Low Carbon Earth Summit 28th September 2013. Xi’an, China

1. Energy Certification - an Efficient Tool to
Achieve Ambitious RES Targets
Case Norway and Sweden
Low Carbon Earth Summit 28th September 2013. Xi’an, China

2. Slide 2 8.10.2013
Grexel in One Sentence
We enable energy
certification by
providing market
infrastructure
solutions and services

3. Slide 3 8.10.2013
Grexel Fact Sheet
• Field of Business
 Energy certification
• Services
 Central certificates
registries
 Regulatory and market
engineering
• Achievements & Figures
 80% of European energy
certificates volume
 11 countries covered
 Trade volume in registries
> 5 b€ annually
• Customers
 Government agencies
o Ministry of Employment
and Economics, Finland
o ILR (Luxembourg)
o Croatian Energy Market
Operator
o EgyptERA (Egypt)
o Ministry of Industry and
Innovation, Iceland
 Main Grids
o Statnett (Norway)
o Svenska Kraftnät (Sweden)
o Energinet.DK (Denmark)
o Landsnet (Iceland)
o EMS (TSO, Republic of
Serbia)

4. Slide 4 8.10.2013
I Will Tell You About…
1. Energy certification and Renewable Portfolio Standards (RPS)
2. Swedish-Norwegian certificate based RPS
3. EU 20-20-20 targets burden sharing
4. RPS versus FiT efficiency data
5. Explanation to the above
6. What’s next

5. Slide 5 8.10.2013
What are Energy Certification?
• Unbundling the value related to origin from physical energy
• Enable efficient financial incentives to increase renewable energy
generation and energy savings
• Do not require a liberalized physical power market in order to be
effective
Production
attribute
Sold in
compliance or
voluntary market
Electricity
Sold in energy
market

6. Slide 6 8.10.2013Slide 3/26/13
Energy Certificates Enable Commercial Tracking of Electricity from
Generation to Consumption
Certificate
Markets
Certificate Registry
CancellationIssuing
Transfer
Electricity
Markets
Authority issues
certificates for
eligible production
based on valid
measurement data
Certificates are traded
separately from energy.
Green investors get
money from selling
certificates.
Certificates are cancelled
to meet quota or prove
green consumption /
sales.

7. Slide 7 8.10.2013
Renewable Portfolio Standard (RPS) Using Energy Certificates
• RPS = producer, consumers or e.g. regional government has to prove that
certain share of electricity (quota) was produced using eligible production
methods
 Eligible production is usually newly built renewable
• Authority issues quota certificate to the account of producer
 1 MWh of produced electricity = 1 certificate
• Certificates are freely tradable separately from physical power
• Quota Obliged Parties have to prove quota compliance by cancelling enough
certificates yearly
Certificate
Markets
Electricity
Markets
X
Y
Z = X + Y
Z
q*Z = Y
Producers
Y
Suppliers/Grid
Company
Interaction with
other Domains
Z = Total Electricity Sales of the Grid Company
X = Fossil&Nuclear Production
Y = Renewable Production
q = Quota % for renewables for Producers

8. Slide 8 8.10.2013
How Governments Use RPS to Reach Their Quotas
• With quota certificates government can harness the market forces without
loosing control over the electricity market
• In case of multiple support schemes, the RPS scheme can act as the flexibility
element
Time
Unsupported RES
FIT Supported RES
GC Supported RES (QOP Quota)
Country RES
Target

9. Slide 9 8.10.2013
Slide 7 8/29/12
Case: Quota Certificate System for Sweden and Norway
Background
• Both countries are bound by the
20-20-20 targets of the EU
directive 2009/28/EC
• All RES support schemes were
replaced by a joint quota
certificate scheme
• Yearly elevating quota on
consumption
• Quota obliged parties: electricity
suppliers and major consumers
• Eligible production: all new
renewable capacity for 15 years
• Competent authorities: Grid
operators and regulators
Norway
Target 67,5%
Sweden
Target 49%
Joint Quota
Certificate Scheme

10. Slide 10 8.10.2013
Quotas in the European Union
• Common 20-20-20 target agreed in directive 2009/28/EC
o 20 % of consumed primary energy from renewable sources by 2020
o 20 % of GHG reduction as compared to 1990 level by 2020
• Burden sharing according to RES potential and economical capability
• Member states are free to select strategies to reach the targets
o Support schemes
o Build own capacity / buy from others
• Member states can trade using defined flexibility mechanisms
o Statistical transfers
o Joint projects
o Joint support schemes
Bottom line: It is equally difficult to reach the targets for all
countries.
Now it is interesting to see how different strategies have worked
out!

11. Slide 11 8.10.2013
EU 20 RES Targets by Country
0
10
20
30
40
50
60
70
80
2005 2011 TARGET 2020

12. Slide 12 8.10.2013
Premium in RPS and FiT
?
FiT price = F
Electricityprice=E
Premium =
F-E
FiT
?
Electricityprice=E
Premium =
C
RPS
Certificateprice=C
?

13. Slide 13 8.10.2013
FiT vs. RPS Costs in the EU after 20-20-20 Targets
25.80
22.84
18.12
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2009 2010 2011
€
Onshore Wind Premiums (normalized to 20 y duration)
Czech Republic Germany Greece Netherlands Spain Sweden

14. Slide 14 8.10.2013
How do FiT and RPS Schemes Deal with Changes Assuming %
RES Targets?
Change Energy Markets FiT RPS
Economy down • Electricity price ↘
• Consumption ↘
• Investment ↗
• Over/under target ↗
• Cost to consumers ↗
• Investment ↘
• Over/under target →
• Cost to consumers ↘
Economy up • Electricity price ↗
• Consumption up ↗
• Investment ↘
• Over/under target ↘
• Cost to consumers ↘
• Investment ↗
• Over/under target →
• Cost to consumers →
Give up Nuclear or Fossil
(other replaces the other)
• Electricity price ↗
• Consumption ↘
• Investment ↘
• Over/under target ↘
• Cost to consumers ↘
• Investment →
• Over/under target →
• Cost to consumers →
Build more Nuclear /
Fossil
• Electricity price ↘
• Consumption ↗
• Investment →
• Over/under target ↘
• Cost to consumers ↗
• Investment ↗
• Over/under target →
• Cost to consumers ↗

15. Slide 15 8.10.2013
Conclusions
• Well designed RPS scheme seems to cope better with changes
 Economic up/downturn
 Electricity consumption increase / decrease
 Electricity price changes
 Maturing of technology
 Changes in investment climate
 Political decisions
• Well designed RPS scheme seems to reach targets more efficiently. Why?
 Market optimizes itself in changing environment
 The market automatically drives towards the target using price flexibilities both in
consumption and production
• RPS is more sustainable in the long term. Why?
 Being market based, investors do not have to worry government budget cuts
 No danger of being suspended because of over investments

16. Slide 16 8.10.2013
Future Work
• Data is partly in contradiction
 Wait 3 more years for cost data
• See how investments go in SE and NO
 Likely to stall
 Cost to consumers going even more down
• Why are some RPS schemes expensive?
 Marked design failed?
• After 3-5 years, there should be enough of data to draw consclusions
 New genenric theory on optimal usage of support schemes
o Investment support
o FiT
o RPS

17. Slide 17 8.10.2013
Thank You!
Marko Lehtovaara
CEO
Grexel Systems Ltd.
Finland
Marko.lehtovaara(at)grexel.com