Pursuant to Article 2(30) of the Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC) ‘renewable energy sources’ mean renewable non-fossil energy sources (wind, solar, geothermal, wave, tidal, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases).
Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast) of 30.11.2016 (COM(2016) 864 final 2016/0380 (COD) - being part of the so-called Winter Energy Package) substitutes the above definition with the following:
‘energy from renewable sources’ means 'energy from renewable non-fossil sources, in particular (wind, solar (solar thermal and solar photovoltaic), geothermal energy, ambient heat, hydropower and tide, ocean, wave energy, and combustible renewables: biofuels, bioliquids, biogas, solid biofuels and combustible wastes of renewable origin.'
In turn, the draft recast of the Electricity Regulation introduces for the renewable energy sources the universal balancing responsibility, and the phase-out of priority dispatch for new installations.
Further, the Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast), 30.11.2016, COM(2016) 767 final, 2016/0382 (COD) added new Annex VI to include a common greenhouse gas accounting methodology for biomass fuels for heat and power, including default values.
The above proposal also laid down the sustainability and greenhouse gas emissions saving criteria for biofuels, bioliquids and biomass fuels and included the draft rule that electricity from biomass fuels produced in installations with a fuel capacity equal to or exceeding 20 MW are to be taken into account as the renewable energy source only if it is produced applying high efficient cogeneration technology.
This provision, if adopted:
- would only apply to installations starting operation after 3 years from date of adoption of the Directive, and
- would be without prejudice to public support provided under schemes approved by 3 years after date of adoption of the Directive.
Moreover, it would not apply to electricity from installations which are the object of a specific notification by a Member State to the European Commission based on the duly substantiated existence of risks for the security of supply of electricity. Upon assessement of the notification, the Commission was granted the power to adopt a decision taking into account the elements included therein.
Mainly four types of RES support schemes are in place in EU, namely:
- Feed-in Tariff (FIT),
- Feed-in Premium (FIP),
- Green certificates (GC), and
- Investment grants.
Recital 4 of the Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast), 30.11.2016, COM(2016) 767 final, 2016/0382 (COD)
Directive 2009/28/EC established a regulatory framework for the promotion of the use of energy from renewable sources which set binding national targets on the share of renewable energy sources in energy consumption and transport to be met by 2020. Commission Communication of 22 of January 201415 established a framework for future Union energy and climate policies and promoted common understanding of how to develop those policies after 2020. The Commission proposed that the Union 2030 target for the share of renewable energy consumed in the Union should be at least 27%.
According to the CEER Status Review of Renewable Support Schemes in Europe C16-SDE-56-03, 11-04-2017 (p. 10), in the period 2014-2015, FIT schemes are still the most prevalent form of RES support throughout Europe (21 out of 28 Member countries) and throughout RES technologies.
13 CEER Member countries rely exclusively on FIT schemes to support their RES deployment (Bulgaria, Croatia, Cyprus, Denmark, Estonia, France, Greece, Hungary, Ireland, Latvia, Lithuania, Portugal, Slovenia).
Green certificates schemes are implemented in seven countries although they are being phased out in Italy, Poland and in the UK.
Investment grants are used as support type in Austria (for hydropower and PV), Finland (all supported RES), Luxemburg (for all supported RES), Malta (for PV) and in Sweden (for PV).
FIP schemes are yet not commonly in place and only implemented in different forms in six CEER member countries (Czech Republic, Finland, Germany, Italy, Netherlands, and the UK).
The said CEER document of 11 April 2017 further observes that in many CEER member countries, two or more support systems cohabit, often combining FIT schemes with more market oriented support elements such as investments grants (Austria, Malta), FIP (Czech Republic, Germany, Italy, UK) or green certificates (UK, Italy).
It is noteworthy, Article 12(5) of the Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD) provides for the rule that where non-market-based downward redispatching or curtailment is used, the following principles as regards renewable energy sources shall apply:
(a) generating installations using renewable energy sources shall only be subject to downward redispatching or curtailment if no other alternative exists or if other solutions would result in disproportionate costs or risks to network security;
(b) self-generated electricity from generating installations using renewable energy sources or high-efficiency cogeneration which is not fed into the transmission or distribution network shall not be curtailed unless no other solution would resolve network security issues;
(d) downward redispatching or curtailment under the above letters shall be duly and transparently justified.
Renewable generation is central to the electricity generation mix in Europe, at circa 30% on average (and rising), the share of RES charges is typically 13% of the cost of electricity to a European residential consumer (Tendering procedures for RES in Europe: State of play and first lessons learnt, CEER Public Document, C17-SD-60-03, 18 June 2018, p. 6).
The said CEER document also observes that the competitive bidding schemes for RES vary substantially depending on political priorities, market environment and the legal framework within each country. Tendering designs can encompass a great number of criteria, which, according to the CEER can be grouped into the following broad categories:
1. Eligibility of RES technologies: technology-neutral vs. technology-specific;
2. Pricing rule (e.g. pay-as-bid or uniform pricing);
3. Price caps (minimum/ maximum bid level);
4. Participation criteria (e.g. size, type of candidates, national vs. cross-border);
5. Prequalification criteria (e.g. financial securities, technical requirements such as building
permits, land use planning);
6. Selection criteria (e.g. price per KW or per kWh, volume, local content, environmental
7. Tendered volume;
8. Frequency of tendering rounds;
9. Penalties (for non-compliance or different realisation time as foreseen); and
10. Tradability of support entitlements.
Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD)
Dispatching of generation and demand response
1. Dispatching of power generation facilities and demand response shall be non- discriminatory and market based unless otherwise provided under paragraphs 2 to 4.
2. When dispatching electricity generating installations, transmission system operators shall give priority to generating installations using renewable energy sources or high-efficiency cogeneration from small generating installations or generating installations using emerging technologies to the following extent:
(a) generating installations using renewable energy sources or high-efficiency cogeneration with an installed electricity capacity of less than 500 kW; or
(b) demonstration projects for innovative technologies.
3. Where the total capacity of generating installations subject to priority dispatch under paragraph 2 is higher than 15 % of the total installed generating capacity in a Member State, point (a) of paragraph 2 shall apply only to additional generating installations using renewable energy sources or high-efficiency cogeneration with an installed electricity capacity of less than 250 kW.
From 1 January 2026, point (a) of paragraph 2 shall apply only to generating installations using renewable energy sources or high-efficiency cogeneration with an installed electricity capacity of less than 250 kW or, if the threshold under the first sentence of this paragraph has been reached, of less than 125 kW.
4. Generating installations using renewable energy sources or high-efficiency cogeneration which have been commissioned prior to [OP: entry into force] and have, when commissioned, been subject to priority dispatch under Article 15(5) of Directive 2012/27/EU of the European Parliament and of the Council or Article 16(2) of Directive 2009/28/EC of the European Parliament and of the Council39 shall remain subject to priority dispatch. Priority dispatch shall no longer be applicable from the date where the generating installation is subject to significant modifications, which shall be the case at least where a new connection agreement is required or the generation capacity is increased.
5. Priority dispatch shall not endanger the secure operation of the electricity system, shall not be used as a justification for curtailment of cross-border capacities beyond what is provided for in Article 14 and shall be based on transparent and non- discriminatory criteria.
Subject to requirements relating to the maintenance of the reliability and safety of the grid, based on transparent and non-discriminatory criteria defined by the competent national authorities, transmission system operators and distribution system operators shall:
(a) guarantee the capability of transmission and distribution networks to transmit electricity produced from renewable energy sources or high-efficiency cogeneration with minimum possible curtailment or redispatching. That shall not prevent network planning from taking into account limited curtailment or redispatching where this is shown to be more economically efficient and does not exceed 5 % of installed capacities using renewable energy sources or high-efficiency cogeneration in their area;
(b) take appropriate grid and market-related operational measures in order to minimise the curtailment or downward redispatching of electricity produced from renewable energy sources or high-efficiency cogeneration.
European Energy Regulators recommend that the removal of priority dispatch should be extended to include existing (as well as new) RES plants, because:
- Removing priority dispatch treats all plants on an equal basis. Keeping priority dispatch for existing plants could result in the perverse outcome that existing RES generators refrain from updating outdated components, adding to system costs.
- The priority dispatch granted to old generators should not be understood as a right with indefinite duration, but as an interim measure to promote non-mature RES technologies.
Hence, European Energy Regulators recommend the removal of priority dispatch in Article 11 of the Electricity Regulation to be extended to existing RES plants.
Avoid non-market approach to redispatch and RES curtailment
European Energy Regulators welcome the Clean Energy package’s proposals to pursue a transparent and non-discriminatory market for redispatching plants based on economic merit-order in which RES competes with other sources.
We agree that in such cases market based prices should form the basis of compensation paid to RES plants that are curtailed.
European Energy Regulators also support the proposals to help distribution system operators reduce the need for RES curtailment.
However, a market for redispatching plants may not always be feasible (as Article 12 of the Electricity Regulation rightly notes) and market prices for RES curtailment may not always send efficient signals.
In this context, European Energy Regulators are especially concerned by the proposed provision setting a floor on the compensation for curtailed RES plants at 90% of the day-ahead price, which does not appear to be supported by any economic consideration and thus might be considered arbitrarily set.
Hence, European Energy Regulators recommend changes to Article 12 of the Electricity Regulation to remove the 90% compensation floor for RES curtailment.
European Energy Regulators’ White Paper #1 Renewables in the Wholesale Market Relevant to European Commission’s Clean Energy Proposals, 11 May 2017, p. 2
The Clean Energy Package provides a first step forward when it comes to both integrating renewable energy sources in the market, and making the market fit for renewables. In combination with the reform of the Renewable Energy Directive (RED II) which foresees the partial opening of RES financial support schemes to cross- border participation, Articles 4 and 11 of the draft recast Electricity Regulation establish the principles of universal balancing responsibility, and the phase-out of priority dispatch for new installations, respectively. These rules combined will help speed up the integration of renewable energy sources into the market, while the reform of, inter alia, balancing markets launched with the Electricity Balancing Guideline will ensure that the market also accommodates all forms of power generation, demand response and storage.
However, Article 4.2 and Article 11.2 of the draft recast Regulation still open the possibility for exemptions of balancing responsibility and standard dispatch rules for installations of less than 500 kW. We believe that the legislation should go further and phase out network-related privileges for all renewables installations, or at the very least set a much lower threshold or limit the exemption to pilot projects in new renewable technologies. The current wording of the recast Directive would de facto exclude the vast majority of solar power installations from common market rules. It is also a counter-incentive to the aggregation of power generation from renewable energy sources, which the European Commission appears to promote to facilitate the integration of renewables in the market and asserts “could help consumers save significant amounts of money”.
We also observe that very few Member States have put measures in place to ensure that renewable energy generators have no incentive to generate electricity in times of negative prices, as laid out in point 22.214.171.124.b of the 2014 Guidelines on State aid for environmental protection and energy. We encourage the legislators to include provisions in this sense in the draft recast Regulation and the draft recast Renewable Energy Directive in order to enshrine this principle in primary legislation.
Article 12.5 of the draft recast Regulation also enshrines in EU legislation priority access for RES generators (and CHP operators): in case of non-market based redispatch, RES and CHP units would be the last ones to be curtailed or redispatched. We believe non-market based curtailment and redispatching should be a last resort option for TSOs (who should always use market measures first), and in this case system security should prevail as the main criterion for curtailment or redispatch decisions. Therefore, we recommend the deletion of the subarticle.
Finally, Article 11.4 of draft recast Regulation enshrines in European legislation the continuation of priority dispatch for RES generation units commissioned prior to the entry into force of the new Regulation. We believe the obligatory grandfathering of nationally created rights through EU legislation is unnecessarily generous and may not be entirely consistent with the current State Aid Guidelines for energy and environment. The indefinite continuation of a right to priority dispatch mandated by EU law, barring a need for renegotiation of the relevant units’ connection agreement, also jars with the clear cessation of immunity from balance responsibility provided for in Article 4 of the draft recast Regulation. We urge reconsideration of the terms of this sub-article.
EFET commentary on the Clean Energy Package for All Europeans, 20 April 2017, 20 April 2017, p. 15, 16
Tendering procedures for RES in Europe: State of play and first lessons learnt, CEER Public Document, C17-SD-60-03, 18 June 2018
CEER Status Review of Renewable Support Schemes in Europe C16-SDE-56-03, 11-04-2017
European Energy Regulators’ White Paper #1 Renewables in the Wholesale Market Relevant to European Commission’s Clean Energy Proposals, 11 May 2017
Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC), Article 2(30)
Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast), 30.11.2016, COM(2016) 767 final, 2016/0382 (COD) and Annexes
Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD)
Proposal for a Regulation of the European Parliament and of the Council on the internal market for electricity (recast), 30.11.2016, COM(2016) 861 final 2016/0379 (COD), Article 11, 12
Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources
Renewable Energy Directive Target, Study for the ITRE committee, Policy Department for Economic and Scienti c Policy, European Parliament, January 2018
EFET commentary on the Clean Energy Package for All Europeans, 20 April 2017, 20 April 2017
Directive on the promotion of the use of energy from renewable sources (RES Directive)
Winter 2016 Package
European Parliament‘s fact sheet on legal issues involved with the renewable energies
European Parliament Briefing - Promoting renewable energy sources in the EU after 2020
Extract: Key support elements of RES in Europe: moving towards market integration, CEER report, C15-SDE-49-03 26 January 2016, p. 44 - 46