09/04/2014 The European Commission adopted revised Guidelines on Energy and Environment Aid (EEAG), due to enter into force on 1 July 2014. The new guidelines pave the way for less distortive support measures and market integration of supported power generation: by extending balancing responsibility, moving from feed-in tariffs to less distortive schemes like feed-in premiums, and adopting competitive bidding. RES are crucial for the diversification of the EU energy mix but recent reforms of national RES support schemes show that there is an urgent need to improve the framework. At the same time, avoiding regulatory uncertainty for renewable power generation is crucial.
Unfortunately however, exemptions for small-scale power generation mean that a major share of RES generation will be exempted. In Germany, for instance, about 70% of installed solar panels fall below the 500kW threshold. Experience from several member states shows that balancing responsibility for small-scale generation can work, not least because service providers or aggregators step in to fulfil balancing and other tasks on behalf of small-scale producers. State aid guidelines should facilitate, not slow down the development of these services.
Secondly, the new guidelines also open the door to exemptions regarding competitive bidding for all renewable generation.
Finally, the new guidelines also affect current discussions on capacity remuneration mechanisms (CRM). State aid control will contribute to identifying non-market based CRM that could involve state aid, while market-based CRM should be considered as an element of a new market design.
