EU Plans Guidance on Support Plans for Renewables, Draft Shows

The European Union is planning to prepare guidance on the overhaul of renewable energy support programs after curbs on state subsidies by some nations undermined investors’ confidence, a draft EU document shows.

Europe should establish principles for support plans that minimize market distortions and avoid over-compensation, while ensuring transparency and predictability, according to a policy paper on renewable energy drafted by the European Commission and obtained by Bloomberg News. The document, which also sets out various policy options for the EU beyond 2020, is due to be published on June 6.

“Support scheme reform or redesign is necessary, as technologies mature, as costs come down,” the commission said in the draft communication. “However, it is clear that recent reforms in some member states have not gone smoothly, lacking consultation with stakeholders, introducing sudden changes and at times even imposing changes retroactively.”

The confidence of renewable-energy producers in Europe is being put to the test as the economic crisis hampers access to financing and debt-burdened governments impose austerity measures. France, Germany, Italy and the U.K. have moved to curb incentives for the industry and in January, Spain surprised investors by shutting off aid that guaranteed developers above-market rates for solar energy they produced.

The commission called on the bloc’s 27 nations to step up efforts to “ensure convergence of approach,” adding that cooperation in the development of renewable energy is an important means of removing distortions and reducing costs.

‘Informed Decisions’

“To encourage such developments, enable transparency and ensure that support schemes in different member states can be compared and investors can take informed decisions, the commission plans to lead discussion on the exchange of best practices in these matters and to prepare guidance on support-scheme reform,” according to the draft paper.

The EU should also start preparations for defining its renewable-energy policies beyond 2020, when the current targets expire, according to the commission. Europe’s goal is to increase the share of renewable energy to an average of 20 percent by 2020. The goal is based on varying general renewable-energy targets for individual countries.

The commission plans to present regulatory proposals for the post-2020 regime in 2014. To stimulate discussion about the future framework, it set out four policy options in the draft document: a business-as-usual scenario, strengthened greenhouse-gas reduction targets without renewable-energy goals, mandatory targets for renewables with coordinated support and binding EU-wide goals backed by a harmonized support program.

“Whatever form any post-2020 renewable-energy milestones take, they must enable renewable energy to form part of the European energy market, with limited support and substantial trade,” the commission said in the draft. “Only in this way we can continue to develop our renewable-energy resources in a cost-effective, indeed, affordable manner.”

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