5% 0.6%
Large hydropower Large CHP Imported
35.9%
33.9%
Distributed generation: other Distributed generation: small HES Distributed generation: Wind energy
23 % Source: Energy figures in Latvia, Investment and Development Agency of Latvia, 2007
Compared to other Baltic countries, Latvia has the largest share of renewable electricity production in 2006 it was 37.7%. The predominant source of this is hydropower. In fact, the volume of electricity generated in Latvia directly depends on the flow of the Daugava River, where most of the hydropower plants are located. Electricity is also generated by 41 wind turbines with a total capacity of 26.9 MW, and 39 cogeneration plants with the total capacity of 137 MW. The small hydropower plants could potentially produce about 150 - 300 GWh per year, however practically there is a limitation due to nature and landscape protection requirements leading to a realised production of 40-70 GWh per year 65. Thus, power plants in Latvia are not able to provide the required amount of electricity and imports from Russia, Estonia and Lithuania are required. However, in the period after 2009, the current excess capacity generated by energy systems of the neighbouring countries will diminish as the nuclear reactor in Ignalina (Lithuania) will be closed down and Latvias opportunities to ensure import of electricity will decrease. In 2007 the electricity market in Latvia was liberalized, ensuring that all consumers have equal rights to freely choose their electricity supplier. Yet, the dominant role in that market still belongs to JSC Latvenergo. Increasing demand for energy, as well as a desire to increase the level of self-sufficiency is moving Latvia in the direction of developing alternative (renewable) sources of energy. The target of the Latvian government is to reach a balance between energy demand and (national) supply in the period
Source: Transmission system operator annual report, 2007, JSC Augstsprieguma tkls (JSC High Voltage Grid) 65 Source: Energy figures in Latvia, Investment and Development Agency of Latvia
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2011 -2012. Government policy (see Table 9) is aimed at reduced carbon emissions and increased usage of renewables. In particular, Latvias target for renewable energy sources is 49.3% of total electricity consumption by 2010. These targets are to be achieved through a series of measures, including development of energy efficiency, compulsory state procurement for a set price, and investments in co-generation power stations. Table 9 Government targets for consumption of electricity produced by renewable energy sources 2007-2010
Type of renewable source and power utility plants Hydropower, capacity above 5 MW Hydropower, capacity up to 5 MW Wind Biogas Biomass cogen biomass and fossil fuel 0.44% Total 44.62% 0.02 41.58% 1.95% 46.18% 3.46% 47.74% 4.97% 49.30% Planned 2007 41.28% 1.04% 1.5% 0.38% Fact: 2007 9 month 66 36.69 0.83 0.69 0.35 2008 39.32% 1.06% 2. 8% 1.07% 2009 37.35% 1.08% 4% 1.77% 2010 35.39% 1.10% 5.8% 2.46%
Source: Minister of Cabinet regulations No.503 on Electricity production from renewable energy resources and Transmission system Operator Annual Report, 2007
According to Minister of Cabinet regulation No.503 and targets listed above, JSC Latvenergo has announced that they will purchase the following amounts of electricity produced by wind power plants: 2008: 193 181 MWh 2009: 295 750 MWh From 2010: 404 081 MWh annually, as a result of mandatory procurement (see 4.3 Price) Latvia is also looking to regional cooperation arrangements to diversify its energy supplies. It is already part-owner and beneficiary of the Estlink 350 MW power cable linking Finland and Estonia, inaugurated in December 2006. Latvia has also been invited to join in the project to connect Lithuanias and Swedens energy grids via a 350 km, 700-1000 MW underwater power cable stretching across the Baltic Sea floor. Currently, Latvia is partnering with Estonia, Lithuania and Poland to build a new nuclear power station in Ignalina, Lithuania. 4.2 Wind - status now and future potential Latvia has long traditions for wind energy utilization. Already before World War II in 1936 - a local enterprise produced wind generators (0.2-0.5 kW); in 1938, over 450 generators were installed providing low electricity prices compared with steam engines in cities. An average generator annually produced 50-70 kWh in central part of Latvia and up to 150 kWh in coastal regions. However during the Soviet period this kind of energy production declined.
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Source for this column: Transmission system Operator Annual Report, 2007, JSC Augstsprieguma tkls (JSC High Voltage Grid)
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After regaining independence, several small wind generators were installed in the first half of the 1990s. In 1995, in Ainazi (on the coast of the Riga Gulf) the first project was carried out: 2 wind generators (600 kW) were erected and 70% of the project was covered by the German government. The installed wind capacity in Latvia is: approx. 41 wind turbines, installed capacity of 26.9 MW, or approx. 0.6% of electricity consumption, volume produced: approximately 46 GWh per year. Most of that - 19.8 MW - is installed by Veja Parks Ltd at Liepaja on the Baltic coast, with 33 Enercon E-40 turbines and built in 2002. Table 10: Wind energy projects in Latvia
Location Veja, Liepaja Ainazi Liepaja Uzava Liepaja (free econ.zone) Alsunga Grobinas Veja parks Nica Capacity (kW) 19800 650 150 1000 1500 1000 600 750 2 1 1 1 2 33 1 Number of wind turbines Owner Veja Parks Ltd. VAS Latvenergo AS Kursa SIA Impakt SIA BK-Energija SIA BALTNORVENT SIA Veja Parks 1 SIA Seteri
Theoretically, the wind energy potential for Latvia has been estimated to 250-1250 million kWh per year 67. As the Ignalina nuclear reactor is closing down at the end of 2009, there will be a need for replacing this capacity potentially with wind farms. This replacement size needed is approximately 300 400 MW operating about 2000 hours annually. However, due to the unevenness of wind production, it is to be supported by other capacities (hydropower or gas). 68 In fact, to ensure Latvias energy system safety, the total installed wind power plant capacity shall not exceed 210 MW 69. After this capacity has been reached, developers could potentially build new, manoeuvrable electricity stations (able to vary its capacity). According to the Ministry of Economy, 643 MW of new capacity have been granted permission, but most of those projects are currently inactive. Table 11 lists all the permitted projects, and can be viewed as a long list of possible projects.
RES Program, 2000. Prepared by COWI Engineers and Planners AS-BkB EC DG1A on request from Ministry of Economics of Latvia and Phare Energy sector agreement Nr. SFR96/04. 68 Analytical edition Energo Forums, Nr. 3, 2007, www.latvenergo.lv 69 According to the Baltic Transmission System Operator Union calculation methodology
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Table 11: Wind park establishment permission, issued by the Ministry of Economics
Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 SIA "LENKAS ENERGO" SIA "T...T" SIA "Novadu mesaimniecba" SIA "ETB" SIA "BK Enerija" SIA "Silfs V" SIA "Zeva enerija" SIA "Almez" SIA "Jlve" SIA "Eko enerija" SIA "Eko enerija" SIA "Eko enerija" SIA "FCM" SIA "HESS" SIA "EURO ENERGETIC" SIA "Jlve" SIA "ENERGE" Capacity (MW) 0.25 6 0.5 0.25 1.95 3 30 9 0.485 0.6 0.6 0.6 200 22.5 0.8 0.11 20 Company 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 SIA "Kolizejs M" SIA "ETB" SIA "ETB" SIA "ETB" SIA "ETB" SIA "WINDLAT" SIA "Enercom" SIA "Apaella" SIA "ENERGO WIND" IK "Pilsums" IK "Pilsums" IK "Pilsums" SIA "Enercom plus" SIA "Actual Information service" SIA "Virtei" SIA "Baltic Wind Power Corporation" Total: Capacity (MW) 0.2 0.25 0.25 0.25 0.25 50 50 9 30 3 3 10 40 0.022 50 100 642.867
Some of the projects currently under development are: Baltic Wind Power Corporation Ltd., which belongs to the company RITKA, has permission for a 100 MW wind park establishment in Ventspils district, Uzava county. Supposedly the company is close to signing the land lease agreements with local land owners. The potential partnership in this project could be discussed. Farm Virteli has permission for a 50 MW wind park establishment in Saldus district. The company belongs to private owners. There is a high possibility that Spanish wind turbine producers will join as co-partners in this project. Enercom Ltd., owned by Vardar Eurus and Freenergy has permission for a 50 MW wind park establishment in Dundaga. Enercom Plus Ltd, owned by three private persons in Latvia, has obtained permission for a 40MW wind park establishment in Ventspils district, Targale and Pope district. FCM Ltd. is a company looking to create an offshore wind park. The project is in its early development stage, but has already received some of the permits required to establish a 200 MW wind park.
There are also other green field projects (started in Pavilosta, Targale, Alsunga), and information on these are expected to be forthcoming before the mandatory procurement application deadline, which is December 30th, 2008. Potential for Offshore Wind The potential for offshore wind energy is still on the investigation level in Latvia. The Baltic Sea costal zone is relatively shallow - not deeper than 80 m and the wind conditions are better than onshore. Latvias potential offshore territory is about 4000 sq.km, but due to different reasons it is to be reduced to 1000 km2. It provides the possibility of constructing wind parks with a total capacity of 2.5-3 GW. 70
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Latvian Wind Association, www.windenergy.lv
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The main reasons preventing the exploitation of Latvias offshore potential at this point are as follows: a lack of economic feasibility studies, lack of connections to power network system, concern about legislation, overall high project costs and a lack of state support mechanisms. However, studies of the potential of the territory have been made by independent consulting companies and show unutilized potential. 71 4.3 Price Latvia has a deregulated electricity market in which all licensed electricity producers can sell electricity. Several years ago a feed-in tariff for electricity produced from wind power and small-scale hydropower was established - at double the rate of the average electricity sales tariff (AEST). There are producers who will continue to receive support according to previously signed agreements up to 2009 (9.8 c /kWh). However, this feed-in tariff is no longer available for new projects. To support electricity production from wind energy, the Ministry of Economy recently announced a tender for a mandatory procurement 72 for electricity produced using wind energy. The tender application deadline is December 30, 2008. The subject of this procurement is 404 081 MWh of electricity per year starting from January 1st 2010 till December 31st 2019. The maximum (starting) price is 100 EUR 73/MWh. Each tender participant must offer the electricity amount ready to be supplied at a fixed price 74. The participant/participants who offer the lowest price and fulfil the needed electricity amount will obtain the rights to sell the electricity. The tender participant can be either an existing wind park or a wind park under development. Participant must ensure that wind turbines will be supplied and installed within 18 month after obtaining the rights to sell electricity in mandatory procurement. The key requirements to participate are that: 1) The company or its parent company 75 shall meet qualification criteria: a. in the last 2 years the companys capital has not been less than 25% from the total balance, b. the division of the total balance (in LVL) with the planned wind park capacity (MW) is 100 000; 2) The wind farms land has to be in the companys ownership or lease; 3) The company has to obtain: a. A Ministry of Economy-issued permit to set up a new power production plant or enlarge existing wind park capacity and b. Public Utilities Commission-issued license to produce the electricity; It is not expected that the country will have any other feed in tariffs or other support mechanisms (except EU structural fund support) for wind energy projects in the next years. Wind parks (existing or under development) that do not obtain the rights to sell electricity under mandatory procurement are free to sell the electricity on the open market and at market prices. 4.4 Relevant locations for wind and ocean based renewable energy Regular measurements of wind speeds have been performed by the national hydro-meteorological agency for a long period of time, but an official wind atlas of the country has not yet been published. The wind resource is concentrated along the coastal area of the Baltic Sea and North-Eastern part of the Riga Gulf, where wind speeds reach 5.1-5.8 m/s. Further on along the coast of the Baltic Sea and
Latvian Wind Energy Association, www.windenergy.lv Regulations No.503 On electricity production from renewable energy sources, issued by the Cabinet of Ministers (August 24, 2007) 73 Equivalent to 70,2804 LVL/MWh 74 Annual price calculation may differ, not exceeding 10% increase in comparison to previous year. 75 Parent company should be registered in the European Economic Area (not in offshore countries)
72 71
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Riga Gulf there are regions in which the wind speed gradually decreases to 4 m/s. The width of this zone near the coast of the Baltic Sea is 15-20 km, at the eastern part of the Gulf of Riga; 10-15 km. In the inland territory of Latvia, wind resources exist only in those regions in which the wind is formed under the influence of elevated plains. Western winds are predominating. A large area of the country is covered by forests and therefore hardly suitable for the wind farms see Figure 30. Figure 30: Forest map of Latvia
Although no official wind map exists, primary calculations and mappings based on meteorology data have been done by the Latvian Wind Power Association see Figure 31. Figure 31: Annual average wind speed in Latvia at 100 metres
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Infrastructure The energy infrastructure in Latvia was developed for a centralized supply. The country thus has a comparatively well developed power, natural gas supply and heating system. However, in the windy zone (western coast) the electrical grid is too weak for local generators. Figure 32 provides a map of the electricity grid network in Latvia
Figure 32: Latvias 330/110 KV Transmission Grid
Source: www.latvenergo.lv
As for road infrastructure, the roads are suitable for transportation of large components of wind turbines, except roads at end (local) sites where they often are of poor quality. Land in Latvia is in possession of individuals, legal entities and state or municipalities. There is a free market for purchase and rent of land, however there are restrictions in regard to national parks, environmental and historical protection zones, and NATURA 2000 areas (EU-classification of protected areas - cover 11% of the country). Figure 33: Environment restriction areas in Latvia Natura 2000
Source: Nature Protection Board
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4.5
Political climate for renewable energy from wind and ocean
The main elements of Latvias energy policy are currently to: promote competition raise the level of energy independence increase the security of supply encourage the use of renewable and local energy resources diversify usable energy resources protect environment
The main energy policy planning documents Energy Development Guidelines 2007 2016 and Guidelines of Renewable Energy Resources Usage for 2006-2013 are the first policy documents in Latvia that set as a priority to encourage clean production of energy using both traditional sources and renewables, defining definite quantitative targets. However, the positive political climate is not supported by any regional or local wind energy development plans. The attitude of society towards the promotion of wind energy has been more positive than negative in Latvia. The main concerns are related to the potential increase in the price of electricity for consumers and potential negative impacts to the landscape and nature. Up to now there have not been any conflicts of interest, except some tendencies of lobbyism by the main energy company Latvenergo against small independent suppliers. 4.6 Incentives for developing / utilising new technology
To reach the targets for renewables set by the main program documents, it is envisaged to attract different financing sources (public financing 180 million; private financing 184 million) from the following sources: state budget means financing from local governments energy producers will have possibility to apply for co-financing from EU funds (10 million EUR). The application criteria are still to be developed. EEA/Norwegian financing schemes private capital. Government support to meet the target of 6 % electricity to be generated by wind will be based on: mandatory procurement of the energy produced by renewables as well as set purchase price (discussed earlier) investment-targeted donations from European Structural funds: o The programme: Wind Electricity station development, administrated by State Agency of Building, Energy and Housing. The total value of this program is 10 million. The support intensity is 30 % (but not exceeding 4.26 million per project) from the wind park design, building and equipment costs. It is expected to launch this support program in third quarter of 2009. o The programme New product and technology development. This programme would have 3 support targets: new product and technology development, new product and technology implementation in production and strengthening intellectual property rights. The total support amount in 2008 is ~57 million EUR. Till 2011 it is expected to support projects with total support amount ~28 million EUR per year. This program
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supports investment in equipment and intangible assets, providing 25-35% support not exceeding 498 thousand EUR per applicant. At the moment there are almost no incentives for R&D for wind technologies in Latvia, nor are there any test facilities. Local capital has shown little interest in wind parks. More interest has been shown by foreign capital Vardar, Iberdrola, Humunite, Siemens, Siffa all have looked at wind park opportunities in Latvia see the next section for more information. Information, support and consulting can be obtained from the Latvian Wind Energy Association. Additionally, note that Latvia has joined the Baltic Offshore Energy Cluster (BOSEC), established in 2007, to foster large scale wind energy production and usage, develop common power grid infrastructure and transfer of technologies (see www.bosec.lt). 4.7 Key Players
Key players in th wind energy sector can be divided in two parts: public institutions and wind park owners. Public institutions: Transmission System operator JSC Augstsprieguma tkls. This company gives advice about connection possibilities and signs connection agreement when the wind park is ready 76 According to Public Utilities Commission decision Nr. 303, all power plants that are going to be connected to the electricity grid, have to sign an agreement with the system operator about connecting to the electricity transmission grid. The system operator in Latvia is JSC Augstsprieguma tkls (JSC High Voltage Grid), owned by Latvenergo)) If not agreed otherwise, the electricity grid between power plant boundaries and the connection place will become grid operators ownership. Ministry of Economy: o Gives permission to establish new power plants for electricity production o Organises mandatory procurement tender (until December 30th, 2008) Public Utilities Commission issues licence that allows to produce electricity Latvenergo is the state owned energy supply group. Its core business is generation of electricity, thermal energy production and trade, as well as providing electricity distribution and transmission services.. Latvenergo is also the company that would procure the electricity from mandatory procurement winners.
Wind park owners Veja Parks is the largest wind park agglomeration in Latvia with 33 wind generators (supplied by Enercon). The wind farm was established in 2002 by the local company LEC (Latvijas Energoceltnieks) and Enercon. The company has changed ownership and now belongs to Rets Investicijas Ltd. All wind stations are owned by local private entrepreneurs, apart from one, owned by JSC Latvenergo. Although JSC Latvenergo generates most of its electricity from hydropower, its portfolio includes two small power plants Ainai wind park with a capacity of 1.2 MW and Aiviekste HPP with a capacity of 0.8 MW. These small power plants generate about 0.1% of Latvenergo total electricity volume.
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In smaller capacity projects these opinion could be given by Sadales tkls (JSC Distribution grid) another Latvenergo owned company responsible for 20 kV grids
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However, as of late there has been interest in the Latvian wind sector from Vardar, Iberdrola, Siffa as well as some Swedish and French companies. Iberdrola currently takes part in the reconstruction of Rigas combined heat power plant (TEC-2) owned by Latvenergo. Iberdrola has also established cooperation with a local consulting company regarding a study of the countrys wind energy potential. Vardar is a holding company owned by Buskerud Fylkeskommune, with investments in real estate, hydropower, bioenergy and wind energy for wind, the focus so far has been on Estonia and Lithuania (see http://www.vardar.no/index.htm). The market is dominated by three wind generator manufacturers: Vestas, Nordex and Enercon. There are no local technology suppliers. However, it is to be noted that there could be a potential for imported utilized wind turbines. 4.8 Market entry Latvia has a substantial wind energy potential with average wind speeds of 3-5.8m/s. The potential for offshore production is to be investigated in more detail. There are no installations offshore yet, but preliminary results indicate potential for future investments. Latvias advantages in the production of wind energy are: o o o the length of its coastline this plays an important role especially for the wind power potential due to the wind speed and the number of hours per year when wind blows optimal conditions for wind generators installation on the Baltic Sea cost all type of wind generators could be installed here at the height 30-100m and offshore Latvia has a low coastal population density (about 200 km long coast suitable for wind energy generation per 1 million inhabitants in adjacent areas) and thus conflict of interest with local population is believed to be low
The Latvian wind energy market is quite small, yet with prospects for further development. As local financial markets are not sufficiently developed, Norwegian companies could partner with local wind companies (acquisitions are also possible) focusing on new developments onshore and offshore. There is a potential support available from EEA/Norwegian Financial Mechanism that under EEA Enlargement Agreement offers grants for the projects in several sectors, including promotion and encouraging using of renewable energy (www.eeagrants.lv) as well as from European Structural fund that will support wind park projects in the second half of 2009. There is a number of local entrepreneurs with suitable land and required permissions in their possession and who are interested in finding cooperation partners.
Taking into account the previous information, possible entry strategies in Latvia includes: 1. Buying an existing project this is the most common strategy used by investors. There are many local land owners who have started some documentary work i.e., obtained Ministry of Economics permission (see chapter 4.2) or have in lease or ownership land in coastal zones. Most of them are interested in cooperation or selling their projects. However, due diligence for each such project is highly recommended. 2. Starting a green field project in this case it is highly recommended to establish a local company or to find a local representative for dealing with local institutions. However, in case of starting a green field project, it is almost impossible to make all documentation (i.e., license number) by the mandatory procurement application deadline of December 31st 2008. If a company is willing to sell electricity on the free market, which might be interesting due to the closing of nuclear reactor in Ignalina in 2009, a green field project can be considered as an alternative.
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Key contacts in the wind energy sector Norwegian companies interested in pursuing the Latvian wind energy market, should contact the following agencies, in addition to Innovation Norways Riga office: State Agency for Building, Energy and Housing, Energy department www.ma.gov.lv Latvian Wind Association www.windenergy.lv Latvian Distributed Energy Foundation Rga, Akadmijas laukums 1-447, LV-1050, 7227719, 7227719 Ministry of Economics, Energy Department www.em.gov.lv JSC LATVENERGO and its grid company Augstsprieguma tkls www.latvenergo.lv Public Utilities Commission www.sprk.gov.lv BOSEC www.bosec.lt Norwegian companies are likely to find it beneficial to cooperate with local consulting companies that have already made initial investigation and calculations.
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5.
Estonia
5.1 Energy demand and supply In 2006, total demand for electricity in Estonia amounted to 6.9 TWh. The net production was 8.8 TWh and exports amounted to ca 1 TWh. Most of Estonias electricity production is fuelled by local oil shale (90 %) see Table 12 followed by natural gas and shale oil gas. Table 12: Estonian electricity supply by the use of resources in %, 2006
Oil shale 90.18 Natural gas 5.56 Shale oil gas 2.50 Wind 0.78 Renewable 0.39 Shale oil 0.29 Peat 0.16 Hydro 0.14 Source: Estonian Ministry of Economic Affairs and Communication
Being able to produce electricity from local oil shale is very important for the country in order to guarantee security of supply. However, it also involves two major disadvantages. The first disadvantage is the inefficiency of oil shale burning technology (36%) - Estonia is among the countries with lowest energy efficiency in the EU. The second disadvantage is the high level of CO2 emissions from burning the oil shale. There is a currently much pressure on Estonia to lower its levels of emissions in the years to come. Long term demand and supply The Ministry of Economy and Communication of Estonia is currently working on the long-term strategy for energy policy of the country and different strategic options for future development of Estonian energy policy are being considered. Even though the strategy paper has not been completed yet, it will definitely include certain priorities like increasing the efficiency of generating electricity from the local oil shale and lowering the emissions of CO2 caused by it and lowering the share of oilshale based energy by developing other sources of energy. It will also include an increase in the share of energy generated by renewable sources, as Estonia will have to meet commitments made within the EU (see Table 13). Estonias target under the EU renewables directive 2001/77/EC is to increase the share of renewable energy in countrys electricity supply to 5.1% by 2010. The countrys internal target is to produce 8% of the local electricity consumption from renewable sources by 2015. Under the draft EU climate package Estonias goal is to increase the share of renewable energy in countrys total energy supply from current ca. 18% to 25% by year 2020. Table 13: Target share of electricity from renewable energy, %
2001 0.2 *Target value 2002 0.5 2003 0.5 2004 0.6 2010* 5.1
Source: Ministry of Economic Affairs and Communications
The new strategy under development is based on an estimated annual demand of 20 TWh in the year 2020 and will have to choose between or combine the following (see Table 14) combinations of different fuels (production capacity in MW). Table 14: Potential long-term scenarios for electricity generation in Estonia, MW
Scenario Oil Shale Nuclear Wind Wind & Gas Coal
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A B C1 C2 D
400 1200 250 400 800 400 400 400 1200 Source: Ministry of Economic Affairs and Communications
1200 400 400 400
400 -
Discussions and negotiations about co-investing in nuclear power generation in either Lithuania or in Finland have also started. Other initiatives like building a natural gas pipe-line from Finland to Estonia (to lower the countrys dependence on Russian natural gas) and decoupling Estonia from the Russian electricity grid by connecting it to the European system of grids (UCTE-system) are also on the agenda in order to increase the countrys security of supply. 5.2 Wind status now and future potential Estimates of the total technical on-shore wind energy resource potential in Estonia vary. One of the most supported ones estimates the total at 3 TWh per year. Taking into account that wind parks can be built offshore, these estimates should be viewed as lower estimates of Estonias total wind energy potential. Difficulties related to grid connection of wind power plants represent a market entry barrier as grid connections at the best wind sites have already been reserved see discussion of grid issues. As of today, the interconnection of around 700 MW of wind power capacity has been approved by the Main Grid Company of Eesti Energia AS (O Phivrk). However, so far only a few of the potential projects are being successfully developed, due to existence of other barriers (absence of land rights, local planning, wind resource assessment, absence of financing, etc.). These 700 MW represent the maximum capacity of wind energy that can be produced under current technical conditions and for the time being Eesti Energia has until further notice stopped signing agreements for new wind energy projects. As of July 2008, 5 commercial-scale wind farms and some single and smaller wind turbines were in operation and one under construction, while total current installed capacity amounted to approximately 66 MW (Table 15). Table 15: Larger operational wind parks in Estonia
Name of the park Viru-Nigula wind park Pakri wind park Esivere wind park Virtsu wind park Virtsu II wind park Source: Estonian Wind Power Association Capacity 24 MW 18.4 MW 8 MW 2.6 MW 6.9 MW
The first wind farm at Virtsu went into operation in 2002 by O Roheline Ring and Eesti Energia AS. This site consists of three Enercon E44 0.6 MW turbines. The project benefited from German cooperation support. The larger Pakri 18.4 MW wind farm consisting of eight Nordex N-90 wind turbines was commissioned in June 2005. The project benefited from financial support under the Finnish JI/CDM Pilot Programme as well as under the EU Fifth Framework Programme for research and demonstration. Esivere wind farm consisting of four Enercon E-44 2.0 MW turbines was put into operation by September 2005 and is benefiting from the sale of carbon credits to the Austrian JI/CDM programme. The Viru-Nigula 24 MW wind farm utilizing Finnish WinWind 3.0 MW turbines is currently under commissioning and will benefit from the sale of carbon credits to Swedish and NEFCO TGF JI programmes. All other operating wind power plants are small and utilizing second hand technology.
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As the latest development, Eesti Energia is building a 39 MW park in Aulepa (operational early 2009). A 50 MW park of the same company is under development in Narva and is scheduled to be commissioned in 2010. The total capacity of wind projects currently under development totals 486 MW (source: Estonian Wind Power Association), and a further 516 MW are under planning. Even though all current large developments concern on-shore parks, there is a growing interest in establishing off-shore wind parks just off the Estonian shores and on the lake Peipsi. The latter offers a good location for a major wind park. Good wind conditions, availability of the grid and closeness to the markets of Russia and Latvia would make it a good location for new developers. The new European Offshore Supergrid, if realised, will pass by the Estonian shores and would give developers of off-shore wind parks an excellent chance to connect their parks. The Baltic Offshore Energy Cluster (BOSEC) has been founded to promote development of off-shore energy in marine areas of Poland, Lithuania, Latvia and Estonia, including establishing off-shore wind parks and construction of the East Baltic arm of Pan European Supergrid (see www.bosec.lt for more information). First studies have already been commissioned (Nelja Energia O) for establishing a park on a 300 km2 area 10 km off the islands on the western coast of Estonia. As the latest development in this field, Eesti Energia has filed an application for starting investigations for its future wind park developments in 11 areas off the Estonian coast and in the lake Peispi. Each such park would have a capacity 200-300 MW. The move has caused controversy in the industry as it would block most areas suitable for off-shore developments for private developers. First of all, however, the state has to create the missing legal framework to enable offshore development. Figure 34: Areas where Eesti Energia plans to investigate new off-shore wind parks
Source: Estonian Wind Power Association, Eesti Energia, Graphics Ivo Sokka
5.3 Price Changes introduced to Estonias Energy Act in 1998 established a fixed price at which electricity produced from renewable sources should be purchased by the distribution system operator. The Electricity Market Act, adopted in early 2003 sets out the framework for further harmonisation with EU market, such as ongoing liberalisation and wider use of renewables, including an obligatory purchase of electricity generated from renewable sources. Until December 2004 the feed-in tariff was linked to the sales price of electrical energy from the Narva power plants; more specifically it was 1.8 times the average Narva price, approved by the Energy Market Inspectorate and adjusted periodically. In accordance with legislation revised in early 2007, an operator of a wind power plant can today choose between three options of support:
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1) Obligatory purchase of renewable electricity by the state utility Eesti Energia at a fixed feed-in tariff of 1.15 EEK/kWh (7.35 c/kWh), valid for the first 12 years or until the total combined annual generation of Estonias wind power plants exceeds 200 GWh. It is important to note that 200 GWh correspond to ca. 75 MW of installed wind power capacity. As of today, ca. 60 MW have already been installed. 2) Sale of electricity on the market at market price and obtaining an extra premium of 0.84 EEK/kWh (5.4 c/kWh) from the transmission system operator. This support scheme is available until total annual wind power generation in Estonia exceeds 400 GWh. 3) As a third option, a renewable operator can choose not to use the above described support measures and obtain a tradable Certificate of Origin for its produced green power from the transmission system operator. No operator is currently utilising this option as no real opportunities exist for selling such green certificates in Estonia or abroad. Beyond a total annual wind power generation of 400 GWh the tradable Certificates of Origin remain the only support measure. This also applies to operators whose wind farms were put into operation before the cap was reached. At the moment it is possible to obtain a short term Power Purchase Agreement at net feed-in tariff level above 7.35 c/kWh, through usage of the second option and sale of power to either national utility Eesti Energia, at Nordpool and /or to Latvian and Lithuanian utilities. The current system is at risk by proposed amendments to the Electricity Market Act that would require the operators to sell the power to the local network operator Eesti Energia instead of the buyer who would pay the best price. The amendment is triggered by the practice where subsidies are cashed in from the Estonian state but the power is exported to achieve the best price. When the power is exported, the subsidies miss their aim of facilitating production and consumption of green energy in the country. Electricity prices in Estonia are regulated and both producers and network operators have to get their prices approved by the Energy Market Inspectorate. The current price is 2.67c /KWh for the dominant producer (Eesti Energia). In order to generate funds for the feed-in tariff for renewable energy, a renewable energy fee has been added to the price of electricity. 5.4 Relevant locations for wind based renewable energy
Physical conditions - wind conditions Estonia is located on the shores of the Baltic Sea and has strong winds due to the intensive cyclonic activity in the region. Strong winds blow in the coastal areas, especially in the western part of the country and on the islands and on the shores of the lake Peipsi. In the archipelago of Western Estonia and open coastal areas, the annual average wind speed at 10m height amounts up to 7 m/s; in the north-eastern and northern parts of Estonia the average wind speeds are 5-6 m/s. In the coastal belt of 20 km inside the mainland, wind speeds drop considerably due to forests and are almost 40% lower than on the coast. In most parts of the inland area, average wind speeds amount to ca 3-4 m/s,
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Figure 35: Estonias wind resource. Average wind speed at 10 m height from the ground
Pakri Kunda
6.0
Ristna
3.0
3.0
Kuusiku
Prnu
Vilsandi
Tartu
Valga
Ain Kull. Geograafia Instituut.
2.0
2.5
3.0
3.5
4.0
5.0
6.0
7.0
8.0
m/s
Source: Ain Kull, Institute of Geography
Figure 36: Yearly average density of wind energy (W/m2) at 30 m from ground
0 7
W/2 7 6 5 4 3 2 2 1 1 5
0 7
Source: Ain Kull, Estonian Wind Atlas, 1996
Issues related to the location of projects Roads Estonia has an adequate network of roads. Even though the sites for potential wind parks are often located away from major roads, they are not perceived as a major technical limitation to the development of new parks as the countrys landscape is flat and wind farm access roads can thus be established at relatively low cost compared to mountainous areas. Grid Connections Availability of suitable grid connections is a major issue when planning wind parks in Estonia. Estimates of how much capacity of wind energy can be installed in the country without extraordinary grid investments range from 600 to 700 MW. Capacities beyond that would require an investment of at least 100 million into transmission networks. This relatively limited possibility of erecting wind parks is due to the fact that the main 220 and 330 kV network does not reach the windy but otherwise
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scarcely inhabited coastal areas in the north and west of the country. Those areas are only covered by the low capacity 110 and 35 kV networks. See Annex 3 for a map of the Estonian Power System. In addition to low grid capacity, the grid connection of wind power at the best wind sites on islands and coastal areas of Western Estonia is also restricted due to the strictness of Eesti Energias company standard Technical Requirements for Connecting Wind Turbine Installations to the Power Network that follows an European IEC standard IEC 61400-21 "Wind turbine generator systems - Part 21: Measurement and assessment of power quality characteristics of grid connected wind turbines". Much of the new development has thus concentrated on the North-Eastern coastline that represents more modest wind conditions but where in most cases no problems with grid connection exist. An example of the strictness of the requirements was the disconnection of Estonias so-far largest Viru-Nigula Wind Power Plant from the grid in February 2008. Constraints and potential conflict areas The planning procedure for medium and large-scale wind farms is similar to most EU countries. Any wind farm larger than 7.5 MW, or 5 wind turbines, has to be foreseen in the comprehensive plan of the municipality (most municipalities do not yet foresee wind farm in their comprehensive plans or the municipalities have not yet adopted respective plans). Note that it is becoming difficult to find suitable sites at best wind areas due to the attractiveness of the (esp. coastal) areas for development of residential housing and presence of environmental restrictions (esp. at the Western coast and islands). Due to Estonias accession into the EU, the planning and environmental legislation have become more comprehensive over the last years and it is advised to pay a close attention to the validity of the planning and environmental permits and necessary steps required for obtaining a final construction permit when evaluating a potential wind power project or site for development. If the comprehensive plan does not foresee a wind farm in the area, a faster option than changing or making the plan, is to agree with municipality for carrying out a faster theme planning for potential wind power development sites in the area. The proposed national theme planning for wind park locations across the country would improve the planning procedure, but its implementation has not yet been decided. Land reform in Estonia is nearly complete and most land has been restituted to private owners. There are no restrictions for EU-citizens and legal entities to purchase or rent land, except for in the border areas. Around 10% of the area of Estonia is under environmental protection, including many areas with good wind conditions. The areas marked with green and orange in Figure 5 are under environmental protection and it may be difficult to get permissions for building wind parks there.
Figure 37: Areas under environmental protection in Estonia
Source: Ministry of Environment, Land Board
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5.5
Political climate for renewable energy from wind
In its current energy policy, Estonia has set a number of strategic objectives to be reached by 2015. They include: 1. Self-sufficiency Ability to cover domestic electricity needs any time by producers located in Estonia. 2. Increase in the use of renewables Indicative target 5.1% of power by 2010 (2001-0.1%; 2005-1.2%) and 8% by 2015 Main emphasis on bio fuels-based CHP generation and wind power. 3. Increase in the use of CHP Indicative objective 20% of power from CHPs by 2020 (today 12-13%). 4. Efficiency Improvements: Primary Energy Consumption in 2010 shall not exceed the level in 2003. The new energy policy strategy is currently being developed by the Ministry of Economy and Communications. It is expected to bring more clarity into the policy but it will most probably incorporate the states earlier energy-related commitments and principles. Carbon finance According to the Kyoto Protocol, Estonia has agreed to reduce its greenhouse gas emissions by 8% (calculated as an average during the period from 2008 to 2012) compared to the 1990 level. Since the target has already been largely achieved as of today, the Estonian government is able to support the implementation of Joint Implementation projects. Estonia has ratified the Kyoto protocol, prepared an Action Plan for Reduction of Greenhouse Gas Emissions and is finalising an establishment of the necessary institutional framework for implementation of JI projects. It has also established a set-aside reserve for JI projects under the National Allocation Plan for EU Emission Trading System 2008-12 that includes wind power projects with nominal capacity of over 200 MW. The Long Term Development Plan for the Energy Sector calls for the use of Joint Implementation for the development of Estonias renewable electricity sector. Note that issuing Letters of Approval to JI projects has until today been frozen mainly due to disagreements over the renewable energy policy between the line ministries mainly. This disagreement in turn was due to the allocation of the CO2-quota for 2008-12 under the EU Emission Trading System, where the quota was cut by 50% in 2007, in accordance with an EU Commission Decision. With ca. one third of total carbon finance projects in the wind power sector, Estonia has been the most successful country in Central and Eastern Europe in using carbon finance to bring wind power plants online. The main reasons for this include the high carbon intensity of the oil-shale based power generation in Estonia and early success of the first respective pilot project (Pakri Wind Farm). All major recent wind power developments have or aim to benefit from the Joint Implementation scheme. The expected carbon revenue during 2008-12 covers approx. 5-7 % of the investment cost of the projects. However, note that this window of opportunity is closing as the crediting period for sale of carbon credits ends in 2012 and as in other EU-countries of Central and Eastern Europe, the JI scheme conflicts with the European Emission Trading Systems over-allocation of the CO2 quota.
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Figure 38: Host countries for JI wind power projects
Slovakia, 1 Estonia, 7 Poland, 6
New Zealand, 2 Lithuania, 2 Hungary, 4
Source: Joergen Fenhann: CDM/JI Pipeline Overview, Updated 11 January 2007
Table 16: Estonian Wind Power Plants benefiting from the JI scheme
Project Pakri 18,4 MW Esivere & VirtsuII 14 MW Viru-Nigula 24 MW Vanakla 9 MW Virtsu III 6,9 MW Pakri II 50,6 MW Trisalu 21,45 MW Total 143,1 MW Estimated emission reductions (mil. tCO2eq.) 0,5 0,3 0,4 0,1 0,1 0,7 0,3 Total ca. 2.4 mil tCO2eq Carbon credit purchaser Finland Austria TGF / Sweden TGF Austria The Netherlands Denmark
Source: UNEP-RIS CDM/JI project pipeline as of Feb. 1 2007
5.6
Incentives for developing / utilising new technology
Available incentives for development, utilising new technology and R&D There are grants available from the state to promote either renewable energy or R&D in general. In the period 2007-2013 EEK 1.4 billion ( 90 million) have been allocated for R&D support. Companies within the renewable energy sector are also eligible for this support scheme. The grants are managed through Enterprise Estonia the governmental enterprise development organisation. In July 2008, the Estonian Energy Technology programme was launched. This EU-financed programme is focusing on three main areas: oil shale-related technologies, renewables (with special focus on second-generation bio fuels) and other new emerging technologies. The programme will be implemented in the period 2008-2013 and has a total budget of EEK 500 million ( 32 million). The funding is available for companies as well as for educational and research institutions. In the past it has been difficult to obtain grant financing for projects. Grant financing from the state budget or EU Structural Funds for the period 2004-6 was limited to max. 5 million EEK (0.3 million) per project and wind power projects had to compete for the limited funds with other environmental projects, some of which have higher priority (e.g. water and waste water sector). For the current 20072013 financing period, there is no specific grant support foreseen for wind power projects from EU
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Structural Funds. Still, for the 2007-2013 period almost 100 million have been allocated to support energy-related projects. One priority area is Ambient air protection and mitigation of climate change, including Investment support for establishing demonstration facilities for power production based on innovative solutions and for applying technologies offering local solutions. This should include demonstration projects for off-shore wind energy. Capital available for investing Most major banks in Estonia are owned by Nordic financial groups (Nordea, SEB, DNB Nor, Swedbank, etc) and most of them have experience in financing wind power projects. Local investment banks have experience in raising equity for projects in the field of renewable energy. Support, guidance and consulting services The Estonian Wind Energy Association is very active in lobbying for the wind industry. For more information, see http://www.tuuleenergia.ee/. For general business advice, the Estonian enterprise development organisation Enterprise Estonia is a good starting point http://www.investinestonia.com/ . Finally, Innovation Norways office in Estonia is experienced in assisting Norwegian companies entering the country. 5.7 Key players
Utilities Eesti Energia AS is the national power company. It produces over 90% of Estonias electricity and owns the national transmission network and most of the distribution networks. The company has decided to invest into wind parks and aims at becoming the largest operator of wind parks in the country. Fortum Elekter AS is the second biggest power company in Estonia. It is part of the Finnish Fortum Group. www.fortum.ee Private developers The most important wind power developers/operators in the Estonian market are: AS Vardar, a Norwegian county-owned renewable energy company that together with NEFCO owns the two largest operational wind farms in Estonia - Pakri (18.4 MW) and ViruNigula (24 MW). AS Freenergy, an Estonian-owned clean power investment fund that has invested in several wind power development projects incl. Pakri II (ca. 50 MW), Virtsu II (ca. 6.9 MW) and Kunda (ca. 6.9 MW), Tooma (8 MW), Esivere (8 MW). O Roheline Ring, an Estonian-owned wind power development and investment company that has developed and invested in now operational Virtsu (1.2 MW), Esivere (8 MW) and Virtsu II (6.9 MW) wind farms and Virtsu III (ca. 6.9 MW) development. Danish Global Green Energy is, through its Estonian daughter companies (AS Tuulepargid, etc.), behind the development and turn-key construction of the Pakri wind farm as well as Pakri II and Trisalu (ca. 22 MW) developments. 4Energy, owned by AS Freenergy, investment bank United Partners and O Solarcom, has been contracted to operate most of Estonias wind farms, including Pakri and Viru-Nigula. 4Energy is also developing the largest off-shore wind farm in Estonia off the coast of the Hiiumaa island in NW Estonia. O Intercon-Energy, a Finnish-owned company that developed Viru-Nigula and Vanakla (9 MW) wind farms Skinest AS, a company based on Russian capital that is behind the development of the ca. 12 MW Ruste wind farm Raisner O, a company co-owned by the Spanish Iberdrola Energias Renovables and local investors is planning to establish a 150 MW park. EBRD has also joined the project with an initial equity investment of 1 million.
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Windest Green Energy AS, the company is developing a 24 MW project in Aseri which has already got a construction permit.
Suppliers Most wind farms are bought on turn-key basis from leading European wind turbine suppliers: WinWind, Nordex, and Enercon are behind the largest deliveries so far. Tallinn Technical University together with Volta AS are developing small turbines and some local companies are renovating second-hand turbines and producing sub-assemblies to wind turbine manufacturers. These companies include Baltic Ship Repairers which is manufacturing shafts and tripods for wind turbines and ABB which is manufacturing stators and rotors for wind energy generators. 5.8 Market entry A number of sites in Estonia meet the criteria for successful wind power project development - good wind conditions, presence of a strong power grid, absence of environmental or other restrictions, acceptance by local authorities and low value of the site for alternative economic activities. Most perspective areas for wind power utilisation include coastal areas at North-West and South-West, as well as areas at the Northern coast and along Lake Peipsi where also a strong electricity grid is present. The price mechanisms set by the Estonian State make renewable energy an economically viable investment for private developers. However, since the grid company Eesti Energia has already signed or approved connection of wind farms for the maximum capacity (ca. 700 MW) of wind energy that can be produced under current technical conditions, Eesti Energia has until further notice stopped signing agreements for new wind energy projects. Many of the developers who have signed connection agreements, however, lack know-how and/or long-term financial strength to develop and commission the parks and may be willing to sell their projects or are looking for equity co-investors. Thus, a possibility for fast entry to the market exists through purchase of the grid connection and/or planning rights from other developers. There are some projects on the market that with the right know-how and financial resources can be developed to profitable operations. Despite the higher transaction costs, this strategy should be preferred to greenfield project development. Opportunities are emerging related to offshore wind power sector where there will be a need for services related to planning / research and ultimately construction of the wind parks. The successful experience of Norwegian Vardar AS, as one of the main players in the Estonian wind power sector, should also encourage other Norwegian companies to enter the market. We believe that if there is interest in the opportunities in the Estonian market, Norwegian developers or suppliers of technology should focus on identification of concrete opportunities. General study trips would not be an efficient solution for gathering market information. Interested Norwegian companies could contact the Estonian Wind Power Association (www.tuuleenergia.ee) or Innovation Norways office in Tallinn (tallinn@innovasjonnorge.no) to receive more specific information about opportunities in the country.
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6.
6.1
Netherlands
For a small country with a small population, the Netherlands has a large and powerful economy. It is the second largest producer of natural gas in the EU, and natural gas and oil dominate its primary energy supply with an aggregate of 83% of the total. In 2006, electricity generation in the Netherlands was 92.45 TWh, with overall consumption of 108 TWh. Electricity generation is largely based on natural gas, accounting for 60.5 % of total gross generation in electricity generation with a significant share also contributed by coal (26 %). Smaller shares of electricity are produced from nuclear (3.9%), oil (2.2 %) and renewable energy sources (6.8 %) see Figure 39. Figure 39: Electricity Supply Netherlands, 2006.
2%
4%
7%
26 %
nuclear renewables coal natural gas oil
61 %
Source: IEA
The Netherlands is a net importer of electricity importing approx. 16 TWh a year in 2006. Prices have been higher than in adjacent countries, mainly due to the dominance of gas for the electricity production, but by late 2007 prices were converging due to the coupling of the market with that in France and Belgium. Germany was the most important import source of electricity, however in the past this proportion has declined and Belgium has been playing an increasing role. Although security of supply has received attention in the Netherlands it remains challenging to encourage adequate investment in generating capacity. In spite of efficiency measures, yearly growth rates of 2.5 percent are expected and in the medium term there is a lack of indigenous power resources. Additionally, with large suppliers of electricity, such as Germany, now facing capacity problems due to nuclear phase out, the Benelux market has a tight generation supply position. Electricity generation from renewable sources dropped from 6.7 % of total electricity production in 2006 to 6 % in 2007, due mainly to a drop in production from biomass. Generation of electricity from wind, however, grew by over a quarter in 2007 thus accounting for more than half the production of renewable electricity. Wind is now the most important renewable resource used in the Netherlands for the production of electricity. Wind capacity has been developed over the past decade and installed wind capacity is now 1,750 MW. The European Wind Energy Association predicts 3000 MW installed by 2010 77
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Source: http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/purepower.pdf
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The climate objective set by the Netherlands as a result of the EUs burden sharing agreement is to achieve a reduction of greenhouse gases (GHGs) of 6 % in the period 2008 2012 compared to 1990 levels. To meet the climate challenge, the Netherlands has chosen a transition approach to a sustainable energy economy, by means of efficiency and ambitious renewable energy targets. The Netherlands Environmental Assessment Agency concludes in its 2007 progress report that the Netherlands is on track to meet its Kyoto obligations. In September 2007, the Dutch Minister of the Environment introduced a policy document New Energy for Climate 2 which set a new target of 20% of electricity from renewable sources by 2020. Due to the fall off in biomass generation, most of the new capacity will come from wind, and perhaps a small proportion from wave and tidal. 6.2 Wind status now and future potential energy
In the Netherlands, wind energy was long considered the second most important renewable energy source after biomass, but is now the main source of renewable electricity. The past few decades have seen a strong development of the wind sector. Under the Administrative agreement National Development Wind Energy (Dutch acronym BLOW), each province has a target to designate locations for wind turbines, specified in MW. In 2004, the 1000 MW milestone of total implemented wind energy capacity was attained. In 2006 The Netherlands saw a record of 350 MW of new installed wind capacity and in the first six months of 2008, 148 turbines with a capacity of 289 MW were installed. The national onshore wind target was already met in 2007. Given the aggressive expansion of onshore wind so far and the countrys high population density, spatial planning is a major challenge in the Netherlands. As a result, and in order to meet the national renewable energy target of 20 %, the installation of offshore wind turbines holds the best prospects. The Dutch North Sea with water depth of 20 to 40 m and yearly average wind speeds of 9 m/s at 80 m height offers good opportunities. As a result, an offshore installed wind capacity of 6,000 MW by 2020 is considered feasible and necessary. There are two small near-shore wind projects (Lely IJsselmeer and Dronten, totalling 16 MW), and two large offshore wind farms: In 2006 the first offshore wind farm Egmond aan Zee (OWEZ) was built and brought online. The wind farm is unique in the world, standing in water depth of 17 to 23 m at a distance of 8 to 12 km from the coast. It comprises 36 turbines with a 108 MW capacity and involved an investment of more than 200 million. The wind farm is a demonstration project, initiated by the Government, with the objective of developing and testing opportunities for offshore wind. The project is linked to an extensive research programme, which aims to determine the effects in the area of technology and ecology. The wind farm is managed by NoordzeeWind, a joint venture of Nuon and Shell. Bouwcombinatie Egmond (BCE), a joint venture of the construction company Ballast Nedam and the wind turbine manufacturer Vestas, was charged with the construction of the wind farm. The farm will initially be operated by BCE under a 5 year warranty operations and maintenance contract. The expected electricity production of 350 GWh per year is sold to Nuon Energy Trading, an affiliate of Nuon (see www.noordzeewind.nl for more detail). In September 2006, the construction of Q7 was started. The 120 MW farm consists of 60 Vestas 2 MW 80 meter diameter turbines producing approx 435GWh of power. The project is owned and developed by a group of companies (ENECO Holding NV, Econcern BV and Energy Investment Holdings). It is built by Vestas Wind Systems A/S and Van Oord Dredging and Marine Contractors BV and will initially be operated by Vestas Offshore. It was inaugurated in June 2008 and its name changed to the Princess Amalia Wind Farm. The cost of building it amounts to 385 million, and the Government has agreed to buy the power produced by the project over the next 10 years with a subsidy of 97/MWh. Seewww.q7wind.nl for more detail. As for other offshore developments, by October 2007, 10 developers had submitted plans for 72 wind farms in the North Sea, for production starting from 2011 onwards. By June 2008, six developers
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submitted applications for 17 wind farms (each 300-500 MW). Three applicants for three sites have been awarded an exclusive right to use. No building permission has been issued to date, but it is expected that tenders for one or two sites will be issued in 2009. Two nearshore projects are in the planning stage; W.P. IJsselmeerdijk, which is a venture between NUON and developer WCI (100MW), and Windfarms westermeerdijk & noordermeerdijk (see www.windkoepelnop.nl and www.we-at-sea.org for more detail). 6.3 Wave and Tidal status now and future potential
The Netherlands is located in a relatively sheltered area of the North Sea and has estimated wave power levels of 15 kW/m. Teamwork Technology BV was the original developer of the Archimedes Wave Swing (AWS). AWS has since moved to Scotland and is also testing a 2 MW pilot plant off the coast of Portugal (www.waveswing.com). As for tidal energy, Teamwork Technology has, in cooperation with Tocardo BV, developed the Tocardo 2800 turbine. A small diameter for inshore purposes and a larger turbine for offshore purposes have been designed and tested. The Tocardo 2800 turbine was tested at a facility in Afsluitdijk, in the north of the Netherlands, at a location were huge amount of water is flushed into sea. In the sluice water, a velocity of more than 4m/s can occur. The system was grid connected with a voltage converter and the functioning of the turbine was proven. In 2007, the site was expanded to three turbines which will be operating fully for the next ten years. Further plans include the installation of a larger turbine in 2008 or 2009 (www.tocardo.com). Other smaller projects have been undertaken by Ecofys and start-up Neptune Systems. 6.4 Price In October 2007, a new Feed-In Tariff was introduced - the SDE. Producers receive a premium covering the extra production costs of green electricity which lasts for a maximum of ten years. The level of support and time will vary with each technology and the wholesale price of electricity. Central Government funds of 300 to 350 million each year have been allocated to 2011. Currently the supports are available for biomass, wind energy, photovoltaics and combined heat and power, but offshore wind has not been included as new connection permits have not yet been issued. The tariff for onshore wind range from 0.088 to 0.028 per kWh. For offshore wind, support has been granted on a project-by-project basis. The Energy Research Centre of the Netherlands (ECN) has produced an estimate for the costs associated with offshore wind and this is available from the website. http://www.ecn.nl/publications/default.aspx?nr=ECN-M--07-120 6.5 Relevant locations for wind energy The Netherlands Exclusive Economic Zone (NEEZ) covers an area of 60,000 km2 offshore. This part of the North Sea provides enough space to accommodate the envisaged 6000 MW of offshore wind power. A study undertaken in 1999 identified 680 km2 with a water depth of a maximum of 20 meters. The Dutch state has exclusive economic rights in this area including the right to issue permits for the construction of wind farms. The preferable areas for wind in the Dutch part of the North Sea lie roughly between Katwijk and Terschelling (see orange-coloured area of Figure 40) 78. In 2004 the Minister of Transport, Public Works and Water Management published the scheme to issue building permits for the construction of offshore wind farms. The scheme is applied under the Public Works and Water Management Act and laid down in policy rules. The policy rules in principle
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Source: Fifth National Policy Document on Spatial Planning
(http://www2.vrom.nl/pagina.html?id=7337)
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open the entire NEEZ for the realisation of offshore wind farms. However the ministry will only grant building permits for individual wind farms that do not cover more than 50 km2 area. The ministry will not grant building permits for areas that are reserved for other activities such as for example military areas, shipping routes, disposal sites, search areas for coarse sand resources and cable routes. A mandatory Environmental Impact assessment is a compulsory requirement to acquire a building permit 79. Figure 40: Suitable offshore locations
Issues related to the location of projects The realisation of 6,000 MW offshore wind power from the North Sea will have major consequences for the Dutch electricity grid. Major investments for the reinforcement of the grid will be necessary to accommodate the increased energy production of these offshore wind farms. The Ministry of Economic Affairs has investigated large-scale grid integration of offshore wind energy in two separate studies. The first study, Connect 6000, concentrated on costs, the most favourable locations for farms and cable routings and gives rather precise time schedules for the necessary grid reinforcements. In the
More detailed information about the Dutch permit scheme for offshore building permits area is available at www.senternovem.nl
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optimistic case, 6000 MW could be accommodated by the transmission system in 2012, whereas in the pessimistic case the maximum injection capacity will remain limited to 2000 MW by 2018. The costs for these grid reinforcements are estimated to be in the range of 281 million Euro (all overhead lines) to 839 million (30% of the new lines underground). All in all, the infrastructure investments necessary to comply with the 2020 goal of 6000 MW offshore wind power are estimated to be between 200 and 500 million, depending on the development scenario (i.e. around 1.1 - 2.2/MWh). The value is approximately 4% of the total investment costs of the 6000 MW (of 10 billion). 6.6 Political climate for renewable energy from wind and ocean
The Dutch long-term energy policy is focused on a sustainable, competitive and secure supply. A key part of the Dutch strategy is the development of renewable energy production, predominantly biomass and wind. In light of the possibility of over achieving the 9% sustainable electricity target for 2010, the Dutch Minister for Economic Affairs in August 2006 announced an immediate stand still for renewable production subsidies. This radical change in policy was the result of the change of government in 2006 and associated budgetary problems. The already appropriated budgets for existing and applied projects are sufficient to reach the national renewable targets in 2010. The interim government therefore left the decision about new targets and the associated extra budgets to the new government which started its work in the beginning of 2007. The new energy policy and associated subsidy schemes were announced in September 2007 as outlined in paragraph 6.4 above. 6.7 Incentives for developing / utilising new technology
The Netherlands is taking various demand side and supply side measures to encourage the use of electricity from renewable energy sources. On the demand side, renewable energy consumption was until 2005 encouraged by a reduction or exemption (2001-2003) of the Regulatory Energy Tax (also known as ecotax), that was introduced in 1996 for small and medium scale energy users. In addition, consumers were supported by means of an Energy Bonus Scheme (EPR) that provided investment subsidies for the acquisition of renewable energy appliances. These measures were effective in spurring the demand for renewable electricity, which however resulted in increased imports of renewable electricity rather than an increase in domestic production. Therefore, since 1997, renewable electricity generators benefit from support through the Energy Investment Tax Relief (EIA). The EIA allows investment in certain technologies (including wind) to be deducted form taxable profit up to a percentage of investment cost. In 2007 this percentage was 44 percent. With current corporate taxation levels of 25.5 % and 29.6%, the EIA can amounts to a discount of between 11 % and 13% of the investment costs if full deduction is applicable. The maximum deduction is currently 110 million per year per fiscal entity and the minimum investment was set at 450. The EIA scheme is administered by Senternovem, which is an agency under the Ministry of Economic Affairs. (www.senternovem.nl) There are also incentives for projects which may reduce CO2 levels, and wind projects are especially eligible. Capital The Green Funds Scheme is a tax incentive investment scheme in existence since 1995. Under it, investors lend their money to banks at a lower interest rate, which in turn is compensated by a tax incentive (environmental tax credit). Green banks can then offer cheaper loans (1-2 percent lower) to qualified environmental projects. This measure resulted in public investment since 1995 of approximately 6 billion (IEA, 2007).
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In addition, there exist provincial funds that support individual projects. The province of North Holland, for example, provided funding for the development, testing and certification and testing of the prototype turbine DarWin. R&D The Netherlands has a strong international standing in the field of renewable energy and energy efficiency and is ranked 6th in the global league table for patent applications for renewable electricity. When the Dutch government introduced its energy strategy in 2001, a strong R&D agenda was set by formulating the energy research strategy called EOS. The EOS R&D programme aims at research that strengthens the Netherlands knowledge position. It has a yearly budget of around 45 million and one research focus area is offshore wind generation and electricity grids. Major research institutions in the field of offshore wind energy include the Energy Research Centre of the Netherlands (ECN), the Technical University of Delft and Ecofys. The Energy Research Centre of the Netherlands (ECN) is the biggest energy research institution in the Netherlands and carries out research in the field of energy. Its research bridges fundamental research at universities with appliance of knowledge and technologies in practice. It has a business unit for wind energy and is involved in a number of projects, such as e.g. RotorflowI. This is a project in which ECN and Twente Technical University (TTU) research new methods for the calculation of aerodynamic loads. For research areas in which ECN together with TU Delft and Knowledge Centre WMDC have a major strength, the consortium INWIND was funded with 1 million per year for a 4 year program. The program concentrates on five areas: concepts and components, aerodynamics and construction dynamics, materials and constructions, model development and realisation of an integrated design environment and design guidelines. Since the beginning of 2003, ECN also has a new test site (Weringermeer) for wind turbine prototype testing. It is located about 40 km east of ECN headquarters and offers four fully equipped locations for the testing of wind turbines up to 6 MW. The Consortium We@Sea develops knowledge and skills to build, exploit and decommission large scale offshore wind farms. It runs a 4 year program, from 2004 -2008, on offshore wind energy and is funded from the national gas fund. The consortium consists of companies in offshore technology, wind energy technology, offshore wind farm development, logistics, investors, energy consultants, environment and other stakeholder 80 Another development consortium, DOWEC (Dutch Offshore Wind Energy Converter) has carried out research in the design of offshore turbines and parks and links different companies and research institutions. 6.8 Key Players There are four major electricity producers in the Netherlands; E.ON, Electrabel, Essent and Nuon. Electrabel is the former Belgian state electricity utility, now owned by GDF Suez. It is now the largest operator in the Benelux with biomass, wind and hydropower operations. Essent is the leading Dutch electricity company with a number of renewable projects. Nuon is involved in offshore wind projects and solar power generation in the Netherlands. The large-scale production by the four large producers is known as the Central Electricity Production. The majority of the wind farms are owned and operated by private owners, often in partnership with energy companies. For instance, the wind farm Egmond aan Zee is jointly owned by Shell Renewables and Nuon. Within offshore wind, project development companies that have started the process of obtaining building permits include WEOM (on behalf of Nuon and Shell Renewables), E-Connection, Evelop, Airtricity, Readthuijs, Arcadis, Bard Engineering Gmbh, Eolic Power Gmbh and Global Wind Support Gmbh. WEOM has been a developer of wind farms since the mid-nineties and is now a subsidiary of
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www.we-at-sea.org
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Nuon. E-connection is one of the oldest independent developers of wind farms since the mid-eighties and developed the offshore wind farm Q7. Evelop is a subsidiary of Econcern. In 2005, Evelop bought the wind farm Q7 from E-connection. Airtricity is a well known Irish developer and owner of wind farms, and owns the first Irish offshore wind farm Arklow Banks-it is now owned by Scottish and Southern Energy. Readthus has been developing wind projects since the mid-nineties and uses a special financial model for wind farm development. Arcadis is a global, consulting and engineering company, active in the field of infrastructure, environment and facilities. The supply industry is dominated by Vestas, followed by Enercon. Other wind turbine manufacturers with Dutch sale representative are Nordex, General Electrics and Siemens. Econcern is the holding company of Ecofys, Evelop, Ecostream and Ecoventures which is a diversified developer of wind farms. In April 2006 Econcern took over the wind developer WinWind, with a portfolio of 300 MW of wind projects and 50 MW under construction and also took over the French developer of wind farms Terra Nova. The company also took a stake in DarwinD which is developing a direct drive, permanent magnet, single bearing wind turbine which will be installed at the ECN wind test site in Wieringermeer. 6.9 Market entry
Compared to other EU countries, the Netherlands has a flexible and liberal legal framework for the organisation of enterprises by non-resident companies or individuals. There are no special restrictions on foreign owned companies that wish to start business in the Netherlands. The one aspect that sets the Dutch energy sector apart from the industry in neighbouring countries is that the Netherlands is ahead of those countries in the liberalisation of its electricity and gas markets, which should provide another advantage. The new support prices for renewable energy will provide an additional incentive, although it is unclear what rate will apply to offshore wind or other ocean energy. Given the limited land mass and high population density of the country, onshore wind expansion possibilities are limited. Activities on wave and tidal energy are limited. Thus, offshore wind is that sector that offers best potential, but questions regarding connection and tariff levels remain, creating an uncertain investment environment. A first starting point for companies wishing to start their business in the Netherlands would be the Netherlands Foreign Investment Agency (NFIA 81). NFIA, a division of the Dutch Ministry of Economic Affairs has been set up for the specific purpose of providing assistance to foreign companies interested in establishing, expanding or re-organising their operations in the Netherlands. SenterNovem, 82 the Netherlands Agency for Energy and the Environment, is another division of the Dutch Ministry of Economic Affairs, with the core competence of implementing Dutch policies. It provides information about permits and subsidies and Dutch energy policies. The Energy Research Centre of the Netherlands 83 (ECN) also provides information on Dutch policies and regulation in the wind sector. The Centre provides reports and a wide range of consultancy and technical services. ECN acts also as a certifying institution. Wind Service Holland 84 provides an overview of Dutch activities, both onshore and offshore. It lists current and planned projects, as well as providing an overview of the wind sector in the Netherlands.
81 82
www.nfia.nl www.senternovem.nl 83 www.ecn.nl 84 http://home.wxs.nl/~windsh/contents.html
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Alternatively, the Netherlands Wind Energy Association 85 (NWEA) provides similar information and support. For offshore projects, the consortium We@Sea also provides a useful starting point. Consultancies that offer market scans and assistance are Kema and Ecofys (part of Econcern). Kema has been involved in wind energy since the early 1980s and works for the government and industry and offers a wide range of wind project services from feasibility to design, financing, grid integration and bid document preparation on engineering, procurement and construction, for both onshore and offshore developments. Ecofys provides similar services and has been involved in a number of projects in the Netherlands.
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7.
Germany
7.1 Energy demand and supply Germany is one of the worlds largest and strongest economies. However, it lacks significant domestic energy sources and is heavily dependent on imports (~ 75%). Imports concern primarily oil, and to a less significant degree gas and solid fuels, Norway and Russia being a considerable source for all fuels. Electricity generation is based primarily on coal and nuclear energy, with growing shares of natural gas and renewable sources. In 2002, Germany decided to phase out nuclear power by 2020. This decision is being reconsidered, however, due to concerns about climate change, limited resources of coal, and the countrys dependency on political unstable countries for oil and gas imports. Additionally, renewables is expected to increase its share of electricity production, in particular wind energy being closest to profitability. Figure 41: Structure of primary energy consumption in Germany 2007.
Development of renewable energy sources in Germany in 2007
Primary energy consumption in Germany in 2007

Total: 13,878 PJ
Oil 34%
Hydropower: 0.5% Wind energy: 1.0% Gas 22%
share RE 6.7% 1)
Biomass: 4.9%
2)
Lignite 12% Hard Coal 14%

1)
Other RE: 0.3%
Nuclear 11%
A cc. to the substitutio n method: Renewable Energies A cco unted fo r 9.1 o f P rimary Energy Co nsumptio n ; 2) solid, liquid, gaseo us bio mass, bio genic share o f % waste, landfill and sewage gas; RE - renewable energies; Versio n: M arch 2008; all figures pro visio nal Source: B M U acco rding to Wo rking Gro up o n Renewable Energies / Statistics (A GEE-Stat); using data fro m Wo rking Gro up o n Energy Balances (A GEB ); physical energy co ntent metho d.
BMU KI III 1 Version: March 2008
Development of renewable energy sources in Germany in 2007
Source: BMU, March 2008
Figure 41: shows the composition of Germanys energy consumption, while Figure 42 shows the relative importance of various sources of renewable energy. Wind clearly dominates, followed by bioenergy and hydropower.
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Figure 42: Structure of Renewable Energies within electricity generation.
Source: BMU March 2008
Germany is intending to register a 30 % RE electricity share by 2020. The RES-E targets set for Germany are 12.5% of gross electricity consumption in 2010, and 20% in 2020. In June 2008, the Federal Cabinet adopted the second package implementing the integrated energy and climate programme. "Germany is pursuing the most ambitious climate and energy programme worldwide. Our aim is to make better use of renewable energies and energy efficiency and move away from oil and gas. This protects the climate, lowers energy costs for our citizens and will create more than 500,000 additional jobs by 2020", said Federal Environment Minister Sigmar Gabriel 86. 7.2 Wind status now and future potential Since the first wind turbines were built at the beginning of the 1990s, power generation from wind energy has seen dynamic growth thanks to state-supported programmes. With more than a third of the world's installed capacity, no other country has more wind turbines than Germany. According to figures from the German Wind Energy Association (BWE), 19,460 wind turbines with a total capacity of 22,247 MW were installed in Germany altogether by the end of 2007. 39.5 TWh of wind electricity were generated during this year. These are over 7 % of Germanys electricity consumption and provide the largest contribution to power generation from renewable energy sources. German manufacturers of turbines and components hold a world market share of 37 % earning about 6 billion in 2007 in exports. The sector currently employs more than 100,000 people. 87 Figure 33 shows growth in installed capacity until 2007
86 87
Source: http://www.erneuerbare-energien.de/inhalt/41914/36356/, 16.07.2008 Source: http://www.wind-energie.de, 16.07.2008
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Figure 43: Development of wind power in Germany.
Source: www.wind-energie.de, July 2008
Wind power production is expected to continue to rise, primarily thanks to the use of offshore wind power. By 2030, the proportion of electricity generation from wind power is to be increased from its current level of around 5 % to at least 25 % (onshore: 10 %, offshore: 15 %). An installed offshore output of between 20,000 and 25,000 MW is possible by the year 2030 88. The potential annual electricity yield from offshore wind farms is estimated at 85 to 100 TWh, accounting for approximately 15 % of Germanys electricity consumption in the reference year 1998. The German offshore market has been slow to take off, due to high costs and technical issues resulting from projects being located far from the shore in deep waters. However, the market will see six 5 MW turbines commissioned in 2008 as part of the first phase of Alpha Ventus, the markets first commercial offshore wind plant (60 MW). The second phase of this wind plant is scheduled for commissioning in mid-2009 for an additional 30 MW, leading to the construction of larger scale projects with up to 400 MW starting in 2010. By year-end 2020, the total installed base in German waters is expected to be 6,197 MW, up from 13 MW at year-end 2007. Germany is set to become one of the most dynamic offshore markets going forward with offshore wind projects in Germany benefiting from project costs decreasing as much as 25% as TSOs are now responsible for offshore grid buildout (through 2013) and with a significant increase in the existing offshore feed-in tariff from January 1st 2009 (see chapter 7.4 for more details). Going forward, the German Government is likely to look for greater coordination between federal and regional agencies to expedite the permitting process.
88
Source: Offshore wind power deployment in Germany, BMU and offshore windenergy foundation
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Figure 34: Market development in Germany. Source: www.deutsche-windindustrie.de
More than 20 projects (all within the German part of the Exclusive Economic Zone, EEZ) have been licensed by now in the North and the Baltic Seas by the national maritime authority (Bundesamt fr Seeschifffahrt und Hydrographie, BSH), a small number of additional projects by the Federal States, adding up to an overall capacity of over 5.000 MW. The main trends expected for the German offshore market are: By year-end 2020, the total installed base in the country will rise to 6,197 MW, up from 13 MW at year-end 2007, with Germany emerging as Europes second largest offshore wind market behind the UK. The German market will add an average of 475 MW per year between 2008 and 2020, accounting for 24% of total European MW additions. While there are over 20 GW of consented or advanced permitting projects in Germany, 6.2 GW of capacity are set to be installed through 2020. The German government has increased incentives to 15/kWh. Developers anticipate availability of turbines greater than 5 MW, starting in 20102011, which will increase site productivity and improve project returns. Slow transmission build-out is expected to result in paced offshore market growth. The first transmission line, part of the Borkum 2 transmission cluster in the North Sea, will be able to handle 400 MW and is scheduled for completion by 2009. With this grid capacity available, the market will increase from 65 MW added in 2009 to 250 MW added in 2010. Further transmission construction in the North Sea, where three other transmission clusters have been created (Borkum 1 and Helgoland 1 and 2) and in the Baltic Sea will be scheduled and contracts awarded as developers flag additional capacity needs. With developers and TSOs able to coordinate
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wind plant and grid construction, the market is set to start adding between 450 MW and 800 MW between 2012 and 2020. Table 17: German Offshore Pipeline, Select Project List.
Source: Emerging Energy Research
The planned use of offshore wind power requires the further development of turbine technology and operational management, as well as the optimisation of turbine assembly and logistics. Sea depths of up to 40 m, long distances from the shore and the physical pressures caused by wind, waves and a high salt content in the air pose a major challenge for the foundations, the encapsulation of the gondola, and the materials used. The transportation of large quantities of electricity to the mainland is also very labour-intensive, as is the associated maintenance and servicing work.
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7.3 Wave and Tidal status now and future potential 89 Table 18 summarises the situation for wave and tidal energy in Germany. Table 18: Ocean Energy Resources and facts in Germany.
Tidal range at the German coast Waves Coast length Currents Osmosis, mean fresh water discharge to the Total resources of consumption Priority for the energy policy R&D System and component development and supply Actual involvments in R&D projects: 2,2 m (Borkum) up to 3,7 (Wilhelmhaven) North Sea: 10-20 kW/m; Baltic Sea: 5-10 kW/m; 1-3.5-5 TWh 250 km coast length North Sea Example case of the Island of Sylt 50 MW North Sea: 1331 m3/s Balitc Sea: 117 m3/s = 13 TWh (Rhine: 20 TW; Oder 4,7 TWh) Ca. 2% Not high Ca. 10 R&D institutions are involved into developing wave, tidal current, osmosis power etc. in the framework of mainly European research projects Around 20 companies are involved, different technologies mainly in Europe HIS, University of Stuttgart: Hydraulic design of rotors for tidal turbines Fluid Mechanics Laboratory (FLM), Technical University Munich: Wave Dragon turbine design etc. GKSS Research Center, Geesthacht: Membrane development for osmotic power plants (salinity power) Coastal Research Centre (FZK), Hannover: Experimental work in the large wave tank (HYDRALAB I,II,) Alfred-Weegener-Institut Polar and Marine research, Bremerhaven: Environmental impact of marine renewables: example of offshore wind energy ISET e.V., Kassel: Tidal turbine - modelling & simulation, electrical engineering, grid integration (SEAFLOW+DTI+German Government-BMU) Actual involvement in industry projects: Voith Siemens Hydro Power Generation GmbH & Co KG: Marine Energies new business opportunities for the hydropower market Lust Drivetronics GmbH: Pitch drives form wind energy for the Seaflow marine current turbine Bosch Rexroth AG, Industrial Hydraulics: Hydraulic drive technology for marine energy technologies Others: Jahnel Kestermann, Hoesch Rothe Erde, SMA, Xperion, Siemens (VATECH Elin) Grid integration: Power forecasting (combination of wind and waves) Cluster management Transport and congestion management Grid management: security, frequency control.. Remote Sensing of Ocean Surface by SAR Along Track
Future research in Ocean Energy
89
Dipl. Phys. Jochen Bard, Institute for Solar Energy Supply Technologies, ISET e.V.
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Summary
Interferometry Very small resources (ocean energy included in Renewable Energy Sources Act (EEG) Political interest: funding companies/institutes involved in international projects, supporting of development of sustainability energy technologies (reference case: solar thermal power plants), generating an export market (according to the wind energy branch: 50% of world market). Industrial interest and engagement
Source: ISET Kassel e.V.
There is interest -in the public as well as in research and industry- in the potential for ocean energy in German waters. Currently, around 10 R&D institutions are involved in the development of wave, tidal current and osmosis power within a framework of mainly European research projects. In addition, there are around 20 companies involved in system and component development and supply to different technologies - mainly in Europe. No installations have been realised yet, but a first Limpet type wave power plant of 250 kW will be installed at the North Sea Cost. The joint project of Wavegen - a Voith Siemens Hydro Company and EnBW, a regional utility, is to be installed between 2008 and 2010. Please read more on the actual project development at: http://www.wavegen.co.uk/index.html Public funding within the framework of the National energy research programme is currently limited to tidal turbine concept and component development. The total amount of public funding between 2001 and 2007 was around 1.4 million. A first international conference on Ocean Energy was held in Bremerhaven in October 2006. However, due to the low flow rates of the ocean currents, the low wave height and the low tidal range, obtaining energy from ocean currents in the German North Sea and Baltic Sea is not very promising economically. Increased funding is to be provided for international research projects concerned, amongst other aspects, with adapting wind power technology to specific conditions at sea. A successful example of such a research venture is the German-British project harnessing the ocean currents caused by tides off the coast of Cornwall, where a 300 kW plant utilizes the tidal flow at a depth of 20 metres for generating electricity. Please read more about the actual project development at: http://www.bwea.com/marine/devices.html 7.4 Price The Renewable Energy Sources Act (EEG) regulates the feed-in compensation for electricity from renewable energy sources in Germany. The EEG contains a minimum price scheme combined with an obligation for grid operators to purchase electricity from renewable energies at a fixed tariff. The EEG is structured degressively in that it varies according to the quality of the site. A 20-year running time ensures planning and investment security. In June 2008 the German Parliament adopted the amendment of the Renewable Energy Sources Act (EEG). The following are among others - central elements of the amended EEG: 1. Remuneration for offshore wind energy Initial remuneration for offshore wind turbines is set at 15 cent/kWh until 2015. After that it will decrease to 13 cent/kWh for new installations, decreasing by five percent per year. The new EEG gives the go-ahead to the German offshore market. It is now time to implement planned projects. Germany should extend its technological leadership in the onshore wind industry to the sea, Albers said. 2. Generation management In future, EEG converters with over 100 kW of power input will be subject to generation management wherever grid bottlenecks occur. This effectively encompasses all new converters. Grid operators will
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need to pay compensation for energy left unused. This suitable instrument will be an added incentive to quickly improve grid capacities. 3. Legally prescribed acceleration of grid connection: The Infrastructure Planning Acceleration Act came into effect on 17 December 2006 and obligates the nearest network operator to connect the offshore wind park to the grid, i.e. from the substation at sea to the best grid connection point from both a technical and economical point of view (Section 17 subsection 2a Energy Industry Act EnWG). This regulation affects any wind park whose construction will commence before the end of 2013 (Section 118 EnWG). The cost of grid connection will be carried by the network operator and can also be distributed across all transmission network operators. As most of the German offshore wind parks are planned to be erected well over 30km from the coast, the cost of grid connection accounts for between 20 and 30 percent of the overall project cost. The Infrastructure Planning Acceleration Act alters the responsibility for financing and operating connection to the grid. 4. Grid optimisation The amended EEG obliges grid operators to expand the grid, but also to optimise and enhance the existing grid. Lawmakers took on board the suggestions made by the German Wind Energy Association: Means for optimising grid capacities include temperature monitoring of overhead power lines or the use of high temperature conductors. For more information please go to: www.wind-energie.de 7.5 Relevant locations for wind and ocean based renewable energy
Figure 35 shows wind speed at relevant sites for offshore wind energy in the North and the Baltic Sea. Figure 35: Wind speed at relevant sites for offshore wind energy, North and Balitc Sea.
Source: http://www.windatlas.dk/Europe/oceanmap.html
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Weather conditions in the North and the Balitc Sea have already been well researched. The Fino1 and the Fino 2 measuring stations (see www.fino1.de and www.fino2.de) have captured data on wind speed, changes in the direction of wind and turbulences for several years. In the German Bight, the wind blows at an average of 7.9 m/s at a height of only 10 metres. The Deutsches Windenergie-Institut (DEWI German Wind Energy Institute) in Wilhelmshaven has measured average wind speeds of 9.9 metres per second at at height of 90 metres, which is where the nacelles of powerful offshore wind turbines are placed. For more information, see http://www.fino-offshore.com/. Experts anticipate the German offshore market to continue growing steadily through 2020, installing an average of 475 MW per year starting in 2013, for a total of 5.1 GW added between 2013 and 2020. Incremental yearly additions will be possible as bottlenecks currently holding back project realization are resolved, including turbine supply, cabling, and installation vessel capacity constraints. However, the market will have to enter a new growth phase post-2020 in order to reach the governments goal of having 25 GW of offshore wind power capacity installed by 2030. Reaching this goal will require not only continued policy support, but also technological improvements to tap more challenging sites. This is why the German Government has identified five areas in the Baltic and North Seas where it will lease sites for offshore wind farm development with the aim of reaching 25GW of installed capacity by 2030. In a consultation paper, Germany's ministry of transport said wind farms will be developed in the five zones, of which two are in the Baltic Sea and three in the North Sea. The new zones will not apply to the more than 20 wind farms that have already been granted permission or those awaiting permission. The German Government has identified five areas in the Baltic and North Seas for offshore wind development. The new zones will not apply to the more than 20 wind farms that have already been granted permission or those awaiting permission. Figure 36 and 37 show offshore wind farms in German waters, as per March 2008. Figure 36: Overview of wind parks in the North Sea.
Source: http://www.bsh.de/de/Meeresnutzung/Wirtschaft/CONTIS-Informationssystem/index.jsp
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Figure 37: Overview of wind parks in the Baltic Sea.
Source: http://www.bsh.de/de/Meeresnutzung/Wirtschaft/CONTIS-Informationssystem/index.jsp
Issues related to the location of projects For offshore wind projects, the federal government is responsible for licensing in the Exclusive Economic Zone (EEZ), with executive competence in the hands of the Federal Maritime and Hydrographic Agency of Germany (Bundesamt fr Seeschifffahrt und Hydrographie BSH, www.bsh.de) located in Hamburg. Decisions are based on regulations in the Marine Facilities Ordinance (SeeAnlV). During the licensing process, the BSH holds conferences on applications and organises hearings with participants. The licensing procedure is based on Article 5 of the Offshore Installations Ordinance. It should be stressed that if there are several applications for the same site, the BSH is required to give priority to the application with the earliest licensable date. This is intended to ensure that favourable locations are not blocked for years by inactive projects. Simpler and faster licensing procedures will apply to offshore wind farms in areas which have been designated as suitable. The BSH has currently granted licences to more than 20 offshore wind farms in the Exclusive Economic Zone of the North Sea and the Baltic Sea. Licences for two wind farms in the Baltic Sea were refused on nature conservation grounds. Integration into the grid Even in a very rapid expansion scenario, electricity generated from wind can be integrated costeffectively into the German grid with a moderate upgrade of the network. Initial calculations suggest that new transmission lines covering a length of 850 km (corresponding to 5 % of the German electricity grid) will need to be constructed in the transmission grid by the year 2015. Until the required grid expansion is complete, there are a number of technical solutions available that can optimise the grid operation and thereby increase grid capacities. 7.6 Political climate for renewable energy from wind and ocean Offshore electricity production is politically seen as having the necessary potential, particularly as for reasons of climate protection and Germanys commitments under the Kyoto Protocol. Tapping this potential not only makes sense from an environmental and energy policy point of view, but also for
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economic reasons. Offshore wind parks strengthen the economy, not only at the coast, in various ways: Manufacturers, the port industry, maritime service providers and suppliers will benefit from wind parks. In addition, there are remarkable export opportunities and technological developments. The amendment of the EEG as described in chapter 7.4 proves the Governments commitment to offshore wind energy in Germany as the most promising contribution in order to reach the countrys climate goals. To furthermore improve the starting position in Germany as described above, the interests of all stakeholders have been bundled. The Offshore Wind Energy Foundation, which was set up in July 2005 with the dedicated support of the Federal Environment Ministry, involves the major players in the offshore wind energy sector into its activities. See http://213.133.101.147/offshore/version1/home.html for more information. In summary, the political climate for renewables in Germany is very positive. A stable and predictable policy framework has created conditions favourable to RE penetration and growth. Germanys leading onshore wind position is expected to be followed up offshore. As for tidal and wave energy, natural resources are more limited and the Government is unlikely to give them the same attention and growth conditions. 7.7 Incentives for developing/ utilising new technology Establishing offshore wind facilities in Germany poses a number of major challenges in terms of technology, integration into the grid and ecological compatibility - extensive research is therefore needed. In recognition of this fact, the German Environment Ministry has set up a renewable energies research programme, and also supports research and development projects relating to the use of offshore wind power. These projects reach far beyond the successful Renewable Energy Act and inlude the following: Offshore test site Alpha Ventus (http://rave.iset.uni-kassel.de/rave/pages/welcome). Over the next few years, offshore research will furthermore focus primarily on the offshore test field in the North Sea (Alpha Ventus). Over a five-year period, the German Environment Ministry will be making 50 million available for research and development in the test field. The R&D funds are primarily intended for German companies, however cooperation with foreign companies are also possible. The project consists of a variety of research projects in connection with the installation and operation of Alpha Ventus. The test site will be equipped with extensive measurement instrumentation in order to provide all participating research projects with detailed data. The goals are the following: Offshore demonstration on high-end multimegawatt wind turbines ( 5 MW); cost reductions for future offshore wind farms by further developments on foundations, logistics and control technology; advanced experience on operation, costs, grid integration and ecological impact; the Lighthouse Project Offshore Test Site is a concerted action of industry, utilities, science and authorities which paves the way for German wind energy development offshore; BMU accelerates offshore wind development with comprehensive research funding. 90 Technological research: o optimisation of supporting structures and rotor blades o the further development of open- and closed-loop control and monitoring technology o offshore assembly techniques and logistics, and o the management of maintenance and repairs Research platforms in the North and Baltic Seas
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Source: http://rave.iset.uni-kassel.de/rave/pages/welcome
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Ecological research
More information at: http://www.erneuerbareenergien.de/files/pdfs/allgemein/application/pdf/jahresbericht_forschung_ee_2007_en.pdf or at: http://www.erneuerbareenergien.de/files/pdfs/allgemein/application/pdf/foerderung_erneuerbare_energien.pdf (German only) Figure 39 shows the distribution of funding to research on wind energy between 2001 and 2007. Figure 39: Funding of research on wind energy between 2001 and 2007
Support, guidance and consulting services As one of Germanys leading project management organisations the Project Management Jlich, PtJ, is a partner for researchers, industry representatives and policy-makers. With their capacities in research and innovation management they help their contractors at federal and federal state level and in the European Commission realise their research targets. They thus serve as an important interface between the involved partners. As a largely independent unit within Research Centre Jlich PtJ is connected to a qualified scientific environment and can rely on an efficient infrastructure. In this respect, Project Management Jlich (www.fz-juelich.de/ptj/) assumes important consultation and coordination tasks. 91 The German Wind Energy Association (BWE, www.wind-energie.de) has monitored and helped to shape the development on wind energy in Germany from the very beginning. Since its foundation, it has been committed to a socially acceptable expansion of wind energy that preserves the integrity of the landscape en route to a decentralised, renewable energy supply. 92 Other institutions, sources and useful links: Institutions Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU): www.erneuerbare-energien.de Projekttrger Jlich: http://www.fz-juelich.de/ptj/ Federal Maritime and Hydrographic Agency (BSH): www.bsh.de German Energy Agency (dena): www.offshore-wind.de
91 92
Source: http://www.fz-juelich.de/ptj/ptj-home Source: http://www.wind-energie.de/en/
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Associations Offshore Wind Energy Foundation: www.offshore-stiftung.de German Wind Energy Association (BWE): www.wind-energie.de/de/themen/offshore/ Bundesverband der Windindustrie: www.deutsche-windindustrie.de/fakten/offshore/ German Engineering Federation (VDMA): www.vdma.org/windenergie Regional Competence-Networks Mecklenburg-Vorpommern: Competence Network Rostock: www.offshore-energies.de Bremen: wab - Windenergie Agentur, Bremerhaven/Bremen e.V: www.windenergie-agentur.de Bremen: fk-wind - Forschungs- und Koordinierungsstelle Windenergie: www.fk-wind.de Schleswig-Holstein: CEwind - Center of Excellence: www.cewind.de Schleswig-Holstein: windcomm - Netzwerkagentur Schleswig-Holstein: www.windcomm.de Lower Saxony: Forwind - Center for Wind Energy Research: www.forwind.de 7.8 Key players The German market for wind developments is characterised by a number of players and a number of projects at different stages of maturity. It is a very diverse market. Figure 40 shows the share of manufacturers in the German wind market in 2007. Figure 40: Share of manufacturers in the German wind market, 2007.
Source: http://www.german-renewable-energy.com/
Figure 44 shows the wind energy value chain (macro level). In Germany there exists strong competition between developers while the market concentration increases and wind farm developers integrate downstream. Some become operators/owners and some diversify into other renewables markets. Utilities are starting to buy wind farms, e.g. the energy utility ENBW has just bought 2 windfarms from the developers WPD and innoVent. Due to high risk and cost factors the German
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offshore market is quite contrary to the onshore market dominated by larger institutions and utilities. Some developers are deciding to remain partly owner while selling the other half to the mentioned utilities. A list of all relevant players is available at: http://www.wind-energy-market.com/
Figure 44: Wind energy value chain (macro level)
Source: DEWI
7.9 Market entry The German market for wind technologies is rapidly opening due to many approved sites in the North and Baltic Seas. There is strong political backing for the renewable energy sector and generous and predictable financial support schemes from January 2009 onwards. For this reason the German market is of great interest to a range of Norwegian companies. Norways oil&gas experience can easily be transferred to the offshore wind sector in Germany. In the near future, experts await in nearly all segments of the value chain bottlenecks where Norwegian companies can be involved. The entering strategy is different from sector to sector and needs to be well prepared, especially with regards to time and financial efforts. Existing competition in one of Europes biggest markets should furthermore not be underestimated. The Wind Energy Association and networks are a good starting point for a potential Norwegian company to enter the German market. The German Wind Energy Association (Bundesverband Windenergie, BWE, www.wind-energie.de) and the Wind Energy Agency Bremerhaven (WAB, www.windenergie-agentur.de) can be named here. Some conferences are also of interest: the WAB Conference in Bremerhaven is organized by the Windenergyagency Bremerhaven on 16-18 June 2009: http://www.windenergie-agentur.de/english/Offshore_Conference/Documentation.html There will also be a conference between Teknologisk Mteplass og Windenergy agency Bremerhaven, in Oslo (probably Dec. 9th) and one in Bremerhaven next spring with site visits etc. In conclusion: The German wind energy market remains buoyant with potential for Norwegian industry to get involved both on- and offshore and more detailed and individual information can be supplied through the Innovation Norway office in Hamburg.
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8.
8.1
United Kingdom
Current demand for electricity in the UK is approximately 380 TWh, while heat and electricity together require around 1,100 TWh. The UK demand for electricity grows annually by approximately 5% and is likely to continue to grow, despite efforts to increase energy efficiency and the recent economic downturn. Figure 45 shows the composition of UKs electricity supply. A number of nuclear and coal fired power plants will be closed in the short- and medium- term but new ones are likely to come on-line as the country would face a shortage otherwise. It is likely that the UK will need around 30-35GW of new electricity generation capacity over the next two decades and around two thirds of this capacity by 2020 93. New capacity will come from a combination of renewables, gas and nuclear. Renewables make up about 5% of UKs electricity production. Figure 45: UK's supply of electricity
Source: http://www.berr.gov.uk/files/file46983.pdf
93
Source: Energy White Paper, May 23, 2007
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Figure 46: Renewable electricity generation in the UK 1997-2006
Source: BERR, Renewable Energy Strategy Proposal 2008
Figure 46 shows the expansion of renewable power production in the UK in the past decade. The fastest growing source has clearly been wind energy. A Renewable Energy Strategy was launched for consultation at the end of June 2008. It aims to enable the UK to meet its proposed 15 % renewable energy target by 2020 (up from 2 % today), mainly by expanding onshore and offshore wind capacity with important contributions from biomass, hydro and potentially major tidal range projects in the Sever Estuary and elsewhere 94. The 15 % is the share directed by the EU, based on the EUs 20% by 2020 target. Note that a 15 % renewable energy target is likely to require 30-35% renewable electricity target and that it is widely recognised that it very unlikely that these targets will be met. The most important event for renewable energy in the UK in recent months was the announcement by the Government to aim for offshore wind capacity to reach 33 GW by 2020 and the opening of Round 3 offshore wind licensing by the Crown Estate (owner of the UK seabed). However, the Government recognises that the 33GW objective is more realistically going to be 14GW 95 The UK Business Secretary John Hutton underlined the Renewable Energy Strategys importance for meeting the UKs climate change objectives, increased energy independence, as well as creating green collar jobs (some 160,000 predicted). The strategy among other things proposes extending the financial support scheme, the Renewable Obligation, to 2035, and has been generally well received by industry stakeholders 96. Figure 47 shows a comparison of renewable electricity generation capacity between 2006 and projected 2020 (if the Government is to reach its objective): offshore and onshore wind is projected to represent the bulk of capacity with approximately 14 GW each.
The Strategy document is available from http://renewableconsultation.berr.gov.uk/consultation/consultation_summary 95 See Strategy document pp. 57 96 See the British Wind Energy Association reaction at http://www.bwea.com/media/news/articles/windrush_as_industry_hails_rou.html) The strategy is available from http://renewableconsultation.berr.gov.uk/consultation/consultation_summary
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Figure 47: Projected renewable electricity generation in UK in 2020
Source: BERR, Renewable Energy Strategy Proposal 2008
Note that there exists an important regional perspective to energy policy in the UK. The Scottish Executive, for instance, has a target of generating 17-18 % of Scotland's electricity from renewables by 2010, rising to 40 % by 2020. Scotlands 2010 target is likely to be met - and early even. For its part, Northern Ireland cooperates with the Republic of Ireland on a number of energy issues: the two regions have established an All-Island Energy Market Development Framework which sets forth the policy context for the creation of an all-island energy market. An All-Island Grid Study is to be completed in 2007 97. There is also an ongoing feasibility study for an offshore renewable energy grid between Ireland and Scotland the ISLES project looking into the potential for electricity generated by offshore wind, wave and tidal to be transported between offshore installations and consumers in Northern Ireland, Scotland and the Republic of Ireland.
97
See http://www.sei.ie./index.asp?locID=1214&docID=-1 for more information.
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8.2
Wind status now and future potential 98
Figure 48: Installed wind capacity in the UK
Installed capacity in the UK

Cumulative end 2007: 2,394 MW
1,000 3,500
800
2,800 Cumulative MW
600 MW
2,100
400
1,400
200
700
0 1995 1998 Installed MW 2001 Forecast 2004 Cumulative 2007 Cumul. forecast
Source: BTM Consult ApS - March 2008
The UKs wind potential is estimated at 114 TWh the highest in Western Europe. The UK Wind Energy Database, UKWED, is a comprehensive database on wind energy projects in the UK, tracking project progress from submission through to operation. It is available from http://www.bwea.com/ukwed/index.asp . As of July 2008 there were 165 operational onshore wind projects, with a combined capacity of about 2,400 MW. Figure 49 shows wind projects in operation (blue dots) and submitted for approval in the UK (black dots - under construction and approved are in addition see http://www.bwea.com/ukwed/google.asp). Figure 49 : Wind projects in operation and submitted
98
Source: Energy White Paper, May 23, 2007.
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If the onshore projects that are under construction or at the planning and permitting stages are fully realised there will be an additional 366 farms delivering a further 10 GW capacity. Most of this capacity addition will take place in Scotland. Offshore UK installed offshore wind is currently around 400 MW, out of a world total installed capacity of 1080 MW 99. If projects that are approved and those under construction are realised, installed capacity will increase by over 3000 MW over the next few years 100. In fact, the UK has recently overtaken Denmark as the country with highest installed offshore wind capacity. A first concession round (Round 1) in 2001 resulted in the approval of some 15 projects. Round 2 was launched in 2003 and has resulted in several large projects, including Humber Gateway (300MW), Robin Rigg (180MW) and Gunfleet Sands (180MW). Round 3 was announced in June 2008. New to Round 3 is the zoning approach whereby zones of development are being identified by the Crown Estate, subject to a strategic environmental assessment (SEA). The development rights of a zone will be exclusive to one consortia of companies and the zones will be defined by Q2 2009. Also new is that the Crown Estate will provide 50% of project development costs (up to point of having secured permit) in the zones.Further and up-to-date information on offshore developments can be accessed at the BWEA and Crown Estate websites (www.bwea.org and www.crownestate.com) Given the UKs natural resources and Government commitment, it is beyond any doubt that the UK will remain among the top-performing European markets in wind developments in the years to come. 8.3 Wave status now and future potential The UK possesses some 35% of Europes wave resource and 50% of its tidal resource. It has been estimated that 3 GW of wave and tidal capacity could be installed in the UK by 2020, a capacity that could generate approximately 8 TWh of electricity a year, which again is equivalent to 2.1% of UK electricity supply in that year 101. However, the Government recognises that the industry is in its infancy and unlikely to generate large quantities by 2020 102 Much of the tidal and wave activity in the UK centres around two test centres: The European Marine Energy Centre (EMEC) at Orkney and the Wave Hub in Cornwall. The latter was announced in April 2007 and has been approved for 21.5 million of funding. EMEC was the first centre of its kind to be established anywhere in the world to give developers the opportunity to test prototype devices in excellent wave and tidal conditions. Several companies are currently testing new devices: one of them is Pelamis Wave Power Various Government institutions have contributed 15 million to EMEC so far. New Energy Finance (NEF) reports of 53 varieties of wave and tidal generators under development. Of the wave devices, NEF points to Oceanlinx (Australia), OPT, Pelamis Wave Power and WaveGen as the most promising and developed technologies at this point 103. 8.4 Tidal status now and future potential In 2006, the UK Governments Sustainable Development Commission (SDC) released a major study on tidal power Turning the Tide that analysed locations and technologies, both for tidal stream and tidal range. The study looked at the potential of tidal power in the Severn Estuary and the proposals
99 See http://www.ewea.org/fileadmin/ewea_documents/documents/publications/reports/purepower.pdf 100 Source: GWEC 101 BWEA, The Path to Power, June 2006, available from http://www.bwea.com/pdf/pathtopower/PathtoPower_low.pdf 102 Source: Renewable Energy Strategy Proposal, June 2008,pp. 58 103 NEF Analyst Reaction, 31 October 2007
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for a tidal barrage there, which could potentially supply up to 5% of the UKs electricity demand 104. The cost of building Severn Barrage could reportedly run into 14 billion 105. In 2008, the Government announced the terms of reference of an extensive feasibility study of the site 106. The study will analyse potential environmental, social and economic impacts of tidal barrages and lagoons, allowing the Government to decide whether to support such a project. The study is expected to last two years and will conclude with a public consultation in early 2010. In addition, the UK Government in July 2008 published a list of 10 possible projects at the Severn Estuary, a few of which will be short-listed later this year for further research. Note that while a barrage across the estuary has more of a chance of being built, the current feasibility study is also considering other options. The UK has good tidal potential several places along the coast. EMEC has a test facility for tidal devices, and Marine Current Turbines this year installed the worlds largest tidal current turbine (SeaGen) in Northern Ireland's Strangford Lough Scottish and Southern Energy has a wholly-owned subsidiary - Renewable Technology Ventures Ltd that has developed the 8 million 'Neptune' demonstrator project at EMEC. Further information on projects and companies can be found in section 8.8 Key Players). 8.5 Price The UKs main mechanism for encouraging the deployment of renewable energy technologies is the Renewable Obligation (RO) scheme 107. The ROs mandate electricity suppliers to provide a growing percentage of their electricity from renewable energy sources. Accredited renewable energy generators earn Renewable Obligation Certificates (ROCs) for each MWh generated, which can be traded. Electricity suppliers must have the necessary number of certificates at the year end, or else pay a buy out fee (34.3/MWh for 2007/08 (43.2)). The buy out fees are recycled to suppliers who have met their obligation, thus increasing the value of the ROC. Wind producers currently receive approximately 6.6 /kWh for their Renewable Obligation Certificates. In addition, renewable energy suppliers are exempt from the Climate Change Levy (of 0.54/kWh (0.43 GBP)), imposed upon businesses in the UK that use more than 1,000kWh per month of electricity. The ROCs, exemption from the Climate Change Levy plus market price bring the price paid pr kWh wind in UK in 2007 to approximately 12 . The Energy White Paper of 2007 proposed banding of the ROs, i.e. differentiating the levels of support according to different technologies. This will encourage less mature technologies: offshore wind will receive 1.5 ROCs/MWh (compared to 1 for onshore wind) and wave and tidal will receive 2.0 ROCs/MWh. The banding is likely to be introduced in 2009 and to last until 2025. Table 19: Technology-differentiated support and prices Onshore wind Offshore wind Wave and tidal stream ROC 1 1.5 2 Value of ROCs/kWh () 6.6 9.9 13.2 Total Price/kWh () 12 15.3 18.6
104 105
The report can be downloaded from http://www.sd-commission.org.uk/pages/tidal.html Daily Mail, Jan. 24, 2008 106 http://news.bbc.co.uk/1/hi/wales/7013068.stm 107 The ROs mandate electricity suppliers to provide a growing % of their electricity (currently 7.9%) from renewable energy sources. Accredited renewables generators earn Renewable Obligation Certificates (ROCs) for each MWh generated, which can be traded. Electricity suppliers must have the necessary number of certificates at the year end, or else pay a buy out fee (34.3/MWh for 2007/08). The buy out fees are recycled to suppliers who have met their obligation, thus increasing the value of the ROC.
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Marine Supply Obligation/Scottish banded ROS The Marine Supply Obligation scheme is only available in Scotland and came in to force on April 1st 2007. The intention is for this mechanism to work until the UK-wide banded RO system described earlier enters into force in 2009 (at the earliest). The MSO has been capped at 75 MW. The income generated from an MSO is 15.2/kWh. Note that a new support scheme has been proposed that would give five ROCs to wave projects and three to tidal projects. The new scheme would only apply to projects that have not already received Government support and is subject to primary legislation being passed in the UK Parliament regarding the banding of ROCs. 8.5 Relevant locations for wind and ocean based renewable energy
UKs wind resource is concentrated in Scotland, Northern England and offshore, but good sites exist throughout the country. The Department for Business, Enterprise and Regulatory Reform (BERR) 108 provides data and maps on UK wind, wave, and tidal power resources, such as the ones presented in Figure 50 109. Figure 50: tidal, wind, and wave power maps UK
Regional studies suggest that the accessible wave resource in waters around the UK (which takes into account constraints on available sites for a wide variety of reasons) could be as much as 700TWh/y, almost double electricity consumption. However, the extent to which this will prove practical to harness will depend upon the successful development of both near shore and deep water technologies. Indeed, it has been reported that the realisable wave potential in the UK is probably closer to 50 TWh/y 110. Likewise, The World Offshore Renewable Energy Report 2002-2007, released by the Department for Business, Enterprise and Regulatory Reform, suggests that while 3000GW of tidal energy is estimated to be available, less than 3% is located in areas suitable for power generation. In September 2008, the Scottish Government and Crown Estates announced a tidal testing and deployment zone in the North of Scotland seeFigure 51.
108 109
Previously the Department for Trade and Industry (DTI) These and various other resource maps are available from http://www.dti.gov.uk/energy/sources/renewables/renewables-explained/wind-energy/page27403.html 110 From the 2001 the Science and Technology Committee, based on estimates from the DTI's Energy Technology Support Unit (ETSU.
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Figure 51: Tidal and Wave zone in Pentland Firth
For offshore wind, Crown Estates (part of the UK Government) has ownership of the seabed. Figure 52 shows the location of current projects and the planned zones for future projects. Figure 52: Maps of Round 3 project zones (indicative) and Rounds 1 and 2 projects
Source: The Crown Estate. A more detailed map of Round 1 and 2 projects is available from http://www.thecrownestate.co.uk/round_1_2_windfarm_sites-3.pdf
Most UK offshore developments have been installed using steel monopiles. As for the potential for offshore wind in deeper water, the British Wind Energy Association claims that Although it is possible to build structures in water deeper than 30 m (e.g. oil platforms in the North Sea), it is very expensive and is not economically viable at present for offshore wind turbines. However, recently
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deep offshore has received a boost following Talisman Energy Ltds announcement that the Beatrice demonstration project 25 km off the Scottish coast is now producing power. Likewise, Farm Energy has announced a 1,500MW `Atlantic Array wind farm, 15 km off the coast of South West England in waters 40m deep 111. Issues related to the location of projects Most land in the UK is privately owned, and leasing of land to onshore wind farms is often a welcome income supplement for farmers. That being said, local opposition to onshore wind parks in the UK is high. In a recent survey, 84% of the population favour the use of renewable energy, while only 64% would be happy to live within 5 km of a wind power development. The UK is a densely populated country and available land is an important limiting factor. Largely due to this opposition, the UKs permitting process is highly congested, although it is transparent and relatively easy to navigate. It can take up to 5 years to obtain a permit, and it has been estimated that currently, the equivalent of 6 % of the UKs electricity supply is stuck in the planning system awaiting decision. The Parliament is currently debating the Planning Bill, designed to improve the planning process. The new Bill includes a proposal to create a fast-track infrastructure planning commission for projects >50 MW (>100MW offshore). The capacity of the national grid is another factor limiting the development of renewables in the UK. There is a mismatch between the location of the UKs highest wave, tidal and wind resource and its centres of demand, leading to problems related both to ability of projects to secure connection and to the cost of connection and network charges. Before additional projects can be connected to the grid, it will be necessary to build a new transmission line (upgrading current capacity) between Scotland and England. The Beauly-Denny line is scheduled to be built in the period 2010-2012, but is awaiting final go-ahead from the Scottish Executive. As for offshore transmission, very little infrastructure has been installed so far. The UK Government is planning a competition whereby companies bid for the right to develop the offshore grid 112. A final factor holding back the expansion of wind - and more generally renewable - energy industry are constraints in the supply chain; there is a shortage of turbines and supply is not keeping up with demand. High prices for raw materials such as steel are an additional burden. 8.6 Political climate for renewable energy from wind and ocean
Local opposition to onshore wind parks and grid issues notwithstanding, there is strong national and regional political support for renewable energy in the UK. Renewable energy as a means to tackle climate change receives very positive coverage in various media, and households and businesses increasingly demand green energy sources Sustained growth in the renewable energy sector is ensured by national and EU targets. In fact, climate change and renewable energy have become subjects on which all three major political parties in the UK compete. As a result of this, it is very likely that the positive political climate surrounding development of renewable energy projects in the UK will remain unchanged or even improve in the foreseeable future. In particular, the UK is pushing for the development of wave and tidal technologies around which they aim to build an industrial base. Since the UK lost the opportunity to build a wind energy empire to Denmark, there is widespread determination in industry and political circles alike to make it a hub for marine renewables. A recent study 113 points to the UKs marine resources, technology base, offshore skills and research and investment interest and argues that the UK has the potential and opportunity to become the worlds leading marine technology hub.
111 112
Project rights were recently bought by Npower Renewables See www.ofgem.gov.uk 113 Source: http://www.bwea.com/pdf/pathtopower/PathtoPower_low.pdf
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8.7
Incentives for developing / utilising new technology
Financial Incentives Other than the value of the ROCs, there are currently no additional financial incentives for onshore wind farms they are considered commercial, or close to commercial. For offshore wind, the Government (Department for Business, Enterprise and Regulatory Reform) administers a 97 million offshore wind demonstration programme consisting of grants (of 40% (max) of cost but most received so far is 10-15%, and there is a maximum of 10M). The programmes aim is to concentrate on large projects. As for tidal and wave energy, the UK government and industry at present provides support to the industry through four main mechanisms: The Technology Programme of the Department for Business, Enterprise and Regulatory Reform (BERR). Note that offshore wind projects also qualify for support. Projects must be must be of a collaborative nature (industry-industry or industry-academia). See http://www.dti.gov.uk/energy/sources/renewables/business-investment/funding/r-andd/page19363.html for details. The Marine Renewables Deployment Fund (MRDF), also by BERR, is a fund specifically to support the wave and tidal technologies at the demonstration stage. It consists of a combination of capital grants (up to 25% of eligible costs) and revenue support (100/MWh). Total value of the Fund is 50 million. For more detail, see http://www.berr.gov.uk/energy/environment/etf/marine/page19419.html The Carbon Trust sponsors the Marine Energy Accelerator Programme, launched in October 2006, which aims to accelerate progress in cost reduction of marine energy. Overall, up to 3.5m of support is available to device developers, component technology manufacturers, engineering consultants/contractors and academic research groups for developments. http://www.carbontrust.co.uk/technology/technologyaccelerator/mea.htm Energy Technology Institute (ETI). The ETI is a public-private consortium of which BP, Caterpillar, EDF Energy. E.ON, Rolls-Royce, and Shell are members. The ETIs pilot programme in marine energy will fund two or three large integrated projects for 5-10 million each. The projects are envisaged to be multi-organisation projects at a fairly advanced stage. The call for expression of interests is now closed.
Note that for most of these programmes, a company has to be registered in the UK to be eligible for support. Also note that all the funds have been under-utilised, mainly because device concepts have not been able to meet the criteria set out in the programmes. In particular, the MRDF requires companies to have gone beyond the initial R&D stage and to be ready to deploy full-scale devices in natural conditions. Regional support schemes may also be available. For instance, Scotland offers Regional Selective Assistance (RSA) to companies that locate in Scotland, where the size of the grant depends on the location of the project as well as its size and employment-creation potential see http://www.rsascotland.gov.uk/rsa/208.html. Capital available for investing This years financial turmoil notwithstanding, London is a financial hub and as such provides an array of choices in terms of financing. Venture capital interest in the sector is on the rise: London-based New Energy Finance recently identified 1 859 venture capital/ private equity investors who have either made investments or stated their intention to do so 114. The financial media is reporting that a flood of
114
http://www.newenergyfinance.com/?n=16
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wave and tidal power initial public offerings are set to hit the London market, many of which go through the London Stock Exchanges Alternative Investment Market (AIM) 115. An example of a mainstream bank with interests in the sector is Barclays Bank purchase of shares (worth GBP15.6 million) in the Irish company Mainstream Renewable Power, which is hoping to develop a subsea electricity network between Britain, Holland and Germany 116. Test facilities for new technology Three important test facilities for marine technologies in the UK are: European Marine Energy Centre (EMEC). Located in the Orkney Islands, EMEC offers developers the opportunity to test prototype devices in challenging wave and tidal conditions. Wave and tidal energy converters are connected to the National Grid via seabed cables running from open-water test berths. Testing takes place in a wide range of sea and weather conditions, with comprehensive round-the-clock monitoring. See www.emec.org.uk The South West England Wave Hub Project. This project, announced in April 2007 and approved for 21.5 million of funding will be the world's largest wave farm test site. It is located off the coast of Cornwall in South West England and is hosted by the South West of England Regional Development Agency. It will consist of an area measuring 4 km by 2 km and provide a high voltage cable 10 miles out to sea that is connected to the National Grid. Four berths will be available, each with a maximum capacity of 5MW. Construction of the site has been postponed on several occasions and is now likely to take place in 2010. Four wave device developers have already been chosen to work with the Wave Hub: Oceanlinx, Ocean Power Technologies, Fred Olsen Ltd., and WestWave (a consortium of E.ON and Ocean Prospect, using the technology of Pelamis Wave Power). See http://www.wavehub.co.uk/ New and Renewable Energy Centre (NaREC). Located in Northumberland, NaREC offers independent research, testing and development of technologies, cluster activities and market development. It has 3 full scale marine deployment projects underway. Additionally, Clipper Windpower has started development work at NaREC for the worlds largest wind turbine to date at 7.5 MW. See http://www.narec.co.uk/main/st518/marine-renewables.htm
Support, Guidance and Consulting Services The Department for Business, Enterprise and Regulatory Reform (BERR)s Energy Group (the UK does not have a Ministry dedicated to energy only) runs UK Renewables, which aims to raise the international profile of the UK renewable energy industry and promotes the UK as a location of choice for overseas investors and buyers (http://www.ukrenewables.com/) UK Trade & Investment is the lead UK Government organisation which helps businesses locate in the UK. It provides general information and business services such as finding appropriate locations and help setting up the business. Support for renewable energy companies can be accessed at http://www.ukinvest.gov.uk/Environmental-&-renewable-technology/en-O2-list.html. Scottish Enterprise, through Scottish Development International, assists international companies in establishing business and collaboration opportunities in Scotland. It has a dedicated energy unit see http://www.sdi.co.uk/pages/Industries/Energy/index.asp However, investment assistance is largely a regional issue in the UK. The regional development agencies (RDAs) can provide practical, financial and network opportunities. They include The South West of England Regional Development Agency, hosting the South West England Wave Hub Project (see previous section) and The East of England Development Agency. Regional energy industry
115 116
http://business.scotsman.com/index.cfm?id=1750682007 The Dublin-based company was established in 2008 by Eddie O'Connor, who was chief executive of wind developer Airtricity before its acquisition by Scottish and Southern Energy in January 2008.
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associations, such as the East of England Energy Groups (EEEgr), the Southwest renewable energy agency, and Aberdeen Renewable Energy Group (AREG) are also relevant http://www.aberdeenrenewables.com/index.php?id=16. The Carbon Trust is an independent company funded by the UK Government to help the UK move to a low carbon economy. It has five complementary business areas, two of which are directly relevant for renewable technology enterprises: Carbon Trust Innovations, which helps develop commercially promising low carbon technologies, and Carbon Trust Investments, which finances clean energy businesses that demonstrate commercial potential. Scottish Renewables: Scottish Renewables is Scotlands leading renewables organisation. It represents companies working in wind, wave, tidal, solar, hydro and biomass. For more information on Scottish Renewables go to www.scottishrenewables.com . The British Wind Energy Association (BWEA) is similarly positioned in the UK (www.bwea.org) The Offshore Wind Energy Network this is a joint industry/academia collaboration promoting research and cooperation between commercial organisations and researchers http://www.owen.eru.rl.ac.uk/ Leading consultancies include Garrad Hassan and Natural Power. 8.8 Key Players
The UK market for wind and ocean energy developments is characterised by a number of players and a number of projects at different stages of maturity. It is a very diverse market. Onshore Wind The largest onshore wind-owning utilities in the UK are: Iberdrola (Scottish Power), Scottish & Southern Energy, E.ON, npower renewables(RWE), and EdF. Private developers include IPPs such as Renewable Energy Systems (RES Ltd.), Fred Olsen Renewables, Ecotricity, and Falck Renewables. Statkraft is currently involved in 9 wind farm projects in the UK In order to mitigate local opposition to onshore wind projects, it is common for investors to team up with local players. This even applies to foreign players with solid project development experience and capabilities. Another strategy followed by some is to acquire projects at advanced planning stages, where risks are lower, but premiums higher. The UK wind turbine supplier market is dominated by Vestas, Siemens, and REpower see Figure 53 Figure 53: Wind suppliers to the UK market
2007 Market Shares in the UK
% of 522MW in total
Enercon 6.8% REpow er 9.2%
Siemens 32.5%
Nordex 27.4%
Gamesa 2.3% Source: BTM Consult ApS - March 2008 Vestas 21.8%
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Offshore Wind Due to its large balance sheet requirements, offshore ownership appeals primarily to utilities. The ones currently involved in offshore UK are Vattenfall (Kentish Flat project), Centrica and Dong (Barrow), E.on (Scroby Sands), npower (North Hoyle) and a consortium consisting of Shell, Nuon, Border Wind and Powergen Renewables (Blyth). Of these, Centrica is reputedly the most ambitious, having missed out on the opportunity to build a large onshore project portfolio. Centrica is currently investing in six offshore wind farm developments, including Lynn and Inner Dowsing. StatoilHydro is the current owner of the Sheringham Shoal Round 2 project, and is positioning itself for Round 3, together with Statkraft and other Norwegian players. Finally, Harland & Wolff, headquartered in Belfast, is an experienced provider of marine design and construction services for offshore wind, wave and tidal projects. Wave Scottish Power will develop the 4 million Pelamis (WEC) project at Orkney. Pelamis Wave Power is an Edinburgh-based company set up in January 1998 to develop wave energy converters. Pelamis is being tested at EMEC, at Agucadora (off the coast of Portugal) and at Wave Hub. The project at the Wave Hub, WestWave is developed by E.ON and Ocean Prospect. Wavegen, formed in 1990 and based in Inverness, Scotland, has developed and operated Limpet, the worlds first commercial-scale wave energy device for the grid (Oscillating Water Column (OWC) technology) of the Scottish coast since 2000. It was recently acquired by Voith Siemens Hydro Power Generation. In April 2008, npower renewables submitted a planning application for a new wave power station on the Isle of Lewis using Wavegen technology. Construction could start as early as 2009. AWS Ocean Energy is commercialising the Archimedes Wave Swing (AWS) technology with grants from the Carbon Trusts Marine Energy Accelerator Programme (2m) and investments from Shell Technology Ventures Fund (STV) and Tudor BVI Global Portfolio. It will shortly deploy at EMEC. See www.awsocean.com for details. ORECon has raised enough funds to build and deploy its full-scale MRC (multi-resonant chambers) wave energy device. The company is backed by four financial investors. See http://www.orecon.com/ The Oyster is a wave-power device from Aquamarine Power. Testing of a prototype is due to start this year in Orkney. Scottish and Southern Energy is an important investor in the company. Ocean Power Technologies (OPT) is a US based company founded in 1994 and has been focused on its proprietary PowerBuoy technology. A full size demonstration plant of up to 10MW capacity is planned for installation in UK waters. It will be testing at the Wave Hub. Additionally, the company is in a joint venture with Iberdrola to install a 1.25 MW wave farm off the northern coast of Spain. OPT is traded on the London Stock Exchanges AIM market. C-Wave plans to install a first grid connected multi-megawatt system in 2009, and then go on to develop floating wave farms in deepwater between five and twenty kilometres offshore. http://www.cwavepower.com/ Oceanlinx is an Australian device developer that combines OWC and its own patented turbine technology. It will be testing at the Wave Hub. Fred. Olsen Ltd. has developed FO3, based on the earlier Buldra version of the technology and will deploy three units at the Wave Hub.
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The Manchester Bobber is a wave energy device that comprises an array of 25-50 individual flotation devices. At the moment it exists as a concept and as a one-tenth scale model in a test tank at NaREC. A consortium has been put together for full-scale testing, consisting of: UMIP (University of Manchester Intellectual Property), ABB, Renold Gears, Renold Chains, Royal Haskoning, Bridon International, Red Rooster, ODE and Burntisland Fabrications.
Tidal Scottish Power has bought a part of Hammerfest Strm, with which it has formed the tidal power company Hammerfest UK. Both parties will work together to optimise Hammerfest Strm's technology (Lanstrom device), with manufacture of the prototype commencing in 2008 and testing at EMEC. Two tidal projects, each with up to 20 turbines, could be installed on the seabed in the Pentland Firth and the Sound of Islay (Scotland). A third is planned off the North Antrim coast in Northern Ireland. Marine Current Turbines has installed the worlds largest tidal current turbine (SeaGen) in Northern Ireland's Strangford Lough. The 1.2MW turbine is the first commercial-scale underwater turbine powered by tidal currents, and can generate enough electricity to power 1,000 homes. The electricity will be sold to Northern Ireland and the Republic of Ireland. Based on the experience with this system, the company plans to scale up the technology to build a 10MW tidal power farm within the next three years and wants to have 500 MW of tidal capacity by 2015. The company received a 4.27m grant to cover half the cost of the installation 117. Their experience builds on several years of testing of Seaflow, a tidal generator installed in May 2003 and still in place near Lynmouth in Devon. Its plans include a 10.5MW project designed to use seven Seagen systems in Welsh waters off Anglesey 118. Lunar Energy and E.ON have plans to build an 8 MW tidal stream power plant off the west coast of England the device is under development by Rotech Engineering (Aberdeen) and expected operation in 2010. Total has reportedly taken a stake in Scotrenewables, which is developing a tidal turbine in Orkney and Rolls-Royce has acquired almost 25% of TGL (Tidal Generation Ltd.) a tidal stream concept developer. Pulse Tidal is testing its prototype in the Humber Estuary, and has received Government funding and planning approval to do this. (See http://www.pulsegeneration.co.uk/?q=node/1). Swanturbines Ltd, is developing a tidal current device, to be tested at EMEC shortly. The consortium is led by Swansea University and has 8 partners, including CB&I John Brown Construction, NaREC, and Green Energy UK Plc 119. Openhydro, an Irish company, has been testing its device at EMEC for 18 months and has been producing for the grid. 8.9 Market entry The UK market for wind and marine-based technologies is open, dynamic, relatively mature and with good prospects for the future as demonstrated in the rankings at the beginning of this report. There is strong political backing for the RE sector and generous and predictable financial support schemes. Thus, Norwegian firms would do well in exploring business opportunities in the UK. It should be kept in mind, however, that since the UK is such an open and mature market, competition is keen and newcomers should therefore prepare a robust strategy and business plan. Likewise, it is a concern that the grid will need reinforcements to carry additional capacity on a large scale, and that the permitting process is time-consuming.
117
http://www.autobloggreen.com/2007/06/16/1-2-mw-tidal-turbine-to-be-installed-off-northern-ireland/ Energy Engineering, issue 15, 2008 119 See http://www.swanturbines.co.uk/

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A good starting point for a potential Norwegian entrant to the UK market is the British Wind Energy Association, which also covers wave and tidal power. It is a very active trade association that has a reputation for being a good lobbyist for the industries it represents. In addition to information about various projects and opportunities, BWEA provides resource data and networking possibilities. See http://www.bwea.com/about/index.html Additionally, a visit to the UK should include meetings with: The Department for Business, Enterprise and Regulatory Reform (BERR)s Renewable Trade Promotion Services UK Trade and Investment Regional Development Agencies The Carbon Trust Potential partners/customers, such as utilities or project developers.
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9.
9.1
Ireland
Energy Demand and Supply
Total energy requirement in Ireland in 2007 was estimated at approx. 28.9 TWh and peak demand exceeded 5,000 MW in December 2006 for the first time. Overall demand grew by approx 4% in 2007 on the previous year driven by increasing population and economic activity, and although economic growth is slowing demand is expected to increase by at least 3% annually through 2020. In fact, the State electricity utility (Electricity Supply Board - ESB) commissioned a study in 2006 based on High, Median and Low economic growth rates, and at Median levels, demand is expected to grow annually by over 4% in the years 2006-2013. While most of Irelands electricity is generated from fossil fuels, renewable energy continues to grow, with wind capacity currently reaching 1,000 MW, in addition to approximately 250 MW from hydropower and generation from landfill gases. Figure 54 Irelands Electricity Production by Fuel source, 2007
5% 2% 24 % Coal Peat Oil Natural Gas 8% 54 % 7% Renewables Net Imports
Source: Sustainable Energy Ireland, Energy Policy Statistical Support Unit.
The primary objectives of government policy are security of supply, environmental sustainability and economic competitiveness. The main challenges are a relatively small energy market, Irelands peripheral position in Europe, limited indigenous fuel sources and sustained population and economic growth. Currently, 87% of natural gas is imported through the UK via two inter-connectors. Government and official concern in Ireland is that if current levels of economic and population growth continue, 70% of electricity would have to be generated by imported gas by 2020, unless there are major policy changes. Currently, renewables account for 5% of electricity generation in Ireland, made up from wind power, hydropower and landfill gas mostly (see Table 20). New government policy is for 15% of electricity generation to come from renewable sources by 2010, with a further target of 33% by 2020. While this target is ambitious, currently there is 961MW of wind generation installed, and although the observed load factor for wind in Ireland is 31% there is an
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additional 1,063 MW contracted to connect to the grid. As this 15% is estimated to equate to an installed capacity of 1,400MW, it seems that Ireland is well on target. In fact, the Commission for Energy Regulation, which licenses connections to the Irish grid currently has applications from organizations proposing to generate 7,000MW from renewable sources. It has announced that it will only license 3,000MW in its next licensing round which with existing and already approved projects would represent over 5,000MW of generating capacity from renewable sources (mainly wind). The Commission is concerned that there should be a balance between conventional and wind generation, due to the intermittent nature of wind power. Additionally, although permission will be given for a large increase in capacity, it is uncertain how many of these projects will proceed, particularly given the difficult planning process in Ireland. (www.cer.ie) Table 20: Irelands Renewable energy generation2007. Source Hydro Wind Biomass Landfill Gas Biogas Total
Source: SEI
Ktoe 57 161 2 24 16 260
% 21 61 1 9 6
Ireland has a Kyoto target of 13% above 1990 levels, but is already falling behind, with the latest figures showing Ireland at 24.5% and predictions that the country could soon hit 28% above 1990 levels. Obviously the expansion of renewable energy is a key factor in the achievement of the Kyoto targets, and is one of the main aims of government policy 120. All-Island/UK Activity The governments of the Republic of Ireland and Northern Ireland (UK) have begun to develop an allisland policy for electricity-generation and -use which recognizes the interdependence of the two parts of the island of Ireland. As part of this co-operation, the Single Electricity Market Ireland was inaugurated on November 1st 2007. It is a joint venture between Eirgrid and the System Operator for Northern Ireland. (www.allislandmarket.com). Various working groups are studying the effects of the all-island electricity market and the place of renewables in that market and a first (highly technical) report called the All Island Grid Study was published in January 2008. (http://www.dcmnr.gov.ie/NR/rdonlyres/D55397CC-395A-4862-90719509A81EAACE/0/AllIslandGridStudyWS4AnalysisofImpactsandBenefitsJan08a.pdf). For more details on the all-island initiative, see http://www.sei.ie./index.asp?locID=1214&docID=-1. Cross border cooperation is also growing the interest by local authorities in renewable energy projects. There is for instance considerable activity in Northern Ireland in tidal energy development, and Harland and Wolff in Belfast (owned by Fred Olsen) is involved in fabricating and maintaining offshore structures. The first grid-connected tidal device in the UK was installed in Strangford Lough during 2007. The governments of the Republic, Northern Ireland and Scotland recently announced a joint feasibility study on the development of an offshore electricity transmission network to link offshore renewable generators off the Irish and Scottish coasts. This study will be partly funded by the EU and will cost in
120
See White Paper on Energy March 2007: www.dcmnr.gov.ie/EN/
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the region of 1.6 million (2 million). It will be formally launched in late 2008, and will be titled the Irish-Scottish Links on Energy Study or ISLES Project. 9.2 Wind-Current Status and potential.
Total wind power installed in the Republic of Ireland is approximately 1,000MW. Offshore is currently accounted for by one installation, the Arklow Bank facility which has a capacity of 25MW, and the first phase of a second facility, this time of 330MW, is due to begin construction in Autumn 2009. One other offshore project, the Codling Bank, developed in a joint venture between Fred Olsen and an Irish developer has received a full Foreshore Lease to construct, but construction has not yet commenced. The Irish Wind Energy Association (www.iwea.com) produces a list of wind farms installed in Ireland and this is available at (http://www.iwea.com/index.cfm/page/windfarmsinireland) According to Sustainable Energy Ireland (SEI), Ireland has the potential to increase its wind capacity to over 1,600 MW (with a minimum investment in grid upgrade), supplying over one million homes with clean electricity 121. Commercial interests, however, believe that if both grid capacity and interconnections with wider markets (UK) are improved then the potential is far higher and that Ireland could even become an exporter of green energy. SEI has produced a wind atlas showing wind speeds and power at 50, 75 and 100 meters above ground level. At 100 meters above ground level almost the entire country has a competitive wind resource, although at lower heights, every county in Ireland has some potential. (See www.sei.ie). The less turbulent, high wind-speed conditions make off-shore locations very attractive. In Irelands case, development located off the East coast and close to the urban centre loads of Dublin has particular potential. 9.3 Wave and TidalCurrent Status and potential 122
An early study confirmed that average wave power in Europe is highest near the west of Ireland with an average wave power of 76 kW per metre occurring off the Irish coast. A more detailed assessment of Irelands wave energy resource was performed in 2005 which looked at the theoretical and accessible levels of wave energy in Irish waters. This study indicates that a theoretical energy resource of up to 525 TWh exists within the total limit of Irish waters.
121 122
http://www.sei.ie/index.asp?locID=104&docID=140 Source: Accessible Wave Energy Resource Atlas Ireland 2005 at www.marine.ie)
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Figure 55: Wave patterns Ireland
Following a number of calculations regarding the physical and engineering constraints of wave power generation, it was estimated that the accessible wave energy resource was in the range of 1.0620.76TWhe per year, with an average of 11.72 TWhe/yearapproximately 75% of the Republics energy requirement. The government White Paper projects approximately 75MW of wave generated capacity operational by 2012 123. The governments Ocean Energy Strategy was launched in 2006. It proposed a 4 stage strategy for the development of ocean energy in Ireland as follows: Phase 1research and development2005-2007 Phase 2---Testing of various devices---2007-2010 Phase 3----Further testing, including grid connection-2010-2015 Phase 4Full commercialization--2010-2015 As part of Phase 1, an ocean test site was developed off the West coast near Galway, where up to scale prototype apparatus can be tested. Five developers have been funded by SEI and two scale devices have been tested there. Under a new initiative, a full-scale development site has been identified off the Mayo coast on the West of Ireland which will be grid-connected and suitable for full scale device testing in a more
123
Source:www.dcmnr.gov.ie/ENERGY/ENERGY+PLANNING+DIVISION/ENERGY+WHITE+PAPER.htm)
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exposed location. Funding has been announced and it is expected that the site will be commissioned within two years. Tidal energy has not been developed to any significant extent in the Republic of Ireland, although a study has been undertaken of the resources available 124. Figure 56 shows that the tidal resource is relatively weak or moderate around the island, except at the Northern tip (Northern Ireland see UK chapter for details on the Strangford Lough development), East Coast and the Shannon Estuary on the West coast. The accessible/practical resource has been assessed to 2.633TWh/year. It is believed that some initial commercial interest has been expressed in two sites offshoreCarnsore Point on the South East tip of Ireland and the Shannon Estuary, but no investigative licenses have yet been granted. (Source: Department of Agriculture, Coastal Zone Management Unit). Figure 56: Tidal Patterns Ireland
124
See www.marine.ie publications, and SEI, Tidal & Current Energy Resources in Ireland.
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9.4 Price of Electricity Generated from renewable sources. Between 1995 and 2003, a tender scheme (the Alternative Energy Requirement AER) was used to support renewable energy developments in Ireland. However, since early 2006, the Renewable Energy Feed in Tariff (REFIT) has become the main tool for promoting renewable energy. 119 million will be used over 15 years to support 55 new renewable electricity plants with a combined capacity of 600 MW. Feed-in tariffs are guaranteed for up to 15 years, but may not extend beyond 2024. During its first year, 98% of all the REFIT support was allocated to wind farms. The REFIT tariffs are as follows: 1. 2. 3. 4. Large Wind Energy ( 5MW) Small Wind Energy ( 5 MW) Biomass (landfill gas) Hydro and other biomass technologies 0.057 /kWh 0.059 /kWh 0.07 /kWh 0.072 /kWh
In January 2008, two new categories were announced under the REFIT scheme, one for wave and tidal and one for offshore wind: 5. The REFIT Tariff for ocean energy is 6. Offshore wind 0.22 /kWh. 0.14 /kWh.
This tariff is the second highest is Europe after Portugal. 9.5 Relevant Locations for wind and ocean based renewable energy
As stated above, there is potential in every county in Ireland and off most coastlines, but other factors will need to be taken into account in deciding locations: Most land in Ireland is privately owned and in relatively small parcels (farm sizes range from 10 to 100Ha.) Larger parcels are made up of more marginal farmland, private forest and bogland which may be suitable for on shore wind farms. Two State organizations, Coillte, (www.coillte.ie) the State forestry service and Bord na Mona,(www.bnm.ie) the peat development company with 400.000 Ha. and 27,000 Ha. of land respectively are heavily involved in the renewable energy business. Wind farms have been promoted by the Irish government farm advisory service as having potential to generate alternative income for farmers, but without any firm recommendations. (www.teagasc.ie) The permit process in Ireland for wind farms, both on-shore and off-shore, is well established. However, the process of allowing appeals can be both complicated and time consuming. Basic requirements are as follows: Compliance with National development policy and County Development Plans Discussions with local planning officers. Discussions with local Energy Agency office. Environmental Impact Statement for potential developments over 5MW 12 months wind speed data from the proposed site Planning Permission for wind speed measurement using a 40 meter mast. Full Planning Permission for the final scheme Foreshore lease application for off-shore projects.
It is likely that for substantial schemes, a full public consultation and enquiry may be required. Appeals against Planning Permission are likely. The whole process could take from 2 to 5 years.
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For offshore installations a Foreshore License and Lease is required. A Foreshore License gives permission to carry out investigative work at an offshore location and lasts for 4 years and a Foreshore Lease gives permission for permanent construction. Only two Foreshore Leases have been granted (Arklow and Codling Banks off the East coast) although there is a considerable number of Foreshore Licenses for locations mainly off the East coast. Details on procedures are available on (http://www.agriculture.gov.ie/index.jsp?file=Fisheries/CoastalZone/Foreshore/index.xml) Grid connection will be key to the success of a project and early discussions with the national grid company, Eirgrid, (www.eirgrid.ie) will be required as most likely locations for on-shore projects are in the West and North of the country, distant from population centers on the East coast. Offshore projects off the East coast are attractive as there are sandbanks and relatively shallow water, and it is close to the large population centers. 9.6 Political climate for renewable energy from wind and ocean.
Although there may be some local opposition to onshore wind parks and the associated grid connections, there is strong national and regional support for renewable energy in Ireland. Irelands peripheral location and reliance on imported fuel to serve a growing economy and population have focused popular and political thought on renewable energy in recent years. The General Election in May 2007 brought the Green Party into government for the first time as part of a coalition and they have clear views on the matter. The Party has secured the Ministry of Energy as part of the Coalition for Government agreement and the new Minister is vigorously promoting renewable energy. In January 2008 he announced a series of measures including funding for ocean energy R & D, the new Ocean energy REFIT scheme and the establishment of a new Ocean Energy Development Unit to implement ocean energy initiatives. Sustainable Energy Ireland commissioned a study in 2003 Attitudes towards wind farms in Ireland 125, from independent researchers Lansdowne Market Research. The key findings were: Three quarters of the Irish population would be willing to support government incentives to build wind farms with eight out of ten believing wind energy to be a good thing Two thirds of Irish adults are favourable to having a wind farm built in their location with little evidence of the not-in-my-backyard effect. Wind farms are more acceptable than other structures such as mobile phone masts, steel electricity towers or power stations. Incentives for developing /utilising new technology
9.7
Research and Development. The Irish government has allocated funding of 179 million under the National Development Plan for Energy Research. This Plan will run for seven years from 2006, and is almost fully funded by the Irish Exchequer. 28 million in targeted funding will go to the ocean energy sector over the next three years. Additionally, EU funding of 2.17 million was announced in January 2007 for energy research in Ireland, which includes two ocean energy projects. Recently, Science Foundation Ireland, which is a government body promoting basic research in Ireland, has added Renewable Energy as one of the areas in which it will fund basic research. (www.sfi.ie).
125
Source: SEI
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Most government funding for the development of new technologies is channeled through two agencies; Sustainable Energy Ireland (SEI) The Marine Institute Both agencies work closely together, but the Marine Institute is primarily concerned with the development of ocean energy, including some off shore wind technologies and SEI with other technologies. The agencies are also responsible for part-funding of R&D activities in various universities and Institutes of Technology. As part of the initiatives announced by the Minister of Energy in January 2008, funding was made available for upgrading of equipment at the Hydraulics and Maritime Research Centre at University College Cork, the establishment of the new wave energy grid connected test facility at French Point in Co. Mayo, the establishment of an Ocean Energy Prototype Fund, and the establishment of the Ocean Energy Development Unit at SEI. To date, the director of the Ocean Energy Development Unit has been appointed, and the grid-connected test facility has been identified, but no mechanism for the operation of the Ocean Energy Prototype Fund has been announced. (http://www.dcmnr.gov.ie/Press+Releases/Minister+Ryan+launches+major+new+Ocean+Energy+initi ative.htm) Product or Process development. Manufacturing or service companies which have developed or licensed renewable energy products or services may be eligible for general industry support by Enterprise Ireland, the government agency for the development of Irish industry. These incentives are generally available to Irish-owned industry. (www.enterprise-ireland.com).Foreign owned industry or service companies may be aided in establishing in Ireland by the Industrial Development Agency (IDA Ireland). (www.ida.ie). Capital available for investment There is one small boutique Venture Capital company specializing in renewable energy active in Ireland, (www.trinergy.ie) but most VC companies focus on high tech start-ups in ICT or pharmaceuticals. There is, however, considerable appetite for investment in renewable energy projects which use proven technology, particularly in wind energy, both from financial institutions, diversifying companies and private individuals. Airtricity (www.airtricity.com) raised a further 100 million late last year through a local stockbroker (before its sale to Scottish and Southern Energy), and Oriel Wind Farms (www.orielwind.com) have raised initial funding for another offshore wind farm. The Irish state electricity utility, ESB, has just announced that it will set up a 200million green private equity fund to look for opportunities in new energy technologies. The state agency has committed to investing 40 million in year one, and the rest over 5 years. This is separate to its commitment to invest 4 billion in developed renewable technologies. The agency is prepared to make stand-alone investments and to enter syndicates backing new energy technologies such as ocean, geothermal and biomass, as well as efficient energy storage and combined heat and power (CHP) services. Since the credit crunch of late 2007, and concerns about a slowing economy, there is some evidence of difficulties in raising finance for renewable energy projects. Test facilities for new technology The Marine Institute has an established offshore test site for scaled prototypes of wave energy devices in Galway Bay off the West coast of Ireland. The test site is 37 Hectares in area and has water depths
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of 21 to 24 metres, and a wave recording buoy is on site. The site is available to all developers of wave energy devices, both Irish and foreign. Full details are available from the Marine Institute site (www.marine.ie). A further test site at French Point on the Atlantic coast of Mayo which will be suitable for full-scale devices and which will be grid connected has been identified and initial funding has been announced for its development. There are also test facilities at the Hydraulics and Marine Research Centre in University College Cork (see www.ucc.ie/research/hmrc), and there are renewable energy research teams at the University of Limerick (www.ul.ie) and National University of Ireland Maynooth.(www.nuim.ie). Queens University in Belfast also has extensive test facilities.
Support, Guidance and Support services Sustainable Energy Ireland is the main support for non-ocean renewable energy in Ireland, and provides both technical support and finance for RE projects. The Ocean Energy Development Unit will be based at SEI. SEI www.sei.ie The Marine Institute has responsibility for the development of Ocean Energy and the implementation of the governments Ocean Energy Strategy. Marine Institute www.marine.ie
The Irish Wind Energy Association is the all-Ireland (Republic of Ireland and Northern Ireland) trade body for companies and individuals involved in the wind energy business. Irish Wind Energy Association www.iwea.ie
The National Offshore Wind association of Ireland is a relatively new body which seeks to promote offshore wind energy. It numbers the five most important offshore wind companies amongst its members. NOW Ireland www.nowireland.ie
Enterprise Ireland is the state agency responsible for the development of Irish owned industry in Ireland. Its primary focus is on high tech growth companies which are focused on export markets. As yet, there is little activity in the renewable sector. Enterprise Ireland www.enterprise-ireland.com
The Industrial Development Agency-IDA Ireland is the state agency which focuses on the attraction of Foreign Direct Investment to Ireland. Companies which are targeted are generally high tech manufacturing or service companies which use Ireland as a base to export product or services. IDA Ireland www.ida.ie
There is a wide range of consulting companies operating in Ireland at the moment. Most are small and are focused on the domestic market, providing energy audits for businesses, alternative energy systems for households, insulation services etc. There is also a wide range of domestic and international
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engineering and mechanical and engineering consultancies in Ireland. The Institution of Engineers of Ireland (www.iei.ie) can be contacted for further information. 9.8 Key Players
Onshore Wind Airtricity. Airtricity is an Irish registered generator and supplier of green electricity with operations in Ireland, the UK, the US and Canada. It was founded in 1999 and was bought by Scottish and southern Energy in summer 2007. It has extensive onshore wind farms in Ireland and developed the first offshore wind farm which is co-owned by GE Energy. It has technical agreements with ACCIONA Energia of Spain, Flour Corporation of the US and GE Energy. www.airtricity.com Hibernian Wind Power. Hibernian Wind Power is a wholly owned subsidiary of the Electricity Supply Board (ESB), which is the Irish state electricity utility. It has two major wind farms in operation and 15 others at planning or construction stage. It has a major advantage in that it is developing sites around existing power stations and has an alliance with the State forestry service to develop sites in State forests. It also has a number of Foreshore Licenses for exploratory work on offshore installations. www.hibernianwindpower.ie
Offshore Wind GE Energy GE Energy is the co-owner and operator of the first offshore wind farm in Ireland which is located off the East coast of Ireland, not far from Dublin. The facility consists of 7 turbines and was developed by Airtricity with technical assistance from GE and ACCIONA Energia. www.ge.com Oriel Windfarm Oriel Windfarm is a new company which has recently received permission to proceed to the development phase of a very large offshore windfarm in the North West Irish Sea, north of Dublin. The company has raised the necessary finance for Phase 1 of testing, and up to 55 turbines are planned. www.orielwind.com Codling Windpark/Fred Olsen. Codling Windpark is a joint venture between Fred Olsen and Treasury Holdings, a large Irish property developer which has interests in onshore wind farms. It has received a Foreshore Lease to construct a large wind farm off the East coast of Ireland. www.codlingwindfarm.ie
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Wave and Tidal Wave and tidal energy are at a less advanced stage of development in Ireland compared to onshore and offshore wind. A number of the companies have developed prototypes which are undergoing tests but there are no commercial activities yet. The following three companies have tested prototypes in Irish waters:
www.wavebob.com.
www.oceanenergy.ie.
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www.hydam.com It should be noted that a number of Irish registered companies have operations in other countries, most notably, Finavera Renewables (www.finavera.com) 9.9 Market entry
Ireland is a small open economy, with a largely undeveloped renewable energy sector. The government is committed to an ambitious programme of development and in order to achieve its targets realizes that input from non-Irish companies will be required to augment development from Irish sources. There is a long history in Ireland of inward investment and technology from foreign sources, and this will be continued in the renewables sector. The main emphasis will be on immediate production of electricity from wind, both onshore and offshore, and to date there is little Irish production of the main heavy equipment, which comes from Germany, Denmark and the UK. Irish companies will be involved in the construction, monitoring and management of generation and transmission equipment. Opportunities will exist to work with Irish developers to supply equipment or expertise in the early phases of onshore and offshore wind farms. The ocean energy sector is at a much earlier stage of development and there are opportunities to supply whole technologies which would be adapted to Irish conditions. Both Sustainable Energy Ireland and the Marine Institute will work with non-Irish companies in testing and proving their equipment in Ireland. A particular area of expertise required is in the fabrication, maintenance and management of offshore structures. Norways experience in the offshore oil sector and reputation amongst the Irish marine scientific community gives particular opportunities. Summary In order to approach this market it is recommended to make an initial visit to have meetings with the most important public and private sector players. The following institutions and companies would be of interest to a first time visitor; Department of Communications, Energy and Natural Resources Department of Transport and the Marine Department of Agriculture and Food www.dcmnr.gov.ie www.transport.ie www.agriculture.gov.ie
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Sustainable Energy Ireland Marine Institute ESBI Eirgrid Airtricity
www.sei.ie www.marine.ie www.esbi.ie www.eirgrid.ie www.airtricity.ie
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10. France
10.1 Energy demand and supply France has set the ambitious goal, within the framework of a European directive, to obtain 21% of its electricity from renewable energy in 2010, against 15% today. To achieve this, the country has to take two simultaneous actions: To increase energy savings To develop renewable energies - especially wind energy. Electricity consumption in France reached 458 TWh in 2007 126. Only moderate growth in demand is expected in the years to come as in the past years (e.g 1.3% growth n 2007 compared to 2006). The dominant source of Frances electricity production is nuclear, accounting for some 80%. Wind and hydropower accounted for 0.5 and 11 % respectively. Figure 57: France's supply of electricity 1% 0% 10 % 9% nuclear thermal hydro wind other renewable 80 %
Its reliance on nuclear power notwithstanding, France is in fact rich in renewable energy resources: With the largest forested area in Western Europe, significant wind energy potential and considerable hydroelectric and geothermal potential, it is the second producer and the second largest consumer of renewable energy in Europe 127. 10.2 Wind status now and future potential
In 2007, France became the third largest market for wind energy in the European Union, according to the Minister of Industry. According to the utility EDF, the capacity of wind grid-connected power installations is 2200 MW, a jump of 80% from 2006, including overseas departments and territories, and in Corsica. This figure does not take into consideration wind parks under commissioning. If these installations are included, French capacity, according to the French renewable energy association (SER), would then amount to 2455 MW, only behind Germany and Spain in Europe.
126 127
Source: Minister of Industry, website 2008 Source: Minister of Industry, statistics 2007
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A list of operating wind farms can be found at http://fee.asso.fr/actualites/statistiques_detaillees_du_parc_eolien_francais and Figure 58 provides a geographical overview. Figure 58: Operating wind farms, end of 2007
Offshore According to the French association for renewable energy (SER) the offshore wind potential in French waters is 4000 MW. The vision is to have this potential developed by 2020. No project is in operation yet, although several are under consideration - for instance the Entertrag project off the coast of Normandy (105 MW, see http://www.offshore-albatre.fr/projet.htm ). By 2011, 50 windmills of 5 MW each are to be installed by WPD France in Port en Bessin, 10 km. north of Bayeux. Another offshore wind farm is planned by the same company for 2013 in Fcamp (Seine-Maritime). The construction of this wind farm would cost 700 million, and consist of 60 turbines, representing a production capacity of 300 MW. The utility Suez is also planning to open a wind farm is the same region for a total of 700 MW, but its precise location is not yet publicly known. Overall Forecast for 2010 and 2015: The French Government aims for an installed wind capacity of 5-10 GW by 2010, distributed between 4.5 and 9 GW for onshore and between 0.5 and 1 GW for offshore. The objective is to have 17 GW installed by 2015 France is expected to become the fastest growing Western European wind energy market, adding a total of over 10,280 MW between 2006 and 2015, at an average rate of 1,142 MW each year, according to our estimates.
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Estimate of the total French wind power potential 2040: In its scenario AND (Existing Technology), the Institute for Energy and Environmental Research evaluates the onshore potential in France at 70 TWh/year and offshore potential at 97 TWh (10 km of the coasts and 10 m of depth. This scenario takes a value of 126 TWh/year of wind production in 2040) 128. A study from the engineering company Espace Eolien (www.espace-eolien.fr) evaluates the potential to 200 Twh/year using the following assumptions: Onshore windmills: 3 MW, 100 m diameter, 80 m height (available since 2005) Offshore windmills: 5 MW, 120 m diameter, 80 m height Geographical and physical distribution of projects: 3 main areas: The great North-West (1 740 km of littoral of North in Maritime Charente), Great South (departments with littoral, 42.650 km ), Great Center (departments of the Southern/South-western Center/without littoral, 30.000 km ). Onshore sites: Limitation inside the band located from 0 and 10 km of the coast for the onshore windmills on the Atlantic coast/Manche/the North Sea (except Brittany where interior sites are usable). Offshore sites: Since the solution of windmills installed on a floating barge is not available yet, the installation of windmills at sea is currently conditioned by the type of sea-beds and their depths (the windmills are installed today at less than twenty meters of depth). In France, the depth increases much more quickly than in Germany or in Denmark. The areas technically accessible to wind are thus, in France, very reduced, so the following hypotheses are taken into account: o 1 to 3.5% of the surface of the sea depending on areas and 0.2% for the areas of the Mediterranean of South-east, limitation up to 2010 in the band between 10 and 20 km of the coast for the offshore windmills, between 0 and 10 km for the inshore windmills on the Atlantic coast/Manche/the North Sea. Then, increase in the distance to more than 20 km and depths of more than 200m. Example: 200 windmills of 5 MW produce 4.5 TWh each year (source: Norsk Hydro, 2005). The complete results are presented in Table 21: Table 21: Wind potential estimates for 2040
WIND POWER IN FRANCE ESTIMATED (in 2040) Power GW 20 40 60 Energy TWh/an 50 150 200 Number of wind mills 8 000 8 000 16 000 Surface km 3 000 6 000 9 000
Onshore sites Offshore sites Total:
Note that this is the theoretical potential and that a number of conditions must be met in order to realise it.
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Reference: Institute for Energy and Environmental Research, USA, May 2006 http://www.ieer.org/reports/energy/france/lowcarbonreport.pdf
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10.3
Wave and Tidal status now and future potential
The first and most powerful tidal power plant in the world was built in France in 1966 in the estuary of Rance, with a power of 240 MW. In comparison, the second most important in size is only 18 MW (Bay of Fundy, Canada). According to the French power group EDF, France alone has 80 percent of the potential for generating electricity from tidal currents in Europe, which it estimated at 10 million MWh per year. In the long term this source of energy could make a significant contribution to the production of electricity from renewable sources, in particular in the United Kingdom and France," EDF said in a statement. EDF recently announced that it has decided to install three to six tidal turbines along the northern coast of Brittany .The pilot scheme, which EDF said is a world first, would be linked to the grid off the city of Paimpol, and have a total capacity of between 4 and 6 MW by 2011. There are two other tidal projects in France, at the planning and development stages. The most advanced one is located in Western Cotentin, north of the Chausey islands, 2 basins in atoll (dams: 69 km; basins: 2 100 km2; without contact with the coast) use a cycle Belidor. Working installed capacity: 1.440 MW (36 groups of 40 MW). Annual power: 5.300 GWh. As for wave energy, developments have concentrated around Hydrohelix Energies, a small company based in Quimper, Brittany. Hydrohelix has worked for several years on a concept that consists of lines of turbines - hydroliennes- with a horizontal axis, made up of 3 blades whose diameter is higher than 5 meters. They will be fixed on the same structure to optimize electric connections. The installations will be completely immersed and fixed on the ground, deep enough to avoid any trouble with navigation see Figure 59. Figure 59: Hydrohelix technology
According to Hydrohelix, the French coasts could have a potential of at least 6 GW which would cover approximately 5% of current French electric production. To reach this capacity, it would be necessary to install 4,500 hydroliennes at the bottom of the seas. That represents a curtain of propellers of some 21 km, disseminated with less than 6 km of the coasts, between the islands of Centre and Ushant and vis-a-vis the course of La Hague, in Cotentin. Hydrohlix indeed claims to have identified three appropriate sites off the French coasts, on which the marine currents can reach a speed from 12 to 18 kilometres per hour.
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Two Hydrohelix projects are currently under testing, the main one being close to Quimper and undergoing full-scale testing. 10.4 Prices
The French electricity market is liberalized in that it is up to private contractors to invest in new means of electricity production. The Electricity Regulatory Commission publishes invitations to tender. Several mechanisms have been set up to encourage wind energy developments: The obligation of purchase makes it possible for wind producers to sell their total production to the distributor- (Obligation of purchase (Law of February 10, 2000)) In order to guarantee the investments and to ensure profitability, a guaranteed tariff was set up in 2001. This tariff was fixed for 15 years, and was composed of two distinct phases (Text Tariffs of purchase (decree n of May 10, 2001)). However, in the summer of 2007, the French Government made announcements that overruled this tariff decree. The new policy is as follows: 1. New purchase prices:
For onshore wind applications, the feed-in tariff is set at 8.2 c/kWh for ten years, and then between 8.2 2.8 c/kWh for the next five years, depending on the number of years the wind turbine is operational. For offshore applications, the purchase price shall be 13 c/kWh for the first ten years and from 13 c/kWh to 3 c/kWh for the next ten years, again depending on the yearly operating life for the wind turbine. These prices shall have a 2% per year sliding scale beginning in 2008 and shall take the evolution of inflation into consideration each year. For wave and tidal a decree from March 2007 set the price at 6.7c/kWh, in addition to specific bonuses from 0.5 to 4 c/kWh according to plant size and regularity of the production. 2. The second concerns the publication of the objectives of the Long-Term Programming of Investments which have been raised to 13.5 GW for the end of the year 2010 and to 17 GW at the end of 2015. Even if these objectives seem very ambitious taking current growth into consideration, they represent a strong signal to the players in the sector. The success of these objectives will to a large degree depend on the success of the regional wind power development zones (ZDE) ( see next section). 10.5 Relevant locations for wind and ocean based renewable energy. From the point of view of wind patterns, France can be compared to Spain. Indeed, there are three principal wind layers in France (Manche frontages North Sea, Brittany - the Atlantic and the Mediterranean) which have the advantage of not being correlated, which again ensures a good expansion if the parks are distributed in a homogeneous way.
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Figure 60: Wind resources in Europe, including France
The French coast is subject to powerful and regular tides. The hydrographic and oceanographic Service of the navy (Shom) 129 is able to predict the fluctuations of them one hundred years in advance. Off the coast of Brest and of Cherbourg in Brittany, the current velocity is often higher than 12 km/h. (see Figure 61) thus making them the most interesting places in France to install tidal devices. Figure 61: Tidal power strength Northern France
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See www.shom.fr
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Issues related to the location of projects The current energy law recommends the installation of Wind Development areas (ZDE) by the prefects (government representative in regions), to regulate the siting of wind farms. As of July 2007, only wind parks constructed in a ZDE will benefit from the wind purchase price (feed-in tariff). These zones are to be defined by the municipalities and endorsed by the prefect. The prefect shall make his decision as a function of different parameters, such as the potential of the site, the possibilities of connection to the power grid and the protection of the landscape and the environment. The ZDE scheme will also apply to offshore applications, but preliminary work to define the maritime areas coming under the responsibility of each municipality will have to be carried out beforehand. To be able to build a wind park, a permit is necessary. The permit requires undertaking an environmental impact study. 10.6 Political climate for renewable energy from wind and ocean
While the country will continue to count on nuclear to meet its carbon emission reduction targets, wind will be a key technology for meeting the 21% RES 2010 objective. With reference to the conference in Grenelle of May 68, Nicolas Sarkozy in July 2007 launched a process that has been called Grenelle of the Environment to start a dialogue between representatives of environmental associations, trade unions, local authorities, and employers. This conference has given a clear view of the governments interest in and commitment to renewable energy. However, as is the case in most countries in Europe, on the local level there is still a lack of political and public support for renewables in many regions which in turn has delayed the definition and implementation of the wind development zones (ZDEs). However, this is expected to change for the better as the central government gives higher priority to the topic. 10.7 Incentives for developing / utilising new technology
Financial Incentives Other than the feed-in tariff, there are no investment incentives targeted at wind or tidal/wave power. Capital available for investing There is capital available for investments in renewables from a variety of sources. These include utilities, energy companies, banks, and funds. Venture Capital interest in the sector is on the rise. Natixis Environment & Infrastructure, specialized in managing funds for sustainable development, announced in June 2008 the establishment of Eurofideme 2, a second investment fund dedicated to projects in renewable energy in Europe. According to Natixis, the new fund is a continuation of Fideme, a fund established in late 2002 in partnership with ADEME, which has contributed through its interventions in 27 projects in more than 320 million euros investment in the renewable energy sector in France. According to Natixis, these investments have represented one-third of wind energy developments in France between 2004 and 2006. Eurofideme 2 seeks a target subscription of 250 million euros. Support, Guidance and Consulting Services The environmental advisers of the regional trade chambers (Chambres de Commerce) can inform regarding available financial assistance, and they can assist in the project preparation process. Associations such as the French Wind Energy Association (online information only available in French: http://fee.asso.fr/) and the European Wind Energy Association http://www.ewea.org/ can
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deliver specific advice. Finally, the French body for energy saving, ADEME, is available to advise about technical and financial feasibility. ( www.ademe.fr ) 10.8 Key Players
Onshore Wind The turbine manufacturer Nordex was the market leader in France in 2006, with 32% of the power installed. The presence of the 4 world market leaders (VESTAS, GAMESA, ENERCON, and GE) in France see Figure 62 is a sign of the maturity of the French market. The market share of French manufacturer VERGNET decreased to 3%. Note that, the French AREVA Group (nuclear conglomerate) has sold its participation of 21% in REPOWER to Suzlon and bought the German offshore windmill manufacturer Multibird. Figure 62: Wind suppliers to the French market, 2006
The largest onshore wind-owning utilities in France are: EDF EN: subsidiary of the utility EDF. It has a strong position, with 20% market share and the goal of being leader with 20 - 30%. Eole-Res is the result of an alliance between the French wind energy developer EOLE TECHNOLOGIE and Renewable Energy Systems. It is wholly-owned by the RES Group (UK).Market share is about 20%. Compagnie du vent: Recently bought by the Suez utility group: Goal of 20% market share Cegelec: Cegelec is an integrated technological solutions and services provider. The company designs, installs and maintains systems and sub-systems in industry, infrastructures and the service sector, owned by a LMBO: LBO France. The remaining market share is highly fragmented and includes companies such as TOTAL and regional companies such as Innovent.
This breakdown is likely to change as a result of the increase of the market last year. For instance, EDF commissioned new wind parks for more than 50 MW. However, the main players on the list should remain the same in the next years as they are strongly involved in this sector.
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Offshore Wind France, despite the geographical potential, is a latecomer when it comes to offshore wind energy. The first offshore wind project will be delivered in 2009, by Enertrag France. http://www.offshorealbatre.fr/index.html Other important players are WPD France, a subsidiary of the German company WPD, which has planned several projects, as well SUEZ (no project has been started so far). It can also to be noted that AREVA has bought 51% of the offshore wind turbine producer Multibrid (German company). Wave and Tidal For wave power, the most important player is Hydrohelix Energies. As for tidal, the La Rance plant is owned by EDF. 10.9 Market entry The French market for wind and marine-based technologies is rapidly growing but still not as strong as in some other Western European countries. This means that a lot of opportunities remain open for newcomers. For instance, concerning wind energy, most competitors do not represent more than 3% of the market and none represents more than 20%. Norwegian companies can potentially find France an interesting market, keeping in mind that the country remains quite bureaucratic and that wellestablished groups (or at least with a presence in France) are usually preferred. The best way to enter the market would be first to hold discussions with French independent bodies such as the ADEME, as they are the entry point to get studies, loans, and contacts within existing companies. The French Trade Chambers (www.ccip.fr ) and Invest in France (www.afii.fr) are also good contacts in this regard. It would also be advisable to attend conferences, such as Salon des energies renouvables, February 2009, in Lyon, and Pollutec, in December in Paris, as well as Energaia, also in December, in Montpellier. Concerning market entry possibilities, several options are open, the first being the creation of a local company. The procedure is now quite simple it only takes a matter of days for a company to be operational. Yet, due to the amount of administrative procedures in this specific market, and the need for sector knowledge, the preferred solution would be a partnership with an existing company. Partnerships can take the form of a joint venture, buying a French company, or technology exchange, according to needs.
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11. Italy
11.1 Energy demand and supply Italy faces some difficult challenges in the energy sector because of its limited domestic energy sources and its dependence on oil, gas and electricity imports to meet its consumption needs. 90% of the countrys energy consumption comes from fossil fuels, and the country is heavily dependent on imports from northern Africa and Russia. Nuclear power production has not been an option since it was abolished after a referendum held in 1987, even if much of the electricity imported from France and Switzerland is of nuclear origin. However, the newly-elected Berlusconi Government is planning to reintroduce nuclear energy and to fill the gap between Italy and other European countries, thanks to a new generation of nuclear power plants in Italy. New nuclear capacity will not be introduced overnight, however, and the lack of energy sources exposes the country to considerable risks of political, environmental and economic nature. The government is therefore taking measures to promote alternative energy sources, increase efficiency, improve the quality of the transmission system and generally reduce energy produced in particular by fossil fuels and coal in particular. By signing the Kyoto protocol, Italy has undertaken to reduce its carbon emissions by 6.5% by 2012 compared to 1990 levels. Unfortunately, emissions in Italy have taken the wrong direction, increasing by 13%. This means that Italy has to reduce todays emissions by 20% before 2012. Electricity demand and supply The total Italian demand for electricity in 2007 was 340 TWh. Growth from the previous year was moderate (0.7%) due to the slow growth of the economy (Figure 1). It is expected to grow to 430 TWh by 2017, (2.2% annual growth in the best estimate) depending on the general development of the economy and the improvements in energy efficiency. Figure 63: Trend of electricity consumption and GDP 1990-2007 130
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Source: Terna, Italian energy transmission grid operator, www.terna.it
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National production of electricity covers approximately 86% of demand. The rest (14%) is imported from neighbouring countries, mainly Switzerland (9 connections) and France (4 connections). Italy is the largest importer of electricity among the EU-countries. Figure 64: Energy available in Italy divided by source, 2007 131
Figure 65 shows the development in renewables production in Italy since 1994. Hydroelectricity is the most important renewable source, but it is losing importance. Wind energy is the fastest growing renewable source experiencing a growth of 28.7% in 2007 and reaching a level of production of 4.3 TWh. Energy from sources in the sea, such as tidal and wave, is insignificant and does not figure in the statistics. Figure 65: Renewable energy production in Italy trend from 1994 to 2007 (GWh) 132
The European RES-E Directive for Italy is a renewables share of 17% by 2020, while the National target is currently 25% within 2010. These obligations have led to a certain development in the
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Source: ENEA, Italian National Agency for New Technologies, Energy and Environment, www.enea.it Source: GSE, www.grtn.it
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production of electricity from renewable sources. However, the effect of the increase is completely cancelled out by a raise in the gross consumption of electric energy. There is a notable gap between the actual share of renewable sources in the consumption and the goal of 25 % fixed for 2010. 11.2 Wind: Status now and future potential
The Italian Wind market growing with 633.3 MW installed during 2007 (including 30.6 MW for the refitting of existing turbines). In total, Italys installed capacity at the end of 2007 stood at 2,726 MW. This growth can in its majority be explained by the high price of Green Certificates, which reached 13.75 c/kWh in 2007. In a report to the European Commission, the (previous) Government indicated Italys ambitions in terms of renewable energy. For wind power, the government estimated that, in the best case scenario, capacity could reach 12,000 MW including 2,000 MW offshore in 2020. The Italian wind industry today employs about 7,500 people, including indirect employment. The installed turbines are medium-sized, with capacity ranging from 600 KW to 3 MW. The trend is now moving towards larger MW-scale turbines, despite the fact that these installations can be difficult to build. Many sites are located in complex and hilly land, where both transportation and access could be difficult. In 2007, more than 64% of the total installed capacity in Italy consisted of large turbines (over 1 MW). To counteract local opposition to wind farms due to visual impact, the Italian Association ANEV 133 has developed best practice siting guidelines with the main environmental associations, WWF, Legambiente and Greenpeace. Figure 66: Development of wind energy technologies in Italy 134
Future potential for wind energy in Italy The Position Paper of the Italian Government, approved on September 2007, defines the technical potential exploitation of renewable energy sources to be reached by 2020. The total potential for wind energy is estimated as 12,000 MW (10,000 MW on-shore and 2,000 off-shore), against 2,700 MW installed at the end of last year.
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ANEV: Wind Energy National Association, www.anev.org Source: ENEA
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According to ENEA ad ANEV, by the end of 2008 there will be a total of 800-900 MW of new wind installations. Figure 67: Potential wind installed capacity 2009-2012 135
Uncertainty remains about what will happen in the development of wind power, onshore as well as offshore, in the medium and long term. This will strongly depend on the willingness of national and regional governments to take additional measures. Some of the obstacles to the development of wind energy include: Lack of information Poor national planning and legislative processes The Italian law no. 387/03, which ratifies the EU directive 2001/77/EC on the promotion of the electricity produced from renewable energy sources in the internal electricity market, has not yet been fully implemented, e.g. the country is still lacking national plant permitting guidelines. Extremely diversified Regional attitudes and sometimes hostility to new wind installations Complex and varying bureaucratic procedures demanding long time Difficulties, real or perceived, in the integration with the electricity grid, mainly due to bureaucratic aspects. Regional Energy Plans approved but not yet implemented
Thus, the obstacles are of political and bureaucratic origin more than practical and technical. In addition to the average lengthy time required to connect wind turbines to the grid, the shortage of turbine components is a serious constraint. Now and in the near future, this shortage is likely to noticeably affect the growth of the sector.
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Source: Terna
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However, the main problem still remains the negative approach of many regions toward wind energy. At the moment, only the Apulia and Campania regions (where the commercial phase of the wind sector started in 1996) and Sicily have shown confidence that wind power could be an actual opportunity for their territory. Sardinia has only partially exploited its potential and for more than three years developments have all but stoppeds prefer investing elsewhere. Many operators have shown interest in windy Sicily, but are wary of new and more restrictive regulation. In the Apulia region, however, developments have been more positive as a new energy and environmental plan has been approved. This regional plan now considers wind energy as a strategic option and thus ends a moratorium on authorizing wind plants. Consequently, many wind projects have been presented and authorized. Offshore wind Offshore wind energy production has not yet been developed in Italy, but offshore wind applications for a total of 700 MW are under planning. According to the Italian Governments plan, offshore turbines will be installed for a total production of about 2,000 MW within 2020 (500 MW within the next 5 years), using an area of the Italian sea of about 11,686 km2, in the following regions: Apulia (2,932 km2), Marche (2,717 km2), Sicily (1,772 km2), Sardinia (1,270 km2), Abruzzo (952 km2), Tuscany (727 km2), Emilia Romagna (369 km2), Molise (292 km2), Lazio (6 km2). The best places locations are in waters near Sicily and Apulia. However, what was supposed to become Italys first offshore wind plant was blocked by the regional government of Molise: the company Effeventi had planned a 162 MW installation 3 km off the coast of Molise in the Adriatic Sea. Even if the installation was barely visible from the coast, the region, the province, several mayors and many tourist interests were strongly against it. Blue H, a company registered in the UK but based in Holland, is now poised to construct the worlds first floating wind turbine, in collaboration with the Italian firm Sky Saver Srl, anchoring its prototype device 12 miles off the coast of Tricase in Apulia. This prototype would be virtually invisible from the shore. Blue H is planning to build a full scale floating 90 MW wind farm in an area of 5 km2 in the Apulia region. A joint venture made by ENEL (57%) and Moncada Costruzioni (43%) has presented a project, which is now under evaluation of the Ministry of the Environment and of the Region of Sicily, for the installation of a wind offshore park (3-5 MW) located 3 miles off the coast of Gela, in Sicily. According to the project, 115 wind generators will be installed, with an investment of about 500 millions. 11.3 Wave and Tidal current status and potential
The wave and tidal power has not received much attention in Italy due to small tidal differences, few currents and insufficiency of waves. This source of energy does not appear in the national statistics nor has it been included in the governments plans and strategies for the development of renewable energy. However, some research has been carried out and the Strait of Messina has been identified as the most favourable location for the capture of marine currents. Average speed of the currents in this are is 2 m/ sec. Some pilot projects have been carried out: The company Ponte di Archimede developed the first turbine to turn marine currents into electricity (Kobold). The turbine, with a capacity of 40 kW, has the aspect of a floating platform with a diameter of 10 m and is located in the Strait of Messina (between Southern Italy and Sicily). Kobold was connected to the electricity grid in March 2006, but was developed for markets where the current exceeds 8 m/sec and thus the company is not planning any further development in Italy.
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Figure 68: The Kobold Tide Turbine
As for wave energy a pilot project has been developed on the island of Ventotene, showing the possibility of obtaining 12 kW for every meter of the Italian coastline by applying the technology of oscillating water columns. The studies were conducted outside the island of Ventotene by the Department of Mechanics of the La Sapienza University of Rome together with MedCres (Mediterranian Center for Renewable Energy and Environmental Sustainability). 136 However, currently there are no plans to exploit this source commercially in Italy.
Figure 69: Wave power potential in the Mediterranean 137
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Source: the news agency ANSA & the technology magazine Newton. Source: Ministry of Environment
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11.4
Price
The price paid for 1 MWh wind generated electricity was in 2007 approximately 197.21 (+VAT 20%) which represents an increase of 12 from the year before. This price also includes the value of the Green Certificate (current reference price: 137.49 /MWh). The certificates, issued by the government body GSE (Gestore dei Servizi Elettrici) give evidence of electricity generation from renewables. In the Green Certificates Market, demand is represented by the producers and importers obligation to yearly inject a given proportion of electricity from renewables into the power grid. This proportion was equal to 2% of the electricity from conventional sources generated and/or imported in the previous year. From 2004 to 2006, the renewables obligation was increased every year by 0.35 percentage points, while the increasing percentage for the period 2007-2012 has been set at 0.75%. Green Certificates for new plants entering into production since 2008 have a duration of 15 years. Green Certificates have a unitary value equal to 1 MWh: wind plant >200 kW coefficient 1.00 X net produced energy; offshore plant coefficient 1.10 X net produced energy. Table 22 shows a cost-benefit analysis of a potential project in Italy, given todays tariff system. The cost will vary depending on the capital expenditure and wind resource. Table 22: Cost Benefit analysis 138 Green Certificates value: Market price electricity: Total price of wind energy production: Cost for wind energy production: 137.49 /MWh 60-70 /MWh 197 /MWh 40 /MWh
The problem with such a high remuneration is that it will lead to speculation rather than a real benefit for the country in terms of renewable energy put on the national net. In fact, the risk is that excessive incentive could bring to the installations of wind plants with a potentially negative cost benefit analysis. Moreover, in addition to the Green Certificate System, there is also a Renewable Energy Certificate System RECS. RECS are international voluntary instruments giving evidence of generation from renewables - of a minimum value of 1 MWh. The current reference price of the RECS is 1.50 /MWh. RECS certificates are complementary to the Italian legislation on Green Certificates, as they represent an alternative incentive scheme for renewable-energy plants that have been excluded from the Ministerial Decree of November 1999. RECS may be granted older plants producing renewable energy, or plants which has expired its right to green certificates. Since the value of the green certificates is much higher than that of the RECS, older plants which have been repowered will typically apply for RECS for the old part of the plant and Green Certificates for the repowered part. Another difference consists in Green Certificates being a sort of incentive which gains value through the obligation of producers of energy to produce or acquire a certain percentage of renewable energy. The RECS is a voluntary system proposed towards the consumer, and is thus indirectly promoting green energy.
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Source: WWF, 2007
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11.5
Relevant Locations for Wind Projects
Most wind parks are situated in the South and on the Islands where wind conditions are more favourable. Access to project locations can be challenging, with hilly terrain and in some cases, substandard roads. Figure 70: Installed wind power capacity (MW) per region by end 2007 139
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Source: ENEA/APER
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Figure 71: Wind intensity, Italian average velocity m/s 50m above ground level 140
In 1998, just two regions represented 78% of the total market in Italy; today all the Southern Italian regions are involved in wind development. The acceptance of wind farms by the local population has been encouraged in some areas by using local workforce for both on site construction and maintenance activities. As for offshore wind conditions, the areas of the Strait of Messina, around the islands of Sicily and Sardinia and in the Ionian Sea (under the sole on the Italian boot) are the most promising. Since Italy has few areas with water less deep than 30 m, deep-water installations are most interesting. Figure 72: Wind map Mediterranean Sea 141
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Source: The Certification Company CESI and University of Genoa Source: ENEA
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11.6
Political climate for wind energy
The 1999 Italian White Book defined the renewables targets for the year 2010, including a target of 2,500 MW for wind installations, which was already exceeded 3 years ahead of time. A paper of the Italian government defined a target of 12,000 MW by 2020 for wind power. The government also confirmed its commitment to the Kyoto Protocol by setting a target for reducing CO2 emissions by 6.5% by 2010. Another fundamental step took place in December 2003 with the adoption of the national decree implementing the EU Renewables Directive, which required an increase of the quota of renewable power by 0.35 % per year in the period 2004-2006, and by 0.75 % per year in the period 2007-2012. The target was 3.05% in 2006 and 3.8% in 2007. The Italian Government will define the increase for the years after 2012. However, some ambiguities in the legislation make enforcement difficult in practice. In 2007, the previous government 142 introduced a Financial Law which will require the individual regions to produce a share of total power consumption by renewable energies. Other measures to promote the deployment of renewable energies for power production include priority access to the grid, as well as a feed-in tariff for solar PV. There is still a lack of administrative coordination between the regions, also because single regional contributions to obtain the national goals have not yet been established. The situation has resulted in defensive and closed attitude by many of the regions. Such bureaucratic delays have been registered in Sardinia, Basilicata, Calabria, Puglia, Molise and Campania, creating an ever changing and very unpredictable situation. Overall, the political climate in Italy for wind energy is good, thanks also to the fact that it is one of the main sources of renewable energy which can be exploited to reach the EU target in a reasonable timescale. However, some obstacles are still hampering the growth of wind energy in Italy, such as: investor uncertainty due to political changes and the lack of clarity in the policy design, complicated authorisation procedures at local level, high grid connection costs, etc. 11.7 Incentives for developing/utilising new technologies
Financial Incentives There are generally few grants or incentives for renewable energy from the Italian Government, and none of them are specifically designed for wind energy. The only source of incentives on national level is represented by the renewable energy certification system. 143 The national budget for research funding is limited and has even decreased slightly during the last years. There is agreement on the importance of investing in research, but it has so far mainly been limited to works on paper. When financing is available, it is often limited in time and amounts, and the process to obtain it is often lengthy due to use of a tender-based application process. National financing of business development is however available through the Law n. 488/1992, a financial law that offers support to industry, commerce, tourism and crafts. Several wind park-projects in Italy have been financed with this support, which partly comes from EU funds. The law is especially advantageous for the poorer regions like Calabria, Apulia, Basilicata, Campania, Sicily and Sardinia. As every bureaucratic procedure in Italy, the application procedure for funding is, however, often long, unclear and the funds available are often limited in time. Help is however
142
After its fall, in April 2008, a new opposite government was elected (led by Berlusconi) which is likely to take different direction in the energy sector (see also par. 1.1). 143 See also paragraph 1.4 Price
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available e.g. through Unione Consulenti an association that offers legal and administrative assistance to companies in applying for such funding. Capital Available for investing An increasing number of national and international investors have, during the last years, started to develop special financing products for renewable energy projects in Italy. The Association of Producers of Renewable Energy, APER, has signed a deal with one of Italys biggest banks, Intesa San Paolo, to offer financing to renewable projects, suited also for small businesses. The deal also includes the initial evaluation of the projects144. Italys oldest bank, Monte Paschi di Siena, has developed special and advantageous financing products for renewable energy en energy efficiency both for smaller as well as larger installations. The bank has also signed agreements with important players in the energy sector such as Enel Si in order to promote the development in the renewable sector. The company Relight is a financial provider which purchases, develops and manages projects portfolios and invests in eco-friendly new ventures145. The Belgium-based financing company Axiom Venture Capital146 offers financing for Energy Efficiency and Renewable Energy project and is active both on the Norwegian as well as on the Italian market. Investments of 3 billion are under planning by Gruppo Moncada Energy in Agrigento (Sicily). They aim to reach 2,900 MW of installed power (not only wind, but also photovoltaic, biomass and geothermal energy) by 2020. The market has also seen examples of project financing: The Spanish company Iberdrola has entered the Italian market through a joint venture with the Italian company Api. The investment of the Spanish company is of 500 million Euros in 2008/2009 for the construction of 7 wind energy projects in Sicily and Apulia (total capacity 350 MW). The new society, Societ Energie Rinnovabili, has divided ownership 50%. Test facilities for new Technology There does not seem to be many dedicated test facilities for wind energy in Italy, but several universities are involved in research. The University of Trento is the Italian partner of IEA (International Energy Agency) and is responsible for the agencys research project regarding wind energy in cold climates, modeling wind turbine performances. Furthermore, the University of Trento together with The Provincial Agency for Energy APE and Interbrennero Spa, with funds from the autonomous Province of Trento has constructed an experimental wind park in the North of the Region of Trento dedicated to study the functionality of small turbines, particularly, mini turbines, in areas without strong wind, but that can function at maximum level wind force. The experimental field consists of three turbines: one three-pole of 20kW, one-pole of 11 kW and one micro turbine of 1 kW. A second field is under planning, in cooperation with a private partner. Research & Development Cesi SpA and ENEA Cassaccia are the two Italian contracting parties of the International Energy Agency in the Implementing Agreement for Co-operation in the Research, Development and Deployment of Wind Energy Systems. Among Italian universities involved in wind research activities, Bologna University has been particularly concerned with lightning protection and offshore foundations, Trento University with cold
144 145
www.futureenergy.it www.relight.it 146 www.axiomvc.com
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climate applications (in participation of the IEA Wind Task 19) and the development of small wind turbines, and Milan Technical University (Polytechnic) with integrated aeroelasticity simulation software. Genoa University is still involved in the study of wind potential onshore and offshore, as well as the simulation of wind flow. The universities also conduct research in cooperation with private companies. Research activities performed in the interest of Italys electricity system were taken over from CESI in 2006 by the new company CESI RICERCA. The staff has resumed work on the Wind Atlas of Italy developed by CESI between 2000 and 2002 and is expected to be available soon. In 2005, CESI RICERCA also conducted research aimed at going deeper into the technical and economic aspects of offshore wind farms along the Italian coasts, especially with an eye to foundations and supporting structures. Support, Guidance, and consulting services Due to much attention to renewables lately, a number of associations dedicated to the promotion of wind energy and renewable energy have been created. These associations differ in importance and not all of them are able to give efficient advice to new players. Some of the most important that may offer support and guidance are: APER - Association of Producers of Energy from Renewable sources 147 ANEV National Association of Wind Energy 148 (This web page contains a list of companies operating in the wind energy sector).
The following institutions may also offer guidance: AEEG Regulatory Authority for Electricity and Gas 149 GSE Gestore del Sistema Elettrico 150 Acquirente Unico 151 Gestore Mercato Elettrico 152 the managing body of the electricity market Terna 153 Italian transmission grid operator Ministry of Production 154 Ministry of Environment 155
However, since decisions regarding renewable energy are mainly made locally, direct contact with regional and local authorities is crucial for obtaining correct information. For public funding of projects, Unione Consulenti 156 offers services and guidance connected to the application for funding. Fire Italia (Italian Federation for the intelligent use of energy) gives advice on energy-related legislation 157.
147 148
www.aper.it www.anev.org 149 www.autorita.energia.it 150 www.grtn.it 151 www.acquirenteunico.it 152 www.mercatoelettrico.org 153 www.terna.it 154 www.sviluppoeconomico.gov.it 155 www.minambiente.it 156 www.unioneconsulenti.it 157 www.fire-italia.it/adempimenti/EnergyManagerProgramme.pdf
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Associazione OWEMES - Offshore Wind and other marine renewable Energy in Mediterranean and European Seas 158, is the only association dedicated to offshore project. 11.8 Key Players
The growing Italian market and high potential returns have seen the arrival of several new domestic players as well as growing interest from foreign developers (such as venture capitalists/private equity funds etc.), even if the wind resource is rather limited. 50% of the market for wind power is controlled by the following three promoters: IVPC 159 (Italian Vento Power Corporation) from Avellino (28%), controlling 10 wind parks generating more than 170 MW. In 1996, the group got a new department: IVPC 4 now running 21 parks with a production of 302 MW. ENEL (12%) 160 Edens (Edison Energie Speciali) (10 %) 161.
Figure 73: Market share wind producers in Italy 162
On July 2008, a joint venture was agreed between UK-owned Airtricity (60%) and Italian Entropya (40%) for wind project development the Italian regions of Apulia, Calabria, Campania, Basilicata and Sicily.
158 159
www.omes.org www.ipvc.it 160 www.enel.it 161 www.edison.it 162 Source: ENEA, 2007
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Figure 74: Market share wind turbine suppliers in Italy 163
As for turbine supplies, Vestas 164 is the market leader, followed by Gamesa Energia 165, Enercon 166, GE Wind and Repower. Recently also the comapny Suzlon from India has entered the market. Vestas, ex IWT Italian Wind Technology, located in Taranto, is the major producer of wind turbines in Italy, specialized in machinery of medium size, v52/ 850 kW. By end 2005, more than a half of the 1720 MW installed in Italy where produced by Vestas. Vestas produces about 550 turbines a year and its sales of 850 kW machines equaled in 2006 a total capacity of about 440 MW. More than 60% of these machines were exported to China. In 2006 the company increased the number of its employees by about 20% to 600. Vestas in Italy comprises two production units, Vestas Nacelles Italia Srl and Vestas Blades Italia Srl and a sales unit Vestas Italia Srl. Gamesa, which installed more than 200 MW in 2006, has taken the second largest share of the Italian market. It is believed that both manufacturers will be widely involved in wind energy development in Italy in the coming years, as shown by important commitments already obtained from Enel and IVPC totaling some 330 MW. 11.9 Market Entry
The Italian market for wind energy is still in an early phase, but a continuing strong growth is expected due both to the countrys need for renewable energy and to the relatively low cost of wind energy compared to other renewable sources. It is hard to say exactly when the market may take off, as many of the factors impeding development are related to a national government that is famous for its unpredictability and an economic sector marked by structural deficiencies. Successful investments in wind energy development, as well as any other sources of renewable energy, need long term perspective as well as deep knowledge of the local market and procedures. The players must also take into account the long procedures of obtaining building permits and grid
163 164
Source: ANEV www.vestas.it 165 www.gamesa.it 166 www.enercon.it
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connection as well as hostile attitudes from neighbours and local governments, including environmental consciousness. Due to the bureaucratic difficulties in obtaining the necessary permits to install wind generators, Norwegian companies interested in the Italian wind market are advised to team up with important players on the Italian market, since local authorities will have more difficulties in blocking such players. Finally, an important exhibition -Eolica Expo Mediterranean- will take place 1-4 Oct. 2008. This is the only event in Italy dedicated exclusively to the wind energy sector, and represents an opportunity to expand business and exchange information and experiences with operators of countries of the Mediterranean area 167.
167
For more information, see: www.zeroemissionrome.eu.
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12. Spain
Spain has a liberalised electricity system which is still dominated by few and strong actors, most of them National Champions, such as Iberdrola, Union Fenosa and Endesa. The electricity trade system is a mixed model combining a free market for conventional energy, called ordinary regime, with a tariff system to support renewable energy production, known as the special regime. 12.1 Energy demand and supply
Figure 75: Electricity Production in Spain, 2007
Renewable energy production has been showing a continued increase year after year, mainly due to wind energy which reached over 15,145 MW of installed power at the end of 2007, representing 8.7 % of the power supply. Although hydro is still the dominant renewable energy source, solar, wind and biomass have become the Spanish Governments priority. The Governments new Renewable Energy Plan 2008-2010 168 will support the growth of solar and wind power. The Spanish Energy Commission estimates that wind energy will be the source with the highest growth rate in the years to come. As in other countries in Europe, the future of Spains power supply is strongly influenced by international environmental agreements in particular the Kyoto protocol and EU RES Directive. Spain is currently behind schedule in terms of fulfilling its commitments under the Kyoto Protocol. 12.2 Wind status now and future potential
From 1996 to 2007, wind power production in Spain experienced continuous growth, particularly noticeable in the latest years: In 2000, the installed power was about 2000 MW and by 2007 had reached 15,145 MW.
Source: Spanish Institute for Energy Saving and Diversification: http://www.idae.es/index.asp?i=en . Note that the document is not available in English.
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Figure 76: Installed wind energy capacity in Spain 1990-2007
Wind installed power Forecast according to the goals of PER
Source: PER (Plan for Renewable Energies 2005-2010 and AEE
The growth in installed capacity of wind is by far the most important among the renewable energies in Spain:
Figure 77: Annual evolution of the Installed capacity: Renewable Energies in Spain 1990-2007
Wind Biomass Solar Hydro
During the period 2003-2005, the wind sector experienced an average growth rate of 37%. In later years, it has kept an average growth of about 15%. Growth of about 1,500 MW per year is expected in the coming years.
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Figure 78: Installed wind energy capacity in Spain in percentage

Hydro 10,52% Biomass Solar 2,89% 2,30%
Source: CNE & AEE
Wind 84,29%
Offshore wind situation Currently there are no offshore wind installations in Spain. Up to August 2007 there were several legal constrains to allow the study and installation of offshore wind parks. In principle the problem was the lack of a legislative frame that could regulate the sector. Under this legal vacuum very few projects were officially submitted and none were approved. However, a Royal Decree (1028/2007) issued on August 1st 2007 (http://www.boe.es/boe/dias/2007/08/01/pdfs/A33171-33179.pdf) allows the offshore wind energy projects and provide the legal framework for future activities. The new legislation establishes the requirements for offshore wind parks and the procedures for how to apply for a sea concession and for the development of a project. Among other issues, the new legislation establishes the following: All existing project proposals/requests will have to be presented again following the new legislation Before the formal project presentation, the Ministry of Environment will have to give the final approval to the complete environmental and zone study of the Spanish Coast, in order to decide the costal areas that will de approved as eligible zones to host offshore wind parks. This study has been performed and now is pending final approval. Only after the definitive report is approved, will project developers be able to begin the formal procedure of requesting a reservation of a maritime area. If the reservation is granted, the promoters will have to present a new and more detailed report on environmental impacts and other issues (fauna, navigation, archaeology, etc). The environmental reports will be sent to an evaluation committee (12 members from 5 Ministries and one rep from the Autonomous Community) to grant the permission for the project The promoters will also present a financial plan proposing a draft for the energy price suggested within the maximum price limits set by the law. Under the new legislation other projects can be presented in competition and in some cases there will be competition on the maritime space available and on the energy price proposed. The winners of the processes will have to present a project guarantee of about 1% of the estimated budget of the installation
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With this new procedure it is estimated that the first offshore wind park will begin to function by 2012. The new guidelines have been well received by the wind energy industry and by environmental associations. An overall picture of the administrative process and the timing of each step is illustrated in Figure 12, provided by the Spanish Wind Energy Association (AEE) Figure 79: Administrative procedure for an Offshore Wind Project
Environmental Strategic Study
Other applications
24 months
Characteristic of the maritime wind area
First applicant
Procedure in process
Zone reservation (2 years)
4 months
8 months
Request for Admin approval
24 months 24 months
Environmental evaluation
Project Begins
Project Implementation
Approval Project implementation
Administrative Approval Concession
Prospects for the years to come Spain has about 4872 km of coastline, but only a share of that coastline is suitable for offshore wind developments. According to the Spanish Agency IDAE, there will be several important challenges to be faced before the offshore wind energy sector can take off, among others: To change the focus from an investment model focused on proven profitable onshore wind projects to a highly costly and still uncertain financial model for the offshore wind energy To solve the technology and environmental difficulties in placing wind farms 20 km away from the coast and in deep water: Material technology, connection to the grid, maintenance, new turbines according to new conditions, are important issues to be resolved
The Spanish Wind Energy Association AEE estimates the potential of offshore wind in Spanish waters to about 4 GW. These are estimates that are by far under the initial forecast of 25 GW for the year 2020. These new estimates represent one-fifth of onshore installed wind capacity. The pre-projects see the next section - so far represent projects for about 10 GW Existing / pre- projects Several pre-projects were presented before the new legislation for offshore wind power came into place. At this moment and pending final approval of the environmental and zoning study, IDAE has
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records of 9 pre-projects requesting a reservation of a marine zone in order to implement an offshore wind project. So far the identity of the promoters for each pre-project is not public but it is known that the companies include Acciona, Capital Energy, Iberdrola Renovables, Endesa Cogeneracin y Renovables (ECyR) and ENERFIN. 12.3 Wave and Tidal status now and future potential There is currently no legislation in place that regulates the wave and tidal energy sector. So far, the few activities within this sector have been regulated by the general regulation for renewable energies under the category B-3 (http://www.boe.es/boe/dias/2007/05/26/pdfs/A22846-22886.pdf) and following the modifications of the tariffs structure published periodically (http://www.boe.es/boe/dias/2007/07/25/pdfs/A32248-32250.pdf). Before starting with a possible regulation of the sector, there are plans in the coming years to perform a feasibility study of the sector. There are a few R&D projects to test the potential of wave energy currently taking place: One of them is the agreement between Ocean Power Technologies (OPT) and Iberdrola to build a 1.25 MW wave power station off the coast of the Cantabria region in northern Spain. The installation is located 4 km from the coast of Santona and will comprise 10 buoys. In the first phase a 10m long 40 kW buoy will be anchored to the seabed some 50m down. The budget for the first phase, which includes the marine electrical infrastructure, comes to some 3 million. The remaining nine buoys, planned for a later phase, will have an initial capacity of 125 kW See also http://www.oceanpowertechnologies.com/PDF/July_31_06Award_Station2.pdf Perseo, an Iberdrolas equity firm and Tecnalia Corporacin Tecnolgica are investing 4 million in R&D and the development of wave energy technology. The project is known as Oceantech Another project is the Biscaye Marine Energy Platform - Bimep developed by the Basque Energy Agency (EVE) http://www.all-energy.co.uk/userfiles/file/Javier_Marques220508.pdf. It involves an R&D platform to be in place by 2010, with connection to the grid.
According to IDAE despite these initiatives it seems that there are no concrete government plans for the exploitation of this resource at the present time, nor is there a relevant legislation in place. Informal sources state that Spain is not very advanced in this area and politically this sector does not yet have much support. Iberdrola Renovables is probably the most committed Spanish player in the research and development of ocean based energy technology. The company is already developing marine energy projects off Spain and off the Orkney Islands in Scotland.
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12.4 Price The price system for wind energy production, both land-based and offshore is regulated by Royal Decree RD 661/2007. (http://www.boe.es/boe/dias/2007/05/26/pdfs/A22846-22886.pdf) with annual tariff modifications. The modified tariff for the year 2008 is published in the ITC Order 3860/2007 (http://www.boe.es/boe/dias/2007/12/29/pdfs/A53781-53805.pdf).Producers can choose between a regulated tariff and one set in the market. The choice is made for the duration of one year, after which the producer can decide to maintain the formula or change to the other option. Under the market system, the price guarantees a lower and an upper limit and it is composed by the pool prices plus a bonus for environmental positive impact. As the pool prices increases, the reference bonus decreases, stabilising the upper price limit at 87.7 /MWh and setting a guarantee of a minimum price at 73.6/MWh see Figure 80 Figure 80: Price system for 2008 according to the Order ICT/3860/2007 that modifies RD 661/2007
Upper limit 87,7 /MWh Bonus + Pool Lower limit 73,6 /MWh
Bonus
Reference prime 30,2 /MWh
87,7 /MWh
Pool
Source: IDAE
In addition to the market price and the bonus, the final energy price includes an incentive component (see Figure 81). In the new model established by the RD 661/2007, the incentive component disappears (see Figure 82), but is partially absorbed into the bonus. Figure 81: Elements of the wind tariff under the RD 436/2004
90 80 70 30,64 7,66 77,64 68,93
/MWh
60 50 40 30 20 10 0 Average Price Bonus Incentive Market income Income Under tariff 39,35
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Figure 82: Elements of the wind tariff under the RD 661/2007
90 0,00 80 34,80 70 74,14 73,23
/MWh
60 50 40 30 20 10 0 Average Price Bonus Incentive Market income Income Under tariff 39,35
There is an obligation to purchase electricity from renewable energy sources. Note that there are no retro-active benefits for past investments. The price system is reviewed at least once a year and published in the Official State Bulletin (www.boe.es). Offshore: A reference tariff for the offshore wind projects have been set for first time in the ITC Order 3860/2007 (http://www.boe.es/boe/dias/2007/12/29/pdfs/A53781-53805.pdf). The reference price has been set at 87.1 /MWh, with a price ceiling of 169.5 /MWh. The price system established is a reference price for contest purposes, meaning that it will not act as a market price, but as a reference figure for the market participants to make their own financial calculations and decide whether to engage or not in the project proposal. This reference price responds to the fact that there is not yet a properly developed market for offshore wind projects and to the fact that the price system to be applied has not yet been fully decided
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12.5
Relevant locations for wind and ocean based renewable energy
Onshore Wind Power From Figure 83 one can see the current location for land-based wind parks. In general terms, Spain is a country with wind power potential in most of its territory. Projects are spread around the country with special importance in the regions of Galicia (North-West), Castilla y Len, Castilla La Mancha (Central Spain) and Andalucia (South). Figure 83: Geographical distribution of installed wind power
Wind Power installed at 01/07/2007: 12.800,74 MW 01/01/2008: 15.145,08
152,77 MW 144,27 277,96 MW 2.951,69 2.712,38 MW 2.818,67 2.253,01 MW 937,33 916,81 MW 446,62 MW 1.723,54 1.676,14 MW 347,44 225,30 MW
3,65 MW 590,94 414,99 MW 3.131,36 2.614,86 MW
152,31 121,76 MW 1,459,71 MW 863,51 MW 133,24 MW 129,49 Source: AEE
Activities developed in the wind energy sector in Spain are wide-ranging and the business potential depends on the activity and actors of interest they are distributed geographically by the split shown in Figure 84.
Figure 84: Type of wind industry activity, by region
Wind turbine Assembly Generators and electrical Components Blades Multipliers Towers and mechanical components
Source: AEE
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Offshore Wind Power An environmental and zoning study pending final approval has divided the coast in 62 possible areas for the development of offshore wind projects. Figure 85 shows the initial conclusions of the zoning study. The areas in red are restricted areas and not open for offshore wind projects, the yellow zones are areas where a more detailed and strict environmental and feasibility study must be performed and the areas in green are the recommended areas. Still, this is an initial zoning pending approval, which should take place sometime in the fall 2008. Figure 85: Possible locations for offshore wind off the Spanish Coast
Source: Ministry of Trade and Industry and Ministry of Environment
Figure 86: Possible locations for offshore wind off the Spanish Coast
Source: Ministry of Trade and Industry and Ministry of Environment
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Wave power No official information is available on potential location for future projects. In an informal conversation with people of the Spanish Institute for Energy Diversification and Savings (www.idae.es), we were told that it is estimated that given the wave intensity in the north of Spain, the most suitable location for a future wave energy industry could be the north of Spain: Figure 87: Possible locations for Wave projects in Spain
Possible location for Wave energy projects
Source: IDAE
12.6 Political climate for renewable energy from wind and ocean Some opposition from some local environmental groups does exist: they claim disruption of wildlife in natural parks and some negative effects on animal and vegetal species. This opposition notwithstanding, there is generally a very positive climate towards renewable energy in Spain. The recently approved legislation on offshore wind energy and the renewable energy plan 2008-2010 confirm this positive climate. An in the near future a new renewable energy plan will be issued for the period 2010-2020, according to the EU directives. Most political parties are in favour of increasing the use of renewable energy. The countrys positive attitude is reflected in the generous price mechanism for wind, and in the newly approved framework for offshore development. Wind energy has gained special importance during the last years and large wind parks can be seen along the whole national territory. National and local authorities are both positive to the development of the sector. Wave- and tidal energy, on the other hand, have not received much attention. With the new legal frame for offshore wind energy, however, it is expected that perspectives may change also for other marine-based technologies. 12.7 Incentives for developing / utilising new technology
Financial Incentives The only incentive for wind energy is the bonus received by the energy producers as part of the tariff regime. No other incentive is available, neither for the development of new technology nor to develop projects. Capital available for investing The wind sectors excellent profitability during the last years has encouraged a diverse set of investors. The largest banks and a number of utilities, both national and international, are involved in financing
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wind energy projects. Most of the banks finance wind energy projects with loans (20.8% average interest rate at 10-12 years). The most important financiers are: BANIF (www.banif.es) Iberdrola (www.iberdrola.es) Banco Sabadell (www.sabadellatlantico.com) Acciona (www.acciona.es) Endesa Cogeneracin y Renovables (www.endesa.es) Caixa Catalunya (www.caixacatalunya.es) Capital Energy (http://www.capitalenergy.es/) La Caixa (www.lacaixa.es)
Support, Guidance and Consulting Services IDAE is the reference institution for political and technical support (www.idea.es) Additionally, several private consulting and engineering companies offer consulting services. Many of these are linked to the main utilities and advise in the development and assessment of projects. Some of them are: Symonds Gabitat (www.symondsgabitat.com) Universidad de Nebrija (www.nebrija.es) ABM-AMOR (www.abnamro.com) ELECNOR (www.elecnor.es) ARIES (www.aries.com) GAMESA (www.gamesa.es) ACCIONA (www.acciona.es) UNION FENOSA (www.unionfenosa.es) Other cluster organizations such as the Spanish Energy Club (www.enerclub.es) or the Spanish Wind Energy Association -AEE- (http://www.aeeolica.org/index.html) are reference organisation including most of the actors of the energy and wind sector. In the case of the AEE, it is a trade organisation with a common position to negotiate as a common front. R&D activities The new Government R&D Programme for the coming State Budget aims to increase government investments total R&D is expected to represent up to 2.2% of GNP. However, only a small portion of this budget is reserved for the renewable energy sector. The main R&D centre supported by the Spanish government related to renewable energy is CENER (http://www.cener.com/index30f7.html) which is the National Centre for Renewable Energies and CIEMAT (http://www.ciemat.es/). CIEMAT is a specialised research centre focused on Renewable Energy. Bimep - a wave test centre - is planned off the coast of the Basque country (northern Spain) see http://www.eve.es/index_hi.asp.
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Apart from this, there is little R&D supported by the Spanish Government and most other activities are made by the centres associated with regional renewable energy institutions (http://www.idae.es/index.asp?i=es). There is one more technology network centre with specialisation in Wind energy: REOLTEC (http://www.reoltec.net/) Gamesa and Ecotecnia are leading an important industrial R&D project named Windlider2015. The aim of this project financed by the Spanish government with 13 million is to keep Spain as a leading country within the wind energy sector. The specific goals of this project are: i) to lead the new design of turbines, ii) to enable Spanish technology, iii) to create simulation programmes, iv) to enable pilot projects and test prototypes. From the EU, there are about 30 projects within the Vth and the VIth EU Framework programme and within the VIIth EU Framework program the Spanish participation is reflected in 2 projects so far. With the aim to develop new technology for the new wind offshore sector, the Spanish government has supported an R&D Consortium called Eolia. The aim of this R&D project is to develop technologies that enable the implementation of offshore wind projects in deep water (more than 40 meter depth). The activities within this project integrate energy technology, fish farming, water desalisation, building and shipping technologies. There are 16 companies participating in Eolia and the project is lead by Acciona Energia and counts with an approved budget of 34 million, and financed by CDTI (the Spanish centre for the financing of innovation projects) with 16.7 million. Eolia includes the participation of 25 research centres and 7 companies subcontracted by the members of the Consortium. The expectation is to generate around 30 patents related to the offshore wind sector. 12.8 Key Players
The wind market in Spain is very active and there are several players. Out of the total accumulated power installed in Spain, Iberdrola Renewables owns about 28% of the wind parks and Acciona 17%. The rest of the ownership is split among more than 10 firms and industrial groups, among them Neo Energa with 12,7% of the market. Iberdrola, Acciona and NeoEnergia are project developers, assuming the project management and running the wind parks. Wind equipment is supplied by several manufacturers, the most important ones being Gamesa, Acciona and Vestas. During 2007 several new manufacturers were identified, confirming the increased openness of the market.
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Table 23: Wind turbine manufacturers

Manufacturer
total at 01/01/2007 In 2007 total at 01/01/2008
Growth rate 2007/2006
% over The total At 01/01/2008
Gamesa is by far the most important manufacturer with close to 50% of the installed wind capacity. In terms of international activity, Spanish wind promoters and utilities such as Iberdrola Renewables, Acciona and Gamesa are important international actors, with a number of projects around the world. Iberdrola announced in August 2008 that it is developing 710 million worth of wind- and solarenergy projects. In total, the projects will have the capacity to generate 1.25 GW of electricity, with the bulk of that coming from wind. Offshore: Acciona is the company that is the most advanced in the procedure for the offshore market. Iberdrola Renovables has expressed their desire to run six projects for a total of 3,000 MW and that aim to be located in the areas of Cadiz, Castelln and Huelva. Iberdrolas estimate is to have these projects in place and operating by 2015. Lastly, Endesa Cogeneracin y Renovables (ECyR) and ENERFIN have signed an agreement for the joint promotion of offshore wind parks in the South of Spain. 12.9 Market entry
Market perspective Land-based wind energy will continue to grow as a consequence of good financial incentives as well as the political and commercial support to the sector. New legislation on tariff structures and offshore procedures will allow maintaining the incentives, which in turn will generate a sense of stability and predictability among investors. Several new wind parks are planned and a growth of about 1,500 MW per year is expected in the coming years. Offshore wind and wave energy have so far not experienced the same level of support. In both cases, but more so for wave energy, some time will pass before conditions are ripe for an industry take-off. Market Obstacles Norwegian actors interested in exploring the Spanish market are likely to encounter the following obstacles: A bureaucratic permitting process
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High competition from local and strong actors No local experience in wave or offshore windenergy There is not a market yet for a wind offshore energy and neither a price system set. There is only a reference price for project planning purposes New legislation for offshore wind energy and still doubts about the effectiveness of the new administrative procedure
Overall market strengths For land-based wind energy the following are strengths that serve to stimulate investments: Favourable political framework with ambitious goals Good understanding and acceptance in society of renewable energy production Positive investment climate Good profitability on investments The Spanish investment promotion agencys view of the wind industry in Spain is shown in Figure 88 Figure 88: Why investing in wind energy in Spain makes sense
Recommendations Entering the Spanish market will require a local partner with expertise in administrative processes and procedures and with the right contacts with the local administration and market knowledge. This applies both for project and technology development companies. That being said, Spain is a potentially exciting market for wind and ocean-based energy companies: It is a mature on-shore wind market, it has excellent tariff incentives for onshore wind, and a positive political climate towards renewables in general. The offshore sector is less developed and more uncertain, but may still be worthwhile exploring, given among others, good natural resources.
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13. Portugal
13.1 Energy demand and supply Portugal has a liberalised electricity market, although it is still highly concentrated, with the EDP Group playing a dominant role across all market areas. The implementation of MIBEL (the Iberian electricity market) and the increase of the electricity transfer capacity between Portugal and Spain are major incentives for the development of competition in the electricity market in Portugal. Electricity consumption was close to 50 TWh in 2006. The largest fraction of the supply of electricity is based on thermal sources such as coal, oil and natural gas. However, Portugal also generates a significant part from hydro power. The production of renewable energy has shown the highest increase in the last years, mainly due to wind energy. Figure 89 shows the growth in installed power from 2002 to 2006: Figure 89: Portugals electricity supply
Renewable Hydro Thermal Peak load
Source: REN
In 2006 the total installed renewable energy capacity was 2,448 MW, of which 687% was wind energy. Renewables experienced an annual average growth rate of 21.9% between 2000 and 2006. Figure 90 shows the increase in renewable energy production from 2000 until May 2008: Hydropower-based production has fluctuated and has had a decreasing trend, whereas wind energy production has increased.
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Figure 90: Development of electricity production from renewable sources (TWh)
Photovoltaic Small hydro Hydro > 10 MW
Source: DGGE
According to estimates, there will be a reduction in the share of thermal and large hydro and a significant increase in renewable energy, mainly wind in the years to come. In fact, the Government estimates that wind energy will achieve 25% of total installed power by 2011. The Portuguese Government has the following new targets for Portugals electricity supply: 2010 - Increase renewables share of electricity consumption from 39% to 45% by 2010 2020 - Increase renewables share of electricity consumption to approximately 60% by 2020 The breakdown in targets is shown in Figure 91
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Figure 91: Sector targets in short- medium- term renewable energy

Wind Power Hydro Power Other renewables Biofuels
on
Reach 5.100MW (+ 600MW

upgrades) by 2010
Optimize current unused

hydro potential (>54%) reinforcement
Promote a diversified policy

other RES
Launch bids for new licenses Anticipate projects on existing facilities Create industrial and R&D
clusters associated to wind power projects
250MW biomass (90% already licensed through public tenders) 150MW solar (with 3 major worldwide plants) 250MW wave (1st plant in the world been set)
Reinforce bio-fuels goals 5.75% -> 10% anticipate by 10 Incentives mechanisms
years the EU target

projects
Two cluster already licensed One public tender for small investors being prepared
+ 650MW, 440M investment Go beyond 5,500MW by 2010
granted by public biding
Materialize new strategic

overpass 7.000MW by 2020 (> 70% national potential)
100MW biogas Innovative policy on micro

simplified licensing
generation (165MW by 2015) PHV, wind power, cogen
Promote technological develop.

and links to national policies
Complementary wind/hydro power policy
e.g. fire-risk mitigation
13.2
Wind status now and future potential
Onshore wind capacity The Portuguese government has set as an objective to have 5200MW of wind installed power by2015, which will represent 20% of the national consumption. Installed wind power capacity at the end of May 2008 was 2428MW, distributed on 159 farms with a total of 1293 wind turbines. As of May 2008, 3688MW of new wind power were licensed. The Government estimates 2800 MW of wind power to be connected to the grid by the end of 2008. Approximately 42% of the installed power is in farms with a rated power of 25MW or less. The average power of the farms by the end of 2008 was of 15.3 MW, with wind turbines of 1.9 MW of average power. There were 23 farms with less than 1 MW, 67 farms between 1 and 10 MW, 44 farms between 10 and 25MW, 16 farms between 25 and 50MW, and 8 farms over 50MW
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Figure 92: Installed wind power capacity
Portugal's wind power installed capacity

MW6000 Installed capacity Installed capacity (33% of the 2012 goal) (33% of the 2012 goal) Licensing under Licensing or or under construction construction 100 400 1200 600 Phase B Phase A 5150 450 5700 600
5000
4000
3000 31% 2150 2000 95% 1000 537 1047 58% 1637 1250 4700 5100
2004
2005
2006
2007
Public tender Equipment upgrades
2010 2010
2012 2012
Source: MEI, DGEG
licensing or under construction
Source: MEI; DGGE
Offshore wind deployment in Portugal According to Government authorities, the installed capacity of offshore wind energy in Portugal could reach 500 MW between 2015 and 2020. Figure 93
On-shore plus Off-shore wind should increase from 4000 GWh to 16200 GWh, between 2007 and 2020.
GWh 40000
35000 30000 25000 20000 15000 10000 5000 0 2007 2010 Combined Heat and Power Thermal SRG Solar Energy Microgeneration 2013 Wind Energy Small-Hydro Wave Energy 2020
Source: REN
Only the floating systems installed deep offshore are currently under consideration. The Portuguese utility EDP is reportedly discussing possible cooperation on future projects with StatoilHydro. R&D cooperation projects in offshore wind between Norway and Portugal are as follows:
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1. NORSEWInD, EC FP7-Energy-2007-2-TREN (INETI and Statoil) New methodologies for offshore wind mapping by simulation, remote detection, satellite data and correlation with information gathered in oil rigs) 2. Project IEA Wind Task 23-Offshore (INETI, SINTEF) Identification of viable deep offshore technologies (e.g. foundations, moorings) 13.3 Wave status now and future potential The Portuguese coast and the Atlantic islands of the Azores are among the best in the world for the production of energy from waves. Preliminary studies show that there are 250/300 km along the coast which may be used for wave energy production. Considering technically possible an average conversion of around 15% of the energy available in offshore systems, an intense use of the energy resource (annual average close to 7.5 GW) would produce about 10TWh/year of electric energy, corresponding to approximately 20 % of national consumption 169. Pelamis Wave Power in cooperation with a Portuguese consortium led by Enersis (EDP group) has installed three wave devices off the coast of Portugal. The first stage of the 8 million project consists of three 750 kW Pelamis machines. When completed, the project is expected to meet the average demand of more than 15 000 households. The project is significant because it goes beyond the prototype or concept-testing to become the worlds first commercial wave. Construction of the project has been completed but production to the grid has been delayed on several occasions. Over the last decade, several wave devices have been tested in Portuguese waters. Some of these systems are at the R&D stage, as is the case of the prototype installed in the Azores island of Pico in 2000 by a Portuguese-Irish-British consortium. This prototype has 400kW of installed power and in normal conditions is able to produce about 1GWh/year of electricity 170. At the end of 2001, AWS (Dutch technology) installed another pilot in the northern coast of Portugal (near Viana do Castelo). In July 2007, an investment contract was signed between API Capital (http://www.apicapital.pt) and Martifer (http://www.martifer.com/) for the development of a wave energy prototype. The prototype is a real scale oscillating offshore unit. The Pilot zone In August 2008, the Portuguese Government announced the decision to create a pilot zone with a total potential operating capacity of 250 MW for the technological development of new prototypes at their industrial and pre-commercial stages. This decision was taken by the Decree Law 5/2008. The pilot zone shall be planned for all marine energies, including offshore wind. This pilot zone would have the highest operating capacity in the world. The project will provide: Simplified and fast licensing and operation through a Managing Body (one-stop-shop) GIS with relevant data Infrastructures promoted by the Managing Body Electrical sub-station and connection to distribution/transportation grid paid by the electrical system. Connection between sub-station and offshore devices paid by project developers Access to the Pilot Zone will be divided as follows: Demonstration (4 MW per technology or 20 MW national) Pre-commercial (20 MW per technology or 100 MW national) Commercial (Over 20 MW per technology)
169 170
Source: National Report on the Ocean Strategy Source: Wave Energy Centre
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Permits and planning will take place this year, while construction of infrastructure is envisaged for 2009 and first deployments to take place in 2010. 13.4 Price In Portugal the price paid to renewable energy producers by the national grid operator (REN) is fixed through the use of a feed-in-tariff. The basic feed-in tariff framework was created in 1999 and amended in 2001, 2005, and 2008. Tariffs increase with inflation, over time and vary based on temporal generation profiles and based on avoided transmission and distribution loss. In the regulation from 2005, inflation is no longer considered from the date the license of the facility is awarded, but rather from the date the plant actually starts operation, in order to minimise delays in the starting-up process. The 2005 amendment also introduces the limitation of the feed-in tariff remuneration period to a maximum of 15 years. At the end of that period, the tariff will converge with the market price plus a premium for the sale of green certificates. The average price paid in 2006 for wind generation was, 92.2/MWh, while at the end of 2007, it was 82/MWh. This year it is 75/MWh and it is expected to continue to decrease as wind becomes more and more competitive with conventional sources. Offshore wind does not yet have a dedicated tariff, but it is expected that it will have one in the near future as the Government continues to explore the offshore wind potential. The Decree Law 225 of May 2007 establishes the feed-in tariff for wave energy, as graphically demonstrated below: Figure 94: Feed-in tariff for wave energy
World Power (MW)
300 0,3 DEMO (< 4MW per technology) 0,25 0,2 /kWh 0,15 0,1 0,05 0 1 10 20 100 250 1000 PRE-COMMERCIAL (< 20 MW per technology) COMMERCIAL 0,075 600
National Power (MW)
Source:Wave Energy Centre
The tariff for the technologies producing less or 4MW up to 20MW, the price is 250/MWh per technology, which means that there might be 5 different technologies getting the same feed-in tariff. The technologies producing more than 4MW and less than or 20MW up to 100MW in Portugal or up to 300MW in total in the world, will get a tariff between 160-210/MWh, when still in a pre-
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commercial stage. The exact tariff to apply is evaluated by the Minister of Economy according to the contribution for the national development of the research and technologies. Commercial plants will get a tariff between 100 to 160/ MWh up to 100MW in Portugal or 300 MW in total in the world. Again, the exact tariff to be applied is evaluated on the same terms as the precommercial projects. 13.5 Relevant locations for wind and ocean based renewable energy
Wind Power Owing to Portugals geographical location, it is only in the mountains that the speed and regularity of the wind enables it to be exploited for energy purposes. Most of the locations with the above characteristics are to be found north of the river Tejo, and south along the west coast. According to the Plan for the Investments and Development of the Grid, prepared by REN for the period 2009-2014, the wind power capacity by region till 2019 is described in Figure 95. Figure 95: Onshore wind capacity by region - 2014 and 2019 (MW)
Region Aveiro Beja Braga Bragana Castelo Branco Coimbra vora Faro Guarda 2014 44 126 202 77 687 815 253 308 2019 47 134 213 332 721
1016 1016 721
Region Leiria Lisboa Portalegre Porto Santarm Setbal Viana do Castelo Vila Real Viseu Total
2014 439 561 72 150 20 460 788 1098 6100
2019 610 590 77 160 22 488 1031 1166 7500
369 524
up to 400 MW by 2019
Source: REN
Issues related to the location of onshore wind projects Large investments in grid interconnection improvements and grid upgrades will be needed in the upcoming years to support the expansion of wind-based production. Today the insufficiency of the grid is critical. The wind power farms are mostly located in the northern region of Portugal and the future prospects reinforce this situation. Most of the wind potential is located in inland hilly regions with low consumptions and with underdeveloped electricity grids. The location of the wind farms is a complex process involving multiple and conflicting interests and many agents with influence in the decisions. The licensing process of a wind farm is the responsibility of the Directorate General of Energy (DGE) and the promoter, though REN has also an important role, since it produces the grid investments plans which will be used by DGE to analyse the preliminary request for the installation of the farm. Additionally to the environmental issues there are in some
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cases problems related to land ownership and the rights to use the land or to cross private properties. The municipalities receive a share of 2.5% of the monthly remuneration paid to the wind farm operators.
The deep offshore wind potential in Portugal Figure 96: Offshore wind potential Portugal
Table 24: Depths of various offshore zones ZONE A B C D E

Source: INETI
Wind potential (h/year) 2600-3000 2600-3000 3400-3700 2400-2600 2600-3000 2600-3000 2600-3400 2600-3000
Depth (m) 20-30 20-35 20-40 10 10-20 10-30 20-40 10-20
Distance to coast (km) 5 5 10-15 0,5-7 5-7 5 2-3 5
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Wave power Figure 97 shows proposed concession areas for wave power in Portuguese waters and Figure 98 shows the proposed pilot zone 171. Figure 97: Wave energy potential locations in Portuguese waters
171
Source: Wave Energy Centres study
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Figure 98: Proposed wave pilot zone
-70 m -50 m -30 m 22 km
Pilot Zone:
320 km2 80 MW (medium voltage) + 170 MW (high voltage)
20 km 18,3 km 14,9 km
Created by DL 5/2008 from January 8, 2008 Source: Wave Energy Centre
The pilot zone will be located in the centre western coast, between Nazar and Figueira da Foz. It will be 50m close to shore, near port infrastructures and with a strong electrical grid along the coast. The terms of the infrastructures construction and financial support are still under discussion. The grid access is planned for 1st half of 2010, but it will be possible to test prototypes with less than 1MW of energy production before that. Figure 99 shows the location of the pilot zone and relation to ports. Figure 99 Location of wave pilot zone and relation to ports
Leixes
Aveiro F. Foz
Pilot Zone
Peniche
Lisboa
Setbal
Sines
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Issues related to the location of wave projects Environmental guidelines dictate that in order to reduce the impact on navigation and fishery, the farms should not have a length over 5 km in the direction parallel to the coast. The width of the farms will depend on the technology used, reaching between 15 m (AWS) and 1 km (Pelamis). A corridor for navigation of 1 km will be needed between each pair of farms with a length of 5 km. 13.6 Political climate for renewable energy from wind and ocean Compared with certain other European countries, Portugal was a latecomer to the wind energy scene. However, in the mid-1990s, with the technology coming to a mature stage and with national and international policies pushing towards an increased use of renewable energy, a more suitable legal and financial framework for RE generation was put in place. Besides regulating and facilitating the access to power production by independent power producers, the price paid for renewable electricity was primed, thus creating a more attractive framework for market to grow on. A strong feed-in tariff has played a key role in this markets growth. For wave energy, the government plans to increase capacity by 200 MW through the creation of a pilot area with a total exploring potential of 250 MW for new emerging industrial and pre-commercial development prototypes. The objective is to attract foreign investors by presenting Portugal as an attractive region for the industrial and commercial of wave energy generation and to reinforce its technical, scientific and business related capacity to assure the participation of national companies and R&D institutions from the start of the development. However, and in spite of a generally very favourable climate, renewable energy developments in Portugal suffer from the same issues as its European neighbours: most importantly among them are an insufficiently developed grid and a bureaucratic licensing procedures for new installations, mostly related to environmental issues. 13.7 Incentives for developing / utilising new technology
Financial Incentives In addition to the feed-in tariff, Portugal encourages renewable energy deployment through: A tendering/concession schemes in connection to power installations with investment subsidies of up to 40% (MAPE Programme).The MAPE programme is particularly aimed at the energy sector, and it grants financial aid as well as low interest loans to public and private investments. The level of subsidy varies according to the renewable technology involved and the economic feasibility of the project. Renewable energy generation projects can benefit from a non-refundable incentive of up to 40% of eligible expenses. Tax reductions are available, and include: -A reduction of VAT from 21% to 12% on all equipment needed for production and use of RE sources -An increased annual tax-depreciation rate for investments in equipment
Capital available for investing Large banks and utilities - both national and international - are the most promising investors in renewable energy in Portugal. The investment arm of the bank Espirito Santo (BESI) has already financed a number of wind energy projects and the bank already ranks 6th in the project finance ranking of Western Europe. (www.esinvestiment.com). EDP, Energias de Portugal (the utility) is among the most important global wind ownership asset owners (www.edp.pt).
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API Capital (http://www.apicapital.pt/) is a venture capital company, involved in a wave energy project with Martifer. The company is an affiliate of AICEP (The Portuguese foreign trade agency) and the Porguguese state is majority shareholder. Test facilities for new technology In addition to the pilot scheme for wave power described in some detail earlier, the National Institute for Engineering and Industrial Technology (INETI) is under the Ministry of Economy and Innovation and is the most active and visible laboratory in this sector. The activities and R&D projects in the wind energy field are partly financed by the government. They have test facilities and some prototypes in the RE department. Support, Guidance and Consulting Services AICEP Global is an agency created by the Portuguese government to support and attract foreign investment. They provide assistance in establishing business in Portugal. (http://www.apinvest.pt). Agencia Portuguesa de Inovao ADI is a state-owned agency, funded by the government, which promotes and support R&D activities of technology based innovation. They also have programs to promote and support international co-operation and technology transfer. (www.adi.pt) IAPMEI is a regional state owned agency with offices all over the country that supply guidance, consultancy and support as well as financial incentives to SMEs in Portugal. The agency also stimulates investment in new projects by giving financial incentives (refundable and non-refundable) and by supplying consultancy and advice to entrepreneurs. (www.iapmei.pt) The Wave Energy Centre is a non-profit organisation, founded in 2003, aimed at the development and promotion of wave energy through technical and strategic support to companies, R&D institutions and public entities. The centre also aim to collaborate with companies and other institutions outside Portugal that recognise the need for international cooperation in testing or presenting wave energy technologies, mainly those who seek an association with Portuguese companies / institutions. (http://www.wave-energy-centre.org/) INETI-the Instituto Nacional de Engenharia, Tecnologia e Inovao (National Institute for Engineering, Technology and Innovation) carries out research, testing and technological development. Its mission is to promote technological innovation focused on science and technology. INETI takes up the role of an interface between the results generated by research and development programmes and their technological integration into the private sector. Energy is one of the priority fields of action in INETI (www.ineti.pt) INEGI-the Instituto Nacional de Engenharia e Gesto Industrial is an interface institution positioned between the University and the Industry, and dedicated to Research, Development, Innovation and Technology Transfer. INEGI aims to increase the competitiveness of the national industry through research & development, demonstration, technology transfer and specialized training in the fields of product design and development, production technologies, energy, maintenance, environment and industrial management. (www.inegi.pt) R&D activities Several R&D projects are taking place at INETI and EDP. Additionally, in the north of Portugal (Porto), R&D activities are mainly carried out by research groups based at FEUP (www.fe.up.pt) at the Research Centre for Wind Energy and Atmospheric Flows, and INEGI, and are part of the research network established by the FCT, the Foundation of Science and Technology (www.fct.mctes.pt) in association with INESC.
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13.8
Key Players
Wind farms developers The wind market in Portugal is very active and there are several players, though the largest share (approximately 60%) is concentrated in 3 groups. They are ENERSIS (Babcock & Brown); Enernova (EDP) and GENERG (Electrabel). Figure 100: Wind developers in Portugal
Source: INEGI
Industrial suppliers of wind equipment In what concerns equipment supply, Enercon is leading the market with 29.6%, followed by Vestas and Gamesa.
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Figure 101 Wind turbine manufacturers in Portuguese market
The creation of clusters There is a desire from the government and the industry to encourage local manufacturing of wind turbines and components, and to create local manufacturing clusters. The wind tender scheme introduced in 2005 also aimed at that objective. The establishment of local manufacturing clusters for wind power equipment is supposed not only brings jobs and local economic development, but also to reduce the installations costs for new wind generators, as well as to increase export possibilities. The consortium winner of the 1500 MW (Eolicas Portugal) will invest on an industrial park in Viana do Castelo (Northern Portugal) to produce a new Enercon wind turbine model, the E-82 with a production capacity of 180 wind turbines/year and 600 towers/year. Meanwhile, EDP, the largest shareholder of the consortium has bought US wind power developer and operator Horizon. Efacec (www.efacec.pt) and Tegopi (www.tegopi.pt), two companies belonging to major industrial groups in Portugal are joining efforts to create a wind cluster. This industrial park will produce all type of equipment for the wind power industry and will represent an investment of 500 million. The two companies plus some wind power promoters have formed a lobbying group to get government approval and financial support (national and EU funding) for this project. The group is now trying to find a partner with know-how on wind power which can offer technology transfer. The industrial park will consist of production units for the wind towers, turbine blades and assembling. The idea is to supply the Portuguese market which needs to produce at least 3000 MW from wind energy by 2010. 13.9 Market entry
Market perspective Onshore wind energy has been the RE market segment of most interest during the last four years in Portugal. A significant number of wind farms have been erected and several projects are now at different planning stages. Different factors played important roles in the success of wind energy in Portugal. First, there are the actual promoters of the projects, which are a vital driving force for the sector and now comprise a small but active group of private investors with ambitious plans for further developing wind energy. Second, the financial institutions that see wind projects as very attractive and are keen on making available the necessary funds for promoters to put their projects into practice.
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And, third, the favourable view of the municipalities, which according to DecreeLaw 339-C-2001, receive 2.5 % of the price paid to wind farms for the electricity supplied to the grid. Wave power is at a much more immature stage. However, the potential is significant. The main advantages for wave power in Portugal are Good natural conditions (deep water near the coast; medium-high resources; good weather conditions) Well developed infrastructures close to potential deployment sites (ports; shipyard infrastructures; grid connection points) Technological and scientific background (more than 25 years of R&D activities at the engineering and technological institutes, and involvement in 3 European pilot plants Pico; Limpet and AWS) Overall, the strength of the Portuguese market for RE lies in the favourable political framework with ambitious goals, a good understanding and acceptance in the society of renewable energy production, and a positive investment climate. On the other hand, obstacles do remain. One of them is the lengthy project planning process: bureaucracy is a major constraint in Portugal and one needs to plan carefully, in order to obtain all of the different permits required to install any RE project. The permits required to install and operate wind parks tend to be more difficult than other resources due to the fact that some sites are environmental-protected areas and therefore, regulated by environmental institutions. Present status and critical factors on the RE market until 2010: National grids capacity fully committed until end of 2010, mostly with wind and hydro new and upgrade projects Expansion of the grid will start beginning of 2011 New projects shall request for grid access beginning of 2009 in order to be ready by 2011. The licences for grid access are given by Public tender or by PIP (previous information request to DGGE) Onshore wind feed-in tariff will gradually be reduced and closer to the electricity market price ( 40/MWh), since technologies have developed and matured over the last years. The price is now 75/MWh. Adjusted feed-in tariffs and special PIP processes dedicated to innovative technologies will be launched Recommendations Companies that want to approach the Portuguese market for wind and ocean power should contact the following governmental bodies/agencies: DGEG (Directorate for energy) ERSE (Regulatory body) REN (National grid operator) AICEP ( Foreign Trade office for large investments)
The Portuguese government offers financial and fiscal incentives to promote renewable power research, production and consumption. There are specific programmes under the EU funding framework available. The creation of a cluster for the wind industry is also being encouraged by the government through the tendering rounds for grid connection rights. Bureaucracy and licensing processes are still the major weaknesses in this market. Teaming up with local partners is crucial for a successful market entrance. To sell equipment, it is also important to have a local agent/representative with a thorough knowledge of the market since competition is high and very aggressive. Potential involvement in local clusters is welcome.s
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Energy from Wind and Ocean a European Market Study

ENERGY FROM WIND AND OCEAN

A EUROPEAN MARKET STUDY 2008

Energy from Wind and Ocean a European Market Study

Line Amlund Hagen Sector responsible Energy & Environment

Bergny Irene Dahl Coordinator Wind&Ocean Multiclient programme

Energy from Wind and Ocean a European Market Study

Innovation Norway contributors to the report

Madis Rausi Senior Adviser, Estonia marau@innovationnorway.no

Iris Stempfle Consultant, Germany: irste@innovationnorway.no

Pernille Holtedahl Senior Advisor, UK Pernille.holtedahl@innovationnorway.no

Patrick Daly Consultant, Ireland Patrick.daly@innovationnorway.no

Energy from Wind and Ocean a European Market Study

Oleg Kosine Consultant, France olkos@innovationnorway.no

Rodrigo Ballesteros-Cruz Senior adviser, Spain rodrigo.ballesteros@innovationnorway.no

Rita Abecasis Commercial Manager, Portugal rita.abecasis@innovationnorway.no

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Source: New Energy Finance, Sep. 23 2008

Source: Monthly Briefing, July 2008

Energy from Wind and Ocean a European Market Study

Figure 3: Top ten capacity installers (MW in 2007)

Energy from Wind and Ocean a European Market Study

Wave and Tidal Power in the World

Figure 4: Global potential for wave and tidal power 2

Energy from Wind and Ocean a European Market Study

Figure 5: Wind Capacity per capita in 2007 (KW/1,000 pop.)

Source: EurObserER 2008

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Table 2 Onshore Wind Attractiveness 5

Energy from Wind and Ocean a European Market Study

Table 3 Offshore Wind Attractiveness 7

Adapted from Ernst&Young Energy Offshore Wind Attractiveness Index, Q2 2008

Energy from Wind and Ocean a European Market Study

Figure 7 Distribution of wave projects by type

Source: IEA- Ocean Energy Systems, 2008

Source: IEA- Ocean Energy Systems, 2008

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Figure 10: Electricity production by fuels

Figure 11: Wind capacity and share of electricity supply 11

Wind status and future potential

Danish Energy Authority

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

http://www.risoe.dk/rispubl/art/2007_183_paper.pdf For more information see: http://fi.dk/site/english/councils-commissions-committees/the-danish-council-forstrategic-research

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Energy from Wind and Ocean a European Market Study

Figure 17: Supply of electricity from renewable sources 31 2003