Gulf and European Energy Supply Security - Feem-project.net

Energy Security: Potential for EU-GCC Cooperation
Figure 1 Cost Reduction of RES-E Investments as Share of Initial Investment Costs (2006) in
a Pessimistic Scenario with regard to Technological Progress according to the “Policy Case”
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technologies, but obviously mostly affecting the
cost of wind energy converters, is remarkable.
This increase in investment cost is largely driven
by the tremendous rise of energy and raw
material prices as observed in recent years and
was expected to prolong in the near to mid future.
In this context, the impact of rising energy and
raw material prices even compensates the cost
reductions achieved due to technological learning.
So, although technology learning is achieved, the
overall investment costs are increasing in this
period. However, still substantial cost reductions
are expected for novel technology options such
as photovoltaics, solar thermal electricity or tidal
stream and wave power.
1.3 Opportunity of Renewable Energy Sources
to Security of Supply
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Source: Green-X calculations
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As stated by Ölz et al. 2007, 1 the use of RES
may contribute to increasing energy security due to
several characteristics.
First, since RES mainly represent indigenous
resources, the replacement of imported fossil
primary energy carriers, such as gas or coal, leads to
a reduction of import dependency.
Second, the decentralized availability of RES
and predominantly small plant sizes often leads
to decentralized generation resulting in the
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Hydropower
Geothermal electricity
Solid biomass - cofiring &
large-scale plant
Solid biomass - small-scale
CHP
Gaseous biomass
Gaseous biomass CHP
Wind energy
Tidal & wave
Solar thermal electricity
Photovoltaics
following advantages: firstly, less infrastructural
risks as the plants may be located closer to the
demand involving a reduced risk for the grid
infrastructure; secondly, the impacts of potential
shutdowns or blackouts on the electricity system
are reduced.
Third, RES technologies with the exception of
biomass-based applications are not dependent on
any fuel costs. Hence, in contrast to conventional
energy conversion technologies based on the use of
fossil fuels, there are neither fuel price fluctuations
nor risks. Furthermore, the use of RES technologies
in the electricity market under certain support
conditions may have an impact on electricity
prices. In this way, Sensfuß et al. 2008 calculate the
impact of wind power feed-in on electricity prices
using the example of Germany. 2 Following the
basic mechanism of electricity markets, where the
operation of electricity generation plants is selected
according to the merit order of the marginal costs,
wind electricity may replace generation options
with high marginal costs, as for example, gas
turbines, in periods of peak load. Thus, electricity
prices are affected by the wind power feed-in.
Finally, a diversification of the existing power
plant portfolio through an increased use of RES may
lead to the portfolio effect and therewith reduce risks.
Figure 2 summarizes the opportunities identified for
RES to contribute to security of supply.