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Analysis: EC investigation threatens to destabilise wind sector

EUROPE: The European Commission (EC) has launched a number of initiatives to clamp down on potential state aid in member states that could threaten to destabilise the wind industry.

The EC's move is part of its role to ensure that renewables support by EU member states complies with internal market rules governing state aid. A recent ruling has put the French wind tariff under threat, while a planned investigation into Germany's support mechanism is also raising concerns. The EC is proposing radical reforms to the guidelines it uses to assess public support for renewable energy.

In 2012, following a legal challenge, the Council of State, France's highest administrative court, asked the European Court of Justice (ECJ) to rule whether its premium purchase price for wind power should be considered state aid. In December 2013, the ECJ ruled that the mechanism constitutes "an intervention through state resources", although it left the "definitive categorisation" of the mechanism as state aid up to the council.

The council is widely expected to uphold the ECJ ruling within the next two to three months and to annul the 2008 decree setting out the wind tariff, as the EC was not notified as required under European law. The industry hopes the council will defer the annulment, pending the validation of a new decree submitted by the French government last autumn. This would ensure the continuity of the tariff. If not, the 2008 decree would become invalid, possibly along with all power purchase agreements signed since then, leaving the industry in chaos.

The German wind industry is equally anxious in the face of an "in-depth" investigation by the EC into the support mechanism as defined by the Renewable Energy Law (EEG) of 2012. The EC is concerned  whether the various exemptions and reductions granted to energy-intensive consumers on a surcharge, designed to finance renewable energy projects, are compatible with EU rules.

While it is still early days, the EEG investigation risks undermining the German wind industry by destabilising investors and threatening jobs, industry observers fear. It will also make discussions about the reform of the EEG, already under way in Germany, more complicated.

Guideline changes

Against this backdrop, the EC's Directorate-General of Competition has published its draft revised guidelines used to determine whether support mechanisms comply with EU market rules. Among other things, the guidelines propose doing away with differentiated support for different technologies, such as onshore and offshore wind; ruling out feed-in tariffs for installations over 5MW; and imposing the use of tenders if countries want to allocate feed-in premiums (where producers receive a premium on top of the wholesale price).

While welcoming the review, the industry is concerned that the guidelines are prescriptive and inflexible. "The Directorate-General of Competition is going a long way beyond its role of ensuring fair competition on the energy market and is slyly trying to redefine energy policy", said >Pierre Tardieu, Regulatory Affairs Advisor at EWEA. "Following the destabilising regulatory changes for renewable energy in many countries, requiring further fundamental changes to support mechanisms would cause major investor uncertainty," he adds.

The guidelines are open for public consultation until mid-February, with the final version scheduled to come into force on 1 July.

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