wind turbine

Austria is putting in place policy, regulations and – crucially – financing, to drive growth in its renewable energy sector, writes Kelvin Ross.

A quick question for you: which European country offers the best investment opportunities for renewable energy? Picked an answer? I bet you went for Germany, maybe Denmark, Norway – or even the UK.

And you would have been wrong on all counts, because the answer, according to a recent report, is Austria. The landlocked country – the 114th biggest in the world, with a population of 8.27 million – came top in the Energy Investment Map, a report complied by UK firm PA Consulting Group.

The map assesses the investment credentials of 14 European countries, and the business case and risk assessment factors for 10 technologies. Austria came first because of its wind, hydro and biomass investment opportunities. Norway and Denmark came second and third, for their commitment to onshore wind; Sweden is in fourth place, with a high renewable index score for hydro power; the UK came fifth, and Germany sixth.

PA Consulting says: “Comparing the scores for all the renewable technologies in each country, we found that Austria came out on top. It has very high feed-in tariffs and high capacity factors for wind, biomass and hydro. It is the only country in Europe where investors can currently find a relatively high internal rate of return in combination with very low levels of risk.”

There is clearly as much going on in Austria as in some of its more headline-grabbing European neighbours.

Country overview

There are two main features of Austria’s energy mix, and they are both well known – that it generates no nuclear power (see sidebar: Austria’s ‘no’ to nuclear), and up to 60 per cent of its capacity comes from hydropower.

The country currently imports some nuclear power but plans to stop this by 2014.

Austria’s electricity production was 69 billion kWh in 2012 and its consumption 63.8 billion kWh, making it 41st in the world – ahead of Switerland, the Czech Republic, Greece and Romania, and immediately behind the Philippines.

The country’s power sector, regulated by Energie-Control Austria, has high market concentration because of a constitutional law that requires 51 per cent of all electricity utilities to be owned by the state.

All participants in Austria’s grid are obliged – if technically and economically reasonable – to connect renewable energy generating capacity to the grid, as regulated in regional general electricity laws.

In the non-hydropower renewable energy sector, generation capacity is owned mainly by several large companies. One of them, Verbund, is Austria’s largest utility, with more than half the country’s generating capacity, and a large slice of transmission infrastructure.

Most of Verbund’s generation capacity is from hydropower – it has 41 plants just in the Styria region alone – and it is investing more than €400 million ($519 million) in expanding and modernising hydropower in the region.

The company is also expanding into wind energy: it operates three wind farms, with a total installed capacity of 49 MW in the lower Austrian municipalities, and it plans to build more.

Another key domestic player is ImWind Group, a pioneer of wind energy in Europe. Its first wind farm was completed in 1998, and in 2002 the company built Tauernwindpark, near Oberzeiring, which at the time was the highest-altitude wind farm in the world, at 1,900 m.

Biomass has taken off in Austria, and Cycleenergy – a domestic business that builds and operates biomass combined heat and power plants across the country – runs two 5.6 MW facilities at Gresten and Aschach, and a 21 MW power station at Gaishorn.

Austria’s transmission system is mainly operated by two companies. Austrian Power Grid (APG) runs most of the grid, except in the west, where it is operated by VKW Netz. The country has some 130 distribution system operators, which operate at regional and municipal levels.

Renewables support

A new transformer for one of Verbund's hydropower facilities is transported to the plant.<br>Credit: Scheuerle
A new transformer for one of Verbund’s hydropower facilities is transported to the plant.
Credit: Scheuerle

In 2010, Austria’s government published its Renewable Energy Action Plan, which covers heating and cooling, electricity and transport, and sets a target of 70.6 per cent of electricity to be delivered from renewables by 2020. In common with most of its European neighbours, Austria supports renewables via feed-in tariffs that are adjusted annually by law. The FiTs were introduced in 2002 under the Austrian Green Electricity Act, and were last revised in July 2011, when some major changes were introduced. These include an extension of the guaranteed payment period to 15 years for biomass or biogas systems, and 13 years for all other installations.

As well as the FiTs, there are investment and state subsidies for smaller PV installations of less than 5 kW capacity, medium-size hydro power plants of between 10 MW and 20 MW, and for CHP plants bigger than 2 MW.

Trends and changes

Analysts at London-headquartered Business Monitor International have recently published a report into Austria’s renewables sector, in which they highlight the following key trends and regulatory changes:

  • The government raised feed-in tariffs (FiTs) for all renewable energy in July 2011, and extended the duration for guaranteed payments.
  • In September 2012, the government terminated the FiT for new building integrated photovoltaics (BIPV) plants, with capacities over 500 kW. It introduced a digression mechanic for FiTs, and made a general reduction in the FiT for solar energy.
  • The government has decided to halt imports of nuclear power by the end of 2014 and will need to seek other generation sources to fill the gap. The country currently imports just over 3 per cent of its electricity needs, and growth of 4.7 per cent per annum in electricity generation should be sufficient to fulfil its ambition.
  • The country recently unveiled a new smart grid project that is aimed at increasing the share of photovoltaic solar power. The €5 million ($6.5 million) project, spanning three years, is expected to lead to the development of 120 photovoltaic systems.

Business Monitor International has revised up its 2013 non-hydropower renewable energy generation forecast from 5.4 per cent to 6.6 per cent, prompted by a strong project pipeline and new solar capacity data released by the Austrian Photovoltaic Association. That data reflected stronger-than-expected growth in the sector, particularly in 2011. Business Monitor International also notes that the government has announced that there is a “strong confirmed pipeline of solar projects queuing for subsidies, and these factors have led us to revise up our long-term solar generation forecast”.

In analysing Austria’s renewables landscape, Business Monitor International has also drawn up a list of the country’s strengths, weaknesses, opportunities and threats, and they break down as follows:

Strengths:

  • The government is very supportive of renewable energy, and has implemented a number of clear and positive regulations.
  • The country’s feed-in tariff scheme is fairly attractive, and a waiting list of new projects has formed for future subsidy allocations.
  • Austria’s transmission networks are relatively well-developed, and the country continues to make investments to improve and develop grid infrastructure.

Weaknesses:

  • Electricity consumption in Austria will not grow substantially in the future.
  • Much of the country’s electricity already comes from hydropower, which will weaken the case for reducing emissions.
  • Austria’s economy continues to weaken, which will hurt electricity consumption in the country, and might well result in a reduction of FiT rates.

Opportunities:

  • Austria has set itself specific targets, in terms of carbon emissions and share of renewables, as it is a member of the EU.
  • The country has strong business regulatory practices.
  • The government’s decision to halve nuclear imports by the end of 2014 represents a void for renewable energy to fill.
  • There are numerous off-grid and alternative opportunities for biomass, such as in heating and cooling, and in transportation.

Threats:

  • Austria’s economy could weaken further, which would reduce electricity consumption and subsidies for renewables.
  • Many regulations in the country favour state-owned utilities.
  • Hydropower remains an extremely attractive and viable option for the country.

For more information on Business Monitor International’s analysis, visit www.businessmonitor.com/industry/renewables/ or email: marketing@businessmonitor.com

Austria’s ‘no’ to nuclear

View into the reactor pressure vessel of the Zwentendorf nuclear power plant
View into the reactor pressure vessel of the Zwentendorf nuclear power plant

Austria’s Zwentendorf nuclear power plant is unique. It is the only one in the world to be completely built yet never commissioned.

To Austrians, the plant, beside the Danube River is testament to the fact that politics can and should always work with the will of the people.

The groundbreaking ceremony for the plant was held in April 1972, and construction took more than four years. It was to be the first of six plants to be built in the country.

But by the time it was nearing completion there was a strong anti-nuclear campaign in Austria, and in 1975 an organisation called Initiative Austrian Nuclear Power Opponents was formed, whose membership rose to more than 500,000 members.

In 1977, nine women from the state of Vorarlberg, who were opposed to the start of trial operations at the plant, held a hunger strike in front of the Austrian Chancellery. Their campaign attracted massive publicity, and as public opposition to nuclear grew, the government held a national referendum on whether Zwentendorf should go on-line: 50.47 per cent voted ‘no’.

As a result of the Zwentendorf Referendum, in December 1978, the Austrian National Assembly passed a law prohibiting the use of nuclear energy in Austria – consigning the Zwentendorf plant to the history books before it had operated for even a minute.

In 2005, the Austrian utility EVN took over the dormant reactor and turned it into a training facility for German nuclear technicians. The nuclear plant is also used as a film and television location, and part of the site has been put into operation as a solar park.

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