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The place of renewable energy in the European internal electricity market

Date

03 Feb 2011

Sections

Energy

EFET* welcomes this week’s Communication of the European Commission on the progress of renewable energy in the EU**. It is good to see expressions of optimism about the achievability of an important strand of the EU 20-20-20 energy and environment goals. We have noted the Commission’s attempt to explain how cooperation mechanisms between Member States should be possible in the future.

On the other hand, as we have pointed out in our recent position paper Effective integration of renewable energy in the European power market ***, there are severe limitations in the new EU Renewable Energy Directive upon the scope for cross border linkages****. EFET doubts whether purely national financial support schemes for renewable electricity, backed only by the limited inter-State coordination foreseen in the Directive, can offer an efficient way to maximise the role of renewable sources in European energy consumption. The absence of any EU programme to harmonise current national schemes means that exporters of electricity are unlikely to be eligible for subsidies paid in an importing country,
while new entrant suppliers in a particular country will invariably be precluded from importing renewable electricity from another Member State, unless they forego any subsidy.

EFET medium term vision

EFET member companies are convinced that a harmonised transition to market
mechanisms for the allocation of financial support will best guarantee cost savings across the EU, while preserving the integrity of the internal market in electricity from other sources. The prolongation of fixed feed-in tariffs paid even to new investors, combined with absolute priority dispatch, will tend to block the advent of market mechanisms, of harmonisation and of the tradability across Europe of renewable attributes.

EFET solutions for the short term

Some measures to promote a closer integration of renewable power sources in the overall European wholesale electricity market can be taken immediately, with the cooperation of national authorities and TSOs. We suggest these solutions should include:

• Adjusting the conditions for priority dispatch of intermittent wind power in countries
with fixed feed-in tariffs
• Revising congestion management procedures, so that involuntary flows caused by
out-of-the-market renewable output do not automatically block international
transactions in the wholesale power market for significant periods
• Making certificates already issued in countries with quota schemes eligible for credits in other EU Member States

EU intervention is feasible

We encourage the European Commission and Member States (assisted by national energy regulators) to take the necessary steps for a more market-friendly integration of increasing volumes of renewable source generation and supply into the European internal power market.

As far as the European Commission specifically is concerned, the new EFET position paper foresees scope for action beyond the initiatives set out in this week’s Commission Communication:

• Accelerate preparation for the scheduled 2014 review of the Renewable Energy
Directive 2009/28/EC, focusing on enhancing the roles of the internal market, of trade and of competition in meeting the 2020 targets
• Consider proposing to Member States an earlier review of the Directive on a
voluntary basis
• Provide more pro-active encouragement to Member States to become frontrunners in creating joint projects and permanently linking their support schemes
• Give the existing Florence, Madrid and Bucharest Forums, chaired by the
Commission, an additional and urgent focus on integration of renewable electricity
supply in the internal energy market

“This Communication on Renewable Energy indicates how seriously the EU Commission takes the challenge of meeting the 2020 targets” commented Peter Styles, Member of the EFET Board. “EFET wishes to continue a dialogue with EU institutions, to discuss possible further reforms at European and regional level. We have in mind reforms which will help all Member States meet the 2020 renewable energy consumption targets, while avoiding jeopardy to the integrity of the European internal market in electricity”. 

* The European Federation of Energy Traders (EFET) promotes and facilitates European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles. EFET currently represents more than 100 energy trading companies, active in over 27 European countries. For more information: www.efet.org
** Renewable energy: progressing towards the 2020 target, available at
http://ec.europa.eu/energy/renewables/reports/reports_en.htm
*** This EFET position paper was issued in December 2010 and will be discussed at a meeting with the European
Commission later this month. With the current press statement we are aiming to provide a summary of the
main points we expressed in the position paper
**** EU Directive 2009/28/EC

For further information, please contact:
Ilaria Conti, Policy and Communication Associate: I.Conti@efet.org; Mob. +32 (0)485 613 773

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