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A legislative package to regain global leadership in renewable energy

Date

11 Feb 2016

Sections

EU Priorities 2020
Energy
Sustainable Dev.

Investment in renewable energy assets in the EU dropped by 18% in 2015 reaching its lowest level since 2006. Retroactive changes in key European markets and the lack of pipeline visibility for the post-2020 period are tarnishing the EU’s reputation as a safe investment hub whilst emerging economies position themselves as attractive alternatives.

The historic Paris climate treaty, signed by 195 governments in December 2015, gave investors a clear signal that high-carbon assets are not viable in the long run and that the transition towards renewable-based economy should be accelerated.

The  EU  has  played  a  key  role  in  brokering  the  Paris  deal.  Yet it needs to translate its climate leadership into domestic policy. To meet COP21 ambition, EU Member States will need to increase their 2030 collective climate pledge and step up renewable energy deployment efforts.

The European Commission should therefore propose an ambitious post-2020 renewable energy package that fosters a vibrant home market with clear growth perspectives and asserts the EU’s leadership in renewables in the face of rising international competition.

The  European  renewables  industry  has  identified  the  following  ten  priorities  for  the  2016 renewables legislative package  which  will enable the  cost-effective fulfilment  of  both  the 2030 renewables target and the EU’s long-term decarbonisation objectives.

1.  A new term for the Renewable Energy Directive

·         The revised Renewable Energy Directive should build upon the current acquis to capitalize on success achieved and ensure a seamless transition to the 2030 regime.

·         The fulfillment of the 2020 national targets should be  the  starting point  for Member States‘ contributions to the  2030  renewables target, which  should be guided by the need to collectively deliver at least 27%.

·         Well-established articles (Article 2 „Definitions“, Article 5 „Methodology to calculate the share of renewables“) should remain unchanged, with the exception of including renewable cooling in Article 5.

·         The  revised  Renewable  Energy  Directive  should  focus  on  improving  the  implementation  of existing  legislation  and  bridging  regulatory  gaps.  Existing  provisions  should  be  reinforced through binding measures (e.g. building codes) to ensure predictability for investors.

2.  Ensure coherence among different legislative proposals

·         The  European  Commission  should  ensure  that  the  post-2020  sectorial  legislation  for renewable energy, energy efficiency, energy performance of buildings and market design are coherent.

·         The State aid guidelines for the post-2020 period should also be fully aligned with the revised sectorial legislation.

3.  Make full use of right of initiative to reflect COP21 level of ambition

·         In view of the Paris agreement, the 2030 EU-wide renewable energy target should be seen as a bare minimum.

·         The 2030 renewable target should factor in an increase in the energy efficiency ambition to ensure coherence between the EU climate and energy goals and international commitments.

·         The European Commission should fully capitalise on  its right of initiative  and propose  ambitious mechanisms that incentivise Member States to pledge higher than 27%.

4.  Establish a binding template for national climate and energy plans

·         The European Commission should provide a uniform and binding template for national climate and energy plans.  This will ensure consistency and comparability among Member  States‘ progress towards the target of at least 27% and allow for proper monitoring.

·         The  template  should  build  upon  existing  renewable  energy  national  plans  and  preserve reporting on trajectories and policy developments per sector, type of renewable energy sources and enabling technologies (for instance CHP, district heating and cooling, and heat pumps).

·         The template should be enshrined in horizontal legislation such as the streamlining of planning and reporting obligations for Member States and duly referenced to in the revised Renewable Energy Directive.

5.  Propose differentiated EU mechanisms for target delivery

·         Measures to prevent gaps between the collective obligation of the EU and Member States‘ plans (gap-avoiders)  and instuments to fill such gaps (gap-filling  instruments)  should be  agreed in advance and enshrined in the revised Renewable Energy Directive.

·         Gap-avoiders,  the  impact  of  which  should  be  modelled  in  the  revised  Renewable  Energy Directive Impact Assessment, could include:

  • Mandatory and ambitious minimum shares of renewables in new buildings, to be covered including through district heating networks, and other measures to increase renewable heating and cooling consumption in exisiting buildings and industry;
  • Conditionality in the allocation of existing EU funds and adapting public deficit accounting rules (exemptions for investments in RES).

·         The above mentioned measures should ensure that Member States are collectively delivering the 27% EU binding target, in addition to the volumes which have to be deployed under the 2020 legally binding national targets. The identification of a potential gap in the post-2020 period could therefore only relate to these additional volumes.

·         The gap-filling instrument should be triggered as a measure of last resort but its design should be clear as of 2020.  It should be composed of different mechanisms, covering both large scale RES installations and decentralised, small-scale systems.

·         The post-2020 Renewable Energy Directive should outline the concrete circumstances under which a gap-filling instrument will be activated.

6.  Reduce soft costs by addressing persistant market failures and barriers

·         Cost of capital will play a key role in the energy transition since many renewable technologies face high up-front investment costs. The revised renewable energy framework  can make a real difference  by better protecting investors in renewables and therefore decreasing the perceived risks in such investments.

·         The future Renewable Energy Directive can better adress:

  • Administrative costs, by  simplifing adminstrative procedures (Article 13);
  • Installation costs, by improving information and training provisions (Article 14);
  • Grid connection costs, by streamlining grid connection regimes, creating a one-stop-shop at national and regional level, and online applications for permits (Article 16).

7.  Ensure that renewable support mechanisms are tailor-made

·         Sufficient  flexibility  should be granted to Member States in the post-2020 period to  design appropriate  support  mechanisms  according  to  renewables  technology  maturity  and technology-specific risk profiles and features.

·         In  view  of  the  limited  distortions  of  trade  and  competition  and  to  empower  citize ns  and cooperatives, small and medium sized projects for electricity production should continue to be exempted from competitive bidding processes and be granted aid in the form of feed-in tariffs.

·         Support for large-scale electricity installations should be granted through market –based support instruments (e.g.  feed-in premiums). The European Commission could come forward with a common methodology for the calculation of cost components used to set up renewable energy support levels. The methodology should be based on the approach presented by the European Commission in its „Guidance for the design of renewable support schemes“ (2013).

·         Smart financial mechanisms should be developed to promote renewable heating and cooling deployment at decentralized, small scale level. To tap into these technologies’ future potential, such tools should foster synergies with energy efficiency measures and tackle the issue of upfront investment costs.

8.  Reflect new dynamics at decentralised level

·         The  revised  Renewable  Energy  Directive  should  accompany  the  fast  development  of decentralised renewable energy generation by introducing new provisions on prosumers and renewable self-generation and consumption of both power and heat.

·         The principles developed in the guidance on self-consumption by the  European Commission should be fine-tuned in the revised Directive in order to make self-consumption of both power and heat easy to develop, smart and accessible to a large number of consumers.

9.  Prioritise market design reform

·         The  ongoing  market  design  reform  should  complement  the  Renewable  Energy  Directive  by strengtening the integration of intraday and balancing markets fit for variable generation.

·         Flexibility covers for electricity generation at utility-scale various dimensions that should be duly addressed in a wider cost/benefit analysis (value-approach instead of cost-approach).

·         In  order to increase the  flexibility  in the system  (both in the form of electricity and heating & cooling), the revised Renewable Energy Directive should put in place concrete provisions to unlock the potential of dispatchable renewable generation, demand response and storage and thus ensure they  efficiently complement  a more variable power mix.  Member States should assess this potential and take it into account in their energy and infrastructure planning as well as in the design of support schemes.

·         Until  flexibility  is  not  properly  valued  by  unhindered  price  formation  and  inflexible  power generation remains online, priority access and dispatch rules should be maintained.

10.  Transpose the new renewable package provisions by end 2020

·         The revised  renewable energy provisions should be transposed in national legislation by end 2020 to avoid a legal vacuum in the post-2020 period and provide investor certainty.

The Signatories:

 

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