European Renewable Energy Investment Flattening Out Despite Calls for More Capacity

     While the European Governments are pushing for ever higher renewable energy quotas, the total rate of renewable energy investment in Europe has flattened out.   "Experts said that investors did not have confidence in European policymakers’ support systems for renewables." EuroActive (2015). "Low-carbon energy" investment in Europe in 2015 dropped by more than half. The Guardian, March 23, 2016. European countries are in transition to support for renewable energy by reverse auctions. Renewable Energy Policy Network, "Global Stats Report: Renewable Energy 2016." Auctions in practice have always been problematic, producing an unpredictable amount of capacity due to limited bids and/or limited build-outs by winning bids. See Mott, "The European Commission's Mismanagementof State Aid Rules for Renewable Energy," PowerGen Europe 2015. A group monitoring the achievement of the Eu 2020 RES targets noted when the guidelines on support were released by the European Commission concern was already evident: “Since the announcement of new state aid guidelines, many potential investors fear less stable conditions. In case the guidelines are implemented as announced, investments will drop to a much lower level.” Keep on Track (2014)(website). This has predictably occurred in 2015-2016.

     Pressure from large utilities in Europe has been effective in pushing the EU towards a policy that rewards the big players in energy, whose cost of capital is lower and whose profit expectations are lower. Auctions for RES support have been a way to allow continued market  dominance of the traditional energy players. See Mott, supra.

     As levels of support go down in many cases in auctions, the percent of projects actually getting built goes down as well.  The "bid in" mechanism is common and precludes this process from creating a stable and predictable supply of RES capacity. This is showing up in the total EU investment results and will grow worse in my opinion until it is corrected.


Popular posts from this blog

Hitting Reality: Polish Energy Policy Meets the Facts

Pushing Electric Cars Will Do Little to Fight Air Pollution in Poland