Rules to push EU countries towards tailing off renewable energy subsidies were adopted by the European Commission today.
New guidelines dictating public support for energy and environmental protection are meant to reduce “serious market distortions”, the Commission said.
Joaquín Almunia, Commission Vice President in charge of competition policy said: “It is time for renewables to join the market. The new guidelines provide a framework for designing more efficient public support measures that reflect market conditions, in a gradual and pragmatic way.”
He added: “Europe should meet its ambitious energy and climate targets at the least possible cost for taxpayers and without undue distortions of competition in the Single Market. This will contribute to making energy more affordable for European citizens and companies.”
The state aid rules also leave room for EU members to “relieve” energy intensive companies which struggle to compete internationally because of higher energy prices from charges levied for renewable subsidy.
Countries will also be able to bring in capacity mechanisms to tempt energy producers to keep power plants open or build more ones, as long as there’s a “real risk” a country won’t have enough electricity generation capacity.
This could be a good sign for the capacity mechanism due to launch in the UK by the end of the year.
But some have suggested new state aid rules could throw doubt on plans for new nuclear power plants in the UK.
Renewable energy companies also fear the changes could discriminates against small-scale projects.
Alexandre Roesch, Head of Regulatory Affairs for EU solar trade group EPIA said: “Cooperatives and community projects, for instance, will now be forced to place their bids in a scheme much more suited to the largest energy players.”
Dr Nina Skorupska, Chief Executive of UK green energy body REA added: “This is a huge leap into the unknown. We support measures to reduce policy costs as renewables continue their journey towards price parity with fossil fuels. But putting so much faith in untested theory is a big risk, especially when the UK is in such desperate need of new capacity.”