Focusing support for renewables

The European Commission’s Tadhg O’Briain outlined the need for a change of thinking in support schemes at Energy Ireland.

Renewable support schemes are not appropriate for technologies integrated into the market, according to Tadhg O’Briain. The European Commission’s desk officer for energy in Ireland spoke on the Commission’s initial plans for policy up to 2030.

O’Briain was speaking before the consultation on the 2030 green paper closed, on 2 July. “We’ve given everybody – the citizens, our industry, NGOs – a voice in shaping one of the most important set of policies for our longer term views at European level,” he commented.

To him, the consultation showed that the Commission “recognised the interactions” between the different parts of energy policy. There was an “absolute” obligation to deal with the challenge of climate change but this should not come “at the price of our economies or of the affordability of energy.”

An inconsistency between renewables targets and emissions trading system targets is often alleged. “I think that’s overly simplistic,” he remarked, “and it’s clear that we still need to provide a kick-start to new renewables technologies but, at the same time, we need to recognise that measures that were appropriate to develop new technologies are not appropriate when they are developed.”

There was a need for a “gradual and effective integration” of renewables technologies into the market so that they can complete on a level playing field. This integration process would be an “extremely important” part of future policy as the 2030 targets will build on the success of the 2020 policy.

As for market integration, he commented: “You could have price-building in the electricity markets across Europe through a single algorithm, a single process, a single way of thinking about how we use the resources that are there in the most efficient way.”

However, O’Briain warned against undermining this process through “counter-productive” interventions i.e. support schemes that are designed “from a purely national perspective.”

The EU institutions need to think about how to adapt those support systems so that they can work in a functioning EU-wide market and “really continue to contribute” towards the common energy policy. This was a job for the Commission, the Parliament and the Council of the European Union, which represents national governments.

The discussion on balancing of markets was sometimes “quite alien” in the Single Electricity Market but was “absolutely critical” in continental European markets.

Speaking frankly, he said that the use of the co-operation mechanism for renewables has been “underwhelming”. The only example of an effective cross-border support scheme has been between Sweden and Norway, a non-member state. If Ireland and the UK were able to sign an inter-governmental agreement by the end of the year, it would be “a good sign for the rest of Europe”.

The Commission plans to release guidance on how member states can make more effective use of the co-operation mechanism. The uptake, though, was dependent on the new transmission infrastructure being constructed.

Capacity mechanisms, which incentivise investments in generation in a particular area, may make “theoretical sense” in a closed market but impacted on a country’s neighbours in an internal market.

In conclusion, he pointed out that renewables were now “integral” to the system and capacity also included demand response (equally important to the supply side).

Public intervention should only happen where there was a clear problem which cannot be addressed by investors or the market.

“The real issue is around identifying the problem accurately in the first place,” he noted, adding that the underlying causes of problems also had to be identified. Intervention also needed to take account of the wider political and regulatory framework, both nationally and across the European Union. A new Commission package, released in July, points out best practice in renewable support schemes, when to intervene, and how to reduce costs over time.