Renewable energy subsidies that helped spur Europe’s €48-billion-a-year clean energy industry are to be phased out across the continent, under new market-friendly state aid rules announced by the European Commission Wednesday.
“It is time for renewables to join the market,” the Commission’s competition chief, Joaquin Almunia, said in a statement. “The new guidelines provide a framework for designing more efficient public support measures that reflect market conditions, in a gradual and pragmatic way.”
Under the new rules, renewable energy subsidies will have to be replaced by market-based mechanisms for all but the smallest of clean electricity generators by 2017, following a pilot phase that will start next year.
Feed-in tariffs will be replaced by feed-in premiums that expose renewables to market signals, while energy infrastructure and cross-border schemes will also to some extent be protected, and 68 energy intensive sectors will be singled out for subsidies. Aid may also be earmarked for measures to keep the lights on through capacity mechanisms should power cuts threaten.
More generally though, competitive bidding processes will become the rule, forcing power generators to sell electricity on the market with balancing responsibilities for “short-term deviations” from delivery commitments.