Jan 18
The new rules aim to increase funding for renewable energy installations - including wind power - across Europe.
Image: Karsten Würth via Unsplash.

The European Commission’s new guidelines for state aid to energy projects, including for technology-specific auctions, will allow for faster deployment of wind power, according to WindEurope.

The rules will additionally endorse revenue stabilization, including 2-sided Contracts for Difference, WindEurope, an industry lobby, said in a statement. Price will continue to be the driving criterion for allocating public support. Yet the EC allowed for up to 30% of non-price-based criteria to be introduced to national auctions.

“National Governments can continue with technology-specific auctions: good. They’re critical to the visibility of the industry and preserving and expanding the European wind supply chain”, says Pierre Tardieu, Chief Policy Officer at WindEurope.

The European Union has, historically, used massive subsidy support to develop renewable energies in auctions. The support provided incentive for technology gains and scaled-up industries. The end goal of the exercise has been to make the technologies competitive and remove subsidies.In many cases, these goals have been achieved. Renewables projects must undergo standard competition rules and stand on their own cost and merit like any other infrastructure projects.

Yet development continues with the EU putting forth ever more ambitious net zero goals to cut carbon emissions. This requires keeping regulatory momentum.

“Complementary technologies essential to Europe’s future energy system, such as wind and solar, need to scale up in parallel,” the statement says. “Having them compete in the same auctions is therefore counterproductive.”

Innovative wind generation projects can gain direct aid aside of auctions, if states prove there is not sufficient competition for specific projects. This applies to wind energy projects with turbine sizes of more than 6 MW, the lobby said, adding that the rules “crucially” incorporate the latest turbine technology.

The new state aid guidelines importantly broaden the scope for increased decarbonization technologies to gain support, including storage and renewable hydrogen projects.

WindEurope particularly welcomed guidelines within the EU Hydrogen Strategy’s push for renewables hydrogen. The rules should work towards reducing the cost gap between fossil and renewable hydrogen.

The new state aid guidelines will enter into force in the first quarter of 2022, with member states given a 2-year transition period to adjust their natural support frameworks to the new guidelines.

The lobby also cited European Commissioner for Competition Margrethe Vestager saying “The faster we get to renewables, the less reliant we are on price spikes of imported fossil fuels.”

It’s questionable whether Europe is ready yet to speak of unlinking wind and natural gas prices. This is because one of the main reasons for the increased draw on natural gas this season, and increased price too, has been a low wind generation rate this year. It just hasn’t been windy.

But setting aside tactical moments and attempts to create political leverage, regulations allowing states to have greater discretion in aid for wind generation should increase the pace of development. This will be an important element for EU member states’ efforts to cut carbon emissions. Additionally, gaining a larger base in wind generation will spur the development of new technologies like renewable hydrogen that can run on a larger wind generation base.

By Stephen Bierman

Stephen Bierman is an energy markets journalist and the editor of New Economy Observer.

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