In an attempt to impose order on muddled and contradictory national support schemes for renewable energy around the European Union, the European Commission has begun work to produce guidelines on such state aid.
The Commission sees a common approach to renewables, including bioenergy, as essential to spur investment so that the EU achieves its aim of a single overall energy market by 2014, involving cross-border trade in renewables.
It also needs strong growth in renewables if the EU is to meet its 2020 targets of a 20 per cent reduction on 1990 levels of greenhouse gas emissions, 20 per cent of energy consumption to come from renewables (compared with almost 13 per cent today) and a 20 per cent reduction through energy efficiency in the otherwise projected primary energy usage.
“Abrupt changes in support schemes have been witnessed for solar and wind power and in the heating sector recently,” says EU energy commissioner Gunther Oettinger. “Investment conditions in the renewables sector as a whole are currently seeing a turn to the worse in a number of countries.”
That is despite what the Directorate-General for Energy (DG Energy) says is a 48 per cent reduction in the five years to 2010 in the average photovoltaic system cost and a 41 per cent reduction in module cost, with the onshore wind investment cost down 10 per cent between 2008 and 2012.
Rule changes wanted
Oettinger wants compatible incentives (although EU regulation is not allowed), but his department’s recent renewable energy “communication” said only a small share of the energy market was affected by national renewable energy support schemes: “Less than a third of the 19 per cent of our electricity from renewable energy is sheltered from market prices.” It added that some support schemes have been abolished.
The communication, echoed by organisations such as European biomass association Aebiom, added that a “well-functioning” carbon market and energy taxes were needed to give investors “clear and strong incentives to invest in low-carbon technologies and their development”.
Eventual guidance on renewables support could be controversial, particularly with critics of nuclear energy. For example, MEP Claude Turmes – a leading energy and environmental policy-maker in Brussels – criticises the guaranteed price proposed for nuclear electricity by the UK’s Department of Energy and Climate Change (Decc) while it argued against support for what he calls unfairly treated renewables: “I am a bit frustrated with Decc.”
European Wind Energy Association chief executive Christian Kjaer says: “Europe must address these underlying distortions.” He says if the ¤63 billion (£50 billion) of EU money earmarked for nuclear decommissioning were invested in offshore wind energy, the resulting units could supply 40 per cent of UK electricity: “It is an example of the staggering inertia we are in.”
Commission ambition
DG Energy will outline EU countries’ progress on renewables at the end of this year, but Hans van Steen, in its industry unit, says only 17 or 18 EU members are on track to meet their individual binding 2020 targets.
Yet DG Energy wants firm targets for 2030, as part of an overall energy strategy up to at least 2050. That faces opposition from some EU national governments, and others, but MEP Kent Johansson says local and regional governments are more likely to be in favour and to have viable strategies.
DG Energy director Marie Donnelly claims widespread support for a mandatory 2030 renewables target. “Are there other mechanisms as effective in delivering the same results without being prescriptive?” she asks.
Renewables trade association the European Renewable Energy Council, for example, calls for a 45 per cent target, and the Smart Energy for Europe Platform says 50-60 per cent is possible.
Van Steen says bioenergy is essential to the 2020 renewables target, with biomass likely to be used for 80 per cent of heating and cooling: “Heating is an absolute critical sector for meeting our targets.”
Heinz Kopetz, president of the World Bioenergy Association and a former Aebiom president, said that EU states’ National Renewable Energy Action Plans show fossil fuels being used for about 80 per cent of heat production in 2020. The Commission accepts that up to now the biomass focus has been on electricity generation.
This article first appeared in Utility Week’s print edition of 7th September 2012.
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