Exec to unveil plans for financing renewables beyond 2020
By Marie-Martine Buckens | Wednesday 30 May 2012
On 6 June, the European Commission will unveil guidelines meant to help the renewable energy sector continue its development in Europe beyond 2020, the deadline for the target of 20% renewable energy in member states’ energy mix compared with 1990 levels. This binding target has so far enabled the capitals to support renewable energy, in particular in the electricity sector with the issuing of issuing ‘green’ certificates or guaranteed purchase prices. Such support programmes are starting to wind down, particularly against the backdrop of the crisis. In Spain, for example, the government decided last January to suspend financial aid for new electricity generation installations that use renewable energy. This situation is worrisome to the services of Energy Commissioner Günther Oettinger. The carbon market is also depressed, which does not encourage new investments. Until the Commission’s proposals to give new impetus to its CO
2 Emission Trading Scheme (ETS) can produce effects, it would be wise to make it clear now – and not in 2018 as foreseen under the 2009 Renewable Energy Directive – what type of support the EU executive would be prepared to give investors.
Time is of the essence, according to the Commission. Without adequate measures, growth in renewables may decline from 6% in recent years to 1% between 2020 and 2050, cutting into job creation – which is particularly strong in these sectors – and increasing the EU’s energy dependence. If no objective is set before 2030, says the Commission, existing scenarios are expected to limit the share of renewables to 25% of the European energy mix by 2030 and 29% by 2050. The question is especially crucial for countries like Germany, which have decided to phase out nuclear power.
Commissioner Oettinger’s services also consider that several renewables – in particular wind and solar energy – should be able to do without subsidies by 2020. The Commission recommends the fastest shift possible towards support programmes that expose producers to market fluctuations and encourage cost-cutting to avoid any overcompensation. This is not the case for other sectors, especially offshore wind farms, in which several member states are investing massively. The United Kingdom in particular has made offshore wind farms a priority, along with nuclear power, in its future energy plan. This and other more recent technologies are expected to benefit from targeted support programmes after 2020.
STRUCTURAL FUNDS TO THE RESCUE?
Another sector should be given priority, namely electricity infrastructures. According to producers of renewable energy, a very well connected European network would help compensate for sudden drops in output inherent to wind and solar systems. Tremendous investments are needed in this sector. The Commission estimates that nearly €100 billion will be needed for the installation of power lines alone. In its draft budget for 2014-2020, the Commission includes some €9 billion for priority energy infrastructure projects, particularly cross-border ones. The European Wind Energy Association (EWEA) maintains that most of this budget should be allocated to electricity infrastructures. EWEA’s Executive Director, Christian Kjaer, proposes that it should be possible to consolidate EU funds “for example through the European Investment Bank or the Structural Funds to invest in technologies that can have an immediate and significant impact on employment while easing Europe’s fuel import bill”.
Without adequate measures, growth in renewables may decline from 6% in recent years to 1% between 2020 and 2050