Ecology, Economy and Security of Supply of the Dutch Electricity Supply System: A Scenario Based Future Analysis

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(1)Ecology, Economy and Security of Supply of the Dutch Electricity Supply System: A Scenario Based Future Analysis.

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(3) Ecology, Economy and Security of Supply of the Dutch Electricity Supply System: A Scenario Based Future Analysis. Proefschrift. ter verkrijging van de graad van doctor aan de Technische Universiteit Delft, op gezag van de Rector Magnificus prof. dr. ir. J.T. Fokkema, voorzitter van het College voor Promoties, in het openbaar te verdedigen op donderdag 9 oktober 2008 om 12:30 uur door. Johannes Gerhardus RÖDEL. Werktuigkundig ingenieur geboren te Doetinchem..

(4) Dit proefschrift is goedgekeurd door de promotor: Prof. dr. ir. A.H.M. Verkooijen. Copromotor: Dr. R.W. Künneke. Samenstelling promotiecommissie: Rector Magnificus, voorzitter Prof. dr. ir. A.H.M. Verkooijen, Technische Universiteit Delft, promotor Dr. R.W. Künneke, Technische Universiteit Delft, copromotor Prof. dr. ir. W. D’haeseleer, Katholieke Universiteit Leuven Prof. dr. J.P.M. Groenewegen, Technische Universiteit Delft Prof. ir. J.P. van Buijtenen, Technische Universiteit Delft Prof. ir. W.L. Kling, Technische Universiteit Eindhoven Dr. F. van der Hooft, N.V. Nuon. The research described in this thesis was made possible through financial support from Nuon.. Cover design: Existing and new supply options (background: satellite image of the Netherlands (NASA), left side: Waste Incineration (AEB), CCGT, Conventional coal, CHP CCGT; right side: Electricity storage (KEMA), Offshore wind (Nuon), IGCC (Nuon), Solar energy (Nuon)). The source is mentioned for all figures, diagrams and graphs which were not created by the author. In so far as was possible permission for use was requested and acquired. The author recognizes the intellectual property rights of rightful owners who could not be traced or contacted. Printed by: Ponsen & Looijen b.v., Wageningen, The Netherlands ISBN 978-90-6464-291-3 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any electronic or mechanical means (including photocopying, recording or information storage retrieval) without permission in writing form the author..

(5) Summary. Summary PhD thesis “Ecology, Economy and Security of Supply of the Dutch Electricity Supply System: A Scenario Based Future Analysis” by Hans Rödel Energy, environment and society are three concepts that are inextricably intertwined. Society cannot do without energy, for energy is essential to economic prosperity. However, this leads to increasing environmental pressure because though energy intensity is declining in the GDP, energy consumption per head of the population is still rising, largely due to greater use of electricity. The electricity and heat used in the Netherlands are produced mainly by large-, medium- and smallscale technologies that convert predominantly fossil fuel into electricity and heat. A small percentage comes from renewable sources, such as wind, sun and water, and geothermal and bio-energy, including waste. In the wake of an EU directive the Dutch electricity sector was transformed in 1998-2004 from a regional/national utility to an international liberalized market with national (public sector) and international privatized producers and providers. A liberalized electricity market is considered the best guarantee for an efficient electricity supply as freedom of choice makes the market players compete and invest in innovation. But, does a liberalized electricity market also offer guarantees for an optimal balance in the objectives for environment, economy and security of supply, as defined in this study? The supply of fossil fuels is finite and the larger part of the Dutch electricity supply goes hand in hand with CO2 and, to a lesser extent, NOx and SOx emissions which affect the environment. There is a general consensus that the environmental burden must be tempered as far as possible, in the form of CO2 emission reductions by the electricity supply system. The government has set new targets for energy savings, renewable energy and CO2 emissions for 2020. It is up to the market to achieve these targets with or without guidelines for, amongst others, renewable energy sources. This study looks at the current electricity supply situation. It shows how the system should be structured to attain the environmental targets, it discusses the various growth parameters for the different electricity production options, and explains the required incentives. But the environment is only one of the study objectives. No less important are economic efficiency and security of supply of the electricity system. That’s why this study focuses on the following questions: Which electricity supply scenarios are possible in the Netherlands, taking account of trends in electricity/heat/fuel supply and demand, economic protectionism versus globalization, and the importance of environmental aspects in a deregulated electricity market? How do these scenarios affect the three objectives: energy savings/CO2 emission reductions, improved economic efficiency of the electricity supply system, and maintaining a high level of security of supply? Which government incentives would be needed? To determine the effects of the selected scenarios on the three objectives of this study a supplydemand techno-economic model has been developed which can calculate the electricity supply for any given year on an hour basis. On the basis of predefined scenarios the simulation model can be used to address optimization issues. The study presupposes an electricity market that works optimally and is impervious to external factors. This dissertation describes the outcome of the study. It is split into ten chapters which are divided over an introduction, five separate parts, conclusions, and recommendations. Below a short description is given for each part.. v.

(6) Introduction: Evolution of the Electricity Supply The introduction traces the gradual evolution of the electricity supply from a private initiative around 1880 to the current deregulated system with diverse market players, generation technologies and electricity import/export. It describes the effects that this process has had on the environment, the economy and security of supply and identifies various trends. Clearly, emissions of NOx and SO2 in particular have risen sharply in recent decades and CO2 emissions are continuing to rise with the growth in the demand for electricity. Mounting fuel prices have pushed up the generation costs despite efficiency improvements. Since the deregulation of the market scarcely any new electricity capacity has been built, resulting in a lower reserve factor and a growing dependence on imports. Part 1: The Reference Situation for the Environment, Economy and Security of Supply In Part 1the reference situation – the electricity supply system in 2003 – is analyzed in terms of the environment, the economy and security of supply in order to define the frame of reference for the scenario analyses. The first part of Chapter 2 presents a brief overview of national and EU environmental guidelines and their aims. These guidelines have an effect on the market and influence the operational deployment of the supply options. For the purposes of the scenario analyses the total CO2 emissions from the domestic electricity supply are fixed at 63.5 Mtons, or 72.3 Mtons including those from electricity imports. The second part of Chapter 2 sketches the economic situation and briefly discusses the electricity markets and price trends which were visible in 2003. On the basis of the price levels in the reference situation, the generation costs are analyzed for four electricity generation options and conclusions are drawn about the performance of these generation options and the deployment in peak (working) and off-peak (other) hours. Chapter 3 concentrates on security of supply, beginning with a description of the methodologies to analyze security of supply. An overview is provided of the supply and demand for electricity in 2003, followed by an analysis of the balance between supply and demand and the implications for security of supply. Part 2: Energy Generation, Transportation and Distribution in the Netherlands Chapter 4 explains the current electricity supply system in the Netherlands. This is split into categories: conventional and CCGT generation, CHP options and renewable sources and waste incineration plants. After a brief description of thermodynamic cycles and possible ways of combining them, the physical locations/installations, the used thermodynamic cycle and the fuel supply system are explained for each category along with a brief outline of the production process. As a preface to the discussion on CHP, the definition of heat/power as understood in this thesis is explained and the advantages of CHP are offset against conventional generation and CCGT without heat. CHP installations larger than 100 MWe are described at the same manner as conventional and CCGT options. CHP installations smaller than 100 MWe are described in clusters. The renewable energy sources are divided into wind, water, solar and bio-energy and are also described in clusters. The physical waste incinerators are addressed with a brief description of the technology. This is followed by a comparison of the key characteristics of the various generation options, including specific fuel consumption, on/off times and maintenance. The influence of heat delivery on performance is also assessed. An overview is presented of the environmental profiles of the current generation options and the openings for the deployment of alternative fuel. The chapter ends with a description of the building process for new generation, from planning to commissioning, and the influence on security of supply. The transport and distribution which are needed to close the supply-and-demand chain are discussed in Chapter 5 in relation to electricity, gas and CHP. Future developments in transport and distribution, such as “Distributed Generation” and “Demand Side Management,” are addressed briefly as well as low temperature district heating systems and developments in central cold systems. Part 3: Latest Trends in the Development of Generation Options In Part 3 a review of the latest trends in the development of generation techniques builds a bridge between the description of the system in Part 2 and the techno-economic simulation model in Part 4. Future developments in the categories listed in Chapter 4 – conventional, CCGT, CHP, renewable sources and waste incineration plants – are described in detail along with the anticipated. vi.

(7) Summary. developments in production processes and key parameters, such as maintenance, unit size, electricity yield and investment levels for 2012 and 2025. The developments in CO2 capturing and storage are explained separately for conventional and CCGT generation. Capturing technology such as pre-, postand oxy-fuel combustion are identified and its effect on production processes, maintenance, unit size, electricity yield and investment levels is assessed. CO2 transport and storage systems are touched on but not explored in detail. The storage of electricity is a good option to absorb discrepancies between supply and demand in the electricity supply system as such. The various systems which are currently available and in development are mentioned. The chapter ends with six tables showing all the above categories and developments in parameters such as unit size, electricity yield, maintenance costs and investment costs for 2012 and 2025. These parameters together with the scenarios in Part 4 serve as input for the model. Part 4: Developed Scenarios and the Techno-Economic Simulation Model Chapter 7 describes four future scenarios for the Dutch electricity supply system. First, the scenario definitions are determined, the driving forces and uncertainties are identified and, on the basis of a literature search, an inventory is compiled of the driving forces that can be used for this study. The four scenarios (A, B, C and D) compiled for this study can be characterized with a matrix of uncertainties. There are two scenarios, A and C, in which the environment and the finite nature of fossil fuel are important, and another two scenarios, B and D, in which only the (lowest) costs are important. The quintessential difference between the “environmental scenarios” and the “lowest-cost scenarios” therefore lies in the nature of the economy: is it largely protectionist (regional) (A and B scenarios) or geared to worldwide free trade (globalization) (C and D scenarios)? The four scenarios serve as input for the techno-economic simulation model, but before the input parameters are determined the mathematical-economic structure of the model is described in Chapter 8. The starting points are defined: the algorithms for the modules – electricity generation plants, other electricity production and import/export – are described and the required input and output parameters are specified. Finally, the results are calculated for reference year 2003 and analyzed and evaluated to validate the model. Part 5: Scenario Analysis In Chapter 9 the demand for electricity and heat in the reference year is analyzed and the load curves are plotted, which will serve as input for the model. On the supply side, factors such as trends in the electricity demand, price ratios for gas, coal and electricity, electricity price levels in neighboring countries, incentives and “must run” deployment are important. The influence of these factors on the development of the various production options for the above-mentioned modules is analyzed. The subsequent load curves and the influencing factors are used to determine the parameters for the four scenarios that feature in the model. The choice of parameters and the figures for each scenario are explained. In Chapter 10, first the results of the model for the scenarios are graphically presented for the environment, the economy and security of supply. Then the outcome for the three domains is discussed for each scenario. A comparison of the figures in each case clearly shows the differences between the scenarios. Scenarios A and C represent a low environmental burden and would allow the government targets for the environment to be achieved. However, economic efficiency of the electricity supply is low. Powerful incentive schemes will be needed every year, especially for protectionist Scenario A. Also, in this protectionist environmentally-friendly scenario, a large volume of reserve capacity will have to be built up to compensate for lapses in the supply of wind energy. In environmentally-friendly Scenario C under worldwide free trade this is less urgent. In addition, the system in the protectionist environmentally-friendly Scenario A will not be able to work at certain times of the year when the electricity load is low because of the large percentage of wind energy. The heavy environmental burden created by the “lowest-cost scenarios” will prevent the achievement of the government targets, but economic efficiency is good and incentives would not be needed. The reserve capacity requirement is low. The chapter ends with graphical representations and an analysis of the effects of electricity storage on the electricity load curve, fuel consumption and CO2 emissions by the electricity supply.. vii.

(8) Conclusions and Recommendations In the Conclusions and Recommendations the research question is answered on the basis of the scenario outcomes presented in Chapter 10. Clearly, the four scenarios differ widely in terms of their ability to realize the objectives for the three domains. The main conclusion is that there is no single scenario that scores well on all counts, but the results of the environmentally-friendly Scenario C under worldwide free trade show that, by applying a smart combination of generation technologies, such as gasification with CO2 capturing and storage, heat/power, on- and off-shore wind energy and biomass (clean wood, waste wood and residual streams such as chicken manure) and by re-using residual heat an option emerges which strikes a reasonable balance between the environment, the economy and security of supply. This and the other conclusions form the basis of the recommendations to the government on the adoption of an electricity supply system that strikes the best possible balance between the three objectives of energy savings/CO2 emission reductions, improved economic efficiency of the electricity supply system, and maintaining a high level of security of supply. The growth parameters of the various production options can be determined and incentive systems devised to achieve this balance. The simulation model is highly versatile and can be used to work out other conceptual scenarios in the Netherlands and also in the EU.. viii.

(9) Samenvatting. Samenvatting Proefschrift “Milieu, economie en voorzieningzekerheid van de Nederlandse elektriciteitsvoorziening: Een toekomst analyse op basis van scenario’s” door Hans Rödel. Energie, Milieu en Samenleving, drie begrippen die onlosmakelijk met elkaar zijn verbonden. De samenleving kan niet zonder energie, energie is welvaart. Dit leidt echter tot een toenemende milieubelasting, want ondanks dat de energie-intensiteit in het BNP dalend is, blijft het energieverbruik per hoofd toenemen voornamelijk door toename van het elektriciteitverbruik. De elektriciteit en warmte die in Nederland wordt gebruikt, wordt voornamelijk geproduceerd met grote-, middelgrote en kleinschalige energie conversie technologieën die ingezet worden om voornamelijk fossiele brandstoffen te converteren naar afgeleide energiedragers elektriciteit en warmte. Een klein gedeelte van deze energiedragers wordt geproduceerd uit hernieuwbare energiebronnen zoals wind, zon, water, geothermie en bio-energie waaronder afval. De Nederlandse elektriciteitssector is als uitvloeisel van EU directieven in de periode 1998-2004 getransformeerd van een regionale/nationale nutsvoorziening tot een internationale geliberaliseerde energiemarkt met nationale (publieke) en internationale geprivatiseerde producenten en leveranciers. Een geliberaliseerde elektriciteitsmarkt wordt gezien als de beste garantie voor een efficiënte elektriciteitsvoorziening waarbij keuzevrijheid voor afnemers de nodige concurrentie teweeg brengt en marktpartijen blijft stimuleren tot innovatie. De vraag die daarbij echter gesteld kan worden is of een geliberaliseerde elektriciteitsmarkt tegelijkertijd garanties biedt voor een optimale balans tussen de drie doelstellingen ‘milieu’, ‘economie’ en ‘voorzieningszekerheid’. Het aanbod aan fossiele brandstoffen is eindig én het grootste deel van de Nederlandse elektriciteitsvoorziening gaat gepaard met milieubelastende emissies als CO2 en in mindere mate NOx en SOx. Er bestaat inmiddels een groot draagvlak voor de verdere matiging van de milieubelasting en dan in de vorm van CO2 emissie reductie van de elektriciteitsvoorziening. De overheid heeft daarvoor nieuwe doelstellingen vastgelegd waarin energiebesparing, aandeel hernieuwbare energie en reductie van CO2 worden bepaald voor 2020. De wijze waarop dit bereikt moet worden wordt aan marktpartijen overgelaten al dan niet aangevuld middels ondersteuningskaders voor bijvoorbeeld hernieuwbare energiebronnen. Deze studie laat zien hoe uitgaande van de huidige elektriciteitsvoorziening het systeem ingericht zou moeten worden om de gewenste milieu doelstellingen te kunnen bereiken, welke groeikaders voor de diverse elektriciteitsproductieopties daarbij mogelijk zijn en welke stimuleringskaders daarvoor noodzakelijk zijn. De gewenste milieu doelstelling is echter slechts één van de beoogde doelstellingen. Evenzeer zijn de doelstellingen voor economische efficiëntie en de voorzieningszekerheid van de elektriciteitsvoorziening van belang. De onderzoeksvraag is daarom als volgt geformuleerd: Welke scenario’s zijn mogelijk voor de Nederlandse elektriciteitsvoorziening rekening houdend met trends in vraag en aanbod van elektriciteit, warmte en brandstoffen, een economie ingesteld op protectionisme versus globalisering en het belang van milieu aspecten in een geliberaliseerde elektriciteitsmarkt? Wat zijn de effecten van deze scenario’s op de drie doelstellingen : besparing/reductie van CO2 emissies, verbeterde economische efficiency van de elektriciteitsvoorziening en het handhaven van een grote mate van voorzieningzekerheid? Welke overheid maatregelen zijn daarbij nodig om dit te ondersteunen. Ter bepaling van de effecten die gekozen scenario’s hebben op de drie in de onderzoeksvraag geformuleerde doelstellingen is een vraag – aanbod, technisch- economisch simulatiemodel ontwikkeld waarmee de elektriciteitvoorziening voor een gekozen jaar met berekeningen op uur basis kan worden doorgerekend. Aan de hand van vooraf gedefinieerde scenario’s kunnen met simulatiemodel optimalisatie vraagstukken beantwoord worden. Belangrijk uitgangspunt is hierbij de. ix.

(10) verondersteld dat er een perfect werkende elektriciteitsmarkt is zonder ondermijnende externe invloeden. De resultaten van dit onderzoek zijn beschreven in dit proefschrift. Het bevat in totaal 10 hoofdstukken die zijn verdeeld over een introductie, 5 afzonderlijke delen en conclusies en aanbevelingen. Hieronder volgt per deel een korte beschrijving van de inhoud. Introductie: Ontstaansgeschiedenis van de elektriciteitsvoorziening Beginnend als een privaat initiatief zo rond 1880 ontwikkelde zich stapsgewijs de huidige en geliberaliseerde elektriciteitsvoorziening met diverse marktpartijen, diverse opwekopties en import/export van elektriciteit. De effecten die deze ontwikkelingen hebben gehad op milieu, economie en voorzieningszekerheid worden beschreven en trends worden benoemd. Duidelijk is dat de emissies van met name NOx en SO2 de afgelopen decennia fors zijn afgenomen maar dat CO2 emissies blijven stijgen met de toename van de elektriciteitsbehoefte. De opwekkosten zijn als gevolg van de alsmaar stijgende brandstofprijzen steeds hoger geworden ondanks brandstofefficiency verbetering van de opwek. Sinds de liberalisering van de elektriciteitsmarkt is er nauwelijks nieuw elektrisch vermogen bijgebouwd met als gevolg een dalende reservefactor en toenemende afhankelijkheid van geïmporteerde elektriciteit. Deel 1: De referentie situatie voor milieu economie en voorzieningszekerheid De situatie van de elektriciteitsvoorziening in 2003 is beschreven voor de aspecten milieu, economie en voorzieningszekerheid en dient als referentie kader voor de scenario analyses die later volgen. In hoofdstuk 2, het 1e deel wordt voor het milieu aspect eerst een korte inventarisatie gemaakt van nationale- en EU reguleringskaders en de doelstelling daarvan. Deze kaders hebben uitwerking op de markt en beïnvloeden de operationele inzet van de aanbod opties welke worden beschreven.Ten behoeve van de scenario analyses is het totaal van CO2 emissies van de binnenlandse elektriciteitsvoorziening vastgesteld op 63.5 Mton. Worden ook de CO2 emissies als gevolg van import elektriciteit meegenomen dan wordt deze CO2 emissie 72.3 Mton. De economie wordt in hoofdstuk 2, het 2e deel beschreven waarbij wordt kort wordt ingegaan op de aanwezige elektriciteitsmarkten en prijs trends die in 2003 waarneembaar waren. Uitgaande van de prijsniveaus in de referentie situatie in 2003 zijn analyses gemaakt van de opwekkosten voor een viertal elektriciteitsproductieopties. Er worden uitspraken gedaan over performance van deze opwekopties en de inzet in peak (werkdaguren) en offpeak (overige uren) van deze opties. In hoofdstuk 3 wordt ingegaan op het aspect voorzieningszekerheid. Daarbij wordt begonnen met een beschrijving van de methodieken om voorzieningszekerheid te analyseren. Na inventarisatie van vraag en aanbod van elektriciteit in 2003 wordt vervolgens een analyse gemaakt hoe de balans is tussen vraag en aanbod en wat de gevolgen zijn voor de voorzieningszekerheid. Deel 2: Energie opwek, transport en distributie van energie in Nederland Hoofdstuk 4 beschrijft de bestaande elektriciteitvoorziening in Nederland. De categorieën die daarin worden onderscheiden zijn conventionele en STEG opwek opties, warmte/kracht opwek opties en als laatste de hernieuwbare energiebronnen en afvalverbrandingsinstallaties. Eerst wordt een korte beschrijving gegeven van thermodynamische cycles en mogelijke combinaties daarvan. Daarna wordt per categorie uiteen gezet welke fysieke locaties/installaties het betreft, welke thermodynamische cycle wordt gehanteerd, hoe de brandstofvoorziening is georganiseerd en hoe het productie proces verloopt. Als inleiding op de uiteenzetting bij warmte/kracht wordt de definitie van warmte/kracht voor dit onderzoek vastgelegd en wordt aangetoond welke voordelen warmte/kracht heeft ten opzichte van conventionele en STEG opwek opties zonder warmtelevering. De warmte/kracht installaties groter dan 100 MWe worden beschreven zoals bij de conventionele en STEG opwek opties. De warmte/kracht installaties kleiner dan 100 MWe worden als cluster beschreven. De hernieuwbare energiebronnen worden verdeeld in wind, water, zon en bio-energie opwek opties en als cluster kort beschreven. De fysieke AVI’s locaties/installaties worden benoemd met daarnaast een korte beschrijving van de gehanteerde technologie. Vervolgens worden de karakteristieken zoals specifiek brandstofverbruik, start- en stop tijden en onderhoudsaspecten van de diverse opwekopties vergeleken en wordt de. x.

(11) Samenvatting. invloed van warmtelevering op de performance bepaald. Een overzicht van de milieukarakteristiek van de huidige opwek opties wordt gegeven en de mogelijkheden voor inzet alternatieve brandstofsoorten benoemd. Het hoofdstuk wordt afgesloten met een beschrijving van het nieuwbouwproces voor nieuwe opwek van de planningsfase tot commisionings fase en de invloed welke dit heeft op voorzieningszeker. Voor het sluiten van de keten tussen vraag en aanbod is transport en distributie van de energiedragers noodzakelijk. Dit wordt in hoofdstuk 5 beschreven voor transport en distributie van elektriciteit, gas en warmte/koude. Bij alle transport en distributie wordt kort ingegaan op toekomstige ontwikkelingen zoals “Distributed Generation” en “Demand Side Management’ bij elektriciteit alsmede laag temperatuur stadswarmte systemen en ontwikkelingen in centrale koude systemen. Deel 3: Nieuwe trends in de ontwikkeling van opwekopties In dit deel wordt een brug geslagen tussen de systeembeschrijving van deel 2 en het technischeconomisch simulatiemodel dat beschreven wordt in deel 4 door het beschrijven van de nieuwe trends in de ontwikkeling van de opwekopties. De toekomstige ontwikkelingen voor de in hoofdstuk 4 genoemde categorieën conventionele en STEG opwek, warmte/kracht en hernieuwbare energiebronnen en afvalverbrandingsinstallaties worden uitgebreid beschreven. Daarbij worden de verwachtingen voor de ontwikkelingen in het productieproces en parameters zoals onderhoud, unit grootte, elektrische rendementen en investeringsniveaus voor de perioden 2012 en 2025 benoemd. Als apart onderdeel van de categorie conventionele en STEG opwek worden de ontwikkelingen in CO2 afvang en opslag beschreven. Afvang technieken als pre- post- and oxyfuel combustion worden benoemd en de effecten voor het productieproces, onderhoud, unit grootte, elektrische rendementen en investeringsniveaus worden bepaald. Transport en opslag systemen voor CO2 wordt aangestipt maar er wordt niet diep op ingegaan. Voor de elektriciteitsvoorziening als zodanig is opslag van elektriciteit een goede optie om discrepanties tussen vraag en aanbod van elektriciteit op te kunnen vangen. Aan de diverse beschikbare en in ontwikkeling zijnde systemen wordt kort aandacht geschonken. Het hoofdstuk besluit met een zestal overzicht tabellen voor alle hierboven genoemde categorieën en met daarin de ontwikkelingen van parameters als unit grootte, elektrische rendementen, onderhoudskosten en investeringskosten voor de jaren 2012 en 2025. Deze parameters dienen in combinatie met de afgeleide scenario’s in deel 4 als input voor het simulatiemodel. Deel 4: Ontwikkelde scenario en het technisch-economisch simulatiemodel In hoofdstuk 7 wordt de werkwijze beschreven hoe vier toekomstige scenario’s worden afgeleid voor de Nederlandse elektriciteitsvoorziening. Hiertoe worden eerst scenario definities bepaald, de drijvende krachten en onzekerheden geïnventariseerd en wordt middels onderzoek van relevante literatuur met betrekking tot scenario’s voor elektriciteitsvoorziening een inventarisatie gemaakt van de drijvende krachten die gebruikt kunnen worden voor deze studie. De vier voor dit onderzoek afgeleide scenario’s, A, B, C en D kunnen worden gekarakteriseerd aan de hand van de matrix van onzekerheden waaruit twee scenario’s, het A en C scenario, naar voren komen waarin milieu en eindigheid van fossiele brandstoffen belangrijk zijn en twee scenario, het B en D scenario waarin alleen (laagste) kosten belangrijk zijn. Onderscheidt tussen de “milieuscenario’s” en de “laagste kostenscenario’s”onderling is vervolgens gelegen in de aard van de economie. Deze is in het ene geval protectionistisch (regionaal) ingesteld, scenario A en B en in het ander geval, scenario’s C en D betreft het een wereldwijd omvattende vrije economie (globalisering). De vier scenario’s dienen als input voor het technisch-economisch simulatiemodel. Voordat echter de input parameters bepaald worden wordt eerst de mathematische/economische structuur van het simulatie model beschreven in hoofdstuk 8. Uitgangspunten worden gedefinieerd, de gebruikte mathematische algoritmen voor de modules elektriciteitsproductiebedrijven, overige elektriciteitsproductie en import/export worden beschreven en de benodigde invoer en uitvoer parameters worden benoemd. Tot slot worden de model resultaten berekend voor het referentiejaar 2003 en worden de uitkomsten geanalyseerd en geëvalueerd ter validatie van het model.. xi.

(12) Deel 5: Analyse van scenario’s In hoofdstuk 9 wordt de elektriciteit en warmte vraag van de referentiesituatie geanalyseerd en worden de load curves voor elektriciteit en warmte afgeleid die als input dienen voor het simulatiemodel. Voor de aanbodzijde zijn factoren als ontwikkeling van de elektriciteitsvraag, de gas/kolen/elektriciteit prijs verhoudingen, de prijsniveaus van elektriciteit in de ons omringende landen, stimuleringskaders en “must run” inzet belangrijk. De invloed van deze factoren op de ontwikkelingen van de verschillende productieopties voor de hierboven benoemde modules wordt geanalyseerd. Met de afgeleide load curves en de van invloed zijnde factoren worden vervolgens de parameters bepaald voor de vier scenario’s die dienen als input voor het simulatiemodel. De keuze van de gebruikte parameters voor het betreffende scenario wordt vervolgens toegelicht en de gehanteerde getallen worden onderbouwd. In hoofdstuk 10 worden de model uitkomsten voor de doorgerekende scenario’s uit deel 4 eerst grafisch gepresenteerd voor de drie doelstellingen milieu, economie en voorzieningszekerheid en vervolgens wordt per scenario ingegaan op de uitkomsten voor de drie doelstellingen. Een getalsmatige vergelijking tussen de scenario’s laat duidelijk de verschillen zien tussen de scenario’s onderling. Voor de scenario’s A en C met een lage milieubelasting geldt dat de milieudoelstellingen van de overheid kunnen worden bereikt. Echter de economische efficiëntie van de elektriciteitsvoorziening voor deze scenario’s is laag en vooral in het protectionistische scenario A is een fors jaarlijks stimuleringskader noodzakelijk. Daarnaast moet in dit protectionistische milieuvriendelijke scenario tevens een behoorlijk aandeel reserve vermogen worden opgesteld ter compensatie van wegvallen van de invoeding van windenergie. In het milieuvriendelijke scenario C met wereldwijde vrije markt is dit in mindere mate noodzakelijk. Tevens blijkt dat het systeem in het protectionistische milieuvriendelijke scenario A op een aantal momenten in het jaar niet kan functioneren bij lagere elektriciteitsbelasting als gevolg van het grote aandeel windvermogen. De “kosten-scenario’s” hebben een hoge milieubelasting waarmee overheidsdoelstellingen niet worden gehaald. De economische efficiëntie is echter goed en stimuleringskaders zijn hier niet van toepassing. Het aandeel noodzakelijk reservevermogen is laag. Het hoofdstuk besluit met de grafische weergaven en analyse van de effecten van elektriciteitsopslag op de elektriciteit load curve en de gevolgen van elektriciteit opslag voor brandstofverbruik en CO2 emissie van de elektriciteitsvoorziening. Conclusies en aanbevelingen In de conclusies en aanbevelingen wordt de onderzoeksvraag beantwoord aan de hand van de scenario uitkomsten uit hoofdstuk 10. Duidelijk blijkt dat er voor de vier gedefinieerde scenario’s grote verschillen optreden voor de drie doelstellingen. Belangrijkste conclusie is dat er niet één scenario is dat voldoet aan alle drie doelstellingen. De uitkomsten van het milieuvriendelijke scenario C met wereldwijde vrije markt laat echter zien dat er middels slimme combinatie van verschillende opwektechnologieën zoals vergassingstechnologie met CO2 afvang en opslag, warmte/kracht, on- en off shore wind energie en de inzet van biomassa (schoon hout, afval hout en reststromen als kippenmest) en hergebruik van restwarmte een variant ontstaat die in redelijke mate voldoet aan de optimale balans tussen milieu, economie en leverzekerheid. Deze conclusie en de overige conclusies leiden tot aanbevelingen voor de keuzes die de overheid kan maken om te komen tot een elektriciteitsvoorziening die voldoet aan de meest optimale balans voor de drie geformuleerde doelstellingen besparing/reductie van CO2 emissies, verbeterde economische efficiency van de elektriciteitsvoorziening en het handhaven van een grote mate van voorzieningzekerheid. Tevens kunnen de groei kaders van de diverse productieopties worden vastgelegd en stimuleringskaders worden bepaald waarmee deze optimale balans bereikt kan worden. Tenslotte blijkt het simulatiemodel zeer geschikt te zijn om ook andere mogelijke scenario’s door te rekenen voor de Nederlandse elektriciteitsvoorzienig maar ook op EU schaal.. xii.

(13) Contents. Contents Summary ..................................................................................................................................................v Samenvatting........................................................................................................................................... ix Contents ............................................................................................................................................... xiii Chapter 1 Introduction .........................................................................................................................1 1.1 Evolution of the Dutch Electricity Sector........................................................................................3 1.2 Effects of Evolution on Environment, Economics, and Security of Supply....................................8 1.2.1 Environment .........................................................................................................................8 1.2.2 Economics..........................................................................................................................11 1.2.3 Security of Supply ..............................................................................................................12 1.2.4 Observations ......................................................................................................................13 1.3 Research Objective and Questions .............................................................................................15 1.3.1 Research Objective............................................................................................................15 1.3.2 Problem Definition..............................................................................................................16 1.3.3 Research Questions ..........................................................................................................17 1.3.4 Scope of the Research ......................................................................................................18 1.4 Thesis Overview ..........................................................................................................................19 References ..................................................................................................................................20. Part 1. Description of the Reference Situation in 2003. Chapter 2 Environment and Economics ..........................................................................................25 2.1 Introduction .................................................................................................................................25 2.2 Environmental (CO2) Performance .............................................................................................25 2.2.1 CO2 Emissions Electricity Production Sector ....................................................................26 2.2.2 Effects of Choices in Electricity Production Options on CO2 Emissions ...........................27 2.3 Economic Performance ..............................................................................................................27 2.3.1 Electricity Market Pricing in 2003 ......................................................................................28 2.3.2 Anticipated Trends in Peak and Off-Peak Prices for 2003 ...............................................30 2.4 Summary ....................................................................................................................................32 Chapter 3 Security of Supply ............................................................................................................33 3.1 Current Method of Operation ......................................................................................................33 3.2 Methods Applied to Analyze Security of Supply .........................................................................33 3.3 Demand for Electricity .................................................................................................................35 3.4 Electricity Supply ........................................................................................................................37 3.5 Matching Supply and Demand ...................................................................................................38 3.6 Summary ....................................................................................................................................40 References ..................................................................................................................................41. Part 2. Description of the System. Chapter 4 Energy Supply Chain and Supply Options .....................................................................45 4.1 Introduction ................................................................................................................................45 4.2 Energy Supply Chain – Overview ...............................................................................................45 4.3 Definition Supply Side ...............................................................................................................45 4.3.1 Main Categories ...............................................................................................................45 4.3.2 Basic and Combined Cycles in Energy Conversion Technology ......................................47 4.3.3 Definition of Input and Output Parameters for the Model .................................................48 4.4 Conventional and Combined Cycle Units ...................................................................................49 4.4.1 Conventional Coal-Fired Units ..........................................................................................49. xiii.

(14) 4.5. 4.6. 4.7 4.8 4.9 4.10. 4.4.2 Conventional Gas-Fired Units ...........................................................................................52 4.4.3 Hot Windox Combined Cycle Gas Turbine (HW CCGT) .................................................53 4.4.4 Nuclear ..............................................................................................................................54 4.4.5 Peak-Load Units ...............................................................................................................57 4.4.6 Integrated Gasification Combined Cycle (IGCC) .............................................................58 4.4.7 Combined Cycle Gas Turbine (CCGT) ............................................................................60 Combined Heat and Power ........................................................................................................64 4.5.1 Specific Characteristics of CHP ........................................................................................64 4.5.2 Heat Supply Pattern; CHP Back-Up / Peak-Demand Facilities ............................................65 4.5.3 Combined Heat and Power Units for Industrial Heating ...................................................67 4.5.4 Combined Cycle Gas Turbine District Heating (CCGT and GT+HRSG DH) ...................76 4.5.5 Small-Scale Combined Heat and Power (Gas Engines) .................................................79 Sustainable Options ....................................................................................................................82 4.6.1 Wind Energy ......................................................................................................................82 4.6.2 Hydro Power .....................................................................................................................83 4.6.3 Photo-Voltaic Solar Energy................................................................................................84 4.6.4 Bio-Energy ........................................................................................................................84 Technical Conditions for Unit Deployment .................................................................................87 Environmental Situation ..............................................................................................................89 Security of Supply .......................................................................................................................91 Summary .....................................................................................................................................92. Chapter 5 Transport and Distribution of Energy .............................................................................93 5.1 Introduction .................................................................................................................................93 5.2 Electricity Transmission and Distribution Grids ..........................................................................93 5.2.1 Introduction .......................................................................................................................93 5.2.2 Transport and Distribution of Electricity .............................................................................94 5.2.3 Structure of the Transmission Grids ..................................................................................95 5.2.4 Structure of the Distribution Grids .....................................................................................95 5.2.5 Cross-Border Connections ................................................................................................96 5.2.6 Near Future Developments ............................................................................................ 100 5.3 Gas Transport and Distribution Grids ...................................................................................... 103 5.3.1 Introduction .................................................................................................................... 103 5.3.2 Transport and Distribution of Natural Gas ..................................................................... 103 5.3.3 Storing Natural Gas ....................................................................................................... 106 5.3.4 Near Future Developments ............................................................................................ 108 5.4 Heat Transport and Distribution Grids ..................................................................................... 109 5.4.1 Introduction ..................................................................................................................... 109 5.4.2 Transport and Distribution of District Heat...................................................................... 109 5.4.3 Near Future Developments............................................................................................. 110 5.4.4 District Heating and District Cooling ............................................................................... 112 5.5 Summary .................................................................................................................................. 113 References ............................................................................................................................... 114. PART 3 Supply Trends Chapter 6 Technological Trends in Supply Options .................................................................... 121 6.1 Introduction .............................................................................................................................. 121 6.2 Conventional and Combined Cycle Technology ..................................................................... 121 6.2.1 Clean Coal Technologies (CCTs) ................................................................................. 121 6.2.2 Nuclear Technologies .................................................................................................... 126 6.2.3 Integrated Gasification Combined Cycle (IGCC) .......................................................... 136 6.2.4 Combined Cycle Gas Turbine (CCGT) ......................................................................... 138 6.2.5 Carbon Capture & Storage ............................................................................................ 145 6.3 Combined Heat and Power ..................................................................................................... 153 6.3.1 Combined Heat and Power Units for Industrial and District Heating ............................. 153 6.3.2 Small-Scale Combined Heat and Power (Gas Engines) .............................................. 155 6.3.3 Small-Scale Combined Heat and Power (µ WKK) ........................................................ 156 6.4 Sustainable Options ................................................................................................................. 159. xiv.

(15) Contents. 6.5. 6.6. 6.4.1 Wind Energy ................................................................................................................... 159 6.4.2 Hydro Power .................................................................................................................. 160 6.4.3 Solar Energy .................................................................................................................. 160 6.4.4 Bio-Energy ..................................................................................................................... 161 6.4.5 Electricity Storage .......................................................................................................... 162 Overview Technologies for Future Scenarios ......................................................................... 163 6.5.1 Conventional Units ......................................................................................................... 163 6.5.2 Combined Heat and Power ............................................................................................ 163 6.5.3 Sustainable Options ....................................................................................................... 164 Summary .................................................................................................................................. 165 References ............................................................................................................................... 166. Part 4. Dutch Electricity Demand and Supply Scenarios and Simulation Model. Chapter 7 Scenarios for the Dutch Electricity Supply.................................................................. 175 7.1 Introduction ............................................................................................................................... 175 7.2 Scenarios.................................................................................................................................. 175 7.2.1 Definitions ....................................................................................................................... 175 7.2.2 Scenario Development.................................................................................................... 176 7.2.3 Scenarios for the Dutch Energy and Fuel Supply in the Literature................................. 177 7.3 Developing Scenarios for the Model......................................................................................... 186 7.3.1 Introduction ..................................................................................................................... 186 7.3.2 Driving Forces and Uncertainties.................................................................................... 186 7.3.3 Horizons .......................................................................................................................... 188 7.3.4 Narrative/Storyline Scenarios ......................................................................................... 189 7.4 Summary .................................................................................................................................. 192 Chapter 8 Dutch Electricity Supply Model ..................................................................................... 193 8.1 Introduction ............................................................................................................................... 193 8.2 Objectives, Delineation, and Simplification of the Model.......................................................... 193 8.3 Structure of the Model .............................................................................................................. 195 8.3.1 Introduction ..................................................................................................................... 195 8.3.2 Short Review of Energy Models, Comparison with Our Model....................................... 195 8.3.3 Model Structure and Sub-Model Description .................................................................. 197 8.3.4 Model Input and Output .................................................................................................. 198 8.3.5 Demand and Supply Balance ......................................................................................... 199 8.4 Mathematical/Economic Structure of the Model....................................................................... 203 8.4.1 Economics of Electricity Generation Companies, Unit Commitment/Dispatch............... 203 8.4.2 Economics of Other Electricity Producers, Combined Heat/Power, Waste Incinerators, Non-Fossil ................................................................................................................................ 211 8.4.3 Economics of Import and Export..................................................................................... 224 8.5 Validating the Model ................................................................................................................. 225 8.6 Summary .................................................................................................................................. 226 References ............................................................................................................................... 227. Part 5. Input Model and Analysis of Scenario Outcomes. Chapter 9 Input Model for the Developed Scenarios.................................................................... 233 9.1 Introduction ............................................................................................................................... 233 9.2 Model Input: Demand Side ....................................................................................................... 233 9.2.1 Introduction ..................................................................................................................... 233 9.2.2 Electricity Demand .......................................................................................................... 233 9.2.3 Electricity Load................................................................................................................ 234 9.2.4 Heat Demand .................................................................................................................. 236 9.2.5 Heat Load........................................................................................................................ 237 9.3 Model Input: Supply Side.......................................................................................................... 238. xv.

(16) 9.4. 9.5. 9.3.1 Introduction ..................................................................................................................... 238 9.3.2 Factors that Influence Supply Trends ............................................................................. 239 9.3.3 Electricity Production Companies ................................................................................... 242 9.3.4 Other Electricity Producers ............................................................................................. 247 9.3.5 Import/Export................................................................................................................... 259 Filling in the Model for the Developed Scenarios ..................................................................... 264 9.4.1 Introduction ..................................................................................................................... 264 9.4.2 Demand and Supply Side ............................................................................................... 264 9.4.3 Operational, Dispatch and Fixed Cost ............................................................................ 267 9.4.4 Financial Parameters ...................................................................................................... 271 9.4.5 Stimulation Measures ..................................................................................................... 273 9.4.6 Parameters Not Taken into Account............................................................................... 273 Summary .................................................................................................................................. 275. Chapter 10 Analysis of Scenario Outcomes.................................................................................. 277 10.1 Introduction ............................................................................................................................... 277 10.2 Model Results for the Developed Scenarios ............................................................................ 277 10.2.1 Environment .................................................................................................................. 277 10.2.2 Economics..................................................................................................................... 278 10.2.3 Security of Supply ......................................................................................................... 280 10.3 Analysis of the Results for 2025 ............................................................................................... 280 10.3.1 Scenario Results ........................................................................................................... 280 10.3.2 Scenario Results Compared ......................................................................................... 284 10.4 Effects of Electricity Storage for Scenario C ............................................................................ 286 10.5 Summary .................................................................................................................................. 288 References ............................................................................................................................... 289 Chapter 11 Overall Conclusions ..................................................................................................... 295 11.1 Summary .................................................................................................................................. 295 11.2 Summarizing Conclusions ........................................................................................................ 298 11.3 Recommendations.................................................................................................................... 298. Appendices Appendix A .......................................................................................................................................... 303 Appendix B .......................................................................................................................................... 305 Appendix C .......................................................................................................................................... 307 Appendix D .......................................................................................................................................... 323 Appendix E .......................................................................................................................................... 325 Appendix F .......................................................................................................................................... 327 Nomenclature ...................................................................................................................................... 351 Dankwoord .......................................................................................................................................... 355 Curriculum Vitae .................................................................................................................................. 357. xvi.

(17) Introduction.

(18) xviii.

(19) Chapter 1 Introduction. Chapter 1. Introduction In the past hundred years, energy supply in the Netherlands and neighboring countries has played a vital role in ensuring that the wheels of society have continued to run smoothly and has made a significant contribution to our standard of living. The use of energy in general and of electricity and heat in particular is therefore bound up with the development of our society and welfare (see Figure 1.1). 180. Prosperity 160. Electricity use. 140. Index (1992 = 100). 120. Energy use. 100. 80. 60. 40. J/€. GDP/cap. 100 = 14,759 €/cap. GWh. 100 = 85,874 GWh. PJ. 100 = 2,802 PJ. PJ/GDP. 100 = 0.0125 10^9 J/€. 20. 0 1992. 1994. 1996. 1998. 2000. 2002. 2004. Figure 1.1: Development prosperity and energy use in the Netherlands (Source: CBS Statline) After World War II the energy use per head of the population has increased ever since. Energy use was booming at the end of the ‘60s and early ‘70s, a steep decrease occurred at the end of the ‘70s and early ‘80s and after that period, energy use still increases but with a smaller slope (see Figure 1.2). 250 First oil crisis (1973). Second oil crisis (1979). 200. GJ/cap. Exponential prosperity growth. 150. 100. 50. 0 1945. 1950. 1955. 1960. 1965. 1970. 1975. 1980. 1985. 1990. 1995. 2000. 2005. Figure 1.2: Development in total energy requirement per capita in the Netherlands (Source: CBS Statline). 1.

(20) The energy intensity in gross domestic product is declining (see Figure 1.1) but with the influences of energy on the development of our society and welfare and the continuously growing demand for energy, particularly electricity, makes the availability of a reliable energy supply system even more important. The energy supply system in the Netherlands comprises: • Supply systems for the energy carriers natural gas (with main- and regional transport systems), coal, oil, uranium, waste, and biomass. • Energy conversion technologies, mainly large-, medium-, and small-scale which are used to convert the energy carriers above into derivative energy carriers electricity, process-, and district heat (only a small part of the energy carrier electricity is generated by converting renewable energy sources such as wind, solar, and hydro). • The energy carriers electricity, process heat, and district heat are supplied to large industrial users, small and medium-sized businesses, and consumers by means of electricity transport and distribution grids, process heat distribution grids, and district heat transport and distribution grids. Although energy conversion technologies are being improved continuously the conversion of fossil fuels still involves substantial energy loss and environmentally harmful emissions. The deployment of the energy supply system to provide the required energy services, the sustainability level of energy generation, and continued security of supply come at a price – which has to be borne by society as a whole. Therefore, creating the right balance between these three pillars – environment, economics and security of supply – is of eminent importance not only to reduce the environmental burden as much as possible but also to maintain an affordable and reliable energy supply system. The European Union was quick to recognize the crucial importance of energy in the operations of the EU as a whole and for the competitiveness of the European economies. As a consequence, the supply of energy carriers such as electricity and gas now is part of the internal market - an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured - in accordance with Article 14 of the EC Treaty. The members of the European Union believe that an efficient internal European market is important to the attainment of EU objectives, to leverage expansion opportunities by admitting new member states, and to strengthen the economic position of the EU with an eye to the ageing population. Directives 96/92/EC and 98/30/EC address the realization of an internal electricity and gas market respectively. The ultimate aim is to create an integrated internal competitive energy market in the European Union and safeguard continuity in the energy supply. On December 19, 1996 the European Parliament and the Council of the European Union issued Directive 96/92/EC setting out common rules for the internal electricity market. The directive consists of a full set of measures aimed at realizing an entirely free electricity market for the benefit of European consumers and endeavors to lay the foundations for fair and honest competition. This directive was later replaced by Directive 2003/54/EC, which the European Parliament and the Council issued on June 26, 2003. In response to a request from the European Summit in Lisbon, the second directive sharpened the rules in order to be sure of realizing the objective of the original directive 96/92/EC. The member states are now obliged to take the necessary steps to ensure that certain objectives are clearly realized by January 1, 2007, such as protection for vulnerable buyers, basic consumer rights, and economic and social cohesion. The EU has also issued or prepared some supplementary guidelines for certain sub-topics relating to electricity. The Dutch government has decided to implement this EU directive by liberalization of the electricity and gas sector. Prime importance is accorded to freedom of choice for the buyer, as this is expected to stimulate competition between the providers and thereby enhance cost-effectiveness. Other anticipated benefits are lower electricity prices (before taxes), a wider choice of product packages, and improved service. Liberalization could also bolster the competitive position on the international market (Ministry of Economic Affairs, 2000). The Electricity Act of 1998 sets the parameters for market forces in the Dutch electricity sector. Directive 2003/54 and a number of implementation problems have already led to four amendments to the act and more are being drafted.. 2.

(21) Chapter 1 Introduction. The EU decision heralded a major change for the electricity sector 1, which had always been organized regionally and nationally as a monopoly and had evolved in tandem with changing circumstances. The effects were compounded by the fact that there was scarcely any insight into how far the electricity service could operate as a technological system in a liberalized market, the organization of the market itself, the possible effects on the environment, economics and security of supply, and the potential behavior of the market players (Boisseleau, 2004). Now that tentative experience has been gained and some politicians and market players are raising questions about market operations, there is a distinct risk that the age-old doctrinaire debate between the supporters and opponents of a liberalized market will be rekindled. To add to the complications, there are no clear-cut criteria for gauging the market performance. This situation can only be resolved by returning to the questions that should have been raised at the start of the debate: “What is technologically feasible with the subsequent implications for the balance between environment, economics, and security of supply? What are the government’s aims and how can they best be realized in the liberalized electricity market?” The following points are crucial to a clear understanding of the technological potential and limitations of the electricity system as a whole: 1. As a product, electricity is a 100% commodity, offering exactly the same quality to all customers. All producers and buyers of electricity are physically interconnected via electricity transport and distribution grids. This means that, in physical terms, electricity is never supplied directly by one specific producer to one specific buyer and that the actions of one producer or buyer or the grid operator (investment decisions, business operations, availability, trends in demand) will exert an influence across the whole system. 2. As it is almost impossible at present to store electricity in large quantities, the demand must be met as it arises. The electricity demand fluctuates strongly in the course of 24 hours and also between working days and weekends. 3. Energy conversion technologies are incomparable in terms of applied technology, availability, cost price of derivative energy carriers, operations, storage potential, and effects on the environment, economics, and security of supply. The evolution of the electricity sector in the Netherlands from its inception to the start of liberalization in 1998 is traced below in order to create a starting point for the research questions.. 1.1. Evolution of the Dutch Electricity Sector. The early years Electricity was first introduced in the Netherlands around 1880 as a private initiative. In its first main market, lighting, it became the arch rival of “stadsgas” (coal gas). Though it won the battle for lighting, electricity and stadsgas have competed against each other for various usages ever since. The stadsgas set-up served as the role model for electricity in the early days, especially in terms of functioning as a public utility. Electricity production was soon taken over by Public Utilities, which were owned by (local) authorities, which held a monopoly in the areas allocated to them. The first municipal energy board was founded in Rotterdam in 1895. These utilities were originally municipal or regional organizations. The State first intervened in 1904 by setting up a Government Commission for Electric Cables. The remit of this commission was to ascertain, with due respect for public safety, the legal conditions under which electric lines and cables would be laid and used, including the accompanying legal relationships. The commission could not deliver a satisfactory result and merely concluded that a concession system was needed. Responsibility still rested, however, with the local authorities. Ever since electricity was first introduced, some users have catered for their own needs by deploying their own installations. Most of them have such high electricity and heat requirements – whereby residual heat can be used in industrial processes – that it is more cost-effective for them to install their own cogeneration system. As such installations were not exactly encouraged by the electricity boards, swaps of surpluses and shortages with the public grid were usually kept to a minimum. 1. In the following of this research, we shall concentrate on the electricity sector.. 3.

(22) Pretty soon, the benefits of economies of scale were discovered thanks, on the one hand, to technological progress in electricity generation methods and grid infrastructure and, on the other hand, to the fact that linked systems require a lower reserve capacity and are more reliable than separate systems. The need for economies of scale further increased due to the concessions granted via the provinces. The government came under mounting pressure to intervene and passed the Electricity Act in 1938. The main thrust of this act was to secure optimal control over electricity. However, only the technical aspects of the act came into effect. Further responsibility for the electricity supply was left to the provinces and the municipalities. The post-war period until 1970, follow the economic growth After World War II the electricity companies realized that the only way to avoid more government intervention was to work together more closely. Until then cooperation had been limited to informal consultations and alignment through the Vereniging van Directeuren van Elektriciteitsbedrijven in Nederland (VDEN / association of directors of electricity companies in the Netherlands). This led to the establishment of N.V. Samenwerkende Electriciteits-Productiebedrijven (SEP / a partnership between electricity producers) in 1948 and the Vereniging van Exploitanten van Elektriciteitsbedrijven in Nederland (VEEN / association of electricity operators in the Netherlands) in 1952. SEP played a coordinating role in the production and was responsible for import/export and production planning (the Electricity Plan). VEEN coordinated the distribution. A system of self-regulation evolved where central and local government had only marginal influence. The advent of natural gas (after the discovery in Slochteren on July 22, 1959), the introduction of petroleum and nuclear energy, and the mine closures made energy a key focus of government attention (Vlijm, 2002), a prime example being the centralization of the gas supply via the Gasunie (founded on April 6, 1963). Strong opposition from the electricity sector put paid, for the time being, to any further attempts by the government to increase its influence in this sector. There was, however, a spectacular rise in the use of natural gas to generate electricity, the argument being that the monetary value of gas would be modest if, as expected, nuclear energy were deployed on a large scale. The government’s role went no further than setting some tariff conditions via the Prijzenbeschikking Elektrische Energie 1952 (pricing agreement for electrical energy) and negotiations on the choice of fuel.. Figure 1.3: Conventional coal-fired power plant “Centrale Gelderland” at Nijmegen in 1959 (Source: Techniek in Nederland in de twintigste eeuw, 2000). 4.

(23) Chapter 1 Introduction. The 1970s, advance of gas, increasing security of supply In the 1970s further economies of scale led to the continued concentration of electricity production in nine provincial electricity boards (Groningen/North Drente, Friesland, Overijssel/South Drente, Gelderland, Utrecht, North Holland, Zeeland, North Brabant and Limburg) and five municipal/regional boards (Amsterdam, Rotterdam, The Hague, Leiden and Dordrecht). These fourteen electricity boards were also the distributors and the joint owners of SEP. With the “general partnership agreement” of 1970 SEP expanded its originally limited role as coordinator of the interconnections and exchanges by becoming owner and manager of the national 380kV interconnected grid built in the 1960s and 1970s, including the connections with other countries, and played a greater role in the national E Plan for mapping out the required production capacity and the internal offsetting of surpluses against shortages. The E Plan was used to determine the units that would be decommissioned on the basis of the anticipated demand, the new capacity that would be built and by whom, and the investments in the interconnected grid. As of 1975 this E Plan had to be approved by the government on the basis of a covenant between the government and SEP. Meanwhile, a great many distribution companies (mostly municipal or regional) continued to exist (see Figure 1.5). Government influence was still limited because most of the responsibility still rested with the provinces and municipalities. It was the first oil crisis2 which was largely responsible for making the government realize the need for an overall energy policy. This resulted in the First Energy Policy Document in 1974, in which the key words were energy-saving and diversification. The aim was to limit the deployment of natural gas and increase the deployment of coal and nuclear energy. To ease the transition a building program was started for the storage of oil. That way, gas-fired power plants that used oil as secondary fuel would be able to switch to oil entirely. A number of gas-fired power plants were also converted for coal. At that time, almost all power plants were equipped for two types of fuel (so-called “dual firing”). Oil was the second fuel for a few coal-fired power plants and for most gas-fired power plants, while gas was the second fuel for some coal-fired power plants.. Figure 1.4: Conventional gas-fired power plant “Flevocentrale” (Source: PGEM, 1988) 2. Together with the United States, Denmark and some other countries, the Netherlands was directly targeted through an oil embargo in 1973, because of their outspoken friendly relations with Israel. The embargo was eventually terminated in 1974.. 5.