Apex Paris - October 2007 1

UK and EuropeanRenewable Energy trends and

implications for energy markets

Philip WolfeRenewable Energy Association

www.r-e-a.net

Apex Paris - October 2007 2

Renewable Energy AssociationMore than 500 members

> multinationals to ‘one-man bands’

Renewable heat, power, fuel & CHP

All technologies:> Biomass> Bioenergy> Solar> Wind> Marine> Hydro> Heat pumps

Apex Paris - October 2007 3

This presentation

EU energy targets

Possible scenarios for 2020

Policy implications

Trading and market implications

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A lot of 20%’s

The EU commitments for 2020Emissions reductions Binding> 20% unilateral, or> 30% if multilateral

Energy conservation Non-binding> 20% below current projections

Renewables Binding> 20% of total energy> 10% of transport fuelstotal energy

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Renewable trends in Europe

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

20.0%

1985 1990 1995 2000 2005 2010 2015 2020

ItalyDenmarkGermanyUnited KingdomEuropean Union 25EU25 (target)UK (target?)

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UK Energy White Paper“The 20% renewables target is an ambitious goal … by 2020, on the basis of existing policies, renewables would contribute around 5% of the UK’s consumption … we will bring forward the appropriate measures, beyond those set out in this White Paper, to make our contribution to meeting these targets.”

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Renewable34%

Renewable18%Renewable

12%

Fossil and nuclear66%

Fossil and nuclear88%

Fossil82%

Transport Heat Power

20% Renewables – EU vision20% Renewables – EU vision

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First: Cut energy consumption

Energy conservation measuresMore efficient energy usage> Regulate against inefficient products> Regulate against parasitic loads

More efficient energy generation> Limit generating stations’ waste energy

UK consumption in 2020 same as nowas a rough working assumption

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Routemap to 2020 New measures needed

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Enhanced policy proposalsMerchant power

Increased RO1 objective ~22% in 2020> Set 25% quota and increase headroom> Retain buyout link to retail price index> Offshore super-grid?

Tidal lagoons, barrages and new large hydro?Incentives for large scale CHP2

> Large thermal generators must use heat> Renewable Heat (or Gas?) Obligation

Measures to deliver biomass strategy3

1. Renewable (electricity) Obligation2 Combined heat and power

3 Published by UK Government in May

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Enhanced policy proposals Other energy sectors

Renewable transport fuels> Higher RTFO4 quotas – 10% in 2020> High blend & second generation bio-fuels

Domestic buildings> Building regulations for new homes > Smart metering roll-out programme> Retrofit programme for existing houses

Non-residential buildings> A new Code for Sustainable Buildings> Heat networks in new developments> Renewables in agriculture

4 Renewable Transport Fuels Obligation

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Routemap to 2020 Enhanced energy policy

Apex Paris - October 2007 13

Renewable34%

Renewable18%Renewable

12%

Fossil and nuclear66%

Fossil and nuclear88%

Fossil82%

Transport Heat Power

20% Renewables – in EU20% Renewables – in EU

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10%23%

12%

2%

2%

16%

7%

11%

3%

51%72%90%

Transport Heat Power

Onboard OnsiteOn farm OnshoreNearshore OffshoreFossil & nuclear

20% Renewables – in UK20% Renewables – in UKWhere it isWhere it is

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5%

23% 11%

8%

8%

10%

2%1%

9%

5%3%

1%

51%90% 72%

Transport Heat Power

Hydro MicroRenew ablesBiomass BioEnergyOnshore w ind MarineOffshore w ind Fossil & nuclear

20% Renewables – in UK20% Renewables – in UKWhat it isWhat it is

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So what’s new ?More focus on heat and fuels> Not simply electricity

Increasing penetration of renewables> Exceeding nuclear, coal and oil

Competition between energy markets> Power, heat & transport competing for:

> Biomass> Gas

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What’s new for power ?Trend towards decentralised generationOffshore renewables:> International grids?

Renewables delivery profile> Base-load / intermittent; predictability

Advanced metering – new facilities:> Load management> Real-time price signals

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Implications for marketsMore and smaller energy producersIncreased cross-border tradingRegional (distribution level) potential?Real-time pricingMore flexible demandIncreasing role for balancing servicesNew trading opportunities for heat?

Apex Paris - October 2007 19

UK and EuropeanRenewable Energy trends and

implications for energy markets

Philip WolfeRenewable Energy Association

www.r-e-a.net