Policy News, BB200605
European Commission took two legal actions against several Member States who do not respect their commitments in terms of promoting renewable electricity and opening their energy markets:
1. Commission cracks whip on countries neglecting Renewables Directive
Countries that are failing on their Renewables Directive obligations have been exposed and held to account by the European Commission. Eight countries have had legal proceedings launched against them for not adequately transposing Community legislation on renewable electricity into national law before the deadline of October 2003. Five - Italy, Latvia, Cyprus, Greece and Ireland - were brought to heel for insufficient implementation of the directive on promoting renewable energy, and four were reprimanded for failing to report their progress on the use of electricity from renewable sources – Italy, Poland, the Czech Republic, and the United Kingdom. Italy was accused on both counts.
The European Wind Energy Association supports the fact that the Commission stands firm on its commitments set out in the Renewables Directive.
In its 4th April actions, which took into account tardiness in opening up gas and electricity markets to competition, as well as slack implemention of the Renewables Directive, the Commission showed that it is not a disembodied policy tower issuing regulations vaguely into the ether, but a force to ensure that member states are legally compelled to deliver national legislation that comply with the tenets of the Directive and act in accordance with it.
Directive 2001/77/EC stipulates that “the promotion of electricity produced from renewable energy sources is a high Community priority as outlined in the White Paper on Renewable Energy Sources for reasons of security and diversification of energy supply, of environmental protection and of social and economic cohesion.”
The Commission reminded Member States in its press release (see link below) that the increase in the use of renewable energy was accorded a top priority in its recently released Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy.
Energy Commissioner Andris Piebalgs said in this context: “Europe should make full use of the potential offered by renewable energy sources.” He continued, “This aim will only be realized through a long-term commitment to develop and install renewable energy”, showing his appreciation of the problem. The Directive only covers the period up to 2010, and so does not provide sufficiently long term security for investors, developers, system operators and other agents. EWEA is calling for longer term, mandatory targets to be enshrined in legislation, and would like to see the Commission taking the same strong stance on this objective. The Green Paper only queries whether or not targets beyond 2010 should be considered, while the recent Spring Summit Conclusions go a little further and put targets for 15% renewable energy by 2015 on the table (see also the story on ‘Spring Summit Conclusions to learn more about this issue).
The Renewables Directive target for 21% of electricity consumption from renewable energy sources by 2010 currently stands at 14%.
One common failing of member states in complying with the Directive is in regard to Article 7 – Grid System Issues. Electricity incumbents stemming from national monopolies can easily twist grid access to exclusively favour themselves. Article 7 decrees that “Member States shall take the necessary measures to ensure that transmission system operators and distribution system operators in their territory guarantee the transmission and distribution of electricity produced from renewable energy sources. They may also provide for priority access to the grid system of electricity produced from renewable energy sources.”
There are many cases, for example in the auctioning process for grid capacity in Ireland, that have seen grid access skewed towards the incumbent to the loss of business of the wind operator.
2. Commission takes action on countries failing to transpose electricity and gas Directives – 28 letters sent to 17 Member States
In a swooping affirmation of what EWEA has been decrying for a long time, namely the poor state of the gas and electricity markets in the exclusive possession of former incumbents, the Commission lashed out with 28 letters of formal notice to 17 Member States on the transgression of their duties to implement legislation on the internal market in energy. The letters were sent on the 4th April.
The letters have been published and are available here.
The same memo includes the key infringements, which mostly point to the absence of, or insufficient, legal unbundling of transmission and distribution system operators.
“Barbed access to the grid or distribution network represents a major impediment to wind energy. It is the fastest growing energy source, but that growth is unfairly curtailed if denied the opportunity to fulfill its potential,” said EWEA’s Amanda Burton.
The preliminary findings of the Sector Inquiry that were published in March revealed very strong and widespread examples of market abuse throughout the sector, gathered from a survey sent to over 3,000 participants.
Energy Commissioner Andris Piebalgs warned of a raft of formal action coming from the Commission at a March conference on EU Energy Law and Policy, when he said he had a stack of infringement papers on his desk, many relating to mounting evidence of anti-competitiveness in the gas and power sector.
On sending the letters Piebalgs stated that “the Member States must implement the directives on gas and electricity quickly and in full, not only in form but also in substance.” The implicit understanding that dominated energy markets and cramp the growth of a genuinely competitive internal energy market must be made explicit. For the wind industry it is especially important as dominant forces erect the barriers that keep the industry at bay.
In examining the transposition of the Directives within Member State countries, the Commission focused on the extent to which the markets are opened up; a real possibility of changing supplier; and the emergence of new market entrants with non-discriminatory access guaranteed by strong, independent regulators.
“In the Commission’s view, the sustainable, competitive and secure supply of energy will not be possible without open, competitive energy markets that enable European companies to compete Europe-wide rather than just being national champions,” said the Commission in the press release adjoining the letters of formal notice.
The Commission is swimming against the tide, as the swell of mega-mergers in European utilities rises to the lure of national champion ambitions. Neelie Kroes, EU competition commissioner, and Charlie McGreevy, EU internal market commissioner are probing the GdF (Gaz de France) bid for Suez that came a few days after the Enel bid, effectively scuppering it. The French government is refusing to acknowledge Enel in the merger. “Today there is one project on the table: that is a merger of GdF and Suez. The project is backed by the state as a first shareholder in GdF but also as the guarantor of the long term strategic energy interests of France,” said France’s deputy industry minister in an interview with La Tribune, mid March.