ICIS Power Perspective: EU reached 17.5% RES share in 2017 – 2020 target in doubt?

Source: Heren

2019/01/31

This story has originally been published for ICIS Power Perspective subscribers on 31 January 2019 at 17:16 CET .

The European Union reached a 17.5% renewable share in final energy consumption in 2017, according to provisional data published by Eurostat on Thursday 31 January. With time having almost run out for member states to take additional steps to increase their renewable share, several countries are facing the prospect of fines. Given the slowing progress over the past three years, it is also not clear that the EU as a whole will reach its binding target.

Background

  • Each member state, as well as the EU as a whole, has a binding target for the share of renewables in their final energy consumption in 2020, laid out in the 2009 renewable energy directive
  • Each member state, as well as the EU as a whole, also has a binding target of 10% RES in the transport sector
  • Eurostat is the official data source of the European Commission, meaning that its findings for 2020 will be used by the Commission to determine whether countries have achieved their targets
  • Member states that fail to reach these targets could face financial penalties

Eurostat data

  • No additional countries have reached their 2020 targets in 2017, compared to 2016
    • As in 2016, there were 11 countries above their target: Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, Hungary, Italy, Lithuania, Romania, and Sweden
    • Just like a year before, 17 countries remained below their 2020 target: Austria, Belgium, Cyprus, France , Germany, Greece, Ireland, Latvia, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovak Republic, Slovenia, Spain, and United Kingdom
  • The top five countries with the biggest distance in percentage points from their 2020 target were the same as in 2016 – Netherlands, France, Ireland, United Kingdom and Luxembourg
    • However, Poland jumped from the ninth worst performer in 2016 to the sixth worst in 2017, after having decreased the share of RES from 11.3% in 2016 to 10.9%, (2020 Polish target is 15%)
    • Eight other countries recorded a worse performance in 2017 compared to 2016: Croatia, Hungary,  Romania, Slovakia, Austria, Portugal, Czech Republic and Bulgaria

  • Within the transport sector, only two of the 28 member states have reached the 10% renewable share required

 Analysis

  • Slowing progress
    • The EU’s progress towards the 2020 target has slowed in recent years, with growth rates of 3.3%, 1.8% and 2.9% in 2015, 2016 and 2017 respectively
    • This has been influenced in large part by the ending of generous feed-in-tariff (FiT) schemes in several countries, which has led to a slowdown in the quantity of new renewable capacity coming online
    • In order to reach the target, the EU will need to see average annual growth of 4.5% per year between 2018 and 2020
  • Auctions
    • The approaching 2020 deadline and the binding RES share target has motivated the countries with the biggest gaps to their target to organise renewable energy auctions
    • Based on the ICIS RES auctions data, 2017 faced a peak of RES auctioning activity
      • In 2017, support was awarded in RES auctions to around 26GW of RES capacity across the EU
      • In 2018, support to around 9GW – but not all countries have yet announced the 2018 auction results
    • Countries with the most awarded auction volumes in 2017-2018 were Germany, Netherlands, France and the UK – all of which are behind their 2020 target

    • The EU’s renewable share can be expected to see a significant increase between 2018 and 2020 as the capacity awarded in these auctions comes online
    • However, it is not yet clear whether the EU is likely to reach its binding target
  • Statistical transfers
    • Given the lead times between awarding support to a renewable project and it coming online, member states have almost run out of time to take action
    • Some solar capacity awarded this year could come online in 2020, but other generation types are unlikely to be commissioned in time to help towards the 2020 target
    • We expect to see more statistical transfers in the coming two years whereby countries that are behind on their targets agree to buy a specified amount of renewable energy from another member state
    • The transaction is only in statistical terms, with no physical transfer of energy
    • Only two such deals have been seen so far, with Luxembourg arranging to buy power from both Lithuania and Estonia in late 2017

Our ICIS Power Perspective customers have access to extensive modelling of different options and proposals. If you have not yet subscribed to our products, please get in contact with Justin Banrey (Justin.Banrey@icis.com). 

Matthew Jones is Senior Analyst - EU Carbon & Power Markets at ICIS. He can be reached at Matthew.Jones@icis.com

Vija Pakalkaite is Analyst - EU Carbon & Power Markets at ICIS. She can be reached at Vija.Pakalkaite@icis.com