The study, like its forerunner, was commissioned to provide the European Commission with an up to date reference document on renewable energy. Indeed, findings from TERES II helped frame the targets for renewable energy set out in the EU green paper on energy. Both studies were produced by Energy for Sustainable Development Ltd, of Bath, England, in conjunction with a number of European organisations.
TERES II highlights the significant improvements in cost and performance of some renewable technologies since the release of TERES 1 in 1994, pointing out that wind is among the cheapest. It sets the new target of 14% of primary energy from renewables by 2020, up from the 9% target of TERES I, and develops four market scenarios after assessing the long term prospects for renewables within the EU and central and eastern Europe -- 27 states in all. The assessment covers the technical performance of the technologies, together with their costs, prospects for improvement and the technical and economic potential.
aid to commercialisation
TERES II repeats the main message of TERES I: significant growth in the penetration of renewables is unlikely unless policy measures are taken to assist commercialisation. The key technologies are identified as wind, wood crops, biofuels and solar PV, with the prospects for wind considerably improved since 1994. In its four scenarios, TERES II says renewables could contribute between 7% and 14% of primary energy supply by 2020, depending on which policy measures are introduced. What is more, the internalisation of external costs is all that is probably required, provided investment in research and development continues and provided that cost and performance targets for the more expensive technologies are met.
The report acknowledges the difficulties of agreeing external cost levels and appears to favour carbon dioxide targets. Significantly, it is this route which EU member states have chosen to follow with their new target of a 15% reduction in EU C02 emissions by 2010.
Important spin-offs would flow from development of the renewables, especially exports and jobs. The report notes the European renewables industry has secured around 75% of the wind market and 50% of PV markets worldwide -- and European industry could become the leading global supplier of renewable energy technologies over the next 25 years. Half a million jobs -- many in rural areas -- could be created as a result of renewable energy development which would also reduce the EU's import dependency for energy from 66% to 53%. Last, but not least, the use of renewable energy technologies could reduce carbon dioxide emissions by 16% from 1990 levels by 2020.
Energy tax best for wind
TERES II is more favourable in its assessment of the prospects for wind energy than its forerunner, probably because of the impressive improvements in performance which have occurred since the early 1990s. It notes that a limited number of wind sites can be classified as economically viable at present for centralised generation and that wind is already competitive, broadly speaking, for decentralised generation. By 2020, the projected unit cost for wind energy is almost the cheapest amongst all the technologiesÐwith the exception of crop residues (fig 1)
The rate at which wind and the other renewables develop depends on which of the four TERES scenarios is followed. These are:
¥ Present policies: no significant change to current strategy.
¥ Industry policies: the policies proposed by renewable energy trade groups are implemented within the EU.
¥ ExternE internalisation: energy taxes are applied corresponding to the best estimate of external costs in ExternE (the EC assessment of external costs).
¥ Best practice policies: the most optimistic scenario for the renewables with internalisation of external costs, market assistance and enhanced research so that impressive cost and performance improvements are achieved in selected technologies. Under such action, the cost of PV would drop to ECU 800/kW by 2020.
Wind energy does best under the "ExternE" internalisation policy, probably because the "best practice" scenario assumes that solar technologies meet very challenging cost targets. The range of estimates for wind by 2020 runs from four to ten million tonnes of oil equivalent (mtoe) or from 40 to 116 TWh (fig 2). With the rising levels of renewable energy penetration there may well be opportunities for hybrid systems involving biomass, solar PV, solar thermal and wind; forging links such as these is likely to give further impetus to the technologies. If nothing changes, however, the wind input would be only 40 TWh, as outlined in the first scenario
Overall, the outlook for wind is bright. By 2020 capital costs are expected to be 50-75% of present levels, allowing financially viable, unsubsidised wind on high and medium wind sites. However, the prospects for decentralised wind in the EU are regarded as less favourable, partly because of the increased competition from other renewables, partly because the wind resource is generally poor close to energy consumers and project costs for single machines are significantly higher than those for larger wind farms.
The market for large wind turbines will grow in developing countries as well, and there is a very large potential demand for smaller turbines better suited to decentralised, isolated loads. A notable omission from the report is any detailed examination of the prospects for exports to the Middle East, Africa, Asia and South America.
TERES II estimates a conservative global market for wind of 1000 MW a year, even though development is today running at 1200 MW annually. But the conclusions of the report are perhaps more optimistic than those of the previous version, reflecting widespread government commitment to policy initiatives which encourage increased penetration of energy markets by the renewables.
Energy market liberalisation and climate change, along with targeted investment in research, demonstration and dissemination (RD&D) of the results, are identified as key policy issues for greater penetration of renewables. Interestingly, experience has so far proved that the level of investment in RD&D is not always reflected in the rate of a technology's development. TERES II presents evidence which shows that European wind, despite being a poor relation alongside the solar technologies and biomass, has secured a commanding position in world markets. The report expects that further R&D will enable further technological advances to be made.
Although there is no breakdown between the use of wind energy for centralised and decentralised applications, the report observes that a potential for wind in decentralised applications is probably under exploited. However, in the decentralised electricity market wind faces stiff competition from small hydro, waste burning and energy crops.
The report says dissemination and education is needed to ensure selection of appropriate technologies on an informed basis and -- perhaps more importantly -- to ensure that siting permit decisions are freed from constraints caused by inadequate or uninformed briefings.
TERES II explains its input assumptions and modelling techniques in more detail than most similar studies and does not cover "oil price shocks" or other global perturbations. Furthermore, it follows the attempts of others to dispel the confusion generated by Eurostat, which defines the oil equivalent of wind energy on the assumption that oil can be converted into electricity with 100% efficiency. It can not. But energy modelling is an imperfect science and global shifts in policy, or weaknesses in the modelling, could still negate the TERES II findings.
TERES II, The European Renewable Energy Study: the prospects for
Renewable Energy in 30 European Countries from 1995-2020.
(To be published shortly by the European Commission, DG XVII