Helsingør — 4 June 2009 Anders Kofoed-Wiuff Ea

Helsingør - 4 June 2009 Anders Kofoed-Wiuff, Ea Energy Analyses Ea Energianalyse

Scope of the study • Phase I – Overview of current energy situation – Scenarios for the future regional energy system • Phase II – Detailed scenario analyses of the electricity and district heating markets – Prioritized list of regional projects/polices to promote the region as a sustainable region • Phase III – Develop strategies for deployment – Regional knowledge sharing in the field of sustainable energy – Outline the possibilities for the industry to be frontrunners in the development of new energy technologies Medio 2008 Medio 2009 Ea Energianalyse

GAS OIL Hydro Nuclear Bio Gas Coal Oilshale Hydro th Nuclear ow gr ic GAS Hydro, Gas om on OIL c e Nuclear gh hi ed Coal Gas Wind Coal Nuclear Wind Nuclear Bio Hydro ct Coal e xp E Ea Energianalyse

Characteristics of the region * Including only North East Germany and North West Russia Ea Energianalyse

Characteristics of the region Ea Energianalyse

How can the energy and transport systems in the region develop to achieve: I. 50 % reduction of CO 2 emissions in 2030 compared to 1990 II. 50 % reduction in oil consumption in 2030 compared to 2005 Ea Energianalyse

Two scenarios for 2030 Small-tech gy er En ra T sp n rt o • • Energy savings District heating - CHP Biomass Wind, wave, solar • Improved fuel economy • Electric vehicles • Modal-change • ICT Big-tech • CCS • Nuclear power • Biomass • Improved fuel economy • Electric vehicles • Biofuels Ea Energianalyse

Results Ea Energianalyse

Results Ea Energianalyse

Scope of the study • Phase I – Overview of current energy situation – Scenarios for the future regional energy system • Phase II – Detailed scenario analyses of the electricity and district heating markets – Prioritized list of regional projects/polices to promote the region as a sustainable region • Phase III – Develop strategies for deployment – Regional knowledge sharing in the field of sustainable energy – Outline the possibilities for the industry to be frontrunners in the development of new energy technologies Medio 2008 Medio 2009 Ea Energianalyse

Balmorel model • The Balmorel model determines based on market principles and regulation: – generation of electricity and heat, distinguished by technology and fuel – consumption of electricity and heat – electricity transmission – emissions – prices – optimal investments in generation capacity given framework conditions and cost data – costs and benefits of alternative scenarios The model is open source: www. balmorel. com Ea Energianalyse

• • • Basic model contains 17 areas with transmission constraints For the purpose of this study data for Russia is included in the model North-West Russia – – – Karelia Kola Pskov Kaliningrad Arkhangelsk St. Petersburg incl. Leningrad – Novgorod – Komi Data is obtained from publicly available sources DE_CS Ea Energianalyse

Baseline scenario 2010 -2030 • Fuel prices according to International Energy Agency - 120 $/bbl in 2030 • Targets – 2020: 21 % CO 2 reduction, 20 % RE (national targets) – 2030: 38 % CO 2 reduction (50 % compared to 1990), 20 % renewable energy (national targets) • Model decides new investments in generation capacity except nuclear and hydro power • Country specific renewable energy sources Ea Energianalyse

Development nuclear power Ea Energianalyse

Selected DRAFT results Baseline: Investments Ea Energianalyse

Selected DRAFT results Baseline: Electricity generation Ea Energianalyse

Selected DRAFT results CO 2 -emissions (Mill. tonnes) 1990 2005 21%red 50%red 38% red Ea Energianalyse

Selected DRAFT results CO 2 and RE prices CO 2 -prices for CO 2 target and RE target Shadow 2020 2030 The cost in the model of additionally Country CO RE reducing one ton of CO 2 EUR/ton EUR/MWh Denmark 9 (may be interpreted as an estimate of the Estonia CO 2 -price) Finland 15 2 2 el el 16 Latvia 15 RE-price 5 59 Lithuania 14 The cost in the model -of additionally Norway increasing RE generation by one MWh. Poland Sweden 16 (may be interpreted as an estimate of 0. 5 the Russia 13 Germany cost of a RE certificate) Ea Energianalyse

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Sensitivity scenarios • Regional renewable energy target • Increased energy efficiency (lower demand for electricity, particularly for heating) • Strong interconnectors • Stronger CO 2 target in 2020 (30%@COP 15) • Case: Integrated off-shore grid at Kriegers Flak Ea Energianalyse

Selected DRAFT results Regional renewable target Shadow prices for CO 2 target and RE target 2020 Country Denmark Estonia Finland Germany Latvia Lithuania 2030 CO 2 EUR/ton RE EUR/MWhel 0 18 54 0 Based on the model analyses it will be possible to quantify the benefits of a common a RE framework Norway Poland Sweden Russia Ea Energianalyse

Selected DRAFT results Benefits of increasing the transmission grid in the region Connections linking thermal power based systems in Poland Germany and the Nordic power system dominated by hydro power have the highest value. Strengthening connections between the Baltic countries and Scandinavia also appear attractive. Further analyses are needed €/MW capacity, in 2020, in the baseline scenario Ea Energianalyse

Preliminary observations • The targets set-out can be achieved given the RE resources available (stronger targets could be met) • Wind power appears to be the most costefficient measure (however more detailed analyses required) • Benefits of increasing strengthening the transmission grid in the region • Benefits of cooperation on achieving RE targets Ea Energianalyse

Scope of the study • Phase I – Overview of current energy situation – Scenarios for the future regional energy system • Phase II – Detailed scenario analyses of the electricity and district heating markets – Prioritized list of regional projects/polices to promote the region as a sustainable region • Phase III – Develop strategies for deployment Workshop – Regional knowledge sharing in the field of sustainable Energizing the sustainable growth in the Region energy Kaliningrad – Outline the possibilities for the industry to be frontrunners 10 -11 June 2009 in the development of new energy technologies Medio 2008 Medio 2009 Ea Energianalyse

Recommendations • • • Develop a shared vision A Green Valley of Europe in order to mobilize the strong traditions in the region for public-private co-operation. Establish an energy stakeholder forum that includes different crossborder, cross-sector and cross-level actors. Not least the private sector needs a larger international platform in order to go beyond small markets. Develop regional projects which could benefit the region as a showcase for comprehensive and sustainable energy systems including R&D and demonstration activities. Develop a common interconnector strategy for the region to allow for a higher level of renewable energy penetration including from offshore wind power. Launch an action plan for efficient and sustainable heating, involving the larger cities in the region and the district heating companies. Establish a common regional training programme to strengthen the capacities in energy planning. Such a programme should aim at developing the exchange of experiences and best practices among officials at local and national level. Ea Energianalyse

THANK YOU Ea Energianalyse

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Analyses (-50 % comp. to 1990) Leading to a synthesis scenarios for the region based on the outcome of the analyses and subsequent discussions of the results with key stakeholders in the region Ea Energianalyse

Fuel prices • In accordance the latest projection of the International Energy Agency Long-term oil price: App. 120 USD/bbl Biomass/waste: -2, 5 to 12 €/GJ Ea Energianalyse

* excl. North West Russia Ea Energianalyse

RE targets 2020 • Assuming, that the absolute share of renewable energy in electricity consumption should increase 1. 5 times more than the overall share of renewable energy. Ea Energianalyse

Electricity demand Ea Energianalyse

Wind power potentials Ea Energianalyse

Based on the model analyses it will be possible to quantify the benefits of a common a RE framework Ea Energianalyse

Selected DRAFT results To the consumer price should be added to the cost of RE subsidies/certificates Ea Energianalyse

Selected DRAFT results Benefits of increasing the transmission grid in the region €/MW capacity, in 2020, in the baseline scenario Ea Energianalyse

Next steps • Final report by June 2009 • Presentation of results at – WS: Energizing the sustainable growth in the Region, Kaliningrad, 10 -11 June – 4 June, Copenhagen, Foreign Ministers • Phase III – Unfold the potentials identified in the scenario analyses through stakeholder activities and further analyses – A synthesis scenario for the BSR – Cooperation with Nordic Energy Perspectives Medio 2008 Medio 2009 Ea Energianalyse

Comments to BSPC report • Involve the stakeholders in the region • Establish concrete activities on specific topics – Opportunities for CHP in the big cities around the Baltic – Common plan for off-shore wind in the BS – Action plan for the utilization of municipal waste and biogas for energy purposes – Information and communication technologies to replace physical transportation • Mention Kriegers Flak as a showcase for the Baltic Sea Region • Education of the new energy planners • Highlight the role of the cities as key to the implementation of energy and climate policies Ea Energianalyse