Provisional EU 32% renewable energy target ‘is achievable’

Alandmark deal on the European Union’s renewable energy directive (RED), reached in the early hours of 14 June in Brussels by the European Commission, European Parliament and EU Council of Ministers means the European power sector will have to become greener. Under the law, the industry will be obliged to increase the amount of renewable energy in EU gross final energy consumption from a minimum 27% – the target adopted by the Commission in November 2016 – to 32% by 2030.

Welcomed by European electricity industry association Eurelectric as a “well- balanced compromise,” the agreement also implements the “energy-efficiency first” principle. It will prioritise in all energy planning, policy and investment decisions, measures to make energy demand and supply more efficient.

The deal now needs formal approval by Council and Parliament. Once this is achieved (probably later this year after the EU’s political summer break), the law will enter into force 20 days after publication in the EU’s Official Journal. Member states then have 18 months to transpose the new elements of the directive into national law.

Review clause

Assuming the deal’s terms hold, in 2023, the 32% target, 12% more than the 20% (by 2020) in the original 2009 directive, will be subject to an upward review clause. The Commission is keen to achieve carbon-free electricity by 2050 and says half of electricity consumed should be renewable by 2030.

The deal also provides a 1.3% sub- target to increase the share of renewables in heating and cooling installations. This will be calculated on a period of five years, starting from 2021.

EU member states will have to ensure that information on energy performance and on the share of renewables in their district and cooling systems is provided to final consumers in an accessible manner. And if customers think their schemes are inefficient, they can terminate their contracts and produce heat from renewable energy themselves.

EU climate action and energy commissioner Miguel Arias Cañete emphasised that the deal would “translate into more jobs, lower energy bills and less energy imports”. And the flagship 32% target, along with the 14% goal for renewable energy in transport, would “provide additional certainty to investors” and help the EU become the “world number one in renewables”.

Support schemes

Other achievements of the deal noted by the Commission and important for the European power industry include measures to improve the design and stability of support schemes for renewables; to simplify administrative procedures; and, to set a “clear and stable regulatory framework on self-consumption”.

Notably, the legislation stressed that EU consumers should be able to generate renewable energy for their own consumption, and store and sell excess production. Under the deal’s terms, consumers would not have to pay for any self-consumed energy until 2026, with “limited exceptions” foreseen thereafter, a Parliament press note said.

Consumers would also be remunerated for the self-generated renewable electricity they feed into the grid and be able to join renewable energy communities.

As the agreement eliminates all charges on electricity produced at home, Spain’s so-called “sun tax”, where householders and businesses with 25 kilowatt-plus installations had to pay for energy created by solar panels, will be a thing of the past.

The deal, which environmental campaigners Greenpeace said would mean “solar panels could soon cover millions more rooftops in Europe”, is “a good one for solar” said Dr James Watson, CEO of the European solar industry association SolarPower Europe.

Dr Watson particularly welcomed that consumers would be authorised to generate their own electricity across the EU under the new law. He added as permits for new installations must now be given within a year, this would “hugely reduce costs” and further promote solar technology.

Also welcoming the news, Alyssa Pek, communications advisor for the European Association of Electrical Contractors, said renewable energy will now become “more accessible and economically attractive for consumers”. Dirk Vansintjan, president of renewable energy co-operative association REScoop.eu, called June 14 “a remarkable day”.

Reaction

While green groups slammed collectively the “inadequate” 32% target and consumer organisations applauded the rules on self- consumers, EU experts and industry were less vocal about a deal that “is still only preliminary,” a Commission spokeswoman emphasised.

“We cannot say much at this stage on the impact on the European power industry, there is still further work at technical level to be finalised,” she told Modern Power Systems.

Furthermore, the entire electricity market design of the Clean Energy for All Europeans package is still pending – with the first trilogues only to start soon.

As well as the RED, this includes seven other legislative proposals – on energy efficiency, energy performance in buildings, and energy union governance (already adopted) – on electricity market design (a rules directive and a general regulation); and, two further regulations on ACER (the Agency for the Co-operation of Energy Regulators) and on risk-preparedness in the electricity sector.

Meanwhile, as for the RED, looking ahead, reports on negotiations on the revised RED are currently being presented to various EP committees who must formally back the deal – with the EP environment committee adopting its own opinion on 28 June and the industry, research and energy committee voting on the provisional agreement resulting from the negotiations on 10 July.

Revised RED

The 32% target is unlikely to change, however. It was considered the best possible compromise after heated discussions between member states. Notably Germany told ministers at the June 11 EU Council of Ministers energy meeting that 32% was the highest it would go. But rules on sustainability criteria covering biomass and biogas used in large heat and power plants, calling for substantial cuts in greenhouse gas emissions, have not been signed off.

The renewables proposal’s impact must also be seen in relation to the other energy dossiers. It was only the second agreed, after energy performance of buildings directive on 14 May, of the eight in the Clean Energy for All Europeans package unveiled 30 November 2016.

Adopted soon afterwards, on 19 June and 20, provisional deals on a new energy efficiency directive and energy union governance regulation will also affect renewable energy requirements for the power industry. They set a 32.5% energy savings goal for 2030 and rules for member states to achieve the targets, notably they must make national energy plans for 2021 to 2030. But, echoing the Commission, Eurelectric secretary general Kristian Ruby said before a full impact on the industry can be assessed, “we need agreement on the electricity market regulation”.

Mr Ruby called the renewables agreement “a well-balanced compromise between Council and Parliament”. But he added, “The higher shares of renewable energy must be combined with a sounder approach to market- based integration and electrification.”

Speaking to Modern Power Systems on 21 June, Eurelectric’s senior advisor renewables & environment, Hélène Lavray explained: “We welcome the clear signal that RES [renewable energy sources] must be integrated into the market.

“The aim of the revised directive to provide longer-term visibility and investment security to companies engaging in RES projects, including avoiding negative retroactive implications for existing installations, is also very positive,” she said.

She said Eurelectric was now awaiting a quick revision of the EU’s environmental and energy state aid guidelines that were adopted in 2014, which limits how EU public subsidies and tax breaks can be made to power operators, including energy infrastructure projects. Clarification would “ensure certainty and visibility for investors until 2030”.

Market targets

Ms Lavray said the 32% target, meant that the ambition of ensuring renewables supplies more than half of EU electricity was “in reach”. “An accelerated deployment of renewables is possible as the planned electrification of transport and other sectors will require more carbon neutral electricity,” she said. The “significantly decreased” costs of renewables in recent years will also boost renewables use.

But she said this target must go “hand in hand with well-functioning electricity markets and delivery of RES through market-based mechanisms, deployment of electrification in other sectors, addressing policy overlaps with the EU emissions trading scheme as well as challenges with permitting procedures and public acceptance.”

Ms Lavray said technological development and market experiences have given the power industry confidence renewables are becoming “fully competitive with other power generation technologies”. So, while the final text on subsidies – which have been key to the initial development of green energy – is not available, “support should be allocated only when needed and according to market-based mechanisms,” she said. “We expect that this will minimise market distortions and ensure that RES are integrated into the electricity market.”

Ms Lavray noted that recent examples of tendering processes reflect reduced RES technology costs – indicating increase market resilience. “In certain cases, the result of tendering processes resulted in a zero subsidy, which means that electricity from these installations will be sold on the wholesale power market.”

Meanwhile, Eurelectric applauds the deal’s promotion of self-generating energy consumers. “Eurelectric supports the right for consumers to generate and sell their electricity both individually and collectively,” she told Modern Power Systems.

For Ms Lavray, “Remuneration for renewable self-consumers should be based on the market value of the electricity fed in (and not implicitly at the retail price). We believe that, in the future, RES self-consumers should become market participants, without any exemption.”

This is happening now, she added: “Power companies are already offering services to their customers to allow for this integration.”