Policy paper taking shape

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The European Commission is still considering the best approach for supporting renewable energies in a competitive electricity market. "We are looking at the direction we need to go to achieve the rapid penetration of renewables. The possibilities are being examined very closely," reported Joanna Tachmintzis, a member of the cabinet of the Directorate General for Energy, DG XVII, in the wake of an international renewable energy financing conference in Bonn last month.

"These could include a Europe-wide measure of a similar type to the system in Germany," she notes, referring to the Renewable Energy Feed In Tariff (REFIT) concept behind Germany's Electricity Feed Law. "Whatever problems there have been in Germany, this system has helped," she said.

Her remarks contrasted with the broad view of the conference that renewables must pursue a "clean hands" policy aimed at doing without subsidies, even though traditional energy forms still receive enormous sums from government. Promising to open a "window for new opportunities," the conference agreed that other approaches for guaranteeing the special treatment to which renewable energy is entitled should be pursued.

Tachmintzis acknowledged that even though the Commission is committed to free competition in the electricity sector, short-term promotional measures for renewables will be allowed. "These will be transitional and temporary," however. "If you believe the competitive system has barriers, that liberalisation isn't going to help renewables, you have to take policy steps and then you find that with the right accompanying measures it can help." The Commission will present its policy proposal in a White Paper on renewable energies, for publication before the end of the year, said Tachmintzis.

While Tachmintzis avoided being pinned down on Commission strategy, Wolfgang Palz from DG XVII's renewables division believes the White Paper will prioritise a REFIT arrangement. According to Palz, the European Parliament supports the REFIT concept, though the reaction of the Council of Energy Ministers is "unpredictable."

Renewables should ideally aim for a subsidy free position, Palz said, but acknowledged that rising interest rates and the expected drop in electricity prices once competition is introduced would make it harder for renewables to compete. "So if we don't have subsidies we have to have regulations," he says. These could include internalising external costs, or fiscal instruments such as an energy tax from which renewables are excluded. "Renewables need fair regulations and a fair price. A wise combination of regulation and temporary subsidies are enough to kick off the market," said Palz.

The main focus of the conference was solar energy, reflecting the interest of the organisers, Eurosolar. But there were some policy highlights for wind. One suggestion for new support, put forward by EU representative Jo Leinen, was to access money from the large pool of structural funds used for supporting infrastructure such as motorways, airports and harbours. Leinen said wind could be included in this regional development category.

Entrepreneurs wanted

An appeal for renewable energy entrepreneurs to step forward with projects in need of finance was made by Wolfgang Roth, a vice-president of the European Investment Bank. "Our experts on energy expect ideas for proposals in these renewables fields," he began. But then, with a sweeping glance across the auditorium, he observed: "I see a lot of academic people here. Academics are good but we need entrepreneurs. We need people willing to risk their capital, the banks need partners. And we are long term banks, we lend for 20 to 30 years."

Roth pinpointed central and eastern Europe as promising markets. "I feel the old systems are at an end there. In most of these countries we are starting afresh with gas -- but we could also start with smaller renewables activities in local areas."

In a parting shot, Roth lambasted his audience. "You must be crazy if you invest in only traditional energies, believe me you must be wrong if you just do that."

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