National Seminar Role of DER in the EU

National Seminar Role of DER in the EU and Current Status in the Baltic States 6 March 2007 Current Status of Energy Policy on Development of Distributed Generation in Estonia Dr. Ülo Rudi Tallinn University of Technology 6 March 2007 Role of DER in EU and in the Baltic States

CONTENTS • The Main Economic Indices • The present situation of the Estonian energy sector • The development conditions for the distributed generation. • Supporting measures for the distributed generation • The main targets for the lager use of distributed generation. • Conclusions. 6 March 2007 Role of DER in EU and in the Baltic States 2

The Main Economic Indices 2000 6. 10 2002 7. 76 2003 8. 49 2004 9. 37 2005 11. 06 6. 10 7. 60 8. 21 9. 07 4. 45 5. 22 5. 61 6. 09 6. 74 7. 9 4. 0 -29. 3 -5. 6 8. 0 3. 6 -39. 4 -11. 0 7. 1 1. 3 -42. 8 -12. 1 8. 1 3. 0 -40. 6 -13. 0 10. 5 4. 1 -31. 9 -11. 0 Growth of average monthly gross wages and salaries , % 10. 5 11. 5 9. 4 8. 4 10. 8 Unemployment rate, % 13. 6 10. 3 10. 0 9. 7 7. 9 Total primary energy supply (TPES), TWh 53. 0 53. 9 58. 6 60. 3 58. 9 TPES ratio to GDP, k. Wh/EEK’ 2000 0. 57 0. 51 0. 52 0. 49 0. 42 INDEX GDP at current prices, billion EUR GDP at 2000 constant prices per capita, thousand EUR GDP change at constant prices, % Change of consumer price index, % Foreign trade balance / exports, % Current account / GDP, % Source: Statistical Office of Estonia, Bank of Estonia 6 March 2007 Role of DER in EU and in the Baltic States 3

TPES ratio to GDP, TPES, milj. EUR PJ 9000 450 TPES / GDP, k. Wh / EUR 2000 k. Wh / EUR 8000 400 7000 350 14 6000 300 12 GDP EUR 2000 TPES, PJ 5000 250 10 4000 200 8 3000 150 6 2000 100 4 1000 50 2 0 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Years 6 March 2007 Role of DER in EU and in the Baltic States 4

BALTIC GENERATION MIX 2005 Lithuania 70% Latvia 66% Estonia 91% Latvia 33% Lithuania 23% Estonia 5% Source: Statistical Office of Estonia, Latvia, Lithuania 6 March 2007 Role of DER in EU and in the Baltic States 5

Capacity and Production of Power Plants Gross Electrical Production Capacity in of Electricity, 2005, MWe GWh Avail. / instal. 2004 / 2005 Thermal Power Plants Hydroplants 2523 / 2697 10302 /10201 5. 0 / 5, 2 22, 4 /21. 5 Windplants 31. 0 / 31, 0 7, 6 / 53. 9 CHP Plants 421 1021 6 March 2007 Role of DER in EU and in the Baltic States 6

Used Resources for the Electricity Production 2005 Hydro Natural gas 5. 34% Biofuel 0. 32% Oil shale 91. 06% Peat 0. 14% Wind 0. 53% 0. 21% Shale oil gas and shale oil 2. 40% Total Gross Electricity Production 10201 GWh Source: Statistical Office of Estonia 6 March 2007 Role of DER in EU and in the Baltic States 7

Fuels for the Heat Production 2005 Shale oil 8. 32% Heavy fuel oil 0. 73% Other (Shale oil gas and biogas, black Coal liquor) Light fuel oil 0. 82% 7. 25% 3. 51% Oil shale 13. 49% Milled peat 1. 71% Liquefied gas 0. 05% Natural gas 41. 33% Sod peat 1. 27% Briquette and pellets 0. 18% Wood waste 19. 97% Firewood 1. 22% Peat briquette 0. 02% Source: Statistical Office of Estonia 6 March 2007 Role of DER in EU and in the Baltic States 8

The biggest problems of the oil shale energy are • The oil shale energy sector is the biggest polluter in Estonia • The big pollution charge • EU Directive 2001/81/EEC • Too low efficiency • The concentrated electricity production 6 March 2007 Role of DER in EU and in the Baltic States 9

The Environmental Requirements Influencing on Operation of Oil Shale Fired Power Plants 01. 2008 – SO 2 bounding on existing boilers > 65%, – fly ash emissions < 200 mg/Nm 3 16. 07. 2009 – to reconstruct ash handling systems, and bring ash landfills in compliance with landfill directive 01. 2012 – SO 2 emissions total < 25 000 ton/year The current SO 2 annual emission rate is about 60 000 tons/year. The new CFB based capacity will be erected 01. 2016 – LCP directive requirements will apply to all boilers 6 March 2007 Role of DER in EU and in the Baltic States 10

Strategic Energy Policy Objectives (1) • Self-sufficiency – Ability to cover domestic electricity needs any time by producers located in Estonia. • Increase in the use of renewables – Indicative target 5, 1% of power by 2010 (2001 -0, 1%; 2005 -1, 1%). – Main emphasise on the biofuels based CHP generation and windpower. 6 March 2007 Role of DER in EU and in the Baltic States 11

Strategic Energy Policy Objectives (2) • Increase in the use of CHP-s – Indicative objective 20% of power from CHP -s by 2020 (today 10%). • Efficiency Improvements: – Primary Energy Consumption shall not exceed until 2010 the level of 2003. 6 March 2007 Role of DER in EU and in the Baltic States 12

Estonian Energy prospective Energy Development Plan 2015 (2030) 2000 Primary energy supply, Oil Shale consumption, Share of renewables in energy supply, Share of RES in production of electricity, Final consumption of electricity, Required net capacity of power plants, Share of CHP in generation of electricity, Opening of electricity market, Heat consumption, Share of CHP in heat production, Emission, share of limit for 2008, SO 2 CO 2 6 March 2007 PJ 106 t % % TWh MW % % TWh % % 2010 189 13. 2 10. 5 0. 1 5. 4 1980 12 – 14 10 8. 5 33 220 – 250 11 – 13 13 – 15 5. 1 6. 5 – 8. 0 2400 – 2650 20 35 – 40 8 – 9 35 – 40 181 48 90 – 100 50 – 55 Role of DER in EU and in the Baltic States 13

% Share of electricity from RES to gross electricity consumption 60 0, 9 50 40 Rest of target 2010 48, 4 30 RES Share 2005 20 6, 8 10 0 4, 0 3, 1 3, 9 1, 1 Estonia Lithuania Source: Eurostat 6 March 2007 14, 2 Latvia Role of DER in EU and in the Baltic States EU 27 14

Instruments for supporting renewable energy sources • Renewable energy sources – hydropower, solar energy, wave energy, tidal energy, geothermal energy, landfill gas, wastewater treatment gas, biogas and biomass • A network operator is obliged to buy electricity produced from renewables within the network, which he owns or possesses • A network operator pays the price for renewables based electricity 5. 17 euro cents per k. Wh. (Planed 7. 34 euro cents per k. Wh since 01 July 2007) 6 March 2007 Role of DER in EU and in the Baltic States 15

Production of hydro- and wind energy GWh Wind 50 45 40 35 30 25 20 15 10 5 0 2000 Hydro 6 March 2007 2001 2002 2003 2004 Role of DER in EU and in the Baltic States 2005 16

Consumption of imported liquid fuels and domestic biofuels TJ for electricity and heat generation 16000 Heavy & light fuel oil 14000 Biomass & biogas 12000 Coal 10000 8000 6000 4000 2000 0 1995 6 March 2007 1998 2002 2004 Role of DER in EU and in the Baltic States 2005 17

CONCLUSIONS • In Estonia wind and biomass resources are significant. If the "right" policies were in place, wind and CHP with biomass could make an important contribution to Estonia's energy supplies. • The development of distributed generation needs the renovation of the transmission and distribution grids. • The change of electricity generation technology needs a good level research. 6 March 2007 Role of DER in EU and in the Baltic States 18

Thank you for your attention ! 6 March 2007 Role of DER in EU and in the Baltic States 19