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Framework of reference and Perspectives for Wind Energy in Spain

Framework of reference and Perspectives for Wind Energy in Spain . Hugo Lucas IDAE – International Department. Table of Contents. 1. Current Situation of Wind Energy in Spain. 2. Technological Aspects. 3. Main Wind Energy Legislation in Spain.

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Framework of reference and Perspectives for Wind Energy in Spain

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  1. Framework of reference and Perspectivesfor Wind Energy in Spain Hugo Lucas IDAE – International Department

  2. Table of Contents 1. Current Situation of Wind Energy in Spain. 2. Technological Aspects. 3. Main Wind Energy Legislation in Spain. 4. Spanish Renewable Energy Plan (PER) 2005 – 2010. Wind Energy Area.

  3. Current Situation of Wind Energy in Spain

  4. 22,245 15,095 3,125 2,725 2,455 2,390 2,150 1,745 4,565 TOTAL EU-27 (ENDING 2007) 56,495 MW Source: EWEA and IDAE Provisional Data Wind energy capacity (MW) in the European Union (EU-27) - 31/12/2007

  5. ACUMULATED CAPACITY YEARLY INSTALLED CAPACITY 16000 3400 3200 15000 IN OPEARATION 3000 14000 2800 ACUMULATED 13000 2600 12000 2400 11000 2200 10000 2000 9000 1800 8000 1600 7000 1400 6000 1200 5000 1000 4000 800 3000 600 2000 400 1000 200 0 0 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 2001 2002 2003 2004 2005 2006 2007 0,4 1,2 0,8 1,5 2,7 0,7 38 6 24 40 96 229 393 642 815 985 1.615 1.344 2.082 1.593 1.811 3.374 IN OPERATION 0,4 1,6 2,4 3,9 6,6 7,3 46 52 75 115 211 440 834 1.476 2.292 3.276 4.891 6.235 8.317 9.910 11.721 15.095 ACUMULATED Development of Wind Energy in Spain (MW) TOTAL SPAIN (ENDING 2007) 15,095 MW Source: IDAE Provisional Data

  6. 3,900 Yearly investment in the wind energy sector in Spain Source: IDAE Provisional Data

  7. Evolution of cost per kW of installed capacity (in nominal terms) Average Cost 2007 1,170 €/kW inst. Average Cost 890 EURO/kW inst. Source: IDAE Estimated value for 2007

  8. Technological Aspects

  9. Technological aspects. Market share by manufacturers in Spain (2007) • 96 % of installed capacity in 2007 were supplied by manufacturers established in Spain: • Spanish technology (67 %): GAMESA, ECOTECNIA(*), ACCIONA WP • Foreign technology (29 %): • VESTAS, G. ELECTRIC, NORDEX, ENERCON • Transfer technology (4 %): • NAVANTIA-SIEMENS Average WT power rating  1.560 kW Average size of wind farm  27 MW TOTAL: 3,374 MW (*)ECOTÈCNIA was acquired last year 2007 by the French company ALSTOM.

  10. Accumulated installed capacity (MW) per technology (31-Dec-2007) TOTAL: 15,095 MW Source: IDAE Provisional Data

  11. Worldwide market share in 2007 Source: BTM Consult – March 2008

  12. Wind turbines manufacturers (Spain)

  13. Key elements for wind energy success in Spain • Existence of significant wind resources. • Stable regulatory framework for electricity generated (Feed-in tariffs system; reasonable return on investment). • Regional support: planning, simple administrative procedures. • Technological maturity. Creation of a strong industrial sector. • Large scale production brings costs reduction (construction, operation and maintenance).

  14. Main Wind Energy Legislation in Spain

  15. FRAMEWORK OF REFERENCE IN THE EUROPEAN UNION (EU-27) • “WHITE PAPER” (December 1997): • Contribution from Renewable Energy Sources of 12%relative to primary energy consumption. • Directive 2001/77/EC: • Contribution of 21% relative to the annual electricity consumption. (Spain: 29.4%) RES – Overall target by 2010 “Renewable Energy in Europe Road Map” -COM(2006) 848 final- • RES: 20% of primary energy consumption. [Proposal for a Directive “on the promotion of the use of energy from renewable sources”. Brussels, 23.01.2008 –COM(2008) 19 final-] New targets by 2020

  16. REGULATORY FRAMEWORK OF REFERENCE IN SPAIN Main legislation at national level - Spanish Electric Power Act 54/1997 (dated November 27th). • Royal Decree 661/2007, on Special Regime. • (Order ITC/3860/2007, electricity tariffs year 2008) Regional level - Administrative Procedures.

  17. RD 2366/1994 Feed-In Tariff • RD 2818/1998 Feed-In Tariff • RD 436/2004 Feed-In Tariff Premium • RD 661/2007 Feed-In Tariff Premium Small capacity facilities. Revision of the tariffs and technologies. Increase maximum capacity. Revision of the tariffs and technologies. Windfall profits in the market option. Insufficient development of biomass and cogeneration. Cap & Floor. LEARNING BY DOING

  18. RD 661/2007. MOTIVATIONS • The modification of the economic and legal framework regulating the special scheme in force so far (RD 436/2004) became necessary for several reasons: • The growth undergone by the special scheme in the last years has pointed to theneed to regulate some technical aspects to contribute to the increase of these technologies, safeguarding the system’s security and guaranteeing its supply quality, as well as the restrictions to the production. • The economic scheme established in the Royal Decree 436/2004 of 12thMarch, because of the behaviour undergone by the market priceswhere some variables not considered earlier have become moreremarkable, made necessary to modify the payment system. • New targets for installed capacity are established incompliance with the objectives in the Renewable Energies Plan 2005-2010 and the Energy Saving and Efficiency Strategy for Spain” (E4), towhich the retribution scheme set out in this Royal Decree shall apply.

  19. RD 661/2007. SCOPE OF APPLICATION Category a): Producers using cogeneration or other ways of electricity production from waste energy. Category b): Installations using any of the non-consumable renewable energies, biomass or any kind of biofuel as primary energy, whenever their titleholder does not carry out production activities under the ordinary scheme. Category c): Power plants that use waste with energy recovery not stated in category b) as primary energy.

  20. RD 661/2007. MAIN CHARACTERISTICS Objective: - Legal and economic scheme for the Special Regime. - Consolidate the regulatory framework, giving stability and predictability to the system. Characteristics: - Feed-in tariff system. - Guaranteed along the life-time of RES installations. - Adapted to the development of each renewable area. Methodology: - Two alternative options for the remuneration of kWh: • 1.Regulated price: • Independent of capacity and year of commissioning. • 2. Open sale in the market: • ‘Pool’ price + Premium + Complements. • Upper and lower limits for the sum (‘pool’+premium)

  21. RD 661/2007. MARKET OPTION • When producers decide to participate in the market, the obtained premium • will vary according to the market price (‘pool’) set up on an hourly basis. Top limit Premium + ‘Pool’ Premium 87,79 2008 Bottom limit 73,66 (€/MWh) Premium of reference 30,27 43,39 57,52 87,79 (€/MWh) ‘Pool’

  22. RD 661/2007. OTHER ASPECTS Other relevant aspects: • Wind farms are obliged to remain connected to the networkin case of sudden voltage drop, contributing in this way to its stability. • Installations have to present a financial guarantee to be allowed to connect to the grid (20 €/kW). • Costs of deviation: The real cost of deviation will be passed on also to the installations with regulated tariff. • In 2008, a new Renewable Energies Plan for the period 2011-2020 will be drawn up.

  23. UPDATING AND REVISION OF TARIFFS, PREMIUMS AND SUPPLEMENTS The amounts of tariffs, premiums, supplements and cap & floor limits will be annually updatedhaving the consumer price index (CPI) as a reference minus 0.25 until the 31st of December 2012 and minus 0.5 since then. During 2010, in view of the result of the follow-up reports on the extent of fulfilment of the Renewable Energies Plan (PER) 2005-2010, the review of tariffs, premiums, supplements and cap & floor limits will take place, bearing in mind the costs associated with each of these technologies, the extent of participation in the special scheme in the meeting of the demand and its effect on the technical and economical system, always guaranteeing reasonable profitability rates with reference to the price of money on the capital market. Every four years and from thenon, a new revision will be done maintaining the above criteria.

  24. Spanish Renewable Energy Plan (PER 2005 – 2010). Wind Energy Area

  25. THE RENEWABLE ENERGY PLAN (PER) 2005-2010 • Approved by the Council of Ministers on 26th of August 2005. • Targets of PER 2005-2010. In 2010, RES will represent: • 12.1% of total energy consumption, • 30.3% of electricity production, • In addition, biofuels will represent 5.83% of diesel and petrol consumption in the transport sector. • Estimated investment for this period: 23,598.64 M€. • In general, individual targets for each technology have been increased. • Decisive role of wind energy.

  26. THE RENEWABLE ENERGY PLAN (PER) 2005-2010

  27. THE RENEWABLE ENERGY PLAN (PER) 2005-2010

  28. RENEWABLE ENERGY PLAN (WIND ENERGY AREA). SUMMARY • Overall target (year 2010) 20,155 MW • Generated electricity (2010) 45,511 GWh/year • Related investment (2005-2010) 11,756 million € • NO subsidies to investment. • Emissions avoided (year 2010) 16,930,092 t CO2 • Estimation of job creation (2005-2010): - Design and Construction 34,680 jobs - Operation and Maintenance 3,113 jobs

  29. PER 2005-2010: MAIN MEASURES IN WIND ENERGY AREA Proposed Measures: • Development of transport grid. • Updating and improvement of the regulatory procedures regarding grid access and operating conditions. • Establishment of a single operation centre for the Special Regime. • Improvement of wind generatorsbehaviour, regarding network.

  30. SUMMARY • Target for wind energy in Spain: 20,155 MW (year 2010). Next year, starting new Renewable Energy Plan for 2011-2020. • Third position world-wide, with 14,600 MW commissioned (ending 2007). • Spanish technologistsamong the ten largest manufacturers. • Stable legal framework: Feed-in Tariffs System, with premium price recognising environmental benefits.

  31. Thank youwww.idae.eshlucas@idae.es

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