Renewables investment incentives should come from market not subsidies: Eurelectric

8 November 2007 - Eurelectric has called on the European Commission to frame its forthcoming proposal for a new directive on renewables to make the internal energy market work in favour of the European economy.

Eurelectric, Renewable Energy Certificate System (RECS) and European Federation of Energy Traders (EFET) said they collectively support an increased role for renewables, in the context of a sustainable energy mix.

However a the target of a 20 per cent share for renewables in overall EU energy consumption - implying an ambitious share of approximately 35 per cent of total electricity production - is an extremely challenging one, it commented.

In striving to achieve this target, it is of vital importance not to close off over one-third of the European electricity market through the creation or continuation of non-market-based incentive mechanisms.

Eurelectric said any new directive on renewable energy must therefore be properly integrated into the framework of the internal electricity market. Specifically, this means adapting renewable energy support mechanisms to patterns of wholesale power supply and demand.

The most obvious immediate way to do so will be to open up EU-internal borders to trade in instruments which evidence renewables production.

Therefore the new directive must provide for a European system of tradable guarantees of origin for electricity produced from renewable sources, the association continued. Member states should be entitled to meet part of their national target through guarantees of origin acquired and redeemed by power suppliers.

Suppliers should be able to trade these instruments across borders independently from the purchase of physical electricity. This would help to optimise cost-effective renewables development, to the benefit of the European customer.

EU Member States must also ensure that their RES incentive systems are compatible with the EU Emissions Trading Scheme, as well as being economically efficient and transparent, added Eurelectric.

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