2020 RES Scenarios for Europe - Are Member States Well on Track for Achieving 2020 RES Targets?

2020 RES scenarios for Europe - are Member States well on track for achieving 2020 RES targets?

Authors: Gustav Resch, Lukas Liebmann, André Ortner, Sebastian Busch TU VIENNA / EEG

Vienna, September 2014

Compiled within the European Intelligent Energy Europe project KEEPONTRACK! (work package 2) www.keepontrack.eu Intelligent Energy Europe (IEE), ALTENER

2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Contact details for this report:

Gustav Resch Vienna University of Technology, Institute of Energy systems and Electric Drives, Energy Economics Group (EEG) Gusshausstrasse 25 / 370-3 A-1040 Vienna Austria Phone: +43(0)1/58801-370354 Fax: +43(0)1/58801-370397 Email: [email protected]

Acknowledgement: Legal Notice: The authors and the whole project consortium The sole responsibility for the content of this gratefully acknowledge the financial and intellectual publication lies with the authors. It does not support of this work provided by the Intelligent necessarily reflect the opinion of the European Energy - Europe (IEE) – Programme. Union. Neither the EACI nor the European Com- mission is responsible for any use that may be made of the information contained therein. All rights reserved; no part of this publication may be translated, reproduced, stored in a retrieval system, or transmitted in any form or by any means, elec- tronic, mechanical, photocopying, recording or other- wise, without the written permission of the pub- lisher. Many of the designations used by manufacturers and with the support of the sellers to distinguish their products are claimed as EUROPEAN COMMISSION trademarks. The quotation of those designations in whatever way does not imply the conclusion that the Executive Agency for Competitiveness use of those designations is legal without the content and Innovation of the owner of the trademark. Intelligent Energy Europe

Page ii 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Table of Contents

Page

1 Executive Summary ...... 1

2 Introduction ...... 5 2.1 The policy context - past progress and future perspectives for RES in the EU ...... 5 2.2 Objective and structure of this report ...... 6

3 Short description of methodology and key assumptions ...... 7 3.1 Model-based assessment of possible RES developments for meeting binding 2020 RES targets ...... 7 3.1.1 Constraints of the model-based policy analysis ...... 7 3.1.2 The policy assessment tool: the Green-X model ...... 7 3.1.3 Overview on assessed cases...... 7 3.1.4 Overview on key parameters ...... 8

4 Key results on 2020 RES target achievement ...... 10 4.1 RES deployment at EU-27 level ...... 10 4.2 Investments and selected costs & benefits at EU-27 level ...... 12 4.3 Cross-country comparison of RES deployment and 2020 RES target achievement ...... 13 4.4 The need for and impact of RES cooperation ...... 14

5 Detailed results on domestic RES deployment by Member State ...... 17 5.1 Austria ...... 18 5.2 Belgium ...... 19 5.3 Bulgaria ...... 20 5.4 Cyprus ...... 21 5.5 Czech Republic ...... 22 5.6 Denmark ...... 23 5.7 Estonia ...... 24 5.8 Finland ...... 25 5.9 France ...... 26

Page iii 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

5.10 Germany ...... 27 5.11 Greece ...... 28 5.12 Hungary ...... 29 5.13 Ireland ...... 30 5.14 Italy ...... 31 5.15 Latvia ...... 32 5.16 Lithuania ...... 34 5.17 Luxembourg ...... 35 5.18 Malta ...... 36 5.19 The Netherlands...... 37 5.20 Poland ...... 38 5.21 Portugal ...... 39 5.22 Romania ...... 40 5.23 Slovakia ...... 41 5.24 Slovenia ...... 42 5.25 Spain ...... 43 5.26 Sweden ...... 44 5.27 United Kingdom ...... 45

6 Conclusions and Recommendations ...... 47

7 References ...... 48

8 Annex 1 – Method of approach / Key assumptions ...... 49 8.1 The policy assessment tool: the Green-X model ...... 49 8.2 Overview on assessed cases ...... 50 8.3 Criteria for the assessment of RES support schemes ...... 51 8.4 Overview on key parameters ...... 52 8.4.1 Energy demand ...... 53 8.4.2 Conventional supply portfolio ...... 54 8.4.3 Fossil fuel and carbon prices ...... 56

Page iv 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Executive Summary

Model-based assessment of 2020 RES deployment

By use of a specialised energy system model (Green-X) a quantitative analysis was conducted to assess feasible RES developments up to 2020 according to selected policy pathways (i.e. a Business- As-Usual and a Policy Recommendations case), indicating RES deployment at Member State and at EU-27 level that can be expected in the near future, as well as related impacts on costs and benefits. Subsequently we present background information and key outcomes in a brief manner.

Methodology and key assumptions

The Green-X model was applied to perform a detailed quantitative assessment of the future deployment of renewable energy on country- and sector level. The core strength of this tool lies on the detailed RES resource and technology representation accompanied by a thorough energy policy description, which allows assessing various policy options with respect to resulting costs and benefits. For a detailed description we refer to www.green-x.at.

The RES policy framework is a Policy recommendations key input to this analysis BAU case: RES scenario: whereby two scenarios were in ◄ policies are Meeting/Exceeding 20% RES by 2020 focus (see Figure 1): a business- applied as as precondition currently ◄Continuation BUT fine-tuning as-usual (BAU) case where the implemented (increasing cost-efficiency & effectiveness) assumption was taken that RES of national RES policies: improving the design (without any policies are applied as currently adaptation) until of RES policies but no change of the in prior 2020, chosen RES policy instrument type implemented (without any adap- i.e. a business as ◄Mitigation of non-cost barriers tation) until 2020, and a policy usual (BAU) ◄RES cooperation comes into play in the forecast. exceptional case that pure national target recommendations (PR) scenario, fulfilment appears not feasible indicating a pathway for meeting (even with high financial incentives) (or even exceeding) the 2020 RES targets, that builds on the Figure 1: Overview on assessed cases policy recommendations derived within this project, see EU Tracking Roadmap 2014 (Keep- on-Track!, 2014).

In order to ensure consistency with existing EU scenarios and projections data on future developments of demand and of energy/carbon prices are taken from PRIMES modelling – i.e. the PRIMES scenarios used is the most recent reference scenario as of 2013 (EC, 2013). With respect to the potentials and cost of RES technologies we refer to the Green-X database, respectively. Table 1 shows which parameters are based on PRIMES and which have been defined for this study.

Page 1 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Table 1: Main input sources for scenario parameters Based on PRIMES Defined for this study Energy demand by sector RES policy framework Primary energy prices Reference electricity prices Conventional supply portfolio and RES cost (Green-X database, incl. biomass) conversion efficiencies CO2 intensity of sectors RES potential (Green-X database) Biomass trade specification Technology diffusion Learning rates

Results on 2020 RES deployment and target achievement

Next, a closer look is taken on key outcomes on expected future RES deployment and related costs, expenditures and benefits at the aggregated (EU-27) level.

First, Figure 2 shows the contribution of RES to meeting gross final and sector-specific energy demands in 2020 for both assessed cases. It turns out that under current RES support and related framework conditions (BAU case) at EU27 level only a RES share of 17.9% appears feasible. Thus, improving national RES policies, for example according to the recommendations as provided within this project, appears essential for several Member States to bring them back on track. This is demonstrated by the results on the alternative policy pathway (Policy Recommendations case), where a RES share of 21.0% can be achieved by 2020. For doing so, RES in all energy sectors have to contribute more but possibly the most impressive changes can be identified for RES in the electricity sector, where 37.2% (PR case) instead of 30.9% (BAU case) are reached in 2020, and for biofuels in transport (i.e., 7.9% (PR case) instead of 5.5% (BAU case)).

Indictors on the costs and benefits of an accelerated RES deployment in the European Union offer central information for decision makers. In this context, Figure 3 summarises the assessed costs and benefits arising from the future RES deployment in the focal period 2011 to 2020. More precisely, this graph provides for the researched cases throughout the period 2011 to 2020 the on average per year arising investment needs and the resulting costs – i.e. additional generation cost and support expenditures. Moreover, they offer an indication of the accompanying benefits in terms of supply security (avoided fossil fuels expressed in monetary terms – with impact upon a country’s trade balance) and climate protection (avoided CO2 emissions – monetarily expressed as avoided expenses for emission allowances). Other benefits – even of possibly significant magnitude - such as job creation or industrial development were not included in this assessment. Apparently, with improved policy design and mitigated non-cost barriers RES deployment and consequently also related investments increase strongly, by about 35% with respect to the latter. Moreover, a significantly improved balance between costs and benefits can be observed.

Page 2 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

40% Avoided expenses for CO2 emission allowances 37.2% RES-E Avoided expenses for fossil fuel (imports) RES-H&C Support expenditures

35% ] Biofuels € Capital expenditures 30.9% 90 30% RES total 80 25% 70 20.6% 21.0% 18.8% 60 20% 17.9% 50 15% 40 77.8 30 5.0 energy demand by demand energy 2020by [%] 57.5 10% 7.9% 4.0 5.5% 20 5% 28.6 30.1 Share in corresponding gross final (sectoral) final(sectoral) gross in corresponding Share 10 24.6 24.0

0% new in and benefits as of well investments as 0 Indicators on yearly average (2011 to 2020) costs 2020)(2011 to costs average yearly on Indicators Business as usual (BAU) Policy recommendations (PR) [billion EU level 2020)2011 to at (installed RES Business as usaul (BAU) Policy recommendations (PR)

Figure 2: Sector-specific RES shares by 2020 at Figure 3: Investments, selected costs & EU-27 level according to the assessed benefits at EU-27 level according to cases (BAU vs. PR) the assessed cases (BAU vs. PR)

RES deployment and RES target achievement at the national level is discussed next. Thereby, Figure 4 provides a graphical illustration of the outcomes of our model-based assessment of 2020 RES target achievement by Member State, indicating the likeliness by Member State following a “traffic light approach”1. Complementary to that, Figure 5 offers further insights on the expected national RES deployment under BAU conditions. This graph also shows the additional deployment at sector level that would occur according to the Policy Recommendations case. Thus, under BAU conditions nine out of the assessed 27 Member States, e.g. Austria, Denmark or Italy, appear well on track. In another four Member States (i.e. Finland, Germany, Ireland and Slovakia) there are doubts whether 2020 targets can be reached with already implemented measures, while the remainder of fourteen Member States can be classified as “not well on track.” In contrast to that, if recommended policy measures are implemented well in time, all Member States still have the possibility to achieve their 2020 RES targets. The majority of countries would even exceed its obligation, and there are good reasons for doing so since, as discussed above, additional RES deployment contributes well to increase supply security and local employment, to name only some additional benefits. Finally, by 2020 five Member States (i.e. France, Luxembourg, Malta, the Netherlands and the UK) make use of RES cooperation mechanisms as a buyer while all others act as (possible) seller.

1 Following the traffic light approach a green colour is used to show that a MS is expected to achieve its 2020 target while an orange colour indicates that there are doubts whether this MS may achieve its given RES target. Finally, red highlights that a MS is not well on track with respect to target achievement. In this context, in order to reflect uncertainty appropriately a threshold of -2% / +3% (of the required 2020 RES deployment) is used to distinguish between achievement, doubt or shortfall.

Page 3 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

This MS is expected to achieve This MS is expected to exceed its its 2020 target 2020 target domestically and acts There are doubts whether this as a (possible) seller within the RES MS may achieve its 2020 target cooperation mechanism in 2020 This MS is expected to achieve its This MS is not well on track to (PR) scenario achieve its 2020 target 2020 target trough a combination of domestic action and RES co-

(BAU) scenario operation, acting as buyer for

meeting the remaining gap

“Business “Business usual” as “Policy recommendations” “Policy

Figure 4: Assessment of 2020 RES target achievement according to the assessed cases (BAU(left) vs. PR (right)) Note: The traffic light colours of the figure on the left hand-side show an achievement or shortfall of 2020 RES targets by MS after possible adjustments through RES cooperation. In this context, in order to reflect uncertainty appropriately a threshold of -2% / +3% (of the required 2020 RES deployment) is used to distinguish between achievement, doubt or shortfall.

RES cooperation Biofuels RES-H&C RES-E BAU RES target 50% Policy Recommendations case: Additional deployment compared to BAU 45% 40% 35% 30% 25%

by 2020by [%] 20% 15% 10%

5% RES share in gross demand final energy gross in share RES

Italy

EU27

Spain

Malta

Latvia

France

Cyprus

Poland

Ireland

Austria

Greece

Finland

Estonia

Sweden

Belgium

Bulgaria

Slovakia

Slovenia

Hungary

Portugal

Romania

Denmark

Germany

Lithuania

Netherlands

Luxembourg Czech Republic Czech United Kingdom Figure 5: Comparison of 2020 RES targets and RES deployment according to a Business-as-usual (BAU) scenario by Member State, and additional (sector-specific) RES deployment in the Policy recommendations case

Page 4 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Introduction

The policy context - past progress and future perspectives for RES in the EU As outlined in detail in the Re-Shaping study (see Ragwitz et al., 2012), the first decade of the new millennium was characterized by the successful deployment of RES across EU Member States – total RES deployment increased by more than 40%. More precisely: RES electricity generation grew by approximately 40%, RES heating and cooling supply by 30% and biofuels by a factor of 27 during the period 2001 to 2010, New renewables in the electricity sector (all technologies except hydropower) increased fivefold during the same period, Total investments in RES technologies increased to about € 40 billion annually in 2009, and more than 80% of all RES investments in 2009 were in wind and PV. With respect to PV an ongoing trend of achieving impressive cost reductions from year to year has started in the final period close to 2010. These impressive structural changes in Europe’s energy supply are the result of a combination of strong national policies and the general focus on RES created by the EU Renewable Energy Directives in the electricity and transport sectors towards 2010 (2001/77/EC and 2003/30/EC). Despite the challenges posed by the financial and economic crisis, RES investments were generally less affected than other energy technologies and partly increased even further over the last couple of years. The European Energy and Climate Package is one of the key factors that contributed to this development. The EU ETS Directive has introduced full auctioning post 2012, thus exposing fossil power generation to the full cost of carbon allowances, at least in theory. In practice, an over- supply of allowances has however led to a deterioration of prices on the carbon market. The pathway for renewables towards 2020 was set and accepted by all the European Council, the European Commission and the European Parliament in April 2009. The related policy package, in particular the EU Directive on the support of energy from renewable sources (2009/28/EC), subsequently named as RES Directive, comprises the establishment of binding RES targets for each Mem- ber State, based on an equal RES share increase modulated by Member State GDP. This provides a clear framework and vision for renewable technologies in the short to mid-term. Implementing the 2020 RES Directive has taken another step forward with the formulation of the National Renewable Energy Action Plans (NREAPs), which outline the national strategies concerning support schemes, cooperation mechanisms and (non-cost) barrier mitigation, in particular with respect to grid-related and administrative issues. In addition, a detailed reporting framework for the European Commission and Member States has been drawn up to ensure that these strategies are well established and coordinated. Despite the successful development of the RES sector over the last decade, substantial challenges still lie ahead. For the renewable energy electricity and heating & cooling sectors (RES-E and RES- Page 5 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

H&C), the growth rate of total generation has to continue in line with the trend observed during the last five years. For meeting 2020 RES targets, compared to the period 2001 to 2010, yearly growth in RES-E needs to almost double from 3.4% (2001 to 2010) to 6.7% in the years up to 2020. There also needs to be a substantial increase in growth in the RES-H&C sector from the 2.7% per year achieved over the past decade to 3.9% per year until 2020. Therefore, the EU as a whole should continue to uphold the past level of achievement and the most successful countries could even over-achieve the 2020 targets by continuing to follow their present trend.

Objective and structure of this report

This report presents the outcomes of a detailed model-based assessment of how well Member States are on track for achieving 2020 RES target. By use of a specialised energy system model (Green-X) a quantitative analysis was conducted to assess feasible RES developments up to 2020 according to selected policy pathways, indicating RES deployment at Member State and at EU-27 level that can be expected in the near future, as well as related impacts on costs and benefits.

As a starting point, section 0 provides a short description of the methodology and key assumptions of this analysis, introducing the model applied and the scenarios assessed. Note that details on background parameter and the overall approach taken are provided in Annex I to this report.

Key outcomes of the analysis of 2020 RES target achievement are subject of section 0. While the first part presents and discusses results on expected future RES deployment and related costs, expenditures and benefits at the aggregated (EU-27) level the subsequent subsections offers a cross- country comparison and an assessment of the need for RES cooperation.

Details on country-specific RES developments in the 2020 context are then discussed in section 0, where for each Member State a closer look is taken on domestic RES deployment at the aggregated and at sector and technology level.

This report concludes with a summary of key findings and recommendations on the way forward, see section 0.

Page 6 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Short description of methodology and key assumptions

3.0 Model-based assessment of possible RES developments for meeting binding 2020 RES targets By use of a specialised energy system model (Green-X) a quantitative analysis was conducted to assess feasible RES developments up to 2020 according to selected policy pathways, indicating RES deployment at Member State and at EU-27 level that can be expected in the near future, as well as related impacts on costs and benefits. Subsequently we present background information and key outcomes in a brief manner.

Note that the Annex to this report provides a detailed description of the methodology and the assumptions taken for this analysis of possible RES developments in the near future (up to 2020). In contrast to that, below only a concise summary of relevant background information is provided.

3.0.1 Constraints of the model-based policy analysis

► Time horizon: 2010 to 2020 – Results are derived on an annual base ► Geographical coverage: all Member States of the European Union as of 2012 (EU27; without Croatia) ► Technology coverage: covering all RES technologies for power and heating and cooling generation as well biofuel production. The (conventional) reference energy system is based on EC modelling (PRIMES) ► Energy demand: demand forecasts are taken form “EU energy, transport and GHG emissions trends to 2050: Reference Scenario 2013” (EC, 2013) ► RES imports to the EU: generally limited to biofuels and forestry biomass meeting the sustainability criteria

3.0.2 The policy assessment tool: the Green-X model The Green-X model was applied to perform a detailed quantitative assessment of the future deployment of renewable energy on country- and sector level. The core strength of this tool lies on the detailed RES resource and technology representation accompanied by a thorough energy policy description, which allows assessing various policy options with respect to resulting costs and benefits. A short characterization of the model is given in the Annex to this main report, whilst for a detailed description we refer to www.green-x.at.

3.0.3 Overview on assessed cases The RES policy framework is a key input to this analysis whereby two scenarios were in focus (see Figure 6): a business-as-usual (BAU) case where the assumption was taken that RES policies are applied as currently implemented (without any adaptation) until 2020, and a policy recommendations (PR) scenario, indicating a pathway for meeting (or even exceeding) the 2020 RES targets, that builds on the policy recommendations derived within this project, see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014). Note that in the PR case RES cooperation is an important element for over- Page 7 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

all RES target achievement for certain Member States. It comes however only into play in exceptional cases when national target achievement appears not feasible even with high financial incentives.2

Generally, data on currently implemented RES policies in the assessed Member States as considered in the BAU case has been collected until end of March 2014. Thus, any policy changes that have been taken afterwards could not be considered in this model-based assessment.

Policy recommendations BAU case: RES scenario: policies are ◄Meeting/Exceeding 20% RES by 2020 applied as as precondition currently ◄Continuation BUT fine-tuning implemented (increasing cost-efficiency & effectiveness) (without any of national RES policies: improving the design adaptation) until of RES policies but no change of the in prior 2020, chosen RES policy instrument type i.e. a business as ◄Mitigation of non-cost barriers usual (BAU) ◄RES cooperation comes into play in the forecast. exceptional case that pure national target fulfilment appears not feasible (even with high financial incentives)

Figure 6: Overview on assessed cases

3.0.4 Overview on key parameters

Table 2: Main input sources for scenario parameters

Based on PRIMES Defined for this study Energy demand by sector RES policy framework Primary energy prices Reference electricity prices Conventional supply portfolio and RES cost (Green-X database, incl. biomass) conversion efficiencies

CO2 intensity of sectors RES potential (Green-X database) Biomass trade specification Technology diffusion Learning rates

2 As threshold with respect to financial RES support across Member States a high value is used – i.e. differences in country-specific support per MWh RES are limited to a maximum of 30 €/MWhRES. Consequently, if support in a country with temporarily limited RES potentials and / or an ambitious RES target exceeds the upper boundary, the remaining gap to its RES target would be covered in line with the flexibility re- gime as defined in the RES Directive through (virtual) imports from other countries that achieve a surplus in RES deployment. The needed support costs for the (virtual) exports are taken over by the importing country. No additional transaction costs are considered.

Page 8 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

In order to ensure maximum consistency with existing EU scenarios and projections the key input parameters of the scenarios presented in this report are derived from PRIMES modelling. With respect to the potentials and cost of RES technologies we refer to Resch et al. (2014) and/or the Green-X database, respectively. Table 2 shows which parameters are based on PRIMES and which have been defined for this study. More precisely, the PRIMES scenario used is the PRIMES reference scenario as of 2013 (EC, 2013).

Page 9 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Key results on 2020 RES target achievement

This section is dedicated to take a closer look on key outcomes of the model-based assessment of 2020 RES target achievement. While the first subsections present and discuss results on expected future RES deployment and related costs, expenditures and benefits at the aggregated (EU-27) level the subsequent part offers a cross-country comparison.

RES deployment at EU-27 level First, Figure 7 illustrates RES developments up to 2020 at EU-27 level in relative terms (i.e. RES share in gross final energy demand) according to the assessed cases (BAU and Policy Recommenda- tions (PR)). It turns out that under current RES support and related framework conditions (BAU case) at EU-27 level only a RES share of 17.9% appears feasible. Thus, improving national RES policies, for example according to the recommendations as provided within this project, appears essential for several Member States to bring them back on track. This is demonstrated by the results on the alternative policy pathway (Policy Recommendations case), where a RES share of 21.0% can be achieved by 2020.

25% Historic and expected future RES developments & 21.0% 2020 RES target 20% 20% fulfillment 17.9%

15% BAU

[%] PR 10%

Historic 5% deployment

2020 RES target RES share gross in final demand energy 0% 2010 2012 2014 2016 2018 2020

Figure 7: RES developments up to 2020 at EU-27 level in relative terms (i.e. RES share in gross final energy demand) according to assessed cases (BAU and PR)

Complementary to above, Figure 8 and Figure 9 provide details on RES deployment at sector level, indicating current (2012) and future (2020) RES generation by sector at EU-27 level in absolute terms (i.e. TWh electricity, heat or transport fuels produced) (Figure 8) as well as sector-specific RES deployment in relative terms (i.e. RES share in corresponding sector-specific and in aggregated gross final energy demand) (Figure 9). As applicable from these graphs, RES in all energy sectors have to contribute more to achieve or even over-succeed the given 2020 RES target as illustrated by

Page 10 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

the PR case. Possibly the most impressive changes can be identified for RES in the electricity sector, where 37.2% (PR case) instead of 30.9% (BAU case) are reached in 2020, and for biofuels in transport (i.e., 7.9% (PR case) instead of 5.5% (BAU case)).

Breakdown of 40% RES-E Biofuels for transport 37.2% RES generation RES-H&C RES-heating & cooling 35% by sector Biofuels RES-electricity 30.9% 3,000 30% RES total 308.3 2,500 25% 214.6 20.6% 21.0% 18.8% 2,000 20% 17.9% 186.3 1283.6 1171.2 1,500 15% 947.9

1,000 demand energy 2020by [%] 10% 7.9% 1255.9 5.5% 500 1042.3 5%

758.8 final(sectoral) gross in corresponding Share 0 0% Energyproduction from RES [TWh/a] 2012 2020 (BAU) 2020 (PR) Business as usual (BAU) Policy recommendations (PR)

Figure 8: Breakdown of RES generation by Figure 9: Sector-specific RES shares by 2020 sector at EU-27 level in 2012 and at EU-27 level according to the 2020 according to assessed cases assessed cases (BAU vs. PR) (BAU and PR)

Biogas 2012 2020 (BAU) 2020 (PR) Biomass* 4% 6% 6% Geothermal 2% 6% Large hydro 7%

(of generation)(of Small hydro 12% 13% 12% 25% 30% PV 29%

CSP E technology E

- 25% Tidal & wave 9% 30% Wind onshore 39% 12% RES 15%

Wind offshore 6% 5% 4% Breakdwon by 2012 2020 (BAU) 2020 (PR)

8% 3% 3% 2% 3% 3% 4% 1% 11% 11%

Biogas 2% 1% (of generation) (of Biomass*

Geothermal H&C technology H&C - Solar thermal 86% 81% 81%

RES Heat pumps Breakdwon by Figure 10: Breakdown of RES generation by technology and by sector (electricity (up) and heating & cooling (down) at EU-27 level in 2012 and 2020 according to assessed cases (BAU and PR)

Technology details are shown in Figure 10, providing a breakdown of RES generation by technology for the electricity sector (upper graphs) and for heating and cooling (lower graphs) according to both assessed cases. A broad portfolio of RES technologies has to contribute to assure RES target achievement, in particular for RES-E the deployment of different technology options appears well Page 11 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

balanced in the 2020 context. In the sector of heating and cooling the dominance of biomass (incl. biowaste) will remain although its relative share in overall sector-specific RES generation is expected to decline in forthcoming years.

Investments and selected costs & benefits at EU-27 level Indictors on the costs and benefits of an accelerated RES deployment in the European Union offer central information for decision makers. In this context, Figure 11 summarises the assessed costs and benefits arising from the future RES deployment in the focal period 2011 to 2020. More precisely, this graph provides for the researched cases throughout the period 2011 to 2020 the on average per year arising investment needs and the resulting costs – i.e. additional generation cost and support expenditures. Moreover, they offer an indication of the accompanying benefits in terms of supply security (avoided fossil fuels expressed in monetary terms – with impact upon a country’s trade balance) and climate protection (avoided CO2 emissions – monetarily expressed as avoided expenses for emission allowances). Other benefits – even of possibly significant magnitude - such as job creation or industrial development were not included in this assessment. Apparently, with improved policy design and mitigated non-cost barriers RES deployment and consequently also related investments increase strongly, by about 35% with respect to the latter. Moreover, a significantly improved balance between costs and benefits can be observed.

Avoided expenses for CO2 emission allowances Avoided expenses for fossil fuel (imports)

Support expenditures ] ]

€ Capital expenditures 90 80 70 60 50

40 77.8 5.0 30 57.5 4.0 20 28.6 30.1 10 24.6 24.0

and benefits of as well as investments new in and benefits as of well investments as 0 Indicators on yearly average (2011 to 2020) costs 2020)(2011 to costs average yearly on Indicators RES (installed 2011 to 2020) at EU level [billion EU level 2020)2011 to at (installed RES Business as usaul (BAU) Policy recommendations (PR)

Figure 11: Investments, selected costs & benefits at EU-27 level according to the assessed cases (BAU vs. PR)

Page 12 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Cross-country comparison of RES deployment and 2020 RES target achievement

This MS is expected to achieve its 2020 target This MS is expected to exceed its 2020 target domestically and acts There are doubts whether this as a (possible) seller within the RES MS may achieve its 2020 target cooperation mechanism in 2020

This MS is not well on track to This MS is expected to achieve its (PR) (PR) scenario achieve its 2020 target 2020 target trough a combination

of domestic action and RES co- (BAU) scenario operation, acting as buyer for

meeting the remaining gap

“Business “Business usual” as “Policy recommendations” “Policy

Figure 12: Assessment of 2020 RES target achievement according to the assessed cases (BAU(left) vs. PR (right)) Note: The traffic light colours of the figure on the left hand-side show an achievement or shortfall of 2020 RES targets by MS after possible adjustments through RES cooperation. In this context, in order to reflect uncertainty appropriately a threshold of -2% / +3% (of the required 2020 RES deployment) is used to distinguish between achievement, doubt or shortfall.

RES deployment and RES target achievement at the national level is discussed next. Thereby, Figure 12 provides a graphical illustration of the outcomes of our model-based assessment of 2020 RES target achievement by Member State, indicating the likeliness by Member State following an “traffic light approach”3. Complementary to that, Figure 13 offers further insights on the expected national RES deployment under BAU conditions. This graph also shows the additional deployment at sector level that would occur according to the Policy Recommendations case. Thus, under BAU conditions nine out of the assessed 27 Member States, e.g. Austria, Denmark or Italy, appear well on track. In another four Member States (i.e. Finland, Germany, Ireland and Slovakia) there are doubts whether 2020 targets can be reached with already implemented measures, while the remainder of fourteen Member States can be classified as “not well on track.” In contrast to that, if recommended policy measures are implemented well in time, all Member States still have the possibility to achieve their

3 Following the traffic light approach a green colour is used to show that a MS is expected to achieve its 2020 target while an orange colour indicates that there are doubts whether this MS may achieve its given RES target. Finally, red highlights that a MS is not well on track with respect to target achievement. In this context, in order to reflect uncertainty appropriately a threshold of -2% / +3% (of the required 2020 RES deployment) is used to distinguish between achievement, doubt or shortfall.

Page 13 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

2020 RES targets. The majority of countries would even exceed its obligation, and there are good reasons for doing so since, as discussed above, additional RES deployment contributes well to increase supply security and local employment, to name only some additional benefits. Finally, by 2020 five Member States (i.e. France, Luxembourg, Malta, the Netherlands and the UK) make use of RES cooperation mechanisms as a buyer while all others act as (possible) seller.

RES cooperation Biofuels RES-H&C RES-E BAU RES target 50% Policy Recommendations case: Additional deployment compared to BAU 45% 40% 35% 30% 25%

by 2020by [%] 20% 15% 10%

5% RES share in gross demand final energy gross in share RES

Italy

EU27

Spain

Malta

Latvia

France

Cyprus

Poland

Ireland

Austria

Greece

Finland

Estonia

Sweden

Belgium

Bulgaria

Slovakia

Slovenia

Hungary

Portugal

Romania

Denmark

Germany

Lithuania

Netherlands

Luxembourg Czech Republic Czech United Kingdom Figure 13: Comparison of 2020 RES targets and RES deployment according to a Business-as-usual (BAU) scenario by Member State, and additional (sector-specific) RES deployment in the Policy recommendations case

The need for and impact of RES cooperation Further details on the need for and impact of RES cooperation are provided below. Generally, RES cooperation between Member States (incl. also Third countries) comes into play if a country falls short in achieving its given RES target purely domestically. In order to provide to Member States sufficient flexibility, the RES Directive has defined rules for cross-country cooperation, allowing to (virtually) import surpluses in RES generation from other Member States.

A simplified approach has been taken in this model-based assessment to incorporate the feasibility and impact of RES cooperation into the outcomes related to country-specific RES target achievement:

If a Member State over-complies with its given target the surplus in RES generation represents a possible export volume, in other words the supply related to RES cooperation. If a Member State falls short in achieving its given target, the deficit in RES generation de- fines the required import volume, in other words the demand for RES cooperation. The feasibility of country-specific imports and exports is then defined at European level: Summing up country-specific import and export volumes, we can clarify on the match between supply (export volumes) and demand (import volumes) for RES cooperation: o If demand and supply perfectly match (i.e. import and export volumes are of similar magnitude), feasibility equals possibility or requirements, respectively, meaning

Page 14 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

that all countries that have a surplus can sell that in full magnitude to other Mem- ber States that fall short etc. o If demand exceeds supply, meaning that required imports are larger in magnitude than possible exports, potential sellers can sell their full surplus in RES generation while buying countries may end up with a deficit. In our assessment this character- ises the situation occurring under BAU conditions. o If possible supply exceeds required demand, buying countries can cover their whole demand for RES imports while potential sellers have the opportunity to sell only parts of their surplus in RES generation. This describes the situation that can be expected if RES deployment follows the PR case.

Below Table 3 lists the resulting country-specific RES shares by 2020 for both assessed cases (BAU vs. PR) with and without RES cooperation. Complementary to that, Error! Reference source not found. provides an illustration of the feasible (virtual) exchange of RES volumes between Member States by 2020, indicating for the case of a seller (exporting country) the feasible surplus in RES generation that can be sold to buying countries while in the case of a buyer (importing country) feasible import volumes can be identified.

8% + export 6%

share in gross gross in share - 2% 0%

finaldemand] energy -2% - import

-4%

Feasible (virtual) exchange of of RES (virtual) exchange Feasible

volumes by by 2020 volumes [%

Italy

Spain

Malta

Latvia

France

Cyprus

Poland

Ireland

Austria

Greece

Finland

Estonia

Sweden

Belgium

Bulgaria

Slovakia

Slovenia

Hungary

Portugal

Romania

Denmark

Germany

Lithuania

Netherlands

Luxembourg Czech Republic Czech UnitedKingdom Figure 14: Feasible (virtual) exchange of RES volumes between Member States (i.e. RES cooperation) by 2020 according to the assessed cases (BAU vs. PR)

Page 15 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Table 3: RES share in gross final energy demand by 2020 at Member State level for both assessed cases (BAU vs. PR) with and without RES cooperation

RES share RES share RES share in gross final without RES share with without RES share with energy demand by cooperation cooperation cooperation cooperation 2020 RES target (BAU) (BAU) (PR) (PR) Austria % 34.0% 36.5% 34.0% 38.7% 36.9% Belgium % 13.0% 11.5% 11.8% 13.0% 13.0% Bulgaria % 16.0% 20.5% 16.0% 24.2% 21.1% Cyprus % 13.0% 13.6% 13.0% 14.5% 13.9% Czech Republic % 13.0% 11.9% 12.1% 13.8% 13.5% Denmark % 30.0% 30.9% 30.0% 31.3% 30.8% Estonia % 25.0% 31.4% 25.0% 32.9% 29.9% Finland % 38.0% 37.5% 37.6% 41.8% 40.3% France % 23.0% 18.8% 19.5% 21.5% 23.0% Germany % 18.0% 17.9% 18.0% 21.2% 20.0% Greece % 18.0% 15.4% 15.8% 19.8% 19.1% Hungary % 13.0% 12.6% 12.6% 14.3% 13.8% Ireland % 16.0% 16.4% 16.0% 18.4% 17.5% Italy % 17.0% 17.6% 17.0% 20.2% 19.0% Latvia % 40.0% 34.0% 35.0% 41.3% 40.8% Lithuania % 23.0% 26.9% 23.0% 27.8% 25.9% Luxembourg % 11.0% 6.7% 7.4% 9.3% 11.0% Malta % 10.0% 3.2% 4.4% 9.1% 10.0% Netherlands % 14.0% 7.2% 8.4% 10.7% 14.0% Poland % 15.0% 12.1% 12.6% 15.1% 15.1% Portugal % 31.0% 28.1% 28.6% 32.7% 32.1% Romania % 24.0% 25.9% 24.0% 26.4% 25.5% Slovakia % 14.0% 14.4% 14.0% 15.1% 14.7% Slovenia % 25.0% 22.5% 22.9% 26.4% 25.9% Spain % 20.0% 15.6% 16.4% 20.6% 20.4% Sweden % 49.0% 53.9% 49.0% 53.6% 51.9% United Kingdom % 15.0% 7.8% 9.0% 12.6% 15.0% EU27 % 20.0% 17.9% 17.9% 21.0% 21.0%

Page 16 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Detailed results on domestic RES deployment by Member State

This section provides details on country-specific RES developments in the 2020 context. Thus, on the following pages for each Member State a closer look is taken on domestic RES deployment at the aggregated and at sector and technology level.

Page 17 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Austria

For Austria it can be expected that its 2020 RES target can be achieved under baseline conditions, i.e. if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Thus, Austria is a candidate for exporting surpluses in RES deployment that are not needed for own target fulfilment – again, even under baseline conditions this appears likely (cf. Figure 16). A closer look at the sector level indicates that significant progress can be expected in forthcoming years for RES in the electricity sector but also RES in heating & cooling and in transport show a continuous and steady growth. Thus, as demonstrated by the PR scenario the feasible progress is higher if policy recommendations like an increase of subsidy volumes for RES-H&C (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are implemented in time. This may increase the contribution of various new RES technologies in the heating and cooling but also in the electricity sector, see for example Figure 17 and Figure 18.

45% Historic and expected future RES cooperation RES developments & 40% 38.7% Possible (virtual) RES exports 36.5% 2020 RES target Feasible (virtual) RES exports 35% 34% fulfillment Required (virtual) RES imports 30% 18 BAU 25% 16

14 [%] 20% PR 12 15% 10

Historic [TWh/a] 8 10% deployment 6 5% 2020 RES target 4 RES share gross in final demand energy 2 0% 0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 15: RES developments up to 2020 in Austria in relative terms Figure 16: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Austria according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 5% 3% 2% RES generation 1% RES-heating & cooling Geothermal 1% 3% by sector Large hydro 9% 4% RES-electricity 12% 13% (of generation)(of Small hydro 9% 13% 11% 140 12% PV 11% CSP 8.8 technology E 120 6.8 - Tidal & wave

Wind onshore 73% 60% 58% RES

100 4.8 Wind offshore

Breakdwon by 57.2 60.1 80 2020 (BAU) 2020 (PR) 51.6 2012 3% 3% 60 4% 3% 4% 5% 4% 2% 1% 1% 1% 1% 40 Biogas 57.9 60.5 generation) (of 20 46.9 Biomass*

Geothermal H&C technology H&C 0 - Solar thermal

91% 87% 90% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 17: Breakdown of RES generation by Figure 18: Breakdown of RES generation by technology and by sector sector in Austria in 2012 and (electricity (up) and heating & cooling (down) in Austria in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 18 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Belgium

Belgium is a Member State where the achievement of its 2020 RES target is not expected under baseline conditions, see Figure 19. This may however change if policy recommendations like the establishment of a legal framework for each RES technology in the electricity sector and for RES in heating and cooling (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are implemented in time. As demonstrated by the PR scenario, Belgium may then well achieve its 2020 target, caused by an expansion of various new RES technologies for heating and cooling but also in the electricity sector, see Figure 21 and Figure 22. As also shown in the PR scenario biofuels in transport have the potential to contribute significantly more towards target fulfilment – for doing so, a clarification on sustainability criteria and/or a dedication to specific applications is of need, aiming to increase social acceptance.

14% Historic and expected future RES cooperation 13% 13.0% RES developments & 12% Possible (virtual) RES exports 11.5% 2020 RES target Feasible (virtual) RES exports fulfillment 10% Required (virtual) RES imports 1 BAU 8% 0

[%] -1 6% PR -2 -3 4% Historic [TWh/a] deployment -4 2% 2020 RES target -5

RES share gross in final demand energy -6 0% -7 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 19: RES developments up to 2020 in Belgium in relative terms Figure 20: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Belgium according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 5% 4% RES-heating & cooling Geothermal 7% 1% by sector Large hydro RES-electricity 7% 16% (of generation)(of Small hydro 27% 17% 25% 60 PV 20% 1% CSP E technology E 39% - 1% 50 8.9 Tidal & wave 33% 28% Wind onshore 23% 27% 14% 1% 5.8 RES

Wind offshore 2% Breakdwon 40 by 2% 22.1 2012 2020 (BAU) 2020 (PR) 30 20.6 4.0 1% 2% 4% 3% 3% 5% 20 1% 8%

14.9 Biogas (of generation) (of 10 21.2 22.8 Biomass* Geothermal 9.5 technology H&C 0 - Solar thermal

92% 93% 88% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 21: Breakdown of RES generation by Figure 22: Breakdown of RES generation by technology and by sector sector in Belgium in 2012 and (electricity (up) and heating & cooling (down) in Belgium in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 19 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Bulgaria

For Bulgaria it can be expected that its 2020 RES target can be achieved under baseline conditions, i.e. if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. The results of the scenario work clearly show that Bulgaria has the potential to act as seller in a European market on RES cooperation – even under baseline conditions this appears likely (see Figure 24). Important for the Bulgarian case is however that implemented RES policy measures are executed as foreseen, meaning that Government bodies and other relevant entities do not disregard previously adopted official regulations since such a lack of transparency has been a key barrier for an enhanced RES take-off in the past. Moreover, the alternative PR scenario clearly demonstrates that much more than needed appears feasible in the 2020 context. This requires that policy recommendations like the establishment of an adequate incentive scheme for RES-H&C (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented in time.

30% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 25% 2020 RES target 24.2% Feasible (virtual) RES exports fulfillment Required (virtual) RES imports 20.5% 20% 12 BAU 16% 10

15% [%] PR 8

10% 6

Historic [TWh/a] deployment 4 5% 2020 RES target

2 RES share gross in final demand energy 0% 0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 23: RES developments up to 2020 in Bulgaria in relative terms Figure 24: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Bulgaria according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 1% 2% RES-heating & cooling RES generation Geothermal 1% by sector Large hydro RES-electricity 8% 10% (of generation)(of Small hydro 16% 24% 20% 30 PV 1.9 CSP 13% 14% E technology E 12% - 40% 25 Tidal & wave 11% 59% 37%

1.4 Wind onshore 15% 16% RES

Wind offshore Breakdwon 20 by 16.8 2012 2020 (BAU) 2020 (PR) 15 14.1 3% 3% 1% 12.8 1% 4% 4% 4% 10 3%

Biogas (of generation) (of 5 9.0 10.3 Biomass*

6.5 Geothermal H&C technology H&C 0 - Solar thermal

92% 93% 92% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 25: Breakdown of RES generation by Figure 26: Breakdown of RES generation by technology and by sector sector in Bulgaria in 2012 and (electricity (up) and heating & cooling (down) in Bulgaria in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 20 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Cyprus

Modelling outcomes show that Cyprus will already achieve its 2020 RES target under baseline conditions. By doing so Cyprus will become a candidate for exporting RES surpluses that are not needed for own target fulfilment – again, even under baseline conditions this appears likely (cf. Figure 28). Uncertainty however remains in this respect since the overall surplus is comparatively small, i.e. a surplus of 0.6% percentage points is expected by 2020 in the BAU case, and because compared to the status quo there is still a strong RES expansion necessary in forthcoming years. Reliability and complexity of the existing legal framework for RES-E is a major concern today as indicated in the policy recommendations derived for Cyprus (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)), and the negative impact of these issues is possibly underestimated in the BAU case. An even more optimistic picture is drawn by the PR scenario where an extension of the support for biofuels in transport and improvements related to incentives for RES in heating & cooling are assumed, see Figure 29.

16% Historic and expected future RES cooperation 14.5% RES developments & 14% Possible (virtual) RES exports 13.6% 2020 RES target 13% Feasible (virtual) RES exports 12% fulfillment Required (virtual) RES imports 0.35 10% BAU 0.30 8% [%] PR 0.25 6% 0.20

Historic [TWh/a] 4% 0.15 deployment 0.10 2% 2020 RES target

RES share gross in final demand energy 0.05 0% 0.00 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 27: RES developments up to 2020 in Cyprus in relative terms Figure 28: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Cyprus according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 3% RES generation 2% 3% 1% RES-heating & cooling Geothermal 4% 5% 20% RES-electricity by sector Large hydro

(of generation)(of Small hydro 8% 3.5 PV

CSP 8% E technology E 3.0 - 0.5 Tidal & wave 72%

0.3 Wind onshore 91% 83% RES

2.5 Wind offshore Breakdwon by 1.3 2.0 1.4 2012 2020 (BAU) 2020 (PR) 2% 1.5 2% 3% 0.2 5% 1.0 Biogas 19% 19% 1.0 1.4 generation) (of 14% 0.5 1.2 Biomass*

Geothermal

H&C technology H&C - 0.3 Solar thermal 79%

0.0 79% 78% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 29: Breakdown of RES generation by Figure 30: Breakdown of RES generation by technology and by sector sector in Cyprus in 2012 and 2020 (electricity (up) and heating & cooling (down) in Cyprus in according to assessed cases (BAU 2012 and 2020 according to assessed cases (BAU and PR) and PR)

Page 21 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Czech Republic

Despite a strong uptake of RES deployment in previous years the Czech Republic is expected to fail in achieving its 2020 RES target under baseline conditions. The main reason for that is the unpredictable and unstable support for renewables in the various sectors. Thanks to past initiatives for RES-E there is however progress in deployment expected in the near future, specifically some wind or biogas projects are expected to remain in their pipeline of realisation. If policy recommendations like to sharpen and to extend support for RES-H&C and for biofuels in transport (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are implemented, a sufficiently strong uptake of RES appears feasible. Thus, in the PR scenario the Czech Republic turns from an importer (BAU case) to an exporter country related to European RES cooperation (cf. Figure 32) and major contributor for doing so are biofuels in transport and RES-H&C (see Figure 33).

16% Historic and expected future RES cooperation RES developments & 14% 13.8% Possible (virtual) RES exports 2020 RES target 13% Feasible (virtual) RES exports fulfillment 12% 11.9% Required (virtual) RES imports 10% 4 BAU 3

8% 2 [%] PR 1 6% 0

Historic [TWh/a] -1 4% deployment -2 2% 2020 RES target -3

RES share gross in final demand energy -4 0% -5 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 31: RES developments up to 2020 in the Czech Republic in relative Figure 32: RES cooperation by 2020 terms (i.e. RES share in gross final energy demand) according to in the Czech Republic assessed cases (BAU and PR) according to assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 8% 6% RES-heating & cooling Geothermal 5% Large hydro 18% RES-electricity by sector 8% 12%

(of generation)(of Small hydro 50 PV 27% 31% CSP 23% E technology E 39% 38% 5.3 - Tidal & wave 23% 40 12% 2.3 Wind onshore 8% RES 15% 10% 9%

Wind offshore 8% Breakdwon by 30 3.3 26.7 2012 2020 (BAU) 2020 (PR) 23.2 1% 3% 3% 4% 4% 2% 20 22.1 6%

Biogas (of generation) (of 10 Biomass* 13.9 13.8 Geothermal 8.1 technology H&C 0 - Solar thermal

90% 93% 94% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 33: Breakdown of RES generation by Figure 34: Breakdown of RES generation by technology and by sector sector in the Czech Republic in (electricity (up) and heating & cooling (down) in the Czech 2012 and 2020 according to Republic in 2012 and 2020 according to assessed cases (BAU assessed cases (BAU and PR) and PR)

Page 22 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Denmark

Denmark is on track to achieve its 2020 RES target. RES deployment by 2020 in the BAU case is 0.9 percentage points above the given target (30%). According to the PR case a further increase to 31.3% is feasible thanks to an increase of RES deployment in heating & cooling and in transport – despite reduced efforts for RES-E (compared to BAU). This indicates that overall RES target achievement is beyond question if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Generally, Denmark may act as exporter of surpluses in RES deployment in a European market related to RES cooperation. As shown in Figure 36 the possible export volumes increase from BAU to PR while feasibility for doing so decreases since several MSs with shortages under baseline conditions are expected to achieve their given targets domestically if policy recommendations are implemented (PR case).

35% Historic and expected future RES cooperation 31.3% RES developments & 30% 30.9% Possible (virtual) RES exports 30% 2020 RES target Feasible (virtual) RES exports fulfillment 25% Required (virtual) RES imports 2.5 BAU 20%

2.0 [%] 15% PR 1.5

10% Historic [TWh/a] 1.0 deployment

5% 2020 RES target 0.5 RES share gross in final demand energy 0% 0.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 35: RES developments up to 2020 in Denmark in relative terms Figure 36: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Denmark according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 2% 3% RES-heating & cooling Geothermal 3% by sector Large hydro RES-electricity 16% (of generation)(of Small hydro 15% 23% 60 27% PV 29% 39% 0.5 CSP 4.2 technology E - Tidal & wave 50 6% 31% 3.1 Wind onshore 52% 49%

RES 1%

Wind offshore 4% Breakdwon 40 by 37.3 39.7 2012 2020 (BAU) 2020 (PR) 30 31.1 4% 4% 1% 8% 2% 1% 20 1%

Biogas 1% 12% 2% 12% (of generation) (of Biomass* 10 17.5

13.9 11.9 Geothermal H&C technology H&C 0 - Solar thermal

89% 82% 81% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 37: Breakdown of RES generation Figure 38: Breakdown of RES generation by technology and by sector by sector in Denmark in 2012 (electricity (up) and heating & cooling (down) in Denmark in and 2020 according to 2012 and 2020 according to assessed cases (BAU and PR) assessed cases (BAU and PR)

Page 23 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Estonia

As applicable from Figure 39 Estonia is well on track to achieve its 2020 RES target of 25%. If currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years (BAU case) a significant surplus appears feasible: a RES share of 31.4% can be expected under baseline conditions. RES deployment may increase further to 32.9% if policy recommendations like the introduction of RES-H building obligations (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are reflected in future policy making. Under both assessed cases Estonia is a candidate for exporting surpluses in RES deployment that are not needed for own target fulfilment, see Figure 40. Despite an increase of the surplus in RES deployment as indicated by the possible exports, feasible (virtual) RES export volumes are higher under baseline conditions due to a shortage in RES deployment at EU level (and, in turn, an increased demand).

35% Historic and expected future RES cooperation 32.9% 31.4% RES developments & 30% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports fulfillment 25% 25% Required (virtual) RES imports 3.5 BAU 20% 3.0

[%] 2.5 15% PR 2.0

10% Historic [TWh/a] 1.5 deployment 1.0 5% 2020 RES target

RES share gross in final demand energy 0.5 0% 0.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 39: RES developments up to 2020 in Estonia in relative terms Figure 40: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Estonia according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 2% 4% RES-heating & cooling Geothermal 1% RES-electricity by sector Large hydro

(of generation)(of Small hydro 14 PV 33% 35% 47%

0.7 CSP E technology E

0.5 - 61% 47% 12 Tidal & wave 64% Wind onshore RES 2%

10 Wind offshore 2% 2% Breakdwon 0.0 by 8 2012 2020 (BAU) 2020 (PR) 10.2 11.0 6 1% 1% 7.6

4 Biogas (of generation) (of 2 Biomass*

Geothermal H&C technology H&C

1.5 1.8 1.4 - 0 Solar thermal

100% 99% 99% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 41: Breakdown of RES generation by Figure 42: Breakdown of RES generation by technology and by sector sector in Estonia in 2012 and (electricity (up) and heating & cooling (down) in Estonia in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 24 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Finland

The results on RES deployment in Finland as shown in Figure 43 indicate a small gap (37.5% instead of 38%) by 2020 under baseline conditions. This falls within the typical uncertainty corridor but can be understood as a warning signal to improve the RES policy framework in Finland in the near future. The policy recommendations derived within this project like the improvement of the attractiveness for small-scale RES-H&C (see EU Track- ing Roadmap 2014 (Keep-on-Track!, 2014) for details) may guide this reform process. Moreover, the PR scenario aims to reflect the impacts of implementing the recommendations derived. Apparently, Finland may get well back on track and may even achieve a significant surplus (about 12 TWh or 3.8 percentage points) by 2020, cf. Figure 43 and Figure 44. This is the consequence of an accelerated take-off of RES within all energy sectors as demonstrated by the PR case.

45% Historic and expected future RES cooperation 41.8% 40% RES developments & Possible (virtual) RES exports 38% 2020 RES target Feasible (virtual) RES exports 35% 37.5% fulfillment Required (virtual) RES imports 30% 14 BAU 25% 12

10 [%] 20% PR 8 15% 6

Historic [TWh/a] 4 10% deployment 2 5% 2020 RES target 0 RES share gross in final demand energy -2 0% -4 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 43: RES developments up to 2020 in Finland in relative terms Figure 44: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Finland according to cases (BAU and PR) assessed cases (BAU and PR)

Biogas 2012 2020 (BAU) 2020 (PR) Breakdown of 3% 1% Biofuels for transport Biomass* 1% 2% 1% RES generation 2% RES-heating & cooling Geothermal 4% 1% 6% 6% RES-electricity by sector Large hydro

(of generation)(of Small hydro 140 PV 42% 43%

4.1 CSP 46% E technology E 120 2.8 - Tidal & wave 47% 44% Wind onshore 3.8 RES

100 Wind offshore Breakdwon by 80 98.9 2012 2020 (BAU) 2020 (PR) 88.5 77.7 60 5% 1%

40 Biogas 10% 10% (of generation) (of 20 Biomass* 26.3 28.0 Geothermal

25.6 technology H&C 0 - Solar thermal

95% 89% 90% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 45: Breakdown of RES generation by Figure 46: Breakdown of RES generation by technology and by sector sector in Finland in 2012 and (electricity (up) and heating & cooling (down) in Finland in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 25 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

France

France is not well on track with respect to its 2020 RES target. Under both assessed cases (BAU and PR) a deficit can be expected by 2020, see Figure 47. The gap in domestic RES deployment that needs to be filled through proactive use of RES cooperation mechanisms is comparatively large under baseline conditions – i.e. a deficit of 4.2 percentage points, corresponding to about 76 TWh can be expected for 2020 in the BAU case. The assessment of barriers and the derivation of policy recommendations as derived within this project (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) signpost our view of the necessary reforms while the PR case aims to indicate general consequences of doing so: An accelerated deployment of RES within all energy sectors as illustrated in Figure 49 may bring domestic RES use in France close to the given target (21.5% instead of 23% by 2020) and, in turn, reduces the need for (virtual) RES imports to ca. 27 TWh, cf. Figure 48.

25% Historic and expected future RES cooperation 23% RES developments & Possible (virtual) RES exports 21.5% 2020 RES target 20% Feasible (virtual) RES exports 18.8% fulfillment Required (virtual) RES imports 0 15% BAU -10 -20 [%] PR 10% -30 -40

Historic [TWh/a] -50 5% deployment -60 2020 RES target -70

RES share gross in final demand energy -80 0% -90 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 47: RES developments up to 2020 in France in relative terms Figure 48: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in France according to cases (BAU and PR) assessed cases (BAU and PR)

Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Breakdown of Biomass* 5% 4% RES generation 5% 1% 2% RES-heating & cooling Geothermal 1% by sector Large hydro RES-electricity 5% 10% (of generation)(of Small hydro 16% 30% 400 PV 28% 44.0 CSP E technology E 9%

350 - Tidal & wave 10% 47% 39% 34.9 63% 10% Wind onshore 300 RES

Wind offshore 7% 6% Breakdwon 190.2 by 250 33.3 178.2 2012 2020 (BAU) 2020 (PR) 200 1% 136.8 11% 1% 4% 150 1% 1% Biogas 1% 17% 1% 10% 100 generation) (of 1% 159.8 131.5 Biomass*

50 86.4 Geothermal H&C technology H&C 0 - Solar thermal

86% 81% 84% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 49: Breakdown of RES generation by Figure 50: Breakdown of RES generation by technology and by sector sector in France in 2012 and (electricity (up) and heating & cooling (down) in France in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 26 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Germany

For Germany it can be expected that the given 2020 RES target (18%) can be achieved under baseline conditions, i.e. if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years4. A negligible deficit of 0.1 percentage points, corresponding to 1.4 TWh in absolute terms, occurs in the BAU case in 2020, cf. Figure 51 and Figure 52. Through dedicated action as demonstrated by the PR case the uncertainty related to RES target achievement can however be significantly reduced. Policy recommendations like an improvement of the functionality of the RES-H&C market or an increase of the reliability of the general RES-E strategy (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) would boost RES deployment within all three energy sectors to 21.2%. In that case a significant surplus of about 78 TWh would occur and Germany would face the opportunity to act as seller in the EU market for RES cooperation, cf. Figure 52.

25% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 21.2% 2020 RES target 20% Feasible (virtual) RES exports fulfillment 18% 17.9% Required (virtual) RES imports 90 15% BAU 80 70 [%] PR 60 10% 50 40

Historic [TWh/a] 30 deployment 5% 20 2020 RES target 10 RES share gross in final demand energy 0 0% -10 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 51: RES developments up to 2020 in Germany in relative terms Figure 52: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Germany according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation RES-heating & cooling Geothermal 1% by sector Large hydro 20% RES-electricity 9% 16% 12% 14% (of generation)(of Small hydro 600 9% PV 36% 10% CSP 9% 34% 5%

E technology E 7% 31% - 500 49.0 Tidal & wave 10% 3% Wind onshore 26% RES 19% 20% 4%

31.6 Wind offshore 5% Breakdwon 400 by 189.0 2020 (BAU) 2020 (PR) 177.6 2012 300 38.5 5% 6% 7% 13% 12% 131.6 10% 4% 200 8% Biogas 12% 272.8 generation) (of 1% 100 223.2 Biomass*

137.9 Geothermal H&C technology H&C 0 - Solar thermal

79% 72% 71% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 53: Breakdown of RES generation by Figure 54: Breakdown of RES generation by technology and by sector sector in Germany in 2012 and (electricity (up) and heating & cooling (down) in Germany in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR)

4 Any RES policy changes made in regards to the new Erneuerbare Energien Gesetz (EEG) in 2014 are not considered in the BAU or PR cases.

Page 27 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Greece

Despite a strong uptake of RES deployment in previous years Greece is expected to fail in achieving its 2020 RES target under baseline conditions. As a consequence of currently unpredictable and unstable support for renewables in the various sectors, partly triggered by retroactive measures that have been taken for RES-E, and a generally limited access to finance, RES target achievement is getting out reach in the BAU case (i.e. 15.4% compared to 18%). Thanks to past initiatives for RES-E there is however progress in deployment expected in the near future, specifically some PV projects have recently (throughout 2013 and 2014) started operation or remain in their pipeline of realisation. If policy recommendations like the implementation of a suitable strategy for RES-H&C and for biofuels in transport (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented well in time, a sufficiently strong uptake of RES appears however feasible. Thus, as shown in Figure 56 in the PR scenario Greece would then turn from an importer (BAU case) to an exporter country concerning RES cooperation. Key options for doing so are biofuels in transport and RES in the electricity sector (see Figure 57).

25% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 2020 RES target 20% 19.8% Feasible (virtual) RES exports fulfillment 18% Required (virtual) RES imports 6 15% 15.4% BAU 4

[%] PR 2 10% 0

Historic [TWh/a] -2 deployment 5% -4 2020 RES target

RES share gross in final demand energy -6 0% -8 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 55: RES developments up to 2020 in Greece in relative terms Figure 56: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Greece according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 2% 3% 3% 3% RES-heating & cooling Geothermal 2% RES-electricity by sector Large hydro (of generation)(of Small hydro 24% 27% 50 PV 38% 37% 34% 33%

CSP E technology E 7.0 - Tidal & wave 40 32% Wind onshore 31% RES 16%

Wind offshore 7% 3% 3% Breakdwon by 30 17.0 0.3 15.1 2012 2020 (BAU) 2020 (PR)

1% 6% 1% 20 17.4 7% 1% 12%

Biogas 10% (of generation) (of 10 20.0 21.1 25% 32% Biomass* 1%

10.2 Geothermal H&C technology H&C - Solar thermal 63% 60%

0 79% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) 1% 1% Breakdwon by Figure 57: Breakdown of RES generation by Figure 58: Breakdown of RES generation by technology and by sector sector in Greece in 2012 and (electricity (up) and heating & cooling (down) in Greece in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR) Page 28 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Hungary

Figure 59 indicates a small gap (12.6% instead of 13%) in RES deployment by 2020 for Hungary under baseline conditions, falling within the general uncertainty corridor related to this model-based analysis. However, it should but understood as a warning signal to improve the RES policy framework in Hungary in forthcoming years. The policy recommendations derived within this project like the simplification of the application procedures for RES-E support or the implementation of clearly defined rules for grid access (see EU Tracking Road- map 2014 (Keep-on-Track!, 2014) for details) signpost the way forward in this respect. Thus, the PR scenario, reflecting the expected consequences of doing so, clearly shows that Hungary has the opportunity to get back on track and may even achieve a comparatively high surplus (about 2.5 TWh or 1.3 percentage points) by 2020, cf. Figure 59 and Figure 60. Thus, the PR case indicates an accelerated uptake of RES within all energy sectors whereby the expansion of RES-E and RES-H&C appears most impressive, cf. Figure 61.

16% Historic and expected future RES cooperation RES developments & 14% 14.3% Possible (virtual) RES exports 13% 2020 RES target Feasible (virtual) RES exports 12% 12.6% fulfillment Required (virtual) RES imports 10% 3.0 BAU 2.5

8% 2.0 [%] PR 1.5 6% 1.0

Historic [TWh/a] 0.5 4% deployment 0.0 2% 2020 RES target -0.5

RES share gross in final demand energy -1.0 0% -1.5 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 59: RES developments up to 2020 in Hungary in relative terms Figure 60: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Hungary according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation RES-heating & cooling Geothermal 9% by sector Large hydro RES-electricity 10% 13%

(of generation)(of Small hydro 21% 24% 30 1% 27% PV 2% 3% CSP 2%

E technology E 7%

3.9 - Tidal & wave 2% 8% 25 55% 57% 47% Wind onshore 3% 5.5 RES

Wind offshore 6% 3% Breakdwon 20 by 1.8 2012 2020 (BAU) 2020 (PR) 15 17.5 1% 15.4 2% 10% 18% 16% 10 13.0

Biogas (of generation) (of 5 Biomass* 7.0 Geothermal 4.2 technology H&C 2.6 - 0 Solar thermal

88% 82% 83% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 61: Breakdown of RES generation by Figure 62: Breakdown of RES generation by technology and by sector sector in Hungary in 2012 and (electricity (up) and heating & cooling (down) in Hungary in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 29 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Ireland

As shown in Figure 63 Ireland is expected to achieve its 2020 RES target if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Thus, even under baseline conditions Ireland may act as exporter of surpluses in RES deployment that are not needed for own target fulfilment. However, uncertainty remains in this respect since the overall surplus is comparatively small, i.e. a surplus of 0.4 percentage points is indicated according to the BAU case by 2020 and because compared to the status quo there is still a strong RES deployment necessary in forthcoming years. A simplification of planning and permitting procedures, especially for wind parks, or the establishment of a reliable RES- H&C strategy are two examples for policy recommendations as derived within this project (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) that aim to speed up RES deployment and, consequently, safeguard RES target achievement. By doing so, the potential for possible and also for feasible exports in a European market for RES cooperation would increase significantly, cf. Figure 64.

20% Historic and expected future RES cooperation 18% 18.4% RES developments & Possible (virtual) RES exports 16.4% 2020 RES target 16% Feasible (virtual) RES exports 16% fulfillment Required (virtual) RES imports 14% 4.0 12% BAU 3.5 10% [%] 3.0 PR 8% 2.5 2.0

6% Historic [TWh/a] 1.5 4% deployment 2020 RES target 1.0 2% RES share gross in final demand energy 0.5 0% 0.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 63: RES developments up to 2020 in Ireland in relative terms Figure 64: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Ireland according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 2% 6% 4% 2% 5% RES generation 1% 4% 4% RES-heating & cooling Geothermal 4% 4% 2% 1% 1% RES-electricity by sector Large hydro 7%

(of generation)(of Small hydro 2% 30 PV 12%

CSP E technology E 25 4.6 - Tidal & wave Wind onshore 77% 82% 79% 2.7 RES

Wind offshore Breakdwon 20 by 9.6 9.9 2012 2020 (BAU) 2020 (PR) 15 8% 1% 1% 4% 4% 10 2.0

(of generation) (of Biogas 2.7 12.5 29% 5 11.7 Biomass* 40% Geothermal

5.4 technology H&C

- 59% 0 Solar thermal 70%

84% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 65: Breakdown of RES generation by Figure 66: Breakdown of RES generation by technology and by sector sector in Ireland in 2012 and (electricity (up) and heating & cooling (down) in Ireland in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR) Page 30 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Italy

Thanks to an impressive progress in RES deployment throughout previous years Italy is expected to achieve its 2020 RES target even under baseline conditions, i.e. if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Thus, a surplus of 0.6 percentage points corresponding to 8 TWh can be expected in the BAU case. Consequently, Italy is a candidate for exporting surpluses in RES deployment that are not needed for own target fulfilment to other Member States being short in domestic RES deployment. A closer look at the sector level indicates significant progress in forthcoming years for RES in the electricity sector but also RES in heating & cooling and in transport show a continuous and steady growth. Apparently, this is progress is more impressive in the PR case, aiming to reflect the consequences of implementing targeted RES policy recommendations as derived within this project.

25% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 2020 RES target 20% 20.2% Feasible (virtual) RES exports fulfillment 17.6% Required (virtual) RES imports 17% 50 15% BAU 45 40 [%] PR 35 10% 30 25

Historic [TWh/a] 20 deployment 5% 15 2020 RES target 10 RES share gross in final demand energy 5 0% 0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 67: RES developments up to 2020 in Italy in relative terms Figure 68: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Italy according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 3% 3% RES-heating & cooling Geothermal 5% by sector Large hydro 7% 5% RES-electricity 6% 19% 7% 8% (of generation) (of Small hydro 13% 8% 25% 300 PV

35.9 CSP 20% 22% E technology E - Tidal & wave 28% 28% 250 30.0 36% Wind onshore 12% 31% RES 8%

Wind offshore 6% Breakdwon 200 115.5 by 19.8 109.5 2020 (BAU) 2020 (PR) 150 2012 85.1 1% 1% 2% 100

146.0 generation) (of Biogas 36% 119.4 36% 34% 50 93.3 Biomass*

Geothermal H&C technology H&C

- 55% 55% 0 Solar thermal 58%

2% RES Energyproduction from RES [TWh/a] Heat pumps

2012 2020 (BAU) 2020 (PR) 4% 5% Breakdwon by 2% 4% 5% Figure 69: Breakdown of RES generation by Figure 70: Breakdown of RES generation by technology and by sector sector in Italy in 2012 and 2020 (electricity (up) and heating & cooling (down) in Italy in 2012 according to assessed cases (BAU and 2020 according to assessed cases (BAU and PR) and PR)

Page 31 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Latvia

Figure 71 shows a strong increase of the RES share (in gross final energy demand) in previous years in Latvia. The main reason for this positive trend is however a strong decline of energy consumption – but not a significant uptake of RES generation in absolute terms. Since the demand forecast used in this model-based assessment, i.e. the latest PRIMES reference scenario (EC, 2013), assumes a demand increase in forthcoming years up to 2020 the BAU scenario of future RES progress draws a pessimistic view on 2020 RES target achievement. Thus, a 2020 RES share of 34.0% can be expected under baseline conditions, leading to a significant gap compared to the given target (40%) (cf. Figure 72). As indicated by the PR scenario it appears feasible for Latvia to achieve and even over-succeed the 2020 RES target. If policy recommendations like a reliable and transparent RES policy design and implementation (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented in time, a sufficiently strong uptake of RES in all energy sectors appears feasible (cf. Figure 73). Thus, in the PR case Latvia turns from an importer (BAU case) to an exporter country related to European RES cooperation.

45% Historic and expected future RES cooperation 40% 41.3% RES developments & Possible (virtual) RES exports 40% 2020 RES target Feasible (virtual) RES exports 35% 34.0% fulfillment Required (virtual) RES imports 30% 1.0 BAU 25% 0.5

0.0 [%] 20% PR -0.5 15% -1.0

Historic [TWh/a] -1.5 10% deployment -2.0 5% 2020 RES target -2.5 RES share gross in final demand energy -3.0 0% -3.5 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 71: RES developments up to 2020 in Latvia in relative terms Figure 72: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Latvia according to cases (BAU and PR) assessed cases (BAU and PR)

Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Breakdown of Biomass* 3% RES generation 3% 6% 2% 2% RES-heating & cooling Geothermal 2% 6% 3% Large hydro 2% 5% RES-electricity by sector 12% 7%

(of generation) (of Small hydro 25 PV

CSP E technology E 1.0 - Tidal & wave 20 87% 86% 74%

RES Wind onshore

0.3 0.6 Wind offshore Breakdwon by 15 2020 (BAU) 2020 (PR) 16.4 2012 13.8 13.6 1% 1% 10 1%

Biogas (of generation) (of 5 Biomass* 4.7 Geothermal 3.5 4.0 technology H&C 0 - Solar thermal

99% 99% 99% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 73: Breakdown of RES generation by Figure 74: Breakdown of RES generation by technology and by sector sector in Latvia in 2012 and (electricity (up) and heating & cooling (down) in Latvia in

Page 32 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 33 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Lithuania

It can be expected that Lithuania achieves its 2020 RES target under baseline conditions, i.e. if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Generally, Lithuania may act as exporter of surpluses in RES deployment in a European market related to RES cooperation. As shown in Figure 76 the possible export volumes increase from BAU to PR while feasibility for doing so decreases since several MSs with shortages under baseline conditions will achieve their given targets domestically if policy recommendations are implemented (PR case). A closer look at the sector level indicates significant progress in forthcoming years for RES in the electricity sector and in heating & cooling. In contrast to above, for biofuels in transport a decline is expected under both cases in the period up to 2020 (see Figure 77).

30% Historic and expected future RES cooperation 27.8% 26.9% RES developments & Possible (virtual) RES exports 25% 2020 RES target 23% Feasible (virtual) RES exports fulfillment Required (virtual) RES imports 20% 3.5 BAU 3.0 15% [%] PR 2.5 2.0 10% Historic [TWh/a] 1.5 deployment 5% 1.0 2020 RES target

RES share gross in final demand energy 0.5 0% 0.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 75: RES developments up to 2020 in Lithuania in relative terms Figure 76: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Lithuania according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 2% 6% RES-heating & cooling Geothermal 4% Large hydro RES-electricity by sector 9% (of generation)(of Small hydro 15% 12% 18 PV 15% 46% 50% CSP 16 1.1 technology E 7% 22%

0.9 - Tidal & wave 29% 66% 14 Wind onshore RES 1% 10%

1.4 Wind offshore 6% Breakdwon 12 by 10 2012 2020 (BAU) 2020 (PR) 13.1 14.2 8 1% 1% 6 10.9

4 generation) (of Biogas Biomass*

2 Geothermal H&C technology H&C

2.4 - 1.2 1.6 Solar thermal 0 100

99% 99% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) % Breakdwon by Figure 77: Breakdown of RES generation by Figure 78: Breakdown of RES generation by technology and by sector sector in Lithuania in 2012 and (electricity (up) and heating & cooling (down) in Lithuania in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 34 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Luxembourg

Considering domestic RES deployment, Luxembourg is not well on track with respect to its 2020 RES target. Under both assessed cases (BAU and PR) a deficit can be expected by 2020, cf. Figure 79. The gap in domestic RES deployment that has to be filled through proactive use of RES cooperation mechanisms is of significant magnitude under baseline conditions – i.e. a deficit of 4.3 percentage points, corresponding to about 2.1 TWh can be expected for 2020 in the BAU case. The assessment of barriers and the derivation of policy recommendations as derived within this project (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) signpost our view of the necessary reforms while the PR case aims to indicate general consequences of doing so: An accelerated deployment of RES within all energy sectors (cf. Figure 81), and in particular of biofuels in transport, may bring domestic RES use in Luxembourg closer to the given target (9.3% compared to 11% by 2020) and, in turn, reduces the need for (virtual) RES imports to approx. 0.8 TWh, cf. Figure 80.

12% Historic and expected future RES cooperation 11% RES developments & Possible (virtual) RES exports 10% 2020 RES target Feasible (virtual) RES exports 9.3% fulfillment Required (virtual) RES imports 8% 0.0 BAU 6.7% 6% -0.5 [%] PR -1.0 4%

Historic [TWh/a] -1.5 deployment 2%

2020 RES target -2.0 RES share gross in final demand energy 0% -2.5 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 79: RES developments up to 2020 in Luxembourg in relative terms Figure 80: RES cooperation by 2020 in (i.e. RES share in gross final energy demand) according to assessed Luxembourg according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES-heating & cooling RES generation Geothermal by sector Large hydro 18% RES-electricity 16% 10% (of generation) (of Small hydro 32% 32% 5 PV 24% 12% CSP 12% 18% E technology E 15% - Tidal & wave 12% 4 10%

RES Wind onshore 34% 24% 31%

Wind offshore Breakdwon 2.4 by 3 2012 2020 (BAU) 2020 (PR) 1.5 2 3% 2% 4% 5% 6% 6% 12% 5% 1.3 11%

(of generation) (of Biogas 0.5 1.2 1 Biomass* 0.7 Geothermal 0.8 technology H&C 0.5 - 0 0.3 Solar thermal

83% 85% 78% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 81: Breakdown of RES generation by Figure 82: Breakdown of RES generation by technology and by sector sector in Luxembourg in 2012 (electricity (up) and heating & cooling (down) in Luxembourg and 2020 according to assessed in 2012 and 2020 according to assessed cases (BAU and PR) cases (BAU and PR)

Page 35 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Malta

Malta is expected to fail in achieving its 2020 RES target under baseline conditions – i.e. as shown in Figure 83 a RES share of 3.2% by 2020 can be expected for 2020 according to the BAU case. This may however change if policy recommendations like the establishment of financial incentives for several RES technology in the electricity sector and for RES in heating and cooling (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented in time. As indicated by the PR scenario, Malta may then come very close to the given 2020 RES target – i.e. a RES share of 9.1% appears feasible, reducing to gap to the binding 2020 RES of 10% significantly compared to BAU. This is the consequence of a rapid expansion of various new RES technologies in the electricity sector but also in the sector of heating and cooling, see Figure 85 and Figure 86.

12% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 10% 10% 2020 RES target Feasible (virtual) RES exports 9.1% fulfillment Required (virtual) RES imports 8% 0.00 BAU -0.05 6% [%] -0.10 PR -0.15 4% -0.20 3.2% Historic [TWh/a] deployment -0.25 2% 2020 RES target -0.30

RES share gross in final demand energy -0.35 0% -0.40 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 83: RES developments up to 2020 in Malta in relative terms Figure 84: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Malta according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES-heating & cooling RES generation Geothermal 3% 7% 18% RES-electricity by sector Large hydro 7%

(of generation) (of Small hydro 35% 0.5 PV 48% 19%

CSP E technology E

0.03 - Tidal & wave 58% 0.4 82% 23%

RES Wind onshore 0.13

Wind offshore Breakdwon by 0.3 2012 2020 (BAU) 2020 (PR) 2% 2% 0.2 6% 26% 10% 0.02 0.30 17%

0.07 generation) (of Biogas 26% 0.1 0.08 Biomass*

0.08 Geothermal H&C technology H&C

0.06 - 0.0 0.02 Solar thermal 72% 81%

Energyproduction from RES [TWh/a] 58%

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 85: Breakdown of RES generation by Figure 86: Breakdown of RES generation by technology and by sector sector in Malta in 2012 and 2020 (electricity (up) and heating & cooling (down) in Malta in 2012 according to assessed cases (BAU and 2020 according to assessed cases (BAU and PR) and PR)

Page 36 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

The Netherlands

The Netherlands is not well on track to achieve its 2020 RES target. Considering domestic RES deployment under both assessed cases (BAU and PR) a significant deficit can be expected in 2020, see Figure 87. The gap in domestic RES deployment that needs to be filled through (virtual) RES imports from other Member States or Third countries is comparatively large under baseline conditions – i.e. a deficit of 6.8 percentage points, corresponding to about 40 TWh RES generation, can be expected for 2020 in the BAU case. The barriers assessed and the related policy recommendations derived within this project (see EU Tracking Roadmap 2014 (Keep-on- Track!, 2014)) signpost our view on the necessary reforms while the PR case aims to indicate general consequences of doing so: A strong uptake of RES use within all energy sectors as anticipated in the PR case (see Figure 89) reduces the gap to target fulfilment significantly and, in turn, cuts the need for (virtual) RES imports to the half compared to BAU (20 TWh (PR) instead of 40 TWh (BAU)), cf. Figure 88.

16% Historic and expected future RES cooperation RES developments & 14% 14% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports 12% fulfillment Required (virtual) RES imports 10.7% 10% 0 BAU -5

8% -10 [%] 7.2% PR -15 6% -20

Historic [TWh/a] -25 4% deployment -30 2% 2020 RES target -35

RES share gross in final demand energy -40 0% -45 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 87: RES developments up to 2020 in the Netherlands in relative terms Figure 88: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in the Netherlands cases (BAU and PR) according to assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 1% 6% RES-heating & cooling Geothermal 6% 8% RES-electricity by sector Large hydro 7%

(of generation)(of Small hydro 70 PV 33% 22%

CSP 33% 34% E technology E 60 - Tidal & wave 57% 12.3 50% 4% Wind onshore RES 35%

50 Wind offshore 2% 1% 1% Breakdwon by 17.8 40 7.3 2012 2020 (BAU) 2020 (PR)

30 8% 1% 10% 6.0 17.0 14% 14% 1% 20 3% 15% 10% 10.9 33.5 generation) (of Biogas 1% 10 Biomass* 18.7 Geothermal

12.5 technology H&C 0 - Solar thermal

68% 76% 79% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 89: Breakdown of RES generation by Figure 90: Breakdown of RES generation by technology and by sector sector in the Netherlands in (electricity (up) and heating & cooling (down) in the 2012 and 2020 according to Netherlands in 2012 and 2020 according to assessed cases assessed cases (BAU and PR) (BAU and PR) Page 37 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Poland

Poland is a Member State where the achievement of its 2020 RES target cannot be expected under baseline conditions, see Figure 91. Since the demand forecast used in this model-based assessment, i.e. the latest PRIMES reference scenario (EC, 2013), assumes for Poland a demand increase in forthcoming years up to 2020 the BAU scenario of future RES progress draws a pessimistic view on 2020 RES target achievement, leading to a gap of 2.9 percentage points (or 27 TWh) compared to the given RES target in 2020. This may however change if policy recommendations like the introduction of a new RES act to fully implement the RES Directive 2009/28/EC (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are considered in actual RES policy making which has been far from being coherent or predictable in previous years. As demonstrated by the PR scenario, Poland may then well achieve its 2020 target, caused by a strong development of various new RES technologies for heating and cooling but also in the electricity sector, cf. Figure 93 and Figure 94.

16% 15% Historic and expected future RES cooperation 15.1% RES developments & 14% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports 12% 12.1% fulfillment Required (virtual) RES imports 5 10% BAU 0 8% [%] PR -5 6% -10

Historic [TWh/a] 4% -15 deployment -20 2% 2020 RES target

RES share gross in final demand energy -25 0% -30 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 91: RES developments up to 2020 in Poland in relative terms Figure 92: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Poland according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 4% 1% RES-heating & cooling Geothermal 3% RES-electricity by sector Large hydro 7%

(of generation) (of Small hydro 160 27% 31% PV 29%

CSP E technology E

140 - 56% 52% 15.6 Tidal & wave 11% 56% 4% 4% 120 RES Wind onshore 5%

Wind offshore 3% 4% 3% Breakdwon 100 12.9 by 2012 2020 (BAU) 2020 (PR) 10.7 80 85.5 2% 2% 2% 60 71.6 2% 1% 1% 58.7 Biogas 40 generation) (of Biomass* 20 37.1 Geothermal 26.0 technology H&C 17.0 - 0 Solar thermal

98% 97% 95% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 93: Breakdown of RES generation by Figure 94: Breakdown of RES generation by technology and by sector sector in Poland in 2012 and (electricity (up) and heating & cooling (down) in Poland in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 38 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Portugal

Portugal is expected to fail in achieving its 2020 RES target under baseline conditions – i.e. if no new RES policy measures are established in addition to the existing ones and if framework conditions may not change in forthcoming years. As a consequence of regulatory instability due to the revision of the RES-E support scheme and the non-existence of a RES-H&C strategy, RES target achievement is getting out reach in the BAU case (i.e. 28.1% compared to 31%, cf. Figure 95). Thus, according to the BAU scenario only a moderate RES expansion is expected within all energy sectors in forthcoming years. If policy recommendations like the implementation of a suitable strategy for RES-H&C and for biofuels in transport (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented well in time, a sufficiently strong uptake of RES appears however feasible. As shown in Figure 96 in the PR scenario Portugal would then turn from an importer (BAU case) to an exporter country concerning RES cooperation. Key RES technologies for doing can be found within all energy sectors (see Figure 97 and Figure 98).

35% Historic and expected future RES cooperation 32.7% RES developments & 30% 31% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports 28.1% fulfillment 25% Required (virtual) RES imports 6 BAU 20% 4

[%] 2 15% PR 0

10% Historic [TWh/a] -2 deployment -4 5% 2020 RES target

RES share gross in final demand energy -6 0% -8 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 95: RES developments up to 2020 in Portugal in relative terms Figure 96: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Portugal according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 1% RES-heating & cooling Geothermal 1% by sector Large hydro RES-electricity 10% 13%

(of generation)(of Small hydro 12% 34% 34% 80 PV 40%

CSP E technology E

70 - Tidal & wave 6.5 41% 1% 50% 44% Wind onshore 1%

RES 1% 60 1% 4%

4.3 Wind offshore 4% 4% 3% Breakdwon by 50 0.1 31.4 2012 2020 (BAU) 2020 (PR) 40 27.8 22.2 4% 4% 10% 1% 30 1%

20 generation) (of Biogas 31.4 25.7 27.5 Biomass*

10 Geothermal H&C technology H&C 0 - Solar thermal

96% 95% 89% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 97: Breakdown of RES generation by Figure 98: Breakdown of RES generation by technology and by sector sector in Portugal in 2012 and (electricity (up) and heating & cooling (down) in Portugal in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR) Page 39 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Romania

Romania is on track to achieve its 2020 RES target. RES deployment by 2020 in the BAU case is 1.9 percentage points above the given target (24%). According to the PR case a further increase to 26.4% is feasible thanks to an increase of RES deployment in heating & cooling – despite reduced efforts for RES-E (compared to BAU). This indicates that overall RES target achievement is beyond question if currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years. Generally, Ro- mania may act as exporter of surpluses in RES deployment in a European market related to RES cooperation. As shown in Figure 100 the possible export volumes increase from BAU to PR while feasibility for doing so decreases since several MSs with shortages under baseline conditions are expected to achieve their given targets domestically if policy recommendations are implemented (PR case).

30% Historic and expected future RES cooperation 26.4% RES developments & Possible (virtual) RES exports 25% 25.9% 2020 RES target 24% Feasible (virtual) RES exports fulfillment Required (virtual) RES imports 20% 8 BAU 7 15% [%] 6 PR 5 10% 4

Historic [TWh/a] deployment 3 5% 2020 RES target 2

RES share gross in final demand energy 1 0% 0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 99: RES developments up to 2020 in Romania in relative terms Figure 100: RES (i.e. RES share in gross final energy demand) according to assessed cooperation by 2020 in cases (BAU and PR) Romania according to assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 1% 3% RES-heating & cooling RES generation Geothermal 1% 4% Large hydro 4% RES-electricity by sector 4% 13% 8% (of generation) (of Small hydro 13% 24% 90 PV CSP 80 5.6 5.6 technology E 5% - Tidal & wave 66% 70 82% 72%

RES Wind onshore

2.1 Wind offshore Breakdwon 60 by 50 50.4 54.8 2012 2020 (BAU) 2020 (PR)

40 42.9 3% 4% 1% 2% 30 1% 2% Biogas 20 generation) (of 27.1 Biomass*

10 19.8 24.1 Geothermal H&C technology H&C 0 - Solar thermal

99% 95% 93% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 101: Breakdown of RES generation Figure 102: Breakdown of RES generation by technology and by sector in Romania in 2012 by sector (electricity (up) and heating & cooling (down) in and 2020 according to assessed Romania in 2012 and 2020 according to assessed cases (BAU cases (BAU and PR) and PR)

Page 40 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Slovakia

As applicable from Figure 103 Slovakia is well on track to achieve its 2020 RES target of 14%. If currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years (BAU case) a small surplus appears feasible: a RES share of 14.4% can be expected under baseline conditions. RES deployment may increase further to 15.1% if policy recommendations like the implementation of a reliable RES-T strategy and support scheme (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details) are realized well in time. Under both assessed cases Slovakia is a candidate for exporting small surpluses in RES deployment that are not needed for own target fulfilment, see Figure 40. Despite an increase of the surplus in RES deployment as indicated by the possible exports, feasible (virtual) RES export volumes are higher under baseline conditions due to a shortage in RES deployment at EU level (and, in turn, an increased demand).

16% Historic and expected future RES cooperation 15.1% RES developments & 14% 14.4% Possible (virtual) RES exports 14% 2020 RES target Feasible (virtual) RES exports 12% fulfillment Required (virtual) RES imports 10% 1.8 BAU 1.6

8% 1.4 [%] PR 1.2 6% 1.0

Historic [TWh/a] 0.8 4% deployment 0.6 2% 2020 RES target 0.4

RES share gross in final demand energy 0.2 0% 0.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 103: RES developments up to 2020 in Slovakia in relative terms Figure 104: RES (i.e. RES share in gross final energy demand) according to assessed cooperation by 2020 in cases (BAU and PR) Slovakia according to assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 2% RES generation 1% 1% RES-heating & cooling Geothermal 3% 5% by sector Large hydro 9% RES-electricity 7% 14% (of generation)(of Small hydro 13% 22% 23% 25 15% PV 12%

CSP E technology E 1.7 2.4 - 20 Tidal & wave

Wind onshore 72% 53% 48% RES

Wind offshore Breakdwon by 15 10.9 11.5 2012 2020 (BAU) 2020 (PR) 1.0 10 1% 1% 1% 1% 6.2 1% 4% 8% 8%

(of generation) (of Biogas 5 8.7 9.6 Biomass*

5.8 Geothermal H&C technology H&C 0 - Solar thermal

94% 91% 90% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 105: Breakdown of RES generation Figure 106: Breakdown of RES generation by technology and by sector in Slovakia in 2012 and by sector (electricity (up) and heating & cooling (down) in 2020 according to assessed cases Slovakia in 2012 and 2020 according to assessed cases (BAU (BAU and PR) and PR) Page 41 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Slovenia

The unclear funding situation due to annual degression rates for some technologies (e.g. PV) has led to major reduction of installed power and number of installation in Slovenia. As a consequence of unpredictable and unstable support for renewables in the various sectors RES target achievement is getting out reach in the BAU case (i.e. 22.5% compared to 25%, see Figure 107). If policy recommendations like the mitigation of barriers in the administrative processes from the integration of RES-E technologies and a RES-H&C strategy and support scheme (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented well in time, a sufficiently strong uptake of RES appears however feasible. Thus, as shown in Figure 108 in the PR scenario Slovenia would then turn from an importer (BAU case) to an exporter country concerning RES cooperation. Key options for doing so are RES in the electricity sector and heating & cooling sector (see Figure 109).

30% Historic and expected future RES cooperation 26.4% RES developments & Possible (virtual) RES exports 25% 25% 2020 RES target Feasible (virtual) RES exports 22.5% fulfillment Required (virtual) RES imports 20% 1.5 BAU 1.0 15% [%] PR 0.5 0.0 10% Historic [TWh/a] -0.5 deployment 5% -1.0 2020 RES target

RES share gross in final demand energy -1.5 0% -2.0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 107: RES developments up to 2020 in Slovenia in relative terms Figure 108: RES (i.e. RES share in gross final energy demand) according to assessed cooperation by 2020 in cases (BAU and PR) Slovenia according to assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* 5% RES generation 2% 0% 4% 2% Geothermal 4% 3% 2% RES-heating & cooling 10% by sector Large hydro 9% 2% RES-electricity 10% 11% 1% (of generation) (of Small hydro 13% 20 PV 10% 10%

CSP E technology E 1.8 - Tidal & wave 81% 63% 58% 15 RES Wind onshore

1.4 Wind offshore Breakdwon by 7.5 2012 2020 (BAU) 2020 (PR) 10 6.3 3% 1% 2% 2% 2% 1% 1% 6.8 0% 2% 5% 3% 3% Biogas 5 generation) (of 7.1 8.0 Biomass*

4.6 Geothermal H&C technology H&C 0 - Solar thermal

91% 92% 92% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 109: Breakdown of RES generation Figure 110: Breakdown of RES generation by technology and by sector by sector in Slovenia in 2012 and (electricity (up) and heating & cooling (down) in Slovenia in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 42 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Spain

In terms of stagnating RES deployment in previous years Spain is expected to fail in achieving its 2020 RES target under baseline conditions. As a consequence of currently unpredictable and unstable support for renewables in the various sectors, partly triggered by retroactive measures that have been taken for RES-E, and a generally limited access to finance, RES target achievement is getting out reach in the BAU case (i.e. 15.6% compared to 20%). Thanks to past initiatives for RES-E there is however progress in deployment expected in the near future. If policy recommendations like the skipping of the discriminatory new grid access fee for RES-E self-consumption (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)) are implemented well in time, a sufficiently strong uptake of RES appears however feasible. Thus, as shown in Figure 112 in the PR scenario Spain would then turn from an importer (BAU case) to an exporter country concerning RES cooperation. Key options for doing so are RES in the electricity sector and biofuels in transport sector (see Figure 113).

25% Historic and expected future RES cooperation RES developments & Possible (virtual) RES exports 20.6% 2020 RES target 20% 20% Feasible (virtual) RES exports fulfillment Required (virtual) RES imports 10 15% 15.6% BAU 0

[%] PR -10 10% -20

Historic [TWh/a] -30 deployment 5% -40 2020 RES target

RES share gross in final demand energy -50 0% -60 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 111: RES developments up to 2020 in Spain in relative terms Figure 112: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Spain according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 1% 4% 1% RES-heating & cooling Geothermal 1% 3% RES-electricity by sector Large hydro 8%

(of generation) (of Small hydro 250 PV 43% 29% 45% 36% 27%

CSP E technology E

- 51% 200 33.6 Tidal & wave 9% RES Wind onshore 16% 3% 7%

Wind offshore 4% 4% 3% 3% 2% Breakdwon 21.1 by 150 25.5 63.7 2020 (BAU) 2020 (PR) 2012 1% 48.8 56.1 5% 9% 1% 1% 1% 100 1% 17% 1% Biogas 128.4 generation) (of 50 93.9 93.8 Biomass*

Geothermal H&C technology H&C - Solar thermal 0 81%

93% 89% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 113: Breakdown of RES generation Figure 114: Breakdown of RES generation by technology and by sector by sector in Spain in 2012 and (electricity (up) and heating & cooling (down) in Spain in 2012 2020 according to assessed cases and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 43 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Sweden

As applicable from Figure 115 Sweden is already achieve its 2020 RES target of 49% by a tremendous growth from 2010 on. If currently implemented RES policy measures are kept in place and framework conditions may not change to the worse in forthcoming years (BAU case) a significant surplus appears feasible: : a RES share of about 54% can be expected under baseline and policy recommendation conditions. The small differences between both cases show, that the early success may also be the biggest barrier for further RES developments in all sectors (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014) for details). Under both assessed cases Swe- den is a candidate for exporting surpluses in RES deployment that are not needed for own target fulfilment, see Figure 116. Despite an increase of the surplus in RES deployment as indicated by the possible exports, feasible (virtual) RES export volumes are higher under baseline conditions due to a shortage in RES deployment at EU level (and, in turn, an increased demand).

55% Historic and expected future RES cooperation RES developments & 54% 53.9% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports 53% 53.6% fulfillment Required (virtual) RES imports 52% 25 BAU 51% 20 [%] 50% PR 15 49% 49%

Historic [TWh/a] 10 48% deployment

47% 2020 RES target 5 RES share gross in final demand energy 46% 0 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 115: RES developments up to 2020 in Sweden in relative terms Figure 116: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in Sweden according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation 1% 1% 1% RES-heating & cooling Geothermal 1% by sector Large hydro 4% RES-electricity 8% 17% 13% 5% 14% 12% (of generation)(of Small hydro 12% 250 PV 5%

CSP E technology E

9.4 7.0 - 200 Tidal & wave

8.3 Wind onshore 75% 64% 67% RES

Wind offshore Breakdwon by 150 116.6 120.9 106.4 2012 2020 (BAU) 2020 (PR)

100 13%

Biogas 15% 14% (of generation) (of 50 86.2 98.0 95.0 Biomass*

Geothermal H&C technology H&C 0 - Solar thermal

87% 85% 86% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 117: Breakdown of RES generation Figure 118: Breakdown of RES generation by technology and by sector by sector in Sweden in 2012 and (electricity (up) and heating & cooling (down) in Sweden in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR) (BAU and PR)

Page 44 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

United Kingdom5

For the UK it is not expected that its 2020 RES target can be achieved under baseline conditions. Likewise, the targets may not be fulfilled in the policy recommendation case but the target is missed by drastically lesser margin. Thus, the UK is a candidate for importing surplus RES deployment of other MS that are not needed for own target fulfilment (Figure 119). The energy produced from RES has to nearly double in 2020 to fulfil the UK target when compared to the baseline case.

16% Historic and expected future RES cooperation 15% RES developments & 14% Possible (virtual) RES exports 2020 RES target Feasible (virtual) RES exports 12.6% 12% fulfillment Required (virtual) RES imports 0 10% BAU -20 8% [%] 7.8% PR -40 6% -60

Historic [TWh/a] 4% deployment -80 2% 2020 RES target

-100 RES share gross in final demand energy 0% -120 2010 2012 2014 2016 2018 2020 Energy productionfrom 2020 by RES BAU PR Figure 119: RES developments up to 2020 in the UK in relative terms Figure 120: RES cooperation by 2020 (i.e. RES share in gross final energy demand) according to assessed in the UK according to cases (BAU and PR) assessed cases (BAU and PR)

Breakdown of Biogas 2012 2020 (BAU) 2020 (PR) Biofuels for transport Biomass* RES generation Geothermal RES-heating & cooling 15% by sector Large hydro RES-electricity 15% 12% 9% (of generation)(of Small hydro 17% 28% 13% 200 PV 13% 3% CSP 1% E technology E 23% 7% 40.0 - 6% Tidal & wave 29% 46% 1% Wind onshore 36% 150 RES 11% 4% 3%

Wind offshore 3% 2% 3% Breakdwon 43.3 by 22.9 2012 2020 (BAU) 2020 (PR) 100 28.4 6% 9% 8% 6% 1% 13% 1% 15.5 112.4 10% 13% 50 14.2 generation) (of Biogas 69.3 Biomass*

40.2 Geothermal H&C technology H&C 0 - Solar thermal

75% 80% 78% Energyproduction from RES [TWh/a]

RES Heat pumps

2012 2020 (BAU) 2020 (PR) Breakdwon by Figure 121: Breakdown of RES generation Figure 122: Breakdown of RES generation by technology and by sector by sector in the UK in 2012 and (electricity (up) and heating & cooling (down) in the UK in 2020 according to assessed cases 2012 and 2020 according to assessed cases (BAU and PR)

5 The results of the model-based RES policy assessment provide a very pessimistic view on UK’s ability to achieve 2020 RES targets domestically, in particular if the BAU case is considered. Two issues appear of relevance in this respect: Firstly, the detailed design of the proposed new CfD scheme has not been applicable when conducting this analysis (and partly there is still unclearness nowadays). Thus, in the BAU case, reflecting only currently implemented (and not planned or intended possible future schemes) the assumption had to be taken that no dedicated support would be applicable for new RES-E installations in the UK beyond 2020. Secondly, the recent uptake of offshore wind power has been underestimated in both scenarios since last year’s statistics drew a less optimistic picture than latest data as pub- lished after completion of the modelling work.

Page 45 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

A closer look to Figure 121 indicates that energy produced from RES has to increase in each sector. This requires that policy recommendations like a clear strategy for the RES-E sector are implemented in time. Issues with the Contracts for Difference (CfD) policy and a transition from Renewable Obligations have to be resolved (see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014)).

Page 46 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

Conclusions and Recommendations

Key conclusions from the model-based assessment of 2020 RES target achievement are:

The Green-X model was used to assess the feasibility of the achievement of the 2020 RES targets for selected policy pathways (Business-As-Usual (BAU case) vs. Policy Recommenda- tions (PR case)) Under current RES support frameworks and related parameters (BAU case), only a RES share of 17.9% appears feasible at EU-27 level. Nine out of the assessed 27 Member States, e.g. Austria, Denmark or Italy, appear well on track. In another four Member States (i.e. Ger- many, Finland, Ireland and Slovakia) there are doubts whether 2020 targets can be reached with already implemented measures, while the remainder of fourteen Member States can be classified as “not well on track.” Improving national RES policies, e.g. according to the recommendations provided within this project, appears essential for several Member States to bring them back on track. If correc- tive measures are taken and implemented well in time, all Member States still have the possibility to achieve their 2020 RES targets. The majority of countries would even exceed its obligation, and there are good reasons for doing so since, as discussed above, additional RES deployment contributes well to increase supply security and local employment, to name only some additional benefits. Finally, by 2020 five Member States (i.e. France, Luxem- bourg, Malta, the Netherlands and the UK) make use of RES cooperation mechanisms as a buyer while all others act as (possible) seller. Thus, this could increase RES deployment to up to 21.0% at EU-27 level.

The Keep on Track! consortium recommends to: Adopt an ambitious binding renewable energy target for 2030, including binding national targets, alongside energy efficiency and greenhouse gas emissions targets. Ensure a predictable and stable legislative framework for RES at the national level and in particular to avoid any retroactive changes to existing support schemes. Increase the focus on the RES-H&C and RES-T sectors, which are strongly dependent on the existence of a supportive and comprehensive framework. Revise the guidelines on State aid for environmental protection and energy 2014-2020 to make sure they are consistent with the RES Directive and support the achievement of its objectives. Re-establish a clear supportive framework for RES-T at European level in order to remove the current policy vacuum. Retain the focus on the removal of administrative barriers.

Page 47 2020 RES scenarios for Europe –are Member States well on track for achieving 2020 RES targets?

References

DIRECTIVE 2001/77/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market DIRECTIVE 2003/30/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport DIRECTIVE 2009/28/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently re- pealing Directives 2001/77/EC and 2003/30/EC European Commission (2013): EU energy, transport and GHG emissions trends to 2050: Reference Scenario 2013. DG Energy, DG Climate Action and DG Mobility and Transport, December 2013. Keep-on-Track! (2014): EU Tracking Roadmap 2014. A report compiled by the whole project consortium within the Intelligent Energy Europe project Keep-on-Track!, coordinated by Eufores and Eclareon. Brussels, Belgium, 2014. Accessible at www.keepontrack.eu. Resch G., A. Ortner, C. Panzer (2014): 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts. A report compiled within the Intelligent Energy Europe project Keep-on- Track!, coordinated by Eufores and Eclareon. TU Vienna, Energy Economics Group, Vienna, Austria, 2014. Accessible at www.keepontrack.eu.

Page 48 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

Annex 1 – Method of approach / Key assumptions

The method of approach and related key assumptions for the modelling work undertaken within this study will be discussed in detail subsequently.

Constraints of the model-based policy analysis

The policy assessment tool: the Green-X model As in previous projects such as FORRES 2020, OPTRES or PROGRESS the Green-X model was applied to perform a detailed quantitative assessment of the future deployment of renewable energy on country-, sector- as well as technology level. The core strength of this tool lies on the detailed RES resource and technology representation accompanied by a thorough energy policy description, which allows assessing various policy options with respect to resulting costs and benefits. A short characterization of the model is given below, whilst for a detailed description we refer to www.green-x.at.

Short characterisation of the Green-X model

The model Green-X has been developed by the Energy Economics Group (EEG) at the Vienna University of Technology under the EU research project “Green-X–Deriving optimal promotion strategies for increasing the share of RES-E in a dynamic European electricity market" (Contract No. ENG2-CT-2002-00607). Initially focussed on the electricity sector, this modelling tool, and its database on renewable energy (RES) potentials and costs, has been extended to incorporate renewable energy technologies within all energy sectors. Green-X covers the EU-27, and can be extended to other countries, such as Turkey, Croatia and Norway. It allows the investigation of the future deployment of RES as well as the accompanying cost (including capital expenditures, additional generation cost of RES compared to conventional options, consumer expenditures due to applied supporting policies) and benefits (for instance, avoidance of fossil fuels and corresponding carbon emission savings). Results are calculated at both a country- and technology-level on a yearly basis. The time- horizon allows for in-depth assessments up to 2030. The Green-X model develops nationally specific dynamic cost-resource curves for all key RES technologies, including for renewable electricity, biogas, biomass, biowaste, wind on- and offshore, hydropower large- and small-scale, solar thermal electricity, photovoltaic, tidal stream and wave power, geothermal electricity; for renewable heat, biomass, sub-divided into log wood, wood chips, pellets, grid-connected heat, geothermal grid-connected heat, heat pumps and solar thermal heat; and, for renewable transport fuels, first generation biofuels (biodiesel and bioethanol), second generation biofuels Page 49 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

(lignocellulosic bioethanol, biomass to liquid), as well as the impact of biofuel imports. Besides the formal description of RES potentials and costs, Green-X provides a detailed representation of dynamic aspects such as technological learning and technology diffusion. Through its in-depth energy policy representation, the Green-X model allows an assessment of the impact of applying (combinations of) different energy policy instruments (for instance, quota obligations based on trad- able green certificates / guarantees of origin, (premium) feed-in tariffs, tax incentives, investment incentives, impact of emission trading on reference energy prices) at both country or European level in a dynamic framework. Sensitivity investigations on key input parameters such as non-economic barriers (influencing the technology diffusion), conventional energy prices, energy demand developments or technological progress (technological learning) typically complement a policy assessment. Within the Green-X model, the allocation of biomass feedstock to feasible technologies and sectors is fully internalised into the overall calculation procedure. For each feedstock category, technology options (and their corresponding demands) are ranked based on the feasible revenue streams as available to a possible investor under the conditioned, scenario-specific energy policy framework that may change on a yearly basis. Recently, a module for intra-European trade of biomass feedstock has been added to Green-X that operates on the same principle as outlined above but at a European rather than at a purely national level. Thus, associated transport costs and GHG emissions reflect the outcomes of a detailed logistic model. Consequently, competition on biomass supply and demand arising within a country from the conditioned support incentives for heat and electricity as well as between countries can be reflected. In other words, the supporting framework at MS level may have a significant impact on the resulting biomass allocation and use as well as associated trade. Moreover, Green-X was recently extended to allow an endogenous modelling of sustainability regulations for the energetic use of biomass. This comprises specifically the application of GHG constraints that exclude technology/feedstock combinations not complying with conditioned thresholds. The model allows flexibility in applying such limitations, that is to say, the user can select which technology clusters and feedstock categories are affected by the regulation both at national and EU level, and, additionally, applied parameters may change over time.

Overview on assessed cases

Figure 123: Overview on assessed cases

The RES policy framework is a key input to this analysis whereby two scenarios were in focus (see Figure 123): a business-as-usual (BAU) case where the assumption was taken that RES policies are applied as currently implemented (without any adaptation) until 2020, and a policy recommenda-

Page 50 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

tions (PR) scenario, indicating a pathway for meeting (or even exceeding) the 2020 RES targets, that builds on the policy recommendations derived within this project, see EU Tracking Roadmap 2014 (Keep-on-Track!, 2014).

Note that in the PR case RES cooperation is an important element for overall RES target achievement for certain Member States. It comes however only into play in exceptional cases when national target achievement appears not feasible even with high financial incentives.6

Criteria for the assessment of RES support schemes

price, costs [€/MWh] MC pMC

Market clearing Producer surplus (PS) price = price for certificate

Generation Costs (GC) quantity [GWh/year]

Quota Q Support expenditures (transfer costs for consumer/ society) = PS + GC – pC * Q = ( pMC – pC ) * Q

pC ... market price for p MC ... marginal price for MC ... marginal (conventional) RES-E (due to generation costs electricity quota obligation)

Figure 124: Basic definitions of the cost elements (illustrated for a RES trading system)

Support instruments have to be effective in order to increase the penetration of RES and efficient with respect to minimising the resulting public costs – i.e. the transfer cost for consumer (society), subsequently named support expenditures – over time. The criteria used for evaluating the various policy instruments are based on two conditions:

Minimise generation costs

6 As threshold with respect to financial RES support across Member States a high value is used – i.e. differences in country-specific support per MWh RES are limited to a maximum of 30 €/MWhRES. Consequently, if support in a country with temporarily limited RES potentials and / or an ambitious RES target exceeds the upper boundary, the remaining gap to its RES target would be covered in line with the flexibility re- gime as defined in the RES Directive through (virtual) imports from other countries that achieve a surplus in RES deployment.

Page 51 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

This objective is fulfilled if total RES-E generation costs (GC) are minimised. In other words, the system should provide incentives for investors to select technologies, scales and sites such that generation costs are minimised.

Reduce producer profits to an adequate level Once such cost-efficient systems have been identified, the next step is to evaluate various implementation options with the aim of minimising the transfer costs for consumer / society.7 This means that feed-in tariffs, investment incentives or RES trading systems should be designed in such a way that public transfer payments are also minimised. This implies lowering generation costs as well as producer surplus (PS)8.

In some cases it may not be possible to reach both objectives simultaneously – minimise generation costs and producer surplus – so that compromises have to be made. For a better illustration of the cost definitions used, the various cost elements are illustrated in Figure 124.

Overview on key parameters

In order to ensure maximum consistency with existing EU scenarios and projections the key input parameters of the scenarios presented in this report are derived from PRIMES modelling and from the Green-X database with respect to the potentials and cost of RES technologies (see Resch et al. (2014)). Table 4 shows which parameters are based on PRIMES and which have been defined for this study. More precisely, the PRIMES scenario used is the reference scenario as of 2012 (EC, 2013),

Table 4: Main input sources for scenario parameters

CO2 intensity of sectors RES potential (Green-X database) Biomass trade specification Technology diffusion Learning rates

7 Support expenditures - i.e. the transfer costs for consumers (society) – due to RES support are defined as the financial transfer payments from the consumer to the RES producer compared to the reference case of consumers purchasing conventional electricity on the power market. This means that these costs do not consider any indirect costs or externalities (environmental benefits, change of employment, etc.). Within this report support expenditures (due to RES support) are either expressed in absolute terms (e.g. billion €), related to the stimulated RES generation, or put in relation to the total electricity / energy consumption. In the latter case, the premium costs refer to each MWh of electricity / energy consumed.

8 The producer surplus is defined as the profit of green electricity generators. If, for example, a green producer receives a feed-in tariff of 60 € for each MWh of electricity sold and generation costs are 40 €/MWh, the resulting profit would be 20 € for each MWh. The sum of the profits of all green generators equals the producer surplus.

Page 52 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

8.4.1 Energy demand Figure 125 depicts the projected energy demand development at EU 28 level according to the PRIMES reference scenario with regard to gross final energy demand (right) as well as gross electricity demand (left).

16,000 5,000

14,000 4,500 4,000 12,000 3,500 10,000 3,000 PRIMES reference 8,000 case 2,500

6,000 2,000 1,500

Gross demand final energy Gross 4,000 Gross electricityGross demand [TWh] (with aviation reduction) [TWh] (with aviation 1,000 2,000 500

0 0

2025 2025 2015 2020 2030 2035 2040 2045 2050 2010 2015 2020 2030 2035 2040 2045 2050 2010 Figure 125: Comparison of projected energy demand development at European (EU-28) level – gross electricity demand (left) and gross final energy demand (right). (Source: PRIMES scenarios)

A comparison to alternative PRIMES demand projections at EU 28 levels shows the following trends: The PRIMES reference case as of 2013 (EC, 2013) draws a modified picture of future demand pat- terns compared to previous baseline and reference cases. The impacts of the global financial crisis are reflected, leading to a reduction of overall gross final energy demand in the short term, and moderate growth in later years towards 2020. Beyond 2020, according to the PRIMES reference case (where the achievement of climate and RES targets for 2020 is assumed) gross final energy demand is expected to stagnate and then moderately decrease.

For the electricity sector, demand growth is generally more pronounced. The distinct PRIMES cases follow a similar pattern and differences between them are moderate – i.e. all cases expect electricity consumption to rise strongly in later years because of cross-sectoral substitutions: electricity is expected to make a stronger contribution to meeting the demand for heat in the future, and similar substitution effects are assumed for the transport sector as well.

Complementary to above, a closer look at the Member State level is taken next. Thus, Figure 126 provides a comparison of actual 2012 data and projected 2020 gross final energy demand by Member State. As applicable from this graph, for several countries (e.g. France, Germany, UK, Netherlands or Spain) projected gross final energy demand by 2020 is, in accordance with the overall trend at aggregated (EU) level, below current (2012) levels. For other Member States like Cyprus, Czech Republic, Greece or Poland PRIMES scenarios show a comparatively strong increase in demand compared to today. This has important implication on country-specific RES target achievement as discussed in section 0.

Page 53 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

2,500 2012 (actual data (Eurostat)) 2020 (PRIMES reference case) 2,000

1,500

1,000 Gross demand final energy Gross

(with aviation reduction) [TWh] (with aviation 500

SI FI

ES SE

FR PT

HU MT

Figure 126: Comparison of actual 2012 and projected 2020 gross final energy demand by Member State. (Source: Eurostat and PRIMES scenarios)

8.4.2 Conventional supply portfolio The conventional supply portfolio, i.e. the share of the different conventional conversion technologies in each sector, is based on PRIMES forecasts on a country-specific basis. These projections of the portfolio of conventional technologies particularly influence the calculations done within this study on the avoidance of fossil fuels and related CO2 emissions. As it is beyond the scope of this study to analyse in detail which conventional power plants would actually be replaced, for instance, by a wind farm installed in the year 2023 in a certain country (i.e. either a less efficient existing coal-fired plant or possibly a new highly-efficient combined cycle gas turbine), the following assumptions are made:

Bearing in mind that fossil energy represents the marginal generation option that determines the prices on energy markets, it was decided to stick to the sector-specific conventional supply portfolio projections on a country level provided by PRIMES. Sector- as well as country-specific conversion efficiencies derived on a yearly basis are used to calculate the amount of avoided primary energy based on the renewable generation figures obtained. Assuming that the fuel mix is un- affected, avoidance can be expressed in units of coal or gas replaced.

A similar approach is chosen with regard to the avoidance of CO2 emissions, where the basis is

the fossil-based conventional supply portfolio and its average country- and sector-specific CO2 intensities that may change over time. In the following, the derived data on aggregated conventional conversion efficiencies and the CO2 intensities characterising the conventional reference system (excl. nuclear energy) are presented.

Figure 127 shows the dynamic development of the average conversion efficiencies as projected by PRIMES for conventional electricity generation as well as for grid-connected heat production. Con- version efficiencies are shown for the PRIMES reference scenario (EC, 2013). Error bars indicate the range of country-specific average efficiencies among EU Member States. For the transport sector, where efficiencies are not explicitly expressed in PRIMES’ results, the average efficiency of the re- finery process used to derive fossil diesel and gasoline was assumed to be 95%.

Page 54 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

100% 90%

[%] 80% Electricity - PRIMES 70% Average efficiency reference case 60% at EU level 50% 40% Bandwith of efficiencies 30% due to differing country- specific circumstances Heat (grid) - 20% PRIMES reference case

of of conventionalenergy production 10% Ranges of average conversion efficiencies 0% 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 127: Country-specific average conversion efficiencies of conventional (fossil-based) electricity and grid-connected heat production in the EU28

Source: PRIMES scenarios (EC, 2013)

1.4 1.3 Electricity - PRIMES 1.2 reference case 1.1 1.0

0.9 Average intensity Heat (grid) - PRIMES 0.8 at EU level reference case 0.7 Bandwith of intensities due to differing country- 0.6 specific circumstances 0.5 Heat (non-grid) - PRIMES 0.4 reference case 0.3 0.2

energyproduction [t CO2/MWhoutput] 0.1 Transport - PRIMES reference case 0.0 Ranges of average CO2 intensities of conventional 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Figure 128: Country-specific average sectoral CO2 intensities of the conventional (fossil-based) energy system in the EU28.

Source: PRIMES scenarios (EC, 2013)

The corresponding data on country- and sector-specific CO2 intensities of the conventional energy conversion system according to the PRIMES reference scenario are shown in Figure 128. Error bars again illustrate the variation across countries.

Page 55 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

8.4.3 Fossil fuel and carbon prices The country- and sector-specific reference energy prices used in this analysis are based on the primary energy price assumptions applied in the latest PRIMES reference scenario that has also served as basis for the Impact Assessment accompanying the Communication from the European Commis- sion “A policy framework for climate and energy in the period from 2020 to 2030” (COM(2014) 15 final). As shown in Figure 129 generally only one price trend is considered – i.e. a default case of moderate energy prices that reflects the price trends of the PRIMES reference case. Compared to the energy prices as observed in 2011, all the price assumptions appear comparatively low, even for the later years up to 2050.

60 Coal /MWh] € 50

40 Oil

30 Gas

20 Fossil energy prices energy [ Fossil 10

2015 2020 2025 2030 2035 2040 2045 2050 2010 Figure 129: Primary energy price assumptions in €/MWh

Source: based on PRIMES scenarios (EC, 2013)

100 90 80

ETS post ETS 2020))post -

] 60 2 PRIMES reference

50 case

/t /t CO € [ 40 30 20

10 Carbon(&prices Non (ETS

2015 2020 2025 2030 2035 2040 2045 2050 2010

Figure 130: CO2 price assumptions in €2010/ton

Source: PRIMES scenarios (EC, 2013)

The CO2 price in the scenarios presented in this report is also based on recent PRIMES modelling, see Figure 130. Actual market prices for EU Allowances have fluctuated between 6 and 30 €/t since

Page 56 2030 RES targets for Europe - a brief pre-assessment of feasibility and impacts

2005 but remained on a low level with averages around 7 €/t in the first quarter of 2012. In the model, it is assumed that CO2 prices are directly passed through to electricity prices as well as to prices for grid-connected heat supply.

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