Conflict derails European renewable energy Directive

The European Commission's draft Directive for a pan-European support model for renewables has been bounced back into the political arena for further discussion. The chorus of dissent against the proposals in the draft is led by the German wind lobby. It remains vehemently wedded to a system of support for wind based on price regulation. Outside Germany there is grave concern that this fierce defence of price regulation is severely slowing wind's chances of becoming a competitive option in the open market.

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The European Commission's proposal for a pan-European support model for renewables has been taken off the boil and put on a back burner. It is now to have a much longer journey than expected before it can become law. Instead of proceeding as a Directive, the proposal is to be bounced into the political arena for further discussion.

Initially put forward by the EU's executive in the form of a draft Directive, the proposal outlines the framework for common rules for supporting renewables across the European Union. The aim was to ensure that support for renewables could continue even after liberalisation of the EU electricity market, the first phase of which is being launched this month. The draft included provision for guaranteed access to the internal electricity market for all power generated from renewable sources of energy.

Instead of pushing forward with a Directive for renewables, it is understood that the EU's energy Commissioner, Christos Papoutsis, is to put his views on a new European framework for renewables to the European Parliament in the form of a "Communication" at the end of February or beginning of March. The Commission's decision to adopt a Communication, rather than a more straightforward proposal for a Directive, delays the progress of its plans into law. It will now be up to the Council of Ministers -- the representatives of national governments and the highest EU organ of power -- to decide whether it wants to enact legislation or to implement the Commission's plans by another route.

Fierce debate

Papoutsis' move to wash his hands of any decision over new legislation follows fierce debate over the draft Directive's proposal that all European renewable support schemes be based on competition between renewable producers, backed by trade in green power certificates. This draft was leaked in November and circulated widely among the renewable energy community.

Backers of the Commission's plans -- including the European Wind Energy Association (EWEA) -- argue that such a framework for renewable energy support is essential if the EU is to have any hope of meeting its Kyoto commitments, which include ambitious targets for reducing greenhouse gases. But EWEA was faced with considerable opposition in its efforts to ensure integration of renewables into the open market, surprisingly enough from within the renewables community -- and even from within its own ranks.

The chorus of dissent against the proposals in the draft Directive is led by the German wind lobby. It remains vehemently wedded to its Renewable Energy Feed-In Tariff (REFIT) system of support for wind based on price regulation. "It would be a slap in the face for renewable energies if the EU goes ahead with the proposal to end the successful renewables payment systems in Germany, Denmark and Spain by 2006," says Peter Ahmels, chairman of the German wind energy association. He calls on the German government to use the opportunity of its six month presidency of the EU to see that the REFIT system is anchored into a European Directive. Ahmels is backed by the association's managing director, Heinrich Bartelt, who warns that if implemented the new rules would mean an end to Germany's renewable energy tariff system by 2006. The German success is of central significance if the Commission is serious about doubling renewable energies by the year 2012, he says.

Grave concern

Outside Germany there is grave concern that this fierce defence of price regulation is severely slowing wind's chances of becoming a competitive option in the open market. In the Netherlands, which is experimenting with a support system close to that proposed by the EC, wind turbine owners are already reaping the benefits of higher returns for their power output (page 34).

Peter Niermeijer of Dutch utilities umbrella organisation EnergieNed, disagrees with the prevailing German view. He foresees conflict between the market and structural support for renewables from national governments once green electricity becomes an export commodity. "You can't have different countries giving different levels of support to their renewables sectors without distorting the market," he points out. In the long term he believes that governments will themselves abandon the idea of structural support once international trade begins.

Compromise routes

While accepting the inevitability of change, Denmark's wind turbine owners warn against moving too fast into the green market. More time is needed for a thorough analysis of differing support models for renewable energy before any changes to the existing system of subsidised payments for wind power, they told the Danish parliamentary energy committee on January 13. "If decisions on a green market are rushed through in the wake of the broad reform of the energy sector, there is considerable risk that a well functioning system that has made Denmark a model for the world will be destroyed," the association warned. "Realisation of the proposal for market controlled prices will alone cause so much uncertainty about future levels of payments that wind power development in Denmark will, with certainty, grind to a halt."

A more openly conciliatory tone is taken by a member of the European Energy Policy Consultative Committee. Andy Stirling of the UK's Science and Technology Policy Research organisation points out that the flexibility afforded by the EU principle of "subsidiarity" allows each member state to choose the regime best suited to its particular situation. He strongly believes the Commission's proposal is a step in the right direction, however, and is anxious that the renewable energy lobby support it. "Above all it is important that we are positive about the Directive. It has got enough enemies who are trying to ditch the whole thing," he stresses.

EWEA is also mindful of the need for a strong and united wind lobby in a European electricity market dominated by giants. It is doing its best to reconcile the move towards a competitive market for renewables with protecting the interests of wind turbine owners -- particularly in Germany, Denmark and Spain -- who enjoy subsidised tariff prices that have historically been the envy of the rest of Europe. Intense diplomatic efforts by its leadership resulted in a cautiously worded response to the draft Directive, issued before it was watered down to a Communication.

Cautious response

EWEA warns against the immediate implication of long term market reform which could destroy present renewable energy markets. "We do recognise the need for liberalisation, but any Directive would have to ensure that a new system would not harm what we had already," says the association's Christophe Bourillon. EWEA argues that liberalisation of renewables can only proceed as part of the liberalisation of the conventional energy sector. Until then, countries should maintain the market support mechanisms that best suit their individual circumstances. Pointing out that Germany, Denmark and Spain account for more than 80% of Europe's wind capacity, EWEA warns: "It would be extremely hazardous to disallow these guaranteed price feed-in schemes without reliable evidence that other support systems would work as well."

Nonetheless, the association welcomes plans for a purchasing obligation upon electricity suppliers to contract for a set percentage of power from renewables. But it believes this should be set at a more ambitious 8% of average annual electricity consumption by 2005, rather than the 5% proposed in the draft Directive; and for countries well ahead in the renewables stakes, the obligation should be at least four percentage points above that contributed by renewables to the supply mix in 1996, compared with the EU's three percentage points proposal. A binding percentage obligation does not rule out the need for viable payments, stresses EWEA. "The wind industry requires long term power purchasing contracts at a price which is determined at the outset and fully recognising the real value and the positive effects of renewable energies."

One of the possible shortcomings of the Commission's proposal is that it lacks the teeth to enforce any Directive, Bourillon fears. To get over this, EWEA calls for a renewables regulator in each member state to ensure that all aspects are implemented, including planning, grid connections and support mechanisms. "I see this directive as a wonderful opportunity to get what we want as policy," comments Bourillon. "The wind industry has come to a stage where something new is going to happen; the cosy little world that we have had in past years is over."

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