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Giles Dickson: Europe needs winds of change for energy transition

EUROPE: The European wind industry contributed €36bn to the EU's gross domestic product (GDP) in 2016, supports 263,000 jobs and generated €8bn of exports outside of Europe. That's the good news, writes WindEurope CEO Giles Dickson.

Wind Europe CEO Giles Dickson at the 2017 conference and exhibition in Amsterdam
Wind Europe CEO Giles Dickson at the 2017 conference and exhibition in Amsterdam

The less good news is that job growth in the industry has flatlined in the last five years.

This is due to many countries becoming less ambitious on renewables: half the EU member states invested nothing in wind last year.

Net exports of wind equipment are falling in the face of strong competition from emerging economies: down from €3bn in 2011 to €2.4bn today.

This is because European turbine manufacturers are sourcing more components from outside Europe. The policy ambition and clarity needed to sustain wind's contribution to the European economy is currently not in place.

Last year's Energy Council meeting in Brussels agreed general approaches on four key files of the EU Clean Energy Package. These will serve as the basis for negotiations with the European Parliament this year.

As far as the wind industry is concerned, there was progress on some key issues but ministers fell short on others.

There is some good news on the Renewable Energy Directive. The 28 member states agreed to give three years' visibility on the volume and budget of public support schemes for renewables, which is key for industrial planning in the supply chain.

Member states will also be able to keep running "technology-specific" auctions, which is important for further cost reductions in offshore wind and the most effective way to plan the energy transition.

Targets

As expected, the Council supported the Commission's proposed 27% target for renewables by 2030. The Council has watered down the Governance Regulation but countries at least agreed to set three indicative benchmarks.

By 2023, they should meet 24% of both the 27% target and national goals. By 2025, progress should be at 40% and 60% in 2027.

Together with detailed energy efficiency plans from EU countries (known as National Plans), the benchmarks will improve visibility for the wind energy supply chain including in the chemicals, steel, construction and other sectors — every €1,000 invested in wind generates €250 value for them.

Markets

On energy market design, the Council outcome had some good points. It retained priority dispatch to the grid for existing renewables — which protects existing investments.

But the risk remains that existing renewables may be exposed to balancing responsibility before having proper access to balancing markets.

There's also encouraging movement on security of supply — national capacity payments will now need to address real supply challenges.

This means the role of grid interconnectors, demand response and renewables to energy security will always need to be taken into account.

However, the methodology for 'system adequacy assessments' and the criteria for allocating capacity payments is still too national and not sufficiently coordinated at regional or European level.

This risks costing consumers. Cooperation on capacity investments could save up to €4.8bn on annual energy bills by 2030.

We're encouraged by some of the progress the Council has made on a number of issues in the Clean Energy Package.

It's good they've endorsed the Commission's proposals on: the three-year visibility requirement for renewables policies; the need to remove barriers to corporate Power Purchase Agreements (PPA); and the binding template for National Energy Plans. These will be key if we want to maintain the strong industrial base of the wind industry in Europe post-2020.

But crucially the Council's failure so far to move anywhere towards the Parliament's support for a 35% renewables target by 2030 is deeply disappointing from an economic perspective.

The costs of non-ambition on renewables — the difference between a 27% and 35% target — is €92bn investments not made and 132,000 jobs not created plus the whole idea of Europe being number one in renewables. And it's not just the wind industry that'll lose out.

Giles Dickson is CEO at WindEurope. First published on Ends Europe.

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