FORRES 2020: Analysis of renewable energy's evolution up to 20201

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Abstract of First Results

FORRES 2020:
                                                   1
Analysis of renewable energy’s evolution up to 2020

         Mario Ragwitz, Joachim Schleich, Fraunhofer ISI
         Claus Huber, Gustav Resch, Thomas Faber, EEG
         Monique Voogt, ECOFYS
         Walter Ruijgrok, KEMA
         Peter Bodo, REC

         Karlsruhe (Germany)
         January 2004

Study supported by:

1 Project supported under Tender No. TREN/D2/10-2002. Project ends in December 2004.
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FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

   Foreword

This summary provides a digest of the interim         of these 25 countries as well as for the two
results of the project FORRES 2020: “Analy-           future Accession States Bulgaria and Roma-
sis of renewable energy’s evolution up to             nia.
2020”. The objectives of this project are to
produce an independent analysis and as-               The FORRES 2020 study was initiated and
sessment of the implementation of renewable           financed by the European Commission, Di-
energy sources in the Member States of the            rectorate-General for Energy and Transport.
European Union and the Candidate Coun-                An international consortium of research and
tries since the publication of the White Paper        consultancy partners is conducting the study.
on renewable energy sources in 1997 and to            The core project team consists of Mario
propose a perspective for the period up to            Ragwitz, Joachim Schleich (Fraunhofer-ISI,
2020. The results of the project will:                Germany), Claus Huber, Gustav Resch,
(1) provide input for monitoring the progress         Thomas Faber (EEG, Vienna University of
    of the targets set in the White Paper, the        Technology,      Austria),     Monique       Voogt
    Directive on the promotion of electricity         (ECOFYS, Netherlands), Walter Ruijgrok
    from renewable energy sources, and the            (KEMA, Netherlands) and Peter Bodo (Re-
    Directive on biofuels; and                        gional Environmental Centre, Hungary).
(2) provide insights into the possible future
    implementation     of   renewable    energy       Support from the European Commission, DG
    sources under different policy develop-           TREN     is   gratefully     acknowledged.    The
    ments up to 2020.                                 authors would like to thank their colleagues
                                                      for their support in various parts of the study.
A main report on the project is available,            The responsibility for the contents of the
which provides an overview of the progress            study and the views expressed remains with
made on the European market for renewable             the core project team.
energy sources for the current EU-15 Mem-
ber States and the 10 Accession States (indi-         For further information, questions and com-
cated as EU-10+). A separate volume con-              ments, please contact the project manager at
tains more detailed country reports for each          the following address:

                                                      Dr. Mario Ragwitz
                                                      Fraunhofer-ISI
                                                      Breslauer Str. 48
                                                      D-76139 Karlsruhe
                                                      Germany
                                                      Tel: + 49 721 6809-157
                                                      E-mail: Mario.Ragwitz@isi.fhg.de
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FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

   Summary

An important aspect of the EU policy to               States. Secondly, it provides a frame-
increase the share of renewable energy                work to analyse the impacts of these
sources (RES) is the monitoring and                   national policies and measures and the
evaluation of the progress made towards               extent to which each of the EU-25 states
the 2010 targets and the determination of             is realising the targeted deployment of
realistic targets for the period up to 2020.          renewable energy. Based on different
The monitoring process concentrates on                assumptions with regard to the imple-
two main issues. Firstly, it monitors the             mented policies, scenarios for the future
national adoption of EU legislation and its           implementation of renewables until 2020
translation into national action plans and            can be calculated.
policy instruments in each of the 25 EU

   Analysing current policies
The European renewable energy market                  the amount and level of supporting poli-
and its set of supporting measures is                 cies. For biofuels changes in the policy
very dynamic. Countries are continuously              environment can be observed as a result
monitoring their sets of policies and                 of the Biofuels Directive. For the heat
measures, which often results in the fine-            sector the recently formulated Directive
tuning of instruments and sometimes the               on the Energy Performance of Buildings
introduction of a completely new set of               represents a starting point for policy set-
instruments. For electricity, the formula-            ting on the European level. More signifi-
tion of the Renewable Electricity Direc-              cant policy changes are expected in the
tive has clearly had a strong influence on            near future.

   Calculation methodology
The calculations and projections con-                 tricity sector in all EU-27 countries. The
ducted in this study are based on two                 model calculates the impact of various
different methods:                                    renewable energy promotion strategies,
1. Forecasts of RES penetration based                 taking into account boundary conditions
     on econometric analyses.                         on the markets. Technologies are speci-
2. Forecasts of RES penetration with                  fied by means of dynamic cost-resource
     the model Green-X.                               curves. The econometric analysis uses
                                                      correlations between historically ob-
The Green-X model allows for a com-
                                                      served policy implementations and cor-
parative, quantitative analysis of interac-
                                                      responding RES penetration. The
tions between electricity from renewable
                                                      econometric analysis is used to set a
sources (RES-E), conventional electricity
                                                      benchmark for the results of the Green-X
and CHP generation, demand-side ac-
                                                      model.
tivities and GHG-reduction in the elec-
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FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

   Scenarios for developments until 2020
Model calculations and analyses are                   els the future evolution based on the cur-
based on two different scenarios; each                rently available best practice strategies of
with a different mix of promotion                     individual EU Member States. Strategies
schemes and assumptions. The first                    that have proven to be most effective in
scenario is the business-as-usual sce-                the past for implementing a maximum
nario (BAU). This scenario models the                 share of RES have been assumed for all
future development based on present                   countries. Furthermore, the policy sce-
policies under currently existing barriers            nario assumes a stable planning horizon
and restrictions, e.g. administrative and             and that currently existing barriers will be
regulative barriers. Future policies, which           overcome. Both scenarios include the
have already been decided on, but have                effects of technology learning and
not yet been implemented, will also be                economies of scale, which have a higher
considered. The second scenario is the                impact in the policy scenario.
policy scenario (PS). This scenario mod-

   Projections until 2020

Electricity
The major outcomes of the projections                 that the cost decline of the technology
for the electricity sector for the EU-25              will not keep track with the annual de-
until 2020 are shown in Table 1. For cal-             cline of feed-in tariffs currently imple-
culating the overall share, the BAU sce-              mented and used in the model. Both so-
nario is related to the baseline demand               lar thermal electricity as well as wave &
scenario, whereas the policy scenario is              tide energy will experience significant
set in relation to the efficiency demand              growth in the next two decades. Electric-
scenario. As can be observed, wind en-                ity generation from biomass, biogas and
ergy shows the strongest increase under               biowaste is expected to reach more than
both scenario assumptions. The major                  three times the current penetration under
difference between the two scenarios                  BAU assumptions and about eight times
with respect to wind energy is that, in the           the present value in the policy scenario.
policy scenario, offshore wind generation             Geothermal energy grows only moder-
is about twice as high as in the BAU sce-             ately in both scenarios because, at the
nario. Only limited growth is projected for           current stage of the project, only conven-
hydropower due to the limited remaining               tional geothermal electricity generation
potentials especially for large hydro-                potentials are considered, e.g. not hot-
power. Photovoltaic electricity is pro-               dry-rock technologies.
jected to grow moderately due to the fact
5
FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

Table 1:       Projected RES electricity generation in 2020 in EU-25 under BAU
               and policy scenario

                                                   2001               2020
              Electricity [TWh]                                BAU           Policy
              Wind energy                          34           335            438
              Hydro power                         326           342            349
               large-scale                        288           298            302
               small-scale                         38            44             47
              Photovoltaic                        0.2           0.8            4.0
              Solar thermal                       0.0           4.2           15.2
              Wave & tide                         0.0           6.9           36.1
              Biomass, biogas, biowaste            37           128            302
              Geothermal                          6.3           7.7            8.2
              TOTAL RES-Electricity               403           824           1153
              TOTAL Demand *                     2960          4000           3580
              Share of Demand                   13.6%         20.6%          32.2%

              * EU energy outlook 2003

The projected share of renewable energy               tials for the different renewables. For
sources in the electricity sector (RES-E)             some countries, like Denmark and Ire-
for the EU-15 Member States and for the               land, significant differences between
Candidate Countries for the year 2020 is              BAU and policy scenario indicate that
shown in Figure 1. Projected RES-E pro-               major improvements of the existing poli-
duction figures under BAU and policy                  cies are feasible. For other countries,
scenario assumptions are related to two               such as Austria, the control of electricity
different demand forecasts from the EU                demand deserves high relevance in or-
energy outlook 2003 (baseline and effi-               der to increase the share of RES-E.
ciency). Large differences between indi-              Generally Figure 1 indicates the need for
vidual countries exist with regard to the             additional support in most EU-25 coun-
achievable generation due to differences              tries in order to utilise higher shares of
in current penetration and future poten-              the existing RES-E potentials.
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FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

Figure 1: Share of RES electricity production in EU-15, EU-10+ and EU-25 in 2020

                                   40
                                        BAU - Demand Baseline   BAU - Demand Efficiency   POLICY - Demand Baseline   POLICY - Demand Efficiency
                                   35
       RES Electricity share [%]

                                   30

                                   25

                                   20

                                   15

                                   10

                                   5

                                   0
                                                  EU-15                                 EU-10+                            EU-25

Heat
Far fewer policy measures have been                                                        value for both the BAU and the policy
implemented in the heat sector than in                                                     scenario. A fairly large increase can be
the electricity sector in the EU-25 coun-                                                  observed in the policy scenario for geo-
tries. This applies especially to bio-                                                     thermal heat generation as well as for
energy, where significantly more effective                                                 active solar thermal applications. This is
policy instruments would be feasible than                                                  mainly the result of assumed strong
are currently implemented in any of the                                                    regulations for geothermal heat pumps,
countries. Since the policy scenario pre-                                                  similar to the Swedish case, and of as-
sented here is based on the currently                                                      sumed effective investment support in-
available best practice policies in one of                                                 struments for solar thermal heat as are
the EU countries, this implies that                                                        currently being applied in Austria and
stronger growth could be achieved by                                                       Germany. However, despite the success
applying new and more effective policy                                                     of these individual examples, it is clear
measures. Furthermore, it has to be em-                                                    that strong policies, clear target setting,
phasised that no efficiency demand sce-                                                    and/or a commonly adopted approach is
nario from the EU energy outlook (2003)                                                    strongly lacking on the European renew-
was available, therefore the baseline                                                      able heat market.
demand had to be used as a reference
7
FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

Table 2:           Projected RES heat generation in 2020 in EU-25 under BAU and
                   policy scenario

                                                           2001                     2020
               Heat [Mtoe]                                                  BAU            Policy ***
               Biomass                                      47               53               75
               Geothermal                                  1.0               5                18
               Solar Thermal                               0.5                3                7
               TOTAL RES-Heat                               49               60              100
               TOTAL Demand * **                           419              478              478
               Share of Demand                            11.7%            12.6%            20.8%

               * EU energy outlook 2003
               ** No efficiency scenario available
               *** More effective policies feasible

Biofuels
The projected biofuel consumption in                            tions for liquid biofuels. The high share of
2020 for the EU-25 is shown in Table 3                          biofuels in the transport sector is due to
for both scenarios. Since a number of EU                        the assumption that a rapid take-off of
countries have since implemented tax                            biofuel production and consumption can
exemptions for liquid biofuels, a major                         also be achieved in the EU-10+ countries
share is already projected in the BAU                           and that the production of biofuels from
scenario. In the policy scenario, the in-                       solid biomass (lignocellulose) is techni-
crease in biofuel production is signifi-                        cally and economically feasible after
cantly stronger because all countries are                       2010.
assumed to implement such tax exemp-

Table 3:           Projected biofuel production in 2020 in EU-25 under BAU and
                   policy scenario

                                                           2001                     2020
               Transport [Mtoe]                                             BAU             Policy
               TOTAL Biofuels                                1                19              52
               TOTAL Demand *                              279               351             323
               Share of Demand                            0.41%             5.5%            16.1%

               * EU energy outlook 2003

2   We would like to mention that the future project work also includes a more in-depth analysis of the competing use of
    bioenergy in the electricity, heat and transport sectors.
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FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

Total primary energy
The projected RES primary energy pro-                 projected to more than triple compared to
duction for the EU-25 in 2020 is shown in             2001 levels, whereas it less than doubles
Table 4 for both scenarios. Primary en-               under the BAU scenario. The major dif-
ergy production was calculated using the              ference between the BAU and policy
EUROSTAT convention and not the sub-                  scenario corresponds to a more signifi-
stitution principle. In the policy scenario,          cant contribution of bioenergy in the
primary energy production from RES is                 sectors of electricity, heat and transport. 2

Table 4:       Projected RES primary energy production in EU-25 in 2020 under
               BAU and policy scenario

                                               2001                   2020
            Total primary energy [Mtoe]                        BAU           Policy
            TOTAL Renewables                    101             179            316
            TOTAL Demand *                     1680            1900           1700
            Share of Demand                    6.0%            9.4%          18.6%
            according to EUROSTAT convention

            * EU energy outlook 2003

The projected share of primary energy                 both scenarios. The reason is, in partial,
production from RES in total demand for               the large difference between biomass
the individual EU-15 Member States and                electricity generation in the BAU and the
for the Candidate Countries for the year              policy scenario, which has a strong im-
2020 is shown in Figure 2 and Figure 3,               pact on the primary energy balance.
respectively. Projected RES production                However, this also suggests that, for
figures under BAU and policy scenario                 many countries, there is especially a
assumptions are again related to two                  need for more effective policies in the
different demand forecasts from the EU                heat and transport sectors. Figure 2 and
energy outlook 2003 (baseline and effi-               Figure 3 display those countries, which
ciency). For most countries, differences              could contribute most significantly in
in primary energy use from total RES                  closing the gap between the two scenar-
between the policy and the BAU scenario               ios by implementing stronger policies for
are substantially larger than the differ-             the promotion of RES and by controlling
ences in the electricity sector between               electricity demand.
9
FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

Figure 2: Share of RES primary energy in EU-15 Member States in 2020

                                      60
                                            BAU - Demand Baseline      BAU - Demand Efficiency    POLICY - Demand Baseline        POLICY - Demand Efficiency
     RES primary energy share [%]

                                      50

                                      40

                                      30

                                      20

                                      10

                                       0
                                           AT    BE     DK        FI   FR     DE     GR      IE        IT    LU   NL    PT          ES    SE     UK    EU15

Figure 3: Share of RES primary energy in Candidate Countries in 2020

                                      80
                                            BAU - Demand Baseline      BAU - Demand Efficiency    POLICY - Demand Baseline        POLICY - Demand Efficiency
                                      70
       RES primary energy share [%]

                                      60

                                      50

                                      40

                                      30

                                      20

                                      10

                                       0
                                           CY      CZ        EE        HU      LA       LT        MT        PL    SK         SI     EU10+      BG      RO
10
FORRES 2020:
Analysis of renewable energy’s evolution up to 2020

   Main conclusions and implications
Under the policy scenario, a RES share                large scale. Under the BAU scenario, the
of 32 % in the electricity sector and of              RES market share reaches 21 % in the
19 % in terms of primary energy (ac-                  electricity sector and 9 % in terms of pri-
cording to EUROSTAT convention) is                    mary energy in 2020. This indicates that
feasible in 2020, but only if additional              significant additional efforts are needed
policies are implemented quickly in most              to reach a RES primary energy share of
Member States. For the heat sector, a                 about 20 % in 2020.
share of about 21 % is projected under
                                                      The growth of primary energy production
this scenario. However, since the policy
                                                      by RES in the BAU scenario until 2020
scenario is based on a collection of the
                                                      leads to reductions in CO2 emissions of
currently available best practice policies,
                                                      about 260 Mt compared to 2001. Addi-
a higher share could be achieved as-
                                                      tional emission reductions of 225 Mt can
suming even more effective policies in
                                                      be achieved under the policy scenario by
the future, especially for heat applica-
                                                      2020, which corresponds to more than
tions. For the biofuel sector, considerable
                                                      half of the EU-25 reduction commitment
growth is projected, provided that tax
                                                      under the Kyoto protocol.
exemptions for biofuels are applied on a
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