On the occasion of the official liberalisation of EU electricity and gas markets on 1 July, a renewable-energy group has complained to the Commission and European Energy Regulators that a lack of transparency and blocked access to energy grids are preventing them from competing on the market.
According to small- and medium-sized generators of electricity, including solar, wind, hydro and biomass facilities, a decentralised energy market is a prerequisite for achieving the “ambitious targets for renewable energy and energy efficiency that were laid out by heads of state and government during the Spring 2007 European Council”.
These “micro-generators” complain that the current regulatory structure in a number of member states prohibits access and limits fair competition, and call for a transparent streamlining and standardisation of grid access across the EU.
However, not all agree that decentralisation is entirely beneficial.
Some proponents of a more centralised model argue that supplying energy should be a public service shielded from unpredictable market forces, and that decentralised generation will lead to massive price fluctuations with potential supply disruptions caused by lack of oversight of a centralised grid.
Refuting claims that liberalisation and decentralisation lead directly to price increases, the Commission in a 1 July press release said that: "It must be recalled that energy prices cannot be expected to always remain low regardless of external factors. Nonetheless, competitive and open markets will bring the best prices to end users, including the energy-intensive industry."
Greenpeace is clearly in favour of decentralisation: "What is essential now...is that there is enough joined-up thinking by the various public authorities to make decentralised energy production grow swiftly enough so that our 2020 climate and other targets are met on time." The NGO also believes that "moves away from inefficient centralised power generation, where most actual energy is thrown away, will in future become the norm. It's a process being driven already by fuel scarcity, by upward prices and by other environmental constraints such as emission caps."
Antoine Pellion, a civil engineer at the Ecole des Mines in Paris, said: "Behind the promotion of decentralised generation, is the issue of an optimal generation park that meets the actual European requirements: preservation of the public service, reduction of fuel consumption to afford energy supply security and reduction of emissions. This could hardly be compatible with lower electricity price on long term."
ERGEG, the European Regulators Group for Electricity and Gas, "acknowledges the work of the two EU collaborative projects - ELEP and DG-GRID - in identifying the barriers to Distributed Generation. During the 4th November 2006 blackout, the tripping of a large amount of distributed generation, mainly wind and CHP, worsened the power disruption. ERGEG's (February 2007) report on the blackout includes a number of recommendations including harmonised connection rules for distributed generation, and better control at least during disturbances and abnormal operation of the power system. Regulators are currently setting out the priorities for their 2008 work programme. In consultation with the European Commission, the European regulators will reflect carefully on the treatment of distributed generation."
Progress towards decentralisation - or micro-generation - has been too slow for supporters of liberalisation: many markets remain dominated by large, monopolistic providers (see our LinksDossier).
Liberalisation and decentralisation were the subjects of considerable debate between experts at a 26 June Brussels conference (EURACTIV 27/06/07).
Contributors to the joint letter include the European Renewable Energy Council, the European Hydrogen Association and Cogen Europe.
- 5 July 2007: Commission to present new initiative on energy rights for consumers (for a future 'Energy Charter').
- 12 July 2007: Parliament plenary vote on internal gas and electricity market report.
- Fall/Winter 2007: Commission to propose further liberalisation of energy markets.
EU official documents
- Commission:1 July press release [FR] [FR] [DE]
- Commission:Electricity legislation
- CommissionGas legislation
- Legislative Observatory:Report: 'Prospects for the internal gas and electricity market'
EU Actors positions
Think tanks & Academia
- Robert Schuman Foundation:The Opening of the European Electricity Markets to Competition: genesis and perspectives of an ambitious project(by Antoine Pellion)
- Notre Europe:Study on micro-scale distributed electricity generation