Energy Union series: Europe’s electricity sector set to achieve 2020 RES targets

Claire Wilson

15-Feb-2016

Plans to create an Energy Union were unveiled by the European Commission in February 2015. Its aim is to ensure Europe has secure, affordable, and climate-friendly energy.

The Energy Union provides a five-pillar framework into which future European energy policies should fit. In this five-part video series, ICIS looks at the most recent developments to have taken place under each of the five pillars. Part 3: climate action.

A total 27.5% of electricity consumed across the 28 EU member states was generated by green resources in 2014, meaning Europe’s electricity sector is on track to achieve its 2020 renewable energy targets, according to figures released by from the European Commission.

Greenhouse gas emissions also fell 20% in comparison to the 1990 baseline, the data shows.

But despite the apparent success of the drive to increase reliance on renewable resources, a number of key stakeholders have questioned the effectiveness of the 2020 Renewable Energy Directive (RED) in helping to achieve EU energy and climate change objectives.

In response to a European Commission consultation on what should be included in the RED 2020-2030, the successor to the 2020 RED, some participants said the 2020 Directive had created distortions in the wholesale market, and pointed to a problematic variation in the amount of renewable energy sources (RES) at a member state level.

They added that too much emphasis had been put on the electricity sector, at the expense of the other areas included in the targets – heating and transport.

Figures from the Commission support this; the share of RES across the transport sector is just 5.9%, compared to a target of 10%, and in heating and cooling it is 18% of a 20% target.

Even in the electricity sector there are concerns that renewable energy resources have not been integrated into the market effectively and do not offer investment signals well enough to be deemed a success.

“The 20-20-20 targets have, in our view, failed to provide the right market-driven investment signals in low-carbon technologies beyond subsidised renewable power generation,” the European Federation of Energy Traders (EFET) said in response to the consultation.

It added that while renewable energy generation is having a competitive impact on the wider electricity market, especially boosting traded volumes in short-term markets and helping to develop the liquidity of intraday markets, a lack of coherence between climate change policies has resulted in significant inefficiencies in the market.

Divisions in the market were also raised by electricity sector union EURELECTRIC, which added that the costs of subsidising developing renewable technologies has also been unnecessarily high for the end consumer.

“Many RES support schemes have not been efficient and led to distortions and fragmentation in the wholesale market,” the union said.

 

The new RED

The European Commission is expected to publish RED 2020-2030 at the end of 2016.

Respondents called for it to include a reform of the EU Emissions Trading System (ETS), the effects of which have until now been hampered by the surge in renewable energy in the EU.

“The ETS was designed to lead the EU’s low carbon transition, but RES support mechanisms have reduced emissions in the power sector. This has significantly reduced demand for EU emission allowances and thus depressed CO2 prices,” EFET said.

Following reform to strengthen the carbon price signal, the ETS should be used as the main driver for RES investments in the electricity sector EURELECTRIC said.

Stakeholders also called for more coherence between climate change targets, including ETS and energy efficiency. Extra effort should also be made to ensure minimal distortion of the internal energy market, they agreed. claire.wilson@icis.com






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