CHANGED RISK PREMIUMS AND EQUITY DEBT REQUIMENTS DUE TO DIFFERENT RES-E POLICY INSTRUMENTS FOR MARKET INTEGRATION OF RENEWABLE ENERGIES IN GERMANY

Kurzfassung

With the implementation of the Renewable Resource Act (EEG) and Feed-In-Tariffs (FIT) as main policy instrument for renewable energy sources of electricity (RES-E) in the year 2000, the German government has risen the share of power generation from RES-E successfully from initially five to over 25 % in the year 2013 (BDEW 2014). With the strong increase of RES-E mainly from variable renewable energy sources (VRES) like wind and photovoltaic, politics and also scientists have called for a better market integration of RES-E to better synchronize fluctuating generation with the yet quite inelastic demand. Hence, the so called floating market premium (MPex_post) has been introduced in the year 2012 in order to confront the RES-E plant operators and there electricity production to the prices signals of the wholesale power market and incentivise a more demand orientated feed-in during operation. On the other hand, it is expected that the floating market premium already effects the investment decision of RES-E investors in order to construct power plants in a way that increases their market value and therefore marketing revenues. Within the amendment process of the EEG 2014 also (ex-ante) fix market or feed-in premiums (MPex_ante) and ca-pacity payments (CP) have been discussed as future RES-E support schemes to even further incentives a better market integration of RES-E. Beside a regulated (reg) fixation of the remuneration height, in the current status of EEG 2014 under revision also tendering - or auctioning (auc) - of the remuneration height is being discussed from 2017 onwards. In general, under the assumption of risk adverse actors, all of the discussed policy instruments go along with higher remuneration risks compared to FITs; with higher risks usually resulting in risk premiums. Due to the specific cost structure of VRES with high shares of fix investment cost and almost negligible marginal cost, changes in policy support can have deep impacts in RES-E capacity investment. In order to elaborate risk premiums and changed requirements in the equity-debt ratio of financing future RES-E projects under changed RES-E policy frameworks in Germany 20 structured interviews with experts from project developers, financers, investors and plant operators are being been carried out. In a first step, the investigated parameters serve as input for a newly developed risk evaluation and cash flow model (RESMIP), which calculates typical financial indicators like the Net Present Value (NPV), the Levelized Cost of Electricity (LCOE), the Internal Rate of Return (IRR) and the Debt Service Coverage Ratio (DSCR). In a second step, these results again serve as input for the agent-based AMIRIS simulation model in order to calculate the most cost effective way for the expansion and market integration of RES-E in Germany on an hourly resolution over a 20 year time period. Especially when analysing effects of VRES a high simulation resolution and dynamic calculation is very important in order to be able to evaluate in depth the impacts of changed policy frameworks on the market actors, their market behaviour and revenue situation under dynamic market develop-ment conditions over the whole lifetime of a RES-E investment. Finally, conclusion of the simulation results lead to specific proposals on how new RES-E support schemes should look like, if the political goals of the German energy transition (“Energiewende”) should be accomplished both effectively and cost efficient.