GreenPrices Weekly, 20 April 2007 – Member States must increase the share of renewable power they use to more than 30% by 2020. Most can only do so by importing, so a green power market is desperately needed, says the European Commission. But how such a market should function, no one knows. Not even the Union of the Electricity Industry, Eurelectric, who made an inventory of the obstacles ahead at a conference in Brussels this week.
The Brussels conference ŒRenewable Energy in the Internal Energy Market The way forward – featured speakers from the European Commission, national policy makers from Member States, electricity generating companies (hydro, wind and biomass), grid operators, power companies and regulating bodies for renewable energy. They represented the multi facetted problem of how to include renewable electricity in power markets.
This is a very topical issue, as Hans van Steen (European Commission, Directorate General of Energy and Transport, DG TREN) explained. After having adopted the energy targets at the Spring Council, the European Council Œinvited¹ the Commission to come up with a proposal on a host of practicalities, among which the analysis of the Œpotential of cross-border and EU-wide synergies.¹ Meaning: to investigate the possibilities of a European internal market for renewable electricity, as this would help Member States in reaching their targets for renewable energy (20% by 2020). The Commission is currently preparing a proposal for the Council, to be tabled before the end of this year.
The share of renewable electricity is expected to increase strongly in the next decades. Paul Bulteel, Secretary General of Eurelectric, expects the 20% overall renewable energy target to translate into 34% of renewable electricity. In 2004 renewable electricity accounted for about 15% of the total power in Europe, with 10% coming from large hydro plants. This means the other sources such as wind, biomass, solar, geothermal, will have to grow even faster, with about a factor five until 2020. This growth represents the a challenge for the power market, explained Bulteel, because the renewable sources are (1) not yet competitive in the market, (2) still immature and (3) they cause undesired grid impacts because of their variable nature (wind especially).
Still, a market for renewable electricity is essential for Member States to reach their targets in renewable energy. A well functioning market would allow companies to generate renewable power at the best fit locations (e.g. offshore wind parks) for customers across Europe. Member States need a well-functioning market to buy the renewable power they need to comply with their targets. Also, grid-operators would be better able to cope with sudden excesses in (wind) power because they would be able to sell it Europe-wide. As yet however, such a green power market is no more than a vision.
One of the problems for a green power market is the renewable electricity book keeping. The Association of Issuing Bodies (AIB) has been set up to provide the groundwork for this. Its President, Christof Timpe, explained how the Guarantee of Origine (GoO) for renewable electricity provides the buyer, be it a Member State, a system operator or an independent client, with the certainty of having bought renewable power by a reliable disclosure of the energy¹s origin. ³The Guarantee of Origin can be linked to target accounting,² told Timpe. ³We want renewable electricity to be part of the market.² Various certificates have been set up, even going beyond the principle of the Guarantee of Origin, like RECS (Renewable Energy Certificate System) or EECS (European Energy Certificate System).
Another problem is the existence of a wide variety of stimulating measures for renewable power in the various Member States. These can be categorised as feed-in tariffs (a fixed price per unit of sustainable power), auctions, premiums and obligations, none of which are very compatible with an open EU Internal Energy Market (IEM). Christian Kjaer, Chief Executive of the European Wind Energy Association (EWEA) therefore proposed to first set up an internal market for renewable electricity, an IREM, which at a later date could then be joined to the IEM.
The conference did not end in a solution to the many challenges. What it did deliver was a clear list of the challenges ahead, as resumed by Paul Bulteel (Eurelectric), who highlighted both the technical problems of integrating large variable sources into the grid and the economic problems of integrating subsidised power into a market system. With regard to the rapid scaling up of overall renewable energy, Bulteel suggested to concentrate on close-to-market technologies such as thermal solar and heat pumps, and to make use of developed technologies such as biomass co firing and offshore wind parks.
copyright © Het Inzicht / Jos Wassink, 2007
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