SECURE Project - Security of Energy Considering its Uncertainty, Risk and Economic implications

WP 5.5 Development and application of specific tools for energy security in the Renewable sector (Hydro, wind, solar, biomass)

Objectives

  • The impact of renewable energy sources on the security of supply

The main objective of this WP is the assessment of the potential impact of renewable energy sources on the security of energy supply. The development and application of specific tools for energy security in the renewable energy sector is foreseen in this WP. Generally an increased use of renewable energy sources contributes to reducing energy insecurity, since fossil energy sources might be substituted by domestic renewable energy sources. Due to their decentralised nature renewable energies are significantly less affected by various risks regarding supply security, e.g. geopolitical risks. Including higher shares of renewable energy sources might enhance the reduction of fossil price risks/volatility by contributing to a diversification of resources. The consequence would be an increase in security of supply according to portfolio theory.

  • Associated costs of a reduction in energy insecurity induced by renewable energy sources

An increased security of supply induced by renewable energy sources goes ahead with higher costs of energy supply, since the costs of renewable energy technologies currently tend to be above the level of conventional energy conversion technologies. In order to stimulate the development of renewable energy technologies, financial support is available for investments in renewable energy technologies. It is the aim of this WP to evaluate the associated costs of a reduction in energy insecurity implicated by the development of the renewable energy market. In addition the different policy options applicable for the promotion of renewable energy sources will be analysed.

  • Potential risks for energy supply caused by the use of renewable energy sources

Negative impacts on the security of supply might also be caused by specific characteristics of some renewable energy sources such as the natural volatility of the power output.  Furthermore, a correlation between biomass resource prices and fossil fuel prices might limit the potential price security increase induced by the use of biomass technologies. Potential risks caused by the energy supply based on renewable energy sources will be analysed. This will be pursued for each renewable energy technology individually.

Participants: Fraunhofer, FEEM, RAMBOLL, CESI RICERCA/ERSE/RSE S.p.A., TU-WIEN

Description of work:

The analysis will address separately energy security issues occurring outside the EU and inside the EU (according to the pathway developed in WP1: Risk characterization, Impact assessment, Estimated values of energy security measures), both in short and long term perspectives.

Task 1: Technical Issues.

Lead: Fraunhofer; RAMBOLL, CESI RICERCA/ERSE/RSE S.p.A., TU-WIEN

1.1 Renewable Energy Sources – Present state-of the art in Europe

An introduction and a short outline of the characteristics of renewable energy technologies and the present status of market development is given in this subtask.

1.2 Assessment of the available potential of renewable energy sources

In this subtask, a potential estimation of how much energy is usable from renewable energy sources is carried out for hydro, wind, solar and biomass. The technically available potential is estimated in a first step, before further limits (i. e. maximum growth rates, grid restrictions, social restrictions) are taken into account in order to estimate a realisable potential assuming a sustainable use of renewable energy sources. This analysis will be fully quantitative.

1.3 Assessment of the potential impact of renewable energy sources on the security of supply

Starting with the same storyline defined in WP3 and a baseline, quantitative modelling will be used for the simulation of the future development of renewable technologies. Based on the simulation runs the amount of fossil fuels that can be avoided will be calculated and analysed. The analysis will be based on the Green-X model. The Green-X model was developed by TU-WIEN within the research project “Green-X – Deriving optimal promotion strategies for increasing the share of RES-E in a dynamic European electricity market”, a joint European research project funded within the 5th framework program of the European Commission, DG Research (Contract No. ENG2-CT-2002-00607). It allows performing a detailed quantitative assessment of the RES deployment until 2030 in a real-world policy context. This tool has been successfully applied for the European Commission within several tenders and research projects on renewable energies and corresponding energy policies, e.g. FORRES 2020, OPTRES, PROGRESS and is currently used in the “20% RES by 2020” target discussion. It fulfils all requirements to explore the prospects of renewable energy technologies:

  • It currently covers geographically the EU-25 plus Bulgaria, Romania and Croatia and can easily be extended to other countries or regions.
  • It allows to investigate the future deployment of RES as well as accompanying generation costs and transfer payments (due to the promotion of RES) within each energy sector (electricity, heat and transport) on country- and technology-level on a yearly basis up to a time-horizon of 2020 / 2030.

The main advantage of the Green-X model as compared to the POLES model applied in WP4 is that it is suitable to derive the costs of promoting renewable energy sources in a very detailed manner, on country and technology basis. In particular the transfer payments can be assessed comprehensively, which is a very important feature of Task 2. Furthermore due to its flexibility the model can analyse different scenarios on RES deployment and resource constraints (see Task 3) and is therefore able to explore a wide spectrum of sensitivities.

Task 2: Economic/Regulatory Issues.

Lead: TU-WIEN; FEEM, Fraunhofer, CESI RICERCA/ERSE/RSE S.p.A.

2.1. Estimation of the costs of energy security measures

In general higher costs of energy supply arise with an increased use of renewable energy sources. It is the aim of this subtask to quantitatively estimate the costs of an increased security of supply induced by renewable energy sources. Therefore economic and technical data that characterises energy conversion with renewable energy sources at present are collected. In addition the role of technology learning of renewable energy technologies and the cost development of these technologies over time is considered.

2.2 Evaluation of policy schemes used for the promotion of renewable energy sources

In this subtask various possibilities of how to promote renewable energy sources effectively and efficiently are evaluated. The associated risks and opportunities of the various policy choices will be investigated using the results of former analysis carried out in this field (OPTRES, FORRES 2020). Therefore the economic consequences of a higher RES share will be quantitatively analysed depending on the policy strategy chosen.

Task 3: General risks and opportunities.

Lead: Fraunhofer; RAMBOLL, TU-WIEN, CESI RICERCA/ERSE/RSE S.p.A.

3.1 Assessment of risks and opportunities of renewables use for security of supply

The reliability of renewable energy technologies as compared to fossil energy conversion technologies is assessed individually for each renewable energy technology. In particular, the following topics will be analysed (these issues will be analysed quantitatively as far as this is feasible):

Hydropower:

- The risks of decreasing hydro potential due to climate change;

- An increasing annual power output volatility.

Biomass:

- The risks of increasing biomass prices due to an increased competition for biomass resources;

- Side-effects of an increased biomass use for energy purposes on other industries such as the pulp & paper industry, material use of wood or competition with food demand;

- The risk of increasing biomass imports reducing security of supply;

- The changed biomass potentials due to climate change.

Wind:

- The impact wind power volatility on security of supply;

- Will very hot and long summers result into long periods of very low wind generation in periods of high demand?

Solar:

- The risk of silicon availability for PV-modules;

- The risk of reduced efficiency of solar cells due to a significant increase of temperatures on sunny (non-cloudy) days.

Workpackage 5.5 is carried out under the co-ordination of Fraunhofer
Seventh Framework Programme

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