Europe can win back its lost clean energy leadership by moving away from subsidy-powered renewables, writes Christopher Burghardt, Vice-President Business Development Europe at First Solar and a member of the Board of Directors of Solar Power Europe. Rather than subsidizing renewables, Burghardt argues, Europe should stimulate utility-scale energy production by independent power producers, just as other markets around the world are successfully doing.
Ernst and Young’s recently launched Renewable Energy Country Attractiveness Index 2016 tells a powerful story. The Index looks at the drivers behind the deployment of, and the investment in, renewables: macro fundamentals, the energy imperative, policy enablement, project delivery and technology potential. Significantly, almost every European nation listed in the 40 country index, saw a decline in its ranking as an attractive market for developing renewable energy. The only exceptions were Denmark, ranked at 15; Finland, ranked at 36; and Greece, which retained its position at 40.
The latest Renwable Energy Global Status Report from REN21, the UN-affiliated Renewable Energy Policy Network, tell a similar story. Renewable energy investment was up last year in most parts of the world, but saw a 21% decline in Europe.
Although groundbreaking new programs in the Middle East, Latin America and India now steal the headlines, European expertise continues to play a pivotal role in driving the industry forward
This is in sharp contrast to a decade ago, when Europe was truly at the forefront of the renewable energy revolution, with programs like Germany’s Energiewende establishing the foundation for the eventual global energy transition. I would go a step further and say that Europe in general and Germany, in particular, enabled the global energy transition that we see today, by creating a market – albeit a subsidy-driven one – for commercial renewable energy technologies.
Thanks largely to demand from Europe, the solar industry was able to scale up manufacturing and supply, while aggressively driving down costs. This reduction in costs and improvements in technology were by no means a benefit limited to Europe; encouraged by just how affordable solar had become, countries around the world began to embrace the potential of clean solar electricity.
This does not mean that Europe does not play an important role anymore in the renewable energy sector. Although groundbreaking new programs in the Middle East, Latin America and India now steal the headlines, European expertise continues to play a pivotal role in driving the industry forward, particularly in the emerging markets.
European developers such as EDF Energie Nouvelles, Neoen, Engie, Fortum, and ENEL Green Power are bidding for and winning utility-scale solar tenders in international markets. The engineering experience of European consulting firms such as Fichtner, Arup, and Tractebel, is highly valued around the world. European engineering, procurement and construction (EPC) companies such as Belectric, Groupo TSK, and Scatec Solar are constructing solar power plants in Africa, Latin America, and the Middle East. And European lenders such as KfW Development Bank and the EBRD are funding projects in a number of developing markets.
Despite instigating the global energy transition to renewables, Europe appears to be settling into a state of status quo
Despite instigating the global energy transition to renewables, Europe appears to be settling into a state of status quo and, some would argue, is in danger of losing its position as a global renewable energy superpower. Apart from France, which stands out as the exception, we have yet to see any major efforts to further decarbonize the power generation sector in Europe by raising renewable energy targets. In fact – almost counter-intuitively – policymakers have placed a long-term bet on gas.
To some extent this is understandable. European policymakers are understandably wary about costs and about triggering a repeat of the boom-bust cycle we experienced a few years ago, by ramping up subsidies. But the fact is that the future of the region’s renewable energy program depends on its ability to evolve into a truly sustainable market, unhindered by the inevitable complications that subsidy programs bring.
The cornerstone of such a sustainable market would be updated renewable energy targets that take advantage of the fast declining economies of scale. Reviewing the region’s current clean energy goals, set out in 2014, is particularly critical in the context of commitments made around COP21. In order to successfully achieve deeper emission cuts, organizations like Solar Power Europe have called on the European Union to revise its renewable energy targets and increase them to 35 percent, to be achieved by 2030.
Once new targets are set, it will be critical for European governments to be reminded that the fastest and most cost-effective route to achieving economically sustainable renewable energy programs is through scale. More specifically, utility-scale.
There needs to be a broader understanding that the future of renewables in Europe must be underpinned by competitiveness
While Europe must have a comprehensive renewable power generation portfolio and there is room for a variety of technologies and models to thrive, the fact is that clean utility-scale energy production is the most effective alternative to fossil fuel-powered utility-scale energy production. By encouraging Independent Power Producers to competitively generate clean energy on a utility scale at market pricing, Europe can effectively move away from subsidy-powered renewables, as other markets around the world are successfully doing.
With some countries across Europe already working on a range of tender-based programs, there needs to be a broader understanding that the future of renewables in Europe must be underpinned by competitiveness. And while it makes sense for these initiatives to be nationally-driven, they need to be encouraged by robust European policy.
Europe today faces a unique opportunity to set a new standard for the adoption of economically sustainable renewable energy that goes well beyond the current business-as-usual levels. Now is the time for policy and policymakers to reignite the region’s competitiveness and passion for innovation, while reinforcing its leadership position.
Christopher Burghardt is First Solar’s Vice President of Business Development for Europe. He also serves on the Board of Directors of Solar Power Europe.