Objective
Cluster Green Electricity focuses on specific problems which renewable energy projects face under present market conditions and thereby aims to help improve their market position. The Cluster consists of five tasks:
VT 1
Empirical analysis on success factors and role models for Green IPPs in liberalised markets.
IPP, ECN, CIEMAT
Identification of success factors of different Green IPP project types under alternative market structures to identify best practice examples and develop new strategic options for Green IPPs in liberalised power markets.
Classification patterns have been developed that permit a detailed differentiation between renewable energy (RE) project classes. The current market situation of Green IPPs (profit-driven RE industry-focused professional market players) is evaluated through empirical country studies.
Work progresses as planned. Data compilation for the empirical country studies has been completed for most countries. Detailed research results are expected at the end of August and will be verified/discussed with external experts during interviews and a project workshop.
Success factors and role models of suitable project structures will be identified and disseminated within the RE industry to enhance further project development and the use of innovative project approaches.
VT 2
Tools and Techniques for the marketing of green electricity to grid-connected consumers.
Linden, Ecuba, PricewaterhouseCoopers.
Identification of measures to increase the number of domestic, commercial, industrial and public sector customers purchasing green electricity.
Barriers and opportunities to the development of GE presented by the legislative and financial structures of the electricity markets in the UK, Italy and the Netherlands are identified. An examination of the electricity market is carried out in each Member State in order to identify consumer groups interested in the purchase of green electricity. The effectiveness of existing marketing techniques is investigated in order to help determine new techniques for penetrating potential markets.
Guidance will be provided to green electricity suppliers on effective marketing techniques. Householders, businesses and local authorities will be provided with advice concerning the purchase of green electricity.
The final report of this consortium is under completion. The main findings from each Member State include:
UK
Despite previous research that has indicated a significant demand for green electricity, the study has found that awareness and use of green electricity in the domestic sector are both very low - less than 1% customers use green electricity. Conversely, the study has found that awareness of the option to buy green electricity among local authorities is high. Approximately 30% local authorities in the UK currently use green electricity. Feedback from the non-domestic sector in general, has indicated a strong demand for green electricity, driven by the Climate Change Levy which places a 0.43p per kWh tax on electricity used (green electricity is exempt from the levy). Both electricity customers and green electricity suppliers have highlighted the pressure of this increased demand on available renewables generating capacity.
Lack of available supply and now market uncertainty due to the introduction of the Renewables Obligation (electricity suppliers are obliged to supply a specified percentage of their total electricity sales from renewable sources) have meant that the marketing of green electricity has not been a high priority for some suppliers. Until the market becomes clearer and more generating capacity is developed, suppliers are unlikely to engage in marketing which will lead to a substantial increase in domestic green electricity customers. At present therefore, the purpose of marketing should be to create a demand for green electricity, not to sell GE as a product. Other institutions such as local authorities and energy efficiency advice centres are well placed to take on this role.
netherlands:
The Netherlands is considering the full deregulation of the consumer electricity market. The green electricity market is already liberalised. Government policy is aimed at stimulating maximum demand for green electricity. An Ecotax has virtually eliminated the price difference between standard and green electricity. Despite all the efforts to promote renewable energy, awareness of green electricity was found to be low. As is the case in the UK, more people state that they would switch to a green electricity supply than actually do in practise. Although some 40% of the consumers indicate that they would switch towards green electricity, only 10% had indeed done so at the beginning of 2002. Higher prices, lack of trust and the administrative bother of switching were all identified as reasons for not switching to green electricity.
Electricity suppliers are pushing the green electricity message in their marketing to prevent their current customers from switching to other suppliers. Energy companies have come to realise that success in a free market requires a "strong brand". The energy companies are promoting themselves as reliable, solid and socially responsible providers of green energy. They all wish to profile themselves with a distinctive green image and an individual definition of green electricity. The energy companies are all using their own sales channels, marketing methods and techniques.
Italy
The Italian electricity market has undergone partial liberalisation. Since January 2002, customers using more than 9 GWh/year can choose their supplier (industrial, commercial and local authorities, can also join a consortium reaching 9 GWh/y but with a single consumption exceeding 1 GWh/y) and therefore opt to buy green electricity in the form of RECs. The total liberalisation of the electricity market is not yet fixed. The Government proposal is to decrease the amount of electricity from 9 GWh/y to 100 MWh/y by 2003.
Enel Greenpower, which owns the majority of the renewable energy power plants in Italy, introduced the 100% green energy label in January 2002. Other companies will sell renewable energy in the future but most probably at higher tariffs. Under this scheme, Green Electricity customers can use a 100% green energy label to show that they are using electricity from renewable sources. The 100% green energy label is managed by APER, the renewable energy sources producer's Association.
In terms of the potential market for green electricity, the majority of people aware of green electricity are in general, also environmentally aware. Environmental associations therefore have an important role to play in promoting green electricity. Local authorities and energy agencies are very sensitive to the option to buy green electricity. The Local Agenda 21 process has been identified as an effective communication environment, which could be used to promote green pricing.
Lessons learnt from other experiences of marketing renewable energy indicate that a premium price for green electricity may not act as a barrier to uptake. Further, symbolic aspects are likely to help increase uptake (e.g. PV panels on roof), so labels for green pricing are well appreciated. The Green Pricing can be a useful way to increase the demand for Green Electricity in a context were the main incentives to RES suppliers come from Green Certificates.
VT 3
Financial instruments based on insurance packages facilitating third party financing.
Green Energy Trading, AON, Integrated Energy Systems, EKAN Gruppen.
The objective of this task was to develop innovative financial instruments based on insurance packages for green electricity and green certificate trading which will provide renewable electricity producers with the means to secure non-recourse project financing from financial institutions.
The financial barriers to green electricity and green certificate trading in the liberalised market were analysed, focusing on access to finance in the absence of a long-term contract or guaranteed feed-in tariffs.
The principal conclusions of this part of the work were that:
1. there is significant risk associated with trading green electricity and green certificates in the liberalised market context;
2. the market regime for the electricity and separately the certificates will determine the nature and extent of this risk;
3. access to finance is determined by the size and nature of the company involved in the green electricity and green certificate businesses;
4. the risk management strategy employed depends greatly on the size of the green electricity trading business as a proportion of the company's overall portfolio, coupled with the risks associated with the other elements of the company's business.
Appropriate instruments based on insurance packages have been explored to facilitate closure on financial packages for the development of renewable energy projects. The outcome of this part of the work has shown that the
1. impacts of September 11 2001 and the collapse of the Enron Corporation have had a severe impact on the insurance industry and on the availability of insurance schemes;
2. the insurance products which the project team initially envisaged as appropriate for managing the market risks associated the sale of green electricity and green certificates in the liberalised electricity market are no longer available. These products are essentially derivatives of performance bonds, which have generally become unacceptable to auditors since the demise of Enron;
3. There are also now much greater difficulties in securing insurance cover for the risks associated with the pre-sale stage of project development. While much media attention and commentary has focused on the significant increase in insurance premiums, there has been relatively little debate about the fact that insurers are now shying away totally from risks which previously were covered without difficulty, for example technology risk. This will have a much greater impact on the development of renewable energy projects than the increase in premiums, as the technology is still maturing and each improvement constitutes an additional risk which is difficult to insure.
This has delayed the completion of this vertical task, which involves the application of the insurance based financial models to the chosen case studies. In addition, there have been delays in the development of the case studies themselves. As a result, it is envisaged that the completion of this vertical task will be in month 15 rather than month 12.
The overall outcome of the project will be a key information resource, which will provide green energy generators, traders and suppliers and financial institutions with the capacity to develop more informed strategies in the delivery of green electricity projects within the liberalised electricity market context. It will further inform policy makers of the difficulties associated with the deployment of green electricity projects in liberalised electricity markets, arising from the impacts of September 11th and the Enron collapse on the availability of insurance.
VT4
Development and piloting of community investment clubs.
Dulas, ARENE
Project objectives.
Facilitating and stimulating community ownership of renewable energy schemes in Wales and Provence-Alpes-Côtes d'Azur region in France via the development and piloting of community-based renewable energy 'investment clubs' (CREICS) as both a financial and market instrument.
Pilot community RE investment clubs are developed and established in both regions and a methodology on how RE projects can be implemented is developed. The promotion of CREICs in both regions will then focus on attracting community participation. Replication opportunities will be studied in other European regions.
Description of work:
A review of the legal and administrative aspects of selling community shares in investment clubs and previous experiences with community investment structures in the EU has been carried out and has been included in the first project progress report.
A community RE investment Club has been established in the UK and a pilot project has used club facilities to raise finance for a community-owned wind turbine in Wales from the local community. Arene are currently in the process of establishing a pilot RE investment club for small-scale hydro schemes in the South of France.
A web-site has been established which promotes community participation in RE projects at www.reic.co.uk. The web-site contains information on investing in community projects, a guide for developers and community groups, a community RE handbook detailing the mechanisms of REIC, on-line membership and the essential guide to developing community RE projects. Arene will add to this web-site with a community handbook for establishing community RE projects and the mechanisms of the working of an investment club in France.
Dissemination of the CREIC has taken place on a wide-scale basis with 8 presentations on the club taking place at National, European and International level including the British Wind Energy Association Conference 2001 and the Global Wind Power Conference in April 2002. A lot of interest in the club was raised from participants at the Global Wind Power Conference from all over the world with replication opportunities being identified in countries including USA, Spain, Netherlands and South America. In addition 6 papers on the club have been published including 1 journal paper, 3 conference papers and 3 magazine articles.
In February 2002 REIC had a promotional stand at the launch of the UK wide community renewables initiative in London. The Renewable Energy Investment Club will officially be launched in May 2002 to promote the activities of the club.
The mid-term project meeting took place in April 2002.
All of the main deliverables have now been completed in Wales and Arene is using the experience gained from the investment club in Wales to replicate the club in France, although difficulties with the differences in legal issues in both countries have made this harder to achieve than originally anticipated.
The handbook produced for the UK will be replicated and applied to the French situation and added to the REIC web-site. Arene are currently organising a promotional event with UDVN (Union Départementale Vie et Nature) to talk about the creation of an investment club in France in September. Arene are hoping to attend the launch of REIC in the UK in May.
Expected results:
The main deliverables for the project were:
1. A report on experience with community ownership and investment in RE in the EU;
2. Incorporation documentation for the REIC;
3. Documentation on structure for CREIC including methodology and handbook;
4. Two promotional events and activities in each partner region;
5. Opportunities for replication in partner countries or other EU states;
6. Dissemination on a web-site, on a regional level and at conferences and seminars.
VT5
Promotion of photovoltaic private roof systems through creation of local partnerships in several European cities: AGEVE, AESS, ALES, Rome Energy Agency.
Local partnerships in Seville, Rome and Modena have been established. The partnerships are now at the point of developing and implementing necessary accompanying measures to foster national PV roof programs. The project partners from Seville, Rome and Modena visited Berlin to become acquainted with successful German campaigns for the promotion of standardised PV roof systems and successful bulk purchase examples.
An analysis of the respective local markets as well as the development of standardised PV roof systems that meet the local requirements is in process.
Training courses for installers and electricians are planned for the coming autumn. Lecturers from several German "Solar Schools" have already been contacted.
In further steps the local partnerships will promote bulk purchases for the developed PV-system and develop and implement financial instruments adjusted to the specific needs of the promoted PV systems. An appropriate publicity campaign will be prepared and launched early in 2003.
Programme(s)
Topic(s)
Data not availableCall for proposal
Data not availableFunding Scheme
CSC - Cost-sharing contractsCoordinator
CB10 1LR Saffron Walden
United Kingdom