EC Proposes to Gradually Terminate Support for Renewables after 2020

The European Commission is proposing to phase out support for renewable technologies after 2020 in a move that pushes its narrow vision for EU energy policy and clouds the future of wind energy.

According to state aid guidelines, the Commission recommends removing support mechanisms for renewable technologies that are expected to become “grid competitive” between 2020 and 2030, without specifically defining what the term means; whereas the guidelines only apply to the period from 2014 to 2020.

The proposals push for market integration above stability, with premiums allocated through tenders to replace feed-in tariffs and “technology neutrality”, which does not distinguish between the maturity of technologies like onshore and offshore wind energy.

Nevertheless, a number of exemptions have been included, allowing Member States to opt out of tendering, to tailor support for technologies at different levels of maturity and to determine the pace at which national support is adjusted to comply with the guidelines.

The complex nature of the state aid guidelines risks exacerbating investor uncertainty around the renewables industry and Member States must be flexible in implementing the proposals.

Justin Wilkes, deputy chief executive officer of The European Wind Energy Association, said: “The Commission would have liked to put the cart before the horse, by focusing on forcing wind energy to compete in a market which still does not exist, while ignoring the obvious market distortions that need to be tackled first, such as the majority of subsidies that go to fossil fuels and nuclear.

“While we welcome the drive for long-term market integration of wind energy, state aid guidelines are not the ideal tool for the Commission to legislate on energy policy. Member States should be flexible in implementing the guidelines, in order to enable the most cost-efficient development of wind energy in Europe, and avoid increased uncertainty for the sector,” he continued.

Wilkes finished by adding: “In the main, the opt-outs will become the most important tools used by Member States because the Commission has failed to propose good design requirements for its favoured method of tendering.”

Press Release, April 10, 2014; Image: ewea