Are New State Aid Rules in the EU Hitting RES Investment?

I have argued strongly that the move by the DG Competition in Brussels to push support for renewable energy into auctions will have very negative effects on the amount of investment in new technologies. Auctions create uncertainty over support, award support to many projects that will never be built, and crowd out some technologies that cannot compete head-to-head (although they may have substantial benefits other than a low price per MWhr).

The data from 2015 in Europe tend to show that my fears have been realized. Just as the EU raises its RES targets for 2030 with many Member States having very ambitious targets, the total investment in Europe is declining. Some of this is the lower price of PV solar per MWhr, but most of it is lower investment. Bloomberg New Energy Finance reports a decline in German RES investments year-to-year of 42% and a French decline of 53%. This is hardly good news if you were expecting RES to meet the bold policy announcements out of Brussels and national capitals.

The state aid guidelines were a serious compromise of the demands of the DG Energy and DG Environment that played heavily on the concerns expressed by EurElectric. Much of the final text was a concession to the big utilities. They historically benefit the most from auctions at the expense of small and medium-size businesses. Auctions promote market concentration and along with restrictions on operating support for energy storage, have been now used to manipulate the system to favor the established ig players.

In doing so, the European Commission may be sabotaging the policies approved by the European Parliament and Council of Ministers. We already can see the impact and it will only gorw more pronounced without changes.


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