Internet: www.eh.gov.

hu

HUNGARIAN ENERGY OFFICE

Distributed generation - Connection to the network

Marianna Berg
Dept. for Electricity Licensing and Supervision

Hungarian Energy Office

Workshop on Distributed Generation

Budapest. July 6. 2007 ERRA EU Integration Working Group

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Budapest by night 1.

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Budapest by night 2.

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Budapest by night 3.

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Principles and regulations in the EU

2003/54/EC directive concerning common rules for the internal market in electricity Chapter I. Definitions Art. 2. 31.: distributed generation' means generation plants connected to the distribution system. Chapter III. Generation Art. 6. (3): Member States shall ensure that authorisation procedures for small and/or distributed generation take into account their limited size and potential impact. Chapter V. Tasks of Distribution System Operators Art. 14.7: When planning the development of the distribution network, energy efficiency/demand-side management measures and/or distributed generation that might supplant the need to upgrade or replace electricity capacity shall be considered by the distribution system operator.
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Principles and regulations in the EU cont.

Chapter VII. Organisation of access to the system Art. 20.: third party access to the transmission and distribution systems based on published tariffs, applicable to all eligible customers and applied objectively and without discrimination between system users. but The operator of a transmission or distribution system may refuse access where it lacks the necessary capacity. Regulatory authorities Art. 23. 1.f: are responsible for the terms, conditions and tariffs for connecting new producers of electricity to guarantee that these are objective, transparent and nondiscriminatory, in particular taking full account of the costs and benefits of the various renewable energy sources technologies, distributed generation and combined heat and power; 6

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Principles and regulations in the EU cont.

2005/89/EC directive concerning measures to safeguard security of electricity supply and infrastructure investment Art. 3. 3(c): Member States shall ensure a high level of security of electricity supply by taking the necessary measures to facilitate a stable investment climateIn implementing the measures they may also take account of the importance of encouragingrenewable energy technologies and distributed generation;

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Principles and regulations in the EU cont. HUNGARIAN ENERGY OFFICE

2001/77/EC on the promotion of electricity produced from renewable energy sources in the internal electricity market Why using renewable energy sources? Because it contributes to environmental protection and supports sustainable development. How does it support to achieve the mentioned targets? Member States are obliged to set national targets for the rate of consumption of electricity produced from renewables to achieve the EU average target of a 20% share of renewable energies in overall EU energy consumption by 2020 they have to support the connection of generators from renewable to the grid
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Hungarian regulation: Act CX. of 2001 on Electricity HUNGARIAN ENERGY OFFICE

Definitions 3. 21. small power plant: a power plant with a capacity below 50 megawatts Access to the grid 31. (1): (1) The public power grid operated by network licensees shall be made available for generators, operators of small power plants for the purposes of electricity transmission at the official price Limitation and suspension of electricity transmission and distribution 33. (1) The system operator may deny access to the transmission network and to the distribution network influencing the operation of the transmission network and/or limit, curtail or suspend contracted supplies in an objective, transparent and nondiscriminatory manner. (3) Denial of access to the public power grid must be justified.
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Licensing of generation from renewables

Determination of the quantity on generated electricity from renewables and waste for mandatory takeover Vhr. 41/A (1) The quantity of electricity generated from renewable energy sources or waste under mandatory takeover shall be established by the HEO in the integrated small power plant licence. (2) In establishing the quantity of the generated electricity for mandatory takeover and in setting the duration of the operating licence, HEO shall take into account different factors among others Hungarys target for using renewables, competitiveness of such generated electricity, effect of the used technology on the balanced operation of the grid, the financial load bearing capacity of the consumers, the opinion of the TSO, other subsidies given to such projects (3) The expected return of the investment shall be taken into account as well EU Integration Working Group

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Licensing of generation from renewables cont. HUNGARIAN ENERGY OFFICE

Vhr. 41/B (1) the applicant requesting an integrated small power plant licence shall ask for the opinion of the system operator. (2) The system operator shall provide its opinion within 15 days a) what impact the mandatory takeover of the electricity would have during the period of the requested licence on the safety of the system, on the preservation of the cooperation capability of the electricity grid and the balancing of the system. b) whether feeding the electricity such generated into the grid can be provided for. (3) If not, a detailed description of the conditions to be met for feeding the electricity into the grid shall be given (4) a detailed explanation for its opinion

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Practise of simplified licensing on example of wind power plants

The Act on Electricity was modified in summer 2005 containing a high mandatory takeover price for electricity generated from renewable (23.- HUF/kWh ca. 9 Eur cent/kWh)flood of applications for license Mainly investors for generation from wind made a request for license very weather dependent ca. 80% reserve capacity is needed + problems by security of supply and balancing up to March 2006 application for 1 138 MW built in capacity wind power plans were submitted to HEO (wind power plants in operation: 17.5 MW at that time) HEO examined the situation with the Hungarian TSO and limited the installation of wind power plants in 330 MW
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Practise of simplified licensing on example of wind power plants cont.

HEO allocated the 330 MW between the applicants on following principles: Unlimited license was given to the already operating wind power plants All power plants with planned built in capacity below 50 MW were selected. which had valid connection agreement before November 11. 2005 (date of effect of the amended Act and Decree) All power plants with only one wind turbine were selected, which fulfilled the mentioned conditions and submitted the application for license up to March 1 and all wind parks, which submitted application up to February 2. 2006
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Practise of simplified licensing on example of wind power plants cont.

Based on the analysis of the rate of return of the projects, on international experiences and with regard to the development of the cost effectiveness of such projects HEO defined max. 15 years for mandatory takeover in the license of the wind power plants Based on the Act and the Decree the licensed projects have to be built within 2 years HEO will analyse the results of the years with bigger wind generated electricity with regard to the impact on the system security. These experience will show if the limitation can be eased or terminated

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Why is the mandatory takeover of supported electricity a big issue?

Quantity of electricity under mandatory takeover:

[GWh]

2003.

2004.

2005.

2006.

CHP Waste Renewable Total

1603 65 124 1791

2056 47 724 2828

2566 101 1 575 4309

3063 136 1184 4383

Source: HEO

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Financial burden
HUNGARIAN ENERGY OFFICE
[Billon HUF] Current supporting payments from this for renewables Current KP receipts (paid as part of the system operation charge for supporting) Deficit to be recovered Total demanded fund Cumulated deficit KP charge [Ft/kWh] 2003. 9.4 0.9 6.8 0.0 9.4 2.6 0.210 2004. 17.0 5.6 15.4 2.6 19.6 4.2 0.461 2005. 31.6 13.9 23.2 4.2 35.8 12.6 0.700 2006. 47.2 14 52.3 12.7 59.9 7.5 2.07
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Source: HEO

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Principles for a new supporting scheme

It is reasonable to keep the capacity limitation for wind power plats at present; in case the technical possibilities improve, HEO will call for tender for new wind power plants The new scheme shouldnt make the system balancing more difficult moreover it should make it easier (investments in easy regulable power plants) The new scheme should take seriously account of the costs and rate of return of the used technology and investment, and in this context a differentiated supporting scheme is proposed (e.g. type of energy source, technology, starting year of generation)
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New supporting scheme proposed by HEO

Principle aim in the new Act on Electricity: harmonisation of the aspects for environmental protection, agriculture and energy for sustainable development to achieve this it is absolutely needed to use the supporting funds for electricity generation from renewable as well as from CHPs based on expedient heat demand and by high efficiency Way of realisation specific price and supporting duration for mandatory takeover by generating techniques, later on green certificate system (based on government decision) Up to the green certification system the certificate for origin will be the evidence for electricity generated from renewables, from waste and in CHPs
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Useful information can be found on the web page of HEO:

www.eh.gov.hu

Thank you for your attention

bergm@eh.gov.hu
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