Renewable Energy for Development

S TOCKHOLM ENVIRONMENT INSTITUTE – N EWSLETTER OF THE CLIMATE AND E NERGY P ROGRAMME

SEI • May 2007 Vol. 20 No. 1 ISSN 1101-8267

SPECIAL THEME ISSUE: RENEWABLE ENERGY IN THE EU A Testing Ground for a Global Sustainable Energy Future

As the European Union celebrates its fiftieth birthday, the rapid expansion of renewables in the EU, but at the crea- occasion seems appropriate for devoting an edition of this tion of broad international platforms for technology trans- newsletter to an overview of renewable energy in the EU. fer and deployment. National and regional approaches are When the European Economic Community was formed in 1957, no longer sufficient in a global economy. energy was among its core concerns. Its predecessor, the Coal The EU has emerged as the world leader on climate policy and Steel Union, was focused on Europe’s major energy source and sustainable energy in recent years through several si- and its major industrial energy consumer. The creation of the multaneously occurring institutional processes, particularly European Atomic Energy Community (EURATOM) alongside the integration of energy markets, the drive to approve and the EEC in 1957 was based on the assumption that the peace- implement the Kyoto Protocol, and the establishment of am- ful use of nuclear energy was a key priority for European bitious targets for renewable energy. Focusing on electric development. power (and heat) production, this issue of the newsletter Fifty years later, the EU is facing a rather different energy summarises the variety of renewable technology deployment challenge, in the form of climate change, the return of energy platforms, policy options and national/regional innovation security issues, and the goal of a competitive and sustain- systems used across the EU and its 27 Member States. It is able energy system for the Community. The policies and in- this wealth of options and platforms that makes the EU a stitutions established in recent years are aimed not only at a testing ground for a global sustainable energy future. Europa, 2007 The Europa tram

In this issue: Overview of Renewable Energy in the EU 2 Ireland and UK ...... 4 Nordic Countries ...... 5 Baltic Countries ...... 7 Poland ...... 8 Central Europe ...... 9 Austria ...... 9 Germany ...... 10 Benelux Countries ...... 11 France ...... 12 The Iberian Peninsula ...... 12 Mediterranean Countries ...... 14 European Community, 2007 European Community, Romania and Bulgaria ...... 16 Overview of Renewable Energy in the EU as well as non-renewable sources (see Figure 3). Energy and Climate policy in the Euro- to 20% between 1990 and 2004. Due to Before the 1990s, the overwhelming pean Union centres on the need to rec- robust electricity demand during much majority of renewable energy in the power oncile three fundamental goals: of this period, all fuels except oil regis- sector was hydro-based; large hydro- sustainability, competitiveness and en- tered an absolute increase; the use of oil power plants that were built several de- ergy security. The growing concern for power generation has been disappear- cades ago provided the only major con- over climate change, along with the ing gradually ever since the oil crises of tribution to electricity generation. Some market opening in the power sector, the 1970s (Figure 1). countries had initiated bioenergy pro- have contributed to a number of recent In spite of the many advances in re- grammes in the 1980s, but their total shifts in the sources of supply. Until the newable markets, the current energy contribution remained small. In the past 5-10 years, wind capacity was in- structure within the EU remains heavily 1990s, several renewable technologies significant, but as of 2004 it represented dependent on fossil fuels, including a were mature and policy support mecha- about 5% of total capacity. The capac- significant amount of imported oil and nisms had evolved sufficiently that ma- ity of thermal, hydro, and nuclear - gas. A reduction in the reliance on im- jor commercial investment accelerated which had long provided the founda- ported fossil fuels is a vital element in tion for EU power supply - all decreased the transition to a sustainable and secure Acknowledgements in share. energy system; this transition is already This special edition of the newslet- The supply mix has become more reflected in the policy instruments and ter was assembled, written and ed- diverse; in 1990, two sources - coal and patterns of investment of recent years, ited by Francis X. Johnson and nuclear - accounted for 70% of power with the strong emphasis on low car- Fiona Zuzarte. Thanks are extended generation, whereas by 2004, these two bon energy sources, particularly natural to the following persons and sources supplied only 60%. Natural gas gas, biomass, and wind. Another impor- organisations that made valuable con- has become the main fuel of choice at tant area of deployment is cogeneration tributions to this newsletter: the margin; the share of natural gas in of heat and power, which greatly im- power production increased from 8% proves the efficiency of biomass plants Maarten J. Arentsen Adam Buchhorn Danae Diakoulaki 3500 Rocio A. Diaz-Chavez Daniele Guidi 3000 Paula Kivimaa Benigna Kiss Other Katarina Korytarova 2500 Volkmar Lauber Biomass Jean-Christian Marcel 2000 Nuclear Gergana Miladinova Hy dro Martynas Nagevicius Miles Perry 1500 Gas Diana Urge-Vorsatz Oil Aviel Verbruggen 1000 Coal Malta Energy Efficiency and Renewable Energies Association 500 References that were cited in this is- 0 sue can be found at: 1990 1995 2000 2004 http://www.sei.se/red/red-vol20-no1- references.html Figure 1: Electric power generation in the EU-25 by source (TWh); (Source: EUROSTAT)

The Stockholm Environment Institute (SEI) is an is also available through the SEI website. ISSN 1101-8267 international research institute focusing on sustainable The views expressed in the articles in this newsletter Printed on chlorine-free, 100 % recycled paper development. The Institute works through an interna- are those of the authors and not necessarily those of SEI tional network of centres, associates, and field staff nor of Sida. around the world. For further information contact Solveig Nilsson, The Climate and Energy Resources Programme is SEI. [email protected] concerned with improving access to environmentally friendly energy services, promoting renewable energy Managing Editor: Anders Arvidson Kräftriket 2B and energy efficiency, and advancing global cooperation Editor: Francis X. Johnson SE-106 91 Stockholm, Sweden on climate change. Publisher: Arno Rosemarin Tel +46 8 674 7070, This newsletter is supported by the Swedish In- Fax +46 8 674 7020 Layout: SEI/Solveig Nilsson ternational Development Cooperation Agency E-mail [email protected] (Sida). The newsletter is distributed free of charge and Printer: Elanders Gotab www.sei.se

2 Stockholm Environment Institute renewables, sets a target of 21% of gross electricity on the other consumption in 2010 to come from re- hand, more newable energy sources in the EU (Di- than tripled rective 2001/77/EC). Indicative targets for from 1990 to member States are specified in the Direc- 2004. tive, and Member States must report on In order progress achieved each year. The targets for renew- vary considerably, based on current shares ables to be- of renewable energy consumption along come fully with the physical reality of wide variations competitive, in the natural endowments - and thus the continued ultimate potential of - renewable resources market ex- in different countries (see Figure 4). Figure 2: Experience curves for energy power technology in the EU, In conjunction with renewable energy 1980-1995; (Source: IEA, 2000) pansion is needed to in- directives and policies, legislation was de- duce learning effects and bring down veloped to allow exemptions in the taxa- considerably. A renewables revolution costs, as occurred from 1980-95 (Fig- tion of energy sources (Directive 2003/ was launched in the EU, with wind and ure 2). Further innovation in technol- 96/EC). The Directive allows Member biomass leading the way. Power genera- ogy development and deployment is States to apply exemptions or reductions tion from hydro sources was relatively needed. The Renewables Directive in the level of taxation on renewable en- stable from 1990 to 2004. The “new” ergy sources, including solar, wind, tidal, geothermal, biomass, and waste. These Combined Heat and Power (CHP) generation tax concessions are considered state aids, which may not be implemented without The European Commission target was to increase the share of CHP electric- prior EC Commission authorisation, in or- Hard coal and Renewable Other fuels derived ity in the EU from 9% in 1994 to 18% der to avoid undue distortion of competi- 10% 9% products 19% in 2010. CHP has great potential for Blast- tion and over-compensation. furnace gas energy savings and reductions in Rapid movement along the technology 1% greenhouse gas emissions, having the Coke-oven gas Lignite and learning curve has resulted in near-com- 1% derived advantage of thermal efficiency. The products conversion of the fuel to useful energy petitive generation costs for wind and bio- 8% Refinery gas 3% can be as high as 80-90% compared to mass, even without considering environ- Residual fuel conventional electricity generation of mental impacts. The use of indigenous re- oil 25-45%. Of the fuels used at the 2002 7% newable resources stimulates innovation, Gasoil EU level, natural gas provided the main Natural gas 1% share (41%), while renewables con- creates jobs, contributes to Kyoto com- 41% tributed 10% . mitments, and reduces the need for energy imports. Short-term imports from de- Figure 3: CHP plant fuel input, EU-25, 2002 (%) veloping countries, which have a tremen- dous resource and potential for biofuels, could be considered a stimulus for the bio- 78.1 mass fuel market in these regions, while contributing to global sustainable devel- 2005 2010 60 opment. Within the EU, the number and

49.3 quality of the businesses and jobs created

39 is generally much greater for small-to-me- 33 33.6 31.5 31 29.4 29 dium scale renewable sources than for 25 21 21

20.1 capital-intensive large-scale options (i.e. 13.2 12.5 hydro, coal and nuclear). Renewable en- 11 10 9 7 8 6 5.7 5.1 7.5 3.6 6 5 ergy is thus recognised as being funda- 57.9 54.3 48.4 35.8 28.2 26.9 24.2 16.5 16 15 14.1 11.8 11.3 10.5 10 7.5 6.8 4.6 4.5 4.3 3.9 3.2 2.9 2.8 1.1 - - 14 mental to the goals of competitiveness, Italy Malta Latvia Spain EU-27 Ireland Poland France Cyprus Austria Finland Greece sustainability, and security. Estonia Sweden Belgium Bulgaria Hungary Slovenia Slovakia Portugal Romania Lithuania Denmark Germany Netherlands Luxembourg Czech Republic United Kingdom Figure 4: Ratio of electricity from renewable energy to gross electricity consumption (and indicative targets); (Source: EUROSTAT)

Renewable Energy for Development, May 2007, Vol. 20, No. 1 3 Ireland The Irish energy system is characterised by import dependence on oil and reliance on fossil-fuel generated electricity, dominated by oil, coal and gas. There is a small amount of hydro and biomass and a growing market in wind power. Demand for energy has been increasing rapidly in recent years due to the surge of economic growth that earned Ireland the nickname “Celtic Tiger”. The Irish electricity market is very different from electricity markets elsewhere in the EU, due to the small size of the market and its lack of integration into the wider EU market. Ireland has a concen- Photo: European Community, 2007 Photo: European Community, tration of load in the east with extensive Use of renewable technologies in Dublin, Ireland rural lines in the west and a special geographical position at the end of Western Europe’s gas supply. There will be a con- United Kingdom Renewable energy remains small, al- tinuing need for new capacity over the The UK energy sector has undergone though there has been more investment coming decade. In the 1960s, the limited considerable restructuring since the oil in wind power and biomass in recent hydro resources provided much of the crises of the 1970s, switching from de- years. electricity demand. But with rising dependence on coal to natural gas and mand and partly due to forecasting er- nuclear. More recently, the UK has gone Energy policy rors, a large amount of capacity was from being a net exporter to a net im- In order to improve its competitive po- built in the 1970s, including coal-fired porter of primary energy. Goals of re- sition, reduce reliance on imported en- power stations to reduce the dependence ducing CO emissions, ensuring secu- 2 ergy, and meet its Kyoto commitments, of the economy on oil. Peat has been one rity of supply and improving long-term several key policy instruments have been of the few domestic fuels available, but competitiveness of the economy have used to facilitate increased investment is now declining and ceasing to be a vi- increased support for demand side en- in renewables and energy efficiency. able option due to socio-economic and ergy efficiency and renewable energy. environmental concerns. The electricity and heat markets in the 1. The climate change Levy (CCL): This Security of supply has been improved UK are highly centralised. The high volt- is a surcharge levied on each unit of en- with connections to Northern Ireland, age national grid transmits electricity ergy used in the commercial, industrial which in turn is connected to the UK. from large power stations, located far and public sectors. Companies can avoid Further transformation is expected with from demand sources. The government paying the CCL by consuming electric- a planned Ireland-Wales inter-connector. is exploring ways to increase the use of ity that comes from eligible renewable Ireland currently generates about 5% of distributed energy so as to reduce trans- sources or CHP schemes and increas- its electricity from renewable sources, mission losses and vulnerability of the ing customer’s willingness to pay for this mostly from hydro with smaller contri- system to large disruptions. energy. A number of climate change butions from wind and landfill gas. Ire- The 1990 liberalisation of power mar- agreements have been negotiated with land is estimated to have the highest per kets created the legal framework to use industry bodies, requiring exchanging eli- capita potential of wind power of any gas as a fuel in electricity generation. gible energy, efficiency or emissions tar- European country and installed capacity Advances in technology and abundant gets in return for an 80% discount on is expected to exceed 700 MW in 2007. North Sea gas were the factors that led the CCL. Other relevant renewable sources of en- to the rapid deployment of gas powered 2. The European Emissions Trading ergy include biomass and solar. stations, the so-called “dash-for-gas”. A Scheme (EU-ETS): The ETS is the Eu- second important feature of liberalisation rope-wide greenhouse gas emissions was the reform of electricity trading and trading scheme that creates a European balancing measures to ensure that sup- carbon price and payment or income ply matches demand. Initially, electric- traded if industry emissions vary from ity prices fell, but have recently risen their awarded allowances. Overall, the due to reliance on imported natural gas. UK National Allocation Plan required an

4 Stockholm Environment Institute 8% cut in emissions from 2005-2007, nuclear power as a low-carbon genera- of renewable energy technology, climate although a 28% cut was required from tor of electricity. The risks and benefits mitigation and market liberalisation are large power stations. of increased investment are being key components of energy policy-mak- 3. The Non-Fossil Fuel Obligation weighed by the private sector actors. ing in the Nordic Countries. Given the UK’s continued substantial (NFFO): The NFFO combined a Fossil generation of electricity from coal, co- Fuel Levy paid on all electricity bills with Denmark firing with biomass is one of the sim- a feed-in tariff system that awards a pre- Discovery of oil and natural gas in the plest and most commercially viable forms mium price to generators of renewable North Sea in the early 1980s helped to of renewable electricity. The RO eligibil- electricity. turn Denmark from an energy importer ity of co-firing is strictly capped at 10% to an energy exporter; it has also re- 4. The Renewables Obligation (RO): The in order not to create major competition sulted in substitution of coal with natu- RO is the long-term replacement for the with other renewable energy sources. ral gas. Gas and biomass have contrib- NFFO. It is an obligation that requires However favourable treatment is given uted to a major expansion of CHP and electricity suppliers to provide a mini- to energy crops, which can be co-fired district heating, resulting in significant mum percentage of their supply from eli- without restriction. gible renewable sources. A market in trad- improvements in the efficiency of de- able Renewable Obligation Certificates is livering heat and hot water. Major developments in the technical and com- created. Nordic Countries mercial development of wind turbines In addition, a government-funded in- Denmark, Sweden and Finland enjoy re- have made Denmark a world leader. dependent company, The Carbon Trust, liable power with a diverse mix of Furthermore, significant investments in aims to create partnerships between the sources and an integrated and liberalised renewable energy and efficiency have public and business sectors, stimulating market that allows consumer choice. The improved the energy and carbon inten- innovation in favour of a transition to- Nordic Power exchange, or Nordpool, sity of the Danish economy; Denmark wards a low carbon economy. was the first international commodity ex- has the lowest energy intensity in the change for electric power. Due to sea- entire EU. Future technologies sonal and annual fluctuations in hydro The electric power sector has been The Large Combustion Plants Directive power availability, trade of electricity is diversified in the last 15 years, includ- aims to close coal plants with capacity important to the markets of Sweden and ing a 1997 ban on expansion of oil and of about 8GW. The speed at which clean Norway; their markets are connected coal-based power production. The share coal technology and carbon capture and with those of Denmark and Finland, both of coal has halved to 46%, with natural storage can be commercialised will have of which have a significant amount of gas contributing 25%, and renewables a major impact on the future of coal in thermal capacity. increasing from 3% to 25%. Natural gas the UK. The current energy systems have been use for heating is also increasing in the UK’s nuclear power is scheduled to evolving to address energy security, com- domestic sector. close over the next 20 years. However, petitiveness and sustainability concerns. Denmark was one of the first coun- there is increasing acknowledgement of Demand-side energy efficiency, support tries in the world to introduce CO2 quo- Photo: Stavros Dimas, European Community, 2007 Dimas, European Community, Photo: Stavros Off shore wind turbines, Denmark

Renewable Energy for Development, May 2007, Vol. 20, No. 1 5 den appears to be on track for meeting the 5.75% EU biofuels target for 2010. Efficiency has received high priority in Swedish energy policy. There have been extensive efforts in improving energy efficiency and conservation in heating homes, lighting, and use of efficient appliances. The existence of several strategic export-driven energy-intensive industries has led to a number of incentive scheme, for energy efficiency investments in these key industries.

Photo: Fiona Zuzarte Finland Biomass harvesting near Jönköping, Sweden Finland has large resources of peat and wood, which are reflected in its power generation mix. Biomass plays a key role in the energy structure with strong ties tas to limit emissions by the industrial and Nuclear power has come almost full to the development of the Finnish forest energy producing sectors. The tax pro- circle in public opinion in the past few sector. ceeds are reinvested in energy-efficient decades. Initially, nuclear was viewed Finland is a net importer of electric- projects. as a “clean” alternative to fossil fuels. ity, with large thermal capacity plants that Like other western countries, Denmark There was a downturn in public opin- rely on nuclear, coal, biomass, natural has experienced major shifts in the de- ion after the Three-Mile Island accident. gas and peat. Nuclear power is seen as mand for energy due to increased eco- Now with climate change concerns, se- supportive of key elements of national nomic growth, mobilisation and demand curity of supply and the higher cost of energy policy, including price stability, for products and services. Energy-in- electricity, its popularity has somewhat security and supply, and low environ- tensive fuel extraction activity in the returned, in spite of some concerns mental impacts. A fifth reactor is under North Sea has increased energy consump- about safety and reliability. construction in Olkiluoto. Renewable en- tion. Despite this, it is remarkable that Since the 1980s, environmental con- ergy contributes 25% of total electricity the total demand has remained relatively cerns have halted expansion of hydro- use, mainly from hydro, biomass and stable, largely due to aggressive Danish power. Bioenergy is primarily used in some wind. The EU Emissions Trading energy conservation policy instruments. the thermal plants, in district heating, in- Scheme (ETS) has created incentives for These include energy taxes, easy avail- dustrial and household applications. renewables and nuclear power. CHP ability of information on energy con- Since the early 1990s, efforts on wind plants, especially from biomass, provide sumption, building standards and energy power have moved from RD&D to in- a significant majority of the heat require- guidelines. creased investment in installations, ments in Finland, both for district heat- growing capacity 10-fold to 452 MW. ing and production processes. The Renewable Energy Certificate Like Norway and Sweden, Finland has Sweden scheme has been promoting renewable significant hydro resources, whose ex- Sweden is endowed with significant wa- energy; however it is not clear if it pro- pansion is regulated for conservation rea- ter and biomass resources. The power vides sufficient incentives for the large- sons. The share of wind power is quite sector underwent significant changes dur- scale investments needed to replace small due to high connection and trans- ing the mid-1990s with three processes nuclear capacity if the 2010 nuclear mission costs and land use concerns. occurring at approximately the same time phase-out were to be implemented. The The recent Finnish Action Plan for Re- that improved overall system efficiency: scheme is currently undergoing modifi- newable energy has focussed on biom- deregulation, integration of Nordpool and cations. ass. Support for development and Sweden’s entry into the EU. In the past The previous government stated goal commercialisation of new technology, 20 years, installed capacity has been to become “independent” of fossil fuels energy taxation, information dissemina- dominated by hydro and nuclear power by 2020 has led to strategies to phase- tion and the EU-ETS have been key policy (90% of electricity). The remaining share out oil in the transport sector and to instruments that have influenced the en- is primarily biomass-produced power, phase in biofuels. In Sweden, biofuel use ergy markets and renewable energy support. with small amounts from oil, gas and has progressed in privately owned ve- wind. hicles and transport fleets. In fact, Swe-

6 Stockholm Environment Institute Baltic Countries Final energy demand in these countries is similar in that it is dominated by the household and transport sector while the industry and service sectors dominate the electricity consumption. There is a heavy dependence on oil and gas for primary energy. During the economic transition in the early 1990s, energy demand fell but has since rebounded, and new efforts are underway to reduce energy intensity and/or efficiency.

Current energy use Estonia Energy is in fact the main industrial sec-

tor in Estonia; both the energy transfor- Photo: Wikipedia.org mation sectors and the chemical sector Kruonis pumped hydro storage plant, Lithuania are based mainly on domestically available oil shale, along with some peat and wood. Estonia has the highest per capita Like its Nordic neighbours, Lithuania has Long Term Development Plan sets tar- GHG emissions in Europe, due to its re- a high level of cogeneration and district gets to increase the share of renewables liance on fossil fuels. Currently biomass heating with over 60 district heating com- and peat in the primary energy supply, is used for household heating and dis- panies operating. mainly from wind and biomass. Estonia trict heating systems. The possibility of The Lithuanian power system is con- has good wind resources as mapped by co-firing biomass in CHP systems and nected with Latvia, Belarus and the Rus- Tartu University, with higher potential in increasing international trade will expand sian Kaliningrad regions, and a specific Estonia’s coastal zone than in other Bal- the end-uses and improve the future mar- feature has been a considerable surplus tic countries. Installed wind capacity was ket options. of power generation. The amount of elec- nearly 50 MW by late 2006. Several wind tricity exported in 2004 was nearly equal projects are under construction, and off- to the amount used in domestic final con- shore wind farms are in the design phase. Latvia sumption. The closure of existing nuclear In this geographical region, hydro and The Latvian energy system is based pri- power units to meet EU conditions will solar have limited potential. marily on hydropower and natural gas have significant impact on electricity sup- The Latvian government has an indica- for electric power production, petroleum ply in the region. The decommissioning tive target of 75% renewable share in elec- products for transport, and biomass and of the second unit of the Ignalina Nuclear tricity generation by 2010, up from 68% natural gas for households and district Power Plant in 2009 would most likely in 2004. This is expected to come from heating. In the electric power sector hy- result in a major reduction of electricity biomass, as wind and solar are limited. dro (1500 MW), thermal power (600 exports and/or a large increase in genera- Lithuania committed to double the MW), and small amounts of wind (25 tion from fossil fuel power plants. The amount of electricity generated from re- MW) make up the balance. The heavy possibility for installing a new nuclear newable energy sources in the balance reliance on hydro electricity requires bal- plant is among the key issues currently of consumed electricity, from 3.3% in ancing during dry years and to make up being debated and this decision is clearly 1999 to 7% in 2010. Bioenergy contrib- for seasonal fluctuations; imported elec- a strategic one for Lithuania and for the utes to household heating and is expected tricity from Estonia and Russia has been whole Baltic region. to contribute to the transport sector. used to fill the gap. The thermal plants There is also a hydro pumped storage power plant with installed capacity of 900 (CHP) run primarily on natural gas, with Renewable energy MW. Incentives are being applied via supplementary biomass fuel, coal and oil. The Baltic countries are strongly com- feed-in tariffs and discounts on grid con- mitted to the EU renewables directive to nection for small hydropower plants, Lithuania increase their respective shares of renew- wind and biomass power plants. Lithuania depends significantly on im- able electricity by 2010. ported oil and gas from Russia, as well Estonia’s target for renewable electric- as uranium for its nuclear power plant. ity in 2010 is 5.1%, up from 1%. The

Renewable Energy for Development, May 2007, Vol. 20, No. 1 7 Renewable energy and energy efficiency Renewable energy sources currently have a low contribution to the Polish energy mix. To increase their share, the Polish government adopted first prefer- ential feed-in tariffs, which were later replaced by a quota obligation and annual targets until 2014. A FORRES study showed that the potential for renewables by 2020 is about 50 TWh. Identified renewable sources with the most potential are: wind and hydro for electricity generation, geothermal energy for heat generation, and biomass for electricity

Photo: Attila Braun and heat generation. Energy plantation, Pécs, Hungary Hydro is the dominant renewable energy source in Poland. Although new Poland units are still being commissioned, the Poland has considerable reserves of potential for large-scale plants is limited. The energy sector high quality coal and is among the world’s There remains the possibility of increas- The Polish energy sector is the largest in major exporters; reserves of hard coal are ing output up to 30% with efficiency im- Central and Eastern Europe (CEE). It has estimated at over 32 billion short tons, and provements in existing plants. traditionally been heavily dependent on lignite/subbituminous coal estimated at Biomass is a promising renewable en- its domestic coal sources, causing sig- over 14 billion short tons. The future of ergy source because of the potential of nificant environmental degradation in coal in Poland will depend mainly on its co-firing with coal, plentiful land avail- some areas. Now the government is look- environmental impacts. With the introduc- able and different options: biogas from ing towards diversification of the fuel mix tion of desulphurisation, low NOx tech- landfills and municipal waste, energy by increasing the share of renewable en- nologies and the use of low sulphur coal, crops, firewood, and waste residues ergy sources, improving reliability of natu- the situation has improved significantly in from agriculture, industry and forestry. ral gas and oil imports, and possible in- the region between Poland, East Germany Biomass electricity generation increased troduction of nuclear power. Coal ac- and the Czech republic, notoriously known four-fold between 2000 and 2004 - from counted for 92% of electricity genera- as “the Black Triangle”. Most of Poland’s 221 GWh to 850 GWh - although even tion in 2004, a decrease from the 1990 natural gas and oil is imported, with ex- after this increase, it still only represents level of 96%; a small amount of natural pected increases. This has led the gov- 1% of the total. gas and biomass generation capacity has ernment to seek possibilities for supply Wind capacity reached 65 MW in been added since 1990. The remaining diversification, including “Naftoport” oil 2004, with electric output of 142 GWh capacity is hydro and a very small amount terminal at Gdansk, which was con- in 2004, which is only 0.1% of the total. of wind. Final energy consumption is structed in the 1990s. The wind potential in Poland and around dominated by industry and households, The aging infrastructure of installed the southern mountains and Baltic coast adding up to nearly 60%, whose reliance coal plants, concern for GHG emissions, create some of the most promising wind on coal overshadows the transport share and long-term sustainability have led to energy markets in Europe. at 18%. plans for further diversification in elec- As with its neighbouring Eastern Eu- Following EU accession, Poland has tric power generation, including nuclear ropean countries, the transition to a mar- to comply with the EU Directives on the power. The government’s strategy docu- ket economy resulted in a dramatic re- liberalisation of energy markets. Poland ment Energy Policy until 2025 includes duction in final energy consumption. The is a member of CENTREL, which is a three key options for achieving a more overall energy intensity remains above regional group of transmission system sustainable energy system: energy effi- average and there are still many “low- operators in Poland, Hungary, Slovakia ciency improvements, increase of renew- hanging fruits” in terms of possibilities and the Czech Republic, now members able energy sources, and nuclear power. for energy efficiency improvements. of the Union for the Co-ordination of The strategies considered include the in- Rough estimations identify the potential Transmission of Electricity (UCTE). The troduction of four nuclear power units of as between 15-25% on average, and cov- group is a net exporter of electricity, with 1000MW each, although there are no con- ering all sectors of the economy. Poland a major contributor. crete plans yet.

8 Stockholm Environment Institute Central Europe: Czech Slovakia aims to increase the share of recent years. The share of renewables Republic, Slovakia, Hun- renewables with an ambitious 31% re- other than hydro remains small, but ex- gary, Slovenia newable electricity share in 2010. Poten- pansion is continuing, particularly for tial sources are biomass in CHP systems biomass. In 2004 hydropower accounted for This region is characterised by its de- and small hydro, geothermal, and lim- 60% of electricity generation, gas 20%, pendence on fossil fuels in the primary ited wind. Complicated licensing, per- and the remaining contribution from bioenergy sector, most of which are im- mits and limited guarantees continue to mass and other sources. The primary ported, although the Czech Republic has be barriers to the expansion of renewables. goal used to be independence in the elec- abundant coal reserves. Nuclear and coal In Hungary, renewable energy has his- tricity sector. Now this is less em- thermal power plants provide most of the torically been quite small, with less than phasised with market liberalisation that electrical power, with some share com- 1% of electricity generation in 2003, has reduced reserve capacities, but in- ing from hydro and biomass. Natural gas mostly from hydro. The potential for bio- creased the resource base of the sys- is becoming a key fuel within the new mass is the largest among all renewable tem. There is a regular flow of peak energy system. As with other transition options in Hungary, followed by geother- power from Austrian pumped hydro countries in Central and Eastern Europe, mal energy for its heat. Investments over storage plants in the Alps to German in- economic transformation has been ac- the past few years, particularly in bio- dustrial areas, balanced by a flow in the companied by changes in the energy sys- mass, have greatly accelerated the mar- opposite direction at times of low de- tem and restructuring of energy-inten- ket share for renewables. mand from German thermal power sive industries, to meet EC Directives, Hydro represents one-third of installed plants. to improve overall competitiveness, ef- power in Slovenia, and has the most sig- A 2002 law setting feed-in tariffs for ficiency and meet environmental stan- nificant potential for expansion. Although renewable electricity resulted in many dards. biomass is another important potential contributor, it faces competition for use smaller decentralised plants based on On the demand side, energy consump- by wood panel and furniture manufac- wind, biomass, and even solar photo- tion has decreased due to structural turers. Wind and solar are limited due to voltaic. A revision of the law in 2006 changes and reduced industrial energy geography and climate conditions. The greatly reduced feed-in tariffs. Support intensity in the 1990s, but in some of the high geothermal electricity production is for renewables will need to be increased countries, it is on the rise since 2000 with currently limited by the cost of develop- again in order for Austria to reach its the continued importance of a number ment, knowledge and demonstration indicative target of 78% under the re- of energy-intensive industries in the re- projects. newable electricity directive. gion. Energy efficiency has been identi- Biomass is the second biggest renew- fied as a key priority for Energy Policy able energy source in Austria. The liq- to defray the need of investment in addi- Austria uid waste from paper production (lig- tional energy supply and reduce import Austria relies significantly on domestic nin) is used for process heat and elec- levels. The support schemes for renew- resources in the form of hydropower and tricity generation. The use of wood able-generated electricity have evolved biomass. There is also some domestic chips, straw, and biogas has been ex- with incentives such as feed-in-tariffs, production of natural gas and oil, although panding considerably. Austria has pio- and purchase obligations. the majority is imported. Primary energy neered the efficient production of wood The Czech Republic is a major EU elec- supply for buildings and transport is pellets for domestic heating, CHP and/ tricity exporter; however, transmission dominated by petroleum products. The or district heating plants. capacity of the Czech grid somewhat use of gas and coal has also increased in Energy efficiency and environmental constrains the exports. Hydro and gas regulations on energy use in industry and make up 10% of the power generation households were tightened considerably with a small amount of biomass, wind, in the 1980s. New building codes, space and waste-to-energy power generation. heating and hot water are expected to The Czech indicative renewable electric- stabilise or decrease household demand. ity target for 2010 is 8%. The most prom- The Austrian opposition to nuclear ising renewable energy sources to meet power has impacted neighbouring coun- the target include biomass, a small tries, with respect to facilities located amount of wind, and waste-to-energy. near the border. However, differing na- Hydro potential is largely utilised or is lim- tional priorities are putting pressure again ited for environmental reasons. Similar in favour of nuclear expansion in the re- to Slovakia, wind power is limited due gion. to landscape and nature protection. 2007 European Community, WoodWood pellets used as biomass fuel

Renewable Energy for Development, May 2007, Vol. 20, No. 1 9 Germany to an overall energy intensity that is be- ergy supply. Heavy dependence on fossil fuels, es- In recent years, the German energy sys- low the EU average. Germany has also pecially coal have raised a variety of en- tem has been shifting from a reliance on emerged as a world leader in the pro- vironmental concerns in the past three coal and nuclear towards a more diversi- duction and use of biodiesel as a trans- decades, including acid rain and carbon fied power system with significant con- port fuel. emissions, reflected in legislation and tributions from renewables and natural shifts in the primary energy structure. gas. On the demand side, Germany has Energy system More recently, expanded heat production experienced slow growth in energy con- EU electricity liberalisation was trans- from biomass and geothermal plants, has sumption during the past three decades, posed into German law in 1998 and the received support as a way of improving following a long period of steady growth. opening of EU markets facilitated a se- the overall efficiency of energy produc- The reunification of Germany in 1990 and ries of mergers and acquisitions that re- tion as well as increasing the share of the resulting industrial restructuring was sulted in a few German companies be- renewables. a key factor in reducing industrial sector ing among the biggest utilities world- About 28% of power in 2004 was pro- energy demand. Energy taxation has wide. The German energy system cur- duced in nuclear plants. An agreement stimulated energy efficiency in the build- rently relies on fossil fuels and nuclear reached in 1999-2000 resulted in legisla- ings and transport sectors, contributing power for about 95% of its primary en- tion aimed at phasing out the remaining 17 nuclear power plants by 2020. As with Renewable energy schemes in Germany the planned nuclear phase-out in Swe- Energy security has historically been a greater. Other Technology R&D is also den, industry leaders continue to express major issue in Germany due to lack of oil encouraged: From 1995-2004, photo- concern with respect to the impacts of reserves and the rapid pace of industri- voltaic power production received the the phase-out on competitiveness and highest national level of funding alization before and after the war. Im- carbon emissions reductions. Production ported gas and oil have renewed energy amongst the renewable energy tech- security concerns. Germany is not par- nologies with 42% of the RD&D budget. from natural gas has increased consid- ticularly privileged with renewable The emphasis on renewables ad- erably since 1990, and provides much sources. Hydropower furnishes only dresses both energy security concerns of the peak power demand. about 3.5% of electricity demand. How- and climate concerns. Energy efficiency ever, the development of new renewable has also been promoted as a “domes- sources is among the most advanced in tic” resource. An ecological tax reform Europe, due in part to the favourable program (1998-2003) increased prices Renewable energy for most energy sources while using rev- framework for renewable energy via the Perhaps the most remarkable of the en- feed-in tariff of the Renewable Energy Act. enues to finance social expenditures. The German feed-in tariff system ap- This helped reduce energy demand, ergy transitions that have been taking pears to have achieved the goals of ad- shifted public investments from roads to place in Germany is the rise of wind vancing renewable energy at a rather the rail sector for several years and power. Germany now has the highest in- funded new energy efficiency programs modest cost, and has led to one of the high- stalled wind turbine capacity in the est global rates of deployment of existing (subsidisation of more efficient boilers, potential in the case of wind power. As better insulation, solar thermal, biomass world, with 21 GW in 2006. The installed onshore sites decline, offshore wind will heating, and building energy stand- capacity of wind is now more than double offer a capacity which is several times ards). that of hydropower, and provides significantly more electricity than hydro.

70,000 The fact that an increasing share of power comes from intermittent sources such as 60,000 wind has been balanced by the expan- Hydropow er Wind Energy Biomass Photovoltaics

50,000 sion of non-intermittent renewables, namely biomass and by more analysis of 40,000 energy storage options. Photovoltaics have also grown at a 30,000 rapid rate. A so-called “100,000 roofs

20,000 programme” (with subsidies) followed by the introduction of a rate that made it 10,000 economically attractive for private inves- tors led to an acceleration of market 0 growth. 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003* 2004* Germany has become the world leader in production and use of biodiesel, ac- Figure 5: Contribution of renewable energy sources to electricity generation in counting for nearly half of the world to- Germany (GWh). Source: Federal Environment Ministry, Germany

10 Stockholm Environment Institute country has well developed access to electricity and natural gas via a high-density energy infrastructure. Gas continues to dominate the energy supply for electricity, heating and appli- ance use, but coal is imported for use in the electricity system. Nuclear power provides a small share of power. The flat landscape provides no hydropower op- portunity, but major renewable options

Photo: ODE (Organization Renewable Energy Flanders) are wind and biomass. The grid is well- Wind turbines along canal to Seabruges, Bruges, Belgium integrated, with connections to Germany, Belgium and Norway, positioning the tal in 2005. An aggressive support Belgium country strategically in overall trade. scheme has been in place in Germany Primary energy is predominantly pro- The Dutch energy system has under- and in several other EU countries for bio- vided by fossil fuels and nuclear power. gone significant changes since the mid- diesel made from rapeseed, increasing The complexity of the country’s politics 1980s, with efficiency improvements on production more than five-fold during has made policy co-ordination and im- both the demand and supply sides as core 2000-2005. Nevertheless, biodiesel still provement of energy systems challeng- drivers. The current fossil-based Dutch accounts for only 2% of total transport ing. The national system gives autonomy energy system is inconsistent with the fuels used in Germany; production will to three regions (Flanders, Walloon and long-term objectives of sustainability and have to increase at a similar pace in or- Brussels) and along with the federal gov- energy security. der to meet the EU target of 5.75% by ernment, each has its own regulatory in- stitutions and activities in the energy sec- 2010. Bioethanol has also been produced Luxembourg and used, although at a much smaller tor. As a result, there has been regional In Luxembourg, the only domestic re- scale. implementation of the EU directives on sources that are used include hydro- Renewable energy is also supported the power market. power and biomass, although a small outside the electricity sector, especially Nuclear power continues to dominate amount of wind power - 35 MW - has for biodiesel (as mentioned above) and the power sector, with its share chang- been installed in recent years. also for space heating purposes. In 2005, ing from 60% to 55%. between 1990 and Restructuring of the steel industry with Germany had about 7.1 square kilometres 2004. Over the same time, gas has in- some closures and replacement of blast of solar thermal collectors, and had the creased its share to 28% and coal de- furnaces with electric arc furnaces has largest collector market in the EU. Wood- creased to 12%. A small amount of re- significantly reduced Luxembourg’s coal based heating systems were also sup- newable energy in the form of biomass consumption, but increased electricity ported, with the high oil prices of the last and hydro contributes to the mix of power use. The government has been promot- two years leading to a veritable boom of generation sources. ing the use of natural gas in order to di- solid biomass-based systems. Investments in wind power and biomass have increased. There is a large po- versify energy supply which is used in tential for off-shore wind power under CHP units, industry and domestic sec- the federal government’s jurisdiction. The tors. About 76% of domestic power was Benelux Countries generated in gas-fired plants and about There is a heavy reliance on imported fos- federal and regional authorities are devel- 21% in hydro plants. The remainder is sil fuels in Belgium and Luxembourg, oping initiatives to promote energy sav- supplied from biomass and wind and while the Netherlands has indigenous ings and renewable power generation, to some is imported from Germany and Bel- fuels, particularly gas. Climate change meet Kyoto targets. More co-ordination gium. goals are receiving highest priority in en- and integration between the authorities The government has provided incen- ergy policy. Consequently, renewables would improve efficiency and effective- tive mechanisms (investment and pro- and demand side efficiency have become ness. duction subsidies) to increase renewable important and even the nuclear option is energy production, with significant im- being debated. Energy-intensive indus- The Netherlands pacts such as 60% growth in photovol- tries, economic growth and increasing The Netherlands high population density taics between 2003 and 2004. The share demand for fuels in transportation are fac- in combination with the country’s small- of renewables in domestic electricity pro- tors contributing to high energy inten- scale, low-lying geography, and intensity duction in 2004 was about 24%, con- sity in these countries. of economic activity has led to an en- sisting mainly of hydro, with 21%, and a ergy system that is highly concentrated small amount of wind and biomass. and technically well-developed. The

Renewable Energy for Development, May 2007, Vol. 20, No. 1 11 France vided a tax credit for energy savings and areas for the future (bioenergy, fuel cells, The energy system in France has use of renewable energy sources, includ- clean vehicles, energy-efficient buildings, evolved based on the principles of en- ing heat pumps, condensing boilers and solar energy, carbon capture and under- insulation materials. Similar to Italy, an ergy access for all citizens, price-com- ground storage of CO2, 4th-generation petitiveness, environmental protection, energy saving certificate scheme (White nuclear power) Certificates) obliges energy sellers to gen- and security of supply. As there are very • To provide methods of transporting erate energy savings over a given period. few indigenous fossil fuel resources, and storing energy, adapted to require- electricity is predominantly generated by ments to guarantee the quality of the elec- nuclear power. There are increasing in- Energy policy tricity supply, reinforce the security of vestments in renewable energy, includ- The French energy policy has been reor- the gas and electricity grids and improve ing biomass, hydro power, wind power ganized to ensure four major energy the safety of France’s energy supply. and solar thermal systems. The Energy policy objectives. As a result, clear targets for action are Act of 2005 laid down new goals for • Independence and security of sup- set by the French Energy Act in the fol- advancing renewable energy and im- ply: With limited energy reserves, France lowing: quartering of CO2 emissions by proving energy efficiency, as well as re- seeks to reduce exposure of the econ- 2050; reduction of final energy intensity affirming the long held energy policy omy to fluctuations in energy prices and of 2% a year and increasing to 2.5% in principles of energy independence and availability. The aim is to ensure avail- 2015; 10% power from renewable en- environmental sustainability. ability of sufficient capacity to cope with ergy by 2010; incorporation of 2% re- Outside of the transport sector, problems of shortages of electricity, gas newable fuels by 2006 and increasing to France is not heavily dependent on fos- and oil. 5.75% in 2008 and 7% in 2010. This last sil fuels, largely due to the domination • Competitive energy prices: A guar- target is above the EU Directive target of of nuclear power in the energy mix, ac- antee of competitive energy prices, 5.75% by 2010. counting for 78% of production in 2004. coupled with high quality and availability Hydro-electricity’s contribution has var- to businesses, aims to enhance France’s ied between 10-15% during 1990-2004. attractiveness and employment. The Iberian Peninsula France is a major exporter with up to • Environment: Risk to human health 12% of its total electricity generation ex- via management of the nuclear sector; Portugal and Spain risk and mitigation of climate change. ported. Unlike many other EU countries, Spain and Portugal depend significantly • Energy access for all: Provision of gas supplies are diverted to non-elec- on imported fossil fuels for primary en- tric uses due to predominance of nuclear affordable, high quality energy guarantees social and territorial cohesion. ergy needs, although Spain has a smaller power and emphasis on renewable en- share due to the contribution from The principle areas of action to achieve ergy and environmental sustainability. nuclear power. Investment and infra- these objectives are; Household and service sectors ac- structure policies have been driven by the • count for 65% of electricity demand in To control energy demand, through a need for source diversification and se- France. The energy demand has been series of incentives and programmes (en- curity of supply. This has been facili- increasing steadily due to economic and ergy saving certificate scheme, standards tated by market liberalisation in 2003- population growth and growing electric- and regulations, tax incentives) 2004. The focus of renewable energy de- • ity use in the domestic and industrial sec- To diversify sources of energy, (in- velopment in energy policies has in- tor. Electricity use has grown at a faster creasing the use of renewable energies, creased to address the challenges of en- pace with increased use of air condi- keeping nuclear options open, develop- ergy security and climate change mitiga- tioners and other appliances. Efforts ing a high-performance energy production. have been made to reduce energy in- tion infrastructure) tensity, and recent legislation has pro- • To increase energy research, in key Photo: Wikipedia.org Concentrating solar power, Font Romeu, France

12 Stockholm Environment Institute Current energy mix capacity. 2.6% of total hydro is small primary consumer of this source of en- In Portugal there has been a significant in- scale capacity. ergy, followed by household and ther- crease in the installed capacity for hydro- mal power plants. Portugal has increased its efforts in the biofuels sector, and re- power and thermal energy from natural gas. Wind and Solar cent laws have been passed that pro- Improvements in the import infrastructure Portugal’s Atlantic archipelago islands mote the use of biofuel quotas in public have made possible the increase in use of of Azores and Madeira have had sev- transport fleets and provide partial ex- LNG and like Spain, the country has diver- eral wind project sites developed since emption from excise duties. sified its supply to improve its security. the late 1980s, leading to a 2004 ca- With subsidies for the construction Spain has a fairly diversified mix of sources pacity of 553 MW. A 10-fold increase of distilleries and promotion of ethanol of energy compared to other EU countries. is expected with a target of 5100 MW Spain has become the largest producer Coal and nuclear power provide a large by 2010. The expansion of windpower of fuel ethanol in the EU, for the trans- share, while the natural gas market is one in Spain is second only to Germany, port sector. National and regional gov- of the fastest growing in the world. with some 8 220 MW of installed ernments provide subsidies and tax ex- wind capacity, and an additional 57 000 emptions for biofuel producers and sup- MW planned. Renewable energy port for promoting ethanol use. Under the Renewable Electricity Directive, The solar energy resource available Portugal has indicated a target of 39% with in the region has been targeted with significant increases in investment in alter- recent investments. An 11 MW solar Energy efficiency native sources. A tariff regime awards PV installation, covering 60 hectares The Mediterranean climate has resulted higher rates per kilo-watt hours depending outside Portugal’s capital Lisbon, is in an increased electricity demand for on the type of technology and the monthly expected to provide electricity for 8000 cooling. New regulations aimed at re- usage. Spain’s General Electricity Law in- homes in 2007. In Spain, guaranteed ducing energy intensity. The National Cli- cluded the goal of 12% of primary energy prices for grid connected solar pho- mate Change Program (2008-2012) in consumption from renewable sources by tovoltaic systems, coupled with cost Portugal aims to ensure Portugal’s com- 2010. It has successfully implemented a di- reductions have allowed the installed pliance with the Kyoto Protocol and puts verse and dispersed range of renewable en- PV capacity to increase to 37 MW in forward measures and policies to ad- ergy technologies, which accounted for 2004. dress sectors not covered by the EU 19% of power generation in 2004. Emissions Trading Scheme (ETS). The high economic growth and rapid indus- Bioenergy trialisation has increased Spain’s energy Bioenergy accounts for 11% of pri- Hydro consumption and the Strategy for En- mary Portuguese energy supply. A fur- Hydropower is the main renewable energy ergy Saving and Efficiency in Spain ther increase of 100 MW installed ca- in Portugal and between 1990 and 2004, 2004-2012 aims to reduce the high de- pacity of forestry-based biomass ther- installed capacity grew by 45%. In Spain, pendence on imported energy. hydropower accounts for 26% of installed mal power stations is expected due to government policies. Industry is the

Portugal wave energy - research and development Although wave power technology has been around for thirty years, there has been slow progress to commercialisation, due to technological setbacks. Oceans are an untapped resource of power for generating useful energy. Commercial technology for conversion of energy from tides, marine currents, thermal gradients or ocean waves is still in its infancy. Ocean energy systems must be able to endure harsh environments of mooring, saltwater corrosion and storm damage while fulfilling environmental require-ments at an economical price. Concerted efforts in research and development are required to move past the technical and commerc- Photo: Wikipedia.org ialisation barriers. With climate change concerns and Pelamis wave machine, Portugal investments in renewable energy, there has been recent focus in wave resource utilisation. Since 1978 Portugal has played a significant role in Wave energy research and development, particularly Oscillating or Assisted Water Columns (OWC). The principle of the OWC used in this case lies in its ability to convert the wave action into a motion that pumps high pressure fluid through a hydraulic motor. This in turn drives an

electrical generator. In 2000-2001, a 400 kWe shoreline OWC was developed on the island of Pico in the Azores, supplying 8-9% of the island’s electricity demand. The world’s first commercial wave power generators off the coast of Povoa de Varzim will begin operation in 2006-2007.

Renewable Energy for Development, May 2007, Vol. 20, No. 1 13 The first geothermal generated electricity was in Larderello, Italy in 1904 and was commercially generated a few years later. It is a resource that can be used directly for heat or indi- rectly for electricity, on large or small scales. A concentration of geothermal energy potential in the country has allowed Italy to take leadership in this technology, with over 642 MW of installed capacity (39% of renewables) in 2004.

Renewable energy

Photo: Daniele Guidi Hydro electricity is the largest contributor to renewable energy, followed by Geothermal power plant, Italy smaller shares of geothermal, wind and biomass energy. About 75% of renewable electricity is generated by hydro Mediterranean Countries plants of which 17% are small-scale plants. Bioenergy has a high potential Italy Reforms in the country and currently under-ex- Lack of domestic fossil fuels and a de- The Decree 79/1999 initiated power sec- ploited. In the production of heat, there pendence on imports are of strategic sig- tor reform that allowed continued evo- has been a growing use of wood, pel- nificance for Italy’s economy. Invest- lution of a plurality of suppliers and a lets and wood-chips. ment and infrastructure policies have gradual liberalisation on the demand Efforts to invest in structural and been driven by the need for source di- side. The reforms have also increased technological innovations in energy-ef- versification, increased competitiveness the shares of renewable energy, which ficient industrial systems have been and security of supply. This has been fa- accounts for 7% of Italy’s energy con- driven by reliance on imported energy cilitated by market liberalisation and in- sumption in 2004. The decree intro- sources, but also by the shift to a ser- creasing the new players in the electric- duced an obligation for power suppli- vice sector economy with the growing ity sector. ers to use renewable sources (except demand for electricity for air condition- The overwhelming share of the pri- large hydro) for production of 2% of ing and other uses. There is also an in- mary energy system is dominated by annual electricity. The quota increases creasing use of co-generation; about fossil fuels (95%). Nuclear power has over time. With a market trade mecha- 28% of national electricity production been subject to a moratorium in Italy. In- nism in place, power suppliers can is based on co-generation, mainly using creasing concerns over carbon emissions choose to generate renewable electric- combined cycle technologies. This trend and environmental impacts of coal use ity or purchase it via Green Certificates. is supported by the energy efficiency have aimed current R&D efforts to im- Constitutional reform in Italy’s en- Ministerial Decrees obliging distributors proving its efficiency. In the natural gas ergy policy and planning has clarified to obtain demand-side energy savings market, there is a need for investment in the role of the central and regional gov- of 2.9 Mtoe. As in the power genera- new gas pipeline infrastructure and ernments in the energy sector, giving tion sector, a flexible market mechanism strengthening of existing lines. This re- Italian regions new authority and re- allows the distributors to implement their quires actions from the surrounding re- sponsibility. This has been an impor- own energy efficient projects or pur- gions with a priority on imports from tant element in the electricity infrastruc- chase third party energy saving projects Russia, North Africa and the Middle East. ture planning choices of 2003-2005. Ad- via White Certificates. With all of the planned infrastructure in- aptation in 2005 of the EU Directive vestments, Italy is emerging as a Euro- 2002/91/EC for energy efficiency now Greece Mediterranean “hub” for the gas market. delegates regions to draft local plans and In recent years, Greece has been re- regulations on new buildings and res- structuring its energy system to improve toration of old ones. sustainability, security and competitiveness, as per the policy goals of EU directives. The Greek energy system has

14 Stockholm Environment Institute mal power plants operating on fossil fuels. EU directives pertaining to energy and environment have been reflected in national legislation. Energy strategies are therefore focused on improving energy efficiency, diversifying the sources of supply, and developing renewable energy sources. The typical warm Medi- terranean marine climate contributes to the increasing demand for summertime cooling. The energy demand in Cyprus has been increasingly steady due to continu- ous economic growth in the tourism and financial sectors. Solar thermal energy is the main renewable energy form in Cyprus today, like Greece, and is used

Photo: European Community, 2007 Photo: European Community, for hot water heating. It is important to Thissavros dam, Greece take advantage of the significant potential of wind, biomass, and solar energy to help diversify the energy mix, take advantage of the sunny climate and historically been characterised by con- ership in public power systems has been achieve the 10% target for renewable tinuous growth, relatively high energy in- reduced. One technical barrier has been electricity by 2010. tensities, and a continuing attachment to the need to expand and/or improve grid Malta currently fulfils the EU power conventional fuels. Primary consumption capacity for connection to places of high system definitions of a “small isolated is dominated by oil and coal. Natural gas wind potential and the demands of a rap- system”, because of its geography, size was added to the energy mix in 1998 and idly growing peak load in the summer. A and isolation as well as the level of elec- efforts are underway to exploit the abun- new law in compliance with the EU electricity generation (below 2500 GWh). dantly available solar and wind potential. tricity directive of 2003 is aimed at re- This may change with the proposed DC Construction of trans-European and moving technical and institutional barri- cable link to Sicily, Italy and plans for trans-continental networks is helping ers to the full market opening. installing an additional 100 MW gener- transform Greece into a key energy link Despite considerable natural endow- ating capacity. between Europe and Asia. ments, the degree of renewable energy Renewable energy targets for 2010 With intensive exploitation of lignite, exploitation remains small and confined in Malta are focused on photovoltaics, coal and imported oil have been major to commercially mature technologies: wind and energy production from fuels for the thermal plants. The continu- large hydro contributing 9% of power waste. Currently, small grid-connected ing dependence on coal, the growing generation. With initial tax incentives and PV systems have been installed, and electricity demand, and the low average advertising campaigns in the 1980s, government subsidies are provided for efficiency of thermal power plants rep- Greece attained the second highest de- small domestic PV and wind systems. resent an environmental liability, as the gree of solar collector penetration in Eu- 2 There is considerable potential for large- power sector is responsible for over 50% rope (270 m /1000 inhabitants) for scale offshore wind generation esti- of CO emissions in Greece. The power household water heating purposes, and 2 mated to reach 10% of the total gen- network consists of the interconnected is also an exporter of this technology. eration capacity. The first waste-to-en- grid on the mainland along with several The systems have been effectively com- ergy pilot plant will come on line in autonomous systems in the islands. bined with absorption units in order to 2008. The fastest growing market has Planned sub-sea interconnections aim to cover the steadily increasing cooling de- been domestic solar water heating sys- drop the cost of small autonomous units, mand. The challenge now is to shift the tems, assisted with government support balance load and enhance the capacity application to the commercial sector. mechanisms. Recent building regula- of the islands to exploit intermittent re- tions, yet to be implemented, set mini- newable sources. Trade with neigh- Cyprus and Malta mum standards of energy performance bouring countries amounts to 3-5% of The energy systems on these two islands for building components and water con- total electricity consumption. are based almost exclusively on oil and servation. Since liberalisation of the Greek elec- imported petroleum products. The electricity market in 1999, government own- tricity generated is primarily from ther-

Renewable Energy for Development, May 2007, Vol. 20, No. 1 15 New Member States: Romania to the design of the nuclear power plant Romania and Bulgaria Romania is a significant producer of gas, in Kozloduy, Bulgaria led the European Commission to insist on their partial clo- Some eighteen years after the fall of com- oil and solid fuels. Domestic production sure. This has led to political discus- munism, Romania and Bulgaria joined the covers a large percentage of energy sions, news headlines and a complete European Union (EU) on January 1, 2007. needs, and thus its import dependence change of public opinion in support of The transition of the heavily centralised at 30% is far below the EU-27 average. proposed second nuclear power plant and subsidised backbone of the commu- There is a small but growing contribu- at Belene island on the Danube river. nist economy to a market-based one has tion from nuclear energy, while coal still Until recently feed-in tariffs were been a slow and demanding process, pos- provides the largest share of electricity adopted only for wind and hydro, ing huge challenges to the energy sector. production, at about 38% in 2004. Bio- which led to rapid growth in the num- Significant progress has been made but mass is used widely for heating and other ber of installations, but there were very further measures are needed to create direct uses in Romania, and accounts for limited developments for other renew- functioning energy markets, to tackle high 11% of primary energy supply. Most of ables. Clearer rules on tariffs and pro- energy intensities and to improve environ- the biomass use occurs in households, motion of renewables are proposed in mental performance of the sector. with the remainder used in industries, the latest policy initiatives. Most cur- Both countries have high energy inten- heating plants and small businesses. rent renewable electricity is hydro (7%), sity due in part to the communist legacy. Provision of public support for re- while biomass and wind have consid- However, their CO intensity is only newable energy projects has been initi- 2 erable future potential. Sustainable use slightly above the EU-27 average, due to ated via tradable green certificates of biomass waste and forest resources the presence of low-carbon sources in (TGCs) and mandatory dispatch and are needed. Recent opposition by envi- their power sectors, primarily hydro and trade of electricity from such sources. ronmental NGOs to large wind farm de- nuclear. Bulgaria has not yet tapped its TGCs are issued to electricity produc- velopment at the Black Sea was con- renewables potential to any significant tion from wind, solar, biomass or hy- cern with Via Pontiaca – a major Euro- extent; Romania has exploited a consid- dropower generated in plants with less pean migratory bird-route. erable amount of its large-scale hydro, than 10 MW capacity. The Industry sec- Inefficient systems, poor fuel use and while small-hydro and other renewables tor accounts for nearly half of the en- high transmission losses contribute to continue to have room for major expan- ergy demand, and will be a key focus of the high energy intensity of the Bulgar- sion. The EU RES-E directive calls for energy efficiency efforts in the coming ian economy, which is the highest in 11% renewable electricity share in Bul- years. Measures in recent national strat- the EU-27. Households have high en- garia in 2010 and 33% in Romania, which egies are set to identify and increase energy use for heating and inefficient ap- already meets nearly 30% of its electric- ergy efficiency. pliances, while most of the building ity needs through hydroelectric power. stock in Bulgaria is poorly insulated. A Bulgaria positive legacy of the communist past The fuel mix in electricity generation is is centralised heating for which dominated by thermal power plants op- modernisation is needed. A mix of gov- erating on fossil fuels and nuclear. In Bul- ernment measures adopted in Bulgaria garia, there is significant reserve in the has had limited success in improving system, making it a net exporter of overall energy efficiency. power. Technological concerns related

Table 1: Key energy/climate indicators 2004

Indicator Units Romania Bulgaria EU-27

Energy per capita kgoe/cap 1826 2425 3689 Energy intensity toe/MEUR 774 1142 185 Energy import dependency share of primary supply 30% 49% 50%

Photo: European Community, 2007 Photo: European Community, CO2 intensity tCO2/toe 2.5 2.3 2.2 CO2 per capita kg/cap 4505 5671 8180 Renewable energy share of primary supply 12% 5% 6% Energy efficiency improvements can Renewable electricity share of gross consumption 29% 8% 14% be more cost-effective than implement- ing renewable energy projects, especially in countries like Romania and Source: http//ec.europa.eu/energy/energy_policy/facts_en.htm Bulgaria. Note: toe = tonnes of oil equivalent; kgoe = kg of oil equivalent

16 Stockholm Environment Institute Renewable Energy for Development, May 2007, Vol. 20, No. 1 17