The way forward for energy in the EU

Date: 20/11/03

Continuing our series of MEPs' comments on topical issues focused on special reports in European Voice, two deputies, from Germany and Luxembourg, offer different perspectives on European Union energy policy

• Promote renewable energies, but in the right places, argues Peter Mombaur

THERE can be no doubt that promotion of renewable energies is necessary.

Of the 6.5 billion people that presently inhabit the earth, at least 2 billion will surely remain beyond the reach of electricity networks in the long run.

Energy will come to them, if at all, via small isolated systems - a classic case for renewable energies.

On the other hand, there is the question of security of supply for our own European home market.

With import dependancy already at 50% of total EU energy consumption - a figure that is set to rise to 70% by 2030 - an extension of home-grown renewables is one important way to diversify supply.

If promoting renewable energies per se is laudable, the way in which this is presently done certainly isn't. The EU has set itself a target to double the share of renewables to 12% of consumption by 2010.

An EU-wide objective makes sense because the point of reference for energy policy should be the common market.

Unfortunately, member states such as Germany pursue their own policies with quantitative targets for production within their own country.

For instance, this has led to a huge proliferation of windmills in areas which are densely populated and relatively wind-protected and where, consequently, generation stands no chance of ever becoming competitive.

Nationally oriented support schemes make absolutely no sense in a common EU market, especially given the vastly different natural conditions for exploiting renewable energy sources throughout the EU member states.

What is more, present support schemes are not only fragmented, but in themselves wrong.

The German Erneuerbare-Energien-Gesetz, for example, requires network operators to buy electricity from German renewable sources at a fixed price (above market level).

This mechanism is the most distorting one of all because it removes all incentives from the producers to become more competitive.

And even if fixed prices were to decrease more substantially over time than is presently envisaged, competition between producers of renewable energy would still be excluded.

The German scheme is also an obstacle to the free movement of goods as the supply companies are limited in their right to buy their electricity from the best producer EU-wide.

The other main type of support scheme presently used prescribes a certain percentage of energy to be from renewable sources.

As long as both patterns co-exist in different member states, producers can even cash in subsidies twice. All of this inflates the bill for taxpayers and consumers.

The problem is that the whole logic is flawed. The aim of any support scheme should be to bring renewables gradually closer to competitiveness, ie to the market, and not to grant the windmill operators a permanent risk-free source of income.

It is absolutely clear that subsidies will still be required for some time to come - but these should mainly be geared towards R&D, demonstration sites and, in general, barriers to market entry.

Crucially, they should flow only to those sites with the best natural conditions for exploitation in the EU market. In a nutshell, what we need is competition for subsidies.

This is the only way that we can ensure that the kind of rapid technological progress needed to give renewables a bright future will, indeed, be achieved.

• Peter Mombaur is a German Christian Democrat MEP. He is vice-chairman of the industry, external trade, research and energy committee and also sits on the bureau of the European Parliament.
• There's a general blackout in Europe's energy policy, says Claude Turmes

WHAT conclusions will EU institutions and national governments draw from the blackout which hit Italy on 28 September?

This question will continue to dominate the EU energy agenda in the coming weeks.

An interim report by the Union for the Coordination of Transmission of Electricity (UCTE), the association of transmission system operators, has identified two main causes for the biggest blackout ever in Europe.

These were a lack of coordination between network operators, combined with grid insecurities due to bulk electricity transfers over large distances.

The first issue is addressing the "human factor". On the night in question, the grid operators in Switzerland and Italy were not able to cope with the problem.

The UCTE report blames "a lack of urgency" by the those involved in managing the crisis and cites a need for better coordination between the grid operators. Moreover, there was a shortage of well-trained staff at the transmission system operators.

The UCTE report also provides a clear indication of the level of "stress" on the grid system that night.

It states that the loading of the crossborder lines to Italy was "mostly not proportional with the capacity of the respective lines" ie the profit maximizing strategy of the transmission service operators meant that the stability of the grid was pushed to its limit.

The second main cause of the blackout, according to the UCTE experts, is a "high-phase angle difference" due to "the transmission distance of considerable power transfer from the generation located in central Europe to the consumers in Italy".

The result was that half of the Italian power plants tripped like a cascade in just 12 seconds - which explains why the existing emergency measures did not work.

The UCTE conclusions are straightforward: the transfer of large quantities of electricity over large distances was to blame and, furthermore, this constitutes asevere problem for the stability of the EU electricity system and thus to security of supply.

So, what lessons can we learn from the UCTE findings?

Obviously, that the economic rationale underpinning the EU internal market, which basically consists of trying to create a competitive set-up for dominant national incumbents through large-scale imports, may be incompatible with physical phenomena.

Secondly, that we should have an interest in building power stations close to where consumers live.

Thirdly, we should try to reduce the demand for electricity by efficient use of equipment and other measures.

Fourthly, we need a separation of interest between the grid operating and commercial operations, such as trading and power production.

Comments from Loyola de Palacio, the energy and transport commissioner, suggest the EU executive is not only intent on ignoring the UCTE findings, but is also diametrically opposed to to the recent measures taken by the Italian grid operator GRTN.

In order to prevent future blackouts, the Italian transmission service operator decided to cut electricity imports from Switzerland at night and weekends from more than 3,000 megawatts to between 1,500 and 2,000 megawatts.

The problem in Italy was not too few power lines, but too much power being squeezed through the existing lines.

• Claude Turmes is a Luxembourg Green MEP and rapporteur of the electricity market liberalization directive. He also sits on the industry, external trade, research and energy committee.

Two MEPs, Peter Mombaur from Germany and Claude Turmes from Luxembourg, offer different perspectives on European Union energy policy.