- Is Brussels going to reject the RES act?
- February 28, 2014
- Law Firm: BSJP Brockhuis Jurczak Prusak Sp.k. - Warsaw Office
On 5th November 2013, the European Commission has published guidelines on state intervention in the energy industry. The guidelines include important information and a set of good practice standards for member states to follow when drafting internal regulations in respect of renewable energy. These guidelines are not of binding nature, however, they nonetheless contain vital principles that will guide the Commission in assessing state interventions in respect of renewable energy. Therefore, they can be taken as an indication of how the European Commission is going to appraise the latest draft of the RES act (version 6.1). The European Commission has established the following rules to be followed by member states, which have been successfully adopted within the EU:
(i) financial support should be limited to what is necessary and help to make renewable energy competitive; (ii) support schemes should be flexible and take into consideration decreasing generation costs; (iii) unannounced and retroactive changes must be avoided, while legitimate expectations of investors in respect of profit from existing investments must be respected; (iv) in order to lower costs, member states should coordinate their support scheme strategies.
As regards renewable energy support schemes such as the auctioning scheme, the European Commission clarifies that they constitute adequate means of support for older renewable energy technologies, such as generation of energy from wind and biomass, where generation costs and investment risk are low. The guaranteed feed-in tariffs scheme should be applied only in relation to new technologies and, as the technologies mature, move towards feed-in premiums (i.e. market price increased by the premium for renewable energy). Support under the green certificate scheme can be applied to all technologies, which in turn stimulates competitiveness. However, technology specific support has to be provided up until the moment when the specific technology reaches a certain age.
Therefore, introducing the auctioning scheme as a support scheme while at the same retaining the green certificate scheme for existing renewable energy installations should be assessed positively. Thus, the aim, which is to lower costs and ensure absence of retroactive changes, is now a given. However, the European Commission may cast a disapproving eye at the fact that the auctioning scheme is to be applied to all renewable energy technologies irrespective of their maturity. For this solution will support older technologies by guaranteeing low generation costs and low risk. Therefore, increased competitiveness of renewable energy may be at threat, while the instruments aimed at ensuring flexibility of the support scheme and its contribution to decreasing the costs of energy may be seen as not guaranteed.
Notwithstanding the above, based on the draft RES act, the European Commission will carefully assess the manner in which the provisions of Directive 2009/28/EC of the European Parliament and of the Council have been implemented, specifically with reference to renewable energy support schemes such as the promotion of the use of renewable energy.