Estonian energy scenarios 2030 2050

Reference and single track scenarios in Balmorel

INTRODUCTION

Process• 4 December 2012: Kick-off meeting• 7+8 January 2013: Scenarios defined• 26 February: Test results for two scenarios• 8 April: Test results for all scenarios• 9 April: Defining combination scenario• 23 April: Skype• 7 May: Draft final report• 14 May: Meeting• 31 May: Final report

4

Purpose of this presentation

• It is draft model runs – not final results– 30 time steps per year • Will be increased to 72

• Can be used to discuss assumptions• Input to discussion of combination scenario

Scenarios– Reference and single track scenarios has been simulated.

Focus on electricity and district heating.

Liberal market

CO2 concern(100€)

Renewable energy focus

CO2 market collapse (0€)

110%

Carbon leakage (0€ in Russia)

Reference

EE

Medium CO2 price

Input driven scenarios

1. Define input– Demand, fuel costs, CO2 price, technology costs,

existing plants and transmissions lines

2. Use “fundamental model”– Optimal dispatch– Optimal investments (simplifyed)

3. Study results– Prices, costs– Emissions

Scenario table of key assumptions

Estonian Demand

Estonian Capacity constraint

Estonian Inland generation

CO2 price (2030 and 2050) EUR/ton

Reference BAU 110 % - 30 47

CO2 market collapse BAU 110 % - 0 0

Carbon leakage BAU 110 % - 30/0 * 47/0 *

CO2 concern EE 110 % - 73 100

Renewable energy EE - 100 % 30 47

Liberal market BAU - - 30 47

* Zero in Russia

Status

• Model runs are successful– Socio-economic evaluation will be included before meeting!

• Renewable energy focus-scenario needs to be reformulated!– Now:

• Only investment in new capacity in Estonia in the form of RE• 100% national generation of electricity

– Should be:• Only investment in new capacity in Estonia in the form of RE• Increasing requirement for RE generation in Estonia

• Work with Stream model is in progress– Result send to demand group for comments

BALMOREL

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Introduction: Balmorel• Optimal dispatch (a given year, with given technology)

– Input:• Electricity and heat demand• Fuel prices• Capacities (generators, transmission) and efficiencies

– Output:• Generation per unit, flow between areas• Costs, emissions

• Optimal investments– Input:

• Cost of technologies• Interest rate, time horizon

– Output:• New MW generation and transmission

– Interpretation: • New capacity is build based on expected development (if profitable in year X)• Construction time = Horizon for expectation• No strategic behaviour

11

“Optimal dispatch and marginal price”

Area 2Generation: 0-100 MW

Marginal price: 150 X/MWh

Area 1:Generation: 0-100 MW

Marginal price: 100 X/MWh50 MW

Demand Generation Price Transmission

Area 1 Area 2 Area 1 Area 2 Area 1 Area 2

10 10 20 0 100 100 +10

10 40 50 0 100 100 +40

40 60 90 10 100 150 +50

50 60 100 10 100 150 +50

75 75 100 50 150 150 +25

40 140 90 90 100 150 +50

MW MW MW MW X/MWh X/MWh MW

12

Model set-up

• Model area– Baltic states, Nordic countries, Poland, Germany,

NW Russia and Belarus• Belarus modelled as transit country (No demand, no

power plants)

– 23 price areas

LVLT

FI

EE

DK_EDK_W

DE_NW DE_NE

DE_CS BLR

SE_S

SE_NSE_M

NO_S

NO_O

NO_NNO_M

RU

RU_KAL

PL

2011

ASSUMPTIONS

Updated assumptions• Base year set to 2012 and investments in new generation capacity from

2020• Possibility for rebuilding selected oil shale plants to coal or biomass (Narva

8, 11 and Auvere )• Updated Estonian electricity demand forecast and grid loss• Oil shale price: set to mining costs in 2012 and short term opportunity

costs from 2020 and onwards (function of oil and CO2 price)• Estonian biogas price and resource• Investment option for oil shale power plants• Estonian wood chips price reduced by 1.75 EUR/GJ per year• Nuclear in Poland postponed to 2025• CO2 leakage to Russia

– Same CO2 price in Russia as within the EU (in most scenarios): Assuming no leakage

– New Carbon leakage scenario• Data feedback from Lithuanian TSO

Levelised cost of energy

• 2030 and 2050

Text will be added

RESULTS: GENERATION

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201220202022202420262028203020352040204520502012202020222024202620282030203520402045205020122020202220242026202820302035204020452050

Reference CO2 concern CO2 market collapse

0

200

400

600

800

1,000

1,200

1,400

1,600

Biomass (CCS)WindBiomassBiogasSolarCoal CCSCoal and ligniteNatural gasPeat Oil shaleOilGeoNuclear HydroWaste

TWh/

year

Electricity generation – model area

Natural gas

Hydro

Wind

Nuclear

Coal CCS

Coal & lignite

Note: Different step of X-axis, corresponding to simulated years

Electriricy generaton by country

Map will be added

20

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

Reference Liberal market

0

2

4

6

8

10

12

14

WindNatural gasCoalWood chipsBiogasOilOil shaleWasteHydro

TWh/

year

Electricity generation – EstoniaReference and Liberal market

Note: higher coal and natural gas generation in reference scenario due to 110 % capacity requirement

21

Electricity generation – EstoniaCO2 concern and CO2 market collapse

Note: CO2 market collapse leads to heavy coal generation

2012 2020 2022 2024 2026 2028 2030 2035 2040 2045 2050 2012 2020 2022 2024 2026 2028 2030 2035 2040 2045 2050CO2 concern CO2 market collapse

0

2

4

6

8

10

12

14

16

WindNatural gasCoalWood chipsBiogasOilOil shaleWasteHydro

TWh/

year

22

Electricity generation – EstoniaRE focus and No CO2 price in Russia

Note: RE scenario method leads to increased oil shale generation. Consider RE % methods instead of investment constraint.

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

RE focus No CO2 price in Russia

-

2.0000

4.0000

6.0000

8.0000

10.0000

12.0000

14.0000

16.0000

WindNatural gasCoalWood chipsBiogasOilOil shaleWasteHydro

TWh/

year

Rebuilding of oil shale plants

• Detailed results about rebuilding of plants

Text will be added

RESULTS: CO2 EMISSIONS

25

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2012

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

Reference CO2 concern CO2 market collapse-100

0

100

200

300

400

500

600

700

800

Biomass (CCS)Natural gasCoal and lignitePeatOilOil shaleWaste

CO2

emis

sion

(Mt/

year

)

CO2 emission – model area

Endogenous investments from 2020

26

CO2 emission – Estonia20

20

2030

2040

2050

2020

2030

2040

2050

2020

2030

2040

2050

2020

2030

2040

2050

2020

2030

2040

2050

2020

2030

2040

2050

Reference CO2 market col-lapse

CO2 concern No CO2 price Russia

RE focus Liberal market

0

2

4

6

8

10

12

Oil shaleCoalNatural gasOilWaste

CO2

emis

sion

(Mt/

year

)

RESULTS: DISTRICT HEATING

28

District heating generation – Estonia20

12

2020

2030

2050

2012

2020

2030

2050

2012

2020

2030

2050

2012

2020

2030

2050

2012

2020

2030

2050

2012

2020

2030

2050

Reference CO2 market col-lapse

CO2 concern No Russion CO2 price

RE focus Liberal market

-

5

10

15

20

25

30

35

ElWood chipsBiogasNatural gasOil shaleCoalOilWaste

PJ/y

ear

RESULTS: INVESTMENTS

30

Investment in elec. generation – model area

Note 2: Remember 5 years time step in the last part: More investments per time step

Note 1: Large investments in first year with endogenousinvestments indicate an unbalance in earlier years

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

Reference CO2 market collapse CO2 concern

-

20000.000

40000.000

60000.000

80000.000

100000.000

120000.000

Biomass (CCS)WindCoal CCSCoalSolarNatural gasBiomassBiogasNuclear GeoWaste

MW

/yea

r

Note 3: Wind and solar investments in 2040 and beyond are primarily reinvestments in Germany due to NREAP

31

Investment in elec. generation - Estonia

Note:

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2024

2026

2028

2030

2035

2040

2045

2050

2020

2022

2026

2028

2030

2035

2040

2045

2050

Reference CO2 market col-lapse

CO2 concern No Russian CO2 price

RE focus Liberal market

0

200

400

600

800

1000

1200

1400

1600

WasteCoalNatural gasWindBiomassBiogas

MW

/yea

r

RESULTS: PRICES

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Electricity prices - Estonia

Note: • Investments from 2020 results in changes electricity price• Fuel prices are the same in all scenarios

2012 2020 2022 2024 2026 2028 2030 2035 2040 2045 20500

10

20

30

40

50

60

70

80

90

ReferenceCO2 market collapseCO2 concernNo Russian CO2 priceRE focusLiberal market

EUR/

MW

h

34

Electricity prices – regionReference

2012 2020 2022 2024 2026 2028 2030 2035 2040 2045 20500

10

20

30

40

50

60

70

80

EstoniaFinlandLithuaniaLatviaNW RussiaEU

R/M

Wh

35

Import balanceReference

CO2 market collapse

(TWh/year) 2012 2020 2030 2050Estonia 4.3 1.6 1.4 -6.9Latvia 0.4 6.6 6.0 3.4Lithuania -4.9 -5.1 -8.2 -5.9Finland -0.1 -5.0 -7.7 -17.7NW Russia -1.9 4.2 5.4 2.7Belarus 0.0 0.0 0.0 0.0Poland 12.6 -3.8 -13.0 -28.7Sweden -6.8 -5.1 4.4 22.2Denmark 10.5 23.7 13.2 -13.5Norway 1.8 10.3 31.0 55.7

Germany -15.7 -27.5 -32.5 -11.1

(TWh/year) 2012 2020 2030 2050Estonia 4.3 1.5 3.7 -1.6Latvia 0.4 5.6 4.8 -2.1Lithuania -4.9 -6.5 -10.1 -8.6Finland -0.1 -4.8 -2.5 -16.5NW Russia -1.9 5.0 4.9 3.4Belarus 0.0 0.0 0.0 0.0Poland 12.6 -1.4 -9.3 -10.7Sweden -6.8 -5.6 4.7 17.4Denmark 10.5 9.5 -4.5 -35.8Norway 1.8 7.7 25.4 55.4

Germany -15.7 -11.0 -17.2 -0.9

(TWh/year) 2012 2020 2030 2050Estonia 4.3 1.1 -2.4 -5.4Latvia 0.4 5.8 2.7 -1.3Lithuania -4.9 -1.7 5.6 4.2Finland -0.1 -8.9 -15.9 -18.4NW Russia -1.9 4.5 1.4 0.4Belarus 0.0 0.0 0.0 0.0Poland 12.6 -9.0 -18.6 -45.5Sweden -6.8 -3.9 14.0 13.0Denmark 10.5 26.0 10.1 0.4Norway 1.8 17.4 43.8 55.6

Germany -15.7 -31.3 -40.7 -3.1

CO2 concern

(TWh/year) 2012 2020 2030 2050Estonia 4.3 0.5 0.5 -6.8Latvia 0.4 5.0 4.4 -1.6Lithuania -4.9 -6.5 -9.2 -8.2Finland -0.1 -7.2 -7.8 -17.8NW Russia -1.9 17.7 15.2 11.9Belarus 0.0 0.0 0.0 0.0Poland 12.6 -6.5 -16.2 -28.4Sweden -6.8 -5.2 4.4 21.2Denmark 10.5 22.5 13.3 -13.8Norway 1.8 10.1 26.7 55.7

Germany -15.7 -30.5 -31.2 -12.2

No CO2 price in Russia

Note: Postive values are export – negative import.

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Transmission 2011(MW) BLR_BLR DE_CS DE_NE DE_NW DK_E DK_W EE_R FI_R LT_R LV_R NO_M NO_N NO_O NO_S PL_Central PL_NW PL_S PL_SE PL_W RU_ARK RU_KAL RU_KAR RU_KOL RU_KOM

BLR_BLR 500

DE_CS 3060 3330 700 171 821

DE_NE 3060 1200 600

DE_NW 3330 1200 1500

DK_E 600 600

DK_W 950 600 1000

EE_R 350 1300

FI_R 350 100

LT_R 500 2000 700

LV_R 1300 2000

NO_M 900 600

NO_N 100 900 50

NO_O 5200

NO_S 700 1000 600 2500

PL_Central INF INF INF INF

PL_NW 598 INF INF INF INF

PL_S INF INF INF INF

PL_SE INF INF INF INF

PL_W 1280 INF INF INF INF

RU_ARK 1E+100

RU_KAL 700

RU_KAR INF

RU_KOL INF

RU_KOM INF

RU_NOV

RU_PSK 500 500 500

RU_STP 500 350 INF

SE_M 740 550 2300

SE_N 1200 750 700

SE_S 600 1700 600

37

Investments in transmission - MW

Text will be added

RESULTS: ECONOMY

Socio-economics

Text will be added

DISCUSSION

Observations - Estonia

Text will be added

Observations – surrounding system

Text will be added

NEXT STEPS

Next steps

• Reformulate RE scenario• Increasing requirement for RE generation in Estonia: x%

by 2030, X% by 2050

• Forecast for district heating demand and check of district heating areas

• Update Latvian data (if we receive feedback)• Increase time resolution

Revised time schedule?Phase Date Tasks Scenario calculations

8+9 April 2013

Meeting with expert groups:• Discussion of results;• Revision of “single track” scenarios;• Agreement on relevant "combination scenario”.

23 Apr 2013 Project status via Skype

Conclusions

7 May 2013 Draft final report

14 May 2013

Meeting with expert groups:• Discussion of main conclusions;• Identification of recommendations for important actions in

the short-term in order to achieve long-term goals and identification of important barriers.

31 May 2012 Final report

EXTRA SLIDES

Reference scenario

Reference scenario – Business as usual i.e. with a requirement of having inland production capacity equal to 110 % of the hourly peak demand, current trend in energy efficiency, an oil shale price is a function of the international oil price, and WEO 2012 forecast of CO2 prices in their new policy scenario i.e. 23-31-34 €/ton CO2 in 2020-2030-2035, respectively. The price in 2050 set to 45 €/ton CO2.

The 110 % requirement is calculated as follows:110 % of peak demand – 150 MW

Liberal market scenario

Liberal market scenario – A scenario with reduced requirements for inland Estonian electricity capacity. In this scenario the impact of setting a lower capacity requirement is analysed. This scenario have no specific requirement for Estonian capacity.

Oil shale opportunity costsMethod

The opportunity costs of oil shale seen from the existing power plants at Narva from 2011 to 2050. The model will then consider the efficiencies at existing Narva power plants and electricity prices etc.This substitution price could be estimated as either the short or long term marginal costs:- Short term costs:

- fuel oil price x refinery efficiency - oil shale refinery OPEX – refinery CO2-costs- Long term costs:

- fuel oil price x refinery efficiency - oil shale refinery CAPEX - oil shale refinery OPEX – refinery CO2-costs.

We assume the refineries are already in operation and base our cost estimate on short term marginal costs.

Oil shale opportunity costsAssumptions

1. Reference oil price set to fuel oil based on price forecast from IEA World Energy Outlook 2012.2. Mining fee (royalty) 2011-2014: 1,1 euro/tonnes. 2014-2050: 2,4 euro/tonnes3. Mining costs (ex transport and royalty): 2011: 10,5 euro/tonnes, 2030: (10,5+16)/2= 13,25

euro/tonnes. 2050: 16 euro/tonnes. For the years between these points I have made a linear projection.

4. Transport costs to Narva: 3 euro/tonnes in all years5. OPEX of refinery: 21 euro/tonnes in all years.6. CAPEX of refinery: Average of Enefit and Petroter: 10 euro/tonnes per year with an interest

rate of 10 % and 20 years pay back time.7. 1 tonnes of oil shale rock set to contain 2,33 MWh or 8,33 GJ energy - based on the report of

the resource group.8. Refinery efficiency set to 70 % based on the report of the resource group. This is in line with

the efficiency of the existing Petroter refinery.9. CO2 price forecast based on IEA World Energy Outlook New Policies scenario with an

adjustment to the historic 2011 and 2012 CO2 price level.10. CO2 emission based on Enefit 280 data: 0,36 tonnes CO2/bbl shale oil. I have estimated

the calorific value of 1 bbl oil shale to 5,52 GJ and used an refinery efficiency of 70 %.

Oil shale short term opportunity costs

20122014

20162018

20202022

20242026

20282030

20322034

20362038

20402042

20442046

20482050

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Oil shale mining costsOil shale long term opp costOil shale short term opp costCoal priceEu

ro/G

J

Note: We have used the short term opportunity costs of oil shale in the following scenarios