Debate on new EU renewables directive at the starting line: where are the pitfalls?

Renewable Energies have grown faster than gross consumption from 2014 to 2015 in the EU (graph: Agora Energiewende)
Renewable Energies have grown faster than gross consumption from 2014 to 2015 in the EU (graph: Agora Energiewende)

It is a matter of weeks before the European parliament starts delving into the new EU renewable energy directive proposed in November by the European Commission. The outlook is good, but there are pitfalls that could derail developments.

The discussion will start in Brussels on 22 March, when the European parliament will hold a public hearing on "Clean energy for all Europeans". In February, the parliament appointed the “rapporteur” on the dossier, the Spanish social democrat José Lopez Blanco. He will be in charge of negotiating changes to the text within the assembly. Then the file will go to the European Council, for a ping-pong expected to last a couple of years.

The debate occurs in a completely different context than 2008, when the first version of the directive was developed. In 2008 the industry was still nascent, prices were high and interest from consumers was relatively low. Everything has changed since then. Wind generation has doubled, from 150 TWh hours in 2010 to 306 TWh hours in 2016. Solar generation has jumped from 23 to 114 TWh. According to a report by Sandbag and Agora Energiewende on the state of the European power sector, in 2016 solar installations hit the landmark of 100 GW, despite a lower growth than 2015. Wind kept installing 10-12 GW annually, with offshore investment on the rise.

Prices are also declining rapidly: offshore wind’s has more than halved in 2016 and prices of German solar auctions fell by 14 %, says the study. Although some EU countries (Ireland, Luxembourg, the Netherlands and the United Kingdom) need to accelerate on their commitments, the EU Commission is also confident that the EU will reach its 20 % renewables target by 2020.

So it would seem relatively straightforward to hit the new objective of 27 % by 2030. But there are some pitfalls on the way.

The first is lack of certainty. The new text set a Europe-wide goal, but does not include mandatory national targets, unlike the existing directive. How to ensure that the commitments will be fulfilled? “The more we approach 2020, the more the future of renewables in Europe becomes uncertain. Post 2020, no reliable EU renewables framework exists nor is proposed to ensure that the EU’s 2030 renewables target is met, which could drive new investments in clean power throughout Europe,” say Sandbag and Agora.

The second are imbalances among countries and related needs to upgrade the grid. Renewables have grown fast but progress has been uneven. According to the Agora report, nearly three quarters of the “new renewables” (excluding hydro) in Europe were produced in only six countries: Germany (28 %), UK (13 %), Spain and Italy (11 % each), France (6 %) and Sweden (4 %). In Germany and Italy electricity consumption also fell, while in countries like Poland and Bulgaria demand is on the rise.

The paradox is that renewable’s spillover from countries with surplus production to those who have less is causing damages. The Wall Street Journal recently wrote that Germany’s surplus power is flowing into Poland and the Czech Republic, putting their grids under pressure and passing over the management costs. The problem is not new but it is exacerbating as days with surplus production become more frequent. The Czech Republic and Poland are installing phase shifters or transformer at the border to redirect the power to Germany. But the real solution could only be the upgrade of the networks.

A recent report prepared for the EU parliamentary committee shows that to complete the energy transition in Europe, huge investments are needed. The study estimates that annual investments of EUR 95 to 145 billion will be needed for the power sector in Europe between 2021 and 2050. Of these, EUR 54 to 80 billion per year would be necessary for electricity generation (compared to current levels of EUR 50 to 60 billion) but EUR 40 to 62 billion per year would be for transmission and distribution grids (compared to EUR 35 billion currently). Investments in storage and demand response should also increase. Probably the biggest task of the new directive lies not so much on new targets but on effectively creating a more integrated European energy network.

Claudia Delpero

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