Smart financing key for renewable energy in the EU

31 Jan 2011

In its communication today, the European Commission said greater co-operation between member states, coupled with a better integration of renewable energy into the single European market, could lead to €10bn savings each year.

Speaking this morning, Energy Commissioner Günther Oettinger, said: “We have to invest much more in renewable energy and we need smart, cost-effective financing. If member states work together and produce renewable energy where it costs less, companies and consumers and the tax payer will benefit from this.”

To achieve a 20pc share of renewable energy by 2020, the European Commission is calling on member states to:

  • Implement the national action plans they presented in the beginning of 2010. According to these plans, all member states will meet their national binding targets by 2020. The European Commission says the latest data shows however, that in 2010, the indicative targets member states set themselves for the electricity and transport sector were missed by most of them and for the EU overall.
  • Ensure a doubling annual capital investments in renewable energy from €35bn per year to €70bn. It says within the new EU legislative framework, member states will have to commit the necessary efforts to further invest and co-operate on developing renewable energy. The European Commission says further investment in renewables will require a substantial use of national support schemes. While different financial instruments are used in all member states to develop renewable energy, ie via grants, loans, feed in tariffs, certificate regimes etc, the communication says their management needs to be improved as investors need greater coherence, clarity and certainty.
  • Co-operate as it says the convergence of support schemes and market integration have to be reinforced to ensure that renewable energy sources and technologies become economically competitive as soon as possible.

Statistical transfers and joint projects between member states

Three mechanisms can support such co-operation, says the European Commission:

  1. “Statistical transfers” whereby one member state with a surplus of renewable energy can “sell” it statistically to another member state, whose renewable energy sources may be more expensive
  2. “Joint projects” whereby a new renewable energy project in one member state can be co-financed by another member state and the production shared statistically between the two;
  3. “Joint support schemes” whereby two or more member states agree to harmonise all or part of their support schemes

The commission will assess in 2014 the effective functioning of the co-operation mechanisms.

The communication is the commission’s response to the reporting requirements set out in the Directive for Renewable Energy 2009/28/EC which had to be transposed into national law by 5 December 2010. The 2001 Green Electricity Directive and the 2003 Biofuels Directive had set national indicative targets for 2010, both for electricity and transport. The communication presented today also refers to these targets.

Carmel Doyle was a long-time reporter with Silicon Republic