Europe framework for a protected market

European governments are considering the draft of an EU law laying down the framework for a protected internal market for renewables and containing a requirement that all member countries meet a minimum of 5% of their electricity needs from renewable sources of energy by end 2005. From that date, schemes directly supporting the price paid for electricity from renewables must be based on competition between renewable energy producers. A system for trade of certified green electricity across national borders must also be in place.

The draft Directive, prepared by the European Commission at the request of energy ministers, follows a report on harmonisation of support for renewables across the EU (Windpower Monthly, April 1998). It is part of the process for creating the EU's internal electricity market, which kicks off in February. The renewables Directive has emerged one year after publication of an EU White Paper (policy document) setting a target for 12% of electricity to come from renewable sources by 2010.

Fierce debate has raged in the wind industry over the past 18 months over the shape of the future pan-European regulatory framework for renewables. While the wind lobby in countries such as Denmark, Britain and the Netherlands has favoured a system based on fixed quotas of renewables in the electricity supply mix, with power purchase contract prices decided by market mechanisms, the German wind lobby has vehemently held out for its current system of premium prices decided by government and paid for by utilities. The EC's draft Directive plumps for quotas and competitive bidding for contracts, but within a protected renewables market. The proposed framework is similar to the principle of the "Renewable Portfolio Standard" advocated by the wind lobby in the United States.

"The financing and grant of the support schemes shall be transparent and based on objective and non-discriminatory criteria. Member states shall ensure that all electricity consumers, including autoproducers in a Member State, participate in the financing according to their consumption of electricity," states the draft Directive.

Fair shares

Within the broad competitive framework set out by the Directive, member states are permitted "the choice of support scheme that they consider most appropriate" to meet the 5% obligation and enable "the transition towards a more competition and trade based system." Protection, however, "should only be given to renewable electricity plants and technologies which cannot compete with electricity produced from other fuels without support."

For countries that reach the 5% obligation ahead of 2006, a further obligation must be met, again measured as an annual average of total national electricity consumption. This is a "three percentage points" obligation requiring that the contribution of renewable energy to the national supply be 3% greater than it was in 1996. The draft Directive excludes hydro power plant above 10 MW.

There are various time-limited "let-out" clauses to ease the way for member states. A country which feels that its short term climate change commitments could be jeopardised by changing its system of renewables support may ask for dispensation until 2010 before introducing competition. And governments may operate a "transition regime" to protect existing producers of renewable energy from "important financial difficulties." On the thorny subject of green power accreditation, the Directive stipulates that certificates "shall be mutually recognised" by all EU countries and that each country must introduce "appropriate mechanisms to ensure certification is both accurate and reliable."

Planning and grid access

Barriers to renewable energy development, such as the administrative procedures connected with both the permitting process and access to the electricity grid, are also tackled in the Directive. Laws, regulations and administrative provisions to lift such barriers must be in place within a year of the Directive being passed.

It asks governments to consider "single reception points at the appropriate administrative level" for planning permit applications and suggests that zoning plans for wind development be prepared at national, regional and local level. It also advises setting up a body to mediate between the authorities and the applicants if permitting disputes arise.

Instructions concerning grid access are short and sharp. Transmission and distribution system operators must publish standard rules of payment for grid connection and grid reinforcement, based on transparent criteria. These must relate to the "sharing of costs" of system installations and they must take account of "future system benefits generated by the installations."

Once the Directive has been adopted by ministers and the EU parliament -- and been published in the Official Journal of the European Communities -- it will come into force on the 20th day following publication.