So far there has been very little cooperation between EU countries in stimulating renewable energy, although better coordination could save tens of billions of euros in support costs. Now that the EU has decided not to have national renewable energy targets for 2030, more and more organisations and countries are trying to develop regional approaches to support renewables projects. The Heinrich Böll Foundation, a think tank close to the German Green party, asked consultancy Ecofys how the EU could stimulate cross-border approaches. Sonja van Renssen reports on what looks to be an important new trend.
The EU’s goal is to be number one in the world in renewables. Member states have set a collective target of “at least 27%” renewable energy by 2030. For environmentalists like the Heinrich Böll Foundation, a think tank close to the German Green party, this shows “a lamentable lack of ambition”. The way to get Europe to deliver more, they believe, is by encouraging regional cooperation on renewables deployment.
“We are not going to get the 28 member states to significantly increase the [EU level] renewables target any time soon so regional cooperation is a practical way forward,” explains Silvia Brugger, Director for the Climate and Energy Programme at the Heinrich Böll Foundation’s EU office. In other words, the key to getting more renewables into the European energy mix is to push ambition “bottom-up” via regional groups.
With this in mind, the Heinrich Böll Foundation’s EU office commissioned energy consultancy Ecofys to explore practical options to strengthen regional cooperation on renewables. The resulting report was launched in Brussels on 1 October with a series of panel debates.
No cooperation to date
The EU institutions – European Commission, European Council and European Parliament – have repeatedly called for more regional cooperation to meet the EU’s 2030 climate and energy goals. The Luxembourg EU presidency (at the helm of the EU from July to December) has made energy governance – with enhanced regional cooperation an integral part of it – its number one energy priority.
EU energy ministers are due to adopt conclusions on governance at their next council in Luxembourg on 26 November. So far, draft conclusions foresee every Member State developing a national energy and climate plan for 2021-30 covering all five dimensions of the Energy Union. In their draft conclusions, Member States call upon the Commission to develop a standardised template for these plans and “guidance on regional cooperation, including the role of existing and new structures”.
These ideas may find their way into a new EU renewable energy directive due from the Commission in 2016 or 2017
So far, there is virtually no regional cooperation on renewables deployment. This is the Ecofys report’s starting point. Lead author Corinna Klessmann, Principal Consultant for Energy Policy at Ecofys, said at the launch: “In the electricity market we see some progress on cooperating among member states. [But] we see relatively little progress on renewables deployment. That means actually coordinating national policies on renewables targets and renewables support schemes.”
The only two countries with a joint support scheme for renewables are Norway and Sweden. When other member states cooperate on renewables, it is to deal with their effects on the energy system, not to deploy them. In July 2014, the European Court of Justice ruled that under existing EU renewables law, member states are not required to open up their support schemes to non-domestic producers.
All change: from national to regional
There are plenty of explanations for the lack of cross-border cooperation on renewables deployment so far. Sustainable energy policy has, until now, been pretty much a national affair, pointed out Tom Eischen, Director General for Energy at the Luxembourg Ministry of the Economy (and therefore representing the Luxembourg EU presidency) at the report’s launch. The 2020 targets for greenhouse gas emissions, renewables and energy efficiency are national targets.
But it’s very different for 2030. Here, the EU has a 27% renewables goal that European leaders have expressly said should not be broken down into national targets. Eischen says: “The target world is changing and this change gives a new role for regional cooperation in renewables especially.”
Eischen sees a second driver for more renewables cooperation. He points to the move to more market-based support schemes: there is a push towards tenders in the latest European guidelines on environment and energy state aid. If in future, there are bilateral, regional or even European-level tenders for renewables support, this equates to cross-border cooperation on renewables.
Five ways get things moving
But Klessmann and her colleagues do not believe that cross-border cooperation on renewables is simply going to happen. So they make some very concrete suggestions for what EU policymakers can do to drive it. These ideas may find their way into a new EU renewable energy directive due from the Commission in 2016 or 2017.
First, Ecofys suggests that the Commission make it mandatory for member states to consult on national energy action plans in future. This is not part of the draft council conclusions for the 26 November so far. Joint regional energy plans are probably too much to ask, Ecofys says.
Building and expanding renewable energy installations in the wrong locations is costing €45 billion in unnecessary investment
Second, Ecofys proposes that the Commission offers “strong guidance” to help define regions (even if their primary definition is bottom-up). This is no easy task. A substantial part of the report walks the reader through many different ways of splitting up Europe that are already in use. “You don’t find regions that are perfect,” says Klessmann. A Commission official at the launch assured the audience it has no intention of wading into this debate with a big stick.
Third, Ecofys envisages joint renewables projects and support schemes. The Commission could simply require Member States to achieve x% of the 27% EU level renewables target jointly. They could choose to cooperate on specific technologies or jointly test new types of support (e.g. auction schemes for specific technologies).
Fourth, Ecofys believes that more regional cooperation at sub-national level can kick-start cooperation and build public acceptance for cross-border work. Very concretely, sub-national regions could try to align spatial planning and licensing procedures.
Fifth, why doesn’t the EU enforce cooperation by linking it to access to finance? Dirk Hendricks, Senior Policy Advisor at the European Renewable Energies Federation (EREF), singled out this incentive as particularly interesting at the report’s launch. A minimum share of EU funds – whether for regional development or from the Juncker investment plan for example – could be earmarked for joint renewables investments. Conversely, member states could also be sanctioned for not cooperating, for example by needing to reach a higher renewables target each (though this would require some kind of benchmark for how much each should be doing in the first place, for which there is currently little political appetite).
Ecofys examines a few other options, notably regional renewables targets. These have not been explicitly rejected by heads of state and government. But apart from public acceptance problems, how could they be enforced? For Klessman, the difficulties of setting and enforcing regional targets mean they are “probably not feasible”.
Making the most of the market
The Commission did not comment in detail on the specific recommendations in the Ecofys report, nor are they found in the draft council conclusions for 26 November. But Eischen did say that for him, a precondition for regional renewable energy cooperation is common market rules.
In the past, the internal energy market depended on regional cooperation to progress. Eischen described the origins of the Pentalateral Energy Forum in 2005: “There was a need to get common rules and they could only be produced, at a technical level… in regional cooperation fora.” The Pentalateral Forum was created by the ministers of the Netherlands, Belgium, Luxembourg, Germany and France to promote collaboration on the cross-border exchange of electricity.
“The day when Poland would join the Baltic market, the citizens in Poland will get cheaper prices”
Of late the Pentalateral Forum has turned to security of supply (see the declaration from 8 June 2015) and next up may well be renewables. “I think all the elements are there. I think the momentum is there to take the next step and use regional cooperation for renewables too,” said Frederik Deloof, from the Benelux Secretariat. On 8 June, members of the Pentalateral Forum decided to develop options for flexible markets such as demand-side response, storage, and cross-border intraday and balancing markets. “I think these will be the elements that will lay the path to better deployment and investment in renewables,” Deloof said.
Meanwhile, the European Commission is due to present new electricity market design proposals next year. “Renewables are the single most important driver today for [energy market] integration in Europe,” said Susanne Nies, Head of Corporate Affairs for ENTSO-E, which represents European Transmission System Operators (TSOs), at the Ecofys launch.
Incentives and barriers
Plenty of studies have shown how much money Europe could save on renewables support if it coordinated this across the continent. In May 2013, Siemens said “building and expanding renewable energy installations in the wrong locations is costing €45 billion in unnecessary investment”. In its report, Ecofys calculates that a joint feed-in premium system in Central and Eastern Europe could deliver a 25% saving in support costs.
“Regional markets can basically organise system and cost benefits without having to change the [EU] Treaty,” said Green MEP Claude Turmes at the report’s launch. “The day when Poland would join the Baltic market, the citizens in Poland will get cheaper prices.”
The problem is political: rolling out renewables on home soil will be valued more than potential cost savings from doing it abroad. Klessmann explained: “The main barrier is convincing consumers to pay support for installations in other countries.” Nies agreed: “The biggest risk for the completion of the internal market today is the national mindset.” For this reason, Ecofys believes that the use of joint projects or support schemes requires “some sort of obligation at national or regional level”.
Back to basics
Some argue that regional cooperation on renewables also requires nationally binding renewables targets. “Without nationally binding targets or something near to it, it will be impossible to organise regional cooperation,” said Claude Turmes on 1 October. He took the Baltic Sea to illustrate: all the countries around it are relatively ambitious on renewables, except for Poland. “So how do you want to organise the benefits of the Baltic Sea if you have one big free-rider?”
Klessmann agreed: “In the end, you need some kind of national benchmark because it will end up being some kind of effort-sharing. How much will each member state contribute?”
Turmes is still pushing for the debate on nationally binding targets to be re-opened. He is part of a cross-party coalition in the European Parliament that is contesting the legitimacy of the 27% EU-only renewables target. They argue that member states (as represented by heads of state and government at the October 2014 summit) cannot decide such a policy without co-decision from the European parliament. For the Commission, in contrast, the debate has moved on: “We need the European Parliament to play its defining role in this governance process,” Commission Vice-President Maroš Šefčovič told MEPs on 6 October.