Europe goes renewable – the evolution of renewable subsidy schemes

In recent years, the EU has been pushing for an internal energy market based on the principles laid out by its Third Energy Package, which came into force in 2009. The proposed EU framework calls for the use of “market-based solutions” to distribute financial support to renewable energy generation. Those rules aim at helping EU countries reach 2020 and 2030 climate and energy targets while avoiding market distortion. As a result, many EU countries have already started to steadily shift their renewable energy subsidy models away from fixed payments towards market-based models.

With this Market Insight Paper, ICIS explores the different paths that Germany, Poland and the UK have chosen on their way to achieving two things: renewable targets and renewable cost reduction. The three countries have one thing in common: all three chose to support renewable generation with a market premium on top of the electricity wholesale price for non-micro generation. The awarding and payment mechanisms, however, differ.

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