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Baltic Energy Technology Scenarios 2018 Towards renewable and low-carbon electricity and district heating
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Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Jul 20, 2020

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Page 1: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Baltic Energy Technology Scenarios 2018

Towards renewable and low-carbon electricity and district heating

Page 2: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Integration of Baltic power systems with Nordic and continental Europe

• The three Baltic countries used to be so-called “energy islands”

• This situation has changed with the establishment of Estlink 1 and 2, LitPol and and the Nordbalt interconnector linking Sweden and Lithuania.

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Page 3: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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An interconnected Europe

The Balmorel model is applied to investigate least cost dispatch and capacity expansions of electricty and heat systems.

It all depends on the assumptions…

Page 4: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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Sharp declines in the cost of wind and solar power.• In recent years, results from

auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power.

• Measured on LCOE, onshore wind and solar PV are the cheapest options by 2020

• Learning curve theory: Prices will continue to drop! Full load hours for wind-based electricity in Latvia: 2140 for onshore, 3640 for offshore. Solar power: 959.

Technical lifetime of individual technologies.4% WACC. Value of heat set to 12 EUR/MWh. Climate externalities (CO2) based on cost of CO2 of 20 EUR/ton. Wood pellets: 8.5 EUR/GJ. Wood chips: 7.4 EUR/GJ. Coal: 3.0 EUR/GJ. Natural gas: 8.9 EUR/GJ.

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61

4353

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-80

-60

-40

-20

-

20

40

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80

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Windonshore

Windoffshore

Solarpower

MediumCHP -woodchips

LargeCHP -coal

LargeCHP -

naturalgas CC

2015

-EU

R/M

Wh

Heat revenue

ClimateexternalitiesOther costs

Fuel cost

O&M costs

Capital cost

LCOE 2020

LCOE 2030

Page 5: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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500

1,000

1,500

2,000

2,500

3,000

3,500

20

20

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30

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40

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50

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4DS 2DS

TW

h

Solar

Offshore wind

Onshore wind

Hydro

Biomass

Other

Natural gas

Coal

Nuclear

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Renewable energy will dominate the future power marketsAnnual electricity generation by fuel in the entire modelled area.

15 €/t => 40 €/tonNational plans, RE subsidies

30 €/t => 100 €/ton

2030: 66% RE

2050: 85% RE66% wind + solar

Page 6: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Wind and solar resources in the Baltic countries are mediocre compared to the rest of Europe

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Page 7: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

7 Title

The Baltic countries are likely to remain net importers of electricity

Page 8: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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The Baltic countries are likely to remain net importers of electricity

Consumption/Production-gap

Page 9: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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Annual electricity generation in 2030

Page 10: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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Wholesale electricity prices in the Baltic countries remain higher than in the Nordic countries in both the 4DS and 2DS

€/MWh €/MWh

TWh TWh

4 DS 2 DS

Page 11: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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District heating: Natural gas is replaced by biomass boilers and heat pumps

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15

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2015 2020 2030 2050 2020 2030 2050 2020 2030 2050

Year2015 4DS BPO 2DS

TW

h

Heat-pump/El-boiler

MSW

Biomass

Other fossil

Shale

Natural gas

Coal

Page 12: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Electric heat pumps are a competitive option in district heating schemes in need of new generation capacity

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Assumptions on COP for heat pumps are conservative compared to international expectations and experiences.

Page 13: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

Power to gas

Cost reflective network tariffs

Batteries- Ancillary services and peak power - Perhaps beyond 2030

Power to heat- Starting up now-Key to sector integration

Page 14: Baltic Energy Technology Scenarios 2018 Towards renewable ... · auctions of renewable energy around the world have indicated sharp declines in the cost of wind and solar power. •Measured

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Key findings• In the absence of sustainable policies to facilitate cost-effective local

generation, the Baltic countries are likely to become large net importers of electricity from the Nordic countries and Russia.

• Modest subsidies (or price guarantees) would incentivize renewable electricity generation in the Baltics countries. Without political support, the deployment of new domestic generation capacity might be limited before 2030.

• Power to heat will become more and more competitive as the share of variable renewables in the electricity system increases. Important to prepare for this transformation.