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National support systems to continue -- Review of EU renewables policy

European renewable energy associations have welcomed the EU Commission's decision to postpone moves towards a single pan-European support system following its review of existing mechanisms adopted by governments for facilitating development of green power. But the Commission's intention to hold yet another review within two years is "pointless," "counter-productive" and could create confusion in the renewables industry, they warn.

Marc Timmer from the European Forum for Renewable Energy Sources points out that the Commission says it wants to see a more secure environment for renewable energy investments. But a further review of support for renewables merely creates insecurity in a market which is highly sensitive to regulatory frameworks, he says.

In its long awaited report, released in December, the Commission says it is too early to compare different support systems in Europe -- some of which, like green power certificates, have not had enough time to prove themselves. It acknowledges that short term changes could disrupt markets and make it more difficult for countries to meet the overall 2010 target of 21% of Europe's electricity from renewables. "Competing national schemes could be seen as healthy, at least in a transitional period," it states.

But in the long term, renewable energy support systems must be compatible with the aims for an internal electricity market that facilitates free trade of electricity across national borders, says the Commission. A single market would lead to lower overall costs, it says. But a better functioning internal electricity market, more interconnection and an end to subsidies for conventional sources are needed first.

The Commission intends to keep an eye on renewable energy in member states and report back on progress towards 2020 targets and a policy framework for renewables post 2010. Disagreement between different departments within the Commission is apparently behind its decision to set the date for the next report so soon. DG TREN, the Directorate General for energy, would have preferred the review to take place in 2010, but the environment directorate, eager to dovetail renewables support with the European emissions trading system, pushed for 2007.

"Based on the results of this evaluation, the Commission may propose a different approach and framework for schemes to support electricity produced from renewable energy sources in the European Union, taking into account the need for adequate transitional time and provisions. In particular, the advantages and disadvantages of further harmonisation will be analysed," says the Commission.

Evolving naturally

Meantime, it wants to encourage more co-operation between countries with similar forms of support, leading to "sub-harmonised" groups of member states. The emerging co-operation between the fixed priced feed-in tariff systems in Germany, Spain and France, and the planned Swedish-Norwegian green certificate system can set examples for others, it says.

The Commission calls on countries to tackle barriers to investment, permitting, grid connection and transmission and to encourage diversity in renewable technologies. On grid access, the report goes further than the landmark 2001 Renewables Directive in recommending that member states should undertake grid infrastructure development to accommodate greater amounts of renewable capacity. The associated costs, moreover, should be covered by grid operators.

Fast tracking

The report complements the Renewables Directive's call to fast track the permitting process for renewables by recommending one-stop authorisation agencies, zoning systems where local authorities assign areas for different renewable energies, and a lighter touch in permitting for small projects. The Commission also requires member states to increase legislative stability and reduce investment risk. This is a particular issue for green certificate markets where market risk results in poor liquidity and, ultimately, higher costs to the consumer.

The European Wind Energy Association (EWEA) agrees with the Commission's analysis, saying that it well reflects countries' current situations. But it condemns the decision to hold another assessment in effectively less than two years time.

"[The Commission's] recommendations on grid access and administrative barriers in the member states are spot on and we also strongly agree on the Commission's main conclusion that it is too early for European harmonisation at this stage," says the EWEA's Christian Kjær. But another review is pointless, he adds. By threatening market upheaval, the Commission "Contradicts its own stated objectives to ensure short and medium term regulatory stability in the member states and allow countries time to fine tune the frameworks they have developed in the last few years," Kjær says.

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