ENERGY SERVICE MCIT REPUBLIC OF CYPRUS Solon Kassinis Director of Energy Service Ministry of Commerce, Industry & Tourism Republic of Cyprus November,

ENERGY SERVICE

MCIT

REPUBLIC OF CYPRUS

Solon KassinisDirector of Energy Service

Ministry of Commerce, Industry & TourismRepublic of Cyprus

November, 27 2009 – Goethe Centre Nicosia

Cyprus Climate ConferenceCyprus Climate Conference

“Cyprus' Current Energy Policy & The Possibilities for Renewable Energies”

Presentation Outline

I. Cyprus Energy System – Main Indicators

II. Cyprus Energy Policy – RES & Energy Saving

III. Legislation – RES & Energy Saving

IV.RES Potential

V. RES Evolution

VI.RES Targets

VII.Development of RES – Measures & Tools

VIII.Energy Saving – Measures & Tools

Cyprus Energy System: Main Indicators

Oil Products95.9%

Solid Fuels1.0%

RES3.1%

Oil Products73.9%

RES4.5%

Solid Fuels1.4%

ElectricityHFO&Diesel

20.2%

Primary Energy Consumption – 2008 Final Energy Consumption – 2008

Transport (Air)15%

Household16%

Commerce & Services

11% Agriculture2%

Industry16%

Transport (Road)40%

Final Energy Consumption by Sector – 2008 Cost of Oil Products Import

(19% of the country's total imports - 2008)

0

150

300

450

600

750

900

1050

1200

1350

1500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Mill. Euros

Cyprus Energy System: Main Indicators

1500

1575

1650

1725

1800

1875

1950

2025

2000 2001 2002 2003 2004 2005 2006 2007 2008

ktoe

Final Energy Consumption (2.6% mean annual increase)

2800

3050

3300

3550

3800

4050

4300

4550

4800

2000 2001 2002 2003 2004 2005 2006 2007 2008

GW

h

Final Electricity Consumption(6.8% mean annual increase)

050

100150200250300350400450500550600650700750800850900950

1,000

Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Sep-08 Oct-08 Nov-08 Dec-08

Average DAY Average Night

MW

Seasonal Fluctuation in Electricity Demand

Energy System in Cyprus: Key Characteristics

• Isolated energy system

• High degree of dependence on imported oil

• High increase rates of energy consumption

• High cost of energy supply

• Electricity generation is almost 100% oil fired and absorbs on average, 42% of the total primary energy consumption

• Limited oil storage capacity

• Energy intensiveness of the economy, particularly in the passenger transport sector

• Seasonality on energy demand

• Environmental constrains

• High potential of rational use of energy and energy conservation

• Significant potential of renewable sources

Cyprus Energy Policy

Security of energy supply

Contribution of the energy sector to the productivity and competitiveness of the national economy

Environmental protection and sustainable development

Clean Energy

AdequateEnergy

Secure Energy

Cost EffectiveEnergy

Main Objectives

Cyprus Energy Policy – RES & Energy Saving

Maximizing the efficient use of domestic resources of renewable energy

Saving energy both in primary form and in energy end-use Promote RES in electricity and heat generation Replace oil in the area of transportation with biofuels Promote efficient electricity and heat co-generation in industries Adopt investments in RES based on the criterion of the overall net

benefit Making efficient use of energy by putting into place mechanisms that

give incentives to users Efficiently develop RES stations based on physical planning Limit bureaucracy and simplify all licensing procedures Growth “energy awareness”

Main Priorities

Legislative Framework for RES & Energy Saving

• Promotion of Energy Conservation and the Encouragement of the Use of Renewable Energy Sources Law (2003)

• Procedures for licensing and interconnecting wind and photovoltaic installations to the national grid

• Integrated land planning policy for large RES developments

• Energy Performance of Building Law (2006 & 2009)

• Energy End-Use Efficiency and Energy Services Law (2009)

• Promotion of Biofuels for Transport Law (2005 & 2006)

• Promotion of Combined Heat and Power Law (2006)

• Eco Design for Energy Using Product Law (2007)

RES Potential

• The average wind speed in some areas, which is suitable for the installation of wind farms, is about 5-6 m/s

Wind Energy

LimitationsLimited potential for wind energy generationLand planning problems (Cyprus, developed

tourism country)Oppositions of local communities Conflict with real estate (touristic) development

Overall annual solar irradiation received by a solar collector

RES Potential

• Cyprus enjoys more than 300days with 75% of sunshine

• Cyprus holds the unofficial “World Record” in solar water heating with almost every household having a system installed (more that 750,000m2 of solar collectors installed)

Solar Energy

RES Potential

• More that 3.2MW of PV systems have been installed

• Per capita, Cyprus ranks the 6th highest in the EU with 2Wp per head of population

Solar Energy

LimitationsLow efficiencyHigh capital investment (very high initial cost)Need very high subsidies in order to be viableR&D

RES Potential

• Significant amount of agricultural residues• Significant biogas potential (exploitation of agricultural

residues, waste disposal plants, exploitation of landfill gas from the waste disposal plants)

Biomass

Limitations/Obstacles Limited suitable agricultural landWater ScarcityHigh dependence on imports to satisfy the targets (indicative and

mandatory targets)High cost of imports

Biofuels

RES Evolution

2.6 2.7

3.5

4.5

0.00.51.01.52.02.53.03.54.04.55.0

%

2000 2001 2002 2003 2004 2005 2006 2007 2008

% RES in the Final Energy Consumption

Solar : 2.84 %Biomass : 0.88 %Biofuels : 0.72 %Electricity (PV, biomass) : 0.06 %

Solar

Biomass

Biofuels

Electricity (PV &

Biomass)

RES Evolution

05

1015202530354045505560

ktoe

2000 2001 2002 2003 2004 2005 2006 2007 2008

Solar Thermal – Energy Production

0

500

1000

1500

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2500

3000

3500

kW

2005 2006 2007 2008 Oct.2009

On Grid Off Grid Total

Installed PV Systems (Cumulative)

0

0.5

1

1.5

2

2.5

3

GWh/yr

2005 2006 2007 2008 Oct.2009

On Grid Off Grid Total

Electricity Production- PV Systems

56ktoe

3.2MW

0

2

4

6

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12

14

16

18

ktoe

2000 2001 2002 2003 2004 2005 2006 2007 2008

0

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kW

2007 2008 Oct. 2009

On Grid Off Grid Total

RES Evolution

Biomass – Energy Production

Electricity Production- Biogas (Cumulative)

Electricity Production- Biogas

17.4ktoe

4.4MW

0

2

4

6

8

10

12

14

16

18

GWh/yr

2007 2008 Oct. 2009

On Grid Off Grid Total

2 new biogas plants (total capacity of 1MW) are expected to operate at the beginning of 2010

RES Evolution

Wind Energy

• First Wind Farm 82MW• Online: end 2010• It will contribute to electricity

production by 2-3%

Biofuels

• One company has been registered for the production of biofuels (7,460 tn for the year 2008)

• 200 tn/yr for own use• 2% (in the energy content) annual mandatory substitution of transport

fuels with biofuels• Substitution of diesel up to 4-5% v/v with biodiesel. No substitution of

petrol with bioethanol

RES – Targets

4.5

23.1

0.3 2.53.8

6

13

10

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2008 2010 2020

%

RES contribution to the primary energy consumption (indicative target)

RES contribution to the final energy consumption (compulsory target)

Electricity production from RES (indicative target)

RES share in the overall transport petrol and diesel consumption (compulsory target)

Biofuels in overall transport petrol and diesel production (indicative target)

CurrentStatus

Development of RES – Measures & Tools

Financing programmes for the support and implementation of RES

The allocation of an explicit RES development roadmap

The elimination of the administrative barriers that prevent the development of RES

Measures of raising public awareness

Financing Tool for the Support of RES

• A Special Fund has been created aiming at support of RES and Energy Saving investments in Cyprus. The revenues (almost €10M) of this fund are coming from the consumers paying an additional tax of 0.22 eurocents/kWh

• Implementation of a Programme with a view to encouraging RES Utilisation

• Provides financial incentives (capital or/and operational aid) in the promotion of Renewable Energy Sources

EAC GridElectricity

Consumers

RES Power Producers Special Fund

0.22cent/kWh

subsidy (feed in tariff)

ElectricityCash Flow

Local Authorities2% of Gross Income(wind, biomass, CSP)

Grant Scheme for RES

• Total number of submitted applications (2004-Nov. 2009): 20,245

• Total amount granted (2004-Nov. 2009): 19.2 million Euros

(~ 6.46 million Euros have been allocated within the year 2009)

0.561.05

3.68

7.47

6.46

0

1

2

3

4

5

6

7

8

2005 2006 2007 2008 2009

783

1995

3899

5512

7846

210

-500

1000

2500

4000

5500

7000

8500

2004 2005 2006 2007 2008 2009

Submitted Applications Allocated Funds (mil. €)

Grant Scheme for RES

• Grant subsidy 15-55% (depends on the type of subsidy, natural or legal entity)

• Large Scale RES Installations: Feed in tariff policy – 20 years Wind systems: €0.166/kWh Solar Thermal: €0.26/kWh PV systems (21-150KW): €0.34/kWh (limitation 2MW/year) Biomass exploitation systems: €0.135/kWh Biogas exploitation systems: €0.1145/kWh

• Main Categories Wind energy systems Solar thermal systems Photovoltaic systems Biomass and biogas utilization Geothermal pumps

Incentives

RES Development

Experimental testing of:

• solar collectors,

• solar water heating systems

Solar Systems Laboratory

RES Projects Co-Funded by EU

• Installation of PV systems in Schools/Governmental Buildings/Army Camps (1.1MW, 65 installations)

• Solar Heating/Cooling Systems in Governmental Buildings (1MW)

• Concentrated Solar Power station

RES Development Program

The proposed action plan includes large scale RES projects for electricity generation for the period 2009-2013 with the possibility of implementing the projects by 2015

RES Roadmap 2009-2013

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50

100

150

200

250

MW

2010 2011 2012 2013 2014 2015

Wind PV CSP Biomass Biogas

Wind : 165MWSolar Thermal: 25MWPV : 14MWBiomass : 4MWBiogas : 3MW------------------------------Total : 211MW

Projection (end 2010) – Optimum Scenarios

• On Grid Small PV Systems from 2.5MW (today) 9.6MW at the end of 2010 (Including 1.1MW from the installation on Public Schools, Governmental Buildings and Army Camps)

• Biomass Systems expected 9.5MW total installations at the end of 2010

• Wind Parks 82MW approved already and is expected to have installations up to 124MW at the end of 2010

2005 2006 2007 2008 2009 End 2010

Total KW

PV systems

155 423 266 746 1,089 6,951 9,629

Biomass - - 250 3,060 245 6,000 9,555

Wind - - - - 124,000 124,000

Electricity Production/Cost – Comparison PV-Wind Parks-Biomass (at the end of 2010)

Biomass23%

Wind64%

PV13%

Biomass21%

Wind73%

PV6%

Electricity Production RES-E (2010)

Cost Distribution per kWh Produced(PV cost was normalized to €0.35/kWh)

Estimation for Electricity Consumption by technology (end 2010)

1.40%

3.38%

0.34%

5.21%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Biomass Wind PV Total

RES Development Program

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1000

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3000

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5000

6000

7000

2010 2011 2012 2013 2014 2015

GW

h h

0

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Electricity Consumption RES-E

RES Development Plan Contribution in Electricity Consumption

0

250

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2500

2010 2011 2012 2013 2014 2015

ktoe

h

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ktoe

g

Final Consumption RES

RES Contribution in Final Consumption

5.8% electricity production from RES

9% RES contribution in final energy consumption(aviation capping mechanism was taken account)

Elimination of the Administrative Barriers

• The Energy Service of the Ministry of Commerce, Industry and Tourist has undertaken the role of “one stop shop” in order to:

• Expedite the procedures

• Facilitate the materialization of investments for the promotion of alternative energy sources and energy conservation technologies.

• Fair and transparent terms for connection of an electricity producer from RES to the national grid

• Existence of energy market rules which eliminate distortions

Barriers to the Development of RES

Barriers related to permission proceduresIdentification of bottleneck organizations

Barriers related to permission proceduresKnowledge about procedures for the whole licensing chain

Barriers to the Development of RES

Barriers related to grid issuesIs cost estimates for grid connection provided by transmission operator transparent?

Barriers related to grid issuesIs cost estimates for grid connection provided by transmission operator discriminatory?

Energy Saving – Measures & Tools

• National Energy Efficiency Action Plan (in conformity with EU Directive on Energy Services) The target (above requirements) consists to 10% by 2016

It will be reached by applying cost effective energy efficiency improvement measures and domestic RES

Priorities are buildings, transport and industry

• Buildings: Implementation of the energy performance buildings directive

• 21.12.2007: Regulations for minimum energy efficiency requirements for new buildings

• 01. 01.2010: Energy Performance Certification

Mandatory installation of Solar water heaters on domestic houses from 1.1.2010

Financial support scheme providing grants and subsidies for energy efficiency investments

For the tertiary sector grants are given for any technology which satisfies the 10% savings criterion. Emphasis is given to efficient electricity use.

CFL lamps: Cyprus Government provides 6 lamps for each household 2007: 300,000 CFL, €580,000

2008: 360,000 CFL, €695,000

2010: 1,070,000 CFL, €1,000,000

Energy Saving – Measures & Tools

• Industry: The main tool used for energy savings is the governmental financial support

scheme. Emphasis is given to heat recovery, efficient use of electricity, CHP.

• Transformation sector:• Introduction of natural gas and CCGT technology

• Transport: Governmental support schemes for purchasing of hybrid, electric, FFV,

low emissions vehicles (120g CO2/km) School bus

• Public Sector: Awareness raising and education of civil servants on simple measures and

behaviour to save energy in the workplace

• Energy Label: Energy labelling for appliances is operating successfully in Cyprus and market

surveillance authorities provide data that a minimum 80% are labelled in shops

Financing Tool for the Support of Energy Saving

• Provides financial incentives (capital aid) in the promotion of Energy Saving

ElectricityConsumers

Energy SavingInvestments

Special Fund0.22cent/kWh grant

• Grant subsidy 15-35%(depends on the type of subsidy, natural or legal entity)

• Main Categories Energy conservation: Heat insulation Hybrid, electric, dual propulsion, low emissions vehicle Cogeneration of Electricity and Heating/Cooling

Incentives

Grant Scheme for Energy Saving

• Total number of submitted applications (2004-Nov. 2009): 27,464

• Total amount granted (2004-Nov. 2009): 27.56 million Euros

(~ 9.46 million Euros have been allocated within the year 2009)

0.311.04

6.31

10.439.47

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

169742

57366524

10384

3909

0

1500

3000

4500

6000

7500

9000

10500

2004 2005 2006 2007 2008 2009

Submitted Applications Allocated Funds (mil. €)

Raising Public Awareness

• Save Energy exhibitions

• Public hearings and RES info days

• School presentations to promote “energy awareness”

Exploiting the Opportunities Offered by the CDM & European Emissions Trading Scheme (or others)

• Preparation of a government strategy and action plan for exploiting the opportunities offered by CDM and EU-ETS for the period 2008-2012 and 2013-2020

• Up to date two wind farms and two biogas installations have been registered with the CDM mechanism and four other projects are under validation

• All projects are in the Renewable Energy Sector

How long is “The Road to Copenhagen”?

• Kyoto Protocol: Much Action – Little Effect

• New Approach is Needed:

• A carbon tax instead of emission trading mechanism

• A carbon tax based on production of carbon and not on consumption

• A policy framework promoting clean technologies with economically viable

and long-term solutions

• R&D for new energy and other environment technologies

• Changing attitude

Thank you for your attention!