Strategy starts to pay off but progress is uneven

If the 27 countries of the EU achieve the scale of renewables deployment that their governments have promised, Europe will exceed its target of 20% of all energy from renewables by 2020. Yet our examination of each of the countries’ commitments reveals that, for wind at least, actual delivery may not always live up to expectations.

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However, the EU’s executive arm, the European Commission, claims its policies for meeting the 2020 targets are paying off. Following the EU’s failure to meet its 21% renewable electricity target for 2010, the commission pushed for a system of legally binding 2020 national targets and the requirement of each member state to produce a National Renewable Energy Action Plan (NREAP). The commission believes this is focusing minds on establishing the regulatory frameworks needed to drive forward clean-energy deployment. 

The 27 NREAPs submitted support that view. An analysis by the European Wind Energy Association (EWEA) shows that if the action plans’ forecasts are correct, the EU will achieve 20.7% of renewable energy in 2020. Nearly half of the member states say they will exceed their own targets and provide surplus to other countries. Only Luxembourg, and possibly Italy, expect to fall short and may resort to the co-operation mechanisms that allow countries to meet their targets from projects in other member states.

Capital investment in renewables will have to double rapidly from €35 billion per year now to €70 billion across the three energy sectors — electricity, heating and cooling, and transport that make up the overall energy target — says the commission in a communication to the European Parliament at the end of January.

For the electricity sector, renewables’ share is expected to grow to 34% in 2020, up from 18% at the end of 2010. Wind will make the biggest single contribution, overtaking hydro in the second half of the decade to provide 41% of electricity’s share of the target. Then come hydro on 30%, biomass (19%), solar photovoltaic (8.5%), geothermal (1%) and wave and tidal (0.5%).

From 84GW of wind farms operating by 2010 and supplying 5% of EU electricity consumption, wind capacity is expected to grow to 213GW in 2020, meeting 14% of Europe’s needs. This means an average increase of 9.7% each year, of which two-thirds will be onshore. It is a feat that, on paper, seems to be achievable, given the average annual market growth of more than 17% over the past 15 years.

But this level of wind penetration requires effective grid access and permitting procedures, and a market design that gives projects adequate incentives. This is by no means yet the case in all 27 states.

Our country-by-country analysis reveals a mixed bag. Germany, Spain, Ireland, Sweden and Belgium are on track to comfortably meet their goals. Some even intend to trade surpluses with under-achieving states under the co-operation provisions. In other countries, namely Poland, Denmark and Portugal, the national wind energy industries are frustrated at their governments’ lack of ambition. And reports from the Netherlands suggest that the future for offshore growth has all but collapsed for the moment.

Barriers coming down

There are many signs, though, that the commission’s strategy is working, with barriers to renewables coming down across Europe. Recent examples are a raft of rules to improve grid access in the UK and a new law in Greece that promises to transform the cumbersome licensing process in which wind projects have been bogged down for years.

On the other hand, markets can be unsettled by governments changing the rules. Plans by the UK and Italy to replace their existing incentives mechanisms risk slowing investment in renewables. And France has shown that government tinkering with existing permitting regulations can lead to market uncertainty and place targets in jeopardy.

Meanwhile, the EU’s newer members in Eastern Europe and the Baltic states, which are starting from a lower base without stable market frameworks in place, have been allowed less challenging or, as some argue, unambitious targets. Even so, industry insiders claim that progress is slow and renewables are not a high priority for some governments. One of the exceptions is Romania, which the EWEA says will enjoy a spectacular growth rate over the next two years and which should meet its target despite market flaws.

While 25 out of the 27 states intend to meet their targets domestically, the commission points out that they could reduce costs by developing cheaper renewables projects in other parts of the EU using the co-operation mechanisms. It estimates they could save up to €10 billion a year by treating renewable energy as a commodity in a single European market.  

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