Brussels, 05/11/2013 (Agence Europe) - The reform advocated by the Commission entails the phasing out of support schemes for renewal energies and the granting of aid to reserve capacities.
In a communication adopted on 5 October, the Commission gives guidance for the future of public aid to the electricity sector. On one hand, it recommends the phasing out of aid granted to renewables and, on the other, the granting of aid, subject to conditions, to the construction of gas-fired and coal-fired electricity generating plants in order to offset the inadequacies of wind and solar power.
“The ultimate aim of the market is to deliver secure and affordable energy for our citizens and business. Public intervention must support these objectives. It needs to be cost-efficient and be adapted to changing circumstances”, Energy Commissioner Günther Oettinger explained on Tuesday.
The Commission explains in a press release that, if public intervention is not carefully designed, it can seriously upset the working of the market and entail energy price increases not only for households but also for business. The communication therefore aims to provide member states with information, guidance and the best current practice to allow them to make the right choice with regard to national schemes.
Aid schemes for renewables. Although this has long been a technology requiring public intervention to help it develop, wind power and solar power should now, the Commission believes, have limited aid given technological progress, the fall in cost of investment to be made in the production of solar panels, and the increased supply. The Commission therefore recommends the gradual phasing out of aid granted to renewable energy production and the setting in place of more flexible schemes allowing feed-in tariffs to be replaced by feed-in premiums or other support instruments which give incentives to producers to respond to market developments. The Commission also recommends the stability and the predictability of schemes for investors, pointing a finger of blame at their unannounced or retroactive changes. Finally, the Commission recommends increased coordination between the EU28 in their renewable strategies in order to limit cost for consumers when it comes to pricing and taxation.
Back-up capacities. The Commission also speaks of the possibility of organising or financing back-up capacities, such as coal or gas-fired power plants that are sufficiently flexible to be turned on or off as required, in order to make up for the times when wind or solar power are inadequate. The communication provides guidance on the way that reserve capacities may be designed in a cost-efficient way and take full advantage of the European market: 1) before deciding on capacity mechanisms, governments should first analyse the causes for inadequate generation; 2) secondly, they should remove any distortions that may in the first place prevent the market from delivering the right incentives for investment in generation capacity (such distortion can be caused by regulated prices, high subsidies for renewable energy); 3) governments should also ensure that renewable electricity producers react to market signals and promote flexibility on the demand side, for example by promoting different tariffs to consumers and therefore giving an incentive to use electricity at other times than peak times; and 4) any back-up capacity mechanism should not be designed having only the national market in mind but the European perspective.
Aid for nuclear energy, a special case. Although the communication is not binding, it defines the key principles which the Commission will apply when assessing state interventions relating to renewable support schemes, capacity mechanisms or measures to ensure consumer demand response, Oettinger explains. These principles are therefore relevant to the future enforcement of EU state aid rules or EU energy legislation. The Commission will also consider whether to propose legal instruments to ensure that these principles are fully implemented. The guidance unveiled on Tuesday will result in guidelines early 2014. The Commission has already specified that the future rules would not concern the nuclear sector, a technology that has reached maturity, which necessarily means that public aid granted to the sector will be unlawful, and the dossiers on this will be treated on a case-by-case basis by the Commission (see EUROPE 10924 and 10938).
Greens denounce manipulation of figures. The ecologist group at the European Parliament was highly critical on Tuesday of the suppression, in the final version of the communication, of figures included in earlier versions of the text, with regard to public aid received by the fossil energy sector (up to €35 billion annually) and fossil fuels, gas and coal (up to €66 billion annually). These figures are far higher than the amount of support for renewable energies (up to €30 billion annually). (EH/transl.jl)