Member states should avoid frequent changes in renewable energy support regimes, stakeholders and producers of clean energy contend. A number of stakeholders would prefer an EU-wide support scheme. EurActiv Czech Republic reports.
The renewable energy directive for the 2020-2030 (REDII) period, currently being prepared by the European Commission, should bring stability into schemes intended to support clean sources, according to energy officials.
“In order to restore trust in investors, it is important for this new directive to establish a non-retroactivity principle for those measures that affect the renewable energy sector,” EurActiv.cz was told by Spanish Photovoltaic Union’s (UNEF) General Manager José Donoso.
Solar energy producers in Spain complain about retroactive actions carried out by the government in 2014.
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“Instead of defining a feed-in system where retribution is based on kilowatt-hour produced, the Spanish government defined a system where it is based on standard investment costs,” Donoso explained.
“Projects saw their retribution cut between 15-50%, with dramatic implications for their income and economic viability,” he claimed.
Because of the investor’s discontent, Spain faces the highest number of investment arbitration cases under the international Energy Charter Treaty.
But retroactive measures in renewable energy support schemes have been implemented in several other EU member states including Bulgaria, Czech Republic, Greece, Italy or Slovakia.
There are lots of investors and lenders now who want to deploy capital into energy efficiency. But the lack of standardisation, which causes uncertainty, is a barrier, Steven Fawkes told EurActiv Czech Republic in an exclusive interview.
At the same time, producers stress that the lack of stability has a major impact on clean sources development in the EU.
In Czechia, the renewable energy industry fears that at the end of this year, the national energy regulatory office will delay its decision on the allocation of support to electricity and heat from renewable sources to be calculated for 2017.
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Such a situation already occurred last winter, when the office hesitated over the allocation of support designated for 2016.
The regulator said it would not pay out the feed-in tariff to most of the renewable power plants until it was approved by the European Commission, even though it had not requested such authorization in the previous years when support was allocated without complications.
The country has several support schemes for various kinds of energy sources installed in different periods, based on legislative acts dating back to 2005 and 2012. A special law was also adopted in 2010, introducing a number of retroactive measures designed to limit the 15-to-25-year-long investor’s revenues from the feed-in tariffs that turned out to be burdening electricity consumers.
There have been legal disputes over whether notification for the support for older power plants is needed. The Czech ministry responsible for energy policy nevertheless asked the Commission’s DG Competition for the approval. Originally, officials anticipated that the assessment could be done by April this year. That has not happened yet.
EurActiv learned on Thursday (21 July) that the notification process could be finished in weeks.
DG Competition did not want to comment on the information and only said it was in contact with the Czech authorities. The Czech ministry declined to provide a statement before the process is completed.
A quick decision would be welcomed by the Czech Banking Association (CBA) which sent a letter to the EU competition Commissioner Margrethe Vestager in April, saying that the renewable energy sector “was constantly put into doubt due to fears of possible implications of the negotiations between the Czech authorities and the Commission”.
CBA members provided loans of approximately €4-5 billion to finance renewable energy sources in Czechia, the bankers wrote to Vestager.
Now they are worried about the profitability of RES projects which affects their chance of getting the loans repaid.
“The banks have, in good faith, provided considerable credit financing. Therefore, it is our wish that the period of uncertainty regarding the notification of state aid to renewable energy sources would end as soon as possible,” CBA Executive Director Pavel Štěpánek told EurActiv.
A European Commission investigation into whether British plans to use public money to convert a coal power plant into a wood-burning facility broke EU competition law, was opened Thursday (19 February).
DG Competition could not comment on the number of RES support schemes it was currently assessing among the EU member states, but EurActiv has learned there are other countries waiting for results of notification processes as well.
In Spain, two types of renewable energy support are also waiting to know the final resolution, UNEF’s Donoso said.
The situation concerns feed-in tariffs established since 2006, as well as retroactive measures carried out by the Spanish government in 2014, he added.
With the new renewable energy directive applicable after 2020, trust in the sector should be restored, investors say.
The expected directive should ensure that member states will contribute to the EU-level target of at least 27% renewable energy in final energy consumption by 2030. In contrast to the current framework, REDII will not be based on mandatory national targets, in compliance with the European Council’s decision from October 2014.
That is all the more reason for a pan-European approach for renewables to be adopted, according to the sector’s representatives.
“It would be good for us as investors present in several member states if the introduction of common rules was easier and we knew that if some measures apply in one country, it will not be totally different in another one,” Communications Director of a solar company Photon Energy Jan Krčmář told EurActiv.
The results of the public consultation accompanying the REDII preparation show that 34% of engaged stakeholders prefer a gradual alignment of national support schemes through common EU rules.
Moving towards an EU-wide level support scheme is supported by 24% of stakeholders and 12% of stakeholders said that regional support schemes could be established.
On the other hand, 13% of stakeholders would prefer keeping purely national-level support schemes. 17% of stakeholders think the national schemes could be open to energy producers in other member states under some conditions.
Renewable energy can be produced from a wide variety of sources including wind, solar, hydro, tidal, geothermal, and biomass. By using more renewables to meet its energy needs, the EU lowers its dependence on imported fossil fuels and makes its energy production more sustainable.
The 2009 Renewable energy directive sets a binding target of 20% final energy consumption from renewable sources by 2020. To achieve this, EU countries have committed to reaching their own national renewables targets ranging from 10% in Malta to 49% in Sweden. They are also each required to have at least 10% of their transport fuels come from renewable sources by 2020.
All EU countries have adopted national renewable energy action plans. These plans include sectorial targets for electricity, heating and cooling, and transport; planned policy measures; the different mix of renewables technologies they expect to employ; and the planned use of cooperation mechanisms.
Renewables will continue to play a key role in helping the EU meet its energy needs beyond 2020. EU countries have already agreed on a new renewable energy target of at least 27% of final energy consumption in the EU as a whole by 2030. This target is part of the EU's energy and climate goals for 2030.
Public interventions such as support schemes remain necessary to make certain renewable energy technologies competitive. To avoid distorting energy prices and the market however, these schemes should be time-limited and carefully designed. The EU has issued guidance on support schemes to help governments when they design or revise support schemes.