How to Foster Research, Development and Deployment of RES-E Technologies October 2011 The Union of the Electricity Industry–EURELECTRIC is the sector association representing the common interests of the electricity industry at pan-European level, plus its affiliates and associates on several other continents. In line with its mission, EURELECTRIC seeks to contribute to the competitiveness of the electricity industry, to provide effective representation for the industry in public affairs, and to promote the role of electricity both in the advancement of society and in helping provide solutions to the challenges of sustainable development. EURELECTRIC’s formal opinions, policy positions and reports are formulated in Working Groups, composed of experts from the electricity industry, supervised by five Committees. This “structure of expertise” ensures that EURELECTRIC’s published documents are based on high-quality input with up-to-date information. 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EURELECTRIC pursues in all its activities the application of the following sustainable development values: Economic Development Growth, added-value, efficiency Environmental Leadership Commitment, innovation, pro-activeness Social Responsibility Transparency, ethics, accountability Dépôt légal: D/2011/12.105/49 How to Foster Research, Development and Deployment of RES-E Technologies -------------------------------------------------------------------------------------------------WG Research Development & Deployment Hakon Mosbech (DK) (Chair) Indrek Aarna (EE); Mona Askmann (NO); Moshe Bachman (IL); Juan Carlos Ballesteros Aparicio (ES); Emmanuel De Jager (BE); Bart Boesmans (BE); Michele De Nigris (IT); Mohamed Noureddine Dhouib (TN); Fergal Egan (IE); Chedly Ghanmi (TN); Ali Gok (TR); Andrej Hanzel (SK); Jasna Ivanova Davidovic (MK); Jörg Kruhl (DE) Stephan Ramesohl (DE); Alexander E. Krylov (RU); Ales Laciok (CZ); Valy Lioliou (GR); Magnus Olofsson (SE); Christine Patte (FR); Michael Paulus (CH); Wolfgang Pell (AT); Andreas Poullikkas (CY); Roman Ruszczynski (PL); Cornelia Serban (RO); Kati Takala (FI); Rasmus Tengvad (DK); György Vecsi (HU); Djordje Zebeljan (SI); Andre G.L. Zeijseink (NL) Special thanks to Ulrich Langnickel (VGB PowerTech) Contact: Henning Haeder – [email protected] This report is part of the EURELECTRIC Renewables Action Plan (RESAP). The electricity industry is an important investor in renewable energy sources (RES) in Europe. For instance, it is responsible for 40% of all wind onshore investments. RES generation already represents a substantial share in the power mix and will continue to increase in the coming years. EURELECTRIC’s Renewables Action Plan (RESAP) was launched in spring 2010 to develop a comprehensive industry strategy on renewables development in Europe. RESAP addresses the following key challenges in promoting RES generation: • • • the need for a system approach to flexibility and back-up, the need for a market-driven approach, the need for a European approach to RES development. RESAP consists of 13 task forces, including for example demand side management, market design, load and storage. The purpose of RESAP is to develop, through a series of reports and a final synopsis report, sound analysis with key recommendations for policymakers and industry experts. For additional information on RESAP please contact: John Scowcroft [email protected] Susanne Nies [email protected] INTRODUCTION Key Findings and Recommendations Findings • All technologies pass through the same stages of the innovation cycle: from basic research through development, demonstration, deployment, and commercial market uptake. Although this may sound like a linear process, in reality the innovation cycle is often an iterative process. • The successful commercialisation of RES technology requires support on all levels. • RES technologies are developed and deployed very differently in different EU member states, based not only on geographical and climatic differences but also on political preferences. Recommendations • Adopt a system approach, not a RES-only approach: the whole electricity value chain should be better represented. • In order to deliver on the 2020 target focus on those technologies which are the most advanced and the most promising, in terms of cost-benefit analysis (CBA). • Upgrade significantly EU energy-related research development and deployment (RD&D) spending, in order to get from promise to practice. • Co-ordinate national and EU-level RD&D projects better and come up with benchmarking. • Progressively shift production subsidies to RD&D funding for new innovative RES technologies. • Lighten the bureaucratic process around EU research programmes, and focus on results. Question principles such as geographical coverage, which may be useful in some cases, but not in all. • Use benchmarking and knowledge transfer on an EU level, and avoid duplication of development activities. • Set up incentives for utilities as well as suppliers, via a consistent framework, to engage more in RD&D. • Set up innovation and demonstration hubs within the EU. How much RD&D can we realistically expect until 2020? And what should we focus on if we want to get from promise to practice on the 20% RES target? This paper addresses the need for a stable and incentivising research, development and deployment (RD&D) framework. Such a framework is key if the various stakeholders – especially utilities and suppliers – are to deliver on the successful commercialisation of technologies. This paper focuses specifically on RD&D needs for RES power generation technologies. EURELECTRIC’s working group RD&D stresses that a system approach – including conventional technologies, grid development and storage – is needed in order to advance. For the sake of greater clarity however, this report somewhat artificially isolates RES technology development from the overall system. The paper is structured as follows: a first part revisits the five step process of RD&D. The second part presents the state of play as well as the needs for various RES technologies. One must stress here that RES covers a wide range of very different technologies at different development stages, divided into various sub-technologies. The final part formulates recommendations for policymakers. Some challenges and needs are common to all or to certain subsets of RES technologies – e.g. the need for improved weather forecasts for wind and solar – while other technologies have very specific needs. 5 I. RD&D: what does it comprise? What kind of support does it require? Technologies pass broadly through the same stages of the innovation cycle: from basic research through development and demonstration over deployment to early commercial market uptake. Although this may sound like a linear process, the reality is very different. In fact, the innovation cycle is an iterative process that continuously contributes to improving the technology. To this extent, additional research and development is a perpetual aspect of rendering the technology competitive. The first three stages of the innovation cycle require policies which support research in the technology so that it can be developed and deployed: ‘technology push measures’. The final steps of the innovation cycle require policies which pull technologies into the market once they have been demonstrated and early commercial market uptake is taking place. It has to be stressed that currently not enough attention – and thus support – is given to the deployment stage as well as to commercial uptake. These stages are decisive for going ‘from promise to practice’, from theory to reality. Altogether the following five stages – not necessarily linear, but iterative – can be identified: Research stage: basic research led by academia with possible industry or other actor participation. Development stage: applied research, development of a concept engineering and process led by industry with possible academic participation. Demonstration stage: testing the design and construction process, assessment of the construction and operational costs. Deployment stage: technology is tested, risks are addressed and infrastructure and maintenance skills are put in place. Commercial market uptake: proven technology needs to compete in a commercial environment in order to gain market share. It has to be stressed that even if a technology has reached the commercial stage it still needs RD&D support in order to further develop. Commercial market uptake can be divided into two basic phases: the initial market uptake, followed by full penetration. 6 II. Status and RD&D needs – technology by technology The following section presents RES technologies with respect to their status quo, today’s development, as well as the identified needs on the five stages of RD&D. It represents the result of an internal enquiry among EURELECTRIC members. This is indeed work in progress, and the list of RD&D needs is indicative, referring to identified priorities, but not exhaustive. A table in alphabetical order provides the reader with a simplified, comparative overview on the state of advancement. As a general observation, RES technologies are developed and deployed very differently in the individual EU member states. This is often due to geographic and climatic differences, but there are also numerous examples which show political priorities when designing support systems. Biomass Solid biomass is a mature technology that can be further developed for large-scale use and commercial market uptake. The discussion on sustainability as well as availability of biomass is prominent at the moment – clear criteria for sustainability, transparency and information on availability are considered as key to the future development of this technology. Some general obstacles with regards to the biomass sector are of a more political and societal nature than based on technical bottlenecks. Issues related to land-use and the effects on agriculture and food prices pose problems for the commercialisation of biomass, since they introduce uncertainty for investors. A clear and stable governmental support scheme and approach is required to ensure an investment climate that supports technology development. RD&D needs RD&D priorities for biomass: - CCS possibilities; - high efficient steam CHP-plants with enhanced steam parameters; - co-firing for different blends of fossil fuels and biomass; - torrefaction for biomass upgrading into commodity fuels in order to improve logistics and safe handling; - enhanced integration of heat/cold storage systems; - utilisation of ashes for fertilising. With regards to the operation of the plants, further research and development is needed to obtain higher efficiency rates and optimise the combustion system. Additionally, improved monitoring systems of biomass boilers need to be developed (applies for stand-alone boilers and co-firing). Biogas Although not yet commercially deployed, biogas has great improvement potential. EURELECTRIC recommends making much more use of benchmarking and of cross-country exchanges. RD&D needs Focus of RD&D should be on the optimisation of the fermentation process, the development of energy-efficient technologies for biogas upgrade, on load flexibility, on short-term biogas storage 7 and seasonal production management, on the development of an intelligent gas distribution system as well as on enhanced integration of heat/cold storage systems. Hydropower Hydropower is a mature technology, with new sites to be used and existing sites presenting efficiency improvement potential. A country’s hydropower potential is to a very large extent determined by national characteristics. Extensive environmental legislation such as the Water Framework Directive has been set up and taken up by the industry. The interpretation of legislation is in some cases incompatible with the setting up of new hydropower and clearly poses a risk to its development. Hydropower plants and especially pumped storage are operated very differently today than ten years ago, with more flexibility services provided as a result of more variable RES feed-in. RD&D needs RD&D needs for hydropower concern the improvement of efficiency, especially in areas where the potential is limited, and on improved operational flexibility. Geothermal energy for power generation Further development of geothermal energy for power generation is bound by certain geographical limits: it can only be developed in thermally active zones. Some countries in Europe are pioneers in its development, but the efficiency of geothermal power plants is still very low. The geothermal process needs additional focus on the development, demonstration and deployment technology so as to prove the technology’s reliability and application possibilities. An assessment study of potentially available sites will help to determine the application possibilities in Europe. Further efforts are needed to improve the technology’s efficiency. At this moment, several individual projects are on-going which might complicate the technology’s standardisation process. The ratio of effective and dead drilling proves to be an obstacle to the development – there is a need to develop a more efficient strategy to tap fields, for example via better seismic tools, and thus reducing the risk of dead drilling, supported also by a risk-sharing business model. RD&D needs Efforts need to be concentrated on cost reduction of drilling and piping, with a special focus on reducing the risk of dead drillings. Solar Photovoltaic There is a fully developed commercial market for off-grid1 applications of PV. Extensive support schemes for grid connected PV in certain countries have led to large-scale deployment of this technology. The further development of PV should focus on cost reduction, and aim at both improving the presently used technology and on developing new concepts. 1 Off-grid installations are autonomous mini-installations (e.g. phone booths). 8 RD&D needs PV efficiency increases should be considered under the cost aspect; a cost-benefit analysis should be performed. In addition, the rate of the energy efficiency conversion needs improvement. Research on alternative raw materials as well as assembly methods is also important. Grid connection and system integration have to be considered as part of the RD&D process. Finally, as with wind, the improvement of weather forecasts is important. Concentrated solar power The development levels of the individual types of concentrated solar power are different. The best sites for this technology are in southern Europe and the MENA2 countries. Its development cannot be separated from establishing transmission interconnections between these regions and the EU. RD&D needs Further development of concentrated solar power is necessary to decrease the high investment costs. Additionally, a lack of standardisation adds to the mounting costs. The geographical location of concentrated solar power (deserts) makes plant cooling and water requirements more challenging. Technically, the following fields need more attention: - Absorber tubes (e.g. direct evaporation systems, use of molten salt); - Heliostats (e.g. optimised sizes, standardisation); - Further development of central receiver concepts (e.g. molten salts and air receivers); - Solar tower with air receiver and gas turbine; - Combination of internal storage and hybridisation in a solar plant. Wind Wind on-shore development has been massive in certain EU countries, where the number of available sites now is limited. This opens the field for offshore wind energy development and for sites with harsher weather conditions, but also for further on-shore deployment in countries where wind has not yet taken off. Wind offshore is lagging behind wind onshore by approximately 15 years, referring to the ability to compete on the market. The challenges common to wind on- and offshore are the already mentioned weather forecasting – although huge improvements have taken place over the last ten years –, balancing, as well as grid connection. RD&D needs On-shore wind electricity production has reached a mature status, hence efforts have to address further improvements related to location of sites, environmental impact and cost of electricity. The development of systems with several GW also requires solutions for large-scale application, including grid connection and integration. Continued research and development have to address several maintenance issues with a view of reducing costs and increasing efficiency. Areas to be addressed for the mechanical aspects include drive trains, blades and foundations. For wind offshore, health and safety are also an issue. The need for regular maintenance should therefore be reduced as far as possible during the design phase. 2 Middle Eastern and North African 9 Further research is needed to make the price performance ratio more favourable for offshore wind electricity production. The large distance to the shore makes building and operating the parks challenging, affecting availability of locations, maintenance costs and accessibility. Specific areas of attention (on- and offshore): - Increase the stability of foundations; - Increase cost-performance ratio of materials and gear; - Grid service at medium voltage; - Work on materials (replace rare earth); - Easily accessible demonstration sites for new designs; - Drive train, gear and generator are to be developed further, as well as highly efficient condition monitoring systems (drive train, blades, tower); - Light weight construction (corresponding materials with low specific weight, high strength and durability against environmental influences and high damage tolerance are needed); - Optimised rotor blades (e.g. more corrosion-resistant surface coatings, automation of manufacturing, aerodynamics); - Reduce environmental impacts (birds, sea mammals); - Safety/health issues for maintenance crews. Ocean – marine, tidal & wave energy Marine, tidal and wave technologies are on a later track than those mentioned above – beyond 2020. In order to achieve the 20% RES target for 2020, EURELECTRIC considers that a clear focus should lie on the most mature RES technologies. RD&D needs Further development and deployment are needed to build confidence in the reliability of these technologies, to increase their commercial viability and energy efficiency, and to achieve the necessary cost reductions for possible commercialisation. At the same time, future grid connections for these technologies need to be considered carefully. Assessment of the environmental impact of these technologies is necessary. 10 Overview: RD&D needs for RES-E3 Phase Research Development Demonstration Market Uptake Deployment Commercial use Technology Biogas Focus on commercial use Biomass Focus on efficiency improvements Geothermal Focus on market uptake Focus on efficiency improvements Hydropower Marine – Ocean streams Focus on development & demonstration Marine – Tidal Focus on development & demonstration Marine – Wave Focus on development & demonstration Solar – Concentrated Power Focus on market uptake Solar – Photovoltaic Focus on cost reduction Wind – Offshore Focus on price / performance ratio Wind – Onshore 3 Focus on cost reduction Renewables for electricity generation 11 III. From promise to practice: recommendations on improved RD&D support for RES-E technologies We are witnessing a strong contrast between the ambitions for RD&D in energy and a reality in which spending is insufficient, fragmented and uncoordinated. In addition, member states focus too much on their share of the already limited budget, rather than developing a European approach. The following section briefly describes existing programmes. Today’s RD&D on the EU level The major share of EU RD&D spending is related to the Framework Programmes for Research. The 7th Framework Programme for Research, Technological Development and Demonstration will be in place until 2013. Covering seven years, the financial share of the programme contained €53 billion of which 2.3 billion were allocated to energy RD&D. EURELECTRIC has assessed that, over the years, energy-related RD&D spending has actually decreased as the number of EU member states has grown. The next Framework Programme will be called “Horizon 2020”, not FP (8); this rebranding is intended to express the move towards more convergence in the 2020 objectives, including RD&D. The European Commission aims to come up with common strategic priorities, focusing on societal challenges, competitiveness and research excellence. The newly designed framework is intended to support the whole innovation cycle: from basic research to market uptake. With this reform in RD&D policy the European Commission is also trying to tackle the administrative burden linked to the application of EU support schemes. Other programmes beyond the Framework Programme include Intelligent Energy Europe, the European Institute for Innovation and Technology, and the Technology Platforms under the SET Plan. • Competitiveness and Innovation Framework Programme (CIP) EUR 3.6 billion (2007-13) / EUR 730 million for Intelligent Energy Europe • European Institute for Innovation and Technology (EIT) EU budget contribution of EUR 309 million (2007-13) / circa EUR 100 million for KIC InnoEnergy • EU Joint Technology Initiatives – Technology Platforms • SET Plan: Strategic Energy Technology Plan and the Industrial Initiatives The SET Plan was launched by the European Commission in 2009 as the technology pillar of the EU energy and climate goals. The SET Plan focuses on accelerating the development and deployment of low-carbon technologies, and attempts to improve coordination between the national RD&D funding systems. Eight industry initiatives have been launched: solar, wind, CCS, electricity grid, bio-energy, next generation nuclear and smart cities. But the SET Plan has not yet led to independent funding for RD&D. 12 Nine Recommendations Many of the RES technologies face the same obstacle to reach competitiveness, namely the costs, often characterised by the high capital expenditure (CAPEX) cost. Deployment and commercial market uptake are important phases in the innovation cycle to ensure competitiveness under market conditions and to hence reach full market penetration. The cost performance ratio of RES technologies is a determinant that should be addressed carefully throughout the different phases in order to ensure reliability of market competitiveness. Government schemes and a clear and stable legislative framework that support innovation are necessary to undertake basic research and development and, in a second step, to create an investment climate that allows RES technologies to gain commercial competitiveness. Only the EU can advocate an overall strategic direction for Europe and can kick-start more exchange on national RD&D programmes among member states. The EU must ensure that each part of the innovation system works effectively within the whole system and must bring together all RD&Drelated participants to set common goals. It should set the level of public funding to leverage investment from the private sector and work to expand research and industrial capacity. In order to deliver on the ambitious 2020 agenda, and especially the 20% RES target, EURELECTRIC recommends the following nine general actions to complement the more specific recommendations in this paper’s technology-related section. Key Actions: 1. Significantly increase the energy-related RD&D budget. 2. Be realistic about what can be achieved by 2020 on the RD&D agenda, focus accordingly and be accountable for the steps to get there. 3. Focus more on deployment and commercial market uptake. 4. Focus clearly on mature technologies, in order to deliver on the 2020 targets, taking this paper’s technology-specific recommendations into account. 5. Promote cooperation and exchange among member states and stakeholders on deployment experiences and RD&D focus and priorities. Avoid duplication of efforts. Set best practice and benchmarks and make them public. 6. Ensure stable incentives for industrial participation. 7. Give the SET Plan an independent budget line and use it as a major instrument to deliver on the 2020 targets. 8. Lighten the bureaucracy around EU research programmes. Adopt a results-oriented approach to programmes and ensure EU-wide benefits, but question for example the required number of participating countries. 9. Rather than merely stimulating competition across all EU member states for limited funding, consolidation or research and demonstration via hubs may lead to advancements. A number of demonstration and innovation hubs across the EU should be identified: they should focus on particular technologies and services, recognising the existing advantages/imperatives in those areas to achieve technological breakthroughs. 13 Union of the Electricity Industry - EURELECTRIC aisbl Boulevard de l’Impératrice, 66 - bte 2 B - 1000 Brussels • Belgium Tel: + 32 2 515 10 00 • Fax: + 32 2 515 10 10 VAT: BE 0462 679 112 • www.eurelectric..org