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ePaper created 2014-06-03, 15:03:20 | version 1.30.01
81 04 RENEWABLES 2014 GLOBAL STATUS REPORT model that builds on existing customer relationships, finds new ways to meet people’s needs, and captures the values associated with renewable energy and distributed generation. Instead of earning revenue for the energy consumed (USD per MWh), revenues would be based on the energy services provided, demand charges, and/or capacity-based pricing (USD per MW).i In Germany, both RWE and EnBW plan to adopt a business model that accommodates distributed self-generation, with EnBW planning to divest up to 80% of its generation and trading business by 2020. However, capacity-based pricing can also undermine energy efficiency efforts and discourage investments in renewables, leading some to argue in favour of a hybrid model. Innovation in the private sector will require an effective enabling policy framework. In many countries, discussions are under way about regulatory reforms needed to support this transition. This begs the questions: What future functions should utilities provide? Which mechanism can appropriately compensate companies for performing those functions? Energy market design reforms include incentivising ancillary services through mechanisms like capacity payments and flexibility premiums, and establishing the right price signals to address misalignments between incentives to distributed electricity system customers, and the cost and value to the electricity system (e.g., network benefit payments, network tariffs that reflect the transmission and distribution costs, and network service charges). The United Kingdom, for example, has introduced a common pricing methodology for electricity networks, whereby decentralised electricity generators are offered a positive network tariff (credit) for feeding power into local networks. The U.S. state of California is experimenting with “on-bill financing” of high-value energy efficiency and on-site renewable energy. Electric utility customers select pre-qualified technologies and service providers, while the utility loses power sales but still profits by “lending” its money. Countrieswithan“energy-only”powermarket,suchasGermany, plan increasingly to implement “capacity markets” that address the need for system balancing. To integrate higher shares of variable renewables into electricity markets, more dispatchable capacity is also needed. Yet traditional peaking plants are being used less—and thereby becoming less profitable—as shares of renewable energy increase. New market designs are needed to incentivise this reserve capacity or increase flexible generation. Power markets should be designed to provide the proper economic incentive for a least-cost and efficient mix of peaking, cycling, and baseload generating units in a system that accommodates ever-growing shares of variable renewables. New market designs will need to balance the choice between currently available solutions to system balancing (such as increasing peaking capacity) and developing alternatives, such as increasing the flexibility of new gas plants, installing diverse types of energy storage at various scales, and pursuing demand- side response options mediated by smart-grid solutions. The “Innovating Energy Systems” sidebar is a regular feature of the Global Status Report that focuses on advances in energy systems related to renewable energy integration and system transformation. i - This would entail reforming the process of retailing decentralised electricity/competitive and liberalised markets, particularly for retail power; enacting enabling regulations for self-generation; and adopting incentives such as time-of-use tariffs, dynamic pricing, peak pricing, and the delivery of new energy services. Source: See Endnote 99 for this section. cap, thereby opening the programme to more consumers; and Vermont raised the net metering cap from 4% of peak demand to 15%.74 In several other states, net metering faced significant utility opposition. In Arizona, net metering was retained, but with a monthly fee of USD 0.70/kW to be applied for all new solar PV systems.75 Public competitive bidding, or tendering, continues to gain prominence, with the number of countries turning to public auctions increasing from 9 in 2009 to 55 by early 2014.76 Central and South American countries continue to be global leaders in renewable energy tenders. Brazil, which has held tenders for wind power for several years, included solar power projects for the first time in November, with 2.7 GW of solar power qualifying for the A-3 auction, although no contracts were awarded in that auction. Overall, Brazil’s auctions awarded 4.7 GW of new wind capacity, 122 MW of solar PV, 700 MW of small hydropower, and 162 MW of bio-power during 2013.77 Chile held its first CSP tender in 2013; Ecuador held its first auction for solar PV; Peru allocated USD 3.6 billion for tendering of renewable energy projects designated to come on line by 2016; and Uruguay launched multiple solar power tenders throughout the year.78 In Central America, El Salvador announced tendering for the allocation of 100 MW of wind and solar PV plants.79 In Europe, France launched a USD 275 million (EUR 200 million) tender for the construction of 80 MW of pilot ocean energy capacity, as well as a tender of USD 4.8 billion (EUR 3.5 billion) for 1,000 MW of offshore wind capacity.80 Also in 2013, Italy held its second wind auction to support the development of 400 MW of new capacity; and Norway awarded USD 3.3 billion worth of onshore wind projects as part of a plan to triple its wind power capacity to over 2 GW by 2020.81 Russia launched its first tenders for renewable energy, selecting 39 projects that totalled 504 MW of new capacity, including 399 MW of solar PV projects.82 In addition, a USD 2.6 billion (RUB 85 billion) programme was