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Designing Financing Mechanisms for Electricity from Renewable Energy Sources: The Role of the European Commission as an Agenda Shaper

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Energy Policy Making in the EU

Part of the book series: Lecture Notes in Energy ((LNEN,volume 28))

Abstract

This chapter focuses on the agenda-shaping role of the European Commission with respect to support mechanisms for renewable energy sources in an increasingly integrated European electricity market. We analyse the role of the European Commission as an agenda-setter in trying to influence the design of these finance mechanisms over the past two decades. The European Commission at times pursues two contradictory objectives. On the one hand, the European Commission is eager to establish low-carbon electricity system in Europe—with an increasing share of renewables. On the other hand, the European Commission is the guardian of a common European market, trying to establish a level playing field in the European electricity sector for all power generation technologies. We argue that the European Commission has failed with two attempts to harmonise finance mechanisms in the usual co-decision-making process. Consequently, the European Commission is now trying to influence national policy decisions indirectly via state-aid guidelines, which can be implemented without a formal consensus within the European Parliament and EU member states.

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Notes

  1. 1.

    Usually, the term “support instruments” or “support mechanisms” is used in order to describe the discussed payment mechanisms for renewable electricity producers. This terminology is based on the belief that “support” is needed for a number of years before renewable energy sources will be able to compete with other power generation technologies on the liberalised electricity market. However, the author assumes that these types of payment mechanisms might also be necessary in the long-term and that refinancing power plant exclusively via spot market sales is not a viable long-term option. Therefore, the term “finance mechanism” is used.

  2. 2.

    In addition to the Commission’s right of legislative initiative, the voting rules for the adoption of new legislation, Pollack also hypotheses that the formal agenda-setting power of supranational organisations also depends upon “the rules governing the application of amendments” (Pollack 2003, p. 56). However, since no amendments to existing legislation have been implemented for renewable energy finance in the European Union, this is not of relevance for our analysis.

  3. 3.

    By early 2012, this policy mechanism had been implemented at the national level in at least 92 jurisdictions around the world (REN21 2012).

  4. 4.

    The second assessment report was published in combination with the draft proposal for the Directive 2009/28/EC (see Sect. 4.3).

  5. 5.

    Wind energy is exempt up to a size of 6 MW or six generation units.

  6. 6.

    There is only very limited exposure to market price risk in the case of floating premium payments.

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Jacobs, D. (2015). Designing Financing Mechanisms for Electricity from Renewable Energy Sources: The Role of the European Commission as an Agenda Shaper. In: Tosun, J., Biesenbender, S., Schulze, K. (eds) Energy Policy Making in the EU. Lecture Notes in Energy, vol 28. Springer, London. https://doi.org/10.1007/978-1-4471-6645-0_6

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