The effect of incentives and uncertainty in renewable energy policy

Three separate papers recently published by Paolo Agnolucci, of the UK PSI, look at different aspects of renewable energy policy in England and Wales, Denmark and Germany.

Agnolucci shows how the English and Welsh Non-Fossil Fuel Obligation has actually had many negative effects on attempts to develop renewable energy; the lessons that can be learned from recent policy changes in Denmark; and the role of uncertainty and relatively low incentives in Germany.

More information on these three papers can be found on Paolo's
PSI web page:

About PSI

PSI (the Policy Studies Institute) is an independent subsidiary of the University of Westminster. It undertakes and publishes research studies relevant to social, economic and industrial policy.

The Institute is a charity, run on a not-for-profit basis and takes a politically neutral stance on issues of public policy, having no connections with any political party, commercial interest or pressure group. Its income is derived from funds for individual research projects received from a variety of sources.

PSI's researchers are organised in three multi-disciplinary research groups: the Employment Group, the Environment Group and the Social Policy Group and it collaborates with other leading research institutes, think tanks and academic departments. PSI undertakes research only on the understanding that the results will be made public - however uncomfortable the findings may be to any established interests.

Annual report on German funding of research into renewable energy

For the first time, the German Federal Ministry of the Environment (BMU) has published an annual report on the funding of research in the area of renewable energy technologies. According to the report, in 2004 the BMU allocated EUR 60 million to R&D focusing mainly on photovoltaics, wind and geothermal energy.

Facts and Figures

Close to 30% of the funds were for research in photovoltaics, 21% focused on wind energy, 19.7% on geothermal energy, and 17,3% on solar thermal power plants. The rest was devoted to low-temperature solar-thermal technologies and other innovative technologies. However, these figures only reflect the priorities of the year 2004. The average figures for the period 2001-2004 show that a total of 46.6% of research funding was allocated to photovoltaics, 20% to wind energy and 13.4% to geothermal energy.

The main goals of federal research funding in the area of renewable energy are:

• to reduce costs
• to ensure a sustainable and environmentally-friendly development
• to facilitate a rapid transfer of research results into practical applications
• to rapidly integrate renewable energy into distribution systems
• to ensure jobs and encourage innovation

The BMU has two research projects selected for financing, managed by: the Association of German Engineers (Verein Deutscher Ingenieure VDI/VDE), that focuses on solar-thermal power plants, and the Research Centre Jülich (Projektträger Jülich PTJ), who coordinates projects for the other forms of energy-related research.

The Research Network Solar Energy (Forschungsverbund Sonnenenergie FVS)

The FVS is a research network of eight non-university research institutions, who cover, between themselves, almost all aspects of renewable energy technologies. Their experts cooperate in identifying priority areas for research and provide the Federal Government with a basis for future policy decisions. With a combined staff of over 1000, the institutes represent ca. 80% of the German research capacity in the renewables area. Their strategy for 2005 is to focus on photovoltaics (34% of research capacities), fuel cells and hydrogen (29%), systems technologies and network management (11%), solar thermal power plants and solar building (14%), biomass, geothermal energy, wind and marine energy (12%).

The eight members of the FVS are:

• The German Aerospace Centre in Cologne (DLR, http://www.dlr.de)
• The Research Centre Jülich (FZJ, http://www.fz-juelich.de)
• The Fraunhofer Institute for Solar Energy Systems in Freiburg (ISE, http://www.ise.fraunhofer.de)
• The National Research Centre for Geosciences in Potsdam (GFZ, http://www.gfz-potsdam.de)
• The Hahn-Meitner Institute in Berlin (HMI, http://www.hmi.de )
• The Institute for Solar Energy Research Hameln (ISFH, http://www.isfh.de)
• The Institute for Solar Energy System Technologies in Kassel (ISET, http://www.iset.uni-kassel.de)
• The Centre for Solar Energy and Hydrogen Research in Stuttgart (ZSW, http://www.zsw-bwm.de)

Further information on energy research and individual projects is available on the Internet pages of the BMU at http://www.bmu.de and http://erneuerbare-energien.de. The project managers of the BMU are the Research Centre Jülich (http://www.fz-juelich.de/ptj/) and the VDI (http://www.pt-solar.de). The website of the FVS Network Solar Energy is at http://www.FV-sonnenenergie.de (in German only, but provides very good links to all energy research financing agencies in Germany).

Energy agenda of German coalition Government

The new coalition government recognises that Germany needs a comprehensive energy strategy, based on a mix of energy sources. It recognises the challenge of climate change and the possible conflict over energy prices and distribution of energy and raw materials. It sees the solution in a joint strategy of improving energy/resource efficiency whilst expanding renewable energy/renewable raw material use.

Nuclear

The coalition partners hold different views on the use of nuclear energy but the existing 2000 law to phase out by 2021 stands. The issue of nuclear waste disposal will be addressed quickly, during this parliamentary term.

Renewables

Germany's existing renewable energy targets will be kept, increasing the percentage of renewable electricity to 12.5% by 2010 and 20% by 2020. This will increase the contribution of renewables to total energy to 4.2% by 2010 and 10% by 2020.

In the longer term, the coalition will concentrate on offshore wind and repowering onshore wind, rather than new-build onshore. The coalition will push for the foundation of an international renewable energy agency IRENA.

Biofuels and renewable raw materials

The previous target to increase the percentage of biofuels in transport to 5.75% by 2010 has been kept, in line with EU requirements. The existing tax exemption for biofuels will be replaced by an obligation to blend biofuels with conventional fuel. The coalition will work with industry to increase biofuel R&D and to bring biomass-to-liquid technology to market.

Energy efficiency

Germany's target of doubling energy productivity by 2020 against 1990 levels will remain. There is a new target of renovating 5% of buildings built before 1978 per year. Government funding for energy-related building renovation will be increased to €1.5bn/year (more than three times the existing level) and the scheme changed from low-interest loans to grants. An energy labelling scheme for buildings will be introduced. CHP, modernisation of the power station stock, EU initiatives to increase energy efficiency and the German Energy Agency's energy saving schemes will all be supported.

Innovation: 'Energy for Germany'

Through an innovation initiative the coalition hopes to retain its world leadership in energy technology. This will require an increase in energy research funding from both the Government and industry.

The coalition is aiming for increased competition on the energy and gas markets. It will support the instruments in the new Energy Law and the responsible authorities and increased inter-European competition. Transit capacity will be increased and LNG infrastructure expanded

Economic Instruments

Germany's eco-tax on energy and road fuels will remain, but not be increased. The existing exemptions for industry will continue.

EU

The coalition supports the development of an EU strategy on sustainable and affordable energy and raw materials and the harmonisation of EU energy taxes. To protect the competitiveness of its manufacturing industry, Germany will exploit measures to relieve the burden on industry when implementing the EU energy tax directive.

The 150-page text is available in German here.

Japan's First Woody Biomass Power Generation in Place

From the Japan for Sustainability web site.

Woody biomass has now become a practical fuel for power generation.
Shikoku Electric Power Co. in western Japan announced the start of
commercial biomass power generation on July 4, 2005 at its Saijo Power
Station, after completing tests for co-firing woody biomass with coal.
This is the nation's first full-fledged incorporation of woody biomass
fuel into an existing coal-fired power plant.

- Full story -

Residential Co-Generation System Proven Effective at Aichi Expo 2005

From the Japan for Sustainability web site

Residential fuel cell co-generation systems were proven to be effective in reducing energy consumption and carbon dioxide (CO2) emissions during the first 5 months of a demonstration test conducted at the World Exposition 2005 held in Aichi, Japan. This was the conclusion announced in an interim report by the Urban Renaissance Agency, Toyota Motor Corp., Aisin Seiki Co. and Toho Gas Co. on August 18, 2005.