UK successfully lobbies for fossil fuel protection in state aid guidelines

The UK has successfully lobbied to have a clause removed from the new EU state aid guidelines that would have hampered support for fossil fuels.

In a submission commenting on the draft guidelines, the UK said that an article containing the phrase “the measure should in principle not reward investments in generation from fossil fuel plants” should be removed.

When the full text of the updated guidelines was revealed on Wednesday night the article had been cut.

“The article the UK refers to places the burden of proof on member states to justify why capacity markets should subsidise fossil fuel power,” Manon Dufour from the environmental think tank E3G told Solar Power Portal. “This is crucial to ensure member states support the development of demand-side resources, storage, and interconnections – innovative and disruptive technologies necessary for the transition to a resource efficient and green economy.

“There is very little doubt that gas plants will qualify – as providers of flexibility with lesser impact on health and environment than coal. However this will make it harder for member states to subsidise existing coal plants, and not extend their use in contradiction with the EU’s energy policy objectives,” she said.

The UK has through a number of platforms, including the G20, backed a reduction in state support for fossil fuels but appears to have opted against exercising this public point of view in its response to the state aid guidelines.

The Department of Energy and Climate Change failed to respond to a request for comment.

Efforts from the UK to defend mid-scale renewable projects from being stranded have fallen on deaf ears however.

The new rules also appear to contradict last week’s Solar Strategy that promoted the development of mid-scale solar. The EU guidelines are widely considered to be an impediment to smaller renewable generators favouring established incumbent players.

There is concern that the new state aid guidelines could create a policy black hole for solar projects between 1MW and 5MW. The contracts for difference mechanism will be compulsory for schemes over 5MW from 2017. However, state aid rules would block feed-in tariff support of projects over 1MW.

“The Commission advocates technology-neutral auctioning and clearer moves towards open competition so it makes no sense at all that they themselves have discriminated against on-site solar power by limiting feed-in tariffs for solar to 1MW while wind can secure 6MW,” said Leonie Greene, head of external affairs at the Solar Trade Association. “Solar power is exceptionally well suited to on-site self-supply and the UK has recently announced a vital push on large solar roof schemes serving businesses, communities and public buildings. It is highly efficient for the grid to use solar power when it is generated, at the point of use", continued Greene.

DECC requested that the threshold be increased to 5MW for all renewables but this request appears to have been ignored.

“This is an illogical decision by the Commission which shows unjustified technology bias, serves a big utility agenda and risks damaging one of the most cost-effective and biggest markets for solar across Europe. It could leave a total policy void for 1-5MW projects from 2017. The solar industry and on-site investors should continue to push back strongly against this very poor decision,” she added.

The government would have to apply for an exemption to the rules.

Rainer Hinrichs-Rahlwes, president of the European Renewable Energies Foundation (EREF) has called on member states to take legal action to annul the new guidelines.

“The Commission erects new barriers against decentralised renewable energy programmes and is trying to terminate feed-in mechanisms, which are from experience a very efficient and cost-effective support for renewable energy,” he said.

“By favouring allegedly technology neutral bidding processes, a State dominated and regulating mechanism without substantial proof of effectiveness and efficiency, the European Commission goes against the majority of renewable energy producers and against the interests of regional and decentralised energy system change. This might lead to low public acceptance and cost increase,” he added.