Investor certainty is crucial for reaching the EU 20% Renewables Target
The European Wind Energy Association (EWEA) today published its position paper on the forthcoming legislation for renewable energy. The wind industry is also formulating 20 questions that need to be addressed prior to proposing “virtual trade”, as currently debated.
Legislative uncertainty is by far the most dangerous enemy for a growing industry such as the wind energy sector. Any shift from the current successful situation must be well prepared in order to maintain investor confidence and the current speed of development. Therefore, EWEA strongly recommends that the creation of a truly competitive Internal Energy Market should precede the establishment of a single trading mechanism for renewable electricity in Europe rather than following it.
EWEA fears that “virtual trading”, as currently debated, would lead Member States to engage in strategic gaming exercises where Member States would frequently adjust their national frameworks to ensure that their support system is attractive enough to maintain domestic action (CO₂ reductions, employment, economic activity) while avoiding catching the attention of foreign exporters. Such frequent adjustments would increase the risk dramatically compared to the present framework and would certainly not be a cost effective solution.
In a trading context, if each national plan for renewables is affected by decisions taken in other member states, there is a major risk that the market becomes highly distorted. EWEA has formulated 20 questions that should be addressed prior to proposing “virtual trade”(1).
“Nobody can be against trade. But the discussion should focus on the preconditions for trade rather than trade itself. Otherwise the discussion becomes tantamount to debating how we re-enter the Earth’s atmosphere and land at Cape Canaveral before having even thought about how to build the space shuttle,” commented Christian Kjaer, EWEA chief executive.
Introducing a virtual trade system that allows one country to import part of its renewable energy target from another only makes sense if the country which acts as the seller is over-performing in comparison with the target it has been assigned, and the country which acts as a buyer is underperforming. Otherwise, we run the risk of creating a market without liquidity, and where all the parties involved are lagging behind their obligations.
A fundamental tool for ensuring the success of the upcoming legislation is the format of the renewable action plans that will have to be developed by all Member States. Their effectiveness will depend on the inclusion of sector-specific targets (how their share is going to be achieved in terms of electricity, heating and cooling, and biofuels), the improvement of the administrative procedures, the design of a grid that takes into account the characteristics of renewable energy sources and the maintenance or improvement of their national support schemes.
‘Given the absence of full ownership unbundling, the directive should ensure priority access to the grid in all Member States’ is another key recommendation of the industry.
EWEA has now released its position on what should be included in the new legislation to ensure that the Commission, which is currently drafting the proposal, is addressing the right issues and can guarantee that the 20% target becomes a reality by 2020.
To see the executive summary: click here
To see the full position paper: click here
(1): To see the 20 questions that should be addressed prior to proposing “virtual trade”: click here