The EU must maintain priority dispatch for existing renewables to ensure investor confidence, the secretary general of EURELECTRIC, Kristian Ruby, told ICIS on Tuesday.
The European Commission’s proposed electricity regulation, which is currently being debated in the European Parliament and Council, includes a grandfathering clause to ensure that priority dispatch and exemptions from balancing responsibilities are maintained for existing renewable projects, while new renewables will not receive such preferential treatment.
However, this clause has been criticised by energy regulatory bodies ACER and CEER, as well as by the European Federation of Energy Traders (EFET), who have called for priority dispatch and balancing exemptions to be removed for both existing and new renewable projects so that all technologies compete fairly in the same market (click here to read story).
Ruby said removing the exemptions would amount to a retroactive change in policy, which would be damaging to investor certainty and incentives. “Let’s avoid retroactive changes in the field of renewables so that people who made their business case five years ago, based on a certain set of assumptions that were applicable at the time, do not all of a sudden stand with an impossible situation,” Ruby said.
The regulatory bodies and EFET argue priority dispatch creates market distortions by failing to incentivise renewable producers to moderate their output efficiently, which can create artificially low prices and ensure that conventional generators have to carry out costly stop-start operations.
While Ruby acknowledged these concerns and stressed that the rules should be changed for new renewable projects, he said that the right balance needed to be struck to ensure trust in previous investment decisions that had been made.
Ruby said that EURELECTRIC would like to see significant progress made on regional cooperation.
“We see some really appalling things in the market today. When you look at the interconnectors, two thirds of capacity is standing idle or not being used for commercial flows of energy, which is a big problem for prices and for the integration of renewables.”
Ruby said that transmission system operators (TSOs) too frequently ignore advice from regional security coordinators (RSCs). These are companies owned by the TSOs, which perform services such as carrying out calculations to inform the TSO of which actions are most cost-efficient but have no decision-making power. “In some cases there may be good reasons for it, but there are some fairly strange examples of very abrupt shutting off of borders,” Ruby said.
EURELECTRIC has called for improved regional methodologies for capacity calculation, fully transparent justification when a TSO decides not to follow the advice of the RSCs, and improved balancing capacity sizing to enhance cross-border exchanges.
“To get this working, we need an institutional set-up to provide regulatory oversight at a regional level,” Ruby said.