european energy storage policy overview · european energy storage policy overview 24 october 2018...

Eversheds Sutherland LLP | 24/10/2018

ees & IBESA Summit France

European Energy Storage Policy Overview

24 October 2018

Eversheds Sutherland LLP | 24/10/2018 Eversheds Sutherland LLP | 24/10/2018 2

−One of the largest full service law firms in the world with nearly 4,500 people including more than 700 partners and 2,400 lawyers.

−66 offices across 32 countries within major cities in Europe, the Middle East, Asia, Africa and the US.

−Four main practice areas: company commercial, human resources, litigation and dispute management and real estate.

−Focusing on a number of key industry sectors including: consumer, diversified industrials, education, energy and natural resources, financial institutions, health, real estate sector, public sector, sport, TMT and transport.

Helping you do business all over the world:

A shared global vision

Eversheds Sutherland in a few words


Electricity Storage: the Swiss pocket knife?

3

Electricity Storage: the „Swiss Army pocket knife“ for flexibility

allows price arbitrage for business and private consumers

allows to integrate variable generation (wind, photovoltaic) into the system

enables network operators to avoid or limit grid enforcement

allows to provide ancillary services to the system

according to a stakeholder - regulators are unaware or more reluctant …


Storage uses

4

IRENA 2015


Energy Storage Revenue Streams

5


Revenue stacking (UK perspective)

6

x% EV charging

x% Renewable Energy

10/15% Capacity Market

25% Price arbitrage

60% Frequency response


Agenda

1. European Union

2. France

3. Germany

7


1. European Union


EU proposal: „Clean Energy for all Europeans“

9

The European Union

- acknowledges the importance of energy storage

- intends to make storage one out of several means for making the electricity markets more flexible and integrating renewable energies („enabler“):

• „Energy Storage – Proposed policy principles and definition“ (2016): should comprise conversion of power into other carriers and be used on a peer basis with demand response and flexible generation

• „Energy storage – the role of electricity“ (2017): overview to technology and current status, emphasis on market-driven further development

• Related: European Battery Alliance

1. Overview


2. Storage in the new framework „Clean Energy for all Europeans“


10

„Winter Package“: Proposal for new legal framework for the internal electricity market, comprising, among others

- recast electricity market directive (addressing consumer matters)

- proposed internal electricity market regulation (wholesale market, grid operation)

Key features:

the electricity internal market should be more competitive, more consumer-centred, and more flexible

renewables to be fully integrated into the market,

emphasis on active consumers and local energy communities, openness of markets and neutrality regarding technologies, however

struggle for activities (and profits) between marketplace players and transmission/distribution system operators


3. State of Affairs and Timetable


11

„Winter Package“ proposal of the European Commission submitted 30 November 2016

Council has provided its general approach on 18 December 2017

Report of the Industry, Research and Energy Committee of the Parliament dated 21 February 2018

Trilogue ongoing, agreement expected/hoped for end of 2018



12

Storage element of the electricity value chain, equal to generation, transmission and supply

no discrimination of storage (and demand response) with respect to

• network tariffs

• balancing markets

• redispatch

level playing field may encourage investment in storage activities

but: no specific promotion or subsidization of storage

4. Treatment of storage



13

Unbundling: Commission suggests that transmission and distribution system operators (TSO/DSO) should own and operate storage facilities only by exception

TSO/DSO should be obliged to procure storage services on the market, and to explore every five years whether such services are available (market testing)

Council:

• wishes to introduce concept of „fully integrated network components“, may comprise storage facilities

• wants to water down market testing obligations

• wishes to exempt new battery storage facilities of TSO/DSO from market testing obligation

5. Areas of controversy regarding storage


2. France


Recent headlines

France : storage patched in the traditional system

Storage: batteries and Pumped storage power plant will be at parity in 2030 Green Univers 21/12/17

EDF to invest €8bn to bolster electricity storage in renewable push FT 27/03/18

In Guyana, French HDF Energy goes bigger than Tesla in Australia L’Usine nouvelle 29/05/18

Renault launches into energy storage with electric car batteries L’Usine nouvelle 25/09/18

Electrical recharging: manufacturers are asking for public support Les Echos 7/04/18

15


Political priority : renewables + storage in island territories (ZNI)


• Favorable context : lots of intermittent renewables / expensive electricity / instant penetration up to 30%

• Call for tender PV + battery : 63 MW awarded in October 2017. Average price is 113 €/MWh VS 200 €/MWh

• Unique legal incentive : since 2017, additional cost of storage facility operated by grid operator is compensated by the Contribution to Electricity public service (art. L121-7 energy code)

• PPE Martinique oct. 2017 : by 2023, 48 MW PV / 44,5 MW PV + storage / 50 MW geothermal / 12 MW wind + storage. Penetration rate increased to 35% in 2018 and 45% in 2023.

16


Continental France : no specific incentive for energy storage as such


• « Storage facilities » must be declared to the grid operator

definition in arrêté 7/07/16 : stationary storage, all technologies.

• Autoconsumption : « can incorporate a storage device ». But no State aid.

• No storage status pay double grid tax (TURPE) as « producer »

and « consumer »

• No storage status very complex grid connection rules

depending on storage behaviour (Enedis-PRO-RES_78E, oct. 2017)

• Attestation Consuel (electric security certification) includes a specific certification on storage since nov. 2016

17


However, regarding grid fees :


• TURPE 5 tarif scheme increases the price delta between peak and low demand period incentive for storage, energy efficiency, block exchange

(effacement)

• « micro-TURPE » for autoconsumption with production facility < 100 Kw can include storage… taxed twice

• TURPE rebate for electro-intensive facilities storage used to flat the curb of grid use

18


TURPE rebate for electro-intensive facilities : up to 90%


19


Of course, storage can also be used for


─ Price arbitrage (front of meter)

─ Services to RTE (TSO) • demand response mechanism (mécanismes d’effacement)

• mechanism of capacity with RTE

• balancing mecanism (reserve 1,2,3)

• frequency and voltage ancillary services

─ Customer support (behind the meter)

─ Voltage stability for industrial chain production (generation support)

─ Co-location with renewables

─ On site EV charging : but no regulation on V2G and scattered local development schemes!

20


Other common right rules


─ Environment • ICPE heading n°2925 « Ateliers de charge d’accumulateurs »

> 50 kW : Declaration

• If on existing ICPE facility, « notable modification »…

• End of life : car battery/industrial battery are dangerous wastes recovery obligation (extended producer responsibility regime)

─ Planning • Bulding permit required, even for containers

21


Other common right rules


─ Property rights • simple civil lease as opposed to commercial lease

─ Tax • VAT, CSPE, TCFE, taxe foncière, Contribution économique

territoriale (CFE et CVAE)

─ Commercial • Service delivery contract

22


Conclusion


• Need for a specific storage status to implement clear measures and level playing field (grid fees, grid connection rules, integration in balance mechanism, V2G)

• Need for subsidies? Not necessarily, but clear policies, eg in PPE

• Not the best economic/environmental solution everywhere compared with smart grid, energy efficiency and demand response mechanism

• Yet precious services in many situations : make the best of storage capacity through revenue stacking

23


3. Germany


Germany: storage patched in the traditional system

25

1. The principles and the setting

No comprehensive legal regime, but various provisions addressing storage

Issues:

• duplication of charges and fees for stored power

• Integration of storage into balancing markets, balancing power tenders

─ Storage = consumption followed by feed-in, duplication of fees and surcharges, like

• network access fees

• surcharge for renewables

• for combined heat and power

• for removable loads

• electricity tax

unless the law alleviates a specific charge typically under narrowly-defined requirements



26

2. Duplication of fees and charges and the exceptions (continued)

Impact of possible duplication of surcharges:

Electricity costs of (average) manufacturing business (ct/kWh)

• power procurement, distribution 8.18

• renewables surcharge 6.792

• electricity tax 1.537

• Combined heat and power, individual network fee and other surcharges …

17.17

─ Costs for a consumer household (ct/kWh)

• power procurement 6.20

• Network fees, metering 7.27

• Concession levy 1.68

• Renewables surcharge 6.792

• … 29.44

More than half of electricity price pertains to surcharges and tax (source: BDEW)


2. Alleviations in front of the meter


27

Surcharges to accrue on the power taken from the storage only, however, under narrowly-defined, complex and sometimes onerous conditions

Network access fees for the power for filling a storage facility will be waived • in case of new storage facilities built after 31 December 2008 and put in service

within 15 years from 4 August 2011, for a period of 20 years • in case of pumped-storage hydro power plants reinforced after 4 August 2011, for a

period of 10 years, and non-typical network use • provided the power is re-fed into the same network (§ 118 EnWG)

Renewables surcharge for power put into a storage facility need not be paid • to the extent such a surcharge is paid on the power taken from the facility • or it is not taken from the facility any more, i. e. lost • subject to reporting obligations of the operator • tight requirements for storage facilities used both for feeding power into a network

and providing power to its operator (bivalent storage facility): calibrated metering of all power streams (§ 61k EEG)

─ Electricity tax • power fed into stationary batteries exempted (§ 5 StromStG) • power used for pumping the water in a pumped storage facility exempted (§ 12

StromStV)


3. Alleviations behind the meter


28

Feed-in tariff or premium for renewable generation will be paid, too, when power generated in a renewable plant is stored before it is fed into the grid. The power actually fed into the grid is relevant for the payment, i. e. losses have to be borne by the plant operator (§ 19 EEG).

Renewables surcharge on power fed into a storage facility

• netting with the power taken from the facility

• or it is not taken from the facility any more, i. e. lost.

• bivalent storage facility: tight requirements, e. g. calibrated metering of all power streams, see above under 2 (§ 61k EEG)

─ Electricity tax: power fed into batteries and used for pumps in a hydro pumped storage facilities is not subject to tax


4. Outlook


29

Coalition agreement of the current Federal Government, i. e. the basic programme of this government agreed between CDU, CSU and SPD:

• pushes for modernisation of energy networks

• acknowledges benefits of energy storage,

• favours sector coupling of heat, mobility and power

• research and development and promotion/subsidies? for storage technologies

change demanded by stakeholders in view of level playing field:

• define electricity storage

• surcharges and fees only on power, filled into or taken from a storage facility

• curtail prerequisites and restrictions

Federal Ministry of Economy and Energy (BMWi): has told it does not plan changes

EU framework and its implementation to be awaited

Eversheds Sutherland LLP | 24/10/2018 | | 30


eversheds-sutherland.de Diese Informationen dienen lediglich zur Orientierung und stellen keinen Ersatz für eine ordentliche Rechtsberatung dar. Eversheds Sutherland (Germany) LLP übernimmt keinerlei Verantwortung für Handlungen, die aufgrund der in diesen Dokumenten enthaltenen Informationen erfolgen.

© 2018 Eversheds Sutherland (Germany) LLP. Alle Rechte vorbehalten. „Eversheds Sutherland“ bezeichnet in diesem Dokument eine globale Rechtsberatungspraxis, deren Mitglieder gesonderte und rechtlich eigenständige Einheiten sind.

Dr. Arndt Scheffler Counsel +49 89 54565 0 [email protected]

Louis-Narito Harada Partner +33 1 55 73 41 21 [email protected]

european energy storage policy overview · european energy storage policy overview 24 october 2018...

Documents