No harmonization of EU support policies in sight

The report analyzing the impact of promotion models for renewable energies in the different EU member states is expected for release soon. But a recommendation for an EU-wide support system is likely to be missing completely, and those in favor of premium feed-in tariffs say this is a good thing. 

© International Institute for Sustainable Development (IISD) Olav Hohmeyer, professor of economics at Flensburg University in Germany: »If Brussels were working on a harmonization of the promotion systems, it would only prove detrimental to the German EEG.«

The deadline is fast approaching. By Oct. 27, 2005 at the latest, the European Commission (EC) must publish a report on the 2001/77/EG guideline. Behind this acronym hides the Directive on the Promotion of Electricity produced from Renewable Energy Sources, which was passed in 2001 with the aim of increasing the portion of European Union-wide energy consumption from green electricity to 22 percent by 2010. But it is no secret that the Brussels-based EC Directorate General for Energy and Transport (DG TREN) in charge of writing the document won't meet the deadline. As it looks now, the officials will only finish the report in December.

However, the report won't become any less important because of the delay. After the fact-finding is over, the 25 commissioners will have the opportunity to recommend which common funding model for green electricity should be used to support the further expansion of renewables in the European Union. 

But the tenants of the house No. 26 in the Rue du Trone do not see any cause for alarm – and if anybody should have reason for worries, it's them: the European lobby associations for solar, wind, biomass, and geothermal energy, all of which are based in the Renewable Energy House. Oliver Schäfer from the European Renewable Energy Council (EREC) is rather composed, like the rest of his colleagues: »We know the report won't recommend a harmonization of green electricity promotion models in Europe.«

	© Ralf Köpke for photon-pictures.com
	Mechtild Rothe, a member for the Socialists in the European Parliament: »Harmonization is nothing more than spoiling successful systems and accepting the decline in the current level of green electricity expansion.«

»Harmonization« – that would mean the European Commission and the Council of Ministers would decide on one mode to guide how the expansion of regenerative energies would be promoted EU-wide in the future. The officials have the choice of two models: on the one hand, a scheme with guaranteed minimum prices like the feed-in tariffs paid to distributed RE generators in Germany according to the Renewable Energy Law (EEG), or a system based on quotas or certificates – as in the UK or Sweden, for example – on the other.

If it were up to the wind energy industry lobbyists in Germany and Spain – the German Wind Energy Association (BWE) or the Spanish Association of Renewable Energy Producers (APPA) – the question of which system to pick wouldn't be an issue. In both countries several hundred wind power plants have been connected to the grid, and it is only thanks to this rapid expansion that the EU will come anywhere close to its 22-percent goal. However it is not just the skeptics who believe this aim is definitely out of reach: EU Commissioner for Energy Andris Piebalgs estimates that if the tempo remains at current speed, the EU will »miss the target« by »at least 3 percent.«

But Latvian citizen Piebalgs made it clear after he entered office that he would be giving no recommendations for any funding model: »It is premature to propose a harmonized European support scheme.« And he has repeated his position many times, most recently at the annual meeting of the German Electricity Association (VDEW) at the beginning of June where the German electric generation companies massively campaigned for a change from the EEG to a quota model. »We first have to analyze the national systems and the experiences in each of the member states. Which models are out there and how have they worked out? What's the situation in the common energy market or with planning security? What are the costs? Only when the whole picture becomes clear will it be possible to point in the direction a necessary long-term strategy should be headed.«

Mechtild Rothe, an energy expert and member for the Socialists in the European Parliament, endorses Piebalg's position. Although a long-time promoter of the feed-in tariff model, she is not really impressed by the fact that 16 out of 25 member states are using funding schemes similar to the EEG: »A thorough analysis shows that the time-span and the funding levels differ greatly. Apart from that, most of the member states only changed over to a minimum price system after 2001.«

And she's right. In the Czech Republic, for example, the feed-in law will come into effect at the beginning of 2006, but the guaranteed tariffs to be paid per kWh fed into the grid over 15 years still haven't been fixed. In Hungary the rates will only last for eight years, and in Estonia operators of biomass and hydroelectric plants can only count on the tariffs for seven years. Until the middle of this year, operators in France only received a premium tariff for wind energy parks up to 12 MW, while the tariff level for solar is still too small to attract investors.

Therefore her attitude is clear: »Whoever is striving for a harmonization at the moment should know that it won't be a feed-in or premium model like in Spain. Harmonization is nothing more than spoiling successful systems and accepting the decline in the current level of green electricity expansion.« In her estimation, Eurelectric, the European union of electricity industry, would profit most from an adjustment in the promotion models – the group supports a Europe-wide quota model with the backing of the VDEW.

Mechtild Rothe believes that it is not only Europe's electricity corporations that oppose the successful feed-in tariff model. As a long-serving member of the European parliament she is familiar with the political situation in Brussels and Strasbourg. And »after last year's election there is not a majority in favor of a minimum price model in both the parliament and the EC.«

Olav Hohmeyer, professor of economics at Flensburg University in Germany believes there can be only one consequence: »Leave everything as it is. If Brussels were working on a harmonization of the promotion systems, it would only prove detrimental to the German EEG.« Hohmeyer belongs to the multinational consortium that researched the existing green electricity support models for the EU-funded RE-Xpansion Project. He underscores that based on his work he believes there is not yet enough information available about the different European funding schemes.

But this gap of knowledge should be filled by another EU project called Renewable Energy and Liberalization in Selected Electricity Markets (REALISE). Using money from Brussels, the experiences of important energy policy players with different models will be researched in Holland, Italy, Germany, Scandinavia, and the new EU member state Slovenia. Independent of the possible results, even the schedule reveals that the EC is not in any rush with harmonization plans. In the first six months of the project, the organizational structures were set up to prepare for the country reports scheduled for Nov. 2005, while REALISE will end only in early 2007.