The Clean Energy Package currently discussed by the EU institutions (Commission, Parliament and Council) has as its main aims to create a European internal energy market ...
... which is based on energy efficiency and renewable energy and in which small and medium sized enterprises, energy cooperatives and energy citizens play a stronger role as energy producers.
The envisaged transformation of Europe’s energy system foresees a switch from fossil fuel and nuclear based, national, central energy systems towards a decentralised and European wide system with renewable energy and energy efficiency as centre piece. Intraday and common balancing markets, complemented by storage, inter-connectors between EU Member States and regional cooperation will provide new opportunities for operation schemes and business cases for hydropower plants.
Properly designed, the Clean Energy Package can unlock EU’s global leadership in green technologies and be a key instrument for the envisaged sustainable energy transition of Europe in terms of social, ecological and economic development.
The “jumbo” package provides a set of legislative proposals on energy efficiency, renewables, governance and a new market design. The Renewable Energy Directive addresses the ambition level of 2030 renewable energy targets and includes definitions of self-consumption, prosumer, energy communities and cooperatives as well as provisions on national support schemes. In the absence of binding national renewables targets, the Governance Regulation seeks a framework for investment security and proposals to calculate the indicative 2030 national renewable energy targets. The proposals on market design are critical for the treatment of small-scale renewable energy installations. Notably, they include the key provisions on priority dispatch and access for renewables, balancing responsibility as well as the definition and threshold for small-scale renewable energy plants. They also tackle the phase-out of subsidies for conventional plants.
Comparing the positions of the three European institutions, the European Parliament is the most ambitious in terms of promoting renewables, followed by the European Commission, which has recently become more ambitious as well. Though supportive of the goals of the Paris agreement, the Council is still reluctant to fully endorse an EU energy system transformation towards renewable energy and energy efficiency.
Though the climate and energy package sets out roughly the right direction for the path towards renewables, it fails to ensure the speed and depth of the transformation. The proposed renewable energy and energy efficiency targets are far too modest, particularly given the falling technology costs and availability of new renewables technologies, thus jeopardising the progress achieved in previous years. The EU energy framework needs to be better aligned with its long-term climate commitments. To maintain at least the current path of transition and to provide a stable investment climate, a share of minimum 35% renewable energy is needed by 2030.
The European Parliament provided a strong Governance proposal which to some extent compensates for the loss of national binding renewable energy targets for 2030. Nevertheless, these positive developments are not yet guaranteed as these foreseen measures can be undermined by legislation for the new market design for which the trilogue negotiations will start in June.
For example, priority access and dispatch for renewables needs to be guaranteed as long as there is no fundamental change in the power market and its fossil and nuclear-based structure. Without priority access and priority dispatch obligation, there will be a roll-back and a perverted merit order, where the old capacities or must run capacities from coal, nuclear and heavy oil will be dispatched first and renewables in the end, despite lower costs for many of the RES technologies.
For the envisaged transformation towards an EU-wide energy system based on renewable energy and energy efficiency, hydropower can play and important role with regard to storage and a stable and balanced grid in a decentralised energy system. Providing the right political and financial investment framework through the new legislation on market design would tap into the benefits and potential of hydropower plants as well as pumped hydropower storage.
It is now time for Governments and European decision-makers to make good on promises to make the EU the global number 1 in renewables and to honour the commitments of the Paris agreement.