sou · GWB313d2 · 2009-01-01 00:00:00 — This is a great difference to the electricity certificate system applied in , for example, where there is a single price for all renewable energies. The most rele- vant feature of the feed-in tariff scheme is that it secures a certain income during a fixed time horizon while the certificate system gives a more uncertain economical support to the renewable energies since the price can vary significantly over time. The stability in the promotion scheme is the main reason why in there is still a large expansion of the wind power sector even if the remunera- tion level is not particularly high. An interesting example of combining a feed-in tariff system and a market-based promotion scheme can be found in where power producers using renewable energies can choose between these two promotion schemes. The income obtained from the market option can be much higher than in the feed-in tariff option but it can also be lower. However, that risk has been minimized by introducing a floor value. At the same time, a cap value has been introduced in in order to limit the State support given to renewable energies. and have also established different criteria in order to limit the State support to wind power. has de- fined for each location a reference production model. After 5 years, each installation is compared to the reference model and in case the production has reached more than of the reference produc- tion the payment decreases to a lower level. In wind turbines producing more than 2,000 MWh per installed MW and per year receive lower payments. turbines producing more than 2,600 MWh per year and per installed MW receive a payment per MWh that is lower than that of turbines producing less than 2,000 MWh. In summary, the countries that have experienced the largest development in the wind power sector, i.e. and , use fixed feed-in tariff promotion schemes. Feed-in tariffs provide a stable investment environment as it sets clear power purchase prices for a defined time horizon. , the regulatory framework re- garding payment schemes can be considered the main driver for the development of renewable energy. However, there are some other factors that are relevant for the development of the wind power sector such as the permitting procedure and the connection procedure. In comparison to the four studied countries, wind power producers in receive the lowest payment, which means that in all other costs such as connection cost, network upgrades and net- work tariffs become even more important than in the other studied countries. It must be noted though that in the electricity certificate system has lead to a significant increase of biomass-based electricity production, but biomass has not been included in the comparison. Table 5-2: Comparison of network connection procedures for producers using renewable energies. lined in law, but the right to be time to deal with to other grids. Yes, both for con- nection to the transmission and the distribution grid. 500 /kW for solar photo- voltaicTPF153FPT and 20 /kW for other renewables. Yes, both for con- No upon size, type for study on avail- and 500 /kW for A well-defined network connection procedure reduces the overall costs for the application. It means that the applicant has a clear understanding of what is required from him and what he has to pay and that the network company can develop a method and procedure of how to deal with connection applications. A well-defined proce- dure includes the information required for the application, the rele- vant timeline for network companies to reply to the application, and the application-related costs (fees) that are typically caused by net- work integration studies to be performed by the network company. There are very detailed network connection procedures in the UK, for instance. The procedures were developed by National , the transmission system operator and reviewed and approved by the 153TP PT Solar photovoltaics installed on residential or industrial premises are exempted of paying such application fees. and are also examples of countries with very detailed connection procedures. The procedures are pre- scribed by law and are not only a conduct code between grid com- panies and producers associations. Countries without clearly defined methods and procedures, in- cluding , frequently report very long response times for net- work connection applications and communication problems between applicants and network companies. In , the procedure is not clearly described, but the net- work association has developed a guideline for the network companies how to deal with applications, but most importantly the relevant law defines that system operators shall immediately and as a priority connect plants generating electricity from renewable energy sources. in case of delays the network companies have to explain to the regulator what caused the delays. That causes addi- tional costs to the network companies if the application is not pro- cessed reasonably fast. In , the evaluation methods that determine how much additional generation can be connected at a certain point are not considered to be sufficiently transparent as net- work data are typically not published. An independent evaluation of the response to an application is therefore rather complicated. In summary, to ensure that the application procedure is conduc- ted in a clear, unbiased and consistent , irrespective of the network company, the renewable energy technology or the applicant, it is necessary to have a clear definition of the connection appli- cation procedure with clear requirements of what is needed for the application, a clear timeframe regarding the reply of the network company, and defined basic principals for the interconnection analysis. Nevertheless, conflicts may arise, hence a clear procedure of how to deal with such conflicts should be developed. , for in- stance, used to have a specific organisation that helped to settle such interconnection disputes. Today this task is part of the newly started regulator in , similar to the approach in . Regarding fees for processing connection applications, there are several countries that apply such fees: , and UK. A reason for such fees is to avoid unserious applications and the work related to them. However, the fees might be a barrier for very small projects such as solar photovoltaics on residential . An option would be to exclude such projects from paying the fees, which is the case in . In , and the UK, the fees are well defined and do not depend on the owner of the grid to which the installation is connected. This is very important in order to improve transparency and to not discriminate against certain pro- ducers. In , fees depend on the grid owners and are only paid when connecting to the distribution grid, even though the amount of the fees paid is typically discounted from the total connection cost to be paid by the producer. Table 5-3: Comparison of network investment costs for producers using re- newable energies. Company (if the by the wind farm by the wind farm fit others (mainly grid) then SvK pays a part or Yes, but only Yes, both for to 2 year Use of In all studied four countries, and also in , project developers have to pay for the construction of the line, transformers and all other necessary installations for the connection to the grid. There is no difference between conventional power producers and power producers using renewable energy sources. However, in 2007 adopted a law which states that grid companies have to pay for power lines connecting off-shore wind projects to their grids. In the UK, the creation of independent Offshore Transmission Owners (OFTO) are proposed. The OFTO would be selected by competitive tender and awarded a transmission licence which enables it to receive a regulated income from offshore wind farms in return for meeting its licence obligations for a predetermined regulatory period (20 years), and would be incentivised to achieve specified performance requirements during this period. OFTO would have the responsibility for designing, , financing and maintaining the offshore transmission network required to connect an offshore gene- rator. In the studied countries and in , there are no laws giving a clear definition of what deep costs, i.e. costs associated to upgrades of the grid necessary to connect new producers, can be considered to benefit just one producer and which can be considered to benefit several producers. This is crucial since this determines who is to pay these upgrades in all studied countries except where upgrades are always paid for by the grid owner. If the upgrades are considered to benefit just one producer, then this producer has to pay the whole cost associated to the upgrade. If they are considered to benefit more than one producer costs are shared between the pro- ducer and the grid owner or between the different producers. , for example, follows the criterion that upgrades in the transmission grid benefit more than one producer and are therefore socialized, i.e., paid by all consumers, while, for example, considers that upgrades in radial power line parts of the transmission grid only benefit one producer and are therefore to be paid for by that pro- ducer. In , grid companies are required to pay all network up- grading costs while in principal renewable energy generators are required to pay the costs for the grid connection, i.e. all costs from the wind farm to the connection point. The main issue is typically to define the best grid connection point. The general rule for de- fining the grid connection point is based on the understanding that total network connection costs, i.e. connection plus upgrade costs, should be minimized independent of who covers which part of the costs. This could mean that a low-voltage network has to be upgraded to a high-voltage network if this is the most economic solution. But it is also possible that the wind farm operator itself has to build a long line to a suitable connection point if this is more economic than upgrading the existing network. In the UK, costs for transmission upgrades are typically sociali- zed. In principle, transmission reinforcements are only performed if sufficient requests for network connections are submitted. How- ever, this approach leads to long delays in cases where strategic works are needed. Recognizing this, the regulator Ofgem approved £560 millions for for Renewable Genera- tion in 2007. When it comes to upgrades in the distribution grid, producers in the UK connected to the distribution network after , have to pay a Use of System charge (DUoS) which generally reflects the upgrading costs for the exclusive use of the generator. For connections to the distribution grid prior to , costs for distribution network reinforce- ment were charged upfront. Table 5-3 shows that is the country where project deve- lopers have to pay most network investment costs since they have to pay for connections, upgrades in the distribution/regional grid as well as upgrades in the transmission grid in case they are caused exclusively by them. On the other hand, is the country where project developers pay less network investment costs since they only pay for the connection, but not for any network upgrades, neither in the distribution grid nor in the transmission grid.TPF154FPT It is interesting to relate this observation to the fact that is the country where wind power producers receive the lowest payment compared to the four studied countries. Both in and , project developers have to pay de- posits to transmission companies if upgrade works are necessary to connect them. The reason is to avoid that projects are not realized and the upgrade works are carried out. In , no such deposits are paid to the transmission company since project developers have to pay network tariffs and upgrade costs (in case the upgrades exclu- sively benefit the project developer) to the transmission company. 154TP upgrade costs in are paid by network companies, which partly causes higher network tariffs for network users, however, these higher network tariffs are currently not considered a major issue by the different stakeholders. In summary, upgrades in the transmission grid and in the distri- bution/regional grid are treated differently in the studies countries. Costs related to the upgrade of the transmission grid are generally socialized, i.e. network companies pay for it and can recover the costs via network tariffs. However in , project developers pay the costs if the upgrade refers to a radial line; while costs are shared be- tween the owner of the production plant and when the upgrade is done in the meshed grid. Distribution network up- grades have to be paid in most of the studied countries by the com- pany which causes the upgrade, except in where they are socialized as well. In comparison with the studied countries, project developers in have to pay most network investment costs. 5.4Capacity Limits in the Regulations for Renewable Energy Table 5-4: Comparison of capacity limits for producers using renewable energies Yes, 1.5 MWTPF FPT city, projects with At least 100 MW farms (new rules 250 MW to con- grid, others to 155TP PT The capacity limit of 1.5 MW in applies to individual units of an installation. This means that a wind farm with 50 wind turbines of 1 MW each is exempted from paying network tariffs, while a wind farm with 10 wind turbines of 2 MW each has to pay network tariffs. Only the UK and have networks tariffs for producers. In all other countries, producers do not pay such network tariffs, see also Section 5.7. and UK are the only countries of the five included in this report which have limits related to the installed capacity for the payment of network tariffs, see also Table 5-4. In producers with a capacity below 1.5 MW do not pay any network tariffs, except the fixed metering cost. In the UK there are capacity limits for generators connected to the distribution grid re- garding the payment of Use of System charges (TNUoS). These limits vary between different areas in the UK, but in most cases the limit is 50 MW in and and 30 MW in the transmission area and 10 MW in the Scottish Hydro transmission area. Most generators connected to the distribution network with a capacity below these limits are exempted from TNUoS in recognition of the reduced demand in a zone served by the transmission system. However, generators that have been connected to the distribution network after have to pay Use of System charges if their connection required a distribution network upgrade. The Distri- bution Network Use of System charge should then recover some of the network upgrade costs. In the countries using promotion schemes based on feed-in tariffs, different limits of installed capacity are defined in order to diffe- rentiate the payment within one and the same technology. A clear example is the different payment that solar photovoltaic installations receive depending on the installed capacity; the difference can be about . For wind power, there are certain differences depen- ding on the installed capacity, but they are in the order of 3–. The countries using certificate systems do not have any capacity limit since there is only one payment for all kinds of renewable energies. Regarding the connection to the grid, only and have defined limits for the connection to the different voltage levels. The reason for setting up such limits has been to simplify the pro- cessing of connection applications and to clarify the different re- sponsibilities of the grid owners. The definition of such limits has nothing to do with the promotion scheme chosen. In , for in- stance, several project developers submit a joint application to the TSO in order to fulfil the minimum capacity requirement for a con- nection to the transmission grid. Additional size definitions are used in the definitions for metering requirements, see Section 4. In summary, in most countries, i.e. , and , there are no capacity limits for the payment of network tariffs similar to those used in . Capacity limits are either used to define connection voltage levels (and ) or to differentiate the feed-in tariff. Table 5-5: Overview of policy issues related to the construction/ownership of new power lines. Can wind power producers build/own the power cables within a wind farm? Can wind power producers build the power lines connecting a wind farm to Network concessions are legal authorizations that are required in some countries in order to build power lines. The origin of these network concessions is the centrally planned electricity system that – with the deregulation – has developed into the current system with several network companies. In , for instance, there are concessions for an area which allow those that have the concession to build power lines in that area (typically for voltage levels up to 20 kVTPF156FPT). In principle no one else can build power lines with a lower or equal voltage level than in that area except power lines that are exempted from concessions as, for example, the power lines of industrial networks. To build power lines with a higher voltage level than typically , another type of concession called line con- cession is needed in . As mentioned before, network con- cessions give the right to build power lines, but together with the obligation to give access to everyone who wants to connect an in- stallation there. In , in order to get a network concession the applicant must not work with electricity production or retail of electricity. 156TP PT There are approximately 330 area concessions in of which only 10 have a voltage level over , all others have a voltage limit of . Producers in have two possibilities regarding the of the connecting lines within the wind farm and from the wind farm to the connection point. One, to pay the network company in the area for those lines and two, to form a network com- pany in order to get line concessions and be able to build the lines themselves. In both cases it is the project developer that pays for the power line but the ownership of the line and the responsibilities associated to it depend on which option is chosen. A drawback with network concessions is that they increase bureaucracy and makes it more difficult for small project developers to find more economical solutions to build these power lines. This is due to the fact that only in the case of creating a network com- pany the owner of the wind farm can build the lines, otherwise it is only the grid company with the concession for that area that can build power lines. To form a network company has, under current legislation, a lot of consequences for example regarding reporting obligations, which are difficult to meet for small investors. In all studied four countries, wind power producers can build the lines between the individual wind turbines in the wind farm without needing concession. The main consequence of this is that in these countries grid companies do not have a monopoly over such lines. As opposed to this, it is necessary in to have a network con- cession in order to build the lines between the wind turbines of a wind farm. Regarding the power lines from the wind farm to the connection points in the transmission grid or in the distribution/regional grid, in all the four studied countries wind farm owners do not need any concession for them. In , wind project developers can build such lines once they are granted the necessary permits that are the same as the permits required for distribution companies or transmission companies including studies on environmental impact and public consultation. It is common practice that – regarding voltage ranges of between 45 and – producers transfer the connecting line and even the position at the substation to the distri- bution company in order to avoid their operation and maintenance and the associated costs. In , it is also quite common on the distribution level that project developers transfer the line to the distribution company in order to avoid maintenance and operation of the line. The distribution company has in that case the obligation to give access to consumers and other producers if there is available capacity. By transfering the connecting line to the grid company in and , producers avoid operation and maintenance costs for that line since they do not pay any network tariffs (see Section 5.7). However, in even if the producer transfers the line to the distribution company he will still pay for its opera- tion and maintenance since these costs are included in the network tariffs that producers pay in . In summary, in all four studied countries wind farm owners can build the power lines within the wind farm and between the wind farm and the transmission/ distribution grid without needing a con- cession. is different since it requires concessions in order to build such lines. The requirement of network concessions increases bureaucracy and makes it more difficult to find more economical solutions to build the power lines since only by creating a network company the owner of the wind farm can build the lines, otherwise it is only the grid company with the concession for that area can build power lines. In the studied countries, lines within a power production installation and from the installation to the distribu- tion/transmission grid are treated differently to lines that are part of the distribution/transmission grid. This applies to all kinds of power producing installations and is not specific for those using re- newable energy sources. In the studied countries, sometimes the wind power producer and the grid company of the area enter into special agreements in order to transfer the ownership of the line up to the connection point to the grid company. This way, the pro- ducer can avoid operation and maintenance of the lines and the grid company can connect other /producers. Table 5-6: Comparison of metering requirements. im/export, ment for all pro- larger 500 kW; for 16 amps/phase im/export meter- (<1 kV). Metering costs can be neglected for large generation plants in the megawatt range; all countries typically have identical metering re- quirements for conventional power plants and renewable energy plants in the megawatt range. Metering costs, however, become a very important issue for small installations in the kW range, e.g. PV, as the metering costs can have a significant impact on the overall project economics. For small projects, , and the UK distinguish between on-site generation, e.g. a PV panel on the roof of a house, and grid-connected generation plant. In case of on-site generation generally no metering is required if the local generation always ex- ceeds local consumption. However, in this case no special payment (feed-in tariff or renewable energy certificates) can be received. In case the local production sometimes exceeds local consumption, in and can opt for net-metering. Net-metering means that the power company only bills the net consumption (consump- tion minus local production). Typically such net-metering is only possible for small installations, e.g. up to 500 kW in . In addition, power producers in as well as in that are connected to the low-voltage grid – mainly solar photovoltaics – can also choose to have two different measurement equipments, one for the produced power and one for the consumed power since the payment for the produced power is almost three times larger than the cost for the consumed power. 157TP PT Here, small project means projects that are connected to the low-voltage grid (<1 kV) and with a capacity lower than 100 kW. Small grid-connected installations, i.e. no on-site installations, often have special rules for metering.