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EU Nations Should Cut Some Wind, Solar Subsidies, Alstom Says

European nations should cut subsidies paid to onshore wind and solar photovoltaic projects after 2020 and focus instead on new technology, said turbine-maker Alstom SA (ALO)’s vice president of environmental policy and global advocacy.

“There are some renewable technologies out there now that need much less subsidy than they did five years ago,” Giles Dickson said Oct. 31 in an interview in London. Onshore wind and solar “possibly” don’t need boosting, as long as they can compete against other forms of power generation, he said.

Electricity generated by onshore wind farms costs only 5.5 percent more than power from coal plants, according to data from Bloomberg New Energy Finance. The price for offshore wind is double that of coal-fired generation, the data show.

The European Commission wants to propose new climate and energy policies for the decade through 2030 by the middle of January, EU Climate Commissioner Connie Hedegaard said the same day at a Green Alliance seminar in London. The bloc should be able to deliver such a package by March, HSBC Holdings Plc said Nov. 1 in an e-mailed research note.

The EU should also raise a target for the amount of energy that comes from renewable sources by 2030 to about 35 percent, compared with the 20 percent goal for 2020, Dickson said. “That does not mean we are pushing for more renewable subsidies,” he said.

Focused Subsidies

Beyond 2020, “subsidies should be focused on those technologies that still need a lot of support to get up the learning curve and down the cost curve,” including offshore wind, tidal and carbon capture and storage, Dickson said.

The total cost of developing and producing energy from onshore wind turbines in the second quarter of 2013 was $82.61 per megawatt hour, compared with $78.30 per megawatt hour for a coal-fired power plant, according to data from Bloomberg New Energy Finance. In the same period, offshore wind cost $220.65 per megawatt hour and tidal power was $440.15 per megawatt hour, the data show.

Renewable energy targets should continue alongside emissions markets as a way of curbing carbon, Dickson said. “It makes sense not to put all your eggs in one basket. If you look at all the jurisdictions around the world that are serious about low carbon, they are generally doing both CO2 pricing and renewables targets,” he said.

Overgenerous Payments

Many EU nations have been overgenerous with subsidies, such as feed-in tariffs, for renewable energy, leading to inefficient allocation of resources, Dickson said. “Three years ago there was more investment in solar PV in the Czech Republic than the whole of the U.S.,” Dickson said.

U.S. consumption of renewable energy was about 51 million tons of oil equivalent last year, compared with 1.3 million tons for the Czech Republic, according to statistics from BP Plc.

Germany recognizes it has more than enough solar photovoltaic and onshore wind capacity, Dickson said. Prior to the Sept. 22 election, in which her party won the largest share of the vote, Chancellor Angela Merkel said revising the nation’s costly renewable energy subsidies was her first priority.

Paris-based Alstom is a preferred bidder to make steam turbines for a nuclear power station Electricite de France SA (EDF) proposes to build at Hinkley Point in England.

The U.K. government has agreed that EDF will receive a 92.50-pound ($148) per megawatt-hour fixed price for power generated by the venture, nearly double the current level of the wholesale electricity market.

This would make Hinkley Point the world’s costliest power station, Liberum Capital Ltd. said last week in a research note.

“The U.K. government wanted new nuclear build,” Dickson said. Centrica Plc, the U.K.’s biggest utility, and EON AG and RWE AG in Germany have all dropped plans to help finance nuclear stations in England, potentially because the price being offered wasn’t working for them, Dickson said.

“The one company that stayed the course, EDF, agreed a deal,” he said.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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